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 2007-120, 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 November 21, 2007
	 
	 	 	 	 
	By:

	 	/s/ Diana L. Cook
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:

	 	Diana L. Cook	 	 
	 
	 	 	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	Date:

	 	The Effective Date (as defined in the Funding Agreement)	 	 

4EX-4.1 SPECIMEN CERTIFICATE FOR COMMON SHARES

 

Exhibit 4.1

	COMMON SHARES THIS CERTIFICATE IS TRANSFERABLE

	NEW YORK, NY, JERSEY CITY, NJ AND

	PITTSBURGH, PA

	This Certifies that

	Invesco Ltd.

	INCORPORATED UNDER THE LAWS OF BERMUDA

	COMMON SHARES

	SEE REVERSE
FOR CERTAIN
DEFINITIONS

	CUSIP G491BT 10 8

	is the record holder of

	fully paid and nonassessable Common Shares, $0.20 par
value, of

	Invesco Ltd. subject to the Memorandum of Association and Bye-laws of the Company,
transferable only on the books of the Company by the holder hereof in person by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid until
countersigned by the Transfer Agent and registered by the Registrar.

	WITNESS the facsimile signatures of the Company’s duly authorized officers.

	Dated:

	AMERICAN BANK NOTE COMPANY PRODUCTION COORDINATOR: DENISE LITTLE
931-490-1706 711 ARMSTRONG LANE PROOF OF NOVEMBER 27, 2007

	COLUMBIA, TENNESSEE 38401 INVESCO LTD. (931) 388-3003
TSB 28673 FC

	SALES: C.SHARKEY 302-731-7088 Operator:R/AP
/ETHER 7 / LIVE JOBS / I /INVESCO 28673 FC            Rev. 3
PLEASE INITIAL THEAPPROPRIATESELECTION FOR THIS            PROOF:OK AS ISOK WITHCHANGES            MAKECHANGES AND SENDANOTHERPROOF
ColorsSelected forPrinting: Logo prints in PMS 2748.Intaglio prints in SC-7 Dark Blue.
COLOR: This proof was printed from a digital file or artwork on a graphics quality, color laser printer. It is a good            representation of the color as it will appear on the final            product. However, it is not an exact color            rendition, and the final printed     
       product may appear slightly            different from the proof due to the            difference            between the dyes and            printing ink.

 

 

     The Company is authorized to issue more than one class or series of shares. The Company will
furnish upon request and without
charge to each shareholder the powers, designations, preferences and relative, participating,
optional and other special rights of each
class of shares and series within a class of shares of the Company, as well as the qualifications,
limitations and restrictions relating to
those preferences and/or rights. A shareholder may make the request to the Company or to the
Transfer Agent and Registrar.

     The following abbreviations, when used in the inscription on the face of this Certificate, shall be
construed as though they were written out in full according to applicable laws or regulations:

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	TEN COM
	 	–
	 	as tenants in common
	 	UNIF GIFT MIN ACT–
	 	                       Custodian
                         
	 

	 	TEN ENT
	 	–
	 	as tenants by the entireties
	 	 	 	     (Cust)                           (Minor)
	 

	 	JT TEN
	 	–
	 	as joint tenants with right of
	 	 	 	under Uniform Gifts to Minors
	 

	 	 	 	 	 	survivorship and not as tenants
	 	 	 	Act                                                            
	 

	 	 	 	 	 	in common
	 	 	 	(State)
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	UNIF TRF MIN ACT–
	 	                    Custodian (until age            )
	 

	 	 	 	 	 	 	 	 	 	                    under Uniform Transfers
	 

	 	 	 	 	 	 	 	 	 	     (Minor)
	 

	 	 	 	 	 	 	 	 	 	To Minors Act                                         
	 

	 	 	 	 	 	 	 	 	 	                  (State)

Additional abbreviations may also be used though not in the above list.

For
Value Received,                      hereby sell, assign and transfer unto

	 	 	 	 	 
	 

	 	PLEASE INSERT SOCIAL SECURITY OR OTHER
	 	 
	 

	 	IDENTIFYING NUMBER OF ASSIGNEE	 	 
	 

	 	 	 
	 

	 	 	 	 

 

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

 

 

            
            
            
            
            
            
            
            
            
     
                                
Common Shares

represented by the within Certificate and do hereby irrevocably constitute and appoint

                                                                  
            
                                                                                       
Attorney

to transfer the said shares on the books of the within named Company with full power of
substitution in the premises.

Dated:                                                             

	 	 	 
	X
	 	 
	 

	 	 
	 
	 	 
	X
	 	 
	 

	 	 
	NOTICE:

	 	THE SIGNATURE(S) TO THIS ASSIGNMENT MUST STRICTLY CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE
 FACE 
OF THE CERTIFICATE IN EVERY PARTICULAR AND WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
	 

	 	

Signature(s) Guaranteed:

	 	 	 	 	 	 	 
	 

	 	By
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.	 	 

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR DESTROYED, THE COMPANY WILL REQUIRE A BOND
OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.

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