Exhibit 4.5


 


Execution Copy




 





 


 


8.875% Senior
Notes due 2019


 


GUARANTEE



from



PRINCIPAL FINANCIAL SERVICES, INC., as Guarantor



to



THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee



Dated as of May 21, 2009


 




 





 

















 


GUARANTEE


 


This Guarantee (this “Guarantee”) is
made and entered into as of May 21, 2009, from PRINCIPAL FINANCIAL
SERVICES, INC., a corporation duly organized and existing under the laws of the
State of Iowa, as guarantor (herein called the “Guarantor,” which term
includes any successor hereunder), to THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., a national banking association incorporated and existing under
the laws of the United States of America, as trustee (the “Trustee,” as
further defined in the Indenture hereinafter referred to). Defined terms used
herein without definition shall have the meanings given to them in the Senior Indenture,
dated as of May 21, 2009 among Principal Financial Group, Inc., a
Delaware corporation (the “Company,” as further defined in the Indenture
hereinafter referred to), the Guarantor and the Trustee, as supplemented by the
Second Supplemental Indenture, dated as of May 21, 2009, among the
Company, the Guarantor and the Trustee with respect to the Securities as
defined below (the “Indenture”).


 


RECITALS


 


The Guarantor is a wholly-owned subsidiary of
the Company and has duly authorized the execution and delivery of this Guarantee
to provide for the guarantee by the Guarantor for the benefit of the Holders of
the Company’s 8.875% Senior Notes due 2019 (the “Securities”) issued
pursuant to the Indenture.


 


For and in consideration of the premises and
the purchase of the Securities by the Holders thereof, it is mutually
covenanted and agreed as follows for the equal and ratable benefit of the
Holders of the Securities:


 


ARTICLE I



REPRESENTATIONS AND WARRANTIES OF GUARANTOR


 


SECTION 1.1         Guarantor Representations and Warranties.


 


The Guarantor does hereby represent and
warrant that it is a corporation duly incorporated and in good standing under
the laws of the State of Iowa, has the power to enter into and perform this Guarantee
and to own its corporate property and assets, has duly authorized the execution
and delivery of this Guarantee by proper corporate action and neither this Guarantee,
the authorization, execution, delivery and performance hereof, the performance
of the agreements herein contained nor the consummation of the transactions
herein contemplated will violate in any material respect any provision of law,
any order of any court or agency of government or any agreement, indenture or
other instrument to which the Guarantor is a party or by which it or its
property is bound, or in 


 


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any material
respect be in conflict with or result in a breach of or constitute a default
under any indenture, agreement or other instrument or any provision of its
certificate of incorporation, bylaws or any requirement of law. This Guarantee
constitutes the legal, valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms, except as the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and by general equitable principles.


 


ARTICLE II



GUARANTEE OF OBLIGATIONS


 


SECTION 2.1         Obligations Guaranteed.


 


Subject to the provisions of this Article 2,
the Guarantor hereby unconditionally guarantees (a) to each Holder
of a Security authenticated and delivered by the Trustee or Authenticating
Agent, (i) the full and prompt payment of the principal of, and
premium, if any, and interest on, and any Redemption Price with respect to,
such Security, when, where and as the same shall become due and payable,
whether at the stated maturity thereof, by acceleration, call for redemption or
otherwise in accordance with the terms of such Security and the Indenture and (ii) the
full and prompt payment of interest on the overdue principal and interest, if
any, on such Security, at the rate specified in such Security and to the extent
lawful and (b) to the Trustee the full and prompt payment upon
written demand therefor of all amounts due to it in accordance with the terms
of the Indenture (collectively the “Guaranteed Obligation”). If for any
reason the Company shall fail punctually to pay any such Guaranteed Obligation,
the Guarantor hereby agrees to cause any such Guaranteed Obligation to be made
punctually when, where and as the same shall become due and payable, whether at
the stated maturity thereof, by acceleration, call for redemption or otherwise.
All payments by the Guarantor hereunder shall be paid in lawful money of the
United States of America.  This Guarantee
is unsecured and ranks equally in right of payment with all of the Guarantor’s
existing and future senior indebtedness.


 


SECTION 2.2         Obligations Unconditional.


 


The obligations of the Guarantor under this Guarantee
shall be absolute, unconditional and irrevocable and shall constitute a
continuing guarantee of payment and not of collectability. Such obligations
shall remain in full force and effect until this Guarantee shall terminate in
accordance with the provisions of Section 5.1 hereof, and, to the maximum
extent permitted by applicable law, such obligations shall not be affected,
modified, released or impaired by any state of facts or the happening from time
to time of any event, including, without limitation, any of the following,
whether or not with notice to, or the consent of, the Guarantor:


 


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(a)           the waiver, compromise, settlement,
release or termination of any or all of the obligations, covenants or
agreements of the Company contained in the Securities or the Indenture, or of
the payment, performance or observance thereof;


 


(b)           the failure to give notice to the Guarantor
of the occurrence of any default or an Event of Default under the terms and
provisions of the Securities or the Indenture;


 


(c)           the assignment or purported
assignment of any of the obligations, covenants and agreements contained in
this Guarantee;


 


(d)           the extension of the time for payment
of any principal of, premium, if any, or interest on, or any Redemption Price
with respect to, the Securities or of the time for performance of any
obligations, covenants or agreements under or arising out of the Securities or
the Indenture or the extension or the renewal of any thereof;


 


(e)           the modification or amendment
(whether material or otherwise) of any obligation, covenant or agreement set
forth in the Securities or the Indenture;


 


(f)            the taking or the omission to take
any of the actions referred to in this Guarantee or in the Indenture;


 


(g)           any failure, omission or delay on the
part of, or the inability of, the Trustee or the Holders of the Securities to
enforce, assert or exercise any right, power or remedy conferred on the
Trustee, such Holders or any other person in this Guarantee or in the Indenture
for any reason;


 


(h)           the voluntary or involuntary
liquidation, dissolution, merger, consolidation, sale or other disposition of
all or substantially all the assets, marshaling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with creditors or readjustment of, or
other similar proceedings affecting the Company or any or all of its assets, or
any allegation or contest of the validity of the Securities or the Indenture or
the disaffirmance of the Securities or the Indenture in any such proceeding; it
being specifically understood, consented and agreed to that this Guarantee
shall remain and continue in full force and effect and shall be enforceable
against the Guarantor to the same extent and with the same force and effect as
if such proceedings had not been instituted, and it is the intent and purpose
of this Guarantee that the Guarantor shall and does hereby waive, to the
maximum extent permitted by applicable law, all rights and benefits which might
accrue to the Guarantor by reason of any such proceedings;


 


(i)            any event or action that would, in
the absence of this clause, result in the release or discharge by operation of
law of the Guarantor from the performance or observance of any obligation,
covenant or agreement contained in this Guarantee;


 


(j)            the default or failure of the Guarantor
fully to perform any of its obligations set forth in this Guarantee;


 


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(k)           the release, substitution or
replacement of any security pledged for the benefit of the Holders of the
Securities under the Indenture;


 


(l)            the disposition by the Company of
any or all of its interest in any capital stock of the Guarantor, or any
change, restructuring or termination of the corporate structure, ownership,
corporate existence or any rights or franchises of the Guarantor;


 


(m)          any other circumstances which might
otherwise constitute a legal or equitable discharge or defense of a surety or a
guarantor; or


 


(n)           any other occurrence whatsoever,
whether similar or dissimilar to the foregoing.


 


SECTION 2.3         No Waiver or Set-Off.


 


The Guarantor agrees that, to the maximum
extent permitted by law, (a) no act of commission or omission of
any kind or at any time on the part of the Trustee or any Holder of the
Securities, or their successors and assigns, in respect of any matter
whatsoever shall in any way impair the rights of the Trustee or such Holders to
enforce any right, power or benefit under this Guarantee, and (b) no
set-off, counterclaim, reduction, or diminution of any obligation, or any
defense of any kind or nature (other than performance), which the Guarantor or
the Company has or may have against the Trustee or such Holders or any assignee
or successor thereof shall be available hereunder to the Guarantor.


 


SECTION 2.4         Waiver of Notice; Expenses.


 


The Guarantor hereby expressly waives notice
from the Trustee or the Holders of the Securities of their acceptance and
reliance on this Guarantee. The Guarantor further waives, to the maximum extent
permitted by law, any right that it may have (a) to require the
Trustee or the Holders of the Securities to take action or otherwise proceed
against the Company, (b) to require the Trustee or the Holders of
the Securities to proceed against or exhaust any security pledged for the
benefit of the Holders of the Securities under the Indenture or (c) to
require the Trustee or the Holders of the Securities otherwise to enforce,
assert or exercise any other right, power or remedy that may be available to
the Trustee or such Holders. The Guarantor agrees to pay all costs, expenses
and fees, including all reasonable attorneys’ fees and expenses, that may be
incurred by the Trustee in enforcing or attempting to enforce this Guarantee or
protecting the rights of the Trustee or the Holders of the Securities following
any default on the part of the Guarantor hereunder, whether the same shall be
enforced by suit or otherwise.


 


SECTION 2.5         Subrogation of Guarantor; Subordination.


 


Notwithstanding any payment or payments made
by the Guarantor, the Guarantor agrees that it will not enforce, by reason of
subrogation, contribution, indemnity or otherwise, any rights the Trustee or
the Holders of the Securities may have against the Company until all of the Guaranteed
Obligations shall have been finally, indefeasibly and unconditionally paid in
full. Any claim of the Guarantor against the Company arising 


 


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from payments
made by the Guarantor by reason of this Guarantee shall be in all respects
subordinated to the final, indefeasible, unconditional, full and complete
payment or discharge of all of the Guaranteed Obligations guaranteed hereby.


 


SECTION 2.6         Reinstatement.


 


This Guarantee shall continue to be
effective, or be automatically reinstated, as the case may be, if at any time
payment, or any part thereof, made by or on behalf of the Company or the Guarantor
in respect of any of the Securities is rescinded or must otherwise be restored
or returned by the Trustee or any Holder of such Securities for any reason
whatsoever, whether upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Company, or upon or as a result of the appointment of
a receiver, intervenor or conservator of, or trustee or similar officer for the
Company or any substantial part of its properties, or otherwise, all as though
such payment had not been made.


 


SECTION 2.7         Rights of Holders.


 


The Guarantor expressly acknowledges that the
Trustee has the right to enforce this Guarantee on behalf of the Holders of the
Securities in accordance with and subject to the provisions of the Indenture.


 


ARTICLE III



COVENANTS OF THE GUARANTOR


 


SECTION 3.1         Consolidation, Merger Conveyance, Transfer or Lease.


 


(a)           Subject
to Section 3.1(c), the Guarantor shall not consolidate with or merge with
or into any other Person or convey, transfer or lease its assets substantially
as an entirety to any Person, and the Guarantor shall not permit any Person to
consolidate with or merge with or into the Guarantor, unless:


 


(1)           the Guarantor or the
Company is the surviving corporation in a merger or consolidation; or


 


(2)           in case the Guarantor
shall consolidate with or merge into another Person or convey, transfer or
lease its assets substantially as an entirety to any Person, the Person formed
by such consolidation or into which the Guarantor is merged or the Person which
acquires by conveyance or transfer, or which leases, the assets of the Guarantor
substantially as an entirety shall be a corporation, partnership, trust or
limited liability company, organized and validly existing under the laws of the
United States of America, any State thereof or the District of Columbia and
shall expressly assume, by a supplemental agreement hereto, executed 


 


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and delivered
to the Trustee, all of the obligations of the Guarantor under the Indenture and
this Guarantee; and


 


(3)           immediately after
giving effect to such transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have happened and be continuing; and


 


(4)           the Guarantor has
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance, transfer or lease
and, if a supplemental agreement is required in connection with such
transaction, such supplemental agreement comply with this Section 3.1 and
that all conditions precedent herein provided for relating to such transaction
have been complied with.


 


(b)           Subject
to Section 3.1(c), any indebtedness which becomes an obligation of the Guarantor
or any of its Subsidiaries as a result of any such transaction shall be treated
as having been incurred by the Guarantor or such Subsidiary at the time of such
transaction.


 


(c)           The
provisions of Section 3.1(a) and (b) shall not be applicable to:


 


(1)           the direct or
indirect conveyance, transfer or lease of all or any portion of the stock,
assets or liabilities of any of the Guarantor’s wholly owned Subsidiaries to
the Guarantor or to the Company or to other wholly owned Subsidiaries of the Guarantor;
or


 


(2)           any recapitalization
transaction, a change of control of the Guarantor or a highly leveraged
transaction unless such transaction or change of control is structured to
include a merger or consolidation by the Guarantor or the conveyance, transfer
or lease of the Guarantor’s assets substantially as an entirety.


 


(d)           Upon
any consolidation of the Guarantor with, or merger of the Guarantor into, any
other Person or any conveyance, transfer or lease of the assets of the Guarantor
substantially as an entirety in accordance with this Section 3.1, the
successor Person formed by such consolidation or into which the Guarantor is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Guarantor
under this Guarantee with the same effect as if such successor Person had been
named as the Guarantor herein, and thereafter, except in the case of any lease,
the Guarantor shall be relieved of all obligations and covenants under this Guarantee
and may be dissolved and liquidated.


 


In case of any such consolidation, merger,
conveyance, transfer or lease, such changes in phraseology and form may be made
in this Guarantee thereafter to be issued as may be appropriate.


 


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SECTION 3.2         Reports by the Guarantor.


 


During the term hereof, the Guarantor
covenants:


 


(a)           to file with the Trustee, within 30
days after the Guarantor is required to file the same with the Commission, 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 Guarantor may be
required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended; or, if the Guarantor is not
required to file information, documents or reports pursuant to either of such
sections, then to file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission pursuant to Section 314(a) of
the Trust Indenture Act, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended, in respect of a security listed
and registered on a national securities exchange as may be prescribed from time
to time in such rules and regulations. 
All reports, information and documents described in this Section 3.2(a) and
filed with the Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval (EDGAR) system or any successor system shall be deemed to be
filed with the Trustee.


 


(b)           to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from
time to time by the Commission pursuant to Section 314(a) of the
Trust Indenture Act, such additional information, documents and reports with
respect to compliance by the Guarantor with the conditions and covenants
provided for in this Guarantee and the Indenture, as may be required from time
to time by such rules and regulations;


 


(c)           to transmit to all Holders of the
Securities within 30 days after the filing thereof with the 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 Guarantor pursuant to subsections (a) and (b) of
this Section 3.2, as may be required by rules and regulations
prescribed from time to time by the Commission pursuant to Section 314(a) of
the Trust Indenture Act; and


 


(d)           to deliver to the Trustee, within 120
days after the end of each fiscal year of the Guarantor, a brief certificate
from the principal executive officer, principal financial officer, or principal
accounting officer as to his or her knowledge of the Guarantor’s compliance
with all conditions and covenants under this Guarantee.  For purposes of this Section 3.2, such
compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Guarantee.


 


Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee’s
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company’s compliance with any of its 


 


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covenants
hereunder (as to which the Trustee is entitled to rely exclusively on Officers’
Certificates).


 


ARTICLE IV



NOTICES


 


SECTION 4.1         Notices.


 


All notices, certificates or other
communications to the Guarantor hereunder shall be sufficient for every purpose
hereunder if in writing and mailed, first-class postage prepaid, to the Guarantor
addressed to it at Principal Financial Services, Inc. 711 High Street, Des
Moines, Iowa 50392, Attention: General Counsel, or at any other address previously
furnished in writing to the Trustee by the Guarantor.


 


ARTICLE V



MISCELLANEOUS


 


SECTION 5.1         Effective Date; Termination.


 


The obligations of the Guarantor hereunder
shall arise absolutely and unconditionally upon the date of the initial
delivery of and authentication of the Securities. Subject to Section 2.6,
this Guarantee shall terminate on such date as the Indenture is discharged and
satisfied.


 


SECTION 5.2         Evidence of Compliance with Conditions Precedent.


 


The Guarantor shall provide the Trustee with
such evidence of compliance with such conditions precedent, if any, provided
for in this Guarantee that relate to the matters set forth in Section 314(c) of
the Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of an
Officers’ Certificate.


 


SECTION 5.3         Remedies Not Exclusive.


 


No remedy herein conferred upon or reserved
to the Trustee or Holders of the Securities is intended to be exclusive of any
other available remedy or remedies, but, to the maximum extent permitted by
law, each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Guarantee or now or hereafter existing at
law or in equity. No delay or omission to exercise any right or power accruing
upon any default, omission or failure of performance hereunder shall impair any
such right or power or shall be construed to be a waiver thereof, but any such
right or power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Trustee and Holders of the Securities to
exercise any remedy reserved 


 


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to any of them
in this Guarantee, to the maximum extent permitted by applicable law, it shall
not be necessary to give any notice. In the event any provision contained in
this Guarantee should be breached, and thereafter duly waived, such waiver
shall be limited to the particular breach so waived and shall not be deemed to
waive any other breach hereunder. To the maximum extent permitted by applicable
law, no waiver, amendment, release or modification of this Guarantee shall be
established by conduct, custom or course of dealing, but solely by an
instrument in writing duly executed by the parties to this Guarantee and
consistent with the terms of the Indenture.


 


SECTION 5.4         Limitation of Guarantor’s Liability.


 


Any term or provision of this Guarantee
notwithstanding, the Guarantee shall not exceed the maximum amount that can be
guaranteed by the Guarantor without rendering the Guarantee voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.


 


SECTION 5.5         Entire Agreement; Counterparts.


 


This Guarantee constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof and may
be executed simultaneously in several counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument.


 


SECTION 5.6         Severability.


 


To the maximum extent permitted by applicable
law, the invalidity or unenforceability of any one or more phrases, sentences,
clauses or sections contained in this Guarantee shall not affect the validity
or enforceability of the remaining portions of this Guarantee, or any part
thereof.


 


SECTION 5.7         Governing Law.


 


THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. This Guarantee
is subject to the Trust Indenture Act and if any provision hereof limits,
qualifies or conflicts with a provision of the Trust Indenture Act that is
required by the Trust Indenture Act to be a part of and govern this Guarantee,
the latter provision shall control. If any provision of this Guarantee modifies
or excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Guarantee as so
modified, or to be excluded, as the case may be, whether or not such provision
of this Guarantee refers expressly to such provision of the Trust Indenture
Act.  The Guarantor shall be an “obligor”
with respect to the Securities as such term is defined in and solely for the
purposes of the Trust Indenture Act and shall comply with those provisions of
the Indenture compliance with which is required by an “obligor” under the Trust
Indenture Act.


 


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SECTION 5.8         Amendment; Modification.


 


This Guarantee may be amended or modified pursuant
to the terms of the Indenture.


 


[Remainder of this
page intentionally blank]


 


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IN WITNESS WHEREOF, the Guarantor has caused
this instrument to be duly executed.


 


 


	
   

  	
  PRINCIPAL
  FINANCIAL SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terrance
  J. Lillis

  
	
   

  	
   

  	
  Name:
  Terrance J. Lillis

  
	
   

  	
   

  	
  Title:
  Senior Vice President and

  
	
   

  	
   

  	
  Chief
  Financial Officer

  



 


 


[Signature page to Guarantee of 8.875% Senior Notes due 2019]