Document:

exv10w1

 

MTN GLOBAL FUNDING AGREEMENT

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392-0001

(515) 247-5111

In consideration of the payment made by, or at the direction of,

Principal Life Income Fundings Trust 2006-74

(the “Agreement Holder”)

of the Net Deposit, as described below, Principal Life Insurance Company (“Principal Life”) agrees
to make payments to the person or persons entitled to them, subject to the provisions of this
funding agreement (this “Agreement”).

This Agreement is delivered in and subject to the laws of the State of Iowa.

This Agreement is issued and accepted subject to all the terms set out in it.

This Agreement is executed by Principal Life at its Corporate Center to take effect as of the 18th
day of October, 2006, which is referred to as the Effective Date, subject to the receipt by
Principal Life or its designee of the Net Deposit (as set forth in Section 1).

	 	 	 
	/s/ Joyce N. Hoffman

	 	/s/ Larry Zimpleman
	Senior Vice President and

	 	President and
	Corporate Secretary

	 	Chief Operating Officer

	 	 	 	 	 
	 

	 	/s/ Jim Madden
	 	 
	 

	 	 	 	 
	 

	 	Registrar	 	 
	 
	 	 	 	 
	 

	 	October 18, 2006	 	 
	 

	 	 	 	 
	 

	 	Date	 	 

GLOBAL FUNDING AGREEMENT NO. 5-18950

RESTRICTIONS REGARDING THE TRANSFER OR SALE OF

THIS FUNDING AGREEMENT OR ANY INTEREST HEREIN ARE SET FORTH HEREIN

GPA 5999

 

 

			
	FUNDING AGREEMENT
	 	No. 5-18950

     This Agreement is issued in connection with the issuance by the Trust (specified in the Annex)
of Secured Notes (the “Notes”) which are identified in the annex hereto (the “Annex”) and which are
being issued by the Trust pursuant to the Prospectus dated February 16, 2006, the Prospectus
Supplement dated February 16, 2006, as from time to time amended or supplemented, and the Pricing
Supplement applicable to the Notes (the “Pricing Supplement”). Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Notes. Where used in this
Agreement, the term “Notes” shall mean the Notes secured by this Agreement as the same exist on the
Effective Date, without giving effect to any amendments or modifications to said Notes effected or
made after any such Effective Date unless such amendments or modifications to said Notes have been
consented to in writing by Principal Life.

	1.	 	Deposit
	 
	 	 	Principal Life agrees to accept, and the Agreement Holder agrees to pay or cause to be paid
to Principal Life, for value on the Effective Date, the Net Deposit (as specified in the
Annex). All funds received by Principal Life under this Agreement shall become the exclusive
property of Principal Life and remain a part of Principal Life’s general account without any
duty or requirement of segregation or separate investment.
	 
	 	 	This Agreement shall become effective only upon the receipt by Principal Life or its
designee of the Net Deposit.

	2.	 	Fund
	 
	 	 	Upon receipt of the Net Deposit, Principal Life will establish, under this Agreement, a
bookkeeping account in the name of the Agreement Holder, which will evidence Principal
Life’s obligations under this Agreement.
	 
	 	 	The Deposit deemed received (as specified in the Annex), (i) less any withdrawals to make
payments hereunder and (ii) plus any interest accrued and premium, if any, pursuant to
Section 7, will be referred to as the “Fund”.
	 
	 	 	Principal Life is neither a trustee nor a fiduciary with respect to the Fund.

	3.	 	Purchase of Notes By Principal Life
	 
	 	 	Principal Life may purchase some or all of the Notes in the open market or otherwise at any
time, and from time to time. Simultaneously, upon such purchase, (1) the purchased Notes
shall, by their terms become mandatorily redeemable by the Trust as specified in the related
Pricing Supplement, Prospectus Supplement and/or Prospectus and (2) the Fund under this
Agreement shall be permanently reduced by the same percentage as the principal amount of the
Notes so redeemed bears to the sum of (i) the aggregate principal amount of all Notes issued
and outstanding immediately prior to such redemption and (ii) the principal amount of the
Trust Beneficial Interest related to such Notes. If Principal Life, in its sole discretion,
engages in such open market or other purchases, then the Trust, the Indenture Trustee in
respect of such Notes, and Principal Life shall take

 2 

 

 

	 	 	actions (including, in the case of Principal Life, making the payment(s) necessary to effect
the Trust’s redemption of such Notes) as may be necessary or desirable to effect the
cancellation of such Notes by the Trust.
	 
	4.	 	Entire Agreement
	 
	 	 	This Agreement and the Annex attached hereto constitute the entire Agreement.
	 
	5.	 	Representations

	 	(a)	 	Each party hereto represents and warrants to the other that as of the date
hereof:

	 	(i)	 	it has the power to enter into this Agreement and to consummate
the transactions contemplated hereby;
	 
	 	(ii)	 	this Agreement has been duly authorized, executed and
delivered, this Agreement constitutes a legal, valid and binding obligation of
each party hereto, and this Agreement is enforceable in accordance with the
terms hereof, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights, and subject as to enforceability to general
principles of equity, regardless of whether enforcement is sought in a
proceeding in equity or at law; and
	 
	 	(iii)	 	the execution and delivery of this Agreement and the
performance of obligations hereunder do not and will not constitute or result
in a default, breach or violation of the terms or provisions of its
certificate, articles or charter of incorporation, declaration of trust,
by-laws or any agreement, instrument, mortgage, judgment, injunction or order
applicable to it or any of its property.

	 	(b)	 	The Trust further represents and warrants to Principal Life that:

	 	(i)	 	it is a person other than a natural person and is purchasing
this Agreement for the purpose of providing collateral security for securities
registered with the United States Securities and Exchange Commission;
	 
	 	(ii)	 	it has been informed and understands that transfer is
restricted by the terms of this Agreement; and
	 
	 	(iii)	 	it (a) is solely responsible for determining whether this
Agreement is suitable for the purpose intended; (b) has carefully read this
Agreement (including the Annex) before signing this Agreement; (c) has had a
reasonable opportunity to make such inquiries as it deemed necessary prior to
signing this Agreement; and (d) has received or had access to such additional
information as it deemed necessary in connection with its decision to sign this
Agreement.

3

 

	 	 	In performing its obligations hereunder Principal Life is not acting as a fiduciary, agent
or other representative for the Agreement Holder or anyone else. All representations and
warranties made by the Agreement Holder and Principal Life in this Agreement shall be
considered to have been relied upon by the other in connection with the execution hereof.
	 
	6.	 	Assignment of Agreement
	 
	 	 	The following conditions must be satisfied in order to effectuate any assignment of this
Agreement:

	 	(i)	 	This Agreement may only be transferred through a book entry system maintained
by Principal Life, or an agent designated by it, within the meaning of Temporary
Treasury Regulations Section 5f.103-1(c) and Treasury Regulations Section
1.871-14(c)(1)(i).
	 
	 	(ii)	 	The Agreement Holder, and any assignee, must comply with applicable securities
laws.
	 
	 	(iii)	 	Principal Life has consented in writing to the proposed assignment, such
consent not to be unreasonably withheld.
	 
	 	(iv)	 	Principal Life shall have received from the proposed assignee a duly executed
certificate containing, in substance, the information, representations, warranties,
acknowledgments and agreements set forth in this Agreement.

	 	 	Any attempted sale, transfer, anticipation, assignment, hypothecation, or alienation not in
accordance with this Section 6 shall be void and of no effect. Until such time, if any, as
Principal Life has consented in writing to a proposed assignment, Principal Life shall not
be obligated to make any payments to or at the direction of anyone other than the person
shown on Principal Life’s books and records as the Agreement Holder. Once the foregoing
conditions have been satisfied with respect to an assignment, the assignee or its successor
shall be deemed to be the sole Agreement Holder for all purposes of this Agreement and
Principal Life shall promptly amend its records to reflect the assignee’s status as
Agreement Holder.
	 
	7.	 	Payments to the Agreement Holder
	 
	 	 	Principal Life shall pay to, or at the direction of, the Agreement Holder by the date (the
“Due Date”) on which any payment becomes due in respect of the Notes secured by this
Agreement (and in any event such period of time prior to the Due Date as shall be necessary
to ensure that the Trust can fulfill its obligation to make payment in full of all amounts
due and payable under the Notes on the Due Date), an amount in the currency or currencies in
which the Notes are denominated as specified in the Notes equal to the sum of (i) the amount
of principal and/or (as the case may be) interest and/or (as the case may be) premium
falling due in respect of the Notes on such Due Date (the “Notes Component”) and (ii) the
amount of any payments owed by the Trust in respect of the Trust Beneficial Interest falling
due on such date (the “Beneficial Interest Component”). In the event that Principal Life
fails to make payment of any such amount on or prior to

4

 

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

	 	(i)	 	Principal Life’s failure to make any payment of interest, premium (if
applicable) or installment payments (if applicable) in accordance with this Agreement,
if such failure to pay is not corrected within seven (7) Business Days after such
payment becomes due and payable; or

5

 

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

	 	 	Notwithstanding anything to the contrary in this Section 8, if an event described in clause
(iii) above occurs, this Agreement will automatically terminate and the amount of the Fund
will be immediately due and payable by Principal Life to the Agreement Holder, or the
account specified by the Agreement Holder.
	 
	 	 	Principal Life will promptly notify the Agreement Holder and the Rating Agencies in writing
of the occurrence of any of (i) through (iii) above.
	 
	9.	 	Withholding; Additional Amounts
	 
	 	 	All amounts due in respect of this Agreement will be made without withholding or deduction
for or on account of any present or future taxes, duties, levies, assessments or

6

 

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

7

 

If to Principal Life:

	 	 	 
	Principal Life Insurance Company
	711 High Street
	Des Moines, Iowa 50392-0001
	Attention:

	 	General Counsel
	Telephone:

	 	(515) 247-5111
	Telecopy:

	 	(515) 248-3011
	 
	 	 
	Principal Life Insurance Company
	711 High Street
	Des Moines, Iowa 50392-0001
	Attention:

	 	Jim Fifield, Counsel
	Telephone:

	 	(515) 248-9196
	Telecopy:

	 	(515) 235-9353

If to the Agreement Holder:

	 	 	 
	Principal Life Income Fundings Trust 2006-74
	c/o U.S. Bank Trust National Association
	100 Wall Street, 16th Floor
	New York, NY 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, NY 10013
	 
	 	 
	Attention:

	 	Nancy Forte
	Telephone:

	 	(212) 816-5685
	Telecopy:

	 	(212) 816-5527

	14.	 	Business Day
	 
	 	 	For purposes of this Agreement, “Business Day” means any day that is a Business Day as
specified in the Notes or the Indenture.

	15.	 	Business Day Convention
	 
	 	 	If the date on which any payment is due to be made under this Agreement shall occur on a day
on which is not a Business Day, such payment shall be made in accordance with the Business
Day Convention as specified in the Notes or the Indenture.

 8 

 

 

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

9

 

ANNEX

This Annex will become effective as of the Effective Date, subject to the requirements of Section
1.

	 	 	 	 	 
	Trust:	 	Principal Life Income Fundings Trust 2006-74
	 
	 	 	 	 
	Net Deposit:	 	The Net Deposit is $7,339,235.00.
	 
	 	 	 	 
	Deposit:	 	Regardless of the amount of the Net Deposit, the
Deposit is deemed to be $7,451,015.00.
	 
	 	 	 	 
	Bank and Account:	 	Wells Fargo Bank Iowa, N.A.
	 	 	ABA No.: XXXXXXXX
	 	 	For credit to Principal Life Insurance Company
	 	 	Account #XXXXXXXX
	 
	 	 	 	 
	Title of Notes:	 	Principal Life Income Fundings Trust 2006-74 5.80%
Principal® Life CoreNotes® Due
2016
	 
	 	 	 	 
	Survivor’s Option:	 	Unless this Agreement has been declared due and payable
prior to the Maturity Date of the related Notes by
reason of any Event of Default, or has been previously
redeemed or otherwise repaid, the Agreement Holder may
request repayment of this Agreement upon the valid
exercise of the Survivor’s Option in the Notes by the
Representative of the deceased Beneficial Owner of such
Notes (a “Survivor’s Option”).
	 
	 	 	 	 
	 	 	Except as provided below, upon the tender to and
acceptance by Principal Life of this Agreement (or
portion thereof) securing the Notes as to which the
Survivor’s Option has been exercised, Principal Life
shall repay to the Agreement Holder the amount of the
Fund equal to (i) 100% of the principal amount of the
Notes as to which the Survivor’s Option has been
validly exercised and accepted, plus accrued and unpaid
interest on such amount to the date of repayment, or
(ii) in the case of Discount Notes, the Issue Price of
the Notes as to which the Survivor’s Option has been
validly exercised and accepted, plus accrued discount
and any accrued and unpaid interest on such amount to
the date of repayment. However, Principal Life shall
not be obligated to repay:
	 
	 	 	 	 
	 

	 	•
	 	more than the greater of $2,000,000 or 2% of
the aggregate deposit for all funding agreement
contracts securing all outstanding notes issued under
the Principal® Life CoreNotesSM
program as of the end of the most recent calendar year;

 A-1 

 

 

	 	•	 	more than $250,000 in aggregate deposit of
funding agreement contracts securing outstanding notes
issued under the Principal® Life
CoreNotesSM program as to which the
Survivor’s Option has been exercised on behalf of any
single beneficial owner in any calendar year; or
	 
	 	•	 	more than 2% of the Deposit under this
Agreement which secures the related Notes, as of the
end of the most recent calendar year.

	 	 	 
	 
	 	Principal Life shall not make repayments pursuant to
the Agreement Holder’s request for repayment upon
exercise of the Survivor’s Option in amounts that are
less than $1,000, and, in the event that the
limitations described in the preceding sentence would
result in the partial repayment of this Agreement, the
principal amount of this Agreement remaining
outstanding after repayment must be at least $1,000
(the minimum authorized denomination of this
Agreement). A request for repayment by the Agreement
Holder upon an otherwise valid election to exercise the
Survivor’s Option may not be withdrawn.
	 
	 	 
	 

	 	This Agreement (or portion thereof) accepted for
repayment shall be repaid on the first Interest Payment
Date for the related Notes that occurs 20 or more
calendar days after the date of such acceptance.
	 
	 	 
	 

	 	In order to obtain repayment of this Agreement (or
portion thereof) upon exercise of the Survivor’s
Option, the Agreement Holder must provide to Principal
Life (i) a written request for repayment signed by the
Agreement Holder, and (ii) any additional information
Principal Life requires to evidence satisfaction of any
conditions to the repayment of this Agreement (or
portion thereof).

A-2

 

	 	 	 	 	 
	PRINCIPAL LIFE INSURANCE COMPANY  
	 
	 	 	 	 
	By:

	 	/s/ Christopher P. Freese	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:

	 	Christopher P. Freese	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:

	 	Officer	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	PRINCIPAL LIFE INCOME FUNDINGS TRUST 2006-74
	 
	 	 	 	 
	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/ Debra Williams	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:

	 	Debra Williams	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:

	 	Vice President	 	 
	 

	 	 	 	 

A-3exv10w2

 

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 2006-74, a New York common law trust (the “Trust”), relating to the notes (the
“Notes”) issued by the Trust, Principal Financial Group, Inc., a Delaware corporation and the
indirect parent company of Principal Life (the “Guarantor”), hereby furnishes to the Trust its full
and unconditional guarantee of the Guaranteed Amounts (as hereinafter defined) as follows:

     1. Guarantee.

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

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

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

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

 1 

 

 

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

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

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

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

If to the Guarantor:

Principal Financial Group, Inc.

711 High Street

Des Moines, Iowa 50392

Attention: General Counsel

Telephone: (515) 247-5111

Facsimile: (515) 248-3011

With a copy to:

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392

Attention: Jim Fifield

Telephone: (515) 248-9196

Facsimile: (866) 496-6527

If to the Trust:

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

2

 

c/o U.S. Bank Trust National Association

100 Wall Street, 16th Floor

New York, New York 10005

Attention: 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

3

 

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

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

	 	 	 
	PRINCIPAL FINANCIAL GROUP, INC.
	 
	 	 
	By:

	 	/s/ Elizabeth D. Swanson
	 

	 	 
	 
	 	 
	Name:

	 	Elizabeth D. Swanson
	 

	 	 
	 
	 	 
	Title:

	 	Counsel
	 

	 	 
	 
	 	 
	Date:

	 	The Effective Date (as defined in
the Funding Agreement)

Acknowledged and Agreed:

THE PRINCIPAL LIFE INCOME FUNDINGS

TRUST DESIGNATED IN THIS GUARANTEE

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

	 	/s/ Debra Williams	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:

	 	Debra Williams	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:

	 	Vice President	 	 
	 

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

 4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]