Document:

exv10w2

 

GUARANTEE

     FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in connection with
that certain funding agreement (the “Funding Agreement”), entered into by and between Principal
Life Insurance Company, an Iowa insurance company (“Principal Life”), and Principal Life Income
Fundings Trust 2007-7, a New York common law trust (the “Trust”), relating to the notes (the
“Notes”) issued by the Trust, Principal Financial Group, Inc., a Delaware corporation and the
indirect parent company of Principal Life (the “Guarantor”), hereby furnishes to the Trust its full
and unconditional guarantee of the Guaranteed Amounts (as hereinafter defined) as follows:

     1. Guarantee.

          (a) The Guarantor hereby fully, irrevocably, absolutely and unconditionally guarantees, as a
guarantee of payment and not merely as a guarantee of collection, immediate payment when due to the
Trust any payments required to be made by Principal Life to the Trust under the Funding Agreement
which shall become due and payable regardless of whether such payment is due at maturity, on an
interest payment date or as a result of redemption or otherwise (the “Scheduled Payments”) but
shall be unpaid by Principal Life (the “Guaranteed Amounts”). Notwithstanding anything to the
contrary contained herein, in no event shall the Guaranteed Amounts exceed the Deposit (as defined
in the Funding Agreement) of the Funding Agreement, plus accrued but unpaid interest and any other
amounts due and owing under the Funding Agreement, less any amounts paid by Principal Life to the
Trust.

          (b) In the event that Principal Life fails to make a Scheduled Payment in full when due (the
“Payment Notice Date”), then the Trust or Citibank, N.A., as indenture trustee for the benefit of
the holders of the Notes (the “Indenture Trustee”), pursuant to the indenture (the “Indenture”)
between the Trust and the Indenture Trustee, may present the Guarantor with notice (each, a
“Payment Notice”) of such failure in writing on or after the Payment Notice Date. The Payment
Notice shall identify (1) the Funding Agreement, (2) the Trust, (3) the Payment Notice Date and (4)
the amount of the Scheduled Payments not paid by Principal Life to the Trust as of the Payment
Notice Date. Upon receipt of such Payment Notice, the Guarantor will immediately pay the
Guaranteed Amounts pursuant to Section 7.

          (c) In the event that, after receipt of a Payment Notice from the Trust, the Guarantor fails
to make immediate payment to the Trust or the Indenture Trustee of the Guaranteed Amounts, then
the Trust and the Indenture Trustee may enforce the obligations of the Guarantor under this
Guarantee, including by immediately bringing suit directly against the Guarantor (without first
bringing suit against Principal Life) for the Guaranteed Amounts not paid to the Trust as of the
Payment Notice Date.

          (d) This Guarantee is an unsecured, unsubordinated and contingent obligation of the Guarantor
and ranks equally with all other unsecured and unsubordinated obligations of the Guarantor.

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     2. Termination. This Guarantee is a continuing and irrevocable guarantee of the
Guaranteed Amounts now or hereafter existing and shall terminate and be of no further force and
effect with respect to the Funding Agreement and the Notes upon the full payment of the Scheduled
Payments or upon the earlier extinguishment of the obligations of Principal Life under the Funding
Agreement.

     3. Amendments. Subject to the trust agreement relating to the Trust and the Indenture, no
provision of this Guarantee may be waived, amended, supplemented or modified, except by a written
instrument executed by the Trust and the Guarantor.

     4. Assignment; Governing Law. This Guarantee shall inure to the benefit of the Trust and its
successors, assigns and pledgees. This Guarantee shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to conflict of law principles.

     5. Notices. All notices given pursuant to this Guarantee shall be in writing, and shall
either be delivered, mailed or telecopied to the locations listed below or at such other address or
to the attention of such other persons as such party shall have designated for such purpose in a
written notice complying as to delivery with the terms of this Section 5. Each such notice shall
be effective (i) if given by telecopy, when transmitted to the applicable number so specified in
this Section 5 (such notice shall also be sent by mail, with first class postage prepaid), (ii) if
given by mail, three days after deposit in the mails with first class postage prepaid, or (iii) if
given by any other means, when actually delivered at such address.

If to the Guarantor:

Principal Financial Group, Inc.

711 High Street

Des Moines, Iowa 50392

Attention: General Counsel

Telephone: (515) 247-5111

Facsimile: (515) 248-3011

With a copy to:

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392

Attention: Jim Fifield

Telephone: (515) 248-9196

Facsimile: (866) 496-6527

If to the Trust:

Principal Life Income Fundings Trust (followed by the number of the Trust specified in this Guarantee)

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c/o U.S. Bank Trust National Association

100 Wall Street, 16th Floor

New York, New York 10005

Attention: Thomas E. Tabor

Telephone: (212) 361-6184

Facsimile: (212) 809-5459

With a copy to:

Citibank, N.A.

Citibank Agency and Trust

388 Greenwich Street, 14th Floor

New York, New York 10013

Attention: Nancy Forte

Telephone: (212) 816-5685

Facsimile: (212) 816-5527

     6. Representations and Warranties. The Guarantor represents and warrants that: (i) it is duly
organized and in good standing under the laws of the jurisdiction of its organization and has full
capacity and right to make and perform this Guarantee, and all necessary authority has been
obtained; (ii) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors’ rights and general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law; (iii) the making and performance of this
Guarantee does not and will not violate the provisions of any applicable law, regulation or order,
and does not and will not result in the breach of, or constitute a default under, any material
agreement, instrument or document to which it is a party or by which it or any of its property may
be bound or affected, except to the extent disclosed in the registration statement registering the
issuance of this Guarantee and the Funding Agreement, as amended, supplemented or modified from
time to time (the “Registration Statement”), and to the extent that any such violation, breach or
default does not result in a material adverse effect on the Guarantor; and (iv) all consents,
approvals, licenses and authorizations of, and filings and registrations with, any governmental
authority required under applicable law and regulations for the making and performance of this
Guarantee have been obtained or made and are in full force and effect, except to the extent
disclosed in the Registration Statement and to the extent that the failure to acquire any such
consent, approval, license, authorization, filing or registration does not result in a material
adverse effect on the Guarantor.

     7. Notice of, and Consent to, Security Interest. The Trust hereby notifies the Guarantor that
it has granted to the Indenture Trustee, on behalf of the holders of the Notes, a security interest
in the Collateral (as defined in the Indenture), including, but not limited to, any and all payment
to be made by the Guarantor to the Trust under this Guarantee. The Trust hereby notifies the
Guarantor that it has collaterally assigned to the Indenture Trustee, for the benefit of the
holders of the Notes, this Guarantee. The Guarantor, by executing this Guarantee, hereby (i)
affirms that it has made or simultaneously will make changes to its books and records to reflect
such security interest and collateral assignment, (ii) consents to the security interest

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granted, and collateral assignment made, by the Trust to the Indenture Trustee of this
Guarantee, (iii) agrees to make all payments due under this Guarantee to the Collection Account (as
defined in the Indenture) or any other account designated in writing to the Guarantor by the
Indenture Trustee and (iv) agrees to comply with all orders of the Indenture Trustee with respect
to this Guarantee without any further consent from the Trust.

     8. WAIVER OF JURY TRIAL; FINAL AGREEMENT. TO THE EXTENT ALLOWED BY APPLICABLE LAW, THE
GUARANTOR WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON OR ARISING
OUT OF THIS GUARANTEE. THIS GUARANTEE REPRESENTS THE FINAL AGREEMENT BETWEEN THE GUARANTOR AND THE
TRUST AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS AMONG SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

	 	 	 
	PRINCIPAL FINANCIAL GROUP, INC.
	 
	 	 
	By:

	 	/s/ Elizabeth D. Swanson
	 

	 	 
	 
	 	 
	Name:

	 	Elizabeth D. Swanson
	 

	 	 
	 
	 	 
	Title:

	 	Counsel
	 

	 	 
	 
	 	 
	Date:

	 	The Effective Date (as defined in the Funding Agreement)

Acknowledged and Agreed:

THE PRINCIPAL LIFE INCOME FUNDINGS

TRUST DESIGNATED IN THIS GUARANTEE

	 	 	 	 	 
	By:	 	U.S. Bank Trust National Association,
	 	 	not in its individual capacity, but solely in its
	 	 	capacity as trustee
	 
	 	 	 	 
	By:	 	Bankers Trust Company, N.A.,
	 	 	under Limited Power of Attorney, dated February 16, 2006
	 
	 	 	 	 
	By:

	 	/s/ Diana L. Cook
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:

	 	Diana L. Cook	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:

	 	Vice President	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:	 	The Effective Date (as defined in the Funding Agreement)

4EX-10.1 EMPLOYMENT AGREEMENT / FRANCIS S. BLAKE

 

Exhibit 10.1

January
23, 2007

Mr. Francis S. Blake

2455 Paces Ferry Road

Atlanta, Georgia 30339

Dear Frank:

I am pleased to confirm The Home Depot, Inc.’s (the “Company”) offer and your acceptance of your
appointment to Chairman & Chief Executive Officer, effective January 2, 2007, reporting directly to
the Company’s Board of Directors. Your new base annual salary will be $975,000, payable in equal
biweekly installments, commencing January 29, 2007.

In addition to your base salary, you will continue to participate in the Management Incentive
Program (“MIP”) in accordance with its terms. Beginning in fiscal year 2007, your annual incentive
target will be equal to 200% of your base salary, based upon achieving established goals. You will
also continue to participate in the Company’s Long-Term Incentive Plan (“LTIP”) in accordance with
its terms. Beginning with the fiscal year 2007—2009 plan, your LTIP target will be equal to 100%
of your base salary as of the beginning of the plan. To be eligible for payment of any MIP or LTIP
incentive, you must be employed on the day on which the incentive is paid (unless your termination
of employment is due to death, disability or Retirement as provided by the terms of the MIP and
LTIP plan documents).

Following your acceptance of this agreement, at the next regularly scheduled meeting of the
Company’s Board of Directors in February 2007, you will receive a grant of Performance Shares under
the 2005 Omnibus Stock Incentive Plan equal to the greatest number of whole shares of the Company’s
common stock resulting from dividing $2,500,000 by the closing stock price on the grant date. The
payout of the Performance Share award will depend on the Company’s total shareholder return (“TSR”)
percentile ranking, compared to the TSR ranking of individual companies included in the S&P 500
Index, at the end of the three year performance period commencing with Fiscal 2007. The target
award payout is 100% at the 50th percentile ranking, 300% at the 100th percentile ranking and 25%
at the 26th percentile ranking. Payout is interpolated for results between these percentile
rankings. There is no payout for rankings below the 26th percentile. Earned shares will be issued
to you as soon as administratively practical after the end of the performance period, free and
clear of restrictions, subject to the standard provisions of the plan and award document. To be
eligible for payment of the Performance Shares, you must be employed at the time the shares are
paid; provided, however, that in the event of your employment termination due to death, disability
or retirement, in each case at or

 

 

after age 60 with at least 5 years of continuous service with the Company, you will be eligible to
receive any Performance Shares that otherwise would have been paid to you had your employment
continued through the payment date. In the event your employment ends due to death or disability
during the 3-year performance period and before you are retirement eligible at age 60 with 5 years
of continuous service, you or your estate will be eligible for a prorated portion of the
Performance Shares that otherwise would have been paid to you had your employment continued through
the payment date.

Following your acceptance of this agreement, at the next regularly scheduled meeting of the
Company’s Board of Directors in February 2007, you will receive a grant of nonqualified stock
options under the 2005 Omnibus Stock Incentive Plan equal to the greatest number of whole shares of
the Company’s common stock resulting from dividing $2,500,000 by the product of the closing stock
price on the grant date and 27.25%, with an exercise price equal to the closing stock price on the
grant date. The options will vest and become fully exercisable on the later of the first
anniversary of the grant date and the date the closing stock price has been 25% greater than the
exercise price of the options for thirty consecutive trading days (the “Target Closing Stock
Price”). The options will expire on the earlier of (i) employment termination for any reason other
than death, disability or Retirement, (ii) five years from the grant date if the Target Closing
Stock Price is not achieved by such date or, otherwise, (iii) ten years from the grant date. You will have 3 months after employment termination, and before expiration of the option, to exercise any vested portion of the award.  However, in the event of your retirement at or after age 60 with at least 5 years of continuous service, or your death or disability at any time, your options will continue to vest pursuant to the foregoing vesting schedule and, if vested before the fifth anniversary of the grant date, may be exercised until the tenth anniversary of the grant date as noted above; provided, however, in the event that your employment ends due to death or disability before you are retirement eligible at age 60 with 5 years of continuous service, your options may only be exercised for one year following the later of the vesting date or the date of termination of your employment.

The above equity awards are in lieu of any equity awards that you would have received at the time
of the Company’s broad-based annual equity awards in March 2007.

In addition to the standard benefits package for salaried associates, as an executive officer of
the Company, you will continue to be eligible to participate in the benefits provided to our
executive officers, including but not limited to a death benefit only insurance policy, the
Company’s executive life insurance program, and our lease car program. You are also eligible to
continue participation in the Supplemental Executive Choice Program, which provides you with an
annual supplemental benefit allowance. You can use this annual allowance to purchase additional
disability or life insurance benefits, personal excess liability insurance, or you can use it to
reimburse yourself for financial services or health care expenses not covered under our standard
health plans.

The Company requests that, where practicable, you travel by use of Company aircraft or charter
aircraft, for security purposes. However, you may elect to travel by commercial aircraft when you
deem appropriate. Also, to accommodate your travel schedule, your family shall be allowed to
travel aboard the Company’s aircraft, provided however, such personal use of the Company’s aircraft
will require the inclusion in your taxable income of an amount equal to the related benefit of such
accommodation. Such inclusion shall be made as required under the Internal

 

 

Revenue Code and related regulations. The Company will provide a tax gross-up for your family’s
personal use of the aircraft only when the Company requests their attendance at a business meeting
or other Company event.

Also, for security purposes, you will be provided with personal and home security by the Company’s
Corporate Security Department, as considered necessary by such department.

You agree that you shall not, without the prior express written consent of the Executive Vice
President, Human Resources of the Company, engage in or have any financial or other interests in,
or render any service in any capacity to any competitor or supplier of the Company or its parents,
subsidiaries, affiliates, or related entities during the course of your employment with the
Company. Notwithstanding the foregoing, you shall not be restricted from owning securities of
corporations listed on a national securities exchange or regularly traded by national securities
dealers, provided that such investment does not exceed 1% of the market value of the outstanding
securities of such corporation.

In the event your employment with the Company is terminated for any reason, you agree not to
disclose any Company proprietary or confidential information to any future employer or third party
or to take any such information, regardless of whether the information is in printed, written, or
electronic form.

All payments described in this letter will be subject to applicable payroll and income tax
withholding and other applicable deductions.

This letter should not be construed, nor is it intended to be a contract of employment for a
specified period of time, and the Company reserves the right to terminate this agreement with or
without cause at any time. The Company will provide, and you agree to provide the Company, with 30
days’ prior written notice of any termination of your employment hereunder. This letter supersedes
and replaces your previous employment letters, including but not limited to the letter dated
February 5, 2002.

In the event that any provisions of this letter shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of this letter shall not
in any way be affected or impaired thereby.

 

 

We are excited about the opportunities that your leadership will bring to this role. Enclosed are
duplicate originals of this letter. Please countersign one original and return it to us. The
other original is for you.

	 	 	 
	 

	 	Sincerely,
	 
	 	 
	 

	 	THE HOME DEPOT, INC.
	 
	 	 
	 
	 	 /s/ Bonnie G. Hill
	 

	 	Bonnie G. Hill, Chair
	 

	 	Leadership Development & Compensation
	 

	 	Committee

	 	 	 
	pc:

	 	Dennis Donovan
	 

	 	Frank Fernandez
	 

	 	Tim Crow

I accept this appointment to Chairman & Chief Executive Officer:

/s/ Francis S. Blake

Francis S. Blake

			
	Date Signed:	 	January 23, 2007

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