EXHIBIT 4.10
OMNIBUS INSTRUMENT
WHEREAS, the parties named herein desire to enter into certain
Program Documents contained herein, each such document dated as of this [ ] day
of [ ], 2004, relating to the issuance by Principal Life Income Fundings Trust
[ ] (the "Trust") of Notes to investors under Principal Life's secured notes
program;
WHEREAS, the Trust is a trust and will be organized under and its
activities will be governed by the provisions of the Trust Agreement (set forth
in Section A of this Omnibus Instrument), dated as of the date of the Pricing
Supplement (attached to this Omnibus Instrument as Exhibit D) (the "Pricing
Supplement"), by and between the parties thereto indicated in Section F herein;
WHEREAS, certain expense and indemnification arrangements between
Principal Life and the Trustee, on behalf of itself and on behalf of the Trust,
are governed pursuant to the provisions of the Expense and Indemnity Agreement
dated as of March 5, 2004, by and between Principal Life and the Trustee;
WHEREAS, certain licensing arrangements between the Trust and
Principal Financial Services, Inc. will be governed pursuant to the provisions
of the License Agreement (set forth in Section B of this Omnibus Instrument),
dated as of the date of the Pricing Supplement, by and between the parties
thereto indicated in Section F herein;
WHEREAS, certain custodial arrangements of the Funding Agreement and
the Guarantee will be governed pursuant to the provisions of the Custodial
Agreement (the "Custodial Agreement") dated as of March 5, 2004, by and among
Bankers Trust Company, N.A., acting as custodian (the "Custodian"), the
Indenture Trustee and the Trustee, on behalf of the Trust;
WHEREAS, the Notes will be issued pursuant to the Indenture (set
forth in Section C of this Omnibus Instrument), dated as of the Original Issue
Date, by and between the parties thereto indicated in Section F herein;
WHEREAS, the sale of the Notes will be governed by the Terms
Agreement (set forth in Section D of this Omnibus Instrument), dated the date of
the Pricing Supplement, by and among the parties thereto indicated in Section F
herein; and
WHEREAS, certain agreements relating to the Notes, the Funding
Agreement and the Guarantee are set forth in the Coordination Agreement (set
forth in Section E of this Omnibus Instrument), dated as of the date of the
Pricing Supplement, by and among the parties thereto indicated in Section F
herein.
All capitalized terms used herein and not otherwise defined will
have the meanings set forth in the Indenture.
[Remainder of Page Left Intentionally Blank.]
SECTION A
TRUST AGREEMENT
This TRUST AGREEMENT (this "Trust Agreement"), dated as of the date
of the Pricing Supplement, is entered into by and between GSS Holdings II, Inc.,
a Delaware corporation, as trust beneficial owner (the "Trust Beneficial
Owner"), and U.S. Bank Trust National Association, a national banking
association, as Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Trust Beneficial Owner and the Trustee desire to
authorize the issuance of a Trust Beneficial Interest and a series of Notes in
connection with the entry into this Trust Agreement;
WHEREAS, all things necessary to make this Trust Agreement a valid
and legally binding agreement of the Trustee and the Trust Beneficial Owner,
enforceable in accordance with its terms, have been done;
WHEREAS, the parties intend to provide for, among other things, (i)
the issuance and sale of the Notes (pursuant to the Indenture, the Distribution
Agreement and the related Terms Agreement) and the Trust Beneficial Interest,
(ii) the use of the proceeds of the sale of the Notes and Trust Beneficial
Interest to acquire the Funding Agreement, the payment obligations of which will
be fully and unconditionally guaranteed by the Guarantee, and (iii) all other
actions deemed necessary or desirable in connection with the transactions
contemplated by this Trust Agreement; and
WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard Trust Terms, dated as of March 5, 2004, and attached to the
Omnibus Instrument as Exhibit A (the "Standard Trust Terms") and all capitalized
terms not otherwise defined herein (including the recitals hereof) shall have
the meanings set forth in the Standard Trust Terms (the Standard Trust Terms and
this Trust Agreement, collectively, the "Trust Agreement").
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the sufficiency
of which are hereby acknowledged, each party hereby agrees as follows:
ARTICLE 1
Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard Trust Terms (except to the extent expressly
modified herein) are hereby incorporated herein by reference with the same force
and effect as though fully set forth herein. To the extent that the terms set
forth in Article 2 of this Trust Agreement are inconsistent with the terms of
the Standard Trust Terms, the terms set forth in Article 2 herein shall apply.
A-1
ARTICLE 2
Section 2.01 Name. The Trust created and governed by the Trust
Agreement shall be the trust specified in the Omnibus Instrument. The name of
the Trust shall be the name specified in the first paragraph of the Omnibus
Instrument, as such name may be modified from time to time by the Trustee
following written notice to the Trust Beneficial Owner.
Section 2.02 Jurisdiction. The Trust is hereby organized in, and
formed under and pursuant to, the laws of the State of New York.
Section 2.03 Initial Capital Contribution and Ownership. The Trust
Beneficial Owner has paid or has caused to be paid to, or to an account at the
direction of, the Trustee, on the date hereof, the sum of $15 (or, in the case
of Notes issued with original issue discount, such amount multiplied by the
issue price of the Notes). The Trustee hereby acknowledges receipt in trust from
the Trust Beneficial Owner, as of the date hereof, of the foregoing
contribution, which shall be used along with the proceeds from the sale of the
series of Notes to purchase the Funding Agreement. Upon the creation of the
Trust and the registration of the Trust Beneficial Interest in the Securities
Register (as defined in the Trust Agreement) by the Registrar in the name of the
Trust Beneficial Owner, the Trust Beneficial Owner shall be the sole beneficial
owner of the Trust.
Section 2.04 Acknowledgment. The Trustee, on behalf of the Trust,
expressly acknowledges its duties and obligations set forth in the Standard
Trust Terms incorporated herein.
Section 2.05 Additional Terms.
None
Section 2.06 Omnibus Instrument; Execution and Incorporation of
Terms.
The parties to the Trust Agreement will enter into the Trust
Agreement by executing the Omnibus Instrument.
By executing the Omnibus Instrument, the Trustee and the Trust
Beneficial Owner hereby agree that the Trust Agreement will constitute a legal,
valid and binding agreement between the Trustee and the Trust Beneficial Owner.
All terms relating to the Trust or the series of Notes not otherwise
included in the Trust Agreement will be as specified in the Omnibus Instrument
or Pricing Supplement, as indicated herein.
A-2
Section 2.07 Governing Law. The Trust Agreement will be governed by,
and construed in accordance with, the laws of the State of New York.
Section 2.08 Counterparts. The Trust Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
[Remainder of Page 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 000 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000 (the "Licensor"), and the
Principal Life Income Fundings Trust specified in the Omnibus Instrument (the
"Licensee").
W I T N E S S E T H:
WHEREAS, the Licensor is the owner of certain trademarks and service
marks and registrations and pending applications therefor, and may acquire
additional trademarks and service marks in the future, all as described more
fully below;
WHEREAS, the Licensee desires to use certain of the Licensor's
trademarks and service marks in connection with the Licensee's activities, as
described more fully below;
WHEREAS, the Licensor and the Licensee wish to formalize the
agreement between them regarding the Licensee's use of the Licensor's marks; and
WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard License Agreement Terms, dated March 5, 2004, and attached to
the Omnibus Instrument as Exhibit B (the "Standard License Agreement Terms") and
all capitalized terms not otherwise defined herein (including the recitals
hereof) shall have the meanings set forth in the Standard License Agreement
Terms (the Standard License Agreement Terms and this License Agreement,
collectively, the "License Agreement").
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and for other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, each party hereby agrees as follows:
ARTICLE 1
Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard License Agreement Terms (except to the
extent expressly modified herein) are hereby incorporated herein by reference
with the same force and effect as though fully set forth herein. To the extent
that the terms set forth in Article 2 of this License Agreement are inconsistent
with the terms of the Standard License Agreement Terms, the terms set forth in
Article 2 herein shall apply.
ARTICLE 2
Section 2.01 Additional Terms.
None
B-1
Section 2.02 Omnibus Instrument; Execution and Incorporation of
Terms.
The parties to the License Agreement will enter into the License
Agreement by executing the Omnibus Instrument.
By executing the Omnibus Instrument, the Licensor and the Licensee
hereby agree that the License Agreement will constitute a legal, valid and
binding agreement between the Licensor and the Licensee.
All terms relating to the Trust or the Notes not otherwise included
in the License Agreement will be as specified in the Omnibus Instrument or
Pricing Supplement, as indicated herein.
Section 2.03 Counterparts. The License Agreement, through the
Omnibus Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
[Remainder of Page Left Intentionally Blank.]
B-2
SECTION C
INDENTURE
This INDENTURE (this "Indenture") is entered into as of the Original
Issue Date by and between the Principal Life Income Fundings Trust specified in
the Omnibus Instrument (the "Trust") and Citibank, N.A., as indenture trustee
(the "Indenture Trustee").
Citibank, N.A., in its capacity as indenture trustee, hereby accepts
its role as Registrar, Paying Agent, Transfer Agent and Calculation Agent
hereunder.
References herein to "Indenture Trustee," "Registrar," "Transfer
Agent," "Paying Agent" or "Calculation Agent" shall include the permitted
successors and assigns of any such entity from time to time.
W I T N E S S E T H:
WHEREAS, the Trust has duly authorized the execution and delivery of
this Indenture to provide for the issuance of Notes;
WHEREAS, all things necessary to make this Indenture a valid and
legally binding agreement of the Trust and the other parties to this Indenture,
enforceable in accordance with its terms, have been done, and the Trust proposes
to do all things necessary to make the Notes, when executed by the Trust and
authenticated and delivered pursuant hereto, valid and legally binding
obligations of the Trust as hereinafter provided; and
WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard Indenture Terms, dated as of March 5, 2004, and attached
to the Omnibus Instrument as Exhibit C (the "Standard Indenture Terms") and all
capitalized terms not otherwise defined herein (including the recitals hereof)
shall have the meanings set forth in the Standard Indenture Terms (the Standard
Indenture Terms and this Indenture, collectively, the "Indenture").
NOW, THEREFORE, for and in consideration of the premises and the
purchase of the Notes by the Holders thereof, it is mutually covenanted and
agreed by each of the parties hereto as follows:
ARTICLE 1
Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard Indenture Terms (except to the extent
expressly modified herein) are hereby incorporated herein by reference (with the
same force and effect as though fully set forth herein). To the extent that the
terms set forth in Article 2 of this Indenture are inconsistent with the terms
of the Standard Indenture Terms, the terms set forth in Article 2 herein shall
apply.
C-1
ARTICLE 2
Section 2.01 Agreement to be Bound. Each of the Trust, the Indenture
Trustee, the Registrar, the Transfer Agent, the Paying Agent and the Calculation
Agent hereby agrees to be bound by all of the terms, provisions and agreements
set forth in the Indenture, with respect to all matters contemplated in the
Indenture, including, without limitation, those relating to the issuance of the
below-referenced Notes.
Section 2.02 Designation of the Trust, the Notes, the Funding
Agreement and the Guarantee. The Trust created by the Trust Agreement and
referred to in the Indenture is the Principal Life Income Fundings Trust
specified in the Omnibus Instrument. The Notes issued by the Trust and
governed by the Indenture shall be the Notes specified in the Pricing
Supplement. The Funding Agreement designated hereby is the Funding Agreement
designated in the Pricing Supplement dated as of the Original Issue Date
between the Trust and Principal Life. The Guarantee designated hereby is the
Guarantee dated as of the Original Issue Date of PFG.
Section 2.03 Additional Terms.
None
Section 2.04 Omnibus Instrument; Execution and Incorporation of
Terms.
The parties to the Indenture will enter into the Indenture by
executing the Omnibus Instrument.
By executing the Omnibus Instrument, the Indenture Trustee, the
Registrar, the Transfer Agent, the Paying Agent, the Calculation Agent and the
Trust hereby agree that the Indenture will constitute a legal, valid and binding
agreement between the Indenture Trustee, the Registrar, the Transfer Agent, the
Paying Agent, the Calculation Agent and the Trust.
All terms relating to the Trust or the Notes not otherwise included
in the Indenture will be as specified in the Omnibus Instrument or Pricing
Supplement, as indicated herein.
Section 2.05 Counterparts. The Indenture, through the Omnibus Instrument, may be
executed in any number of counterparts, each of which counterparts shall be
deemed to be an original, and all of which counterparts shall constitute one and
the same instrument.
[Remainder of Page Left Intentionally Blank.]
C-2
SECTION D
TERMS AGREEMENT
This TERMS AGREEMENT (this "Terms Agreement") is entered into as of
the Original Issue Date by and among Principal Life Insurance Company
("Principal Life"), Principal Financial Group, Inc. ("PFG"), the Principal Life
Income Fundings Trust specified in the Omnibus Instrument (the "Trust") and the
[Purchasing Agent/Agent(s)], specified in the Pricing Supplement [(the
"Purchasing Agent")/(the "Agent(s)")].
W I T N E S S E T H:
WHEREAS, Principal Life, PFG and the agents named therein, including
the [Purchasing Agent/Agent(s)] have entered into that certain Distribution
Agreement dated March 5, 2004 (the "Distribution Agreement").
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, each of the parties hereby agrees as follows:
ARTICLE 1
Section 1.01 Incorporation by Reference. The provisions of the
Distribution Agreement and the related definitions (unless otherwise specified
herein) are incorporated by reference herein and shall be deemed to have the
same force and effect as if set forth in full herein.
ARTICLE 2
Section 2.01 Addition of Trust as Party to Distribution Agreement.
Pursuant to Section 1 of the Distribution Agreement, each of the
undersigned parties hereby acknowledges and agrees that the Trust, upon
execution hereof by the Trust and the other parties to the Distribution
Agreement (other than any other trusts organized in connection with the
Registration Statement that are party thereto as of the date hereof), shall
become a Trust for purposes of the Distribution Agreement in accordance with the
terms thereof, in respect of the Notes, with all the authority, rights, powers,
duties and obligations of a Trust under the Distribution Agreement. The Trust
confirms that any agreement, covenant, acknowledgment, representation or
warranty under the Distribution Agreement applicable to the Trust is made by the
Trust at the date hereof, unless another time or times are specified in the
Distribution Agreement, in which case such agreement, covenant, acknowledgment,
representation or warranty shall be deemed to be confirmed by the Trust at such
specified time or times.
------
*Include only if [Purchasing Agent/Agent(s)] purchasing Notes as principals.
**Include only if Agents serving as agents.
D-1
[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 each Purchasing Agent
and each Purchasing Agent hereby agrees to purchase, [severally and not
jointly,] the Notes having the terms specified in the Pricing Supplement
relating to such Notes.
(b) In connection with any purchase of Notes from the Trust by the
Purchasing Agent(s) as principal, the parties agrees that the items specified on
Schedule I of the Omnibus Instrument will be delivered as of the Settlement
Date.]*
[Section 2.02 Sale of Notes Through Agents. Subject in all respects
to the terms and conditions of the Distribution Agreement, the Trust and each
Agent hereby agree that the Trust will sell the Notes through each Agent as
agent on behalf of the Trust.]**
Section 2.03 Termination. [Upon the termination of this Terms
Agreement pursuant to Section 13(b) of the Distribution Agreement]* [In the
event that a purchaser shall fail either to accept delivery of or to make
payment for a Note on the date fixed for settlement]** the undersigned parties
hereby agree to allocate the expenses reasonably incurred prior to or in
connection with such [termination]* [failure]** as follows:
Section 2.04 Governing Law. This Terms Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to the principles of conflicts of laws thereof.
Section 2.05 Notices. For purposes of Section 14 of the Distribution
Agreement, the Trust's communications details are as set forth in Section E of
the Omnibus Instrument.
Section 2.06 Omnibus Instrument; Execution and Incorporation of
Terms.
The parties to this Terms Agreement will enter into this Terms
Agreement by executing the Omnibus Instrument.
By executing the Omnibus Instrument, each party hereto agrees that
this Terms Agreement will constitute a legal, valid and binding agreement by and
among such parties.
All terms relating to the Trust or the Notes not otherwise included
in this Terms Agreement will be as specified in the Omnibus Instrument or
Pricing Supplement, as indicated herein.
------
*Include only if [Purchasing Agent/Agent(s)] purchasing Notes as principals.
**Include only if Agents serving as agents.
D-2
Section 2.08 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-3
SECTION E
COORDINATION AGREEMENT
This COORDINATION AGREEMENT (this "Coordination Agreement"), dated
as of the date of the Pricing Supplement, is entered into by and among Principal
Life Insurance Company ("Principal Life"), Principal Financial Group, Inc.
("PFG"), the Principal Life Income Fundings Trust specified in the Omnibus
Instrument (the "Trust"), Principal Financial Services, Inc. ("PFSI"), Bankers
Trust Company, N.A. and Citibank, N.A., as indenture trustee (the "Indenture
Trustee").
W I T N E S S E T H
WHEREAS, the Trust will enter into the Funding Agreement with
Principal Life dated as of the Original Issue Date specified in the Pricing
Supplement;
WHEREAS, PFG will issue a Guarantee to the Trust as of the Original
Issue Date specified in the Pricing Supplement, which will fully and
unconditionally guarantee the payment obligations of Principal Life under the
Funding Agreement;
WHEREAS, the Purchasing Agents (as defined in the Distribution
Agreement) have agreed to sell the Notes in accordance with the Registration
Statement;
WHEREAS, the Trust intends to issue the Notes in accordance with the
Indenture, to collaterally assign to, and grant a security interest in, the
Funding Agreement and the Guarantee to and in favor of the Indenture Trustee in
accordance with the Indenture to secure payment of the Notes;
WHEREAS, the Custodian will hold the Funding Agreement and the
Guarantee on behalf of the Indenture Trustee pursuant to the terms of the
Custodial Agreement; and
WHEREAS, certain licensing arrangements between the Trust and PFSI
will be governed pursuant to the provisions of the License Agreement.
NOW, THEREFORE, to give effect to the agreements and arrangements
established under the Terms Agreement included in the Omnibus Instrument, as
applicable, the Trust Agreement, the Indenture and the Notes, and in
consideration of the agreements and obligations set forth herein and for other
good and valuable consideration, the sufficiency of which are hereby
acknowledged, each party hereby agrees as follows:
ARTICLE 1
Section 1.01 Delivery of the Funding Agreement and the Guarantee.
The Trust hereby authorizes the Custodian, on behalf of the Indenture Trustee,
to receive the Funding Agreement from Principal Life and the Guarantee from PFG
pursuant to the assignment of the Funding Agreement and Guarantee (the
"Assignment"), to be entered into on the Original Issue Date, included in the
closing instrument dated as of the Original Issue Date (the "Closing
Instrument").
E-1
Section 1.02 Issuance and Purchase of the Notes.
(a) Delivery of the Funding Agreement and the Guarantee to the
Custodian, on behalf of the Indenture Trustee, pursuant to the Assignment or
execution of the cross receipt contained in the Closing Instrument shall be
confirmation of payment by the Trust for the Funding Agreement.
(b) The Trust hereby directs the Indenture Trustee, upon receipt by
the Custodian, on behalf of the Indenture Trustee, of the Funding Agreement
pursuant to the Assignment and upon receipt by the Custodian, on behalf of the
Indenture Trustee, of the Guarantee, (i) to authenticate the certificates
representing the Notes (the "Notes Certificates") in accordance with the
Indenture and (ii) to (A) deliver each relevant Notes Certificate to the
clearing system or systems identified in each such Notes Certificate, or to the
nominee of such clearing system, or the custodian thereof, for credit to such
accounts as the Purchasing Agent(s) may direct, or (B) deliver each relevant
Notes Certificate to the purchasers thereof as identified by the Purchasing
Agent(s).
ARTICLE 2
Section 2.01 Directions Regarding Periodic Payments. As registered
owner of the Funding Agreement and the Guarantee as collateral securing payments
on the Notes, the Indenture Trustee will receive payments on the Funding
Agreement and the Guarantee on behalf of the Trust. The Trust hereby directs the
Indenture Trustee to use such funds to make payments on behalf of the Trust
pursuant to the Trust Agreement and the Indenture.
Section 2.02 Maturity of the Funding Agreement. Upon the maturity of
the Funding Agreement and the return of funds thereunder, the Trust hereby
directs the Indenture Trustee to set aside from such funds an amount sufficient
for the repayment of the outstanding principal on the Notes and Trust Beneficial
Interest when due.
ARTICLE 3
Section 3.01 Certificates. Principal Life hereby agrees to deliver
an Officer's Certificate, a copy of which is attached hereto as Exhibit E, on a
quarterly basis to any rating agency currently rating the Program. The Trust
hereby agrees to deliver an Officer's Certificate, a copy of which is attached
hereto as Exhibit F, on a quarterly basis to any rating agency currently rating
the Program.
Section 3.02 Filings. Principal Life hereby covenants to file, or
cause to be filed, in a timely manner on behalf of the Trust all reports,
certifications or similar filings required under the Securities Exchange Act of
1934, as amended.
ARTICLE 4
Section 4.01 No Additional Liability. Nothing in this Coordination
Agreement shall impose any liability or obligation on the part of any party to
this Coordination Agreement to make any payment or disbursement in addition to
any liability or obligation such party has under the Program Documents, except
to the extent that a party has actually received funds which it is obligated to
disburse pursuant to this Coordination Agreement.
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
E-2
provisions of one or more Program Documents, the provisions of such Program
Documents shall govern.
Section 4.03 Governing Law. This Coordination Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to the principles of conflicts of laws thereof.
Section 4.04 Severability. If any provision in this Coordination
Agreement shall be invalid, illegal or unenforceable, such provision shall be
deemed severable from the remaining provisions of this Coordination Agreement
and shall in no way affect the validity or enforceability of such other
provisions of this Coordination Agreement.
Section 4.05 Severability. If any provision in this Coordination
Agreement shall be invalid, illegal or unenforceable, such provision shall be
deemed severable from the remaining provisions of this Coordination Agreement
and shall in no way affect the validity or enforceability of such other
provisions of this Coordination Agreement.
Section 4.06 Notices. All demands, notices and communications under
this Coordination Agreement shall be in writing and shall be deemed to have been
duly given upon receipt at the addresses set forth below:
To the Trust:
Principal Life Income Fundings Trust (followed by the number
set forth in the Omnibus Instrument)
c/o U.S. Bank Trust National Association
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 and (000) 000-0000
To the Indenture Trustee:
Citibank, N.A.
Citibank Agency & Trust
000 Xxxx Xxxxxx, 14th Floor, Xxxx 0
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Principal Life:
Principal Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Principal Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: Xxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-3
To PFG:
Principal Financial Group, Inc.
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Principal Financial Group, Inc.
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: Xxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Principal Financial Services, Inc.:
Principal Financial Services, Inc.
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Principal Financial Group, Inc.
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: Xxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Bankers Trust Company, N.A:
Bankers Trust Company, N.A.
000 Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attention: Xxxxxx Brick
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as shall be designated by any such party in a written
notice to the other parties.
ARTICLE 5
Section 5.01 Omnibus Instrument; Execution and Incorporation of
Terms.
The parties to this Coordination Agreement will enter into this
Coordination Agreement by executing the Omnibus Instrument.
By executing the Omnibus Instrument, each party hereto agrees that
this Coordination Agreement will constitute a legal, valid and binding agreement
by and among the Trust, Principal Life, PFG, PFSI, the Custodian and the
Indenture Trustee.
All terms relating to the Trust or the Notes not otherwise included
in this Coordination Agreement will be as specified in the Omnibus Instrument or
Pricing Supplement, as indicated herein.
E-4
Section 5.02 Acknowledgment. Principal Life hereby acknowledges
Section 2.10 of the Indenture and Section 6.1 of the Custodial Agreement. The
Trust hereby acknowledges and agrees to the terms of the Custodial Agreement.
Section 5.03 Counterparts. This Coordination Agreement, through the
Omnibus Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 5.04 Capitalized Terms. All capitalized terms used herein
and not otherwise defined in this Coordination Agreement will have the meanings
set forth in the Indenture.
[Remainder of Page Left Intentionally Blank.]
E-5
SECTION F
MISCELLANEOUS AND EXECUTION PAGES
This Omnibus Instrument may be executed by each of the parties
hereto in any number of counterparts, and by each of the parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
Each signatory, by its execution hereof, does hereby become a party
to each of the agreements or indenture identified for such party as of the date
specified in such agreements or indenture.
IN WITNESS WHEREOF, the undersigned have executed this Omnibus
Instrument with respect to the Notes as of the date first written above.
PRINCIPAL LIFE INSURANCE COMPANY (in
executing below agrees and becomes a party
to (i) the Terms Agreement set forth in
Section D herein and (ii) the Coordination
Agreement set forth in Section E herein)
By:
----------------------------------------
Name:
Title:
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:
----------------------------------------
Name:
Title:
PRINCIPAL FINANCIAL SERVICES, INC. (in
executing below agrees and becomes a party
to (i) the License Agreement set forth in
Section B herein and (ii) the Coordination
Agreement set forth in Section E herein)
By:
----------------------------------------
Name:
Title:
[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:
----------------------------------------
Name:
Title:
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:
----------------------------------------
Name:
Title:
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:
----------------------------------------
Name:
Title:
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:
----------------------------------------
Name:
Title:
[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:
----------------------------------------
Name:
Title:
[XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED](1) (in executing below agrees
and becomes a party to the Terms Agreement
set forth in Section D herein)
By:
----------------------------------------
Name:
Title:
----------
(1) Insert name of Purchasing Agent(s) if other xxxx Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated.
[Execution Page 3 of 3]
EXHIBIT A
STANDARD TRUST TERMS
WITH RESPECT TO
PRINCIPAL LIFE INCOME FUNDINGS TRUSTS
DATED AS OF March 5, 2004
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions...............................................................................1
Section 1.02. Usage of Terms............................................................................3
Section 1.03. Section References........................................................................3
ARTICLE 2
CREATION OF TRUST
Section 2.01. Name of the Trust.........................................................................3
Section 2.02. Office of the Trustee; Principal Place of Business........................................3
Section 2.03. Appointment of Trustee....................................................................3
Section 2.04. Trust Beneficial Interest.................................................................4
Section 2.05. Issuance of the Notes.....................................................................4
Section 2.06. Acquisition of Funding Agreement and Guarantee............................................4
Section 2.07. Security Interest in the Collateral.......................................................4
Section 2.08. Purposes of the Trust.....................................................................4
Section 2.09. Title to Collateral.......................................................................5
Section 2.10. Allocation of Trust Expenses..............................................................5
Section 2.11. Liability.................................................................................5
Section 2.12. Income Tax Treatment; Tax Returns and Reports.............................................5
Section 2.13. Situs of Trust............................................................................5
ARTICLE 3
PAYMENT ACCOUNT
Section 3.01. Payment Account...........................................................................6
ARTICLE 4
TRUST SECURITIES
Section 4.01. Initial Ownership.........................................................................7
Section 4.02. Notes.....................................................................................7
Section 4.03. Registration of Transfer of Trust Beneficial Interest.....................................7
Section 4.04. Persons Deemed Holders of Trust Securities................................................7
Section 4.05. Maintenance of Office.....................................................................7
Section 4.06. Ownership of the Trust Beneficial Interest................................................7
i
TABLE OF CONTENTS
(Continued)
Page
----
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Trustee...................................................................................8
Section 5.02. Trust Beneficial Owner....................................................................9
ARTICLE 6
TRUSTEE
Section 6.01. General Authority.........................................................................9
Section 6.02. General Duties...........................................................................14
Section 6.03. Specific Duties..........................................................................14
Section 6.04. Acceptance of Trust and Duties; Limitation on Liability..................................14
Section 6.05. Reliance; Advice of Counsel..............................................................18
Section 6.06. Delegation of Authorities and Duties.....................................................18
ARTICLE 7
LIQUIDATION AND TERMINATION
Section 7.01. Termination Upon the Trust Expiration Date...............................................18
Section 7.02. Termination of Agreement.................................................................18
Section 7.03. Liquidation..............................................................................19
ARTICLE 8
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01. Eligibility Requirements for the Trustee.................................................19
Section 8.02. Resignation or Removal of the Trustee....................................................20
Section 8.03. Successor Trustee........................................................................20
Section 8.04. Merger or Consolidation of Trustee.......................................................21
Section 8.05. Appointment of Co-Trustee or Separate Trustee............................................21
Section 8.06. Trustee May Own Notes....................................................................22
ARTICLE 9
VOTING; ACTS OF SECURITYHOLDERS; MEETINGS
Section 9.01. Limitations on Voting Rights.............................................................23
Section 9.02. Meetings of the Trust Beneficial Owner...................................................23
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.01. Limitation on Rights of Securityholders.................................................23
Section 10.02. Amendment...............................................................................24
ii
TABLE OF CONTENTS
(Continued)
Page
----
Section 10.03. Notice..................................................................................25
Section 10.04. No Recourse.............................................................................26
Section 10.05. No Petition.............................................................................26
Section 10.06. Governing Law...........................................................................26
Section 10.07. Severability............................................................................26
Section 10.08. Trust Securities Nonassessable and Fully Paid...........................................26
Section 10.09 Third-Party Beneficiaries...............................................................26
iii
STANDARD TRUST TERMS
This document constitutes the Standard Trust Terms, dated as of
March 5, 2004, which will be incorporated by reference in the Trust Agreement
(specified in Section A of the Omnibus Instrument, as defined in the Indenture
(as defined below)) between U.S. Bank Trust National Association, a national
banking association, as trustee, (the "Trustee"), and GSS Holdings II, Inc., a
Delaware corporation, as trust beneficial owner (the "Trust Beneficial Owner").
These Standard Trust Terms shall be of no force and effect unless and
until incorporated by reference in, and then only to the extent not modified by,
such Trust Agreement.
The following terms and provisions shall govern the activities of the
Trust (as defined in the Indenture) subject to contrary terms and provisions
expressly adopted in such Trust Agreement, which contrary terms shall be
controlling.
WITNESSETH:
WHEREAS, the Trustee and the Trust Beneficial Owner desire to establish
a trust for the purpose of issuing Notes (as defined in the Indenture) to
investors which will be secured, and payments with respect to which will be
funded, solely by the assets held in the Trust, and the proceeds of which will
be used to purchase the Funding Agreement (as defined in the Indenture), issued
by Principal Life (as defined in the Indenture), the payment obligations of
which will be fully and unconditionally guaranteed by the Guarantee (as defined
in the Indenture).
NOW, THEREFORE, it being the intention of the parties hereto that the
Trust Agreement (as defined below) constitutes the governing instrument of the
Trust, the Trustee and the Trust Beneficial Owner agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. All capitalized terms not otherwise defined
herein will have the meanings set forth in the Indenture. The following terms
have the meanings set forth below:
"Corporate Trust Office" means the office of the Trustee located at 000
Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Funding Agreement Event of Default" means an "Event of Default" as
defined in the Funding Agreement.
1
"Indenture" means that certain Indenture dated as of the date specified
in the Omnibus Instrument, by and among the Trust and the Indenture Trustee,
Registrar, Transfer Agent, Paying Agent and Calculation Agent, as may be
amended, modified or supplemented from time to time.
"Payment Account" means each segregated non-interest-bearing corporate
trust account for the Trust maintained by the Trustee in its trust department in
which all amounts paid to the Trustee in respect of the Collateral will be held
and from which the Trustee shall make payments pursuant to Section 3.01(b) and
Article 7, to the extent such amounts are paid to the Trustee and deposited in
the Payment Account.
"Registrar" has the meaning specified in Section 4.03.
"Securities Register" has the meaning specified in Section 4.03.
"Securityholder" means each Person in whose name any Trust Security is
registered in the Securities Register or Register.
"Standard Trust Terms" means these Standard Trust Terms, dated as of
March 5, 2004.
"Standing Order" has the meaning set forth in Section 3.01(d).
"Trust Agreement" means that certain Trust Agreement dated as of the
date specified in the Omnibus Instrument, by and between the Trustee and the
Trust Beneficial Owner, as may be amended, modified or supplemented from time to
time, which incorporates by reference these Standard Trust Terms.
"Trust Beneficial Interest" means the undivided beneficial interest in
the assets held in the Trust, having such rights as provided for in the Trust
Agreement.
"Trust Beneficial Owner" means the Person identified as the "Trust
Beneficial Owner" in the preamble to the Trust Agreement, in its capacity as the
sole beneficial owner of the Trust.
"Trust Expenses" means any liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to the Trust.
"Trust Expiration Date" means the date specified in the Pricing
Supplement or such earlier date as all of the outstanding Notes are redeemed or
repaid in full by the Trust.
"Trust Security" means a Note or the Trust Beneficial Interest.
2
"Trustee" means the party named as such in the preamble to the Trust
Agreement and shall also include its permitted successors and assigns, or any
successor Trustee appointed, acting not in its individual capacity but solely as
Trustee under the Trust Agreement. If there shall be at any time more than one
Trustee hereunder, "Trustee" shall mean each such Trustee.
Section 1.02 Usage of Terms. With respect to all terms used in these
Standard Trust Terms, the singular includes the plural and the plural the
singular; words importing any gender include the other genders; references to
"writing" include printing, typing, lithography, facsimile, electronic
transmissions and other means of reproducing words in a visible form; references
to agreements and other contractual instruments include all subsequent
amendments hereto or changes herein entered into in accordance with their
respective terms and not prohibited by the Trust Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
Section 1.03 Section References. All references to Articles, sections,
paragraphs, subsections, exhibits and schedules shall be to such portions of
these Standard Trust Terms unless otherwise expressly provided.
ARTICLE 2
CREATION OF TRUST
Section 2.01 Name of the Trust. The Trust created under the Trust
Agreement shall have the name specified in the Omnibus Instrument. The Trust's
activities shall be conducted under the name of the Trust.
Section 2.02 Office of the Trustee; Principal Place of Business. The
principal office of the Trust shall be in care of the Trustee at the Corporate
Trust Office, or such other address in the State of
New York as the Trustee may
designate by written notice to the Trust Beneficial Owner, the Indenture Trustee
and the Ratings Agencies.
Section 2.03 Appointment of Trustee. The parties to the Trust Agreement
hereby appoint the Trustee as trustee of the Trust, to have all rights, powers
and duties set forth in the Trust Agreement and in accordance with the
applicable law with respect to accomplishing the purposes of the Trust.
3
Section 2.04 Trust Beneficial Interest. Contemporaneously with the
execution and delivery of the Trust Agreement, the Trustee, on behalf of the
Trust, shall cause the Trust Beneficial Owner to be recorded as the registered
owner of the Trust Beneficial Interest on the Securities Register, against
payment of $15 (multiplied by the issue price of the Notes in the case of Notes
that are discount notes) by the Trust Beneficial Owner to, or to an account at
the direction of, the Trustee.
Section 2.05 Issuance of the Notes. Promptly following the execution
and delivery of the Trust Agreement, the Trust shall, in accordance with the
Indenture, issue and deliver or cause to be issued and delivered the aggregate
principal amount of the Notes specified in the Pricing Supplement or supplement
to the Indenture against payment therefor. The Holders of the Notes shall only
have a right to receive payments from the Collateral as described in the
Indenture and shall have no right to receive payments under the assets held in
any other trust organized under the Program.
Section 2.06 Acquisition of Funding Agreement and Guarantee.
Contemporaneously with the issuance and delivery of the Notes, the Trust shall
acquire the Funding Agreement and the Guarantee.
Section 2.07 Security Interest in the Collateral. Contemporaneously
with the issuance and delivery of the Notes, pursuant to the Indenture, the
Trust shall collaterally assign the Funding Agreement and Guarantee to the
Indenture Trustee, for the benefit of the Holders of the Notes, and grant to the
Indenture Trustee, for the benefit of the Holders of the Notes, a first priority
perfected security interest in and to the Collateral, including, without
limitation, the Funding Agreement purchased by the Trust and the Guarantee.
Section 2.08 Purposes of the Trust. The exclusive purposes and
functions of the Trust are (a) to issue and sell the Notes and the Trust
Beneficial Interest, (b) to use the proceeds of the sale of the Notes and the
Trust Beneficial Interest to acquire the Funding Agreement, (c) to collaterally
assign and grant a security interest in the Funding Agreement in favor of the
Indenture Trustee, (d) to acquire the Guarantee and to collaterally assign and
grant a security interest in the Guarantee in favor of the Indenture Trustee,
(e) to pay amounts due in respect of the Notes and the Trust Beneficial
Interest, (f) to enter into the agreements and to take such actions as the
Trustee has the power and authority to take pursuant to Section 6.01, as
applicable, and (g) to engage in those activities necessary, advisable or
incidental thereto (such as registering the transfer of the Trust Securities).
4
Section 2.09 Title to Collateral. Legal title to the Collateral shall
be vested at all times in the Trust as a separate legal entity and shall be held
and administered by the Trustee for the benefit of the Trust and each
Securityholder, except that with respect to the Funding Agreement and the
Guarantee collaterally assigned to the Indenture Trustee, legal title to the
Funding Agreement and the Guarantee shall be recorded at all times in the books
and records of Principal Life and PFG, respectively, in the name of the
Indenture Trustee, for the benefit of the Holders.
Section 2.10 Allocation of Trust Expenses. Any costs and expenses of
the Trust shall be paid by Principal Life pursuant to the applicable Expense and
Indemnity Agreement to the extent provided therein.
Section 2.11 Liability. None of the Trustee or the Securityholders
shall have any personal liability for any liability or obligation of the Trust.
Section 2.12 Income Tax Treatment; Tax Returns and Reports.
(a) The Trust and the Trust Beneficial Interest Owner agree, and by
acceptance of a beneficial interest in a Note each holder of a beneficial
interest in a Note agrees, for U.S. federal, state and local income and
franchise tax purposes, to treat (i) the Trust as a separate grantor trust, (ii)
such Note as an ownership interest in such grantor trust and (iii) the Funding
Agreement as debt of Principal Life.
(b) The Trustee shall prepare, file and sign or cause to be prepared,
filed and signed, consistent with the treatment of the Trust as a grantor trust,
all federal, state and local income tax and information returns and reports
required to be filed with respect to the Trust and the Notes under any
applicable federal, state or local tax statute or any rule or regulation under
any of them. The Trustee shall keep copies or cause copies to be kept of the tax
and information returns (including Internal Revenue Service Form 1041).
Section 2.13 Situs of Trust. The Trust shall be located in the
jurisdiction set forth in the Trust Agreement. All bank accounts maintained by
the Trustee on behalf of the Trust shall be located in such jurisdiction except
that those accounts established under the Indenture shall be maintained with the
Indenture Trustee in accordance with the Indenture. The Trust shall not have any
employees in any jurisdiction other than in such jurisdiction. Except as set
forth in the Program Documents, payments will be received by the Trust only in
such jurisdiction and payments will be made by the Trust only from such
jurisdiction.
5
ARTICLE 3
PAYMENT ACCOUNT
Section 3.01 Payment Account.
(a) On the Original Issue Date, the Trustee shall establish a Payment
Account. The Trustee and any agent of the Trustee shall have exclusive control
and sole right of withdrawal with respect to the Payment Account for the purpose
of making deposits in and withdrawals from the Payment Account in accordance
with the Trust Agreement and the Indenture. Subject to the Indenture, all monies
or other property received by the Trustee on behalf of the Trust in respect of
the Collateral will be deposited in the Payment Account. All monies and other
property deposited or held from time to time in the Payment Account shall be
held by the Trustee in the Payment Account for the exclusive benefit of the
Trust Beneficial Owner, subject to the security interest in the Collateral in
favor of the Indenture Trustee on behalf of the Holders of the Notes, and for
distribution by the Trustee as provided in the Trust Agreement, including (and
subject to) any priority of payments provided for in the Trust Agreement.
(b) Except for payments made on the Trust Expiration Date or otherwise
pursuant to Section 7.03 and subject to Section 3.01(a), all monies and other
property deposited into the Payment Account shall be distributed by the Trust as
follows:
first, to the Indenture Trustee for the payment of all amounts then due
and unpaid upon the Notes, if any, in accordance with the Indenture; and
second, to the Trust Beneficial Owner all of the amounts that would be
payable under clause first of Section 5.02 of the Indenture to the Trust
Beneficial Owner if the Trust Beneficial Owner held a Note with an original
principal amount of $15 (multiplied by the issue price of the Notes in the case
of Notes that are discount notes).
Any remaining monies and other property deposited into the Payment
Account shall be distributed ratably in proportion to their original principal
amounts to the Holders last noted in the Register as the Holders of the Notes
and the Trust Beneficial Owner (as if the Trust Beneficial Owner held a Note
with an original principal amount of $15 (multiplied by the issue price of the
Notes in the case of Notes that are discount notes)).
(c) The Trustee shall deposit in the Payment Account, promptly upon
receipt, any payments received with respect to the Collateral. Amounts held in
the Payment Account shall not be invested by the Trustee pending the
distribution of such amounts to cover the Trust's obligations on the Notes or
the Trust Beneficial Interest.
(d) Notwithstanding anything herein to the contrary, the Trustee, on
behalf of the Trust, shall issue a standing order (the "Standing Order") to the
Indenture Trustee pursuant to which the Indenture Trustee shall distribute all
amounts due and unpaid under
6
Section 3.01(b). For so long as (i) the Trustee, on behalf of the Trust, has not
rescinded the Standing Order and (ii) the Indenture Trustee is able to, and
does, comply with the Standing Order, the Trustee will not be required to
establish a Payment Account in accordance with Section 3.01.
ARTICLE 4
TRUST SECURITIES
Section 4.01 Initial Ownership. Upon the creation of the Trust, the
Trust Beneficial Owner shall be the sole beneficial owner of such Trust.
Section 4.02 Notes.
The Notes will be issued pursuant to and be governed by the Indenture.
Section 4.03 Registration of Transfer of Trust Beneficial Interest.
(a) The Trustee or its agent (in this capacity, the "Registrar") shall
maintain a register or registers for the Trust for the purpose, subject to
Section 4.06, of registering the transfer of the Trust Beneficial Interest and
Notes (a "Securities Register").
(b) The Registrar shall not be required to register the transfer of the
Trust Beneficial Interest in any manner inconsistent with the terms of the Trust
Agreement or the Indenture.
Section 4.04 Persons Deemed Holders of Trust Securities. The Trustee
and the Registrar shall treat the Person in whose name any Trust Beneficial
Interest is registered as the owner of such Trust Beneficial Interest for all
purposes whatsoever, and none of the Trustee and the Registrar shall be bound by
any notice to the contrary. The Trustee shall treat the Person determined in
accordance with Section 2.11 of the Indenture as the owner of the applicable
Note(s) for all purposes whatsoever, and the Trustee shall not be bound by any
notice to the contrary.
Section 4.05 Maintenance of Office. Subject to the provisions of the
Indenture, the Trustee shall maintain an office or offices where notices and
demands to or upon the Trustee in respect of the Trust Securities may be served.
The Trustee initially designates its Corporate Trust Office as the office for
such purposes. The Trustee shall give prompt written notice to the Trust
Beneficial Owner and the Indenture Trustee of any change in the location of the
register or any office or agency.
Section 4.06 Ownership of the Trust Beneficial Interest. On the
Original Issue Date, the Trust Beneficial Owner shall acquire and, thereafter,
retain beneficial and record ownership of the Trust Beneficial Interest. The
Trust Beneficial Interest shall not be certificated. To the fullest extent
permitted by law, any attempted transfer of the Trust Beneficial Interest shall
be void.
7
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01 Trustee. The Trustee represents and warrants for the
benefit of the Securityholders as follows:
(a) it is a national banking association duly organized, validly
existing and in good standing under the laws of the United States and it is a
"bank" within the meaning of Section 581 of the Code;
(b) it is a "United States person" within the meaning of Section
7701(a)(30) of the Code;
(c) it has full corporate or other power, authority and legal right to
execute, deliver and perform its obligations under the Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of the Trust Agreement;
(d) the Trust Agreement has been duly authorized, executed and
delivered by it and constitutes the valid and legally binding agreement of it
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity;
(e) neither the execution or delivery by it of the Trust Agreement, nor
the performance by it of its obligations under the Trust Agreement, will (i)
violate its organizational documents, (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of any Lien on any properties or assets held in
the Trust pursuant to the provisions of, any indenture, mortgage, credit
agreement, license or other agreement or instrument to which it is a party or by
which it is bound which would materially and adversely affect the Trust, or
(iii) violate any law, governmental rule or regulation of the United States
governing the banking, trust or general powers of it or any order, judgment or
decree applicable to it;
(f) the authorization, execution or delivery by it of the Trust
Agreement and the consummation of any of the transactions by it contemplated by
the Trust Agreement do not require the consent or approval of, the giving of
notice to, the registration with or the taking of any other action with respect
to any governmental authority or agency; and
(g) there are no proceedings pending or, to the best of its knowledge,
threatened against or affecting it in any court or before any governmental
authority, agency or arbitration board or tribunal which, individually or in the
aggregate, would materially and adversely affect the Trust or would question the
right, power and authority of it to enter into or perform its obligations under
the Trust Agreement.
8
Section 5.02 Trust Beneficial Owner. The Trust Beneficial Owner hereby
represents and warrants that, to the fullest extent permitted by law, it has
irrevocably waived any right or interest it may have under the Trust Agreement,
by operation of law or equity, to direct or otherwise require the Trustee to
initiate or consent to any bankruptcy, insolvency or receivership proceedings,
it being expressly understood that any such action by the Trustee shall be
undertaken or refrained from, in the Trustee's sole and absolute discretion,
without regard to any rights or interests of the Trust Beneficial Owner.
ARTICLE 6
TRUSTEE
Section 6.01 General Authority.
(a) The Trustee shall conduct the affairs of the Trust in accordance
with the terms of the Trust Agreement. Subject to the limitations set forth in
Section 6.01(b), the Trustee shall have the power and authority to act on behalf
of the Trust, with respect to the following matters:
(i) to execute and deliver the Notes and the Trust Beneficial
Interest in accordance with the Trust Agreement and the Indenture;
(ii) to cause the Trust to perform the Trust Agreement and to
enter into, and to execute, deliver and perform on behalf of itself,
the Program Documents to which it is a party and such other
certificates, other documents or agreements as may be necessary,
contemplated by or desirable in connection with the purposes and
function of the Trust or any of such Program Documents;
(iii) subject to the Indenture, to purchase, receive and
maintain custody of the Funding Agreement and to exercise all of the
rights, powers and privileges of an owner or policyholder of the
Funding Agreement;
(iv) subject to the Indenture and the Guarantee, to receive
and maintain custody of the Guarantee and to exercise all of the
rights, powers and privileges of a beneficiary under the Guarantee;
(v) to grant to the Indenture Trustee a first priority
perfected security interest in the Collateral and to collaterally
assign the rights, title and interest of the Trust in such Collateral
to the Indenture Trustee for the benefit of the Holders and to seek
release of such security interest upon payment in full of all amounts
required to be paid with respect to the Notes pursuant to the terms and
conditions of the Notes or the Indenture;
9
(vi) to establish the Payment Account;
(vii) subject to Section 4.06, to cause any transfer of the
Trust Beneficial Interest to be registered in accordance with the Trust
Agreement;
(viii) to send notices regarding the Trust Securities, the
Funding Agreement and the Guarantee to Principal Life, PFG, the
Indenture Trustee, the Ratings Agencies, the Trust Beneficial Owner and
the Relevant Agents in accordance with the Funding Agreement, the
Guarantee, the Distribution Agreement and the Trust Agreement;
(ix) to take all actions necessary or appropriate to enable
the Trust to comply with Section 2.12 regarding income tax treatment,
tax returns and information reporting;
(x) after the occurrence of a Funding Agreement Event of
Default actually known to a Responsible Officer of the Trustee, subject
to the Indenture, to take any action as it may from time to time
determine (based solely upon the advice of counsel) is necessary or
advisable to give effect to the terms of the Trust Agreement and to
protect and conserve the Collateral for the benefit of each
Securityholder (without consideration of the effect of any such action
on any particular Securityholder) and, within five Business Days after
the occurrence of a Funding Agreement Event of Default actually known
to a Responsible Officer of the Trustee, to give notice thereof to the
Trust Beneficial Owner and the Indenture Trustee;
(xi) to the extent permitted by the Trust Agreement, to
participate in the winding up of the affairs of and liquidation of the
Trust; and
(xii) subject to the Indenture, to take any action and to
execute any documents on behalf of the Trust, incidental to the
foregoing as the Trustee may from time to time determine (based on the
advice of counsel) is necessary or advisable to give effect to the
terms of the Trust Agreement for the benefit of each Securityholder
(without consideration of the effect of any such action on any
particular Securityholder).
It is expressly understood and agreed that the Trustee shall be
entitled to engage outside counsel, independent accountants and other experts
appointed with due care to assist the Trustee in connection with the performance
of its duties and powers set forth in this Section 6.01(a), including, without
limitation, the preparation of all tax reports and returns, securities law
filings, certificates, reports, opinions, notices or any other documents. The
Trustee shall be entitled to rely conclusively on the advice of such counsel,
accountants and other experts in the performance of all its duties under the
Trust
10
Agreement and shall have no liability for any documents prepared by such
counsel, accountants or experts or any action or inaction taken pursuant to the
advice of such counsel, accountants or experts. Any expenses of such counsel,
accountants and experts shall be paid by Principal Life in accordance with the
applicable Expense and Indemnity Agreement to the extent provided therein.
(b) So long as the Trust Agreement remains in effect, the Trust (and
the Trustee acting on behalf of the Trust) shall not undertake any business,
activity or transaction except as expressly provided for or contemplated by the
Trust Agreement or the Indenture. In particular, the Trust shall not, except as
otherwise contemplated by the Indenture:
(i) sell, transfer, exchange, assign, lease, convey or
otherwise dispose of any assets held by the Trust (owned as of the date
of the Trust Agreement or thereafter acquired), including, without
limitation, any portion of the Collateral, except as expressly
permitted under the Indenture;
(ii) incur or otherwise become liable, directly or indirectly,
for any Indebtedness or Contingent Obligation except for the Notes
issued pursuant to the Indenture and the transactions contemplated
under the Indenture;
(iii) engage in any business or activity other than in
connection with, or relating to, (a) the performance of the Trust
Agreement and the execution, delivery and performance of any documents
(other than the Trust Agreement), including the Program Documents,
relating to the Notes issued under the Indenture and the transactions
contemplated thereby, and (b) the issuance of the Notes pursuant to the
Indenture;
(iv) (a) permit the validity or effectiveness of the Indenture
or any grant of security interest in or assignment for collateral
purposes of the Collateral to be impaired, or permit a Lien created
under the Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations under any document or agreement assigned to
the Indenture Trustee, except as may be expressly permitted under the
Indenture, (b) create, incur, assume or permit any Lien or other
encumbrance (other than a Lien created under the Indenture) on any of
its properties or assets owned or thereafter acquired, or any interest
therein or the proceeds thereof, or (c) permit a Lien created under the
Indenture not to constitute a valid first priority perfected security
interest in the Collateral;
(v) amend, modify or fail to comply with any material
provision of the Trust Agreement except for any amendment or
modification of the Trust Agreement expressly permitted thereunder;
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(vi) own any subsidiary or lend or advance any funds to, or
make any investment in, any Person, except for an investment in the
Funding Agreement or the investment of any funds held by the Indenture
Trustee, the Paying Agent, or the Trustee as provided in the Indenture
or the Trust Agreement;
(vii) directly or indirectly declare or make any distribution
or other payment to, or redeem or otherwise acquire or retire for value
the interests of, the Trust Beneficial Owner if any amount under the
Notes is due and unpaid, or directly or indirectly redeem or otherwise
acquire or retire for value any Indebtedness or Contingent Obligation
other than the Notes;
(viii) exercise any rights with respect to the Collateral
except at the written direction of, or with the prior written approval
of, the Indenture Trustee;
(ix) cause or, to the fullest extent permitted by law, permit
the sale or other transfer of all or a portion of the Trust Beneficial
Interest, or cause or, to the fullest extent permitted by law, permit
the creation, incurrence, assumption or existence of any Lien on, all
or a portion of the Trust Beneficial Interest;
(x) become an "investment company" or come under the "control"
of an "investment company," as such terms are defined in the Investment
Company Act;
(xi) enter into any transaction of merger or consolidation or
liquidate or dissolve itself (or, to the fullest extent permitted by
law, suffer any liquidation or dissolution), or acquire by purchase or
otherwise all or substantially all the business or assets of, or any
stock or other evidence of beneficial ownership of, any other Person;
(xii) take any action that would cause it not to be treated as
a disregarded entity or as a grantor trust (assuming it was not a
disregarded entity) for United States federal income tax purposes;
(xiii) have any subsidiaries, employees or agents other than
the Trustee and other persons necessary to conduct its business and
enter into transactions contemplated under the Program Documents;
(xiv) have an interest in any bank account other than (a)
those accounts required under the Program Documents, and (b) those
accounts expressly permitted by the Indenture Trustee; provided that
any interest therein shall be charged or otherwise secured in favor of
the Indenture Trustee;
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(xv) permit any Affiliate, employee or officer of Principal
Life or PFG or any agent appointed under the Distribution Agreement to
be a trustee of the Trust;
(xvi) issue Notes under the Indenture unless (a) the Trust has
purchased or will simultaneously purchase the Funding Agreement from
Principal Life to secure such Notes, (b) Principal Life has affirmed in
writing to the Trust that it has made or simultaneously will make
changes to its books and records to reflect the granting of a security
interest in, and the making of an assignment for collateral purposes
of, the Funding Agreement by the Trust, to the Indenture Trustee, (c)
PFG has issued the Guarantee to the Trust, which the Trust has
collaterally assigned to the Indenture Trustee on behalf of the Holder
of Notes and in which the Trust has granted a security interest or will
simultaneously grant a security interest to the Indenture Trustee on
behalf of the Holders of Notes (and PFG has affirmed in writing to the
Trust that it has made or simultaneously will make changes to its books
and records to reflect such collateral assignment and security
interest) and (d) the Trust has taken such other steps as may be
necessary to cause the grant of security interest in, and assignment
for collateral purposes of, the Collateral to the Indenture Trustee to
be perfected for purposes of the UCC or effective against the Trust's
creditors and subsequent purchasers of the Collateral pursuant to
insurance or other applicable law;
(xvii) commingle the assets of the Trust with assets of any
Affiliates (including any other trust organized under the Program), or
guarantee any obligation of any Affiliates (including any other trust
organized under the Program); or
(xviii) maintain any joint account with any Person, become a
party, whether as co-obligor or otherwise, to any agreement to which
any Person is a party (other than in respect of the Program Documents),
or become liable as a guarantor or otherwise with respect to any
Indebtedness or contractual obligation of any Person.
(c) The Trust and the Trustee acting on behalf of the Trust shall not,
notwithstanding any other provision of the Trust Agreement, take any action that
would cause the Trust not to be treated as a disregarded or treated as a grantor
trust (assuming it was not a disregarded entity) for U.S. federal income tax
purposes.
(d) The Trustee shall, based on the advice of counsel, defend against
all claims and demands of all Persons at any time claiming any Lien on any of
the assets of the Trust adverse to the interest of the Trust or any
Securityholder, other than the security interests in the Collateral granted in
favor of the Indenture Trustee for the benefit of each Holder of the Notes
pursuant to the Indenture.
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(e) If and for so long as the Funding Agreement and the Guarantee are
held by the Trustee for the benefit of the Trust, the Trustee shall not (i)
waive any default under the Funding Agreement or Guarantee or (ii) consent to
any amendment, modification or termination of the Funding Agreement or the
Guarantee, without, in each case, obtaining the prior approval of the Indenture
Trustee in accordance with the Indenture and an opinion of counsel experienced
in such matters to the effect that any such action shall not cause the Trust not
to be treated as a grantor trust for U.S. federal income tax purposes.
(f) The Trustee is authorized and directed to conduct the affairs of
the Trust and to operate the Trust (i) so that the Trust will not become
required to register as an "investment company" under the Investment Company
Act, and (ii) so that the Trust will not fail to be treated as a disregarded
entity or as a grantor trust (assuming it was not a disregarded entity) for U.S.
federal income tax purposes. In connection with the preceding sentence, the
Trustee shall have no duty to determine whether any action it takes complies
with the preceding sentence and shall be entitled to rely conclusively on an
opinion of counsel with respect to any such matters.
Section 6.02 General Duties. It shall be the duty of the Trustee to
discharge, or cause to be discharged, all of its responsibilities pursuant to
the terms of the Trust Agreement, or any other documents or instruments to which
it is a party, and to administer the Trust, in accordance with the provisions of
the Trust Agreement and the other Program Documents and any other documents or
instruments to which the Trust is a party.
Section 6.03 Specific Duties.
(a) The Trustee undertakes to perform only such duties as are
specifically set forth in the Trust Agreement and as it may be directed from
time to time by the Trust Beneficial Owner and the Indenture Trustee in
accordance with the terms of the Trust Agreement and the Indenture.
(b) The Trustee agrees that it will not manage, control, use, sell,
dispose of or otherwise deal with the Collateral except as expressly required or
permitted by the terms of the Trust Agreement and the Indenture.
Section 6.04 Acceptance of Trust and Duties; Limitation on Liability.
The Trustee accepts the trust created by the Trust Agreement and agrees to
perform its duties under the Trust Agreement with respect to the same, but only
upon the terms of the Trust Agreement. No implied covenants or obligations shall
be read into the Trust Agreement. The Trustee shall not be liable under the
Trust Agreement under any circumstances or for any action or failure to act,
except for (i) its own willful misconduct, bad faith or negligence or (ii) the
inaccuracy of any representation or warranty contained in the Trust Agreement
expressly made by it. In particular (but without limitation), subject to the
exceptions set forth in the preceding sentence:
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(a) the Trustee shall not be liable for any error of judgment made in
good faith by any of its responsible officers, unless such error of judgment
constitutes negligence;
(b) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the written
instructions of the Trust Beneficial Owner or the Indenture Trustee or pursuant
to the advice of counsel, accountants or other experts selected by it in good
faith, so long as such action or omission is consistent with the terms of the
Trust Agreement and the Indenture;
(c) no provision of the Trust Agreement shall require the Trustee to
expend or risk personal funds or otherwise incur any financial liability in the
performance of any of its rights or powers hereunder if the Trustee has
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;
(d) under no circumstances shall the Trustee be liable for indebtedness
or other obligations evidenced by or arising under the Trust Agreement, the
Funding Agreement, the Guarantee or any related document, including the
principal of and interest on the Notes and payments on the Trust Beneficial
Interest;
(e) the Trustee shall not be responsible for, or in respect of, the
validity or sufficiency of the Trust Agreement or any related document or for
the due execution of the Trust Agreement by any party (except by the Trustee
itself) or for the form, character, genuineness, sufficiency, value or validity
of any of the Collateral, other than, in the case of the Trustee, the execution
of any certificate;
(f) the Trustee shall not be liable for any action, inaction, default
or misconduct of the Indenture Trustee or any Paying Agent under the Indenture,
the Notes or any related documents or otherwise, and the Trustee shall not have
any obligation or liability to perform the obligations of the Trust under the
Trust Agreement or any related document or under any federal, state, foreign or
local tax or securities law, in each case, that are required to be performed by
other Persons, including the Indenture Trustee under the Indenture;
(g) the Trustee shall not be liable for any action, inaction, default
or misconduct of Principal Life or PFG, and the Trustee shall not have any
obligation or liability to perform the obligations of Principal Life under the
Funding Agreement or PFG under the Guarantee or any related documents;
(h) the Trustee shall not be under any obligation to exercise any of
the rights or powers vested in it by the Trust Agreement, or to institute,
conduct or defend any litigation under the Trust Agreement or otherwise or in
relation to the Trust Agreement or
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any related document, at the request, order or direction of any Person unless
such Person has offered to the Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities that may be incurred by the Trustee.
The right of the Trustee to perform any discretionary act enumerated in the
Trust Agreement or in any related document shall not be construed as a duty, and
the Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act;
(i) except as expressly provided in the Trust Agreement in accepting
the trusts created by the Trust Agreement the Trustee acts solely as trustee
under the Trust Agreement and not in its individual capacity, and all persons
having any claim against the Trustee by reason of the transactions contemplated
by the Trust Agreement shall look only to the Trust's property for payment or
satisfaction thereof;
(j) the Trustee shall not have any responsibility or liability for or
with respect to the genuineness, value, sufficiency or validity of any
Collateral, and the Trustee shall in no event assume or incur any liability,
duty or obligation to the Trust Beneficial Owner or any other Person other than
as expressly provided for in the Trust Agreement;
(k) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note or other paper or document;
(l) every provision of the Trust Agreement relating to the Trustee
shall be subject to the provisions of this Article 6;
(m) except in accordance with the written instructions furnished by the
Trust Beneficial Owner or as provided in the Trust Agreement, the Trustee shall
have no duty (i) to see to any recording or filing of any document, (ii) to
confirm or verify any financial statements of the Trust Beneficial Owner or the
Indenture Trustee, (iii) to inspect the Trust Beneficial Owner's or the
Indenture Trustee's books and records at any time or (iv) to see to the payment
or discharge of any tax, assessment or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or levied against any
part of the Trust, except to the extent the Trustee has received funds, on
behalf of the Trust, pursuant to the applicable Expense and Indemnity Agreement
from Principal Life in satisfaction of any such tax, assessment or other
governmental charge or any lien or encumbrance of any kind and in accordance
with payment or transfer instructions provided by Principal Life;
(n) the Trustee shall have no duty or obligation to manage, control,
use, sell, dispose of or otherwise deal with the Trust or to otherwise take or
refrain from taking any action under the Trust Agreement, except as expressly
required by the terms of the Trust Agreement, or as expressly provided in
written instructions from the Trust Beneficial Owner, and in no event shall the
Trustee have any implied duties or obligations under the
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Trust Agreement; the Trustee nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any liens
on any part of the property of the Trust which result from claims against the
Trustee personally that are not related to the ownership or the administration
of the property of the Trust or the transactions contemplated by the Program
Documents;
(o) the Trustee shall not be required to take any action under the
Trust Agreement if the Trustee shall reasonably determine or shall have been
advised by counsel that such action is contrary to the terms of the Trust
Agreement or is otherwise contrary to law;
(p) the Trustee may fully rely upon and shall have no liability in
connection with calculations or instructions forwarded to the Trustee by the
Trust Beneficial Owner or the Indenture Trustee, nor shall the Trustee have any
obligation to furnish information to any Trust Beneficial Owner or other Person
if it has not received such information as it may need from the Trust Beneficial
Owner, or the Indenture Trustee or any other Person;
(q) the Trustee shall not be liable with respect to any act or omission
in good faith in accordance with the advice or direction of the Trust Beneficial
Owner or the Indenture Trustee. Whenever the Trustee is unable to decide between
alternative courses of action permitted or required by the terms of the Trust
Agreement, or is unsure as to the application, intent, interpretation or meaning
of any provision hereof, the Trustee may give notice (in such form as shall be
appropriate under the circumstances) to the Trust Beneficial Owner requesting
instructions as to the course of action to be adopted, and, to the extent the
Trustee acts in good faith in accordance with any such instruction received, the
Trustee shall not be liable on account of such action to any Person. If the
Trustee shall not have received appropriate instructions within ten days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances), it may, but shall be
under no duty to, take or refrain from taking such action which is consistent,
in its view, with the Trust Agreement and as it shall deem to be in the best
interest of the relevant Trust Beneficial Owner, and the Trustee shall have no
liability to any Person for such action or inaction;
(r) in no event whatsoever shall the Trustee be personally liable for
any representation, warranty, covenant, agreement, indebtedness or other
obligation of the Trust; and
(s) the Trustee shall incur no liability if, by reason of any provision
of any present or future law or regulation thereunder, or by any force majeure
event, including but not limited to natural disaster, war or other circumstances
beyond its control, the Trustee shall be prevented or forbidden from doing or
performing any act or thing which the terms of the Trust Agreement provide shall
or may be done or performed.
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Section 6.05 Reliance; Advice of Counsel.
(a) The Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it in
good faith to be genuine and signed by the proper party or parties. The Trustee
may accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the manner of ascertainment of which is not
specifically prescribed in the Trust Agreement, the Trustee may for all purposes
of the Trust Agreement rely on a certificate, signed by the president or any
vice president or by the treasurer or any assistant treasurer or the secretary
or any assistant secretary of the relevant party, as to such fact or matter, and
such certificate shall constitute full protection to the Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the Trust, the Trustee (i) may
act directly or, at the expense of the Trust, through agents or attorneys
pursuant to agreements entered into with any of them, and the Trustee shall not
be liable for the action, inaction, default or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Trustee in
good faith and with reasonable care, and (ii) may consult with counsel,
accountants and other skilled persons to be selected in good faith and with
reasonable care and employed by it, and it shall not be liable for anything
done, suffered or omitted to be done in good faith by it in accordance with the
written opinion or advice of any such counsel, accountants or other skilled
persons.
Section 6.06 Delegation of Authorities and Duties. The Trustee
delegates to the Indenture Trustee all duties required to be performed by the
Indenture Trustee pursuant to the terms of the Trust Agreement and the
Indenture. The Trustee undertakes no responsibility for the performance, or
non-performance, of any duties delegated to the Indenture Trustee under the
Trust Agreement.
ARTICLE 7
LIQUIDATION AND TERMINATION
Section 7.01 Termination Upon the Trust Expiration Date. Unless earlier
terminated, the Trust shall terminate on the Trust Expiration Date.
Section 7.02 Termination of Agreement. The Trust Agreement and the
Trust created and continued thereby shall terminate upon the latest to occur of
the following: (a) a distribution by the Trustee to Securityholders upon the
liquidation of the Trust pursuant to Section 7.03 of all amounts required to be
distributed under the Trust Agreement upon the final payment of the Trust
Securities; (b) the payment of, or
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reasonable provision for payment of, all expenses and other liabilities owed by
the Trust; and (c) the discharge of all administrative duties of the Trustee
including the performance of any tax reporting obligations with respect to the
Trust or the Securityholders.
Section 7.03 Liquidation. On the Trust Expiration Date, the remaining
Collateral and any other assets held in the Trust shall be liquidated and
distributed as follows: (i) the Trust shall first pay all amounts due and unpaid
on the Notes, if any, in accordance with the Indenture, (ii) the Trust shall
then pay any other claims, including expenses relating to such liquidation to
the extent not paid, or reasonably provided for, pursuant to the applicable
Expense and Indemnity Agreement, and (iii) the Trust shall then pay to the Trust
Beneficial Owner all of the amounts that would be payable under clause first of
Section 5.02 of the Indenture to the Trust Beneficial Owner if the Trust
Beneficial Owner held a Note with an original principal amount of $15
(multiplied by the issue price of the Notes in the case of Notes that are
discount notes). Any remaining monies and other property shall be paid ratably
in proportion to their original principal amounts to the Holders last noted in
the Register as the Holders of the Notes and the Trust Beneficial Owner (as if
the Trust Beneficial Owner held a Note with an original principal amount of $15
(multiplied by the issue price of the Notes in the case of Notes that are
discount notes) and as if each such Holder continued to hold its Notes after all
amounts due on such Notes under the Indenture have been paid).
ARTICLE 8
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Eligibility Requirements for the Trustee. The Trustee
shall at all times (a) be a Person organized and doing business under the laws
of the United States or the State of
New York, (b) be authorized to exercise
corporate trust powers, (c) have a combined capital and surplus of at least
$50,000,000 and be subject to supervision or examination by Federal or State
authorities, (d) have (or have a parent which has) a rating of at least Baa3 by
Xxxxx'x Investors Service, Inc. or BBB- by Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc., (e) be a "bank" within the meaning
of Section 581 of the Code and (f) be a "United States person" within the
meaning of Section 7701(a)(30) of the Code. In addition, the Trustee shall be an
entity with its Corporate Trust Office in the State of
New York. If the Trustee
shall publish reports of condition at least annually, pursuant to applicable law
or to the requirements of the aforesaid supervising or examining authority, then
for the purpose of this Section 8.01, the combined capital and surplus of the
Trustee shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
8.01, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.02.
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Section 8.02 Resignation or Removal of the Trustee. The Trustee may at
any time resign and be discharged from its duties under the Trust Agreement and
the Trust created by the Trust Agreement by giving written notice thereof to the
Trust Beneficial Owner and the Indenture Trustee at least 60 days before the
date specified in such instrument. Upon receiving such notice of resignation,
the Trust Beneficial Owner shall promptly appoint a successor Trustee meeting
the qualifications set forth in Section 8.01 by written instrument, in
duplicate, one copy of which instrument shall be delivered to each of the
resigning Trustee, the successor Trustee, any remaining Trustees, the Indenture
Trustee and Principal Life. If no successor Trustee shall have been so appointed
and have accepted appointment within 90 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.01 and shall fail to resign after written
request therefor by the Trust Beneficial Owner and the Indenture Trustee, or if
at any time the Trustee shall be legally unable to act or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Trust Beneficial Owner and the Indenture Trustee may
remove such Trustee. If the Trust Beneficial Owner and the Indenture Trustee
shall remove the Trustee under the authority of the immediately preceding
sentence, the Trust Beneficial Owner shall promptly appoint a successor Trustee
meeting the qualification requirements of Section 8.01 by (i) the execution of a
written instrument, one copy of which instrument shall be delivered to each of
the outgoing Trustee so removed, the successor Trustee, the Indenture Trustee
and Principal Life and (ii) the payment of all fees and expenses owed to the
outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.02 shall
not become effective until all fees and expenses, including any indemnity
payments, due to the outgoing Trustee have been paid and until acceptance of
appointment by the successor Trustee pursuant to Section 8.03.
Section 8.03 Successor Trustee. Any successor Trustee appointed
pursuant to Section 8.02 shall execute, acknowledge and deliver to the Trust
Beneficial Owner, the Indenture Trustee and the predecessor Trustee an
instrument accepting such appointment under the Trust Agreement, and thereupon
the resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under the Trust Agreement, with like effect as if originally named
as Trustee. The predecessor Trustee shall deliver to the successor Trustee all
documents and statements and monies held by it under the Trust Agreement; and
the
20
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 8.03 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 8.01.
Section 8.04 Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the corporate trust business of the Trustee, shall, without the execution or
filing of any instrument or any further act on the part of any of the parties to
the Trust Agreement, anything in the Trust Agreement to the contrary
notwithstanding, be the successor of the Trustee under the Trust Agreement;
provided, such Person shall be eligible pursuant to Section 8.01.
Section 8.05 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of the Trust Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of any Collateral may at the time be located, the Trustee shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Trustee to act as co-trustee, jointly with it, or
as separate trustee or separate trustees, of all or any part of any Collateral,
and subject to Section 2.08 to vest in such Person, in such capacity, such title
to any Collateral, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee under the
Trust Agreement shall be required to meet the terms of eligibility as a
successor Trustee pursuant to Section 8.03 and no notice of the appointment of
any co-trustee or separate trustee shall be required; provided, however, that
any co-trustee or separate trustee must be a "United States person" within the
meaning of Section 7701(a)(30) of the Code and a "bank" within the meaning of
Section 581 of the Code.
(b) Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, the Trustee
21
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the discretion of the trustee;
(ii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee; and
(iii) no trustee shall be personally liable by reason of the
act or omission of any other trustee under the Trust Agreement.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustee and co-trustee,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Section 8.05 and the
conditions of this Article 8. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instruments of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of the
Trust Agreement, specifically including every provision of the Trust Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Each such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time appoint the
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of the
Trust Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
Section 8.06 Trustee May Own Notes. Except to the extent prohibited
under the terms of the Notes, the Trustee, in its individual or any other
capacity, may become the beneficial owner or pledgee of Notes, to the extent
that such ownership does not inhibit the Trust from relying on Rule 3a-7
promulgated under the Investment Company Act, with the same rights as it would
have if it were not the Trustee; provided, that any Notes so owned or pledged
shall not be entitled to participate in any decisions made or instructions given
to the Trustee or the Indenture Trustee by the Holders as a group. The Trustee
may deal with the Trust and the Trust Beneficial Owner in banking and trustee
transactions with the same rights as it would have if it were not the Trustee.
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ARTICLE 9
VOTING; ACTS OF SECURITYHOLDERS; MEETINGS
Section 9.01 Limitations on Voting Rights. Except as provided in the
Trust Agreement or in the Indenture or as otherwise required by law, no Holder
of Trust Securities shall have any right to vote or in any manner otherwise
control the administration, operation and management of the Trust or the
obligations of the parties to the Trust Agreement, nor shall anything in the
Trust Agreement set forth, or contained in the terms of the Trust Securities, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
Section 9.02 Meetings of the Trust Beneficial Owner. No annual or other
meeting of the Trust Beneficial Owner is required to be held.
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.01 Limitation on Rights of Securityholders.
(a) The death, bankruptcy, termination, dissolution or incapacity of
any Person having an interest, beneficial or otherwise, in Trust Securities or
the Trust shall not operate to terminate the Trust Agreement, nor to annul,
dissolve or terminate the Trust, nor to entitle the legal successors,
representatives or heirs of such Person or any Securityholder for such Person,
to claim an accounting, take any action or bring any proceeding in any court for
a partition or winding up of the arrangements contemplated by the Trust
Agreement, nor otherwise affect the rights, obligations and liabilities of the
parties to the Trust Agreement or any of them.
(b) Except as provided in the Indenture, no Securityholder shall have
any right by virtue of any provision of the Trust Agreement to institute any
suit, action or proceeding in equity or at law with respect to the Trust
Agreement, unless (i) the Securityholders shall have made written request upon
the Trustee to institute such suit, action or proceeding in the name of the
Trust and shall have offered to the Trustee and the Trust such reasonable
indemnity as they may require against the costs, expenses and liabilities to be
incurred thereby and (ii) the Trustee, for 30 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such suit, action or proceeding. It is expressly understood and
covenanted by each Securityholder with every other Securityholder, the Trust and
the Trustee, that no one or more Securityholder shall have any right in any
manner whatever by availing itself or themselves of any provision of the Trust
Agreement to affect, disturb or prejudice the rights of any other
Securityholder, or to obtain or seek to obtain priority over or preference to
any other such Securityholder, or to enforce any right under the Trust
Agreement, except in the manner provided in the Trust Agreement.
23
Section 10.02 Amendment.
(a) The Trust Agreement may be amended from time to time by the Trustee
and the Trust Beneficial Owner, by, and only by, a written instrument executed
by the Trustee and the Trust Beneficial Owner, in any way that is not
inconsistent with the intent of the Trust Agreement, including, without
limitation, (i) to cure any ambiguity, (ii) to correct, supplement or modify any
provision in the Trust Agreement that is inconsistent with another provision in
the Trust Agreement or (iii) to modify, eliminate or add to any provisions of
the Trust Agreement to the extent necessary to ensure that the Trust will be
classified for U.S. federal income tax purposes as disregarded or treated as a
grantor trust (assuming that the Trust was not a disregarded entity) at all
times or to ensure that the Trust will not be required to register as an
investment company under the Investment Company Act and no such amendment shall
require the consent of any other Securityholder, except to the extent specified
in Sections 10.02(b) and 10.02(c).
(b) For so long as any Trust Securities remain outstanding, except as
provided in Section 10.02(c), any amendment to the Trust Agreement that would
adversely affect, in any material respect, the terms of any Notes, other then
any amendment of the type contemplated by clause (iii) of Section 10.02(a),
shall require the prior consent of the Holders of a majority of the outstanding
principal amount of the Notes.
(c) For so long as any Trust Securities remain outstanding, the Trust
Agreement may not be amended to (i) change the amount or timing of any payment
of any Trust Securities or (ii) impair the right of any Securityholder to
institute suit for the enforcement of any right for principal and interest or
other distribution without the consent of each affected Securityholder.
(d) The Trustee shall not be required to enter into any amendment to
the Trust Agreement which affects its own rights, duties or immunities under the
Trust Agreement.
(e) Prior to execution of any amendment to the Trust Agreement, the
Trustee shall be entitled to an opinion of counsel as to whether such amendment
is permitted by the terms of the Trust Agreement and whether all conditions
precedent to such amendment have been met.
(f) Promptly after the execution of any such amendment or consent, the
Trustee shall furnish a copy of such amendment or consent (including those
obtained or effected hereby) to the Indenture Trustee, the Trust Beneficial
Owner, the agents under the Distribution Agreement and the Rating Agencies.
(g) Notwithstanding any other provision of the Trust Agreement, (i) no
amendment to the Trust Agreement may be made if such amendment would cause the
Trust not to be treated as disregarded or treated as a grantor trust (assuming
that the Trust
24
was not disregarded) for U.S. federal income tax purposes and (ii) no amendment
to the Trust Agreement may be made without the prior consent of Principal Life.
Section 10.03 Notice. All demands, notices, instructions and other
communications shall be in writing (including telecopied or telegraphic
communications) and shall be personally delivered, mailed or transmitted by
telecopy or telegraph, respectively, addressed as set forth below:
If to the Trustee:
U.S. Bank Trust National Association
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
If to the Trust Beneficial Owner:
GSS Holdings II, Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
If to the Indenture Trustee, at
Citibank, N.A.
Citibank Agency & Trust
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxx 0
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
or at such other address as shall be designated by any such party in a written
notice to the other parties. Notwithstanding the foregoing, any notice required
or permitted to be mailed to the Trust Beneficial Owner shall be given by first
class mail, postage prepaid, at the address of the Trust Beneficial Owner as
shown in the Securities Register, and any notices mailed within the time
prescribed in the Trust Agreement shall be conclusively presumed to have been
duly given, whether or not the Trust Beneficial Owner received such notice. Any
notice required or permitted to be mailed to any Holder of a Note shall be given
as specified in the Indenture.
25
Section 10.04 No Recourse. The Trust Beneficial Owner acknowledges that
the Trust Beneficial Interest represents a beneficial interest in the Trust only
and does not represent an obligation of Principal Life, the Trustee, the
Indenture Trustee or any Affiliate of any of the foregoing and no recourse may
be had against such parties or their assets, except as may be expressly set
forth or contemplated in the Trust Agreement or the Indenture.
Section 10.05 No Petition. To the extent permitted by applicable law,
each of the Trustee and the Trust Beneficial Owner covenants and agrees that it
will not institute against, or join with any other Person in instituting
against, the Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under the laws of any
jurisdiction. This Section 10.05 shall survive termination of the Trust
Agreement.
Section 10.06 Governing Law. The Trust Agreement shall be governed by
and construed in accordance with the laws of the jurisdiction specified in the
Trust Agreement without regard to the principles of conflicts of laws thereof
and the obligations, rights and remedies of the parties under the Trust
Agreement shall be determined in accordance with such laws.
Section 10.07 Severability. If any provision in the Trust Agreement
shall be invalid, illegal or unenforceable, such provisions shall be deemed
severable from the remaining provisions of the Trust Agreement and shall in no
way affect the validity or enforceability of such other provisions of the Trust
Agreement.
Section 10.08 Trust Securities Nonassessable and Fully Paid.
Securityholders shall not be personally liable for the obligations of the Trust.
The fractional undivided beneficial interest in the assets held in the Trust
represented by the Trust Beneficial Interest shall be nonassessable for any
losses or expenses related to the Trust or for any reason whatsoever. The Notes,
upon execution thereof by the Trustee pursuant to the Indenture and upon receipt
of payment therefore, are and shall be deemed fully paid.
Section 10.09 Third-Party Beneficiaries. The Trust Agreement shall
inure to the benefit of and be binding upon the parties thereto and their
respective successors and permitted assigns. Except as otherwise provided in the
Trust Agreement, no other Person shall have any right or obligation thereunder.
26
EXHIBIT B
STANDARD LICENSE AGREEMENT TERMS
This document constitutes the Standard License Agreement Terms,
dated as of March 5, 2004, which are incorporated by reference in the License
Agreement (specified in Section B of the Omnibus Instrument as defined below)
between Principal Financial Services, Inc., an Iowa corporation with its
principal place of business at 000 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000 (the
"Licensor"), and the Trust named in the Omnibus Instrument (the "Licensee").
These Standard License Agreement Terms shall be of no force and
effect unless and until incorporated by reference in, and then only to the
extent not modified by, a License Agreement.
The following terms and provisions shall govern the activities of
the Licensee subject to contrary terms and provisions expressly adopted in the
License Agreement, which contrary terms, if any, shall be controlling.
W I T N E S S E T H:
WHEREAS, the Licensor is the owner of certain trademarks and service
marks and registrations and pending applications therefor, and may acquire
additional trademarks and service marks in the future, all as defined 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; and
WHEREAS, the Licensor and the Licensee wish to formalize the
agreement between them regarding the Licensee's use of the Licensor's marks.
NOW, THEREFORE, in consideration of the mutual promises set forth in
these Standard License Agreement Terms and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties agree as follows:
ARTICLE 1
Definitions
Section 1.01 Definitions. Capitalized words or phrases used and not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture between the Licensee and Citibank, N.A., as indenture trustee, dated
as of the date specified in the Omnibus Instrument (the "Indenture").
Section 1.02 The following terms have the meanings set forth below:
-1-
"Agreement" means a License Agreement substantially in the form
included in Section B of the Omnibus Instrument, as amended, modified or
supplemented from time to time, that incorporates by reference these Standard
License Agreement Terms.
"Licensed Marks" means all marks listed in the attached Appendix A,
as amended from time-to-time by the parties, as provided for in Article 5.
"Licensed Services" means the activities undertaken by the Licensee,
in connection with the establishment and conduct of the Program established by
Principal Life for the issuance of debt obligations of the Licensee, such as the
issuance of Notes to investors and any actions incident to the foregoing.
"Omnibus Instrument" means the omnibus instrument pursuant to which
certain Program Documents are executed and the Trust is established.
"Territory" means: world-wide.
ARTICLE 2
Grant of License
Subject to the terms and conditions set forth in the Agreement, the
Licensor hereby grants to the Licensee for the duration of the Agreement a
non-exclusive, non-transferable, royalty-free right and license to use the
Licensed Marks in connection with the Licensed Services within the Territory.
The Licensee agrees and acknowledges that the limited rights and licenses
granted in this Article 2 are revocable by the Licensor immediately and that the
Agreement is terminable by the Licensor as provided in Article 8.
ARTICLE 3
Ownership and Maintenance of the Licensed Marks
Section 3.01 The Licensee acknowledges that the Licensor is the sole
owner of the Licensed Marks, agrees that it will do nothing inconsistent with
such ownership, agrees that all use of the Licensed Marks by the Licensee,
including all goodwill associated therewith, shall inure solely to the benefit
of the Licensor, and agrees to assist the Licensor in executing any additional
documents that may be necessary to effect the purposes of this provision,
including but not limited to the execution of any and all documents required by
governmental agencies in order to register or maintain the current registrations
of the Licensed Marks. The Licensee agrees that it will not represent that it
has any ownership interest in the Licensed Marks or any registration thereof.
The Licensee acknowledges the validity of the Licensed Marks and agrees that it
will not, directly or indirectly, attack or challenge in any way the validity of
the Licensed Marks, the Licensor's rights in and to the Licensed Marks or the
validity or enforceability of the Agreement. The Licensee acknowledges that
nothing in the Agreement shall give the Licensee any right, title or interest in
the Licensed Marks or any goodwill associated therewith, other than those rights
expressly granted under the Agreement.
-2-
Section 3.02 The Licensee acknowledges that its use of a Licensed
Xxxx of the Licensor prior to the Agreement creates no ownership rights for the
Licensee in a Licensed Xxxx in any jurisdiction. Upon termination of the rights
granted by the Agreement, the Licensee agrees it shall not claim any ownership
rights to any Licensed Xxxx of the Licensor as a result of such use.
Section 3.03 The Licensor shall use commercially reasonable efforts
to maintain the Licensed Marks and all registrations thereof and/or applications
therefor in the Territory. The Licensee shall execute all documents as are
reasonably necessary or expedient to aid in, and shall otherwise cooperate at
the Licensor's expense with, the Licensor's efforts to prepare, obtain, file,
record and maintain all such registrations and applications.
Section 3.04 The Licensor shall have no further maintenance
obligations as to the Licensed Marks or any registration thereof or application
therefor upon giving written notice to the Licensee that it does not intend to
continue such maintenance; provided, however that the Licensor shall have no
such right of termination of its maintenance obligations in the event any series
of Notes is outstanding. Notwithstanding anything to the contrary contained
herein, after giving such notice, the Licensor shall not be liable to the
Licensee in any manner for any failure by the Licensor to maintain any Licensed
Marks.
ARTICLE 4
Quality Control
Section 4.01 At all times, the Licensee agrees to use the Licensed
Marks in the Territory only in accordance with such quality standards and
specifications as may be established by the Licensor and communicated to the
Licensee from time to time. All use of the Licensed Marks made by the Licensee
hereunder shall faithfully reproduce the design and appearance of the Licensed
Marks as reflected on Appendix A.
Section 4.02 The Licensee agrees that the nature and quality of all
Licensed Services shall conform to the quality standards and specifications, as
may be established by the Licensor and communicated to the Licensee from time to
time, and shall not deviate materially from the current quality of services and
products included in the Licensed Services.
Section 4.03 The Licensor has the sole and exclusive right to
control the appearance of the Licensed Marks, including the quality of the xxxx
in the Licensed Marks. The Licensor shall have the right to inspect, upon
reasonable notice and at all reasonable times, the business facilities and
records of the Licensee and, upon reasonable request, to obtain written
materials of the Licensee at any time during the term of the Agreement so that
the Licensor may determine whether the Licensee is appropriately maintaining the
Licensor's quality standards pertaining to the Licensed Marks and to the
Licensed Services. The Licensee will immediately modify or discontinue any use
of the Licensed Marks that the Licensor deems not to be in compliance with its
quality standards.
-3-
Section 4.04 Upon request by the Licensor, the Licensee shall
provide the Licensor with representative samples of all promotional materials,
packaging, labels, advertisements or any other materials that include any of the
Licensed Marks so that the Licensor may ensure that said materials are in
conformance with the Licensor's quality standards.
Section 4.05 The Licensee agrees that all activities conducted in
accordance with the Agreement shall be in conformance with all applicable laws,
rules and regulations. The Licensee shall affix to all materials that bear a
Licensed Xxxx, including, but not limited to, all stationery, labels, packaging,
advertising and promotional materials, manuals, invoices and all other printed
materials, (a) notices in compliance with applicable trademark laws and (b) such
legend as the Licensor may reasonably designate by written notice and is
required or otherwise reasonably necessary to allow adequate protection of the
Licensed Marks and the benefits thereof under applicable trademark laws from
time to time.
ARTICLE 5
Amendment of Agreement
The Agreement may be amended at any time by the parties to add or
delete Licensed Marks or to modify the scope of Licensed Services. Such
amendment(s) may be accomplished by a simple letter agreement outlining the
amendment(s) and signed by both parties.
ARTICLE 6
Manner of Use
Section 6.01 The Licensee agrees to use the Licensed Marks only in
the form and manner, and with appropriate ownership legends, as prescribed from
time to time by the Licensor.
Section 6.02 The Licensee shall have the right to use the marks
shown in Appendix A in connection with the Licensee's name, but, aside from this
right, the Licensee shall not have the right to (a) change or modify the
Licensed Marks, or create any design variation of the Licensed Marks, without
obtaining the prior written consent of the Licensor, (b) join any name, xxxx or
logo with the Licensed Marks so as to form a composite trade name or xxxx, (c)
use the Licensed Marks in any manner that reflects improperly upon the Licensed
Marks or (d) use any other xxxx that is confusingly similar to the Licensed
Marks.
Section 6.03 The Licensee's use of Licensed Marks for any Licensed
Services other than the Program is subject to the prior written approval of the
Licensor.
Section 6.04 The Licensee shall not at any time do or suffer to be
done any act or thing, including, without limitation, opposing the Licensor's
registration of the Licensed Marks, that will in any way impair the Licensor's
rights in the Licensed Marks.
Section 6.05 The Licensee shall promptly notify the Licensor of any
country in which the Licensee intends to use a Licensed Xxxx. The Licensee
hereby notifies the Licensor that the
-4-
Licensee intends to use the Licensed Marks in the United States. The Licensor
may, but shall have no obligation to, apply for trademark registration in such
country, or otherwise initiate action to protect its trademark rights in that
country. If necessary or requested by the Licensor, the Licensee shall join in
such application, shall execute any documents and shall take any action as may
be or requested by the Licensor to implement such application or to retain,
enforce or defend the Licensed Marks.
Section 6.06 The Licensee shall not at any time, without the prior
written consent of the Licensor, acquire a registration or file and prosecute a
trademark application or applications to register the Licensed Marks, or any
component, variation or derivation thereof, or any name or xxxx confusingly
similar thereto, for any goods or services anywhere in the world. If the
Licensee at any time, without the prior written consent of the Licensor, files
or causes to be filed, in its own name or otherwise on its behalf, an
application to register or otherwise takes steps under applicable laws to obtain
trademark protection of the Licensed Marks in any country, territory or
jurisdiction, the Licensee shall, at the direction of the Licensor, either (a)
assign and transfer to the Licensor, without further consideration, all right,
title and interest in or to the Licensed Marks in such country, territory or
jurisdiction, or (b) surrender and abandon such registration or application for
registration.
ARTICLE 7
Infringement or Dilution Proceedings
Section 7.01 The Licensee agrees to promptly notify the Licensor of
any unauthorized use of any of the Licensed Marks as such unauthorized use comes
to the Licensee's attention. The Licensor shall have the sole right and
discretion to take any action relating to the Licensed Marks, and the Licensee
agrees to cooperate fully, should the Licensor decide to take such action.
Section 7.02 If infringement or dilution proceedings relating to the
Licensed Marks result in an award of damages or the payment of any sums to the
Licensor, any such damages or payments shall belong solely to the Licensor.
Section 7.03 The Licensee will promptly notify the Licensor of any
claim, complaint, allegation or threatened litigation (a "Claim") relating to
the Licensed Marks, including, but not limited to, any Claim of infringement or
dilution by any third party. The Licensor shall have sole authority to address,
settle or litigate any Claim at its expense, provided, however, the Licensee
shall fully cooperate with the Licensor in any Claim brought.
ARTICLE 8
Term and Termination
Section 8.01 The Agreement shall continue in force and effect for so
long as the Program is in effect, but no later than December 31, 2099, unless it
is sooner terminated as provided for herein.
-5-
Section 8.02 The Licensor may terminate the Agreement forthwith,
upon written notice to the Licensee, if, in the Licensor's sole discretion and
determination, there is a material breach of the Licensee's obligations under
the Agreement.
Section 8.03 Either party may terminate the Agreement, without
cause, by giving thirty (30) days written notice to the other party.
Section 8.04 Notwithstanding Section 8.03, for the further
protection of the Licensed Marks, the license granted herein shall automatically
and immediately terminate, without any notice by or any action required on the
part of the Licensor, in the event that there is an Event of Default relating to
the Licensee's Notes which results in such Notes becoming due and payable prior
to their stated maturity.
ARTICLE 9
Effect of Termination
Section 9.01 Immediately upon termination of the Agreement, the
Licensee shall cease and desist from any and all use of the Licensed Marks,
amend its organizational documents, take all other actions necessary or
desirable to change its name to a name that does not include any of the Licensed
Marks, or any confusingly similar term, cease to distribute all materials
bearing the Licensed Marks and destroy any remaining inventory of documents
bearing the Licensed Marks.
Section 9.02 Immediately upon termination of the Agreement, the
Licensee shall cease and desist from any and all use of the Licensed Marks,
cease to distribute all materials that bear the Licensed Marks, and destroy any
remaining inventory of documents that bear the Licensed Marks.
Section 9.03 Upon termination of the Agreement, the Licensee agrees
to cooperate fully with the Licensor to amend or cancel any governmental
recordations or approvals for the benefit of the Licensee pertaining to any
marks or names which consist of or include any of the Licensed Marks.
Section 9.04 Upon termination of the Agreement, any and all rights
in the Licensed Marks and the goodwill connected therewith shall remain the
exclusive property of the Licensor.
ARTICLE 10
Miscellaneous Provisions
Section 10.01 Interpretation and Enforcement of Agreement. The
Agreement shall be interpreted according to the laws of the State of Iowa, and
the parties agree that exclusive jurisdiction over the enforcement of the
Agreement shall be appropriate in the state or federal courts of the State of
Iowa. The parties agree that any breaches of the Agreement shall cause
irreparable injury to the nonbreaching party and that an injunction shall be an
appropriate remedy.
-6-
Section 10.02 Amendment and Waiver. No amendment, modification or
discharge of the Agreement, and no waiver under the Agreement, shall be valid or
binding unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by either of the parties hereto of a breach of or a default under any of
the provisions of the Agreement, nor the failure by either of the parties, on
one or more occasions, to enforce any of the provisions of the Agreement or to
exercise any right or privilege under the Agreement, shall be construed as a
waiver of any other breach or default of a similar nature, or as a waiver of any
of such provisions, rights or privileges under the Agreement. The rights and
remedies provided in the Agreement are cumulative and are not exclusive of any
rights or remedies that either party otherwise may have at law or in equity.
Section 10.03 Severability. In the event any provision of the
Agreement shall be invalid or unenforceable, it shall be deemed to be separate
and shall not affect any other provision of the Agreement.
Section 10.04 Assignment. The Agreement including the licenses
granted in the Agreement is not assignable or transferable by agreement or by
operation of law without the express written consent of the Licensor. Any such
unauthorized assignment or transfer shall be null and void and of no legal
effect. The Agreement shall be binding upon and inure to the benefit of the
parties to the Agreement and their respective heirs, successors and permitted
assigns.
Section 10.05 Notices. All notices, requests, demands and other
communications required to be in writing under the Agreement shall be addressed
as follows and notice shall be considered given five (5) days following dispatch
by first class mail, postage prepaid or if transmitted by facsimile, when
confirmed:
If to the Licensor:
Principal Financial Services, Inc.
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: General Counsel
With a copy to:
Principal Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxx Xxxxxxx
If to the Licensee:
The Principal Life Income Fundings Trust specified in the Omnibus
Instrument
c/o U.S. Bank Trust National Association
000 Xxxx Xxxxxx, 00xx Xxxxx
-0-
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxx Xxxxxx
Section 10.06 Trustee. The Agreement has been executed on behalf of
the Licensee by the Trustee solely in its capacity as trustee of the Licensee,
and not in its individual capacity. In no case shall the Trustee (or any entity
acting as successor or additional trustee) be personally liable for or on
account of any of the statements, representations, warranties, covenants or
obligations of the Licensee under the Agreement, any right to assert any such
liabilities against the Trustee (or any entity acting as successor or additional
trustee) being hereby waived by the other party to the Agreement; provided,
however, that such waiver shall not affect the liability of the Trustee (or any
entity acting as successor or additional trustee) to any person under any other
agreement to the extent expressly agreed to in its individual capacity
thereunder.
Section 10.07 Counterparts. The Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
Section 10.08 Equitable Relief. The Licensee acknowledges that the
Licensor will suffer irreparable harm as a result of the material breach by the
Licensee of any covenant or agreement to be performed or observed by the
Licensee under the Agreement, and acknowledges that the Licensor shall be
entitled to apply for and receive from any court or administrative body of
competent jurisdiction a temporary restraining order, preliminary injunction
and/or permanent injunction, without any necessity of proving damages, enjoining
the Licensee from further breach of the Agreement or further infringement or
impairment of the rights of the Licensor.
Section 10.09 Further Assurances. Each of the parties to the
Agreement agrees to execute all such further instruments and documents and to
take all such further action as the other party may reasonably require in order
to effectuate the terms and purposes of the Agreement. The parties shall act in
good faith in the performance of their obligations under the Agreement.
-8-
APPENDIX A
LICENSED MARKS
PRINCIPAL(R)
THE PRINCIPAL(R)
PRINCIPAL FINANCIAL GROUP(R)
PRINCIPAL FINANCIAL GROUP and Design(R)
-9-
EXHIBIT C
STANDARD INDENTURE TERMS
WITH RESPECT TO
PRINCIPAL LIFE INCOME FUNDINGS TRUSTS
SENIOR SECURED MEDIUM-TERM NOTES AND
PRINCIPAL(R) LIFE CORENOTES(R)
DATED AS OF March 5, 2004
"CoreNotes(R)" is a registered service xxxx of Xxxxxxx Xxxxx & Co.
"Principal(R)" is a registered service xxxx of Principal Financial Services,
Inc. and is used under license.
EXHIBIT 4.1
STANDARD INDENTURE TERMS
WITH RESPECT TO
PRINCIPAL LIFE INCOME FUNDINGS TRUSTS
SENIOR SECURED MEDIUM-TERM NOTES AND
PRINCIPAL(R) LIFE CORENOTES(R)
DATED AS OF March 5, 2004
"CoreNotes(R)" is a registered service xxxx of Xxxxxxx Xxxxx & Co.
"Principal(R)" is a registered service xxxx of Principal Financial Services,
Inc. and is used under license.
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Compliance Certificates and Opinions..........................11
SECTION 1.03. Form of Documents Delivered to Indenture Trustee..............11
SECTION 1.04. Acts of Holders...............................................13
SECTION 1.05. Notices.......................................................14
SECTION 1.06. Notice to Holders; Waiver.....................................16
SECTION 1.07. Severability..................................................16
SECTION 1.08. Successors and Assigns........................................16
SECTION 1.09. Benefits of Indenture.........................................17
SECTION 1.10. Language of Notices...........................................17
SECTION 1.11. Governing Law.................................................17
SECTION 1.12. Waiver of Jury Trial..........................................17
SECTION 1.13. Counterparts..................................................18
SECTION 1.14. Third Party Beneficiaries.....................................18
SECTION 1.15. Conflict with Trust Indenture Act.............................18
ARTICLE 2
THE NOTES
SECTION 2.01. Forms Generally...............................................18
SECTION 2.02. No Limitation on Aggregate Principal Amount of Notes..........21
SECTION 2.03. Listing.......................................................21
SECTION 2.04. Redemption and Repayment......................................21
SECTION 2.05. Execution, Authentication and Delivery Generally..............23
SECTION 2.06. Registration..................................................26
SECTION 2.07. Transfer......................................................26
SECTION 2.08. Mutilated, Destroyed, Lost and Stolen Notes...................27
SECTION 2.09. Payment of Interest; Rights To Interest Preserved.............27
SECTION 2.10. Cancellation..................................................28
SECTION 2.11. Persons Deemed Owners.........................................28
SECTION 2.12. Tax Treatment; Tax Returns and Reports........................29
SECTION 2.13. No Association................................................29
SECTION 2.14. Administrative Procedures.....................................29
ARTICLE 3
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Payment of Principal and any Premium, Interest and Additional
Amounts.......................................................29
SECTION 3.02. Collection Account............................................30
SECTION 3.03. Agreements of the Paying Agent................................30
SECTION 3.04. Maintenance of Office or Agency...............................32
SECTION 3.05. Duties of the Agents..........................................33
SECTION 3.06. Duties of the Transfer Agent..................................34
SECTION 3.07. Duties of the Registrar.......................................34
i
SECTION 3.08. Unclaimed Monies..............................................35
SECTION 3.09. Protection of Collateral......................................36
SECTION 3.10. Opinions as to Collateral; Annual Statement as to Compliance..37
SECTION 3.11. Performance of Obligations....................................39
SECTION 3.12. Existence.....................................................39
SECTION 3.13. Reports; Financial Information; Notices of Defaults...........40
SECTION 3.14. Payment of Taxes and Other Claims.............................41
SECTION 3.15. Negative Covenants............................................41
SECTION 3.16. Non-Petition..................................................43
SECTION 3.17. Title to the Collateral.......................................44
SECTION 3.18. Withholding and Payment of Additional Amounts.................44
SECTION 3.19. Additional Representations and Warranties.....................46
SECTION 3.20. Ancillary Documents...........................................47
ARTICLE 4
GRANTING OF SECURITY INTEREST AND ASSIGNMENT FOR COLLATERAL PURPOSES
SECTION 4.01. Creation......................................................47
SECTION 4.02. Scope.........................................................48
SECTION 4.03. Termination of Security Interest..............................49
ARTICLE 5
SATISFACTION AND DISCHARGE; SUBROGATION
SECTION 5.01. Satisfaction and Discharge of Indenture.......................50
SECTION 5.02. Application of Trust Money....................................50
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.............................................51
SECTION 6.02. Acceleration of Maturity Date; Rescission and Annulment.......53
SECTION 6.03. Collection of Indebtedness and Suits for Enforcement..........54
SECTION 6.04. Indenture Trustee May File Proofs of Claim....................54
SECTION 6.05. Indenture Trustee May Enforce Claims Without Possession of
Notes.........................................................55
SECTION 6.06. Application of Money Collected................................55
SECTION 6.07. Limitation on Suits...........................................56
SECTION 6.08. Unconditional Rights of Holders to Receive Payments...........57
SECTION 6.09. Restoration of Rights and Remedies............................57
SECTION 6.10. Rights and Remedies Cumulative................................57
SECTION 6.11. Delay or Omission Not Waiver..................................57
SECTION 6.12. Control by Holders............................................57
SECTION 6.13. Waiver of Past Defaults.......................................58
SECTION 6.14. Undertaking for Costs.........................................58
SECTION 6.15. Waiver of Stay or Extension Laws..............................58
ARTICLE 7
THE INDENTURE TRUSTEE AND OTHER AGENTS
SECTION 7.01. Duties of Indenture Trustee...................................59
ii
SECTION 7.02. No Liability to Invest........................................60
SECTION 7.03. Performance Upon Default......................................61
SECTION 7.04. No Assumption by Paying Agent, Transfer Agent, Calculation
Agent or Registrar............................................61
SECTION 7.05. Notice of Default.............................................61
SECTION 7.06. Rights of Indenture Trustee...................................61
SECTION 7.07. Not Responsible for Recitals or Issuance of Notes.............63
SECTION 7.08. Indenture Trustee May Hold Notes..............................63
SECTION 7.09. Money Held in Trust...........................................63
SECTION 7.10. Compensation and Reimbursement................................63
SECTION 7.11. Eligibility...................................................63
SECTION 7.12. Resignation and Removal; Appointment of Successor.............64
SECTION 7.13. Acceptance of Appointment by Successor........................65
SECTION 7.14. Merger, Conversion, Consolidation or Succession to Business
of Indenture Trustee..........................................66
SECTION 7.15. Co-trustees...................................................66
SECTION 7.16. Appointment and Duties of the Calculation Agent...............67
SECTION 7.17. Changes in Agents.............................................68
SECTION 7.18. Limitation of Trustee Liability...............................70
ARTICLE 8
SUPPLEMENTAL INDENTURES
SECTION 8.01. Supplemental Indentures Without Consent of Holders............71
SECTION 8.02. Supplemental Indenture With Consent of Holders................71
SECTION 8.03. Execution of Supplemental Indentures..........................73
SECTION 8.04. Effect of Supplemental Indenture..............................73
SECTION 8.05. Reference in Notes to Supplemental Indentures.................73
SECTION 8.06. Conformity with Trust Indenture Act...........................73
ARTICLE 9
NON-RECOURSE PROVISIONS
SECTION 9.01. Nonrecourse Enforcement.......................................74
ARTICLE 10
MEETINGS OF HOLDERS OF NOTES
SECTION 10.01. Purposes for Which Meetings May be Called....................74
SECTION 10.02. Call, Notice and Place of Meetings...........................74
SECTION 10.03. Persons Entitled to Vote at Meetings.........................75
SECTION 10.04. Quorum; Action...............................................75
SECTION 10.05. Determination of Voting Rights; Conduct and Adjournment of
Meetings.....................................................76
SECTION 10.06. Counting Votes and Recording Action of Meetings..............77
ARTICLE 11
NOTES IN FOREIGN CURRENCIES
SECTION 11.01. Notes in Foreign Currencies..................................77
iii
Exhibit A-1 Form of Retail Global Note
Exhibit A-2 Form of Institutional Global Note
Exhibit A-3 Form of Institutional Definitive Note
iv
Reconciliation and tie between
Trust Indenture Act of 1939 (the "Trust Indenture Act")
and Indenture
Trust Indenture Act Section Indenture Section
ss.310(a)..................................................................7.11
(b)........................................................................7.11
ss.311(a)..................................................................7.08
ss.312(a) .................................................................3.13
(b)........................................................................3.13
(c)........................................................................3.13
ss.313(a)..................................................................3.13
(b)........................................................................3.13
(c)........................................................................3.13
(d)........................................................................3.13
ss.314(a) .................................................................3.10
(b)........................................................................3.10
(c) .................................................................1.02, 3.10
(d) .......................................................................3.10
(e)..................................................................1.03, 3.10
ss.315(c)..................................................................7.01
ss.316(a)(1) (A) ....................................................6.02, 6.12
(a)(1)(B)..................................................................6.13
(b)........................................................................6.08
(c)........................................................................1.04
ss.317(a)(1)...............................................................6.03
(a)(2) ....................................................................6.04
(b)........................................................................3.03
ss.318(a) .................................................................1.15
(c)........................................................................1.15
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
Attention should also be directed to Section 318(c) of the Trust Indenture Act,
which provides that certain provisions of Sections 310 to and including 317 are
a part of and govern every qualified indenture, whether or not physically
contained in the Indenture.
v
STANDARD INDENTURE TERMS
This document constitutes the Standard Indenture Terms, dated as of March
5, 2004, which are incorporated by reference in the Indenture (specified in
Section C of the Omnibus Instrument, as defined below), by and among the Trust
named in the Omnibus Instrument and the Indenture Trustee, Registrar, Transfer
Agent, Paying Agent and Calculation Agent for such Trust, in connection with the
Program (all as defined in the Indenture).
These Standard Indenture Terms shall be of no force and effect unless and
until incorporated by reference into, and then only to the extent not modified
by, such Indenture.
The following terms and provisions shall govern the Notes subject to
contrary terms and provisions expressly adopted in such Indenture, any
supplemental indenture or the Notes, which contrary terms shall be controlling.
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions. For all purposes of the Indenture, of all
indentures supplemental to the Indenture and of all Notes issued under the
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in the Indenture have the meanings assigned to
them in this Article 1, and include the plural as well as the singular;
(b) all accounting terms not otherwise defined in the Indenture have
the meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise expressly provided in
the Indenture, the term "generally accepted accounting principles" with respect
to any computation required or permitted under the Indenture shall mean such
accounting principles as are generally accepted at the date of such computation
in the United States;
(c) the word "including" shall be construed to be followed by the
words "without limitation";
(d) Article and Section headings are for the convenience of the reader
and shall not be considered in interpreting the Indenture or the intent of the
parties to the Indenture;
(e) the words "hereby," "herein," "hereof" and "hereunder" and other
words of similar import refer to the Indenture as a whole and not to any
particular Article, Section, Exhibit or other subdivision; and
(f) references in the Indenture to Articles, Sections, Exhibits and
Schedules shall, refer respectively to Articles, Sections, Exhibits and
Schedules of these Standard Indenture Terms, unless otherwise expressly
provided.
"ACT", with respect to any Holder, has the meaning set forth in Section
1.04.
1
"ADDITIONAL AMOUNTS" means additional amounts that are required by the
Indenture or the Notes to be paid by the Trust to Holders pursuant to Section
3.18 or additional amounts that are required pursuant to the Funding Agreement,
under circumstances specified therein, to be paid by Principal Life to the
Funding Agreement Holder, to compensate for any withholding or deduction for or
on the account of any present or future taxes, duties, levies, assessments or
other governmental charges of whatever nature imposed or levied on payments in
respect of such Notes or Funding Agreement, as applicable, by or on behalf of
any governmental authority in the United States having the power to tax, so that
the net amount received by the Holders or the Funding Agreement Holder, will
equal the amount that would have been received under such Notes or Funding
Agreement, as applicable, had no such deduction or withholding been required.
"AFFILIATE" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, that Person and, in the case of an individual, any spouse or other
member of that individual's immediate family. For the purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or otherwise.
"AGENT" means any of the Registrar, Transfer Agent, Paying Agent or
Calculation Agent.
"AUTHORIZED NEWSPAPER" means a newspaper, in an official language of the
place of publication or in the English language, customarily published on each
day that is a business day in the place of publication, whether or not published
on days that are not business days in the place of publication, and of general
circulation in each place in connection with which the term is used or in the
financial community of each such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and, in each case, on any day that is a business day in
the place of publication.
"AUTHORIZED SIGNATORIES" mean Responsible Officers authorized to execute
documents on behalf of the Trust.
"BANKING DAY" means a day (other than a Saturday or Sunday) on which
commercial banks are generally open for business (including dealings in foreign
exchange and foreign currency deposits) in the place where the specified office
of the Paying Agent or, as the case may be, the Registrar is located.
"BUSINESS DAY" means (i) for any Note, any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which commercial banks are
authorized or required by law, regulation or executive order to close in The
City of
New York, (ii) for LIBOR Notes only, any day on which commercial banks
are open for business (including dealings in the LIBOR Currency) in London,
England, (iii) for Notes that have a Specified Currency other than U.S. Dollars
only, and other than Notes denominated in euros, any day that is not a day on
which commercial banks are authorized or required by law, regulation or
executive order to close in the
2
Principal Financial Center of the country issuing the Specified Currency, and
(iv) for Notes that have euros as the Specified Currency only a day on which the
TARGET System is open.
"CALCULATION AGENT" means the institution appointed as calculation agent
for the Notes and named as such in the relevant Pricing Supplement or its
successors or assigns. For such purpose, the Paying Agent accepts its
appointment as the initial Calculation Agent pursuant to Section 7.16.
"CLEARING SYSTEM" means DTC and any other clearing system specified in the
relevant Pricing Supplement.
"CODE" means the Internal Revenue Code of 1986, as amended, including any
successor or amendatory statutes and any applicable rules, regulations, notices
or orders promulgated thereunder.
"COLLATERAL" means the right, title, benefits, remedies and interests of
the Trust in, to and under (i) the Funding Agreement, (ii) all Proceeds of the
Funding Agreement and the Guarantee and all amounts and instruments on deposit
from time to time in the Collection Account, (iii) the Guarantee, (iv) all books
and records pertaining to the Funding Agreement and the Guarantee, and (v) all
rights of the Trust pertaining to the foregoing.
"COLLECTION ACCOUNT" means a non-interest bearing account with the
Indenture Trustee in the name of the Trust or such other account with a
depositary institution that is rated at least AA- or Aa3 by a nationally
recognized statistical rating organization as may be designated by the Trustee,
which account shall be segregated from other accounts held by the Indenture
Trustee or such other depositary institution.
"COMMISSION" means the Securities and Exchange Commission or any successor
body performing such duties of the Commission.
"CONTINGENT OBLIGATION" means, as applied to any Person, without
duplication, any direct or indirect liability, contingent or otherwise, of that
Person (i) with respect to any Indebtedness, lease, dividend, letter of credit
or other obligation of another if the primary purpose or intent thereof by the
Person incurring the Contingent Obligation is to provide assurance to the
obligee of such obligation of another that such obligation of another will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof, (ii) under any letter of credit issued
for the account of or for which that Person is otherwise liable for
reimbursement thereof, (iii) under agreements providing for the hedging or
limitation of interest rate or currency risk, (iv) under any performance bond or
other surety arrangement, (v) under any direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another, or (vi) for the obligations of another through any
agreement (contingent or otherwise).
"CORPORATE TRUST OFFICE" means the office of the Indenture Trustee at which
the corporate trust business of the Indenture Trustee shall, at any particular
time, be principally administered, which office at the date of the Indenture is
located as indicated in Section 1.05.
3
"DEFAULT" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"DEFAULTED INTEREST" has the meaning set forth in Section 2.09.
"DEFINITIVE NOTE" means a Note issued in certificated and registered form.
"DEPOSITARY" means the Person designated as Depositary by the Trust
pursuant to the Indenture, which Person, if required by any applicable law,
regulation or exchange requirement, must be a clearing agency registered under
the Securities Exchange Act and, if so provided with respect to any Note, any
successor to such Person. Initially, the "Depositary" shall be DTC.
"DISTRIBUTION AGREEMENT" means that certain Distribution Agreement, dated
March 5, 2004, by and among Principal Life, PFG and the agents named therein
and acknowledged and agreed to by the Trust, relating to the issuance and sale
of the Notes under the Program, as the same may be amended, modified or
supplemented from time to time.
"DOLLARS", "$", "U.S. $" and "U.S. DOLLARS" mean such coin or currency of
the United States as at the time shall be legal tender for the payment of public
or private debts.
"DTC" means The Depository Trust Company,
New York,
New York, and its
successors and assigns.
"EUROPEAN UNION DIRECTIVE" means any law, regulation, directive or any
interpretation by the European Union or a member nation of the European Union
which requires the withholding or deduction of any amounts payable under the
Notes, the Indenture or the Funding Agreement.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXPENSE AND INDEMNITY AGREEMENT" means, as applicable, (i) that certain
Expense and Indemnity Agreement, dated March 5, 2004, by and between
Principal Life and the Trustee, on behalf of itself and each trust organized
under the Program, including the Trust, (ii) that certain Expense and Indemnity
Agreement, dated March 5, 2004, by and between Principal Life and the
Indenture Trustee, (iii) that certain Expense and Indemnity Agreement, dated
March 5, 2004, by and between Principal Life and the Trust Beneficial Owner
and (iv) that certain Expense and Indemnity Agreement, dated March 5, 2004,
by and between Principal Life and Bankers Trust Company, N.A., as each may be
amended, modified or supplemented from time to time.
"FUNDING AGREEMENT" means that certain funding agreement designated in the
Indenture, entered into by and between Principal Life and the Trust, as it
may be modified, restated, replaced, supplemented or otherwise amended from time
to time in accordance with the terms thereof.
"FUNDING AGREEMENT HOLDER" means, with respect to the Notes, the "Agreement
Holder" as specified in the Funding Agreement.
4
"GLOBAL NOTE" means a Note issued in book-entry and registered form.
"GUARANTEE" means that certain guarantee issued by PFG to the Trust
designated in the Indenture, which fully and unconditionally guarantees
Principal Life's payment obligations under the Funding Agreement, as it may be
modified, restated, replaced, supplemented or otherwise amended from time to
time in accordance with the terms thereof.
"HOLDER" means the Person in whose name a Note or Notes is registered in
the Register.
"INDEBTEDNESS" means, as applied to any Person, (i) all indebtedness for
borrowed money or for the deferred purchase price of property or services in
respect of which such Person is liable, contingent or otherwise, or in respect
of which such Person otherwise assures a creditor against loss (excluding trade
accounts payable and accrued expenses arising in the ordinary course of business
as determined in good faith by such Person), (ii) that portion of obligations
with respect to capital leases which is properly classified as a liability on a
balance sheet in conformity with generally accepted accounting principles, (iii)
obligations evidenced by bonds, notes, debentures or similar instruments of such
Person, and notes payable by such Person and drafts accepted by such Person
representing extensions of credit whether or not representing obligations for
borrowed money, (iv) the face amount of all drafts drawn thereunder, and (v) all
indebtedness secured by any Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is non-recourse to the credit of that Person.
"INDENTURE" means that certain Indenture, contained in, and dated as of the
date specified in, the Omnibus Instrument, by and among the Indenture Trustee,
Registrar, Transfer Agent, Paying Agent and Calculation Agent and the Trust, as
may be amended, modified or supplemented from time to time, which incorporates
by reference these Standard Indenture Terms, and shall include the terms of the
Notes established as contemplated hereunder and thereunder.
"INDENTURE TRUSTEE" means, unless otherwise specified in the Indenture,
Citibank, N.A. and, subject to the provisions of Article 7, shall also include
its successors and assigns as Indenture Trustee under the Indenture.
"INTEREST PAYMENT DATE" means each date on which interest is paid to the
Holders of the Notes as specified in the Indenture.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as it
may be amended or supplemented from time to time, and any successor statute
thereto, and the rules, regulations and published interpretations of the
Commission promulgated thereunder from time to time.
5
"LIBOR CURRENCY" means the currency specified in the Pricing Supplement as
to which LIBOR shall be calculated or, if no currency is specified in the
Pricing Supplement, United States dollars.
"LIBOR NOTES" means Notes that bear interest based on LIBOR (as defined in
the Notes).
"LICENSE AGREEMENT" means that certain License Agreement by and between the
Trustee, on behalf of the Trust, and Principal Financial Services, Inc.,
contained in, and dated as of the date specified in, the Omnibus Instrument, as
the same may be amended, modified or supplemented from time to time.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including without limitation any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the UCC or comparable law of any jurisdiction).
"MATURITY DATE" means the date on which the principal of the Notes becomes
due and payable as provided therein or in the Indenture, whether at the Stated
Maturity Date thereof, by declaration of acceleration, notice of redemption of
the Trust, notice of the Holder's option to elect repayment or otherwise.
"NONRECOURSE PARTIES" has the meaning set forth in Section 9.01.
"NOTE" means any senior secured note of the Trust designated in the
Indenture and authenticated and delivered under the Indenture, which is in
registered form and may be represented by a Global Note or a Definitive Note,
and which shall be substantially in the forms attached as Exhibit X-0, Xxxxxxx
X-0 and Exhibit A-3 to the Indenture and "NOTES" means the senior secured notes
of the Trust represented by such Note.
"NOTICE OF DEFAULT" has the meaning set forth in Section 6.01.
"OFFICE OR AGENCY" means an office or agency of the Trust, the Indenture
Trustee, the Paying Agent or the Registrar, as the case may be, maintained or
designated as the Place of Payment for the Notes pursuant to Section 3.04 or any
other office or agency of the Trust, Indenture Trustee, Paying Agent or
Registrar, as the case may be, maintained or designated for such Notes pursuant
to Section 3.04.
"OMNIBUS INSTRUMENT" means the omnibus instrument pursuant to which certain
Program Documents are executed.
"OPINION OF COUNSEL" means a written opinion addressed to the Indenture
Trustee (among other addressees) by legal counsel, who may be internal legal
counsel to Principal Life, who may, except as otherwise expressly provided in
the Indenture, be counsel for the Trust or Principal Life or other counsel and
who shall be reasonably satisfactory to the Indenture Trustee.
"ORIGINAL ISSUE DATE", with respect to the Notes, means the original issue
date of the Notes, as specified in the Pricing Supplement.
6
"OUTSTANDING" means as of any date of determination, all of the Notes
theretofore authenticated and delivered under the Indenture or in one or more
indentures supplemental to the Indenture, except:
(i) Notes theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) Notes or portions thereof for the payment or redemption of
which money in the necessary amount has been theretofore deposited
with the Indenture Trustee or any Paying Agent in trust for the
Holders of the Notes, provided that, if the Notes are to be redeemed,
notice of such redemption has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made;
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to the Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a holder in due course;
(iv) Notes alleged to have been destroyed, lost, stolen or
mutilated and surrendered to the Indenture Trustee for which either
replacement Notes have been issued or payment has been made as
provided for in Section 2.08 unless proof satisfactory to the
Indenture Trustee is presented that any such Notes are held by a
holder in due course; and
(v) Notes represented by Global Notes to the extent that they
shall have been duly exchanged for Definitive Notes pursuant to the
Indenture unless proof satisfactory to the Indenture Trustee is
presented that any such Notes are held by a holder in due course;
provided further, however, that in determining whether the Holders of the
requisite percentage of the principal amount of the Outstanding Notes have given
any request, demand, authorization, direction, notice, consent or waiver under
the Indenture, Notes owned by the Trust or any Affiliate of the Trust shall be
disregarded and deemed not to be Outstanding, except that in determining whether
the Indenture Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Notes that the
Indenture Trustee knows to be so owned shall be so disregarded. Notes so owned
that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee that the
pledgee is entitled so to act with respect to such Notes and that the pledgee is
not the Trust or any Affiliate of the Trust.
"PAYING AGENT" means, unless otherwise specified in the Indenture or a
supplemental indenture, the Indenture Trustee, in its capacity as paying agent
under the Indenture or its successors or assigns.
"PERSON" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
limited liability company, trust (including any beneficiary thereof), bank,
trust company, land trust, business trust or other
7
organization, whether or not a legal entity, and governments and agencies and
political subdivisions thereof.
"PFG" means Principal Financial Group, Inc., a Delaware corporation and the
indirect parent of Principal Life, or any successor thereto.
"PLACE OF PAYMENT" means the place where the principal of, premium, if any,
and interest on the Notes are payable which, unless otherwise specified in the
Indenture, shall be the address specified in Section 1.05 for the Indenture
Trustee.
"PRICING SUPPLEMENT" means the pricing supplement attached to the Omnibus
Instrument as Exhibit D as prepared by the Trust in connection with the issuance
and sale by the Trust of the Notes and agreed to by Principal Life, the Trust
and the Relevant Agents appointed under the Distribution Agreement, as such
Pricing Supplement may be amended, modified, supplemented or replaced from time
to time.
"PRINCIPAL FINANCIAL CENTER" means, as applicable, the capital city of the
country issuing the Specified Currency or the capital city of the country to
which the LIBOR Currency relates; provided, however, that with respect to United
States Dollars, Australian dollars, Canadian dollars, the euro, South African
rand and Swiss francs, the "Principal Financial Center" shall be The City of New
York, Sydney, Toronto, London (solely in the case of the LIBOR Currency),
Johannesburg and Zurich, respectively.
"PRINCIPAL LIFE" means
Principal Life Insurance Company, an Iowa insurance
company, or any successor thereto.
"PROCEEDS" means all of the proceeds of, and all other profits, products,
rents, principal payments, interest payments or other receipts, in whatever
form, arising from the collection, sale, lease, exchange, assignment, licensing
or other disposition or maturity of, or other realization upon, the Funding
Agreement or the Guarantee, including without limitation all claims of the Trust
against third parties for loss of, damage to or destruction of, or for proceeds
payable under, the Funding Agreement or the Guarantee, in each case whether now
existing or hereafter arising.
"PROGRAM" means, collectively, the Senior Secured Medium-Term Notes Program
and the Principal(R) Life CoreNotes(R) Program, in each case, of the Principal
Life Income Fundings Trusts.
"PROGRAM DOCUMENTS" means the Indenture, the Notes, the Trust Agreement,
the Funding Agreement, the Guarantee, the Distribution Agreement, the License
Agreement and each Expense and Indemnity Agreement and any other documents or
instruments entered into by, with respect to, or on behalf of, the Trust.
"RATING AGENCY" means any rating agency that has rated the Program or the
Notes.
"REDEMPTION PRICE" means the price at which the Notes are to be redeemed
pursuant to Section 2.04, as set forth in the applicable Pricing Supplement or a
supplemental indenture.
"REGISTER" has the meaning set forth in Section 2.06.
8
"REGISTRAR" means, unless otherwise specified in the Indenture or a
supplemental indenture, the Indenture Trustee, in its capacity as registrar
under the Indenture, or its successors or assigns.
"REGISTRATION STATEMENT" means (a) a registration statement on Form S-3 or
other appropriate form, including the prospectus, prospectus supplements and the
exhibits included therein and including any documents or filings incorporated by
reference therein, any pre-effective or post-effective amendments thereto and
any registration statements filed subsequent thereto under rules promulgated
under the Securities Act, relating to the registration under the Securities Act
of the Notes, the Funding Agreement and the Guarantee, (b) any preliminary
prospectus or prospectus supplements thereto relating to the Notes whether or
not required to be filed pursuant to the Securities Act and any documents or
filings incorporated therein by reference, and (c) a registration statement and
such other documents, forms or filings as may be required by the Securities Act
or the Trust Indenture Act, or other securities laws in each case relating to
the Notes.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment Date
means the date specified for that purpose in the Notes or the Indenture.
"RELEVANT AGENTS" means the agent or agents (in a firm commitment offering
of Notes or in a best efforts offering of Notes) appointed pursuant to the
Distribution Agreement.
"RESPONSIBLE OFFICER" means, with respect to the Indenture Trustee or the
Trustee, any vice president, assistant vice president, any assistant secretary,
any assistant treasurer, any trust officer or assistant trust officer, or any
other officer of the Indenture Trustee or the Trustee, as the case may be,
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject, and also, with respect
to the Trustee, having direct responsibility for the administration of the
Trust, or with respect to the Indenture Trustee, having direct responsibility
for the administration of the Indenture.
"SECURED OBLIGATIONS" means the obligations of the Trust secured under the
Notes and the Indenture, including (i) all principal of, premium, if any, and
interest (including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Trust, whether or not allowed or allowable
as a claim in any such proceeding) on such Notes or pursuant to the Indenture,
(ii) all other amounts payable by the Trust under the Indenture or under such
Notes including all Additional Amounts (if applicable) and all costs and
expenses (including without limitation attorneys' fees) incurred by the
Indenture Trustee (to the extent not paid pursuant to the applicable Expense and
Indemnity Agreement) and (iii) any renewals or extensions of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as it may be amended or
supplemented from time to time, and any successor statute thereto, and the
rules, regulations and published interpretations of the Commission promulgated
thereunder from time to time.
9
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as it
may be amended or supplemented from time to time, and any successor statute
thereto, and the rules, regulations and published interpretations of the
Commission promulgated thereunder from time to time.
"SPECIAL RECORD DATE" means a date fixed by the Indenture Trustee pursuant
to Section 2.09 for the payment of any Defaulted Interest on any Note.
"SPECIFIED CURRENCY" means the currency in which the Notes are denominated
(or, if such currency is no longer legal tender for the payment of public and
private debts in the country issuing such currency or, in the case of the euro,
in the member states of the European Union that have adopted the single currency
in accordance with the treaty establishing the European Community, as amended by
the treaty on European Union, such currency which is then such legal tender).
"STANDARD INDENTURE TERMS" means these Standard Indenture Terms, dated as
of March 5, 2004.
"STATED MATURITY DATE" means the date specified in the Notes, as the fixed
date on which the principal of such Notes is due and payable, which date will be
a day between nine months and thirty years from the date of original issuance of
the Notes and be on the last scheduled Interest Payment Date.
"STERLING" means such coin or currency of the United Kingdom as at the time
shall be legal tender for the payment of public or private debts.
"TARGET SYSTEM" means the Trans-European Automated Real-Time Gross
Settlement Express Transfer System.
"TRANSFER AGENT" means, unless otherwise specified in the Indenture or a
supplemental indenture, the Indenture Trustee, in its capacity as transfer agent
under the Indenture or its successors or assigns.
"TREASURY REGULATIONS" means the regulations promulgated by the United
States Treasury Department pursuant to the Code.
"TRUST" means the Principal Life Income Fundings Trust named in the Omnibus
Instrument, which shall be a trust, formed under the laws of the jurisdiction
specified in the Trust Agreement, together with its permitted successors and
assigns; provided, however, unless the context requires otherwise, all
references in the Indenture to the "Trust" shall also include the Trustee, on
behalf of the Trust.
"TRUST AGREEMENT" means that certain Trust Agreement, contained in, and
dated as of the date specified in, the Omnibus Instrument, by and between the
Trustee and the Trust Beneficial Owner, declaring and establishing the Trust, as
may be amended, modified or supplemented from time to time.
"TRUST BENEFICIAL INTEREST" has the meaning set forth in the Trust
Agreement.
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"TRUST BENEFICIAL OWNER" means the beneficial owner of the Trust Beneficial
Interest.
"TRUST CERTIFICATE" means a certificate signed by one or more Responsible
Officers of the Trustee on behalf of the Trust and delivered to the Indenture
Trustee.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as it may be
amended or supplemented from time to time, and any successor statute thereto,
and the rules, regulations and published interpretations of the Commission
promulgated thereunder from time to time.
"TRUST ORDER" or "TRUST REQUEST" means a written statement, request or
order of the Trust signed in its name by one or more Responsible Officers of the
Trustee and delivered to the Indenture Trustee.
"TRUSTEE" means, unless otherwise specified in the Trust Agreement, U.S.
Bank Trust National Association, not in its individual capacity, but solely as
the Trustee under the Trust Agreement, and shall also include its permitted
successors and assigns under the Trust Agreement.
"UCC" means the Uniform Commercial Code, as from time to time in effect in
the State of New York; provided that, with respect to the perfection, effect of
perfection or non-perfection, or priority of any security interest in the
Collateral, "UCC" shall mean the Uniform Commercial Code, as from time to time
in effect in the applicable jurisdiction whose law governs such perfection,
non-perfection or priority.
"UNITED STATES" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.
SECTION 1.02. Compliance Certificates and Opinions. Upon any application or
request by the Trust to the Indenture Trustee to take any action under any
provision of the Indenture, the Trust shall furnish to the Indenture Trustee a
Trust Certificate stating that all conditions precedent, if any, provided for in
the Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of the Indenture, no additional
certificate or opinion need be furnished.
SECTION 1.03. Form of Documents Delivered to Indenture Trustee.
(a) In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of the Trust may be based, insofar as
it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless the Trustee knows that the certificate or
opinion or representations with respect to the matters upon
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which its certificate or opinion is based are erroneous. Any such certificate or
opinion or any Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, the Trustee
stating that the information with respect to such factual matters is in the
possession of the Trustee, unless such counsel knows that the certificate or
opinion or representations with respect to such matters are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion and shall include a statement to the effect that such counsel
believes that such counsel and the Indenture Trustee may reasonably rely upon
the opinion of such other counsel. Any certificate or opinion of the Trust or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of Principal Life, PFG or the Trust, unless the
Trustee knows that the certificate or opinion or representations with respect to
the accounting matters upon which its certificate or opinion is based are
erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under the Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Wherever in the Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Trust
shall deliver any document as a condition of the granting of such application,
or as evidence of compliance with any term of the Indenture, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Trust to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to limit the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 7.01.
(e) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in the Indenture (including one furnished
pursuant to specific requirements of the Indenture relating to a particular
application or request) shall substantially include:
(i) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in the
Indenture relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary
to enable him or her to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
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(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.04. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by the Indenture to be given or taken by any
Holder may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holder in person or by one or more
agents duly appointed in writing. Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by the Indenture to be given or
taken by Holders may, alternatively, be embodied in and evidenced by the record
of Holders of Notes voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders of Notes duly called and held in
accordance with the provisions of Article 10, or a combination of such
instruments and any such record. Except as otherwise expressly provided in the
Indenture, such action shall become effective when such instrument or
instruments or record or both are delivered to the Indenture Trustee. Such
instrument or instruments and any such record (and the action embodied therein
and evidenced thereby) are sometimes referred to in the Indenture as the "ACT"
of the Holders signing such instrument or instruments or so voting at any
meeting. Proof of execution of any such instrument or of writing appointing any
such agent, or of the holding by any Person of a Note, shall be sufficient for
any purpose of the Indenture and (subject to Section 7.01) conclusive in favor
of the Indenture Trustee, and the Trust, if made in the manner provided in this
Section 1.04. The record of any meeting of Holders of Notes shall be proved in
the manner provided in Section 10.06. Without limiting the generality of this
Section 1.04, unless otherwise provided in or pursuant to the Indenture, a
Clearing System that is or whose nominee is a Holder of a Global Note may allow
its account holders who have beneficial interests in such Global Note credited
to accounts with such Clearing System to direct such Clearing System in taking
such action through such Clearing System's standing instructions and customary
practices. The Clearing System shall report only one result of its solicitation
of proxies to the Indenture Trustee.
(b) Subject to Section 7.01, the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Whenever such execution is by a signer acting in a capacity other than his or
her individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his or her authority. The fact and date of the execution of
any such instrument or writing, or the authority of the Person executing the
same, may be proved in any other manner that the Indenture Trustee deems
sufficient.
(c) The ownership, principal amount and serial numbers of Notes held
by any Person, and the date of the commencement and the date of the termination
of holding the same, shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in
13
lieu thereof in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Trust in reliance thereon, whether or not notation of
such action is made upon such Note.
(e) Except as provided in subsection (f) below, if the Trust shall
solicit from the Holders of Notes any Act referred to in Section 1.04(a), the
Trust may, at its option, fix in advance a record date for the determination of
Holders entitled to vote or consent in connection with any such Act, but the
Trust shall have no obligation to do so. If such record date is fixed, such Act
may be given after such record date, but only the Holders of record at the close
of business on such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of Outstanding Notes
have authorized or agreed or consented to such Act, and for that purpose the
Outstanding Notes shall be computed as of such record date; provided, that no
such Act by Holders on such record date shall be deemed effective unless it
shall become effective pursuant to the provisions of the Indenture not later
than six months after the record date. Nothing in this subsection (e) shall be
construed to render ineffective any action taken by Holders of the requisite
principal amount of Outstanding Notes on the date such action is taken. Promptly
after any record date is set pursuant to this subsection (e), the Trust shall
cause notice of such record date and the proposed action by Holders to be given
to the Indenture Trustee in writing and to each Holder of the Notes in the
manner set forth in Section 1.06.
(f) The Indenture Trustee may set any day as a record date for the
purpose of determining the Holders entitled to join in the giving or making of
(i) any notice delivered pursuant to Section 6.01(d), (ii) any declaration of
acceleration referred to in Section 6.02, (iii) any request to institute
proceedings referred to in Section 6.07(b) or (iv) any direction referred to in
Section 6.12. If such a record date is fixed pursuant to this subsection (f),
the relevant action may be taken or given after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Notes have authorized or agreed or consented to such
action, and for that purpose the Outstanding Notes shall be computed as of such
record date; provided, that no such action by Holders on such record date shall
be deemed effective unless it shall become effective pursuant to the provisions
of the Indenture not later than six months after the record date. Nothing in
this subsection (f) shall be construed to prevent the Indenture Trustee from
setting a new record date for any action for which a record date has previously
been set pursuant to this subsection (f) (whereupon the record date previously
set shall automatically and with no action by any Person be cancelled and of no
effect), and nothing in this subsection (f) shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Notes on the date such action is taken. Promptly after any record
date is set pursuant to this subsection (f), the Indenture Trustee shall cause
notice of such record date and the proposed action by Holders to be given to the
Trust in writing and to each Holder of the Notes in the manner set forth in
Section 1.06.
SECTION 1.05. Notices. Any request, demand, authorization, direction,
notice, consent, waiver or other action required or permitted by the Indenture
to be made upon, given or furnished to, or filed with, the Indenture Trustee,
the Registrar, the Transfer Agent, the Paying Agent, the Calculation Agent, the
Trust and the Rating Agencies shall be sufficient for every purpose under the
Indenture (unless otherwise expressly provided in the Indenture) if in writing
and sent by fax, telex, or mailed, first-class mail or overnight courier, in
each case postage
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prepaid, at the address specified in this Section 1.05 or at any other address
previously furnished in writing by one party to the other.
Such notices shall be addressed
if to the Indenture Trustee, to:
Citibank, N.A.
Citibank Agency & Trust
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxx 0
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
if to the Registrar, Transfer Agent, Paying Agent and
Calculation Agent, to:
Citibank, N.A.
Citibank Agency & Trust
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxx 0
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
if to the Trust, to:
Principal Life Income Fundings Trust (followed by the number
of the Trust designated in the Omnibus Instrument)
c/o U.S. Bank Trust National Association
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
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if to the Rating Agencies, to:
Standard & Poor's Rating Services
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000)000-0000
Attention: Capital Markets
Xxxxx'x Investors Service, Inc.
Life Insurance Group
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: [Principal Life Income Fundings Trusts]
SECTION 1.06. Notice to Holders; Waiver.
(a) Except as otherwise expressly provided in or pursuant to the
Indenture, notices to Holders required under the Notes shall be sufficiently
given upon the mailing by overnight courier or first-class mail (or equivalent),
or (if posted to an overseas address) by airmail, postage prepaid, of such
notices to each Holder of the Notes at their registered addresses as recorded in
the Register.
(b) Where the Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Indenture Trustee,
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver. In any case, neither the failure to give
such notice, nor any defect in any notice to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders, and any notice
which is mailed in the manner provided in the Indenture shall be conclusively
presumed to have been duly given.
(c) In the case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Indenture
Trustee shall constitute a sufficient notification for every purpose under the
Indenture.
SECTION 1.07. Severability. In case any provision in or obligation under
the Indenture or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby to the
fullest extent permitted under applicable law.
SECTION 1.08. Successors and Assigns. All covenants, stipulations, promises
and agreements in the Indenture by the Trust shall bind its successors and
assigns, whether so expressed or not.
16
SECTION 1.09. Benefits of Indenture. Nothing in the Indenture or in any
Note, expressed or implied, shall give to any Person other than the parties
under the Indenture and their successors and the Holders, any legal or equitable
right, remedy or claim under the Indenture.
SECTION 1.10. Language of Notices. Any request, demand, authorization,
direction, notice, consent, election or waiver required or permitted under the
Indenture shall be in the English language, except that, if the Trust so elects,
any published notice may be in an official language of the country of
publication.
SECTION 1.11. Governing Law.
(a) The Indenture and the Notes (unless otherwise specified in the
Pricing Supplement) shall be governed by, and construed in accordance with, the
laws of the State of New York without regard to conflict of law principles,
except as required by mandatory provisions of law and except to the extent that
the validity or perfection of the Trust's ownership of the Funding Agreement and
Guarantee, the perfection of the Indenture Trustee's security interest therein,
or remedies under the Indenture in respect thereof may be governed by laws of a
jurisdiction other than the State of New York.
(b) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE TRUST, THE ASSETS OF
THE TRUST, THE INDENTURE TRUSTEE, REGISTRAR, TRANSFER AGENT OR PAYING AGENT OR
ANY OTHER AGENT, ARISING OUT OF OR RELATING TO THE INDENTURE, ANY NOTE OR ANY
PORTION OF THE COLLATERAL MAY BE BROUGHT IN A UNITED STATES FEDERAL COURT OF
COMPETENT JURISDICTION LOCATED IN NEW YORK CITY, THE BOROUGH OF MANHATTAN, AND
BY EXECUTION AND DELIVERY OF THE INDENTURE EACH OF THE TRUST, THE INDENTURE
TRUSTEE, THE REGISTRAR, THE TRANSFER AGENT, THE PAYING AGENT AND ANY OTHER AGENT
(IN SUCH CAPACITIES) ACCEPT (AND WITH RESPECT TO THE TRUST, IN CONNECTION WITH
ITS PROPERTY ACCEPTS), GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURT AND WAIVE ANY DEFENSE OF FORUM NON
CONVENIENS (EXCEPT TO THE EXTENT A UNITED STATES FEDERAL COURT RAISES SUCH ISSUE
ON ITS OWN MOTION) AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THE INDENTURE, ANY NOTE OR ANY PORTION OF THE
COLLATERAL.
SECTION 1.12. Waiver of Jury Trial. EACH OF THE PARTIES TO THE INDENTURE
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE INDENTURE, THE NOTES OR ANY
DEALINGS AMONG THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. The
scope of this waiver is intended to encompass any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Each party under the
Indenture acknowledges that this waiver is a material inducement to enter into a
business relationship, that such party has already relied on the waiver in
entering into the Indenture, and that such party will continue to rely on the
waiver in its related future dealings. Each party under the Indenture
17
further warrants and represents that it has reviewed this waiver with its legal
counsel, and that it knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THE INDENTURE OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE INDENTURE. In
the event of litigation, the Indenture may be filed as a written consent to a
trial by the court.
SECTION 1.13. Counterparts. The Indenture and any amendments, waivers,
consents or supplements to the Indenture may be executed in any number of
counterparts, and by different parties to the Indenture in separate
counterparts, and each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one and the
same instrument. The Indenture shall become effective upon the execution of a
counterpart of the Indenture by each of the parties to the Indenture.
SECTION 1.14. Third Party Beneficiaries. The Indenture will inure to the
benefit of and be binding upon the parties to the Indenture, and the Trustee and
their respective successors and permitted assigns.
SECTION 1.15. Conflict with Trust Indenture Act. If any provision of the
Indenture limits, qualifies or conflicts with any duties imposed by any of
Sections 310 to 317, inclusive, of the Trust Indenture Act through operation of
Section 318(c) thereof, such imposed duties shall control.
ARTICLE 2
THE NOTES
SECTION 2.01. Forms Generally.
(a) The Notes constitute direct, unconditional, unsubordinated and
secured non-recourse obligations of the Trust and rank equally among themselves.
The Notes shall be in substantially the form set forth in Exhibit X-0, Xxxxxxx
X-0 and Exhibit A-3 attached to the Indenture, as applicable, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required by the Indenture or as may in the Trust's judgment be necessary,
appropriate or convenient to permit such Notes to be issued and sold, or to
comply, or facilitate compliance, with applicable laws, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange on which such Notes may be listed, or as may, consistently
with the Indenture, be determined by the Trustee (based conclusively on the
advice of counsel) as evidenced by its execution thereof. Any portion of the
text of any Note may be set forth on the reverse thereof with an appropriate
reference on the face of the Note.
(b) The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made a part of the Indenture, and, to the extent
applicable, the Indenture Trustee, by its execution and delivery of the
Indenture, and the Trust by its execution and delivery of the Indenture,
expressly agree to such terms and provisions and to be bound thereby.
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(c) Except as described in this Section 2.01(c), no Global Note
evidencing any of the Notes and deposited with or on behalf of any Clearing
System shall be exchangeable for Definitive Notes. Subject to the foregoing
sentence, if (i) such Clearing System notifies Principal Life that it is
unwilling or unable to continue as Depositary or Principal Life becomes aware
that the Clearing System has ceased to be a clearing agency registered under the
Securities Exchange Act and in any such case Principal Life fails to appoint a
successor depositary within sixty (60) calendar days after receiving the notice
from such Clearing System or becoming aware that such Clearing System is no
longer registered under the Exchange Act, (ii) an Event of Default shall have
occurred and is continuing with respect to the Notes or (iii) the Trust shall
have decided in its sole discretion that the Notes should no longer be evidenced
solely by one or more Global Notes, then, pursuant to written instructions by
Principal Life to the Indenture Trustee (in the case of clause (i)), or upon
written request of the Holder (or accountholder of such Clearing System with an
interest in the Notes) (in the case of clause (ii)), or pursuant to written
instructions by the Trust to the Indenture Trustee and Clearing System (in the
case of clause (iii)):
(A) with respect to each Global Note evidencing such Notes, the Trust
shall execute, and the Indenture Trustee shall authenticate and
deliver, Definitive Notes in authorized denominations in exchange for
the Global Note, in an aggregate principal amount equal to the
Outstanding principal amount of the related Global Note. Upon the
exchange of the Global Note for the Definitive Notes, such Global Note
shall be cancelled by the Registrar. Definitive Notes issued in
exchange for a Global Note pursuant to this Section 2.01(c) shall be
registered in the Register in such names and in such denominations as
the Clearing System for such Global Note, pursuant to the instructions
from its direct or indirect participants or otherwise, shall instruct
the Indenture Trustee, serving as custodian, on behalf of the nominee
of the Depositary, of the Global Note. The Indenture Trustee shall
immediately provide the information to the Registrar. Immediately
after the authentication of the Definitive Notes by the Indenture
Trustee, the Indenture Trustee shall deliver such Definitive Notes to
the Holders of such Notes;
(B) if Definitive Notes are issued in exchange for any portion of a Global
Note after the close of business at the Office or Agency for such Note
where such exchange occurs on (1) any Regular Record Date for such
Notes and before the opening of business at such Office or Agency on
the next Interest Payment Date, or (2) any Special Record Date for
such Notes and before the opening of business at such Office or Agency
on the related proposed date for payment of interest or Defaulted
Interest, as the case may be, interest shall not be payable on such
Interest Payment Date or proposed date for payment, as the case may
be, in respect of such Definitive Notes, but shall be payable on such
Interest Payment Date or proposed date for payment, as the case may
be, only to the Person to whom interest in respect of such portion of
such Global Note shall be payable in accordance with the provisions of
the Indenture; and
(C) if for any reason Definitive Notes are not issued, authenticated and
delivered to the Holders in accordance with paragraph (A) of this
Section 2.01(c), then:
19
(1) the Clearing System or its successors may provide to
each of its accountholders a statement of such accountholder's
interest in the Notes evidenced by each Global Note held by such
Clearing System or its successors, together with a copy of such
Global Note; and
(2) subject to the limitations on individual Holder action
contained in the Notes or the Indenture, each such accountholder
or its successors and assigns (x) shall have a claim, directly
against the Trust, for the payment of any amount due or to become
due in respect of such accountholder's interest in the Notes
evidenced by such Global Note, and shall be empowered to bring
any claim, to the extent of such accountholder's interest in the
Notes evidenced by such Global Note and to the exclusion of such
Clearing System or its successors, that as a matter of law could
be brought by the Holder of such Global Note and the Person in
whose name the Notes are registered and (y) may, without the
consent and to the exclusion of such Clearing System or its
successors, file any claim, take any action or institute any
proceeding, directly against the Trust, to compel the payment of
such amount or enforce any such rights, as fully as though the
interest of such accountholder in the Notes evidenced by such
Global Note were evidenced by a Definitive Note in such
accountholder's actual possession and as if an amount of Notes
equal to such accountholder's stated interest were registered in
such accountholder's name and without the need to produce such
Global Note in its original form.
Notwithstanding anything in this paragraph (C) to the contrary, the
Indenture Trustee shall not be required to recognize any account
holder or any of its successors and assigns referred to in said
paragraph as a Holder for any purpose of the Indenture or the Notes
and shall be entitled to treat the Person in whose name the Global
Note is registered as a Holder for all purposes of the Indenture and
the Notes if and until Definitive Notes are issued to and registered
in the names of such accountholders or their successors and assigns.
The account records of any Clearing System or its successor shall, in the
absence of manifest error, be conclusive evidence of the identity of each
accountholder that has any interest in the Notes evidenced by the Global Note
held by such Clearing System or its successor and the amount of such interest.
Definitive Notes shall be issued only in denominations as specified in the
relevant Pricing Supplement.
(d) Subject to the other provisions of the Indenture, if any Global
Note is exchanged for Definitive Notes, then:
(i) the Trust, the Indenture Trustee and any Paying Agent will
have the right to treat each Holder of Definitive Notes as the Person
exclusively
20
entitled to receive interest and other payments or property in respect
of or in exchange for the Notes, and otherwise to exercise all the
rights and powers with respect to any Note (subject to the record date
provisions of the Indenture and of the Notes); and
(ii) the obligation of the Trust to make payments of principal,
premium, if any, interest and other amounts with respect to the Notes
shall be discharged at the time payment in the appropriate amount is
made in accordance with the Indenture to each Holder.
SECTION 2.02. No Limitation on Aggregate Principal Amount of Notes. The
aggregate principal amount of Notes which may be authenticated and delivered
under the Indenture is unlimited. Unless otherwise specified in the applicable
Pricing Supplement, the Notes shall be issued in denominations of $1,000 and any
larger amount that is a multiple of $1,000; the authorized denominations of
Notes that have a Specified Currency other than U.S. Dollars will be the
appropriate equivalent in such Specified Currency. The specific terms and
conditions of the Notes shall be set out in a Pricing Supplement and, if
applicable, a supplemental indenture entered into pursuant to Section 8.01(e).
SECTION 2.03. Listing. If specified in the Pricing Supplement, the Notes
will be listed on the securities exchange set forth in such Pricing Supplement.
SECTION 2.04. Redemption and Repayment.
(a) Except as otherwise provided in the Pricing Supplement, a
supplemental indenture and the Notes or in Section 6.02, the Trust will redeem
the Notes only if Principal Life redeems the Funding Agreement securing such
Notes in an amount equal to the amount of the related Notes to be redeemed in
accordance with the terms of the Indenture and the Notes, and the Trust will not
redeem the Notes if Principal Life does not redeem the Funding Agreement
securing such Notes in an amount equal to the amount of the Notes to be redeemed
in accordance with the Indenture and the Notes. Unless otherwise specified in
the relevant Pricing Supplement and a supplemental indenture or the Notes, the
Trust may not redeem the Notes after the date that is thirty (30) calendar days
prior to the Stated Maturity Date.
(b) If, but only if, specified in the Pricing Supplement and a
supplemental indenture or the Notes, such Notes will be repayable at the option
of the Holders thereof in accordance with the repayment provisions included in
the Pricing Supplement and supplemental indenture or the Notes.
(c) In connection with the redemption by the Trust of the Notes under
Section 2.04(a), upon receipt by the Trust of notice of redemption of the
Funding Agreement from Principal Life, the Trust will promptly give written
notice of such redemption to the Indenture Trustee and the Indenture Trustee
will give written notice to the Holders in accordance with Section 1.06 not less
than thirty (30) calendar days and no more than sixty (60) calendar days prior
to the date set for such redemption. All notices of redemption shall identify
the Notes to be redeemed (including the CUSIP numbers) and shall state:
(i) the redemption date;
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(ii) the Redemption Price or, if not then ascertainable, the
manner of calculation thereof;
(iii) that on the redemption date the Redemption Price will
become due and payable on the Notes to be redeemed and that interest
thereon will cease to accrue on and after said date; and
(iv) the place or places where the Notes to be redeemed are to be
surrendered for payment of the Redemption Price.
(d) Prior to 10:00 a.m. New York City time on the redemption date, the
Trust shall deposit with the Paying Agent an amount of money sufficient to pay
the Redemption Price of and accrued and unpaid interest on all Notes which are
to be redeemed on that date.
(e) Upon notice of redemption having been given pursuant to Section
2.04(c), the Notes to be so redeemed shall, on the redemption date, become due
and payable at the Redemption Price therein specified, and from and after such
date (unless the Trust shall default in the payment of the Redemption Price and
accrued interest, if any) such Notes shall cease to bear or accrue any interest.
Upon surrender of the Notes for redemption in accordance with said notice, such
Notes shall be paid by the Trust at the Redemption Price, together with any
accrued but unpaid interest to but not including the redemption date.
(f) The election of the Trust to redeem any Notes shall be evidenced
by a Trust Certificate. In case of any redemption at the election of the Trust,
the Trust shall, at least forty-five (45) calendar days prior to the redemption
date fixed by the Trust (unless a shorter notice shall be satisfactory to the
Indenture Trustee), notify the Indenture Trustee of such redemption date, and of
the principal amount of Notes to be redeemed. In the case of any redemption of
Notes (a) prior to the expiration of any restriction on such redemption provided
in the terms of such Notes or elsewhere in the Indenture, or (b) pursuant to an
election of the Trust which is subject to a condition specified in the terms of
such Notes or elsewhere in the Indenture, the Trust shall furnish the Indenture
Trustee with a Trust Certificate evidencing compliance with such restriction or
condition.
(g) If less than all of the Notes are to be redeemed (unless such
redemption affects only a single Note), the particular Notes to be redeemed
shall be selected not more than sixty (60) calendar days prior to the redemption
date by the Indenture Trustee, from the Outstanding Notes not previously called
for redemption, by lot or pro rata, in its reasonable discretion, in accordance
with the customary procedures of the Indenture Trustee; provided that the
unredeemed portion of the principal amount of any Note shall be in an authorized
denomination (which shall not be less than the minimum authorized denomination)
for such Note; provided further, that if at the time of redemption such Notes
are registered as Global Notes, the Depositary shall determine, in accordance
with its procedures, the principal amount of such Notes to be redeemed by each
of the Depositary's participants.
The Indenture Trustee shall promptly notify the Trust in writing of
the Notes selected for redemption as aforesaid and, in the case of any Notes
selected for partial redemption as aforesaid, the principal amount thereof to be
redeemed.
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For all purposes of the Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Notes redeemed or to be redeemed only in part, to the portion of
the principal amount of such Notes which has been or is to be redeemed.
(h) Any Note which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Trust or the Indenture Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Trust and the Indenture Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Trust shall
execute, and the Indenture Trustee shall authenticate and deliver to the Holder
of such Note without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Note so
surrendered.
(i) The Notes will not be subject to, or entitled to the benefit of,
any sinking fund unless otherwise specified in the Pricing Supplement and a
supplemental indenture of the Notes.
SECTION 2.05. Execution, Authentication and Delivery Generally.
(a) Upon the execution of any terms agreement pursuant to the
Distribution Agreement (if the Relevant Agents agree to purchase the Notes on a
principal basis), the acceptance of an offer to purchase Notes solicited by the
Relevant Agents on an agency basis, or the acceptance of a direct offer of Notes
for sale by the Trust, the Trust shall, as soon as practicable but in any event
(unless otherwise agreed by the parties) not later than 11:00 a.m. (New York
time) on the second Business Day following the date of Principal Life's
acceptance of the offer for the purchase of Notes:
(i) confirm by fax to the Indenture Trustee, the Paying Agent and
the Registrar, all such information as the Indenture Trustee, the
Paying Agent or the Registrar may reasonably require to carry out
their respective functions under the Indenture, including, in
particular, the settlement and payment procedures that will apply to
the relevant Notes and, if applicable, the account of the Trust to
which payment should be made;
(ii) deliver a copy of the Pricing Supplement or duly executed
supplemental indenture in relation to the relevant Notes to the
Indenture Trustee, the Paying Agent and the Registrar; and
(iii) unless a Global Note is to be used and the Trust shall have
provided such Global Note to the Registrar pursuant to Section
2.05(c), ensure that there is delivered to the Registrar a stock of
Definitive Notes (in unauthenticated form and with the names of the
registered Holders left blank but duly executed on behalf of the Trust
and otherwise complete) in relation to the relevant Notes.
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(b) The Trust will deliver to the Indenture Trustee on the Original
Issue Date for the Notes a duly executed original of the Funding Agreement,
Guarantee and Trust Agreement (unless previously delivered) and all
documentation relating to the foregoing for the Notes.
(c) The Trust may, at its option, and shall, at the request of the
Registrar, deliver from time to time to the Registrar a stock of Global Notes
(in unauthenticated form but duly executed on behalf of the Trust).
(d) The Registrar shall, having been advised in accordance with
Section 2.05(a) on behalf of the Trust, on which securities exchange, if any,
the Notes are to be listed, deliver a copy of the Pricing Supplement or
supplemental indenture in relation to each relevant Notes to such exchange or
the relevant listing agent for such exchange as soon as practicable but in any
event no later than two (2) Business Days prior to the proposed Original Issue
Date therefor.
(e) Having received from the Trust the documents referred to in
Section 2.05(a), (b) and (c) (to the extent applicable) (such documents
constituting for all purposes of the Indenture a Trust Order for the
authentication and delivery of the applicable Notes), on or before 10:00 a.m.
(New York time) on the Original Issue Date in relation to the Notes (unless
otherwise agreed by the parties), the Indenture Trustee shall authenticate and
deliver the relevant Global Note to the relevant custodian for DTC and/or any
other relevant Clearing System or otherwise in accordance with such Clearing
System's procedures. The Indenture Trustee shall give instructions to DTC and/or
any other relevant Clearing System to credit Notes represented by a Global Note
registered in the name of a nominee for such Clearing System, to the Indenture
Trustee's distribution account and to hold each such Note to the order of the
Trust pending delivery to the Relevant Agent(s) on a delivery against payment
basis (or on such other basis as shall have been agreed between the Trust and
the Relevant Agent(s) and which the Indenture Trustee has been notified) in
accordance with the normal procedures of DTC or such other Clearing System, as
the case may be and, following payment (unless otherwise agreed), to debit the
Notes represented by such Global Note to such securities account(s) as shall
have been notified in writing to the Indenture Trustee by the Trust. The
Indenture Trustee shall on the Original Issue Date in respect of the relevant
Notes, and upon receipt of funds from the Relevant Agent(s), transfer, or cause
to be transferred, the proceeds of issue (net of any applicable commissions,
fees or like amounts specified in writing by Principal Life) to or as directed
by Principal Life on behalf of the Trust to satisfy the deposit requirement
pursuant to the Funding Agreement (as specified by Principal Life in such
direction).
If no such securities account(s) shall have been specified, or the
relevant Notes is not intended to be cleared through any Clearing System, the
Indenture Trustee shall authenticate and make available at its specified office
on the Original Issue Date in respect of the relevant Notes the relevant Global
Note or the relevant Definitive Notes, as the case may be, duly executed and
made available to the Indenture Trustee by the Trust.
(f) If the Indenture Trustee should pay an amount (an "ADVANCE") to
the Trust in the belief that a payment has been or will be received from the
Relevant Agents, and if such payment is not received by the Indenture Trustee on
the date that the Indenture Trustee pays the Trust, the Trust shall forthwith
repay the advance (unless prior to such repayment the payment is received from
the Relevant Agents) and shall pay interest on such amount which shall accrue
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(after as well as before judgment) on the basis of a year of 360 days (365 days
(366 days in the case of a leap year) in the case of an advance paid in
Sterling) and the actual number of days elapsed from the date of payment of such
advance until the earlier of (i) repayment of the advance or (ii) receipt by the
Indenture Trustee of the payment from the Relevant Agents, and at the rate per
annum which is the aggregate of one per cent per annum and the rate determined
and certified by the Indenture Trustee and expressed as a rate per annum as
reflecting its cost of funds for the time being in relation to the unpaid
amount.
(g) The Notes shall be executed on behalf of the Trust by a
Responsible Officer of the Trustee. The signature of any of these officers on
the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time Responsible Officers of the Trustee shall bind the Trust,
notwithstanding that any such individuals have ceased to hold such offices prior
to the authentication and delivery of such Notes or did not hold such offices at
the date of such Notes.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for in the
Indenture executed by the Indenture Trustee by manual signature of an authorized
officer, and such certificate upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
under the Indenture.
The Indenture Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Notes of 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
By:_______________________
Authorized Signatory
Notes bearing the manual signatures of individuals who were at any
time authorized officers of the Indenture Trustee shall bind the Trust,
notwithstanding that any such individuals have ceased to hold such offices prior
to the delivery of such Notes or did not hold such offices at the date of such
Notes.
In authenticating Notes under the Indenture, the Indenture Trustee
shall be entitled to conclusively assume that any Note authenticated by it has
been duly executed on behalf of, and is a legal, valid, binding and enforceable
obligation of, the Trust and is entitled to the benefits of the Indenture, and
that the Trust Agreement, the Funding Agreement and the
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Guarantee have been duly executed by, and are the legal, valid, binding and
enforceable obligations of, the parties thereto.
(h) The Trust undertakes to notify the Paying Agent, the Registrar
and, if different, the Indenture Trustee, in writing, of any changes in the
identity of the agents appointed generally in respect of the Program.
SECTION 2.06. Registration. All Notes shall be registered and may be
represented either as Global Notes or Definitive Notes. Unless otherwise
specified in the relevant Pricing Supplement, Global Notes will be registered in
the name of a nominee for, and deposited with, a custodian for DTC. The
Registrar shall maintain a register (in the Indenture sometimes referred to as
the "REGISTER") in which, subject to such reasonable regulations as it may
prescribe, the Registrar shall provide for the registration of the Notes and
registration of transfer of the Notes. The Register shall be in written form in
English or in any other form capable of being converted into such form within a
reasonable time. The Indenture Trustee is hereby initially appointed as the
Registrar. In the event that the Indenture Trustee shall not be the Registrar,
it shall have the right to examine the Register at all reasonable times. Subject
to the definition of "Outstanding" in Section 1.01, the Trust, the Indenture
Trustee, the Registrar or the Paying Agent or any other Agent may become the
owner or pledgee of Notes and may deal with such Notes with the same rights of
any other Holder of such Notes.
SECTION 2.07. Transfer.
(a) Subject to Section 2.01(c) and (d), (A) upon surrender for
registration of transfer of any Note in accordance with its terms, the Trustee,
on behalf of the Trust shall execute, and the Indenture Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes denominated as authorized in or pursuant to
the Indenture, of a like aggregate principal amount bearing a number not
contemporaneously outstanding and containing identical terms and provisions and
(B) at the option of the Holder, Notes may be exchanged, in accordance with
their terms, for other Notes containing identical terms and provisions, in any
authorized denominations, and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at the Office or Agency of the Indenture
Trustee. Whenever any Notes are surrendered for exchange as contemplated by this
Section 2.07(a), the Trust shall execute, and the Indenture Trustee shall
authenticate and deliver, the Notes which the Holder making the exchange is
entitled to receive. Definitive Notes shall not be exchanged for Global Notes.
Beneficial interests in Global Notes may be transferred or exchanged only
through the Depositary. No Global Note may be transferred except as a whole by a
nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or another nominee of the Depositary to a
successor of the Depositary or a nominee of a successor to the Depositary. With
respect to any Global Note, the Depositary or its nominee is the Holder of such
Global Note for the purposes of the Indenture. Except as set forth in Section
2.01(c), the beneficial owners of any Global Note will not be entitled to
receive Definitive Notes and shall not be considered "Holders" under the
Indenture.
(b) All Notes issued upon a registration of transfer or exchange of
Notes shall be the valid obligations of the Trust evidencing the same debt and
entitling the Holders thereof to
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the same benefits under the Indenture as the Notes surrendered upon such
registration of transfer or exchange.
(c) No service charge shall be made for any registration of transfer
or exchange, of Notes, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes (other than
certain exchanges not involving any transfer).
SECTION 2.08. Mutilated, Destroyed, Lost and Stolen Notes.
(a) If (i) any mutilated Note is surrendered to the Indenture Trustee
directly or through any Paying Agent or (ii) in the case of an alleged
destroyed, lost or stolen Note, the Indenture Trustee receives evidence to its
satisfaction of the destruction, loss or theft of the Note and there is
delivered to the Indenture Trustee, the Registrar and the Trust such security or
indemnity as may be required by the Indenture Trustee, the Registrar and the
Trust to save the Indenture Trustee, the Registrar and the Trust harmless, then
in either case the Trust shall execute and the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of such mutilated,
destroyed, lost or stolen Note, a new Note, of the same maturity, tenor and
principal amount as such mutilated, destroyed, lost or stolen Note, bearing a
number not contemporaneously outstanding; provided, however, that if any such
mutilated, destroyed, lost or stolen Note shall have become or shall be about to
become due and payable, instead of issuing a new Note, the Trust may pay such
Note without surrender of such Note, except that any mutilated Note shall be
surrendered.
(b) Upon the issuance of any new Note under this Section 2.08, the
Indenture Trustee or the Trust may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee, Registrar or any Paying Agent) in connection therewith.
(c) Every new Note issued pursuant to this Section 2.08 in lieu of any
destroyed, lost or stolen Note shall constitute a separate obligation of the
Trust, whether or not the destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of the
Indenture equally and proportionately with any and all other Notes duly issued
under the Indenture. The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.09. Payment of Interest; Rights To Interest Preserved.
(a) The Notes shall bear interest at a rate and on terms stated on the
Notes.
(b) Any interest on any Note which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date, shall be paid to the Person
in whose name that Note is registered at the close of business on the Regular
Record Date for such interest payment (except that interest, if any, on any Note
due on the Maturity Date will be paid to the Person to whom the principal of the
Note is paid).
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(c) Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (in the Indenture called
"DEFAULTED INTEREST") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of their having been such Holder, and
such Defaulted Interest shall be paid by the Trust to the Persons in whose names
such Notes (or their respective predecessor Notes) are registered at the close
of business on a Special Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The Trust shall notify the
Indenture Trustee in writing of the amount of Defaulted Interest proposed to be
paid on each Note and the date of the proposed payment. Thereupon the Indenture
Trustee shall fix a date for the payment of such Defaulted Interest which shall
be not more than fifteen (15) days and not less than ten (10) days prior to the
date of the proposed payment and not less than ten (10) days after the receipt
by the Indenture Trustee of the notice of the proposed payment (the "SPECIAL
RECORD DATE"). The Indenture Trustee shall promptly notify the Trust of such
Special Record Date and, in the name of the Trust shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor
to be given to each Holder in accordance with Section 1.06. The Trust may make
payment of any Defaulted Interest on the Notes in any other lawful manner not
inconsistent with the requirements of any securities exchange, if any, on which
such Notes may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Trust to the Indenture Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Indenture Trustee. Subject to the foregoing provisions of
this Section, each Note delivered under the Indenture upon registration of
transfer of or in exchange for or in lieu of any other Note shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Note.
SECTION 2.10. Cancellation. All Notes surrendered for payment, registration
of transfer or exchange shall, if surrendered to any Person other than the
Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly
cancelled by it. Principal Life or any Affiliate thereof shall promptly deliver
to the Indenture Trustee for cancellation any Note previously authenticated and
delivered under the Indenture that Principal Life or such Affiliate may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Indenture Trustee. No Notes shall be authenticated in lieu of
or in exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by the Indenture. All cancelled Notes held by the Indenture
Trustee shall be disposed of by the Indenture Trustee in accordance with its
customary procedures, unless the Trust shall otherwise direct by a Trust Order.
SECTION 2.11. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any 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 any Note is registered as
the absolute and sole owner of such Note for the purpose of receiving payment of
the principal of, any premium, or interest on or any Additional Amounts with
respect to such Note and for all other purposes whatsoever, whether or not such
Note shall be overdue, and, except as otherwise required by applicable law, 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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SECTION 2.12. Tax Treatment; Tax Returns and Reports.
(a) The Trust agrees, and by acceptance of a beneficial interest in a
Note, each holder of a beneficial interest in a Note agrees, for U.S. federal,
state and local income and franchise tax purposes, to (i) disregard the Trust
and (ii) treat such Note as debt of Principal Life.
(b) The Trust Agreement provides that the Trustee shall prepare and
file or cause to be prepared or filed, consistent with the treatment of the
Trust as disregarded, all federal, state and local income tax and
information returns and reports required to be filed with respect to the Trust
and the Notes under any applicable federal, state or local tax statute or any
rule or regulation under any of them. The Trust Agreement provides that the
Trustee shall keep copies or cause copies to be kept of any such tax and
information returns and reports required to be filed. The Indenture Trustee
agrees to provide to the Trustee such information, upon receipt of written
request from the Trust, as is necessary for the Trustee to fulfill its
obligations under this Section 2.12.
SECTION 2.13. No Association. Nothing set forth in the Indenture shall be
construed to constitute the Holders of Notes, from time to time, as members of
an association.
SECTION 2.14. Administrative Procedures. The Indenture Trustee shall comply
with the Procedures (as defined in the Distribution Agreement), as they may be
amended from time to time in accordance with the terms of the Distribution
Agreement.
ARTICLE 3
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Payment of Principal and any Premium, Interest and Additional
Amounts. The Trust covenants and agrees, for the benefit of the Holders of the
Notes, that it will:
(a) Pay or cause to be paid to the Paying Agent on or before the date
on which any payment becomes due, an amount equal to the amount of principal
(and premium, if any) and interest and any Additional Amount (if applicable)
payable in respect of the Notes then becoming due in respect of the Notes.
(b) Pay each amount payable to the Paying Agent under Section 3.01(a)
by transfer of immediately available funds denominated in the Specified Currency
not later than 10:00 a.m. (at the Place of Payment) on the date when such
amounts are due and payable in respect of the Notes.
(c) Confirm, before 10:00 a.m. (at the Place of Payment) on the second
Business Day before the due date of each payment by it under Section 3.01(a) to
the Paying Agent by confirmed facsimile, that irrevocable instructions have been
given by it, for the transfer of the relevant funds to the Paying Agent and the
name and the account of the bank through which such payment is being made.
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For purposes of this Section 3.01, an installment of principal, premium, if any,
or interest and any other amount payable in respect of the Notes shall be
considered paid on the date it is due if the Trust has deposited, or caused to
be deposited, with the Paying Agent by such date money designated for, and
capable of being applied towards, and sufficient to pay such installment.
SECTION 3.02. Collection Account. The Indenture Trustee shall, on or prior
to the initial Original Issue Date, establish a non-interest bearing account
with the Indenture Trustee or such other depository institution that is rated at
least AA- or Aa3 by a nationally recognized statistical rating organization as
may be designated by the Trustee, in the name of the Trust, which account shall
collect payments received under the applicable Funding Agreement and/or related
Guarantee and shall be segregated from other accounts held by the Indenture
Trustee or such other depositary institution.
SECTION 3.03. Agreements of the Paying Agent. The Paying Agent agrees that:
(a) The Paying Agent shall be entitled to deal with each amount paid
to it under the Indenture in the same manner as other amounts paid to it as a
banker by its customers provided that:
(i) the Paying Agent shall not, against the Trust or any Holder
of a Note, exercise any lien, right of set-off or similar claim in
respect thereof (except as otherwise provided or permitted under the
Indenture);
(ii) the Paying Agent shall not be liable to any Person for
interest thereon;
(iii) the Paying Agent need not segregate any money held by it
except as required by law or as otherwise provided under the
Indenture; and
(iv) the Paying Agent shall comply with the provisions of Section
317(b) of the Trust Indenture Act and agrees that it will, during the
continuance of any default by the Trust (or any other obligor upon the
Notes) in the making of any payment in respect of the Notes, upon the
written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums held in trust by such Paying Agent for
payment in respect of the Notes.
(b) The Paying Agent shall pay or cause to be paid by transfer of
immediately available funds denominated in the Specified Currency to the Holders
all moneys received by the Paying Agent for such purpose from the Trust pursuant
to Section 3.01. In the event a Note is issued between a Regular Record Date or
Special Record Date and the related Interest Payment Date, interest for the
period beginning on the original issue date for such Note or the previous
Interest Payment Date, as the case may be, and ending on the subject Interest
Payment Date will be paid on the immediately following Interest Payment Date to
the Person who was the registered Holder of such Note as of the immediately
preceding Regular Record Date. With respect to Global Notes, the Paying Agent
shall pay principal, premium, if any, interest and any other amounts due on such
Global Notes in accordance with the Notes and the arrangements established by
and between the Paying Agent and the Depositary. Notwithstanding anything in the
Indenture to the contrary, payments of principal and premium, if any, in respect
of Definitive
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Notes on the Maturity Date shall be made as provided in or pursuant to the
Indenture in immediately available funds against presentation and surrender of
the relevant Definitive Notes at the designated office of the Registrar in The
City of New York, as provided in the Indenture or in the applicable Definitive
Note. Payments of interest and other amounts due and owing, if any, on the
Maturity Date of Definitive Notes shall be made to the Person to whom payment of
the principal thereof and premium, if any, thereon shall be made.
Notwithstanding anything in the Indenture to the contrary, interest on
Definitive Notes other than on the Maturity Date shall be paid to the person
shown in the applicable Register at the close of business on the Regular Record
Date or Special Record Date, as applicable, as provided in or pursuant to the
Indenture before the due date for payment thereof. Notwithstanding anything in
the Indenture to the contrary, payments of interest and other amounts due and
owing on each Definitive Note other than the Maturity Date shall be made in the
currency in which such payments are due by check drawn on a bank in the
Principal Financial Center of the country of the Specified Currency and mailed
to the holder (or to the first named of joint holders) of such Definitive Note
at its address appearing in the applicable Register. Notwithstanding the
foregoing, the Paying Agent shall make, or cause to be made, payments of
interest and other amounts due and owing, if any, on a Definitive Note on any
Interest Payment Date other then the Maturity Date to each Holder of $10,000,000
(or, if the Specified Currency is other than United States dollars, the
equivalent thereof in the particular Specified Currency) or more in aggregate
principal amount of Definitive Notes by wire transfer of immediately available
funds if the applicable Holder has delivered appropriate wire transfer
instructions in writing to the Paying Agent not less than fifteen (15) calendar
days prior to the particular Interest Payment Date. Any such wire transfer
instructions received by the Paying Agent shall remain in effect until revoked
by the applicable Holder. All moneys paid to the Paying Agent by the Trust in
respect of any Note shall be held by the Paying Agent from the moment when such
moneys are received until the time of actual payment thereof, for the persons
entitled thereto, and shall be applied in accordance with Section 3.03 (c)
through (g); provided, that the obligation of the Paying Agent to hold such
moneys shall be subject to the provisions of Section 3.08.
(c) The Paying Agent acting through its specified office shall make
payments of interest and Additional Amounts (if applicable) or, as the case may
be, principal in respect of the Notes in accordance with the terms thereof and
of the Indenture, provided that such Paying Agent shall not be obliged (but
shall be entitled) to make such payments if it is not able to establish that it
has received (whether or not at the due time) the full amount of the relevant
payment due to it under Section 3.01(a). Payment of any Note redemption amount
(together with accrued interest) due in respect of Notes will be made against
presentation and surrender of the relevant Notes at the specified office of the
Paying Agent, subject to Section 2.04(h). Payment of amounts (whether principal,
interest or otherwise) due in respect of Notes will be paid by the Paying Agent
to the Holder thereof (or, in the case of joint Holders, the first named) which
shall be the person appearing as Holder in the register kept by the Registrar as
at the close of business (local time in the place of the specified office of the
Registrar) on the Regular Record Date.
(d) If a Paying Agent makes any payment in accordance with paragraph
(c), it shall be entitled to appropriate for its own account out of the funds
received by it under Section 3.01(a) an amount equal to the amount so paid by
it.
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(e) If a Paying Agent makes a payment in respect of Notes at a time at
which it has not received the full amount of the relevant payment due to it
under Section 3.01(a) and is not able to reimburse itself out of funds received
by it under Section 3.01(a) therefor by appropriation under paragraph (e), the
Trust shall from time to time on demand pay to the Paying Agent for its own
account:
(i) the amount so paid out by such Paying Agent and not so
reimbursed to it; and
(ii) interest on such amount from the date on which such Paying
Agent made such payment until the date of reimbursement of such
amount;
provided that any payment made under clause (i) above shall satisfy
pro tanto the Trust's obligations under Section 3.01(a).
(f) Interest shall accrue for the purpose of clause (ii) of paragraph
(f) (as well after as before judgment) on the basis of a year of 360 days (365
days (366 days in the case of a leap year) in the case of an amount in Sterling)
and the actual number of days elapsed and at the rate per annum which is the
aggregate of one percent per annum and the rate per annum specified by the
Paying Agent as reflecting its cost of funds for the time being in relation to
the unpaid amount.
(g) If at any time and for any reason a Paying Agent makes a partial
payment in respect of any Note surrendered for payment to it, such Paying Agent
shall endorse thereon and in the Register a statement indicating the amount and
date of such payment.
SECTION 3.04. Maintenance of Office or Agency.
(a) The Trust will maintain in the Place of Payment an Office or
Agency where Notes may be presented or surrendered for payment, where Notes may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trust in respect of the Notes and the Indenture may be
served; provided, however, that if the Notes are listed on any stock exchange
and the rules of such stock exchange shall so require, the Trust shall maintain
an Office or Agency in any other required city so long as the Notes are listed
on such exchange. The Trust will give prompt written notice to the Indenture
Trustee of the location, and any change in the location, of such Office or
Agency. If at any time the Trust shall fail to maintain any such required Office
or Agency or shall fail to furnish the Indenture Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Indenture Trustee and the Trust
hereby appoints the Indenture Trustee as its agent to receive such respective
presentations, surrenders, notices and demands. The Trust shall promptly notify
the Indenture Trustee of the name and address of each Paying Agent (if different
than the Indenture Trustee) appointed by it and will notify the Indenture
Trustee of the resignation or termination of any Paying Agent.
(b) The Trust may also from time to time designate one or more other
Offices or Agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or
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rescission shall in any manner relieve the Trust of its obligation to maintain
the Offices or Agencies for Notes in the Place of Payment for the foregoing
purposes. The Trust shall give prompt written notice to the Indenture Trustee of
any such designation or rescission and of any change in the location of any such
Office or Agency.
(c) Unless otherwise provided in or pursuant to the Indenture, the
Trust hereby appoints the Indenture Trustee as Paying Agent, Registrar and
Transfer Agent.
SECTION 3.05. Duties of the Agents.
(a) The Trust shall provide to the Paying Agent sufficient copies of
all documents required to be available for inspection as provided in the
Registration Statement or the Pricing Supplement in respect of the Notes.
(b) To the extent permitted by applicable law, the Paying Agent shall
make available for inspection during normal business hours at its specified
office such documents as may be specified as so available at the specified
office of the Paying Agent in respect of the Notes, or as may be required by any
stock exchange on which the Notes may be listed.
(c) Notwithstanding anything to the contrary, the Trust shall be
solely responsible for ensuring that each Note to be issued or other
transactions to be effected under the Indenture shall comply with all applicable
laws and regulations of any governmental or other regulatory authority in
connection with any Note and that all necessary consents and approvals of,
notifications to and registrations and filings with, any such authority in
connection therewith are effected, obtained and maintained in full force and
effect.
(d) The Paying Agent shall collect all forms from Holders or, in the
case of Notes held in a Clearing System, from the relevant Clearing System, that
are required to exempt payments under the Notes, the related Guarantee, and/or
the related Funding Agreement, from United States federal income tax
withholding. The Paying Agent shall (i) withhold from each payment under the
Indenture or under any Note any and all United States federal or state
withholding taxes applicable thereto as required by law and (ii) file any
information reports as it may be required to file under applicable law.
(e) Each Agent shall be obligated to perform such duties and only such
duties as are set out in the Indenture and no implied duties or obligations
shall be read into the Indenture against such Agent.
(f) Each Agent shall be protected and shall incur no liability for or
in respect of any action taken, omitted or suffered in reliance upon any
instruction, request or order from the Trust or any notice, resolution,
direction, consent, certificate, affidavit, statement, facsimile, telex or other
paper or document (duly signed or which it believes in good faith to have been
duly signed, where applicable) which it believes in good faith to be genuine and
to have been delivered, signed or sent by the proper party or parties.
(g) Each Agent and any of its officers, directors, employees or
controlling persons may become the owner of, or acquire any interest in, any
Note, with the same rights that it or he would have if it or he were not
appointed under the Indenture, and may engage or be
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interested in, any financial or other transaction with the Trust, PFG or
Principal Life, or any Affiliate thereof, or may act as depositary, trustee or
agent for any committee or body of Holders, as freely as if it or he were not
appointed under the Indenture.
(h) Each Agent may consult with legal and other professional advisers
and the opinion of the advisers shall be full and complete protection in respect
of action taken, omitted or suffered under the Indenture in good faith and in
accordance with the opinion of the advisers.
(i) Under no circumstances will the Paying Agent or any other Agent be
liable to the Trust, or any other party to the Indenture for any consequential
loss (being loss of business, goodwill, opportunity or profit), punitive damages
or indirect loss even if advised of the possibility of such loss.
SECTION 3.06. Duties of the Transfer Agent. If and to the extent specified
in the terms and conditions of the Notes or if otherwise requested by the Trust
or Indenture Trustee, the Transfer Agent shall in compliance with the Notes and
the Indenture:
(a) Receive requests from Holders of Notes for the transfer of
Definitive Notes, inform the Registrar in writing of the receipt of such
requests, forward the deposited Definitive Note(s) to or to the order of the
Registrar and assist in the issuance of a new Definitive Note and in particular,
without limitation, notify the Registrar in writing of (i) the name and address
of the Holder of the Definitive Note, (ii) the serial number and principal
amount of the Definitive Note, (iii) in the case of a transfer of a portion of
the Note only, the principal amount of the Definitive Note to be so transferred
and (iv) the name and address of the transferee to be entered on the Register;
(b) Make available for collection by each relevant Holder new
Definitive Notes;
(c) Accept surrender of Definitive Notes and assist in effecting final
payment of the Notes on the due date for payment;
(d) Keep the Registrar informed of all transfers; and
(e) Carry out such other acts as may reasonably be necessary to give
effect to the Notes and the Indenture.
SECTION 3.07. Duties of the Registrar.
(a) The Registrar shall maintain a Register which shall show the
aggregate principal amount and date of issue of the Notes, the names and
addresses of the initial Holders thereof and the dates of all transfers to, and
the names and addresses of, all subsequent Holders thereof.
(b) The Registrar shall by the issue of new Notes, the cancellation of
old Notes and the making of entries in the Register give effect to transfers of
Notes in accordance with the Indenture.
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(c) The Trust may from time to time deliver to the Registrar Notes of
which it is the Holder for cancellation, whereupon the Registrar shall cancel
the same and shall make the corresponding entries in the Register.
(d) As soon as reasonably practicable but in any event within ninety
(90) calendar days after each date on which Notes fall due for redemption, the
Registrar shall notify the Trust of the serial numbers of any Notes against
surrender of which payment has been made and of the serial numbers of any Notes
(and the names and addresses of the Holders thereof) which have not yet been
surrendered for payment.
(e) The Registrar shall, upon and in accordance with the instructions
of the Trust but not otherwise, arrange for the delivery in accordance with the
Indenture of any notice which is to be given to the Holders of Notes and shall
supply a copy thereof to the Indenture Trustee and the Paying Agent.
(f) The Trust shall ensure that the Registrar has available to it
supplies of such Notes as shall be necessary in connection with the transfer of
Notes and the exchange of Global Notes for Definitive Notes. (g) The Registrar
shall make available, at the request of the Holder of any Note, forms of proxy
in a form and manner which comply with the provisions of the Indenture and shall
perform and comply with the provisions of the Indenture.
(h) The Trust shall provide to the Registrar:
(i) specimen Notes in definitive form; and
(ii) sufficient copies of all documents required to be available
for inspection as provided in the Registration Statement or the
Pricing Supplement in respect of the Notes, as may be required by any
securities exchange on which the Notes may be listed, or as may be
required by applicable law.
(i) The Registrar shall make available for inspection during normal
business hours at its specified office such documents as may be specified as so
available at the specified office of such Registrar, as may be required by any
securities exchange on which the Notes may be listed, or as may be required by
applicable law.
(j) The Registrar shall provide the Paying Agent and/or the Indenture
Trustee with all such information in the Registrar's possession with respect to
the Notes as the Paying Agent or the Indenture Trustee, as the case may be, may
reasonably require in order to perform the obligations set out in the Indenture.
(k) The Registrar shall ensure that in no event shall Definitive Notes
be exchanged for Global Notes.
SECTION 3.08. Unclaimed Monies. Any money deposited with the Indenture
Trustee, Registrar or the Paying Agent for the payment of the principal of,
premium, if any, or interest on
35
any Note and remaining unclaimed for two years after such principal or any such
premium or interest had become due and payable shall, unless otherwise required
by mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be paid to Principal Life pursuant to a Trust Request and pursuant to the
applicable Funding Agreement; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to Principal Life for payment thereof,
and all liability of the Indenture Trustee, Registrar or the Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Indenture Trustee, Registrar or the Paying Agent, before being required to make
any such repayment, may cause to be published once, in an Authorized Newspaper
in each Place of Payment or to be mailed to Holders, or both, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than thirty (30) calendar days from the date of such publication or
mailing, any unclaimed balance of such money then remaining will be repaid to
Principal Life.
SECTION 3.09. Protection of Collateral.
(a) The Trust shall, from time to time, execute and deliver all such
supplements and amendments to the Indenture and all such financing statements,
continuation statements, instruments of further assurance, and other
instruments, and take such other action as may be necessary or advisable to:
(i) create, perfect or maintain a perfected security
interest in, grant, or make or maintain a valid and effective
assignment for collateral purposes of, all or any portion of the
Collateral (including without limitation the Funding Agreement
and the Guarantee included therein);
(ii) maintain or preserve any Lien of the Indenture, the
Funding Agreement or the Guarantee or carry out more effectively
the purposes of the Indenture or thereof;
(iii) perfect, publish notice of, or protect the validity
of, any security interest or assignment for collateral purposes
made pursuant to the Indenture, the Funding Agreement or the
Guarantee;
(iv) enforce any portion, or obtain the full benefits, of
the Collateral (including without limitation the Funding
Agreement and the Guarantee included therein); and
(v) preserve and defend title to the Collateral and the
rights of the Indenture Trustee and of the Holders in the
Collateral held for the benefit and security of the Holders or
other instrument against the claims of all Persons.
The Trust hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required or permitted pursuant to this Section 3.09; provided,
however, that the duty of the Indenture Trustee to execute any instrument
required pursuant to this Section 3.09 shall arise only if any Responsible
Officer of the Indenture Trustee has actual knowledge of any failure of the
Trust to comply with the provisions of this Section 3.09.
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(b) The Trust will pay or cause to be paid all taxes and fees
incidental to such filing, registration and recording, and all expenses
incidental to the preparation, execution and acknowledgment of any instrument of
further assurance, and all Federal or state or jurisdiction of organization of
the Trust stamp taxes or other similar taxes, duties and charges arising out of
or in connection with the execution and delivery of such instruments; provided,
however, that the Trust shall not be required to pay or discharge or cause to be
paid or discharged any Lien affecting the Collateral to the extent such Lien is
being contested in good faith by appropriate proceedings. The Trust will at all
times preserve, warrant and defend the Indenture Trustee's title and right in
and to the property included in the Collateral against the claims of all
Persons.
(c) The Trust will faithfully observe and perform, or cause to be
observed and performed, all its covenants, agreements, conditions and
requirements contained in the Funding Agreement in accordance with the terms
thereof and will maintain the validity and effectiveness of the Funding
Agreement and the security interest therein or the assignment for collateral
purposes thereof to the Indenture Trustee. The Trust will take no action, nor
permit any action to be taken, which will release any party to the Funding
Agreement from any of its obligations or liabilities thereunder, or will result
in the termination, modification or amendment, or will impair the validity, of
the Funding Agreement except as expressly provided for in the Indenture and
therein. The Trust will give the Indenture Trustee written notice of any default
by any party to the Funding Agreement promptly after it becomes known to the
Trust.
(d) The Trust will faithfully observe and perform, or cause to be
observed and performed, all its covenants, agreements, conditions and
requirements contained in the Guarantee in accordance with the terms thereof and
will maintain the validity and effectiveness of the Guarantee and the security
interest therein or the assignment for collateral purposes thereof to the
Indenture Trustee. The Trust will take no action, nor permit any action to be
taken, which will release any party to the Guarantee from any of its obligations
or liabilities thereunder, or will result in the termination, modification or
amendment, or will impair the validity, of the Guarantee except as expressly
provided for in the Indenture and therein. The Trust will give the Indenture
Trustee written notice of any breach by any party to the Guarantee promptly
after it becomes known to the Trust.
(e) At the written request of the Indenture Trustee and also following
the occurrence of an "Event of Default" under the Funding Agreement or a breach
of PFG's obligations under the Guarantee, the Trust will, subject to the written
direction and control of the Indenture Trustee, take such action, or at the
Indenture Trustee's written request furnish funds sufficient to enable the
Indenture Trustee to take such action, as the Indenture Trustee may deem
necessary or advisable for enforcing payment when due, subject to applicable
notice and grace periods, under or pursuant to the Indenture, the Funding
Agreement or the Guarantee.
SECTION 3.10. Opinions as to Collateral; Annual Statement as to Compliance.
(a) On or before the 15th day of March of each calendar year, commencing
March 15, 2005, the Trust shall furnish or cause to be furnished to the
Indenture Trustee an Opinion of Counsel stating that, in the opinion of such
counsel, either (i) such action has been taken with respect to the recording,
filing, re-recording and re-filing of the Indenture, any indentures supplemental
to the Indenture and any other requisite documents and with respect to the
execution and filing of
37
any financing statements and continuation statements as is necessary to perfect
and/or maintain the perfection of liens, security interests and assignments for
collateral purposes created or effected pursuant to the Indenture with respect
to the Funding Agreement and the Guarantee that is part of any Collateral and
reciting the details of such action or (ii) in the opinion of such counsel no
such action is necessary to perfect and/or maintain the perfection of such lien,
security interest and/or assignment for collateral purposes. Such Opinion of
Counsel shall also describe the recording, filing, re-recording and re-filing of
the Indenture, any indentures supplemental to the Indenture and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to perfect and/or maintain the perfection of the liens, security interests and
assignments for collateral purposes created or effected pursuant to the
Indenture with respect to the Funding Agreement and the Guarantee that is part
of any Collateral until the 15th day of March in the following calendar year.
(b) On or before the 15th day of March in each calendar year, commencing
March 15, 2005, the Trust shall deliver to the Indenture Trustee a Trust
Certificate stating, as to each signer thereof, that in the course of the
performance by each signer of such Trust Certificate of his or her present
duties as a Responsible Officer of the Trustee, such signer would normally
obtain knowledge as to the existence of any condition or event which would
constitute a Default or an Event of Default and that to the best of such
signer's knowledge:
(i) a review of the fulfillment by the Trust and during such year
of its obligations under the Indenture has been made under the
supervision of such signer; and
(ii) the Trust has fulfilled in all material respects its
obligations under the Indenture throughout such year, or, if there has
been a Default or an Event of Default in the fulfillment of any such
obligation, specifying each such Default or Event of Default known to
such signer and the nature and status thereof.
(c) The Trust, pursuant to Section 314(a) of the Trust Indenture Act,
shall:
(i) file, or cause to be filed, with the Indenture Trustee,
within fifteen (15) days after the Trust or Principal Life is required
to file the same with the Commission and to the extent available to
the Trust, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Trust or Principal Life may be
required to file with the Commission in connection with the Program
pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act; or, if the Trust or Principal Life is not required to file
information, documents or reports pursuant to either of said Sections,
then it shall file, or cause to be filed, with the Indenture Trustee
and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which
may be required pursuant to Section 13 of the Securities Exchange Act
in respect of a security listed and registered on a national
38
securities exchange as may be prescribed from time to time in such
rules and regulations; provided that if, pursuant to any publicly
available interpretations of the Commission, the Trust or Principal
Life would not be required to make such filings in connection with the
Program under Section 314(a) of the Trust Indenture Act, then the
Trust or Principal Life shall not be required to make such filings;
(ii) file, or cause to be filed, with the Indenture Trustee and
the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission, such additional information,
documents and reports with respect to compliance by the Trust, with
the conditions and covenants of the Indenture as may be required from
time to time by such rules and regulations; and
(iii) transmit, or cause to be transmitted, within thirty (30)
days after the filing thereof with the Indenture Trustee, in the
manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, such summaries of any information, documents and
reports required to be filed by the Trust pursuant to paragraphs (i)
and (ii) of this Section 3.10(c) as may be required by rules and
regulations prescribed from time to time by the Commission.
(d) The Trust shall comply with the provisions of Section 314(d) of
the Trust Indenture Act.
SECTION 3.11. Performance of Obligations. The Trust may contract with other
Persons for the performance of the Trust's obligations under the Indenture
(other than the execution and delivery of Trust Requests, Trust Orders and Trust
Certificates) and the performance of such obligations by such other Persons
shall be deemed to be the performance thereof by the Trust, as applicable.
SECTION 3.12. Existence.
(a) The Trust will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights (charter and
statutory) and franchises as a trust formed under the jurisdiction set forth in
the Omnibus Instrument, as applicable, and, upon the advice of counsel, will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes or any portion of the Collateral. The
Trust will, promptly after any amendment or modification of the Trust Agreement,
send copies thereof to the Indenture Trustee and the Rating Agencies.
(b) The Trust will maintain books and records and bank accounts
separate from those of any other Person and any other trust organized under the
Program; will at all times hold itself out to the public as separate and
distinct from any Affiliates and each other trust organized under the Program;
and file or cause to be filed its own tax returns.
(c) The Trust shall maintain its assets and transactions separately
from those of any Affiliates and any other trust organized under the Program,
reflect such assets and transactions in financial statements separate and
distinct from those of any Affiliates and any
39
other trust organized under the Program and evidence such assets and
transactions by appropriate entries in books and records separate and distinct
from those of any Affiliates (including any other trust organized under the
Program).
SECTION 3.13. Reports; Financial Information; Notices of Defaults.
(a) The Trust shall promptly deliver to the Indenture Trustee copies
of all reports, statements and information received by it pursuant to the
Funding Agreement, the Guarantee or otherwise in respect of the Collateral.
(b) The Trust shall promptly inform the Indenture Trustee in writing
of the occurrence of any Default or Event of Default which is continuing of
which it has actual knowledge. Each notice given pursuant to this Section
3.13(b) shall be accompanied by a Trust Certificate setting forth details of the
occurrence referred to therein and stating what action, if any, the Trust has
taken or proposes to take with respect thereto.
(c) The Trust shall collect all forms (or, if applicable, copies of
such forms), if any, from the Paying Agent or Registrar (or from such other
persons as are relevant) that are required to exempt payments under the Notes,
the Guarantee or the Funding Agreement from United States federal income tax
withholding. In addition, the Trust shall execute and file such forms and take
such actions for United States federal income tax purposes as shall be
reasonable and necessary to ensure that payments of interest, principal, premium
and Additional Amounts, if applicable, in respect of the Notes, the Funding
Agreement or the Guarantee are not subject to United States federal withholding
or backup withholding tax.
(d) In accordance with Section 312(a) of the Trust Indenture Act, the
Trust shall furnish or cause to be furnished to the Indenture Trustee:
(i) semi-annually with respect to Notes not later than the 15th
day of March and the 15th day of September of each year or upon such
other dates as are set forth in or pursuant to a Trust Order or
indenture supplemental to the Indenture a list, in each case in such
form as the Indenture Trustee may reasonably require, of the names and
addresses of Holders as of the applicable date, and
(ii) at such other times as the Indenture Trustee may request in
writing, within thirty (30) days after the receipt by the Trust of any
such request, a list of similar form and content as of a date not more
than fifteen (15) days prior to the time such list is furnished,
provided, however, that so long as the Indenture Trustee is the Registrar no
such list shall be required to be furnished.
(e) The Indenture Trustee shall comply with the obligations imposed
upon it pursuant to Section 312 of the Trust Indenture Act.
Every Holder, by receiving and holding Notes, agrees with the Trust
and the Indenture Trustee that neither the Trust, the Indenture Trustee, the
Paying Agent or the Registrar shall be held accountable by reason of the
disclosure of any such information as to the names and
40
addresses of the Holders in accordance with Section 312(c) of the Trust
Indenture Act, regardless of the source from which such information was derived,
and that the Indenture Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.
(f) (i) Within sixty (60) days after the 15th day of March of each
year commencing with the first such date following the first issuance of Notes,
if required by Section 313(a) of the Trust Indenture Act, the Indenture Trustee
shall transmit, pursuant to Section 313(c) of the Trust Indenture Act, a brief
report dated as of such 15th day of March of such year with respect to any of
the events specified in said Section 313(a) of the Trust Indenture Act which may
have occurred since the later of the immediately preceding 15th day of March and
the date of the Indenture.
(ii) The Indenture Trustee shall transmit, pursuant to Section
313(c) of the Trust Indenture Act, the reports required by Section
313(b) of the Trust Indenture Act at the time specified therein.
(iii) Reports pursuant to this Section shall be transmitted in
the manner and to the Persons required by Sections 313(c) and 313(d)
of the Trust Indenture Act.
SECTION 3.14. Payment of Taxes and Other Claims. The Trust will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Trust or upon the income, profits or property of the Trust, and
(2) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a Lien upon the property of the Trust; provided, however, that the
Trust shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings. The
Trust shall comply with the requirements of all other applicable laws, the
non-compliance with which would, individually or in the aggregate, materially
and adversely affect the condition (financial or otherwise) of the Trust or
which would impair in any material respect the ability of the Trust to perform
its obligations under the Notes or the Indenture.
SECTION 3.15. Negative Covenants. So long as any Notes are Outstanding, the
Trust will not take any of the following actions, except as otherwise permitted
under the Indenture:
(a) sell, transfer, exchange, assign, lease, convey or otherwise
dispose of any assets held by the Trust (owned as of the date of the Trust
Agreement or thereafter acquired), including, without limitation, any portion of
the Collateral, except as expressly permitted by the Indenture;
(b) incur or otherwise become liable, directly or indirectly, for any
Indebtedness or Contingent Obligation except for the Notes issued pursuant to
the Indenture and the transactions contemplated thereby;
(c) engage in any business or activity other than in connection with,
or relating to, (i) the performance of the Trust Agreement and the execution,
delivery and
41
performance of any documents (other than the Trust Agreement), including the
Program Documents, relating to the Notes issued under the Indenture and the
transactions contemplated thereby, and (ii) the issuance of the Notes pursuant
to the Indenture;
(d) (i) permit the validity or effectiveness of the Indenture or any
grant of security interest in or assignment for collateral purposes of the
Collateral to be impaired, or permit a Lien created under the Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations under any document or
agreement assigned to the Indenture Trustee, except as may be expressly
permitted by the Indenture, (ii) create, incur, assume or permit any Lien or
other encumbrance (other than the Lien created by the Indenture) on any of its
properties or assets owned or thereafter acquired, or any interest therein or
the proceeds thereof, or (iii) permit a Lien created under the Indenture not to
constitute a valid first priority perfected security interest in the Collateral;
(e) amend, modify or fail to comply with any material provision of the
Trust Agreement except for any amendment or modification of the Trust Agreement
expressly permitted thereunder;
(f) own any subsidiary or lend or advance any funds to, or make any
investment in, any Person, except for an investment in the Funding Agreement or
the investment of any funds held by the Indenture Trustee, the Paying Agent or
the Trustee as provided in the Indenture or the Trust Agreement;
(g) directly or indirectly declare or make any distribution or other
payment to, or redeem or otherwise acquire or retire for value the interest of,
the Trust Beneficial Owner if any amount under the Notes is due and unpaid, or
directly or indirectly redeem or otherwise acquire or retire for value any
Indebtedness or Contingent Obligation other than the Notes;
(h) exercise any rights with respect to the Collateral except at the
written direction of, or with the prior written approval of, the Indenture
Trustee;
(i) cause or, to the fullest extent permitted by law, permit the sale
or other transfer of all or a portion of the Trust Beneficial Interest, or cause
or, to the fullest extent permitted by law, permit the creation, incurrence,
assumption or existence of any Lien on, all or a portion of any of the Trust
Beneficial Interest;
(j) become an "investment company", or come under the "control" of an
"investment company," as such terms are defined in the Investment Company Act;
(k) enter into any transaction of merger or consolidation or liquidate
or dissolve itself (or, to the fullest extent permitted by law, suffer any
liquidation or dissolution), or acquire by purchase or otherwise all or
substantially all the business or assets of, or any stock or other evidence of
beneficial ownership of, any other Person;
(l) take any action that would cause it not to be treated as
disregarded or treated as a grantor trust (assuming it were not disregarded)
for United States federal income tax purposes;
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(m) have any subsidiaries, employees or agents other than the Trustee
and other persons necessary to conduct its activities and enter into
transactions contemplated under the Program Documents;
(n) have an interest in any bank account other than (i) those accounts
required under the Program Documents, and (ii) those accounts expressly
permitted by the Indenture Trustee; provided that any such further accounts or
the Trust's interest therein shall be charged or otherwise secured in favor of
the Indenture Trustee;
(o) issue Notes under the Indenture unless (i) the Trust has purchased
or will simultaneously purchase the Funding Agreement from Principal Life to
secure such Notes, (ii) Principal Life has affirmed in writing to the Trust that
it has made or simultaneously will make changes to its books and records to
reflect the granting of a security interest in, and the making of an assignment
for collateral purposes of, the Funding Agreement by the Trust to the Indenture
Trustee, (iii) PFG has issued the Guarantee to the Trust, which the Trust has
granted a security interest and collaterally assigned to the Indenture Trustee
on behalf of the Holders of Notes (and PFG has affirmed in writing to the Trust
that it has made or simultaneously will make changes to its books and records to
reflect such security interest), and (iv) the Trust has taken such other steps
as may be necessary to cause the grant of security interest in, and assignment
for collateral purposes of, the Collateral to the Indenture Trustee to be
perfected for purposes of the UCC or effective against the Trust's creditors and
subsequent purchasers of the Collateral pursuant to insurance or other
applicable law;
(p) permit any Affiliate, employee or officer of Principal Life or PFG
or any agent under the Distribution Agreement to be a trustee of the Trust;
(q) commingle the assets of the Trust with assets of any Affiliates
(including any other trust organized under the Program), or guarantee any
obligation of any Affiliates (including any other trust organized under the
Program); or
(r) maintain any joint account with any Person, become a party,
whether as co-obligor or otherwise, to any agreement to which any Person is a
party (other than in respect of the Program Documents), or become liable as a
guarantor or otherwise with respect to any Indebtedness or contractual
obligation of any Person.
SECTION 3.16. Non-Petition. Each of the Indenture Trustee, each Holder of a
Note, each Agent and the Trustee covenants and agrees that, for a period of one
year plus one day after payment in full of all amounts payable under or in
respect of the Indenture and the Notes, it will not institute against, or join
any other Person in instituting against, the Trust any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law. The
immediately preceding sentence shall survive any termination of the Indenture.
Notwithstanding the foregoing, each of the Indenture Trustee and each Agent
covenants and agrees that, it will not institute against, or join any other
Person in instituting against, the Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or
43
other proceedings under any federal or state bankruptcy or similar law, as a
result of the failure to pay fees or expenses pursuant to Section 7.10 to any
party entitled thereto.
Moreover, each of the Indenture Trustee, the Paying Agent, the Transfer
Agent, the Calculation Agent and the Registrar covenants and agrees that it will
not cause an Event of Default as a result of the Trust's failure to pay any fees
or expenses pursuant to Section 7.10 to any party entitled thereto.
SECTION 3.17. Title to the Collateral. The Trust covenants and agrees that
the Trust owns or, prior to the issuance of the Notes will own, the Funding
Agreement, the Guarantee and all of the rest of the Collateral, free and clear
of any Liens other than the security interests or assignments for collateral
purposes made pursuant to Article 4; and that the Trust is not and will not
become a party to or otherwise be bound by any agreement, other than the
Indenture, which restricts in any manner the rights of any present or future
holder of any of the Collateral with respect thereto.
The Trust shall notify in writing the Indenture Trustee and any Rating
Agencies as promptly as practicable upon becoming aware of any change in the law
of the State of Iowa following the date of the Indenture with respect to the
priority status of the Funding Agreement in a liquidation of, or other
delinquency proceeding against, Principal Life.
SECTION 3.18. Withholding and Payment of Additional Amounts.
(a) All payments due in respect of the Notes 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, unless such
withholding or deduction is so required by law. Unless otherwise specified in
the applicable Pricing Supplement, the Trust will not pay any Additional Amounts
to Holders in respect of any such withholding or deduction and any such
withholding or deduction will not give rise to a Default or an Event of Default
or any independent right or obligation to redeem the Notes. Unless the Funding
Agreement specifies that Principal Life will pay Additional Amounts to the Trust
in the event that any amount due with respect to the Funding Agreement is
subject to 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, the
Trust will be deemed for all purposes of the Program Documents to have received
cash in an amount equal to the amount of any such withholding or deduction, and
each Holder will be deemed for all purposes of the Program Documents 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 the Notes as equitably
determined by the Trust.
(b) Subject to the final sentence of this Section 3.18(b), and only to
the extent specified in the applicable Pricing Supplement and supplemental
indenture or Note, the Trust shall pay to a Holder of any Note who is not a
"United States person" within the meaning of Section 7701(a)(30) of the Code,
Additional Amounts to compensate for any withholding or
44
deduction for or on account of any present or future taxes, duties, levies,
assessments or other governmental charges of whatever nature imposed or levied
on payments in respect of such Note, by or on behalf of any governmental
authority in the United States having the power to tax, so that the net amount
received by the Holder under that Note, after giving effect to such withholding
or deduction, will equal the amount that would have been received under such
Note were no such deduction or withholding required; provided that the Trust
shall not, unless otherwise specified in the applicable Pricing Supplement or a
supplemental indenture, be required to make any payment of any Additional Amount
for or on account of: (i) any tax, duty, levy, assessment or other governmental
charge imposed which would have not been imposed but for (A) the existence of
any present or former connection between the Holder or beneficial owner (as
determined for United States federal income tax purposes) of the Note or the
Funding Agreement (any such Holder or beneficial owner, the "Owner") and such
governmental authority, including without limitation, being or having been a
citizen or resident thereof, or being or having been present therein,
incorporated therein, engaged in a trade or business therein or having (or
having had) a permanent establishment or principal office therein, (B) such
Owner being or having been a controlled foreign corporation within the meaning
of Section 957(a) of the Code, related within the meaning of Section 864(d)(4)
of the Code to Principal Life or a private foundation or other tax-exempt
organization, (C) such Owner being or having been an actual or constructive
owner of ten percent (10%) or more of the total combined voting power of all the
outstanding stock of Principal Life, (D) such Owner being a bank for United
States federal income tax purposes whose receipt of interest on the Note or
Funding Agreement is described in Section 881(c)(3)(A) of the Code or (E) such
Owner being subject to backup withholding as of the date of becoming an Owner;
(ii) any tax, duty, levy, assessment or other governmental charge which would
not have been imposed but for the presentation of the Note or other evidence of
beneficial ownership thereof (where presentation is required) for payment on a
date more than thirty (30) days after the date on which such payment becomes due
and payable or the date on which payment is duly provided for whichever occurs
later; except to the extent that the Owner would have been entitled to
Additional Amounts had the Note been presented on the last day of such thirty
(30) day period; (iii) any tax, duty, levy, assessment or other governmental
charge which is imposed or withheld by reason of the failure of an Owner to
comply with certification, identification or information reporting requirements
concerning the nationality, residence, identity or connection with the United
States of an Owner (including, without limitation, failure to provide IRS Forms
W-8BEN or W-8ECI), if compliance is required by statute, by regulation of the
United States Treasury Department, judicial or administrative interpretation,
other law or by an applicable income tax treaty to which the United States is a
party as a condition to exemption from such tax, duty, levy, assessment or other
governmental charge; (iv) any inheritance, gift, estate, personal property,
sales, transfer or similar tax, duty, levy, assessment or similar governmental
charge; (v) any tax, duty, levy, assessment or other governmental charge that is
payable otherwise than by withholding from payments in respect of the Notes;
(vi) any tax, duty, levy, assessment or other governmental charge that would not
have been imposed or withheld but for the treatment of payments in respect of
the Notes or the Funding Agreement as contingent interest described in Section
871(h)(4) of the Code; (vii) any tax, duty, levy, assessment or other
governmental charge that would not have been imposed or withheld but for an
election by the Owner the effect of which is to make payment in respect of the
Notes subject to United States federal income tax; (viii) any tax, duty, levy,
assessment or other governmental charge resulting from a European Union
Directive; or (ix) any combination of items (i), (ii), (iii), (iv), (v), (vi),
(vii) or (viii). The obligation to pay Additional Amounts under this Section
3.18
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shall not apply unless Principal Life is obligated to pay additional amounts
under the Funding Agreement (1) to compensate for any 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 on payments in
respect of the Funding Agreement by or on behalf of any governmental authority
in the United States having the power to tax and (2) to reimburse the Trust for
any Additional Amounts due to Holders.
(c) If the applicable Pricing Supplement indicates that the Trust will
pay any Additional Amounts to Holders as described in Section 3.18(b) and any
such Additional Amounts actually become due and payable the Trust shall deliver
to the Indenture Trustee a Trust Certificate that indicates the amount of such
Additional Amounts and the dates of the payment of such Additional Amounts. The
Indenture Trustee may conclusively rely on such Trust Certificate in making the
payment of such Additional Amounts.
(d) Whenever in the Indenture or in any Note there is mentioned, in
any context, the payment of the principal of or any premium or interest on, or
in respect of, any Note or the net proceeds received on the sale or exchange of
any Note, such mention shall be deemed to include mention of the payment of
Additional Amounts if so specified in the applicable Pricing Supplement.
Further, express mention of the payment of Additional Amounts (if applicable) in
any provision of the Indenture or in any Note shall not be construed as
excluding Additional Amounts in those provisions of the Indenture or in such
Note where such express mention is not made.
SECTION 3.19. Additional Representations and Warranties.
(a) The Trust hereby represents and warrants that:
(i) to the extent the creation of a security interest in the
Funding Agreement is governed by the UCC, the Indenture will create a
valid security interest (as defined in the UCC) in the Funding
Agreement in favor of the Indenture Trustee for the benefit and
security of the Holders, which security interest will be prior to all
other Liens;
(ii) the Indenture will create a valid security interest (as
defined in the UCC) in the Guarantee in favor of the Indenture Trustee
for the benefit and security of the Holders, which security interest
will be prior to all other Liens;
(iii) the Funding Agreement and the Guarantee will each
constitute a "general intangible" or "instrument" within the meaning
of the UCC;
(iv) subject to the grant of security interest, pledge and
collateral assignment of the Trust's right, title and interest in the
Funding Agreement, the Trust will be a party to and will be the person
entitled to payment under the Funding Agreement on the dates specified
therein free and clear of any Lien, claim or encumbrance of any
Person, other than the Lien created under the Indenture or any Lien
otherwise permitted under the Indenture;
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(v) subject to the grant of security interest, pledge and
collateral assignment of the Trust's right, title and interest in the
Guarantee, the Trust will be the person entitled to any payment under
the Guarantee free and clear of any Lien, claim or encumbrance of any
Person, other than the Lien created under the Indenture or any Lien
otherwise permitted under the Indenture;
(vi) to the extent the UCC applies, the Trust has caused or will
have caused, within ten (10) days of the issuance of the Notes, the
filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law in order
to perfect the security interest in the Funding Agreement and the
Guarantee granted to the Indenture Trustee for the benefit and
security of the Holders;
(vii) other than the security interests granted to the Indenture
Trustee for the benefit and security of the Holders pursuant to the
Indenture, the Trust will not pledge, assign, sell, grant a security
interest in, or otherwise convey any interest in the Funding Agreement
or the Guarantee;
(viii) the Trust will not authorize the filing of and is not
aware of any financing statements against the Trust that include a
description of collateral covering the Funding Agreement or the
Guarantee other than any financing statement relating to the security
interests granted to the Indenture Trustee for the benefit and
security of the Holders;
(ix) the Trust is not aware of any judgment or tax lien filings
against the Trust; and
(x) none of the instruments that constitute or evidence the
Funding Agreement or Guarantee has any marks or notations indicating
that it has been pledged, assigned or otherwise conveyed to any Person
other than the Indenture Trustee for the benefit and security of the
Holders.
(b) The foregoing representations and warranties will survive the
execution and delivery of the Notes. No party will waive any of the foregoing
representations and warranties. The Indenture Trustee and the Trust will
maintain the perfection and priority of the security interest in the Funding
Agreement and the Guarantee.
SECTION 3.20. Ancillary Documents. The Trust hereby expressly authorizes
and directs the Indenture Trustee to execute and deliver each of the documents,
instruments and agreements attached as Exhibits or otherwise expressly
contemplated by the terms of the Indenture with respect to the Notes from time
to time.
ARTICLE 4
GRANTING OF SECURITY INTEREST AND ASSIGNMENT FOR COLLATERAL PURPOSES
SECTION 4.01. Creation. To secure the full and punctual payment of the
Secured Obligations in accordance with the terms thereof and to secure the
performance of the Trust's
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obligations under the Notes and the Indenture, the Trust, with respect to the
Funding Agreement and the Guarantee, hereby assigns and pledges to and with the
Indenture Trustee for the ratable benefit of each Holder and, with respect to
all of the Collateral, grants to the Indenture Trustee for the ratable benefit
of each Holder security interests in the Collateral, and all of its rights and
privileges with respect to the Collateral, and all income and profits thereon,
and all interest, dividends and other payments and distributions with respect
thereto, and all Proceeds of the foregoing. Contemporaneously with the issuance
of the Notes, the Trust will deliver the Funding Agreement and the Guarantee to
the Indenture Trustee or its agent in pledge under the Indenture and make such
filings, cause Principal Life as the issuer of the Funding Agreement, and PFG as
issuer of the Guarantee, to register and acknowledge the Indenture Trustee or
its agent or the Holders as having the rights of an assignee for collateral
purposes of the Funding Agreement and the Guarantee, respectively, and take such
other action as may be necessary to cause the Indenture Trustee for the ratable
benefit of each Holder to have a perfected security interest in or be the
recipient of a valid assignment for collateral purposes of the Funding Agreement
and the Guarantee, respectively, and the rest of the Collateral that is
effective against the Trust's creditors and subsequent purchasers thereof.
SECTION 4.02. Scope.
(a) The security interest or assignment for collateral purposes
granted or made pursuant to Section 4.01 is granted or made in trust to secure
the full and punctual payment of the Secured Obligations equally and ratably
among the Holders, without prejudice, priority or distinction, except as
expressly provided in the Indenture, in the following order of priority:
first, to the payment of the amounts then due and unpaid upon the
Notes for principal and interest and all other amounts in respect of
which or for the benefit of which such amount has been collected,
ratably, without preference or priority of any kind, according to the
aggregate amounts due and payable on the Notes; and
second, any remaining balance shall be paid to the Trust and such
remaining balance shall be distributed by the Trustee in accordance
with the Trust Agreement.
(b) The Trust does hereby constitute and irrevocably appoint the
Indenture Trustee the true and lawful attorney of the Trust, with full power (in
the name of the Trust or otherwise), upon the occurrence and during the
continuance of an Event of Default, to exercise all rights of the Trust with
respect to the Collateral and to ask, require, demand, receive, settle,
compromise, compound and give acquittance for any and all monies and claims for
monies due and to become due under or arising out of any of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings that the
Indenture Trustee may deem to be necessary or advisable in the circumstances.
The power of attorney granted pursuant to the Indenture and all authority
conferred by the Indenture are granted and conferred solely to protect the
Indenture Trustee's interest in the Collateral held for the benefit and security
of the Holders and shall not impose any duty upon the Indenture Trustee to
exercise any power. This power of attorney shall be irrevocable as one coupled
with an interest prior to the payment in full of all the Notes.
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(c) The Indenture shall constitute a security agreement and an
agreement to assign the Collateral for collateral purposes under the laws of the
State of New York applicable to agreements made and to be performed therein.
Upon the occurrence of any Event of Default with respect to the Notes, and in
addition to any other rights available under the Indenture, the Funding
Agreement and the Guarantee or otherwise available at law or in equity, the
Indenture Trustee shall have all rights and remedies of a secured party or an
assignee for collateral purposes on default under the laws of the State of New
York and other applicable law to enforce the assignments and security interests
contained in the Indenture and, in addition, shall have the right, subject to
compliance with any mandatory requirements of applicable law, to sell or apply
the Funding Agreement or Guarantee, exercise its rights under the Guarantee and
any other rights and other interests assigned or pledged by the Indenture in
accordance with the terms of the Indenture at public or private sale. All
amounts received under the Indenture shall be applied first to all costs and
expenses incurred by the Indenture Trustee in connection with such collection
and enforcement and thereafter as provided in the Indenture.
(d) It is expressly agreed that anything in the Indenture or therein
contained to the contrary notwithstanding, the Trust shall remain liable under
the Funding Agreement or the Guarantee to perform all the obligations of it
thereunder, all in accordance with and pursuant to the terms and provisions
thereof, and the Indenture Trustee shall not have any obligations or liabilities
with respect to the Funding Agreement or the Guarantee by reason of or arising
out of the Indenture, nor shall the Indenture Trustee be required or obligated
in any manner to perform or fulfill any obligations of the Trust under or
pursuant to the Funding Agreement or the Guarantee or, other than as provided in
the Indenture, to make any payment, to make any inquiry as to the nature or
sufficiency of any payment received by it, or, prior to the occurrence and
continuance of an Event of Default, to present or file any claim, or to take any
action to collect or enforce the payment of any amounts that may have been
assigned to it or to which it may be entitled at any time or times.
(e) The Trust hereby directs and instructs the Indenture Trustee to
enter into a custodial arrangement with Bankers Trust Company, N.A., a national
banking association, to hold the Funding Agreement and Guarantee in safe custody
for the benefit of the Indenture Trustee within the State of Iowa.
(f) The Indenture Trustee acknowledges the granting of such security
interests and the making of such assignments for collateral purposes, accepts
the terms under the Indenture in accordance with the provisions of the Indenture
and agrees to perform its duties in the Indenture subject to and with the
benefit of the provisions of the Indenture, to the end that the interests of the
Holders may be adequately and effectively protected.
SECTION 4.03. Termination of Security Interest. Upon the payment in
full of all Secured Obligations relating to the Notes, the security interest
shall terminate and all rights to the Collateral shall revert to the Trust. Upon
termination of the security interest, the Indenture Trustee will execute and
deliver to the Trust such documents as the Trust shall reasonably request to
evidence the termination of such security interest.
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ARTICLE 5
SATISFACTION AND DISCHARGE; SUBROGATION
SECTION 5.01. Satisfaction and Discharge of Indenture. The Indenture shall
cease to be of further effect with respect to the Notes (except as to any
surviving rights of registration of transfer or exchange of Notes expressly
provided for in the Indenture) and the Indenture Trustee, on written demand of
the Trust, shall execute proper instruments acknowledging satisfaction and
discharge of the Indenture with respect to the Notes, when
(a) either:
(i) all Notes theretofore authenticated and delivered (other than
Notes which have been mutilated, destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.08) have been
delivered to the Indenture Trustee for cancellation; or
(ii) all Notes
(A) have become due and payable,
(B) will become due and payable at their Stated Maturity
Date within one year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving
of notice of redemption by the Indenture Trustee in the name, and
at the expense, of the Trust,
and the Trust, in the case of (A), (B) or (C) above, has deposited or
caused to be deposited with the Indenture Trustee as trust funds in
trust for such purpose, an amount sufficient to pay and discharge the
entire indebtedness on the Notes not theretofore delivered to the
Indenture Trustee for cancellation, for principal of, premium, if any,
or any interest on, the Notes to the date of such deposit (in the case
of Notes which have become due and payable) or to the Stated Maturity
Date, as the case may be;
(b) the Trust has paid or caused to be paid in full all other sums
payable under the Indenture by the Trust with respect to the Secured
Obligations; and
(c) the Trust has delivered to the Indenture Trustee a Trust
Certificate and an Opinion of Counsel each stating that all conditions precedent
in the Indenture providing for the satisfaction and discharge of the Indenture
with respect to the Notes have been complied with.
Notwithstanding the satisfaction and discharge of the Indenture with
respect to the Notes, the obligations of the Indenture Trustee under Section
5.02 shall survive.
SECTION 5.02. Application of Trust Money. All money deposited with the
Indenture Trustee pursuant to the Indenture shall be held in trust in the
Collection Account and applied by
50
it, in accordance with the provisions of the Notes and the Indenture, to the
payment through any Paying Agent, to the Persons entitled thereto, of the
principal, premium, if any, interest and Additional Amounts, if any, for whose
payment such money has been deposited with or received by the Indenture Trustee.
If no Event of Default with respect to the Notes exists, the following priority
of payments shall apply:
first, to the payment of the amounts then due and unpaid upon the
Notes for principal and interest and all other amounts in respect of which
or for the benefit of which such amount has been collected, ratably,
without preference or priority of any kind, according to the aggregate
principal amounts due and payable on the Notes; and
second, any remaining balance shall be paid to the Trust and such
remaining balance shall be distributed by the Trustee in accordance with
the Trust Agreement.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
"EVENT OF DEFAULT" means any one of the following events with respect to
the Notes (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) failure to pay the principal (other than any installment payment),
when due and payable, of any Note and the continuance of such failure for a
period of one (1) Business Day;
(b) failure to pay any interest, premium (if applicable), installment
payments (if applicable) or any other amounts, when due and payable, on any Note
and a continuance of such failure for a period of seven (7) Business Days;
(c) an "Event of Default" (as defined in the Funding Agreement) by
Principal Life under the Funding Agreement securing the Notes;
(d) failure to observe or perform in any material respect any one or
more of the other covenants in the Indenture (other than a covenant or default
or breach of which is specifically set forth in Section 6.01(a), (b) and, if
applicable (h)) or the Notes, and continuance of such failure for a period of
sixty (60) days after the date on which there shall have been given written
notice by registered or certified mail, return receipt requested, specifying
such failure, thereof to the Trust by the Indenture Trustee or to the Trust and
the Indenture Trustee by Holders of Notes representing at least twenty-five
percent (25%) of the aggregate principal amount of the Outstanding Notes, which
written notice shall be delivered by registered or certified mail, return
51
receipt requested, and shall specify such failure and require such failure to be
remedied and which notice shall state that it is a "NOTICE OF DEFAULT" under the
Indenture;
(e) the Indenture for any reason shall cease to be in full force and
effect (other than in accordance with its terms) or shall be declared null and
void, or the Indenture Trustee fails to have or maintain a validly created and
perfected security interest subject to no prior Liens or security interests in
the Collateral and proceeds thereof except as expressly permitted by the
Indenture; or any Person shall successfully claim as finally determined by a
court of competent jurisdiction that any of the Liens granted to the Indenture
Trustee with respect to any of the Collateral are void or that the enforcement
thereof or any other recourse by the Indenture Trustee against any of the
Collateral is materially limited because of any preference, fraudulent transfer,
conveyance or similar law;
(f) either (i) a court having jurisdiction in the premises shall enter
a decree or order for relief in respect of the Trust or the Collateral in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect in the applicable jurisdiction, which decree or
order is not stayed; or any other similar relief shall be granted under any
applicable law; or (ii) an involuntary case shall be commenced against the Trust
or the Collateral under any applicable bankruptcy, insolvency or other similar
law of the applicable jurisdiction; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over the
Trust or the Collateral, or over all or a substantial part of its property,
shall have been entered; or there shall have occurred the involuntary
appointment of an interim receiver, trustee or other custodian of the Trust or
the Collateral for all or a substantial part of its property; or a court having
jurisdiction in the premises shall enter a decree or order declaring the
dissolution of the Trust; or a warrant of attachment, execution or similar
process shall have been issued against any substantial part of the property of
the Trust and any such event described in this clause (ii) shall continue for
sixty (60) days unless dismissed, bonded or discharged;
(g) either (i) the Trust shall have an order for relief entered with
respect to it or shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law of the applicable jurisdiction, or
shall consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such law,
or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or the
Trust shall make any assignment for the benefit of creditors; or (ii) the Trust
shall fail or be unable, or the Trust admits in writing its inability, to pay
its debts as such debts become due; or the trustee of the Trust shall adopt any
resolution or otherwise authorize any action to approve or for the purpose of
effecting any of the actions referred to in this paragraph (g); or
(h) any other Event of Default provided in (i) the applicable Pricing
Supplement and (ii) the Notes or any supplemental indenture.
Notwithstanding anything contained herein to the contrary, any event of
default or other breach by PFG under the Guarantee will not be an Event of
Default hereunder with respect to the Notes.
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SECTION 6.02. Acceleration of Maturity Date; Rescission and Annulment. If
an Event of Default specified in any of Sections 6.01(a), (b), (c), (f) or (g)
occurs and is continuing, the principal of and all accrued and unpaid interest
and any other amounts payable on the Notes or if such Notes are non-interest
bearing, the amortized face amount of such Notes or other redemption amount as
may be specified in the Pricing Supplement, shall automatically be and become
due and payable immediately, without any declaration or other act whatsoever on
the part of the Trust, the Indenture Trustee or any Holder. If any Event of
Default other than those specified in Sections 6.01(a), (b), (c), (f) or (g)
occurs and is continuing, then in every such case the Indenture Trustee or the
Holders of more than twenty-five percent (25%) in aggregate principal amount of
the Outstanding Notes, by a notice in writing to the Trust (and to the Indenture
Trustee if given by the Holders of the Notes), may (but are not required to)
declare the sum of (a) the principal amount of all the Outstanding Notes and (b)
any other amounts, including accrued and unpaid interest, payable to the Holders
to the extent such amounts are permitted by law to be paid, to be due and
payable immediately, and upon any such declaration such amount shall become due
and payable on the date the written declaration is received by the Trust;
provided, however, that with respect to any Note issued with original issue
discount the amount of principal due and payable for such Note will be the
amount determined as set forth in the Pricing Supplement or, if not so set
forth, by multiplying (i) the then outstanding aggregate principal amount of
such Note by (ii) the sum of (A) the original issue price of the Note (expressed
as a percentage of the then outstanding aggregate principal amount of such Note)
plus (B) the original issue discount (expressed as a percentage) amortized from
the original issue date of such Note to the date of declaration of acceleration
of maturity of such Note (calculated using the interest method in accordance
with generally accepted accounting principles in effect on the date of
determination).
At any time after such a declaration of acceleration of maturity of the
Notes has been made pursuant to the second sentence of this Section 6.02 and
before a judgment or decree for payment of the money due has been obtained by
the Indenture Trustee as provided in this Article, the Holders of Notes
representing at least sixty-six and two-thirds percent (66-2/3%) of the
aggregate principal amount of the Outstanding Notes, by written notice to the
Trust and the Indenture Trustee, may rescind and annul such declaration and its
consequences if
(a) the Trust has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all overdue installments of interest and Additional Amounts,
if applicable, on all Notes,
(ii) the principal and premium, if any, of any Notes which have
become due otherwise than by such declaration of acceleration and
interest thereon with respect thereto at the rate borne by the Notes,
and
(iii) all sums paid or advanced by the Indenture Trustee under
the Indenture; and
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(b) all Events of Default, other than the nonpayment of the principal
of or interest on the Notes which have become due solely as a result of such
acceleration, have been cured or waived as provided in Section 6.13.
No such rescission shall affect any subsequent Default or Event of Default
or impair any right consequent thereon.
SECTION 6.03. Collection of Indebtedness and Suits for Enforcement. The
Trust covenants that if:
(a) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable (after the expiration of any
applicable cure period), or
(b) default is made in the payment of the principal or premium, if
any, of any Note when such principal or premium, if any, becomes due and
payable,
the Trust will upon demand of the Indenture Trustee (which the Indenture Trustee
may make, but is not required to make) pay to the Indenture Trustee, for the
benefit of all the Holders of the Notes, the whole amount then due and payable
on the Notes (together, as applicable, with interest upon the overdue principal
and any premium and (to the extent that payment of such interest is enforceable
under applicable law) upon the overdue installments of interest at the rate
borne by the Notes or, if the Notes are non-interest bearing, the rate for such
interest set forth in the Notes or the Indenture, if applicable) and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and counsel.
If the Trust fails to pay such amounts it is required to pay the Indenture
Trustee pursuant to the preceding paragraph, then forthwith upon the demand of
the Indenture Trustee, in its own name and as trustee of an express trust, the
Indenture Trustee may (but is not required to) institute a judicial proceeding
for the collection of the sums so due and unpaid, may prosecute such proceeding
to judgment or final decree and may enforce the same against the Trust or any
other obligor upon any of the Notes and collect the monies adjudged or decreed
to be payable in the manner provided by law out of the property of the Trust or
any other obligor upon the Notes, including the Collateral, wherever situated.
If an Event of Default with respect to the Notes occurs and is continuing,
the Indenture Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Notes by such appropriate judicial
proceedings as the Indenture Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in the Indenture or in aid of the exercise of any power granted in the
Indenture, or to enforce any other proper remedy.
SECTION 6.04. Indenture Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other judicial proceeding relative
to the Trust or any other obligor upon the Notes or the property held in the
Trust or of such other obligor or their creditors, the Indenture Trustee
(irrespective of whether the Notes shall then be due and payable as therein
expressed or by
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declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand on the Trust for the payment of any overdue
principal, premium or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal of,
and any premium and interest owing and unpaid in respect of, the Notes and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel) and of the Holders allowed in such proceeding; and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same, and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Indenture Trustee and, in the event that the Indenture Trustee
shall consent, to make such payments directly to the Holders, and to pay to the
Indenture Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel, and any other amounts due to the Indenture Trustee under Section 7.10.
Nothing contained in the Indenture shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment, or composition
affecting any of the Notes or the rights of any Holder thereof, or to authorize
the Indenture Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.05. Indenture Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under the Indenture or any of the Notes
may be prosecuted and enforced by the Indenture Trustee without the possession
of any of the Notes or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Indenture Trustee in
accordance with the terms of the Indenture shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel, be for the ratable
benefit of the Holders of Notes in respect of which such judgment has been
recovered.
SECTION 6.06. Application of Money Collected. Notwithstanding anything in
the Indenture to the contrary, any money collected by the Indenture Trustee
following an Event of Default and during the continuance thereof pursuant to
Article 6 or otherwise under the Indenture or, any supplements to the Indenture,
and any moneys that may then be held or thereafter received by the Indenture
Trustee as security with respect to the Notes shall be held in the Collection
Account and be applied in the following order, at the date or dates fixed by the
Indenture Trustee and, in case of the distribution on account of principal or
interest, upon presentation of the Notes, or both, and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
first, to the payment of the reasonable and customary expenses
and counsel fees incurred by the Indenture Trustee and any other amounts
due and
55
unpaid to the Indenture Trustee by the Trust, in an aggregate amount of no
more than $250,000 for all notes issued under the Program, to the extent
not paid pursuant to the applicable Expense and Indemnity Agreement;
second, to the payment of the amounts then due and unpaid upon
the Notes for principal and interest and all other amounts in respect of
which, or for the benefit of which, such amount has been collected,
ratably, without preference or priority of any kind, according to the
aggregate principal amounts due and payable on the Notes; and
third, any remaining balance shall be paid to the Trust and such
remaining balance shall be distributed by the Trustee in accordance with
the Trust Agreement.
Except as expressly set forth in the Indenture, none of the Indenture
Trustee, Paying Agent, Registrar or any other Agent or any of their successors,
employees, officers, directors, affiliates or agents shall have any claim or
rights of any nature in or to the Collateral, whether as a result of set-off,
banker's lien or otherwise, and the Indenture Trustee hereby waives, and the
Paying Agent and Registrar appointed under the Indenture shall be deemed to have
waived, by its acceptance of the duties under the Indenture, on behalf of itself
and each such other Person, any such claim or rights in or to the Collateral.
SECTION 6.07. Limitation on Suits. Except as otherwise provided in Section
6.08, no Holder shall have any right to institute any proceedings, judicial or
otherwise, with respect to the Indenture or any agreement or instrument included
in the Collateral for the Notes or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default with respect to the Notes;
(b) the Holder or Holders of Notes representing not less than
twenty-five percent (25%) of the aggregate principal amount of the Outstanding
Notes shall have made written request to the Indenture Trustee to institute
proceedings in respect of such Event of Default in its own name as Indenture
Trustee under the Indenture;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity or security satisfactory to it against the costs, expenses
and liabilities to be incurred in compliance with such request;
(d) the Indenture Trustee for sixty (60) days after its receipt of
such notice, request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has been given
to the Indenture Trustee during such sixty (60) day period by the Holder or
Holders of Notes representing at least 66 2/3% in aggregate principal amount of
the Outstanding Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of the Indenture to affect,
56
disturb or prejudice the rights of any other Holder of any Note or to obtain or
to seek to obtain priority or preference over any other Holder of any Note or to
enforce any right under the Indenture, except in the manner provided in the
Indenture and for the equal and ratable benefit of all the Holders of the Notes.
SECTION 6.08. Unconditional Rights of Holders to Receive Payments.
Notwithstanding any other provision in the Indenture, each Holder of any Note
shall have the right, which is absolute and unconditional, to receive payment of
the principal of, 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 6.09. Restoration of Rights and Remedies. If the Indenture Trustee
or any Holder has instituted any proceeding to enforce any right or remedy under
the Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Indenture Trustee or to such
Holder, then and in every such case the Trust, the Indenture Trustee and each
such Holder shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions under the Indenture, and
thereafter all rights and remedies of the Indenture Trustee and each such Holder
shall continue as though no such proceeding had been instituted.
SECTION 6.10. Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Notes in Section 2.08, no right or remedy in the Indenture conferred upon
or reserved to the Indenture Trustee or to each and every Holder is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given under the Indenture or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy under
the Indenture, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.11. Delay or Omission Not Waiver. No delay or omission of the
Indenture Trustee or of any Holder to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such right or remedy accruing upon any Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Indenture Trustee or to any Holder may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee or by such Holder,
as the case may be.
SECTION 6.12. Control by Holders. Holders, representing a majority of the
aggregate principal amount of the Outstanding Notes, who provide the Indenture
Trustee with indemnification satisfactory to the Indenture Trustee, shall have
the right to direct the time, method and place of conducting any proceedings for
exercising any remedy available to the Indenture Trustee or exercising any trust
or power conferred on the Indenture Trustee with respect to the Notes, including
with respect to the Collateral; provided, however, that (a) such direction shall
not be in conflict with any rule of law or with the Indenture and (b) the
Indenture
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Trustee may take any other action deemed proper by the Indenture Trustee that is
not inconsistent with such direction.
SECTION 6.13. Waiver of Past Defaults. Notwithstanding anything in the
Indenture to the contrary, only Holders representing a majority of the aggregate
principal amount of the Outstanding Notes may on behalf of the Holders of all
the Notes waive any past Default with respect thereto and its consequences,
except a Default:
(a) in the payment of any principal of, any interest on, or premium,
if any, on any Note, or
(b) in respect of a covenant or provision of the Indenture that cannot
be modified or amended without the consent of the Holder of each Outstanding
Note.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of the Indenture with respect to the Notes; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
SECTION 6.14. Undertaking for Costs. All parties to the Indenture agree,
and each Holder, by acceptance of a Note, shall be deemed to have agreed that,
in any suit for the enforcement of any right or remedy under the Indenture, or
in any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, any court may in its discretion require the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Indenture Trustee or any Agent, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate Notes representing
more than ten percent (10%) of the aggregate principal amount of the Outstanding
Notes, or to any suit instituted by any Holder for the enforcement of the
payment of any installment of interest on any Note on or after the Stated
Maturity Date thereof expressed in such Note or for the enforcement of the
payment of any principal of such Note at the Stated Maturity Date therefor.
SECTION 6.15. Waiver of Stay or Extension Laws. The Trust covenants that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any law wherever enacted, now or at any time
hereafter in force, providing for any appraisement, valuation, stay, extension
or redemption, which may affect the covenants in, or the performance of, the
Indenture; and the Trust hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the execution
of any power granted in the Indenture to the Indenture Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
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ARTICLE 7
THE INDENTURE TRUSTEE AND OTHER AGENTS
SECTION 7.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
the Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default, the duties
and liabilities of the Indenture Trustee are to perform only those duties that
are specifically set forth in the Indenture and no others, and no implied
covenants or obligations of the Indenture Trustee shall be read into the
Indenture.
(c) No provision of the Indenture shall be construed to relieve the
Indenture Trustee or any Agent from liability for its own negligent action, its
own negligent failure to act, or its own bad faith or willful misconduct, except
that:
(i) this subsection does not limit the effect of subsection (b)
of this Section 7.01;
(ii) each of the Indenture Trustee and each Agent may in good
faith conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to it and conforming to the requirements of the
Indenture unless a Responsible Officer of the Indenture Trustee or
such Agent, respectively, has actual knowledge that such statements or
opinions are false; provided that the Indenture Trustee or Agent, as
the case may be, must examine such certificates and opinions to
determine whether they conform to the requirements of the Indenture;
(iii) each of the Indenture Trustee and each Agent shall not be
liable for any error of judgment made in good faith by a Responsible
Officer, unless it is proved that the Indenture Trustee or Agent, as
the case may be, was negligent in ascertaining the pertinent facts;
(iv) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with
the direction of Holders representing a majority of the aggregate
principal amount of the Outstanding Notes or pursuant to Section 6.07
for actions or omissions relating to the time, method and place of
conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred upon the Indenture
Trustee, under the Indenture with respect to the Notes; and
(v) no provision of the Indenture shall require the Indenture
Trustee or any Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
under the Indenture, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for
59
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
the Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to the provisions of this
Section 7.01.
(e) The Indenture Trustee shall promptly upon its receipt thereof
deliver to each Rating Agency copies of each of the following:
(i) any notice of any Event of Default by any party under the
Funding Agreement delivered by the Trust to the Indenture Trustee
pursuant to paragraph (b) of Section 3.13;
(ii) any amendment or modification of the Trust Agreement
delivered by the Trust to the Indenture Trustee pursuant to paragraph
(a) of Section 3.12;
(iii) any notice of any Default or Event of Default, together
with any relevant Trust Certificate relating thereto, delivered by the
Trust to the Indenture Trustee pursuant to paragraph (b) of Section
3.13;
(iv) any supplemental indenture referred to in Section 8.01 or
8.02;
(v) any other information reasonably requested by any Rating
Agency;
(vi) any notice of change in the identity of the Trust;
(vii) any notice of change in the identity of the Indenture
Trustee;
(viii) any notice of adverse change in the priority status of the
Funding Agreement as a matter of the laws of the State of Iowa; and
(ix) any notice of redemption delivered to the Indenture Trustee
under Section 2.04.
(f) The Indenture Trustee shall, on behalf of the Trust, and to the
extent that the relevant information shall be reasonably available to it, submit
such reports or information as may be required from time to time in relation to
the issue of the Notes by applicable law, regulations and guidelines by
governmental regulatory authorities as may be subsequently requested by the
Trust and agreed to in writing between the Trust and the Indenture Trustee.
SECTION 7.02. No Liability to Invest. None of the Agents shall be under any
liability for interest on, or have any responsibility to invest, any monies
received by it pursuant to any of the provisions of the Indenture or the Notes.
60
SECTION 7.03. Performance Upon Default. None of the Agents shall have any
duty or responsibility in case of any default by the Trust in the performance of
its obligations (including, without limiting the generality of the foregoing,
any duty or responsibility to accelerate all or any of the Notes or to initiate
or to attempt to initiate any proceedings at law or otherwise or to make any
demand for the payment thereof upon the Trust).
SECTION 7.04. No Assumption by Paying Agent, Transfer Agent, Calculation
Agent or Registrar. In acting under the Indenture and in connection with the
Notes, the Paying Agent, the Transfer Agent, the Calculation Agent and the
Registrar shall act solely as agents of the Trust and will not thereby assume
any obligations towards, or relationship of agency or trust for, any of the
Holders.
SECTION 7.05. Notice of Default. Within ninety (90) days after a
Responsible Officer of the Indenture Trustee becomes aware of the occurrence of
any Default or Event of Default which is continuing, the Indenture Trustee shall
transmit to the Trustee, PFG and Principal Life and all Holders of Notes notice
of each such Default or Event of Default known to the Indenture Trustee, unless
such Default or Event of Default shall have been cured or waived; provided,
however, that, except in the case of a Default of the kind described in Section
6.01(a), (b), (c), (f) or (g) the Indenture Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Indenture Trustee in good faith determine that the withholding of such notice is
in the interests of the Holders.
SECTION 7.06. Rights of Indenture Trustee. Subject to the provisions of
Section 7.01(c):
(a) The Indenture Trustee may conclusively rely on any document
believed by it in good faith to be genuine and to have been signed or presented
by the proper Person. The Indenture Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting,
including in connection with the issuance of the Notes pursuant to Section 2.02,
it may require a Trust Certificate or an Opinion of Counsel (or may consult with
financial or other advisors or consultants appointed with due care). The
Indenture Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on any Trust Order, Trust Request, Trust Certificate,
Opinion of Counsel or advice from financial or other advisors or consultants
appointed with due care.
(c) The Indenture Trustee may act through agents or attorneys and
shall not be responsible for monitoring or supervising the actions of, or for
the misconduct or negligence of, any agent or attorney appointed with due care.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or within its
rights or powers.
(e) (i) The Indenture Trustee may employ or retain such counsel,
accountants, appraisers, agents or other experts or advisers as it may
reasonably require for the
61
purpose of determining and discharging its rights and duties under the Indenture
and shall not be responsible for misconduct on the part of any such person
appointed with due care.
(ii) The Indenture Trustee may conclusively act and rely and
shall be protected in acting and relying in good faith on the opinion or advice
of or information obtained from any counsel, accountant, appraiser, agents or
other expert or adviser, whether retained or employed by the Trust or by the
Indenture Trustee, in relation to any matter arising in the administration of
the trusts of the Indenture.
(f) The Indenture Trustee may consult with counsel of its selection
and the advice of such counsel or any opinion of counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it under the Indenture in good faith and in reliance thereon.
(g) The Indenture Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by the Indenture at the request or
direction of any of the Holders pursuant to the Indenture, unless such Holders
shall have offered to the Indenture Trustee security or indemnity satisfactory
to it against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction.
(h) The Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Indenture Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Indenture Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of the Trust,
personally or by agent or attorney, with any reasonable costs related thereto to
be paid by Principal Life pursuant to the applicable Expense and Indemnity
Agreement, and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation.
(i) The Indenture Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Indenture
Trustee has actual knowledge thereof or unless written notice of any event which
is in fact such a default is received by a Responsible Officer of the Indenture
Trustee at the Corporate Trust Office of the Indenture Trustee, and such notice
references the Notes and the Indenture and states that a Default or Event of
Default has occurred.
(j) Permissive powers granted to the Indenture Trustee under the
Indenture shall not be construed to be mandatory duties on its part.
(k) The rights and protections afforded to the Indenture Trustee
pursuant to this Article 7 shall also be afforded to the Paying Agent,
Calculation Agent, Registrar or Transfer Agent, or any successor or agent
thereof.
(l) The Indenture Trustee shall have no liability for the actions or
omissions of the Paying Agent, Registrar, Calculation Agent or Transfer Agent,
provided that such action
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or omission is not caused by the Indenture Trustee's own negligence, bad faith
or willful misconduct.
(m) The Indenture Trustee may execute any of the trusts or powers
under the Indenture or perform any duties under the Indenture either directly or
by or through delegates, agents, attorneys, custodians, or nominees, and the
Indenture Trustee shall not be responsible for any misconduct or negligence on
the part, or the supervision, of any agent, attorney, custodian, or nominee
appointed with due care under the Indenture except as otherwise agreed in
writing with the Trust.
(n) The Indenture Trustee may request that the Trust deliver an
officer's certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to the
Indenture, which officer's certificate may be signed by any person authorized to
sign an officer's certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
SECTION 7.07. Not Responsible for Recitals or Issuance of Notes. The
recitals contained in the Indenture and in the Notes, except the certificates of
authentication on the Notes, shall be taken as the statements of the Trust and
neither the Indenture Trustee nor any Agent assumes any responsibility for their
correctness. Neither the Indenture Trustee nor any Agent makes any
representations with respect to any Collateral or as to the validity,
enforceability or sufficiency of the Indenture or of the Notes or of any
security interest created under the Indenture. Neither the Indenture Trustee nor
any Agent shall be accountable for the use or application by the Trust of the
Notes or the proceeds thereof or any money paid to the Trust or upon Trust Order
pursuant to the provisions of the Indenture.
SECTION 7.08. Indenture Trustee May Hold Notes. The Indenture Trustee, in
its individual or any other capacity, may become the owner or pledgee of Notes
and, subject to Section 7.11 and Section 311(a) of the Trust Indenture Act, may
otherwise deal with the Trust with the same rights it would have if it were not
Indenture Trustee.
SECTION 7.09. Money Held in Trust. Money held by the Indenture Trustee in
trust under the Indenture need not be segregated from other funds except to the
extent required by the Indenture or by law. The Indenture Trustee shall be under
no liability for interest on any money received by it under the Indenture and
shall not invest such money, unless otherwise agreed to in writing and permitted
by law.
SECTION 7.10. Compensation and Reimbursement. The Indenture Trustee and the
Agents will be entitled to payment of fees, reimbursement for, and
indemnification with respect to, costs and expenses for services rendered under
the Indenture to the extent provided in the applicable Expense and Indemnity
Agreement and, with respect to only the Indenture Trustee, Section 6.06. Except
as provided in Section 6.06 with respect to the Indenture Trustee, none of the
Indenture Trustee, Paying Agent, Registrar or Transfer Agent shall be entitled
to seek any payment from the Trust with respect to its services under the
Indenture.
SECTION 7.11. Eligibility. The Trust agrees, for the benefit of the
Holders, that there shall at all times be an Indenture Trustee under the
Indenture which shall be a corporation or
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national banking association organized and doing business under the laws of the
United States, any state thereof or the District of Columbia, authorized under
such law to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 subject to supervision or examination by federal
or state authority and having a credit rating of BBB- or better by Standard &
Poor's Ratings Service, a Division of the XxXxxx-Xxxx Companies or a credit
rating of Baa3 or better by Xxxxx'x Investors Service, Inc. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section 7.11, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition as published. If at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect specified in this Article.
In addition, the Indenture Trustee, each successor Indenture Trustee and
each Person appointed to act as co-trustee pursuant to Section 7.15 must be a
"United States person" within the meaning of Section 7701(a)(30) of the Code.
SECTION 7.12. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Section shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 7.13.
(b) The Indenture Trustee may resign at any time by giving not less
than sixty (60) days' prior written notice thereof to the Trust and the Holders
of the Notes. If an instrument of acceptance by a successor Indenture Trustee
shall not have been delivered to the Indenture Trustee within thirty (30) days
after the giving of such notice of resignation, the resigning Indenture Trustee
may petition any court of competent jurisdiction at the expense of the Trust for
the appointment of a successor Indenture Trustee and any and all amounts then
due and owing to the retiring Indenture Trustee shall be paid in full.
(c) The Indenture Trustee may be removed at any time by an Act of
Holders of Notes representing a majority of the aggregate principal amount of
the Outstanding Notes, delivered to the Indenture Trustee and to the Trust. If
an instrument of acceptance by a successor Indenture Trustee shall not have been
delivered to the Indenture Trustee within thirty (30) days after the giving of
such notice of removal, the Indenture Trustee being removed may petition, at the
expense of the Trust, any court of competent jurisdiction for the appointment of
a successor Indenture Trustee with respect to the Notes.
(d) If at any time (i) the Indenture Trustee shall cease to be
eligible under Section 7.11 and shall fail to resign after written request by
the Trust or any Holder (who has been a bona fide Holder of a Note for at least
six months), (ii) shall become incapable of acting or shall be adjudged as
bankrupt or insolvent, or a receiver or liquidator of the Indenture Trustee or
of its property shall be appointed, or any public officer shall take charge or
control of the Indenture Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation or (iii) the Indenture Trustee
shall fail to comply with the obligations imposed upon it under Section 310(b)
of the Trust Indenture Act with respect to the Notes after written request
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therefor by the Trust or any Holder who has been a bona fide Holder of a Note
for at least six months, then, (x) the Trust (except during the existence of an
Event of Default) by a Trust Order may remove the Indenture Trustee, or (y)
subject to Section 6.14, any Holder who has been a bona fide Holder for at least
six months may, on behalf of himself, herself or itself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Indenture
Trustee for any reason, the Trust, by a Trust Order, shall promptly appoint a
successor Indenture Trustee and shall comply with the applicable requirements of
Section 7.13. If, within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Indenture Trustee
shall be appointed by Act of Holders of Notes representing a majority of the
aggregate principal amount of the Outstanding Notes delivered to the Trust and
the retiring Indenture Trustee, the successor Trustee so appointed shall, upon
its acceptance of such appointment in accordance with the applicable
requirements of Section 7.13, become the successor Indenture Trustee and
supersede the successor Indenture Trustee appointed by the Trust. If no
successor Indenture Trustee shall have been so appointed by the Trust or Holders
and shall have accepted appointment in the manner provided in the Indenture, any
Holder who has been a Holder for at least six months may (subject to Section
6.14), on behalf of himself, herself or itself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee.
(f) The Trust shall give notice of each resignation and each removal
of the Indenture Trustee and each appointment of a successor Indenture Trustee
by mailing written notice of such event by first-class mail, postage prepaid, to
the Holders of the Notes, if any, as their names and addresses appear in the
Register. Each notice shall include the name of the successor Indenture Trustee
and the address of its Corporate Trust Office.
(g) Any successor Indenture Trustee shall satisfy all applicable
requirements under the Indenture.
SECTION 7.13. Acceptance of Appointment by Successor.
(a) Every successor Indenture Trustee appointed under the Indenture
shall execute, acknowledge and deliver to the Trust and the retiring Indenture
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Indenture Trustee shall become effective and such
successor Indenture Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Indenture Trustee. Notwithstanding the foregoing, on request of the Trust or the
successor Indenture Trustee, such retiring Indenture Trustee shall, upon payment
of all amounts owed to it, execute and deliver an instrument transferring to
such successor Indenture Trustee all the rights, powers and trusts of the
retiring Indenture Trustee, and shall duly assign, transfer and deliver to such
successor Indenture Trustee all property and money held by such retiring
Indenture Trustee under the Indenture.
(b) Upon request of any such successor Indenture Trustee, the Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such
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successor Indenture Trustee all such rights, powers and trusts referred to in
this Section, as the case may be.
(c) No successor Indenture Trustee shall accept its appointment unless
at the time of such acceptance such successor Indenture Trustee shall be
qualified and eligible under this Article.
SECTION 7.14. Merger, Conversion, Consolidation or Succession to Business
of Indenture Trustee. Any corporation or national banking association into which
the Indenture Trustee may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, conversion or consolidation to which the Indenture Trustee shall be
a party, or any corporation or national banking association succeeding to all or
substantially all of the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee under the Indenture, without the
execution or filing of any paper or any further act on the part of any of the
parties to the Indenture; provided, however, that such corporation or national
banking association shall be otherwise qualified and eligible under this
Article. In case any Notes have been authenticated, but not delivered, by the
Indenture Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Indenture Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Indenture Trustee had authenticated such Notes.
SECTION 7.15. Co-trustees.
(a) At any time or times, for the purpose of meeting the legal or
regulatory requirements of any jurisdiction in which any portion of any
Collateral may at the time be located, the Trust and the Indenture Trustee shall
have power to appoint, and, upon the written request of the Holders of Notes
representing a majority of the aggregate principal amount of the Outstanding
Notes, the Trust shall for such purpose join with the Indenture Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint one or more Persons approved by the Indenture Trustee to
act as co-trustee, jointly with the Indenture Trustee, of all or any part of the
Collateral, with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section. If the Trust does not join in such
appointment within fifteen (15) days after the receipt by it of a request so to
do, or in case an Event of Default has occurred and is continuing, the Indenture
Trustee alone shall have power to make such appointment.
(b) Should any written instrument from the Trust be required by any
co-trustee so appointed for more fully confirming to such co-trustee such
property, title, right or power, any and all such instruments shall, on request,
be executed, acknowledged and delivered by the Trust.
(c) Every co-trustee shall, to the extent permitted by law, but to
such extent only, be appointed subject to the following terms:
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(i) the Notes shall be authenticated and delivered and all
rights, powers, duties and obligations under the Indenture in respect
of the custody of securities, cash and other personal property held
by, or required to be deposited or pledged with, the Indenture Trustee
under the Indenture, shall be exercised solely by the Indenture
Trustee;
(ii) the rights, powers, duties and obligations conferred by the
Indenture or imposed upon the Indenture Trustee shall be conferred or
imposed upon and exercised or performed by the Indenture Trustee or by
the Indenture Trustee and such co-trustee jointly, as shall be
provided in the instrument appointing such co-trustee, except to the
extent that, under any law of any jurisdiction in which any particular
act is to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers,
duties and obligations shall be exercised and performed by such
co-trustee;
(iii) the Indenture Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Trust evidenced by
a Trust Request, may accept the resignation of or remove any
co-trustee appointed under this Section, and, in case an Event of
Default has occurred and is continuing, the Indenture Trustee shall
have power to accept the resignation of, or remove, any such
co-trustee without the concurrence of the Trust. Upon the written
request of the Indenture Trustee, the Trust shall join with the
Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee so resigned or
removed may be appointed in the manner provided in this Section;
(iv) no co-trustee under the Indenture shall be personally liable
by reason of any act or omission of the Indenture Trustee or any other
such trustee under the Indenture and the Indenture Trustee shall not
be personally liable by reason of any act or omission of any
co-trustee under the Indenture; and
(v) any Act of Holders delivered to the Indenture Trustee shall
be deemed to have been delivered to each such co-trustee.
SECTION 7.16. Appointment and Duties of the Calculation Agent.
(a) Unless the Paying Agent advises the Trust that it is unable to act
as Calculation Agent, the Trust appoints the Paying Agent at its specified
office as Calculation Agent in relation to the Notes in respect of which it is
named as such in the relevant Pricing Supplement for the purposes specified in
the Indenture and all matters incidental thereto.
(b) The Paying Agent accepts its appointment as Calculation Agent in
relation to the Notes in respect of which it is named as such in the relevant
Pricing Supplement and shall perform all matters expressly to be performed by it
in, and otherwise comply with, the terms and conditions of the Notes and the
provisions of the Indenture and, in connection therewith, shall take all such
action as may be incidental thereto. The Paying Agent acknowledges and agrees
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that it shall be named in the relevant Pricing Supplement as Calculation Agent
in respect of the Notes unless the Relevant Agents (or one of the Relevant
Agents) through whom the Notes are issued has agreed with the Trust to act as
Calculation Agent (in which case such Relevant Agent or Agents shall be named as
Calculation Agent in the related Pricing Supplement). If the Calculation Agent
is incapable or unwilling to perform its duties under the Indenture, the
Indenture Trustee will appoint the Paying Agent or another leading commercial
bank to serve as Calculation Agent. Any resignation by or termination of a
Calculation Agent shall not be effective until a successor Calculation Agent has
been appointed.
(c) The Calculation Agent shall:
(i) obtain such quotes and rates and/or make such determinations,
calculations and adjustments as may be required under the Notes and
provide notice of any applicable interest rate calculations or
determinations or periods with respect to the Notes to the Holders of
the Notes upon their request and to the Indenture Trustee, Paying
Agent, the Trust, Principal Life and PFG, and if the Notes are listed
on a stock exchange, and the rules of such exchange so require, such
exchange as soon as possible after the Calculation Agent's
determination or calculation of such interest rates or interest rate
periods, but in no event later than the fourth (4th) Banking Day
thereafter or, earlier in the case of notification to a stock
exchange, if the rules of such exchange so require; and
(ii) maintain a record of all quotations obtained by it and of
all amounts, rates and other items determined or calculated by it and
make such record available for inspection at all reasonable times by
the Trust, the Indenture Trustee, Principal Life, PFG and the Paying
Agent.
(d) The Calculation Agent shall have no liability to the Holders of
Notes in respect of any determination, calculation, quote or rate made or
provided by the Calculation Agent.
SECTION 7.17. Changes in Agents.
(a) Any Agent may resign its appointment under the Indenture upon the
expiration of not less than thirty (30) days' notice to that effect to the Trust
(with a copy to the Indenture Trustee); provided, however, that any such notice
which would otherwise expire within thirty (30) days before or after the
Maturity Date or any interest or other payment date of the Notes shall be deemed
to expire on the thirtieth (30th) day following the Maturity Date or, as the
case may be, such interest or other payment date.
(b) The Trust may revoke its appointment of any Agent under the
Indenture by giving not less than thirty (30) days' notice to the applicable
Agent and the Indenture Trustee to that effect.
(c) The appointment of any Agent under the Indenture shall terminate
forthwith if any of the following events or circumstances shall occur or arise,
namely, such Agent becomes incapable of acting; is adjudged bankrupt or
insolvent; files a voluntary petition in bankruptcy or makes an assignment for
the benefit of its creditors or consents to the
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appointment of a receiver, administrator or other similar official of all or any
substantial part of its property or admits in writing its inability to pay or
meet its debts as they mature or suspends payment thereof; a resolution is
passed or an order is made for the winding-up or dissolution of such Agent; a
receiver, administrator or other similar official of such Agent or of all or any
substantial part of its property is appointed; an order of any court is entered
approving any petition filed by or against such Agent under the provisions of
any applicable bankruptcy or insolvency law; or any public officer takes charge
or control of such Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation.
(d) The Trust may (and shall where necessary to comply with the terms
and conditions of the Notes) appoint substitute or additional agents in relation
to the Notes and shall forthwith notify the other parties to the Indenture,
whereupon the parties to the Indenture and such substitute or additional agents
shall thereafter have the same rights and obligations among them as would have
been the case had they then entered into an agreement in the form mutatis
mutandis of the Indenture.
(e) If any Agent gives notice of its resignation in accordance with
this Section 7.17, the provisions of paragraph (d) of Section 7.17 apply and by
the tenth (10th) day before the expiration of such notice a successor to such
Agent in relation to such Notes has not been appointed by the Trust, such Agent
may itself, following such consultation with the Trust as may be practicable in
the circumstances, appoint as its successor any reputable and experienced bank
or financial institution (which will ensure compliance with the terms and
conditions of the Notes) and give notice of such appointment in accordance with
the terms and conditions of the Notes, whereupon the parties to the Indenture
and such successor agent shall thereafter have the same rights and obligations
among them as would have been the case had they then entered into an agreement
in the form mutatis mutandis of the Indenture.
(f) Upon any resignation or revocation becoming effective under this
Section, the relevant Agent shall:
(i) be released and discharged from its obligations under the
Indenture;
(ii) repay, in accordance with the applicable Expense and
Indemnity Agreement, to Principal Life such part of any fee paid to it
as may be agreed between the relevant Agent and Principal Life;
(iii) in the case of the Paying Agent, deliver to the Trust and
to the successor Paying Agent a copy, certified as true and up-to-date
by an officer of the Paying Agent, of the records maintained by it in
accordance with Section 3.04;
(iv) in the case of the Registrar, deliver to the Trust and to
the successor Registrar a copy, certified as true and up-to-date by an
officer of such Registrar, of each of the Registers and other records
maintained by it in accordance with Section 2.06;
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(v) in the case of a Calculation Agent, deliver to the Trust and
to the successor Calculation Agent a copy, certified as true and
up-to-date by an officer of such Calculation Agent of the records
maintained by it in accordance with Section 7.16; and
(vi) upon payment to it by Principal Life of all amounts owed to
it, forthwith transfer all moneys and papers (including any unissued
Global Notes or Definitive Notes) held by it under the Indenture to
its successor in that capacity and, upon appropriate notice, provide
reasonable assistance to such successor for the discharge by it of its
duties and responsibilities under the Indenture.
(g) Any corporation into which any Agent may be merged or converted,
any corporation with which any Agent may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which any Agent shall
be a party or any corporation succeeding to all or substantially all the
corporate agency business of such Agent, shall, to the extent permitted by
applicable law, be the successor to such Agent under the Indenture and in
relation to the Notes without any further formality, whereupon the parties to
the Indenture and such successor agent shall thereafter have the same rights and
obligations among them as would have been the case had they then entered into an
agreement in the form mutatis mutandis of the Indenture. Notice of any such
merger, conversion, consolidation or asset transfer shall forthwith be given by
such successor to the Trust and the other parties to the Indenture.
(h) If any Agent decides to change its specified office (which may
only be effected within the same city) it shall give notice to the Trust (with a
copy to the Indenture Trustee) of the address of the new specified office
stating the date on which such change is to take effect, which date shall be not
less than thirty (30) days after the date of such notice. The relevant Agent
shall at its own expense not less than fourteen (14) days prior to the date on
which such change is to take effect (unless the appointment of the relevant
Agent is to terminate pursuant to any of the foregoing provisions of this
Section on or prior to the date of such change) publish or cause to be published
notice thereof.
Upon the execution of the Indenture and thereafter forthwith upon any change of
the same, the Trust shall deliver to the Indenture Trustee (with a copy to the
Paying Agent) a list of the Authorized Signatories of the Trust together with
certified specimen signatures of the same.
SECTION 7.18. Limitation of Trustee Liability. It is expressly understood
and agreed by the parties that (a) the Indenture is executed and delivered by
U.S. Bank Trust National Association, not individually or personally, but solely
as trustee of the Trust, in the exercise of the powers and authority conferred
and vested in it, pursuant to the Trust Agreement, (b) each of the
representations, undertakings and agreements in the Indenture made on the part
of the Trust is made and intended not as personal representations, undertakings
and agreements by U.S. Bank Trust National Association, but is made and intended
for the purpose of binding only the Trust, (c) nothing contained in the
Indenture shall be construed as creating any liability on the part of U.S. Bank
Trust National Association, individually or personally, to perform any covenant
either expressed or implied contained in the Indenture, all such liability, if
any, being expressly waived by the parties to the Indenture and by any person
claiming by, through or under the parties to the Indenture, and (d) under no
circumstances shall U.S. Bank Trust National Association, be
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personally liable for the payment of any indebtedness or expenses of the Trust
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Trust under the Indenture or any
other related documents.
ARTICLE 8
SUPPLEMENTAL INDENTURES
SECTION 8.01. Supplemental Indentures Without Consent of Holders. Without
notice to, or the consent of, any Holder, the Trust and the Indenture Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental to the Indenture, in form satisfactory to the Indenture Trustee,
for the purpose of:
(a) curing any ambiguity or correcting or supplementing any provision
contained in the Indenture, in the Notes or in any supplemental indenture which
may be defective or inconsistent with any other provision contained in the
Indenture, the Notes, the Funding Agreement or any other Program Documents,
which shall not materially adversely affect the interests of any Holder of the
Notes;
(b) evidencing and providing for the acceptance of appointment under
the Indenture of a successor Indenture Trustee and to add or to change any of
the provisions of the Indenture as shall be necessary to provide for or
facilitate the administration of the Trust or of the Notes under the Indenture
by more than one trustee;
(c) adding to the covenants of the Trust or the Indenture Trustee for
the benefit of the Holders of the Notes or to surrender any right or power
conferred in the Indenture on the Trust;
(d) adding any additional Events of Default;
(e) to provide for the issuance of and establish the form and terms
and conditions of Notes as provided in Section 2.02; or
(f) to establish the form of any certifications required to be
furnished pursuant to the terms of the Indenture or of the Notes.
Notwithstanding any other provision, the Trust will not enter into any
supplemental indenture with the Indenture Trustee or permit the Indenture to be
amended or modified if such supplemental indenture, amendment or modification
would cause the Trust not to be disregarded or treated as a grantor trust
(assuming the Trust were not disregarded) for United States federal income tax
purposes.
The Indenture Trustee shall be entitled to receive and rely on an Opinion
of Counsel as to whether any such supplemental indenture complies with the
requirements of Section 8.01(a), if applicable, and any such opinion shall be
conclusive on the Holders.
SECTION 8.02. Supplemental Indenture With Consent of Holders.
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(a) With the consent of the Holders of Notes representing a majority
in aggregate principal amount of all Outstanding Notes affected by such
supplemental indenture, by Act of said Holders delivered to the Trust and the
Indenture Trustee, the Trust and the Indenture Trustee may enter one or more
indentures supplemental to the Indenture 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 the Holders of the
Notes under the Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Note affected
thereby:
(i) change the Stated Maturity Date of the principal of, or the
time of payment of interest on, any Note;
(ii) reduce the principal amount of, or the interest on, any
Note;
(iii) change any Place of Payment where, or the coin or currency
in which the principal of, or interest on, any Note is payable;
(iv) impair or affect the right of any Holder to institute suit
for the enforcement of any payment on or with respect to the Notes;
(v) reduce the percentage of the aggregate principal amount of
the Outstanding Notes, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of
which is required for any waiver of compliance with provisions of the
Indenture or defaults thereunder and their consequences provided for
in the Indenture;
(vi) modify any of the provisions of this Section or similar
provisions, except to increase any percentage specified in the
Indenture or to provide that additional provisions of the Indenture
cannot be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby;
(vii) modify or alter the provisions of the definition of the
term "Outstanding";
(viii) modify or affect in any manner adverse to the interest of
any Holder the terms and conditions of the obligations of the Trust
regarding the due and punctual payment of the principal of or interest
on, or any other amounts due with respect to, the Notes; or
(ix) permit the creation of any Lien ranking prior to or on a
parity with the Lien of the Indenture with respect to any part of any
Collateral or terminate the Lien of the Indenture on any property held
for the benefit and security of Holders at any time subject to the
Indenture or deprive any Holder of the security afforded by the Lien
of the Indenture.
(b) The Indenture Trustee may in its discretion determine whether or
not any Notes would be affected by any supplemental indenture (and may receive
and conclusively rely upon an Opinion of Counsel in doing so) and any such
determination shall be conclusive upon all
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the Holders, whether theretofore or thereafter authenticated and delivered under
the Indenture. The Indenture Trustee shall not be liable for any such
determination made in good faith. It shall not be necessary for any Act of
Holders under this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act shall approve the
substance thereof. Promptly after the execution by the Trust and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Holders of the Notes a notice setting forth in general
terms the substance of such supplemental indenture. Any failure of the Trust to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
(c) Notwithstanding any other provision, the Trust will not enter into
any supplemental indenture with the Indenture Trustee or permit the Indenture to
be amended or modified if such supplemental indenture, amendment or modification
would cause the Trust not to be treated as a disregarded entity or as a grantor
trust (assuming it was not a disregarded entity) for United States federal
income tax purposes.
SECTION 8.03. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by the
Indenture, the Indenture Trustee shall be entitled to receive, and (subject to
Section 7.01) shall be fully protected in relying upon, an Opinion of Counsel or
officer's certificate stating that the execution of such supplemental indenture
is authorized or permitted by the Indenture. The Indenture Trustee may, but
shall not be obligated to, enter into any such supplemental indenture that
affects the Indenture Trustee's own rights, duties, indemnities or immunities
under the Indenture or otherwise.
SECTION 8.04. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture under this Article, the Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of the
Indenture for all purposes; and every Holder of a Note which has theretofore
been or thereafter authenticated and delivered under the Indenture shall be
bound thereby. Further, the Trust shall be bound by any such supplemental
indenture.
SECTION 8.05. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Trust shall so determine,
new Notes so modified as to conform, in the opinion of the Indenture Trustee and
the Trust, to any such supplemental indenture may be prepared and executed by
the Trust and authenticated by the Indenture Trustee and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
SECTION 8.06. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
73
ARTICLE 9
NON-RECOURSE PROVISIONS
SECTION 9.01. Nonrecourse Enforcement. Notwithstanding anything to the
contrary contained in the Indenture or any Notes, none of Principal Life, its
officers, directors, Affiliates, employees or agents, PFG, its officers,
directors, Affiliates, employees or agents, or the Trust or any of the Trustee,
the Trust Beneficial Owner, the Agents or any of their respective officers,
directors, Affiliates, employees or agents (the "NONRECOURSE PARTIES") will be
personally liable for the payment of any principal, interest or any other sums
at any time owing under the terms of the Notes. If any Event of Default shall
occur with respect to the Notes, the right of the Holders of the Notes and the
Indenture Trustee on behalf of such Holders in connection with a claim on such
Notes shall be limited solely to a proceeding against the Collateral. Neither
such Holders nor the Indenture Trustee on behalf of such Holders will have the
right to proceed against the Nonrecourse Parties or the assets held in any other
trust organized under the Program or otherwise, to enforce the Notes (except
that to the extent they exercise their rights, if any, to (i) seize the Funding
Agreement, they may enforce the Funding Agreement against Principal Life, its
successors or assigns or (ii) collect under the Guarantee, they may enforce
their rights under the Guarantee against PFG, its successors or assigns) or for
any deficiency judgment remaining after foreclosure of any property included in
the Collateral.
It is expressly understood and agreed that nothing contained in this
Section 9.01 shall in any manner or way constitute or be deemed a release of the
debt or other obligations evidenced by the Notes or otherwise affect or impair
the enforceability against the Trust of the liens, assignments, rights and
security interests created by the Indenture, the Collateral or any other
instrument or agreement evidencing, securing or relating to the indebtedness or
the obligations evidenced by the Notes. Nothing in this Section 9.01 shall
preclude the Holders from foreclosing upon any property included in the
Collateral.
Holders may not seek to enforce rights against the Trust (a) by commencing
any recovery or enforcement proceedings against the Trust, (b) by applying to
wind up the Trust, (c) otherwise than through the Indenture Trustee in its
exercise of powers to petition a court to appoint a receiver or administrator to
the Trust or for the Collateral, (d) by making any statutory demand upon the
Trust under applicable corporation law, or (e) in any other manner except as may
be provided in the Indenture or in the Notes.
ARTICLE 10
MEETINGS OF HOLDERS OF NOTES
SECTION 10.01. Purposes for Which Meetings May be Called. A meeting of
Holders of Notes may be called at any time and from time to time pursuant to
this Article to make, give or take any request, demand, authorization,
direction, notice, consent, waiver or other action provided by the Indenture to
be made, given or taken by the Holders of Notes.
SECTION 10.02. Call, Notice and Place of Meetings. (a) Unless otherwise
provided in the Notes, the Indenture Trustee may at any time call a meeting of
Holders of the Notes for any purpose specified in Section 10.01, to be held at
such time and at such place in The City of New York or such other place as the
Indenture Trustee shall determine. Notice of every meeting of
74
Holders, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 1.06, not less than twenty-one (21) nor more than 180
days prior to the date fixed for the meeting.
(b) In case at any time the Trust or the Holders of at least ten
percent (10%) in principal amount of the Outstanding Notes shall have requested
the Indenture Trustee to call a meeting of Holders for any purpose specified in
Section 10.01, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Indenture Trustee shall not have
made the first publication or mailing of the notice of such meeting within
twenty-one (21) days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided in the Indenture, then the
Trust or the Holders of Notes in the amount above specified, as the case may be,
may determine the time and the place in The City of New York and may call such
meeting for such purposes by giving notice thereof as provided in paragraph (a)
of this Section.
SECTION 10.03. Persons Entitled to Vote at Meetings. To be entitled to vote
at any meeting of Holders, a Person shall be (a) a Holder of one or more
Outstanding Notes; or (b) a Person appointed by an instrument in writing as
proxy for a Holder or Holders of one or more Outstanding Notes by such Holder or
Holders. The only Persons who shall be entitled to be present or to speak at any
meeting of Holders shall be the Persons entitled to vote at such meeting and
their counsel, any representatives of the Indenture Trustee and its counsel and
any representatives of the Trust and its counsel.
SECTION 10.04. Quorum; Action. The Persons entitled to vote a majority in
principal amount of the Outstanding Notes shall constitute a quorum for a
meeting of Holders; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which the Indenture expressly
provides may be given by the Holders of a majority in principal amount of the
Outstanding Notes, the Persons entitled to vote a majority in principal amount
of the Outstanding Notes shall constitute a quorum. In the absence of a quorum
within thirty (30) minutes after the time appointed for any such meeting, the
meeting shall, if convened at the request of Holders, be dissolved. In any other
case the meeting may be adjourned for a period of not less than ten (10) days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than ten
(10) days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 10.02(a), except that such notice need be
given only once not less than five (5) days prior to the date on which the
meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned
meeting shall state expressly the percentage, as provided above, of the
principal amount of the Outstanding Notes which shall constitute a quorum.
Except as limited by Section 8.02(a) and Section 6.02, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted only by the affirmative vote of the Holders
of a majority in principal amount of the Outstanding Notes; provided, however,
that, except as limited by Section 8.02(a) and Section 6.02, any resolution with
respect to any consent or waiver which the Indenture expressly provides may be
given by the Holders of a majority in principal amount of the Outstanding Notes
75
may be adopted at a meeting or an adjourned meeting duly convened and at which a
quorum is present as aforesaid only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Notes; and provided, further,
that, except as limited by Section 8.02(a) and Section 6.02, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which the Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage, which is less than a majority
in principal amount of the Outstanding Notes may be adopted at a meeting or an
adjourned meeting duly reconvened and at which a quorum is present as aforesaid
by the affirmative vote of the Holders of such specified percentage in principal
amount of the Outstanding Notes.
Notwithstanding the preceding two paragraphs, any request, demand,
authorization, direction, notice, consent, waiver or other action of Holders
under the Indenture or the Notes may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as otherwise expressly
provided in the Indenture, such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee and, when it is
expressly required, to the Trust. The percentage of principal amount of the
Outstanding Notes held by the Holders delivering such instruments which is
required to approve any such action shall be the same as the percentage required
for approval at a duly convened meeting of Holders.
Any resolution passed or decision taken at any meeting of Holders duly held
or by duly executed instrument in accordance with this Section shall be binding
on all Holders of the Notes, whether or not such Holders were present or
represented at the meeting.
SECTION 10.05. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of the Indenture, the
Indenture Trustee may make such reasonable regulations as it may deem advisable
for any meeting of Holders in regard to proof of the holding of Notes and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Notes shall be proved in the
manner specified in Section 1.04 and the appointment of any proxy shall be
proved in the manner specified in Section 1.04. Such regulations may provide
that written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 1.04 or other
proof.
(b) The Indenture Trustee shall, by an instrument in writing, appoint
a temporary chairman of the meeting, unless the meeting shall have been called
by the Trust or by Holders as provided in Section 10.02(b), in which case the
Trust or the Holders calling the meeting, as the case may be, shall in like
manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons entitled to
vote a majority in principal amount of the Outstanding Notes represented at the
meeting.
76
(c) At any meeting, each Holder or proxy shall be entitled to one vote
for each $1,000 of principal amount of Notes held or represented by him, her or
it; provided, however, that no vote shall be cast or counted at any meeting in
respect of any Note challenged as not Outstanding and ruled by the chairman of
the meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder or proxy.
(d) Notwithstanding any other provision in the Indenture to the
contrary, any meeting of Holders duly called pursuant to Section 10.02 at which
a quorum is present may be adjourned from time to time by Persons entitled to
vote a majority in principal amount of the Outstanding Notes represented at the
meeting; and the meeting may be held as so adjourned without further notice.
SECTION 10.06. Counting Votes and Recording Action of Meetings. The vote
upon any resolution submitted to any meeting of Holders shall be by written
ballots on which shall be subscribed the signatures of the Holders or of their
representatives by proxy and the principal amounts and serial numbers of the
Outstanding Notes held or represented by them. The permanent chairman of the
meeting shall appoint two inspectors of votes who shall count all votes cast at
the meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record, at least in triplicate, of the proceedings
of each meeting of Holders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was given as provided in Section 10.02 and, if
applicable, Section 10.04. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Trust, and another to the Indenture Trustee to be
preserved by the Indenture Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
ARTICLE 11
NOTES IN FOREIGN CURRENCIES
SECTION 11.01. Notes in Foreign Currencies. In the absence of any provision
to the contrary in the form of Notes, whenever the Indenture provides for (a)
any action by, or the determination of any of the rights of, the Holders of
Notes if not all of the Notes are denominated in the same currency, or (b) any
distribution to the Holders of Notes of any amount in respect of any Note
denominated in a currency other than Dollars, then all foreign denominated Notes
shall be treated for any such action, determination of rights or distribution as
that amount of Dollars that could be obtained for such amount on such reasonable
basis of exchange and as of the Regular Record Date with respect to such Notes
for such action, determination of rights or distribution (or, if there shall be
no applicable Regular Record Date, such other date reasonably proximate to the
date of such action, determination of rights or distribution) as the Trust may
specify in a written notice to the Indenture Trustee or, in the absence of such
written notice, as the Indenture Trustee may determine.
77
EXHIBIT A-1
FORM OF RETAIL GLOBAL NOTE
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.
REGISTERED NO.: CUSIP NO.: PRINCIPAL AMOUNT: U.S. $
PRINCIPAL LIFE INCOME FUNDINGS TRUST o
PRINCIPAL(R) LIFE CORENOTES(R)
Original Issue Date: Floating Rate Note: [ ] Yes [ ] No. If yes,
Issue Price: Regular Floating Rate Notes [ ]
Stated Maturity Date: Floating Rate/ Fixed Rate Notes: [ ]
Settlement Date: Interest Rate:
Securities Exchange Listing: [ ] Yes [ ] No. If yes, Interest Rate Basis(es):
indicate name(s) of Securities Exchange(s): LIBOR [ ]
__________________________________. [ ] LIBOR Reuters Page:
Depositary: [ ] LIBOR Moneyline Telerate Page:
Authorized Denominations: LIBOR Currency:
--------
"Principal(R)" is a registered service xxxx of Principal Financial Services,
Inc. and is used under license. "CoreNotes(R)" is a registered service xxxx of
Xxxxxxx Xxxxx & Co.
Collateral held in the Trust: Principal Life Insurance CMT Rate [ ]
Company Funding Agreement No. __, the related Principal Designated CMT Telerate Page:
Financial Group, Inc. Guarantee which fully and If Telerate Page7052:
unconditionally guarantees the payment obligations of [ ] Weekly Average
Principal Life Insurance Company under the Funding [ ] Monthly Average
Agreement, all proceeds of the Funding Agreement and Designated CMT Maturity Index:
the related Guarantee and all rights and books and CD Rate [ ]
records pertaining to the foregoing. Commercial Paper Rate [ ]
Interest Rate or Formula: Prime Rate [ ]
Fixed Rate Note: [ ] Yes [ ] No. If yes, Treasury Rate [ ]
Interest Rate: Index Maturity:
Interest Payment Frequency: Spread and/or Spread Multiplier:
Day Count Convention: Initial Interest Rate, if any:
Additional/Other Terms: Initial Interest Reset Date:
Discount Note: [ ] Yes [ ] No. If yes, Interest Reset Dates:
Total Amount of Discount: Interest Determination Date(s):
Initial Accrual Period of Discount: Interest Payment Dates:
Interest Payment Dates: Maximum Interest Rate, if any:
Additional/Other Terms: Minimum Interest Rate, if any:
Redemption Provisions: [ ] Yes [ ] No. If yes, Fixed Rate Commencement Date, if any:
Initial Redemption Date: Fixed Interest Rate, if any:
Additional/Other Terms: Day Count Convention:
Repayment Provisions: [ ] Yes [ ] No. If yes, Additional/Other Terms:
Repayment Date(s): Regular Record Date(s):
Repayment Price: Sinking Fund:
Additional/Other Terms: Calculation Agent:
Additional/Other Terms:
Survivor's Option: [ ] Yes [ ] No.
If yes, the attached Survivor's
Option Rider is incorporated into this
Note.
Trust Put Limitation:
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 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
A-1-2
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 more than a percentage equal to the
product of 0.25% 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.
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.
A-1-3
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: ________________________________
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: _____________________________
Authorized Signatory
A-1-4
[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":
A-1-5
(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, LIBOR, the Prime Rate or the Treasury
Rate (each as defined below).
(ii) Effective Rate. The rate derived from the applicable Interest
Rate Basis 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.
A-1-6
(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 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 Commercial
Paper Rate and the Prime Rate--the Business Day immediately preceding
the related Interest Reset Date; (2) with respect to the CD Rate and
the CMT Rate--the second Business Day preceding the related Interest
Reset Date; (3) with respect to LIBOR--the second London Banking Day
(as defined below) preceding the related Interest Reset Date; and (4)
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 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
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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 rounded upwards.
All dollar amounts used in or resulting from any calculation on this
Floating Rate Note will be rounded to the nearest cent.
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(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, 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. 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 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//xxx.xxxxxxxxxxxxxx.xxx/xxxxxxxx/X00/xxxxxx, or any
successor site or publication.
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(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 CMT Moneyline Telerate Page 7051 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
Moneyline Telerate (or any successor service) on page
7051 (or any other page as may replace the specified
page on that service) ("Moneyline Telerate Page 7051"),
for the particular Interest Determination Date; or
ii. if the rate referred to in clause (i) does not so
appear on Moneyline Telerate Page 7051, 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 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
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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 CMT Moneyline Telerate Page 7052 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
as published in H.15(519) opposite the caption
"Treasury Constant Maturities", as the yield is
displayed on Moneyline Telerate (or any successor
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service) (on page 7052 or any other page as may replace
the specified page on that service) ("Moneyline
Telerate Page 7052"), 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 Moneyline Telerate Page 7052, 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
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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 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--
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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 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) 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) if "LIBOR Moneyline Telerate" is specified
on the face hereof or if neither "LIBOR Reuters" nor "LIBOR Moneyline
Telerate" is 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 "LIBOR Reuters" is
specified on the face hereof, the arithmetic mean of the offered
rates, calculated by the Calculation Agent, or the offered rate, if
the LIBOR Page by its terms provides only for a single rate, for
deposits in the LIBOR Currency having the particular Index Maturity,
commencing on the related Interest Reset Date, that appear or appears,
as the case may be, on the LIBOR Page as of 11:00 A.M., London time,
on the particular Interest Determination Date; or (3) if fewer than
two offered rates appear, or no rate appears, as the case may be, on
the particular Interest Determination Date on the LIBOR Page as
specified in clause (1) or (2), as applicable, the rate calculated by
the Calculation Agent 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 purchasing agent) in the London interbank market 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
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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 (4) if fewer than
two offered quotations referred to in clause (3) 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 purchasing agent) 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 (5) if the banks so
selected by the Calculation Agent are not quoting as mentioned in
clause (4), 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 either:
(1) if "LIBOR Reuters" is specified on the face hereof, the display on
the Reuter Monitor Money Rates 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; or (2)
if "LIBOR Moneyline Telerate" is specified on the face hereof or
neither "LIBOR Reuters" nor "LIBOR Moneyline Telerate" is specified on
the face hereof as the method for calculating LIBOR, the display on
Moneyline Telerate (or any successor service) on the page specified on
the face hereof (or any other page as may replace such page on such
service) for the purpose of displaying the London interbank rates of
major banks for the LIBOR Currency.
(E) 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
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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.
(F) 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 Moneyline Telerate (or
any successor service) on page 56 (or any other page as may replace
that page on that service) ("Moneyline Telerate Page 56") or page 57
(or any other page as may replace that page on that service)
("Moneyline Telerate Page 57"); 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 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
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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 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
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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 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 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.
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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 the terms and conditions of Section 2.04 of
the Indenture, 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.
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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.
(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 will not 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
A-1-20
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.
A-1-21
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).
$ _____________________ _________________________________________
NOTICE: The signature on this Option to
DATE: _________________ Elect Repayment must correspond with the
name as written upon the face of this
Note in every particular, without
alteration or enlargement or any change
whatever.
Principal Amount to be repaid, if amount to be Fill in for registration of Notes
repaid is less than the Principal Amount of if to be issued otherwise than this
Note (Principal Amount remaining must be to the registered Holder:
an authorized denomination)
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 this
Note was held by the Beneficial Owner or the estate of that Beneficial Owner for
a period beginning at least 6 months immediately prior to the death of such
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(R) Life CoreNotes(R) 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(R) Life
CoreNotes(R) 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").
(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).
(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
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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(R) Life CoreNotessm program that have been tendered pursuant to the
valid exercise of the Survivor's Option during such year has exceeded the Annual
Put Limitation, the Individual Put Limitation or 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 was the Beneficial
Owner of this Note at the time of death and the interest in this Note was owned
by the deceased Beneficial Owner or his or her estate for a period beginning at
least six months immediately prior to the death of such 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 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
A-1-24
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.
A-1-25
ANNEX A
REPAYMENT ELECTION FORM
PRINCIPAL LIFE INSURANCE COMPANY
PRINCIPAL(R) LIFE CORENOTES(R)
CUSIP NUMBER ________
To: [Name of Issuing Trust] (the "TRUST")
The undersigned financial institution (the "FINANCIAL INSTITUTION")
represents the following:
o 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(R) Life CoreNotes(R) (CUSIP
No. ____________) (the "NOTES").
o At the time of his or her death, the Deceased Beneficial Owner owned
Notes in the principal amount listed below.
o The Deceased Beneficial Owner acquired the Notes at least six (6)
months before the date of death of such Deceased Beneficial Owner.
o 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:
o The Financial Institution shall follow the instructions (the
"INSTRUCTIONS") accompanying this Repayment Election Form (this
"FORM").
o 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.
o 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
--------
"Principal(R)" is a registered service xxxx of Principal Financial Services,
Inc. and is used under license. "CoreNotes(R)" is a service xxxx of Xxxxxxx
Xxxxx & Co.
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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.
o Repayment elections may not be withdrawn.
o 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.
o 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.
o 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.
A-1-27
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 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:
o 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.
o 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.
o 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.
o 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).
4. Indicate the name of the Authorized Representative requesting repayment on
line (3).
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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
000 Xxxx Xxxxxx, 14th Floor, Xxxx 0
Xxx Xxxx, Xxx Xxxx 00000
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 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: Corporate Trust
Administration, telephone number: (000) 000-0000.
15. For assistance with this Form or any questions relating thereto, please
contact U.S. Bank Trust National Association at 000 Xxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: Corporate Trust Administration,
telephone number: (000) 000-0000.
X-0-00
XXXXXXX X-0
FORM OF INSTITUTIONAL GLOBAL NOTE
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.
REGISTERED NO.: CUSIP NO.: PRINCIPAL AMOUNT: U.S. $
Principal Life Income Fundings Trust o
SENIOR SECURED MEDIUM-TERM NOTES
Original Issue Date: Floating Rate Note: [ ] Yes [ ] No. If yes,
Issue Price: Regular Floating Rate Notes [ ]
Stated Maturity Date: Inverse Floating Rate Notes [ ]
Settlement Date: Floating Rate/ Fixed Rate Notes: [ ]
Securities Exchange Listing: [ ] Yes [ ] No. If yes, Interest Rate:
indicate name(s) of Securities Exchange(s): Interest Rate Basis(es):
__________________________________. LIBOR [ ]
Depositary: [ ] LIBOR Reuters Page:
Authorized Denominations: [ ] LIBOR Moneyline Telerate Page:
Collateral held in the Trust: Principal Life Insurance LIBOR Currency:
Company Funding Agreement No. o , the related EURIBOR [ ]
Principal Financial Group, Inc. Guarantee which fully
CMT Rate [ ]
and unconditionally guarantees the payment obligations of Designated CMT Telerate Page:
Principal Life Insurance Company under the Funding If Telerate Page 7052:
Agreement, all proceeds of the Funding Agreement and [ ] Weekly Average
the related Guarantee and all rights and books and [ ] Monthly Average
records pertaining to the foregoing. Designated CMT Maturity Index:
Additional Amounts to be Paid: [ ] Yes [ ] No CD Rate [ ]
Interest Rate or Formula: Commercial Paper Rate [ ]
Fixed Rate Note: [ ] Yes [ ] No. If yes, Eleventh District Cost of Funds Rate [ ]
Interest Rate: Federal Funds Rate [ ]
Interest Payment Frequency: Prime Rate [ ]
Day Count Convention: Treasury Rate [ ]
Additional/Other Terms: Index Maturity:
Amortizing Note: [ ] Yes [ ] No. If yes, Spread and/or Spread Multiplier:
Amortization schedule or formula: Initial Interest Rate, if any:
Additional/Other Terms: Initial Interest Reset Date:
Discount Note: [ ] Yes [ ] No. If yes, Interest Reset Dates:
Total Amount of Discount: Interest Determination Date(s):
Initial Accrual Period of Discount: Interest Payment Dates:
Interest Payment Dates: Maximum Interest Rate, if any:
Additional/Other Terms: Minimum Interest Rate, if any:
Redemption Provisions: [ ] Yes [ ] No. If yes, Fixed Rate Commencement Date, if any:
Initial Redemption Date: Fixed Interest Rate, if any:
Initial Redemption Percentage: Day Count Convention:
Annual Redemption Percentage Reduction, Additional/Other Terms:
if any: Regular Record Date(s):
Additional/Other Terms: Sinking Fund:
Repayment Provisions: [ ] Yes [ ] No. If yes, Specified Currency:
Repayment Date(s): Exchange Rate Agent:
Repayment Price: Calculation Agent:
Additional/Other Terms: Additional/Other Terms:
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. Unless otherwise specified above, 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"). If the
Specified Currency specified above is other than U.S. Dollars, the Holder (as
defined in the Indenture) shall receive such payments in such Foreign Currency
(as hereinafter defined). The "Principal Amount" of this Note at any time means
(1) if this Note is a Discount Note (as hereinafter
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defined), the Amortized Face Amount (as hereinafter defined) at such time (as
defined in Section 3(c) on the reverse hereof) and (2) in 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 more than a percentage equal to the
product of 0.25% 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-2-3
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.
A-2-4
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: ________________________________
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: _____________________________
Authorized Signatory
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[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.
(a) Unless specified otherwise on the face hereof, this Note is denominated
in, and payments of principal, premium, if any, and/or interest, if any, will be
made in U.S. Dollars. If specified as the Specified Currency, this Note may be
denominated in, and payments of principal, premium, if any, and/or interest, if
any, may be made in a single currency other than U.S. Dollars (a "Foreign
Currency"). If this Note is denominated in a Foreign Currency, the Holder of
this Note is required to pay for this Note in the Specified Currency.
(b) Unless specified otherwise on the face hereof, if this Note is
denominated in a Foreign Currency, the Trust is obligated to make payments of
principal of, and premium, if any, and interest, if any, on, this Note in the
Specified Currency. Any amounts so payable by the Trust in the Specified
Currency will be converted by the Exchange Rate Agent into U.S. Dollars for
payment to the Holder hereof unless otherwise specified on the face of this Note
or the Holder elects, in the manner described below, to receive these amounts in
the Specified Currency. If this Note is denominated in a Foreign Currency, any
U.S. Dollar amount to be received by the Holder hereof will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange
Rate Agent and approved by the Trust for the purchase by the quoting dealer of
the Specified Currency for U.S. Dollars for settlement on that payment date in
the aggregate amount of the Specified Currency payable to all Holders of the
Notes scheduled to receive U.S. Dollar payments and at which the applicable
dealer commits to execute a contract. All currency exchange costs will be borne
by the Holders of the Notes by deductions from any payments. If three bid
quotations are not available, payments will be made in the Specified Currency.
If this Note is denominated in a Foreign Currency, the Holder of this Note may
elect to receive all or a specified portion of any payment of principal,
premium, if any, and/or interest, if any, in the Specified Currency by
submitting a written request to the Indenture Trustee at its Corporate Trust
Office in The City of New York on or prior to the applicable Regular Record Date
or at least 15 calendar days prior to the Maturity Date, as the case may be.
This written request may be mailed or hand delivered or sent by cable, telex or
other form of facsimile transmission. This election will remain in effect until
revoked by written notice delivered to the Indenture Trustee on or prior to a
Regular Record Date or at least 15 calendar days prior to the Maturity Date, as
the case may be. The Holder of a Note denominated in a Foreign Currency to be
held in the name of a broker or nominee should contact their broker or nominee
to determine whether and how an election to receive payments in the Specified
Currency may be made. Unless specified otherwise on the face hereof, if the
Specified Currency is other than U.S. Dollars, a beneficial owner of a Note
represented by a global security which elects to receive payments of principal,
premium, if any, and/or interest, if any, in the Specified Currency must notify
the participant
A-2-6
through which it owns its interest on or prior to the applicable Regular Record
Date or at least 15 calendar days prior to the Maturity Date, as the case may
be, of its election. The applicable participant must notify DTC of its election
on or prior to the third Business Day after the applicable Regular Record Date
or at least 12 calendar days prior to the Maturity Date, as the case may be, and
DTC will notify the Indenture Trustee of that election on or prior to the fifth
Business Day after the applicable Regular Record Date or at least ten calendar
days prior the Maturity Date, as the case may be. If complete instructions are
received by the participant from the applicable beneficial owner and forwarded
by the participant to DTC, and by DTC to the Indenture Trustee, on or prior to
such dates, then the applicable beneficial owner will receive payments in the
Specified Currency.
(c) The Trust will indemnify the Holder hereof against any loss incurred as
a result of any judgment or order being given or made for any amount due under
this Note and that judgment or order requiring payment in a currency (the
"Judgment Currency") other than the Specified Currency, and as a result of any
variation between: (i) the rate of exchange at which the Specified Currency
amount is converted into the Judgment Currency for the purpose of that judgment
or order; and (ii) the rate of exchange at which the Holder, on the date of
payment of that judgment or order, is able to purchase the Specified Currency
with the amount of the Judgment Currency actually received.
(d) Unless otherwise specified on the face hereof, if payment hereon is
required to be made in a Foreign Currency and such currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the Trust's
control, then the Trust will be entitled to make payments with respect hereto in
U.S. Dollars on the basis of the Market Exchange Rate (as hereinafter defined),
computed by the Exchange Rate Agent, on the second Business Day prior to the
particular payment or, if the Market Exchange Rate is not then available, on the
basis of the most recently available Market Exchange Rate.
(e) The "Market Exchange Rate" for the Foreign Currency shall mean the noon
dollar buying rate in The City of New York for cable transfers for the Foreign
Currency as certified for customs purposes (or, if not so certified, as
otherwise determined) by the Federal Reserve Bank of New York.
(f) All determinations made by the Exchange Rate Agent shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on the Holder hereof.
(g) All costs of exchange in respect of this Note, if denominated in a
Foreign Currency, will be borne by the Holder hereof.
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.
A-2-7
(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 Eleventh District Cost of Funds
Rate, the Federal Funds Rate, LIBOR, EURIBOR, the Prime Rate or the
Treasury Rate (each as defined below).
(ii) Effective Rate. The rate derived from the applicable Interest
Rate Basis 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
A-2-8
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 or an Inverse Floating
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) Inverse Floating Rate Notes. If this Note is specified on the
face hereof as an "Inverse Floating Rate Note", this Note will bear
interest at the Fixed Interest Rate minus 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; provided,
however, that interest on this Inverse Floating Rate Note will not be
less than zero. Commencing on the first Interest Reset Date, the rate
at which interest on this Inverse 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.
(vii) 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 Rate Basis, which will reset the Tuesday of each
week; (3) monthly--the fifteenth day of each calendar month, with the
exception of any
A-2-9
monthly reset Floating Rate Note as to which the Eleventh District
Cost of Funds Rate is an applicable Interest Rate Basis, which will
reset on the first calendar day of the 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.
(viii) 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 Commercial
Paper Rate, Federal Funds Rate and the Prime Rate--the Business Day
immediately preceding the related Interest Reset Date; (2) with
respect to the CD Rate and the CMT Rate--the second Business Day
preceding the related Interest Reset Date; (3) with respect to the
Eleventh District Cost of Funds Rate--the last working day of the
month immediately preceding the related Interest Reset Date on which
the Federal Home Loan Bank of San Francisco publishes the Eleventh
District Index (as defined below); (4) with respect to LIBOR and
EURIBOR--the second London Banking Day (as defined below) preceding
the related Interest Reset Date; and (5) 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.
(ix) 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, EURIBOR and the Eleventh District Cost of Funds Rate, which
will be determined on the particular Interest Determination Date. Upon
request of the Holder of a Floating Rate Note, the 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
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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.
(x) 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.
(xi) 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.
(xii) 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 rounded upwards.
All dollar amounts used in or resulting from any calculation on this
Floating Rate Note will be rounded, in the case of U.S. Dollars, to
A-2-11
the nearest cent or, in the case of a Foreign Currency, to the nearest
unit (with one-half cent or unit being rounded upwards).
(xiii) 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 Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR, EURIBOR 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. 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.
(xiv) 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 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
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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//xxx.xxxxxxxxxxxxxx.xxx/xxxxxxxx/X00/xxxxxx, 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 CMT Moneyline Telerate Page 7051 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
Moneyline Telerate (or any successor service) on page
7051 (or any other page as may replace the specified
page on that service) ("Moneyline Telerate Page 7051"),
for the particular Interest Determination Date; or
ii. if the rate referred to in clause (i) does not so
appear on Moneyline Telerate Page 7051, 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 government securities dealers in The City of New
York (which may include the purchasing agent or its
affiliates) (each, a
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"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 CMT Moneyline Telerate Page 7052 is specified on the face
hereof:
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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
as published in H.15(519) opposite the caption
"Treasury Constant Maturities", as the yield is
displayed on Moneyline Telerate (or any successor
service) (on page 7052 or any other page as may replace
the specified page on that service) ("Moneyline
Telerate Page 7052"), 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 Moneyline Telerate Page 7052, 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
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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 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--
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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 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) Eleventh District Cost of Funds Rate Notes. If the Interest Rate
Basis is the Eleventh District Cost of Funds Rate, this Note shall be
deemed an "Eleventh District Cost of Funds Rate Note." Unless
otherwise specified on the face hereof, "Eleventh District Cost of
Funds Rate" means: (1) the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month
in which the particular Interest Determination Date falls as set forth
under the caption "11th District" on the display on Moneyline Telerate
(or any successor service) on page 7058 (or any other page as may
replace the specified page on that service) ("Moneyline Telerate Page
7058") as of 11:00 A.M., San Francisco time, on that Interest
Determination Date; or (2) if the rate referred to in clause (1) does
not so appear on Moneyline Telerate Page 7058, the monthly weighted
average cost of funds paid by member institutions of the Eleventh
Federal Home Loan Bank District that was most recently announced (the
"Eleventh District Index") by the Federal Home Loan Bank of San
Francisco as the cost of funds for the calendar month immediately
preceding that Interest Determination Date; or (3) if the Federal Home
Loan Bank of San Francisco fails to announce the Eleventh District
Index on or prior to the particular Interest Determination Date for
the calendar month immediately preceding that Interest Determination
Date,
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the Eleventh District Cost of Funds Rate in effect on the particular
Interest Determination Date.
(E) 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 on 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
Moneyline Telerate (or any successor service) on page 120 (or any
other page as may replace the specified page on that service)
("Moneyline Telerate Page 120"); or (2) if the rate referred to in
clause (1) does not so appear on Moneyline Telerate Page 120 or 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 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 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 for the last transaction in overnight United States dollar
federal funds arranged by three leading brokers of United States
dollar federal funds transactions in The City of New York (which may
include the purchasing agent or its affiliates) selected by the
Calculation Agent prior to 9:00 A.M., New York City time, on that
Interest Determination Date; or (4) if the brokers so selected by the
Calculation Agent are not quoting as mentioned in clause (3), the
Federal Funds Rate in effect on the particular Interest Determination
Date.
(F) 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) if "LIBOR Moneyline Telerate" is specified
on the face hereof or if neither "LIBOR Reuters" nor "LIBOR Moneyline
Telerate" is 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 "LIBOR Reuters" is
specified on the face hereof, the arithmetic mean of the offered
rates, calculated by the Calculation Agent, or the offered rate, if
the LIBOR Page by its terms provides only for a single rate, for
deposits in the LIBOR Currency having the particular Index Maturity,
commencing on the related Interest Reset Date, that appear or appears,
as the case may be, on the LIBOR Page as of 11:00 A.M., London time,
on the particular Interest Determination Date; or (3) if fewer than
two offered rates appear, or no rate appears, as the case may be, on
the particular Interest Determination Date on the LIBOR Page as
specified in clause (1) or (2), as applicable, the rate calculated by
the Calculation Agent 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
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affiliates of the purchasing agent) in the London interbank market 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 (4) if fewer than two offered quotations
referred to in clause (3) 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 purchasing
agent) 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 (5) if the banks so selected by the
Calculation Agent are not quoting as mentioned in clause (4), 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 either: (1) if
"LIBOR Reuters" is specified on the face hereof, the display on the
Reuter Monitor Money Rates 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; or (2) if
"LIBOR Moneyline Telerate" is specified on the face hereof or neither
"LIBOR Reuters" nor "LIBOR Moneyline Telerate" is specified on the
face hereof as the method for calculating LIBOR, the display on
Moneyline Telerate (or any successor service) on the page specified on
the face hereof (or any other page as may replace such page on such
service) for the purpose of displaying the London interbank rates of
major banks for the LIBOR Currency.
(G) EURIBOR Notes. If the Interest Rate Basis is EURIBOR, this Note
shall be deemed a "EURIBOR Note." Unless otherwise specified on the
face hereof, "EURIBOR" means: (1) with respect to any Interest
Determination Date relating to this EURIBOR Note (a "EURIBOR Interest
Determination Date"), the rate for deposits in euros as sponsored,
calculated and published jointly by the European Banking Federation
and ACI - The Financial Market Association, or any company established
by the joint sponsors for purposes of compiling and publishing those
rates, having the Index Maturity specified on the face hereof,
commencing on the applicable Interest Reset Date, as the rate appears
on Moneyline Telerate or any successor service, on page 248 (or any
other page as may replace that specified page on the service)
("Moneyline Telerate Page 248") as of 11:00 A.M., Brussels time, on
the applicable EURIBOR Interest Determination Date; or (2) if such
rate does not appear on Moneyline Telerate Page 248, or is not so
published by 11:00 A.M., Brussels time, on the applicable EURIBOR
Interest Determination Date, such rate will be calculated by the
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Calculation Agent and will be the arithmetic mean of at least two
quotations obtained by the Calculation Agent after requesting the
principal Euro-zone (as defined below) offices of four major banks in
the Euro-zone interbank market to provide the Calculation Agent with
its offered quotation for deposits in euros for the period of the
Index Maturity specified on the face hereof, commencing on the
applicable Interest Reset Date, to prime banks in the Euro-zone
interbank market at approximately 11:00 A.M., Brussels time, on the
applicable EURIBOR Interest Determination Date and in a principal
amount not less than the equivalent of $1 million in euros that is
representative for a single transaction in euro in the market at that
time; or (3) if fewer than two such quotations are so provided, the
rate on the applicable EURIBOR Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of
the rates quoted at approximately 11:00 A.M., Brussels time, on such
EURIBOR Interest Determination Date by four major banks in the
Euro-zone for loans in euro to leading European banks, having the
Index Maturity specified on the face hereof, commencing on the
applicable Interest Reset Date and in a principal amount not less than
the equivalent of $1 million in euros that is representative for a
single transaction in euros in the market at that time; or (4) if the
banks so selected by the Calculation Agent are not quoting as
mentioned above, EURIBOR will be EURIBOR in effect on the applicable
EURIBOR Interest Determination Date. "Euro-zone" means the region
comprised of member states of the European Union that have adopted the
single currency in accordance with the treaty establishing the
European Community, as amended by the treaty on European Union.
(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
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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 Moneyline Telerate (or
any successor service) on page 56 (or any other page as may replace
that page on that service) ("Moneyline Telerate Page 56") or page 57
(or any other page as may replace that page on that service)
("Moneyline Telerate Page 57"); 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 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
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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, in the event of any
redemption of such Discount Note, if applicable, multiplied by the
Initial Redemption Percentage (as adjusted by the Annual Redemption
Percentage Reduction, if applicable); 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 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.
(d) Amortizing Notes. If this Note is specified on the face hereof as an
"Amortizing Note", this Note will bear interest in the same manner as set forth
in Section 3(a) above, and payments on principal, premium, if any, and interest
will be made as set forth on the face hereof
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and/or in accordance with Schedule I attached hereto. The Trust will make
payments combining principal, premium (if any) and interest, if applicable, on
the dates and in the amounts set forth in the table appearing in Schedule I,
attached to this Note or in accordance with the formula specified on the face
hereof. Payments made hereon will be applied first to interest due and payable
hereon and then to the reduction of the unpaid principal amount hereof.
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 an amount equal to the Initial Redemption
Percentage (as adjusted by the Annual Redemption Percentage Reduction, if
applicable) multiplied by 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. The Initial Redemption Percentage, if
any, applicable to this Note shall decline at each anniversary of the Initial
Redemption Date by an amount equal to the applicable Annual Redemption
Percentage Reduction, if any, until the Redemption Price is equal to 100% of the
unpaid amount thereof to be redeemed. 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 AND AMORTIZING NOTES. Unless specified on the face
hereof, this Note will not be subject to, or entitled to the benefit of, any
sinking fund. If this Note is an Amortizing Note, this Note may pay an amount in
respect of both interest and principal amortized over the life of this Note.
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
A-2-23
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.
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; 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 the terms and conditions of Section 2.04 of
the Indenture, at the Tax Event
A-2-24
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.
A-2-25
(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 will not 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.
A-2-26
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).
$ ________________________ ________________________________________________
NOTICE: The signature on this Option to
DATE: Elect Repayment must correspond with the
name as written upon the face of this
Note in every particular, without
alteration or enlargement or any change
whatever.
Principal Amount to be repaid, if amount to be Fill in for registration of Notes
repaid is less than the Principal Amount of if to be issued otherwise than this
Note (Principal Amount remaining must be to the registered Holder:
an authorized denomination)
Name: __________________________
$_________________________ Address: ________________________
________________________
(Please print name and
address including zip code)
SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER: _________________
A-2-27
SCHEDULE I
AMORTIZATION TABLE OR FORMULA
X-0-00
XXXXXXX X-0
FORM OF INSTITUTIONAL DEFINITIVE NOTE
THIS NOTE IS A DEFINITIVE NOTE WITHIN THE MEANING OF THE INDENTURE (HEREINAFTER
DEFINED) AND IS REGISTERED IN THE NAME OF THE HOLDER (AS DEFINED IN THE
INDENTURE) HEREOF. THIS NOTE IS NOT EXCHANGEABLE FOR A GLOBAL NOTE (AS DEFINED
IN THE INDENTURE).
UNLESS THIS NOTE IS PRESENTED BY THE HOLDER OR AN AUTHORIZED REPRESENTATIVE OF
THE HOLDER TO THE TRUST (HEREINAFTER DEFINED) OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
HOLDER HEREOF HAS AN INTEREST HEREIN.
REGISTERED NO.: CUSIP NO.: PRINCIPAL AMOUNT: U.S. $
Principal Life Income Fundings Trust o
SENIOR SECURED MEDIUM-TERM NOTES
Original Issue Date: Floating Rate Note: [ ] Yes [ ] No. If yes,
Issue Price: Regular Floating Rate Notes [ ]
Stated Maturity Date: Inverse Floating Rate Notes [ ]
Settlement Date: Floating Rate/ Fixed Rate Notes: [ ]
Securities Exchange Listing: [ ] Yes [ ] No. If yes, Interest Rate:
indicate name(s) of Securities Exchange(s): Interest Rate Basis(es):
__________________________________. LIBOR [ ]
Authorized Denominations: [ ] LIBOR Reuters Page:
Collateral held in the Trust: Principal Life Insurance [ ] LIBOR Moneyline Telerate Page:
Company Funding Agreement No. ?, the related Principal LIBOR Currency:
Financial Group, Inc. Guarantee which fully and EURIBOR [ ]
unconditionally guarantees the payment obligations of CMT Rate [ ]
Principal Life Insurance Company under the Funding Designated CMT Telerate Page:
Agreement, all proceeds of the Funding Agreement and If Telerate Page 7052:
the related Guarantee and all rights and books and [ ] Weekly Average
records pertaining to the foregoing. [ ] Monthly Average
Additional Amounts to be Paid: [ ] Yes [ ] No
Interest Rate or Formula: Designated CMT Maturity Index:
Fixed Rate Note: [ ] Yes [ ] No. If yes, CD Rate [ ]
Interest Rate: Commercial Paper Rate [ ]
Interest Payment Frequency: Eleventh District Cost of Funds Rate [ ]
Day Count Convention: Federal Funds Rate [ ]
Additional/Other Terms: Prime Rate [ ]
Amortizing Note: [ ] Yes [ ] No. If yes, Treasury Rate [ ]
Amortization schedule or formula: Index Maturity:
Additional/Other Terms: Spread and/or Spread Multiplier:
Discount Note: [ ] Yes [ ] No. If yes, Initial Interest Rate, if any:
Total Amount of Discount: Initial Interest Reset Date:
Initial Accrual Period of Discount: Interest Reset Dates:
Interest Payment Dates: Interest Determination Date(s):
Additional/Other Terms: Interest Payment Dates:
Redemption Provisions: [ ] Yes [ ] No. If yes, Maximum Interest Rate, if any:
Initial Redemption Date: Minimum Interest Rate, if any:
Initial Redemption Percentage: Fixed Rate Commencement Date, if any:
Annual Redemption Percentage Reduction, Fixed Interest Rate, if any:
if any: Day Count Convention:
Additional/Other Terms: Additional/Other Terms:
Repayment Provisions: [ ] Yes [ ] No. If yes, Regular Record Date(s):
Repayment Date(s): Sinking Fund:
Repayment Price: Specified Currency:
Additional/Other Terms: Exchange Rate Agent:
Calculation Agent:
Additional/Other Terms:
The Principal Life Income Fundings Trust designated above (the
"Trust"), for value received, hereby promises to pay to _____________, 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. Unless otherwise specified above, 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"). If the
Specified Currency specified above is other than U.S. Dollars, the Holder (as
defined in the Indenture) shall receive such payments in such Foreign Currency
(as hereinafter defined). 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 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-3-2
A "Discount Note" is any Note that has an Issue Price that is less than
100% of the Principal Amount thereof by more than a percentage equal to the
product of 0.25% 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.
The Trust will make payments of principal of, and premium, if any, on
the Maturity Date of this Note in immediately available funds against
presentation and surrender hereof (and, in the case of any repayment on a
Repayment Date, upon submission of a duly completed election form if and as
required by the provisions described on the reverse hereof) at the office or
agency maintained by the Trust for this purpose in the Borough of Manhattan, The
City of New York. The Trust will make payments of interest and other amounts due
and owing, if any, on the Maturity Date of this Note to the Person to whom
payment of the principal hereof and premium, if any, hereon shall be made. The
Trust will make payments of interest and other amounts due and owing, if any, on
this Note on any Interest Payment Date other than the Maturity Date by check
mailed to the Holder hereof. Notwithstanding the foregoing, the Paying Agent
will make, or cause to be made, payments of interest and other amounts due and
owing, if any, on this Note on any Interest Payment Date other than the Maturity
Date to any Holder hereof of $10,000,000 (or, if the Specified Currency is other
than U.S. Dollars, the equivalent thereof in the particular Specified Currency)
or more in aggregate principal amount of Notes (whether having identical or
different terms and provisions) by wire transfer of immediately available funds
if the Holder hereof has delivered appropriate wire transfer instructions in
writing to the Indenture Trustee not less than 15 calendar days prior to the
particular Interest Payment Date. Any wire transfer instructions received by the
Indenture Trustee shall remain in effect until revoked by the Holder hereof.
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.
A-3-3
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.
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.
A-3-4
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: ________________________________
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: _____________________________
Authorized Signatory
A-3-5
[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.
(a) Unless specified otherwise on the face hereof, this Note is denominated
in, and payments of principal, premium, if any, and/or interest, if any, will be
made in U.S. Dollars. If specified as the Specified Currency, this Note may be
denominated in, and payments of principal, premium, if any, and/or interest, if
any, may be made in a single currency other than U.S. Dollars (a "Foreign
Currency"). If this Note is denominated in a Foreign Currency, the Holder of
this Note is required to pay for this Note in the Specified Currency.
(b) Unless specified otherwise on the face hereof, if this Note is
denominated in a Foreign Currency, the Trust is obligated to make payments of
principal of, and premium, if any, and interest, if any, on, this Note in the
Specified Currency. Any amounts so payable by the Trust in the Specified
Currency will be converted by the Exchange Rate Agent into U.S. Dollars for
payment to the Holder hereof unless otherwise specified on the face of this Note
or the Holder elects, in the manner described below, to receive these amounts in
the Specified Currency. If this Note is denominated in a Foreign Currency, any
U.S. Dollar amount to be received by the Holder hereof will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange
Rate Agent and approved by the Trust for the purchase by the quoting dealer of
the Specified Currency for U.S. Dollars for settlement on that payment date in
the aggregate amount of the Specified Currency payable to all Holders of the
Notes scheduled to receive U.S. Dollar payments and at which the applicable
dealer commits to execute a contract. All currency exchange costs will be borne
by the Holders of the Notes by deductions from any payments. If three bid
quotations are not available, payments will be made in the Specified Currency.
If this Note is denominated in a Foreign Currency, the Holder of this Note may
elect to receive all or a specified portion of any payment of principal,
premium, if any, and/or interest, if any, in the Specified Currency by
submitting a written request to the Indenture Trustee at its Corporate Trust
Office in The City of New York on or prior to the applicable Regular Record Date
or at least 15 calendar days prior to the Maturity Date, as the case may be.
This written request may be mailed or hand delivered or sent by cable, telex or
other form of facsimile transmission. This election will remain in effect until
revoked by written notice delivered to the Indenture Trustee on or prior to a
Regular Record Date or at least 15 calendar days prior to the Maturity Date, as
the case may be.
(c) The Trust will indemnify the Holder hereof against any loss incurred as
a result of any judgment or order being given or made for any amount due under
this Note and that judgment or order requiring payment in a currency (the
"Judgment Currency") other than the Specified Currency, and as a result of any
variation between: (i) the rate of exchange at which
A-3-6
the Specified Currency amount is converted into the Judgment Currency for the
purpose of that judgment or order; and (ii) the rate of exchange at which the
Holder, on the date of payment of that judgment or order, is able to purchase
the Specified Currency with the amount of the Judgment Currency actually
received.
(d) Unless otherwise specified on the face hereof, if payment hereon is
required to be made in a Foreign Currency and such currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the Trust's
control, then the Trust will be entitled to make payments with respect hereto in
U.S. Dollars on the basis of the Market Exchange Rate (as hereinafter defined),
computed by the Exchange Rate Agent, on the second Business Day prior to the
particular payment or, if the Market Exchange Rate is not then available, on the
basis of the most recently available Market Exchange Rate.
(e) The "Market Exchange Rate" for the Foreign Currency shall mean the noon
dollar buying rate in The City of New York for cable transfers for the Foreign
Currency as certified for customs purposes (or, if not so certified, as
otherwise determined) by the Federal Reserve Bank of New York.
(f) All determinations made by the Exchange Rate Agent shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on the Holder hereof.
(g) All costs of exchange in respect of this Note, if denominated in a
Foreign Currency, will be borne by the Holder hereof.
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
A-3-7
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 Eleventh District Cost of Funds
Rate, the Federal Funds Rate, LIBOR, EURIBOR, the Prime Rate or the
Treasury Rate (each as defined below).
(ii) Effective Rate. The rate derived from the applicable Interest
Rate Basis 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 or an Inverse Floating
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;
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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) Inverse Floating Rate Notes. If this Note is specified on the
face hereof as an "Inverse Floating Rate Note", this Note will bear
interest at the Fixed Interest Rate minus 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; provided,
however, that interest on this Inverse Floating Rate Note will not be
less than zero. Commencing on the first Interest Reset Date, the rate
at which interest on this Inverse 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.
(vii) 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 Rate Basis, which will reset the Tuesday of each
week; (3) monthly--the fifteenth day of each calendar month, with the
exception of any monthly reset Floating Rate Note as to which the
Eleventh District Cost of Funds Rate is an applicable Interest Rate
Basis, which will reset on the first calendar day of the 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.
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(viii) 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 Commercial
Paper Rate, Federal Funds Rate and the Prime Rate--the Business Day
immediately preceding the related Interest Reset Date; (2) with
respect to the CD Rate and the CMT Rate--the second Business Day
preceding the related Interest Reset Date; (3) with respect to the
Eleventh District Cost of Funds Rate--the last working day of the
month immediately preceding the related Interest Reset Date on which
the Federal Home Loan Bank of San Francisco publishes the Eleventh
District Index (as defined below); (4) with respect to LIBOR and
EURIBOR--the second London Banking Day (as defined below) preceding
the related Interest Reset Date; and (5) 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.
(ix) 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, EURIBOR and the Eleventh District Cost of Funds Rate, which
will be determined on the particular Interest Determination Date. Upon
request of the Holder of a Floating Rate Note, the 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.
(x) 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
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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.
(xi) 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.
(xii) 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 rounded upwards.
All dollar amounts used in or resulting from any calculation on this
Floating Rate Note will be rounded, in the case of U.S. Dollars, to
the nearest cent or, in the case of a Foreign Currency, to the nearest
unit (with one-half cent or unit being rounded upwards).
(xiii) 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 Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR, EURIBOR 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. The interest
factor for a Floating Rate Note as to which the interest rate is
calculated with reference to two or more
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Interest Rate Bases will be calculated in each period in the same
manner as if only the applicable Interest Rate Basis specified above
applied.
(xiv) 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 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//xxx.xxxxxxxxxxxxxx.xxx/xxxxxxxx/X00/xxxxxx, 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 CMT Moneyline Telerate Page 7051 is specified on the
face hereof:
A-3-12
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
Moneyline Telerate (or any successor service) on page
7051 (or any other page as may replace the specified
page on that service) ("Moneyline Telerate Page 7051"),
for the particular Interest Determination Date; or
ii. if the rate referred to in clause (i) does not so
appear on Moneyline Telerate Page 7051, 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 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
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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 CMT Moneyline Telerate Page 7052 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
as published in H.15(519) opposite the caption
"Treasury Constant Maturities", as the yield is
displayed on Moneyline Telerate (or any successor
service) (on page 7052 or any other page as may replace
the specified page on that service) ("Moneyline
Telerate Page 7052"), 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
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ii. if the rate referred to in clause (i) does not so
appear on Moneyline Telerate Page 7052, 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 mean of the secondary market bid prices as
of approximately 3:30 P.M., New York City time, on
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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
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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 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) Eleventh District Cost of Funds Rate Notes. If the Interest Rate
Basis is the Eleventh District Cost of Funds Rate, this Note shall be
deemed an "Eleventh District Cost of Funds Rate Note." Unless
otherwise specified on the face hereof, "Eleventh District Cost of
Funds Rate" means: (1) the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month
in which the particular Interest Determination Date falls as set forth
under the caption "11th District" on the display on Moneyline Telerate
(or any successor service) on page 7058 (or any other page as may
replace the specified page on that service) ("Moneyline Telerate Page
7058") as of 11:00 A.M., San Francisco time, on that Interest
Determination Date; or (2) if the rate referred to in clause (1) does
not so appear on Moneyline Telerate Page 7058, the monthly weighted
average cost of funds paid by member institutions of the Eleventh
Federal Home Loan Bank District that was most recently announced (the
"Eleventh District Index") by the Federal Home Loan Bank of San
Francisco as the cost of funds for the calendar month immediately
preceding that Interest Determination Date; or (3) if the Federal Home
Loan Bank of San Francisco fails to announce the Eleventh District
Index on or prior to the particular Interest Determination Date for
the calendar month immediately preceding that Interest Determination
Date, the Eleventh District Cost of Funds Rate in effect on the
particular Interest Determination Date.
(E) 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 on 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
Moneyline Telerate (or any successor service) on page 120 (or any
other page as may replace the specified page on that service)
("Moneyline Telerate Page 120"); or (2) if the rate referred to in
clause (1) does not so appear on Moneyline Telerate Page 120 or is not
so published by 3:00 P.M., New York
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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 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 for the last transaction in overnight
United States dollar federal funds arranged by three leading brokers
of United States dollar federal funds transactions in The City of New
York (which may include the purchasing agent or its affiliates)
selected by the Calculation Agent prior to 9:00 A.M., New York City
time, on that Interest Determination Date; or (4) if the brokers so
selected by the Calculation Agent are not quoting as mentioned in
clause (3), the Federal Funds Rate in effect on the particular
Interest Determination Date.
(F) 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) if "LIBOR Moneyline Telerate" is specified
on the face hereof or if neither "LIBOR Reuters" nor "LIBOR Moneyline
Telerate" is 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 "LIBOR Reuters" is
specified on the face hereof, the arithmetic mean of the offered
rates, calculated by the Calculation Agent, or the offered rate, if
the LIBOR Page by its terms provides only for a single rate, for
deposits in the LIBOR Currency having the particular Index Maturity,
commencing on the related Interest Reset Date, that appear or appears,
as the case may be, on the LIBOR Page as of 11:00 A.M., London time,
on the particular Interest Determination Date; or (3) if fewer than
two offered rates appear, or no rate appears, as the case may be, on
the particular Interest Determination Date on the LIBOR Page as
specified in clause (1) or (2), as applicable, the rate calculated by
the Calculation Agent 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 purchasing agent) in the London interbank market 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 (4) if fewer than two offered quotations
referred to in clause (3) 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 purchasing
agent) in that principal financial center selected by the Calculation
Agent for loans in the
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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 (5)
if the banks so selected by the Calculation Agent are not quoting as
mentioned in clause (4), 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 either: (1) if "LIBOR Reuters" is specified on the
face hereof, the display on the Reuter Monitor Money Rates 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; or (2) if "LIBOR Moneyline Telerate" is specified
on the face hereof or neither "LIBOR Reuters" nor "LIBOR Moneyline
Telerate" is specified on the face hereof as the method for
calculating LIBOR, the display on Moneyline Telerate (or any successor
service) on the page specified on the face hereof (or any other page
as may replace such page on such service) for the purpose of
displaying the London interbank rates of major banks for the LIBOR
Currency.
(G) EURIBOR Notes. If the Interest Rate Basis is EURIBOR, this Note
shall be deemed a "EURIBOR Note." Unless otherwise specified on the
face hereof, "EURIBOR" means: (1) with respect to any Interest
Determination Date relating to this EURIBOR Note (a "EURIBOR Interest
Determination Date"), the rate for deposits in euros as sponsored,
calculated and published jointly by the European Banking Federation
and ACI - The Financial Market Association, or any company established
by the joint sponsors for purposes of compiling and publishing those
rates, having the Index Maturity specified on the face hereof,
commencing on the applicable Interest Reset Date, as the rate appears
on Moneyline Telerate or any successor service, on page 248 (or any
other page as may replace that specified page on the service)
("Moneyline Telerate Page 248") as of 11:00 A.M., Brussels time, on
the applicable EURIBOR Interest Determination Date; or (2) if such
rate does not appear on Moneyline Telerate Page 248, or is not so
published by 11:00 A.M., Brussels time, on the applicable EURIBOR
Interest Determination Date, such rate will be calculated by the
Calculation Agent and will be the arithmetic mean of at least two
quotations obtained by the Calculation Agent after requesting the
principal Euro-zone (as defined below) offices of four major banks in
the Euro-zone interbank market to provide the Calculation Agent with
its offered quotation for deposits in euros for the period of the
Index Maturity specified on the face hereof, commencing on the
applicable Interest Reset Date, to prime banks in the Euro-zone
interbank market at approximately 11:00 A.M., Brussels time, on the
applicable EURIBOR Interest Determination Date and in a principal
amount not less than the equivalent of $1 million in euros that is
representative for a single transaction in euro in the market at that
time; or (3) if fewer than two such quotations are so provided, the
rate on the applicable EURIBOR Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of
the rates quoted at
A-3-19
approximately 11:00 A.M., Brussels time, on such EURIBOR Interest
Determination Date by four major banks in the Euro-zone for loans in
euro to leading European banks, having the Index Maturity specified on
the face hereof, commencing on the applicable Interest Reset Date and
in a principal amount not less than the equivalent of $1 million in
euros that is representative for a single transaction in euros in the
market at that time; or (4) if the banks so selected by the
Calculation Agent are not quoting as mentioned above, EURIBOR will be
EURIBOR in effect on the applicable EURIBOR Interest Determination
Date. "Euro-zone" means the region comprised of member states of the
European Union that have adopted the single currency in accordance
with the treaty establishing the European Community, as amended by the
treaty on European Union.
(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
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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 Moneyline Telerate (or any successor service) on page
56 (or any other page as may replace that page on that service)
("Moneyline Telerate Page 56") or page 57 (or any other page as may
replace that page on that service) ("Moneyline Telerate Page 57"); 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 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
A-3-21
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, in the event of any
redemption of such Discount Note, if applicable, multiplied by the
Initial Redemption Percentage (as adjusted by the Annual Redemption
Percentage Reduction, if applicable); 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 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.
(d) Amortizing Notes. If this Note is specified on the face hereof as an
"Amortizing Note", this Note will bear interest in the same manner as set forth
in Section 3(a) above, and payments on principal, premium, if any, and interest
will be made as set forth on the face hereof and/or in accordance with Schedule
I attached hereto. The Trust will make payments combining principal, premium (if
any) and interest, if applicable, on the dates and in the amounts set forth in
the table appearing in Schedule I, attached to this Note or in accordance with
the formula specified on the face hereof. Payments made hereon will be applied
first to interest due and payable hereon and then to the reduction of the unpaid
principal amount hereof.
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
A-3-22
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 an amount equal to the Initial Redemption
Percentage (as adjusted by the Annual Redemption Percentage Reduction, if
applicable) multiplied by 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. The Initial Redemption Percentage, if
any, applicable to this Note shall decline at each anniversary of the Initial
Redemption Date by an amount equal to the applicable Annual Redemption
Percentage Reduction, if any, until the Redemption Price is equal to 100% of the
unpaid amount thereof to be redeemed. 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 AND AMORTIZING NOTES. Unless specified on the face
hereof, this Note will not be subject to, or entitled to the benefit of, any
sinking fund. If this Note is an Amortizing Note, this Note may pay an amount in
respect of both interest and principal amortized over the life of this Note.
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 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.
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
A-3-23
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; 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 the terms and conditions of Section 2.04 of
the Indenture, 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,
A-3-24
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.
(c) The Notes are being issued by means of physical distribution of Notes
to be made as provided in the Indenture. The Register maintained by the
Registrar will evidence ownership of the Notes, with transfers of ownership
effected on the Register and through the Transfer Agent. Transfer of principal,
premium (if any) and interest (if any) to the Holder will be the responsibility
of the Paying Agent. The selection of any Notes to be redeemed or repaid will be
determined by the Indenture Trustee pursuant to the Indenture.
(d) This Note or portion hereof may not be exchanged for Global Notes. 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.
A-3-25
SECTION 15. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
A-3-26
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).
$ ___________________________ _______________________________________________
NOTICE: The signature on this Option to
DATE: _________________________ Elect Repayment must correspond with the
name as written upon the face of this
Note in every particular, without
alteration or enlargement or any change
whatever.
Principal Amount to be repaid, if amount to be Fill in for registration of Notes
repaid is less than the Principal Amount of if to be issued otherwise than this
Note (Principal Amount remaining must be to the registered Holder:
an authorized denomination)
Name: ____________________________
$_________________________ Address: _________________________
_________________________
(Please print name and
address including zip code)
SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER: _________________
A-3-27
SCHEDULE I
AMORTIZATION TABLE OR FORMULA
A-3-28
EXHIBIT D
Pricing Supplement
[INSTITUTIONAL PRICING SUPPLEMENT]
Filed pursuant to Rule 424(b)( )
Registration Statement Nos. 333-110499 and
000-000000-00
Pricing Supplement No. Dated ______, 200_
(To Prospectus dated _____, 200_, and
Prospectus Supplement dated _____, 200_)
CUSIP: ________
[PRINCIPAL FINANCIAL GROUP LOGO]
PRINCIPAL LIFE INSURANCE COMPANY
SECURED MEDIUM-TERM NOTES
ISSUED THROUGH
PRINCIPAL LIFE INCOME FUNDINGS TRUST o (THE "TRUST")
The description of this pricing supplement of the particular terms
of the Secured Medium-Term Notes offered hereby, and the Funding Agreement
(specified below) issued by Principal Life Insurance Company ("Principal Life")
to the Trust, the payment obligations of which are fully and unconditionally
guaranteed by the Guarantee (specified below) issued by Principal Financial
Group, Inc. to the Trust, supplements the description of the general terms and
provisions of the notes, the funding agreements and the guarantees set forth in
the accompanying prospectus and prospectus supplement, to which reference is
hereby made.
1. THE NOTES
--------------------------------------------------------------------------------
Principal Amount: Purchasing Agent(s) Discount:
Issue Price: Original Issue Date:
Net Proceeds to the Trust: Stated Maturity Date:
--------------------------------------------------------------------------------
Specified Currency:
Interest Payment Dates:
Initial Interest Payment Date:
Regular Record Date: [15 calendar days prior to the Interest Payment Date]
Type of Interest Rate: [ ] Fixed Rate [ ] Floating Rate
Fixed Rate Notes: [ ] Yes [ ] No. If, Yes,
Interest Rate:
Floating Rate Notes: [ ] Yes [ ] No. If, Yes,
D-1
Regular Floating Rate Notes: [ ] Yes [ ] No. If, Yes,
Interest Rate:
Interest Rate Basis(es):
Floating Rate/Fixed Rate Note: [ ] Yes [ ] No. If, Yes,
Floating Interest Rate:
Interest Rate Basis(es):
Fixed Interest Rate:
Fixed Rate Commencement Date:
Inverse Floating Rate Note: [ ] Yes [ ] No. If, Yes,
Fixed Interest Rate:
Floating Interest Rate:
Interest Rate Basis(es):
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Rate Basis(es). Check all that apply:
[ ] CD Rate [ ] Commercial Paper Rate
[ ] CMT Rate [ ] Eleventh District Cost of Funds Rate
[ ] LIBOR [ ] Federal Funds Rate
[ ] EURIBOR [ ] Treasury Rate
[ ] Prime Rate [ ] Other (See Attached)
If LIBOR: [ ] LIBOR Reuters Page [ ] LIBOR Moneyline Telerate Page
LIBOR Currency:
If CMT Rate:
Designated CMT Telerate Page:
If 7052: [ ] Weekly Average [ ] Monthly Average
Designated CMT Maturity Index:
Index Maturity:
Spread (+/-):
Spread Multiplier:
Interest Reset Date(s):
Interest Rate Determination Date(s):
Maximum Interest Rate, if any:
Minimum Interest Rate, if any;
Calculation Agent: [Citibank, N.A.]
Exchange Rate Agent:
Computation of Interest (not applicable unless different than as specified in
the prospectus and prospectus supplement):
Day Count Convention (not applicable unless different than as specified in the
prospectus and prospectus supplement):
Amortizing Note: [ ] Yes [ ] No. If, Yes,
Amortizing Schedule:
Additional/Other Terms:
Discount Note: [ ] Yes [ ] No. If, Yes,
Total Amount of Discount:
Initial Accrual Period of Discount:
Additional/Other Terms:
Redemption Provisions: [ ] Yes [ ] No. If, Yes,
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction (if any):
Redemption: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional/Other Terms:
Repayment: [ ] Yes [ ] No. If, Yes,
Repayment Date(s):
Repayment Price:
Repayment: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional/Other Terms:
Sinking Fund (not applicable unless specified):
Additional Amounts to be Paid for Withholding Tax (not applicable unless
specified):
Securities Exchange Listing: [ ] Yes [ ] No. If Yes, Name of Exchange:_________
Authorized Denominations: [$1,000]
Ratings:
The Notes issued under the Program are rated _____ by Standard &
Poor's ("S&P"). Principal Life expects the Notes to be rated ___ by
Xxxxx'x Investors Service, Inc. ("Moody's").
Purchasing Agent(s) Purchasing Notes as Principal: [ ] Yes [ ] No. If Yes,
Purchasing Agent(s) Principal Amount
------------------- ----------------
--------------------------------------------------------------------
Total:
Purchasing Agent(s) Acting as Agent: [ ] Yes [ ] No. If Yes,
Purchasing Agent(s) Principal Amount
------------------- ----------------
--------------------------------------------------------------------
Total:
State of Organization of the Trust: [New York]
Additional/Other Terms:
Special Tax Considerations:
2. THE FUNDING AGREEMENT
Funding Agreement Issuer: Principal Life Insurance Company
Funding Agreement No.:
Deposit:
Net Deposit:
Effective Date:
Stated Maturity Date:
Specified Currency:
Interest Payment Dates:
Initial Interest Payment Date:
Type of Interest Rate: [ ] Fixed Rate [ ] Floating Rate
Fixed Rate Funding Agreement: [ ] Yes [ ] No. If, Yes,
Interest Rate:
Floating Rate Funding Agreement: [ ] Yes [ ] No. If, Yes,
Regular Floating Rate Funding Agreement: [ ] Yes [ ] No. If, Yes,
Interest Rate:
Interest Rate Basis(es):
Floating Rate/Fixed Rate Funding Agreement: [ ] Yes [ ] No. If, Yes,
Floating Interest Rate:
Interest Rate Basis(es):
Fixed Interest Rate:
Fixed Rate Commencement Date:
Inverse Floating Rate Funding Agreement: [ ] Yes [ ] No. If, Yes,
Fixed Interest Rate:
Floating Interest Rate:
Interest Rate Basis(es):
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Rate Basis(es). Check all that apply:
[ ] CD Rate [ ] Commercial Paper Rate
[ ] CMT Rate [ ] Eleventh District Cost of Funds Rate
[ ] LIBOR [ ] Federal Funds Rate
[ ] EURIBOR [ ] Treasury Rate
[ ] Prime Rate [ ] Other (See Attached)
If LIBOR: [ ] LIBOR Reuters Page [ ] LIBOR Moneyline Telerate
LIBOR Currency: Page
If CMT Rate:
Designated CMT Telerate Page:
If 7052: [ ] Weekly Average [ ] Monthly Average
Designated CMT Maturity Index:
Index Maturity:
Spread (+/-):
Spread Multiplier:
Interest Reset Date(s):
Interest Rate Determination Date(s):
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Computation of Interest (not applicable unless different than as specified in
the prospectus and prospectus supplement):
Day Count Convention (not applicable unless different than as specified in the
prospectus and prospectus supplement):
Amortizing Funding Agreement: [ ] Yes [ ] No. If, Yes,
Amortizing Schedule:
Additional/Other Terms:
Discount Funding Agreement: [ ] Yes [ ] No. If, Yes,
Total Amount of Discount:
Initial Accrual Period of Discount:
Additional/Other Terms:
Redemption Provisions: [ ] Yes [ ] No. If, Yes,
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction (if any):
Redemption: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional/Other Terms:
Repayment: [ ] Yes [ ] No. If, Yes,
Repayment Date(s):
Repayment Price:
Repayment: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional/Other Terms:
Sinking Fund (not applicable unless specified):
Additional Amounts to be Paid For Withholding Tax (not applicable unless
specified):
Ratings:
The Funding Agreement issued under the Program is rated _____ by
S&P. Principal Life expects the Funding Agreement to be rated ___
by Moody's.
Additional/Other Terms:
Special Tax Considerations:
3. THE GUARANTEE
Guarantee Issuer: Principal Financial Group, Inc.
Guarantee No:
Effective Date:
Additional/Other Terms:
[RETAIL PRICING SUPPLEMENT]
Filed pursuant to Rule 424(b)( )
Registration Statement Nos. 333-110499 and
000-000000-00
Pricing Supplement No. Dated ______, 200_
(To Prospectus dated _____, 200_, and
Prospectus Supplement dated _____, 200_)
CUSIP: ________
[PRINCIPAL FINANCIAL GROUP LOGO]
PRINCIPAL LIFE INSURANCE COMPANY
PRINCIPAL(R) LIFE CORENOTES(R)
ISSUED THROUGH
PRINCIPAL LIFE INCOME FUNDINGS TRUST o (THE "TRUST")
The description of this pricing supplement of the particular terms
of the Principal(R) Life CoreNotes(R) offered hereby, and the Funding Agreement
(specified below) issued by Principal Life Insurance Company ("Principal Life")
to the Trust, the payment obligations of which are fully and unconditionally
guaranteed by the Guarantee (specified below) issued by Principal Financial
Group, Inc. to the Trust, supplements the description of the general terms and
provisions of the notes, the funding agreements and the guarantees set forth in
the accompanying prospectus and prospectus supplement, to which reference is
hereby made.
1. THE NOTES
--------------------------------------------------------------------------------
Principal Amount: Purchasing Agent(s) Discount:
Issue Price: Original Issue Date:
Net Proceeds to the Trust: Stated Maturity Date:
--------------------------------------------------------------------------------
Interest Payment Dates:
Initial Interest Payment Date:
Regular Record Date: [15 calendar days prior to the Interest Payment Date]
Type of Interest Rate: [ ] Fixed Rate [ ] Floating Rate
Fixed Rate Notes: [ ] Yes [ ] No. If, Yes,
Interest Rate:
Floating Rate Notes: [ ] Yes [ ] No. If, Yes,
Regular Floating Rate Notes: [ ] Yes [ ] No. If, Yes,
Interest Rate:
Interest Rate Basis(es):
Floating Rate/Fixed Rate Note: [ ] Yes [ ] No. If, Yes,
Floating Interest Rate:
Interest Rate Basis(es):
Fixed Interest Rate:
Fixed Rate Commencement Date:
----------
"Principal(R)" is a registered service xxxx of Principal Financial Services,
Inc. and is used under license.
"CoreNotes(R)" is a registered service xxxx of Xxxxxxx Xxxxx & Co.
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Rate Basis(es). Check all that apply:
[ ] CD Rate [ ] CMT Rate
[ ] Commercial Paper Rate [ ] LIBOR
[ ] Treasury Rate [ ] Prime Rate
[ ] Other (See Attached)
If LIBOR: [ ] LIBOR Reuters Page [ ] LIBOR Moneyline Telerate
LIBOR Currency: Page
If CMT Rate:
Designated CMT Telerate Page:
If 7052: [ ] Weekly Average [ ] Monthly Average
Designated CMT Maturity Index:
Index Maturity:
Spread (+/-):
Spread Multiplier:
Interest Reset Date(s):
Interest Rate Determination Date(s):
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Calculation Agent: [Citibank, N.A.]
Computation of Interest (not applicable unless different than as specified in
the prospectus and prospectus supplement):
Day Count Convention (not applicable unless different than as specified in the
prospectus and prospectus supplement):
Discount Note: [ ] Yes [ ] No. If, Yes,
Total Amount of Discount:
Initial Accrual Period of Discount:
Additional/Other Terms:
Terms of Survivor's Option:
Annual Put Limitation: [ ] $2,000,000 or 2%; or
[ ] $_______ or __%
Individual Put Limitation: [ ] $250,000; or
[ ] $_______
Trust Put Limitation: [ ] ______
Redemption Provisions: [ ] Yes [ ] No. If, Yes,
Initial Redemption Date:
Redemption: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional Other Terms:
Repayment: [ ] Yes [ ] No. If, Yes,
Repayment Date(s):
Repayment Price:
Repayment: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional/Other Terms:
Sinking Fund (not applicable unless specified):
Securities Exchange Listing: [ ] Yes [ ] No. If Yes, Name of Exchange:______
Authorized Denominations: [$1,000]
Ratings:
The Notes issued under the Program are rated _____ by Standard &
Poor's ("S&P"). Principal Life expects the Notes to be rated ___ by
Xxxxx'x Investors Service, Inc. ("Moody's").
Purchasing Agent(s) Purchasing Notes as Principal: [ ] Yes [ ] No. If Yes,
Purchasing Agent(s) Principal Amount
------------------- ----------------
-----------------------------------------------------------------------------------
Total:
Purchasing Agent(s) Acting as Agent: [ ] Yes [ ] No. If Yes,
Purchasing Agent(s) Principal Amount
------------------- ----------------
-----------------------------------------------------------------------------------
Total:
State of Organization of the Trust: [New York]
Additional/Other Terms:
Special Tax Considerations:
2. THE FUNDING AGREEMENT
Funding Agreement Issuer: Principal Life Insurance Company
Funding Agreement No.:
Deposit:
Net Deposit:
Effective Date:
Stated Maturity Date:
Interest Payment Dates:
Initial Interest Payment Date:
Type of Interest Rate: [ ] Fixed Rate [ ] Floating Rate
Fixed Rate Funding Agreement: [ ]Yes [ ] No. If, Yes,
Interest Rate:
Floating Rate Funding Agreement: [ ]Yes [ ] No. If, Yes,
Regular Floating Rate Funding Agreement: [ ] Yes [ ] No. If, Yes,
Interest Rate:
Interest Rate Basis(es):
Floating Rate/Fixed Rate Funding Agreement: [ ] Yes [ ] No. If, Yes,
Floating Interest Rate:
Interest Rate Basis(es):
Fixed Interest Rate:
Fixed Rate Commencement Date:
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Rate Basis(es). Check all that apply:
[ ] CD Rate [ ] CMT Rate
[ ] Commercial Paper Rate [ ] LIBOR
[ ] Treasury Rate [ ] Prime Rate
[ ] Other (See Attached)
If LIBOR: [ ] LIBOR Reuters Page [ ] LIBOR Moneyline
LIBOR Currency: Telerate Page
If CMT Rate:
Designated CMT Telerate Page:
If 7052: [ ] Weekly Average [ ] Monthly Average
Designated CMT Maturity Index:
Index Maturity:
Spread (+/-):
Spread Multiplier:
Interest Reset Date(s):
Interest Rate Determination Date(s):
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Computation of Interest (not applicable unless different than as specified in
the prospectus and prospectus supplement):
Day Count Convention (not applicable unless different than as specified in the
prospectus and prospectus supplement):
Discount Funding Agreement: [ ]Yes [ ] No. If, Yes,
Total Amount of Discount:
Initial Accrual Period of Discount:
Additional/Other Terms:
Terms of Survivor's Option:
Annual Put Limitation: [ ] $2,000,000 or 2%; or
[ ] $_______ or __%
Individual Put Limitation: [ ] $250,000; or
[ ] $
Trust Put Limitation: [ ] ______
Redemption: [ ]Yes [ ] No. If, Yes,
Initial Redemption Dates:
Redemption: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional/Other Terms:
Repayment: [ ]Yes [ ] No. If, Yes,
Repayment Date(s):
Repayment Price:
Repayment: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional/Other Terms:
Sinking Fund (not applicable unless specified):
Ratings:
The Funding Agreement issued under the Program is rated _____ by
S&P. Principal Life expects the Funding Agreement to be rated
____ by Moody's.
Additional/Other Terms:
Special Tax Considerations:
3. THE GUARANTEE
Guarantee Issuer: Principal Financial Group, Inc.
Guarantee No:
Effective Date:
Additional/Other Terms:
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 XxXxxx-Xxxx Companies,
Inc., in such capacity and on behalf of Principal Life, to the knowledge of the
undersigned and after reasonable inquiry, that:
1. each of the representations and warranties of Principal
Life contained in each Expense and Indemnity Agreement
entered into in connection with the Registration
Statement (defined below), and each Funding Agreement
issued in connection with the Program (the "Specified
Agreements") (other than any representation or warranty
expressly made as of a date prior to the date hereof)
are true and correct on and as of the date hereof, with
the same effect as though such representation or
warranty had been made on and as of the date hereof;
2. no default under any of the Specified Agreements and no
event or any condition which, with notice or lapse of
time or both, would become a default, has occurred and
is continuing as of the date hereof;
3. Principal Life has performed and complied with,
respectively, in all material respects, all of the
agreements, covenants, obligations and conditions
applicable to Principal Life required by the Specified
Agreements to be performed or complied with by Principal
Life on or before the date hereof;
4. the Registration Statement filed on Form S-3 (File Nos.
333-110499 and 333-110499-01) (the "Registration
Statement") by Principal Life and Principal Financial
Group, Inc. has been declared effective by the
Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act")
and no stop order suspending the effectiveness of the
Registration Statement has been issued and no
proceedings for that purpose have been commenced by or
are pending before or contemplated by the Commission;
5. all filings, if any, required by Rule 424 and Rule 430A
under the Act have been made in a timely manner;
6. since [ ], the Trusts organized in connection with the
program contemplated by the Registration Statement have
issued the following series of Notes:
[List each series of Notes.]
[(collectively, the "Designated Notes")]; and
7. The Funding Agreements issued in connection with the
Designated Notes have been executed and delivered by
Principal Life in accordance with the terms and
conditions of the Program Documents.
E-1
Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Standard Indenture Terms attached as Exhibit
4.1 to the Registration Statement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of the [ ] day of [ ], 200__.
[NAME], [in his/her] capacity as an authorized
officer of Principal Life
By:
------------------------------------------------
Name:
Title:
E-2
EXHIBIT F
Principal Life Income Fundings Trusts
Officer's Certificate
The undersigned, the [ ] of U.S. Bank Trust National
Association, the trustee (the "Trustee") of each common law trust
organized under the laws of the State of New York (each, a "Trust")
in connection with the program contemplated by Registration
Statement Nos. 333-110499 and 000-000000-00 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 XxXxxx-Xxxx Companies, Inc., in such
capacity and on behalf of each Trust, to the knowledge of the
undersigned officer and after reasonable inquiry, that:
1. each of the representations and warranties of each Trust
contained in the Notes issued in connection with the
Program, each Indenture entered into in connection with
the Registration Statement and the Expense and Indemnity
Agreement concerning the Trusts (the "Specified
Agreements") (other than any representation or warranty
expressly made as of a date prior to the date hereof)
are true and correct on and as of the date hereof, with
the same effect as though such representation or
warranty had been made on and as of the date hereof;
2. no default under any of the Specified Agreements and no
event or any condition which, with notice or lapse of
time or both, would become a default, has occurred and
is continuing as of the date hereof;
3. each Trust has performed and complied with,
respectively, in all material respects, all of the
agreements, covenants, obligations and conditions
applicable to such Trust required by the Specified
Agreements to be performed or complied with by such
Trust on or before the date hereof;
4. the Notes issued in connection with the Program, have
been issued, in all material respects, in accordance
with the terms and conditions of the Program Documents;
and
5. each Funding Agreement has been executed and delivered
by the related Trust in accordance with the terms and
conditions of the Program Documents.
Capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth in the Standard Indenture
Terms attached as Exhibit 4.1 to the Registration Statement.
F-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
the [ ] day of [ ], 200__.
[NAME], in [his/her] capacity as _______ of
the Trustee of each Trust
By:
--------------------------------------
Name:
Title:
F-2
SCHEDULE I
Terms Agreement Specifications
[In connection with Section 3(a)(iv) of the Distribution Agreement, the Program
under which the Notes are issued is rated [ ] by Xxxxx'x Investors Service, Inc.
("Moody's") and [ ] by Standard & Poor's Rating Services, a division of The
XxXxxx-Xxxx Companies, Inc. ("S&P"). Principal Life and PFG expect that the
Notes will be rated [ ] by Moody's. The Company's financial strength rating is
[ ] by Moody's and [ ] by S&P.]
[In accordance with Section 2.02(b) of the Terms Agreement and in connection
with the purchase of Notes from the Trust by the Purchasing Agent(s) as
principal, the following items will be delivered on the Settlement Date:
Specify opinions and comfort letter, as applicable.]
All capitalized terms used herein and not otherwise defined herein
will have the meanings set forth in the Distribution Agreement.
I-1
