TABLE OF CONTENTS

 

			Page
		ARTICLE I
		The Series of Securities
SECTION 1.1.		Establishment	2
SECTION 1.2.		Definitions	2
SECTION 1.3.		Payment of Principal, Premium, if any, and Interest	2
SECTION 1.4.		Denominations	3
SECTION 1.5.		No Sinking Fund	3
SECTION 1.6.		Global Securities	3
SECTION 1.7.		Transfer	4
SECTION 1.8.		Defeasance	4
SECTION 1.9.		Optional Redemption	4
SECTION 1.10.		Events of Default	5
		ARTICLE II
		Guarantee
SECTION 2.1.		Guarantee	6
		ARTICLE III
		Miscellaneous
SECTION 3.1.		Recitals by the Company	6
SECTION 3.2.		Application of Supplemental Indenture	7
SECTION 3.3.		Executed in Counterparts	7
SECTION 3.4.		Governing Law; Waiver of Jury Trial	7
Exhibit A	Form of Global Note
Exhibit B	Form of Guarantee

 

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FIRST SUPPLEMENTAL INDENTURE, dated as of May 21, 2009, among PRINCIPAL FINANCIAL GROUP, INC., a corporation duly organized and existing under the laws of the State of Delaware (the “ Company ,” as further defined in the Original Indenture hereinafter referred to), PRINCIPAL FINANCIAL SERVICES, INC., a corporation duly organized and existing under the laws of the State of Iowa, as guarantor (the “ Guarantor ,” as further defined in the Original Indenture hereinafter referred to), and 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 Original Indenture hereinafter referred to).

 

WHEREAS, the Company, the Guarantor and the Trustee have heretofore entered into an Indenture, dated as of May 21, 2009 (the “ Original Indenture ”), with the Trustee;

 

WHEREAS, the Original Indenture is incorporated herein by this reference and the Original Indenture, as supplemented by this First Supplemental Indenture, is herein called the “Indenture”;

 

WHEREAS, Section 301 of the Original Indenture provides for various matters with respect to Securities issued under the Original Indenture to be established in an indenture supplemental to the Original Indenture;

 

WHEREAS, Section 901(4) of the Original Indenture permits the execution and delivery of a supplemental indenture without the consent of any Holders to establish the form or terms of Securities of any series;

 

WHEREAS, the Company proposes to create under the Indenture a new series of Securities;

 

WHEREAS, the Guarantor will fully and unconditionally guarantee the obligations of the Company under the new series of Securities in accordance with the provisions of the Indenture; and

 

WHEREAS, all the conditions and requirements necessary to make this First Supplemental Indenture, when duly executed and delivered, a valid and binding agreement in accordance with its terms and for the purposes herein expressed have been performed and fulfilled.

 

NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

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ARTICLE I

THE SERIES OF SECURITIES

 

SECTION 1.1.            Establishment .

 

There is hereby established a new series of Securities to be issued under the Indenture, to be designated as the Company’s “7.875% Senior Notes due 2014” (the “ Senior Notes ”).

 

The initial limit upon the aggregate principal amount of the Senior Notes that may be authenticated and delivered under the Indenture (except for ( i ) Senior Notes authenticated and delivered upon registration or transfer of, or in exchange for or in lieu of, other Senior Notes pursuant to Sections 304, 305, 306, 906 or 1108 of the Original Indenture, and ( ii ) any Senior Notes which, pursuant to Section 303 of the Original Indenture, are deemed never to have been authenticated and delivered thereunder) is $400,000,000; provided , however , that the aggregate principal amount of the Senior Notes may be increased in the future, without the consent of the holders of the Senior Notes, on the same terms and with the same CUSIP and ISIN numbers as the Senior Notes, except that the issue price, the first interest payment date and the issue date may vary.

 

The Senior Notes shall be issued in the form of one or more Global Securities in substantially the form set forth in Exhibit A hereto.  The Depositary with respect to the Senior Notes shall be The Depository Trust Company.

 

SECTION 1.2.            Definitions .

 

The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below.  Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture.

 

“ Interest Payment Date ” means May 15 and November 15 of each year, commencing November 15, 2009.

 

“ Regular Record Date ” mean, the May 1 or November 1 of each year (whether or not a Business Day) immediately preceding the related Interest Payment Date.

 

SECTION 1.3.            Payment of Principal, Premium, if any, and Interest .

 

The Senior Notes will mature on May 15, 2014.  The Senior Notes shall bear interest at the rate of 7.875% per annum from May 21, 2009.  Interest shall be paid semi-annually on each Interest Payment Date, commencing November 15, 2009, to the Person in whose name the Senior Notes are registered on the Regular Record Date for

 

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such Interest Payment Date.  Any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the holders on such Regular Record Date and may be paid as provided in Section 307 of the Original Indenture.

 

Principal of, and premium, if any, and interest on the Senior Notes will be payable, and transfers of the Senior Notes will be registrable, at the Company’s office or agency in the Borough of Manhattan, The City of New York, which initially shall be the Corporate Trust Office of the Trustee.  Transfers of the Senior Notes will also be registrable at any of the Company’s other offices or agencies that it may maintain for that purpose.

 

SECTION 1.4.            Denominations .

 

The Senior Notes may be issued in denominations of $2,000 or any multiple of $1,000 in excess thereof.

 

SECTION 1.5.            No Sinking Fund .

 

The Senior Notes are not entitled to the benefit of any sinking fund.

 

SECTION 1.6.            Global Securities .

 

The Senior Notes will be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee.  Except under the limited circumstances described below, Senior Notes represented by Global Securities will not be exchangeable for, and will not otherwise be issuable as, Senior Notes in definitive form.  The Global Securities described above may not be transferred except as a whole by the Depositary to a nominee of the Depositary, or by a nominee of the Depositary to the Depositary or another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or its nominee.

 

Owners of beneficial interests in such Global Securities will not be considered the holders thereof for any purpose under the Indenture, and no Global Security representing a Senior Note shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the Depositary or its nominee or to a successor Depositary or its nominee.  The rights of holders of such Global Securities shall be exercised only through the Depositary.

 

A Global Security shall be exchangeable for Senior Notes registered in the names of Persons other than the Depositary or its nominee only as provided by Section 305 of the Original Indenture.  Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Senior Notes registered in such names as the Depositary shall direct.

 

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SECTION 1.7.            Transfer .

 

No service charge will be made for any registration of transfer or exchange of Senior Notes, but payment will be required of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

 

SECTION 1.8.            Defeasance .

 

The provisions of Sections 1202 and 1203 of the Original Indenture will apply to the Senior Notes.

 

SECTION 1.9.            Optional Redemption .

 

The Senior Notes will be redeemable, at the option of the Company, in whole at any time or in part from time to time (a “ Redemption Date ”), at a redemption price (the “ Redemption Price ”) equal to the greater of (i) 100% of the principal amount of the Senior Notes to be redeemed or (ii) an amount equal to the sum of the present values of the remaining scheduled payments of principal and interest on the Senior Notes to be redeemed, not including any portion of the payments of interest accrued as of such Redemption Date, discounted to such Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate, plus 50 basis points, as calculated by an Independent Investment Banker; plus in each case, accrued and unpaid interest on the Senior Notes to be redeemed to, but excluding, such Redemption Date.

 

If the Company has given notice as provided in the Original Indenture and made funds available for the redemption of any Senior Notes called for redemption on the Redemption Date referred to in that notice, those Senior Notes will cease to bear interest on that Redemption Date.  Any interest accrued to the date fixed for redemption will be paid as specified in such notice.  The Company will give written notice of any redemption of any Senior Notes to holders of the Senior Notes to be redeemed at their addresses, as shown in the security register for the Senior Notes, at least 30 days and not more than 60 days prior to the date fixed for redemption.  The notice of redemption will specify, among other items, the date fixed for redemption, the redemption price and the aggregate principal amount of the Senior Notes to be redeemed.

 

If the Company chooses to redeem less than all of the Senior Notes, the particular Senior Notes to be redeemed shall be selected by the Trustee not more than 45 days prior to the Redemption Date.  The Trustee will select the method in its sole discretion, in such manner as it shall deem appropriate and fair, for the Senior Notes to be redeemed in part.

 

“ Comparable Treasury Issue ” means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Senior Notes to be redeemed that would be utilized, at the time of selection

 

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and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Senior Notes.

 

“ Comparable Treasury Price ” means, with respect to any Redemption Date for the Senior Notes, the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or if the Company obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“ Independent Investment Banker ” means an independent investment banking institution of national standing appointed by the Company.

 

“ Reference Treasury Dealer ” means each of Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and two other primary U.S government securities dealers (each, a “ Primary Treasury Dealer ”), as specified by the Company; provided that if any of Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. or any Primary Treasury Dealer as specified by the Company shall cease to be a Primary Treasury Dealer, the Company will substitute therefor another Primary Treasury Dealer.

 

“ Reference Treasury Dealer Quotations ” means, with respect to the Reference Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed, in each case, as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such Redemption Date.

 

“ Treasury Rate ” means the rate per year equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.  The Treasury Rate shall be calculated on the third business day preceding the Redemption Date.

 

SECTION 1.10.          Events of Default .

 

In addition to the Events of Default set forth in Section 501 of the Original Indenture, each of the following will also constitute an “Event of Default” for the Senior Notes:

 

·                                           default for 30 days in the payment of any interest on the Senior Notes under the Guarantee by the Guarantor;

 

·                                           default in the payment of principal of the Senior Notes, or premium, if any, when due under the Guarantee by the Guarantor;

 

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·                                           default in the performance, or breach, of any covenant or warranty of the Guarantor in the Indenture or the Guarantee (other than a covenant or warranty a default in the performance of which or the breach of which is specifically dealt with elsewhere in this Section), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Guarantor by the Trustee or to the Guarantor and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;

 

·                                           the entry of a decree or order by a court having jurisdiction in the premises adjudging the Guarantor bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Guarantor under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Guarantor or of any substantial part of its property or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; or

 

·                                           the Guarantee ceases to be in full force and effect (other than in accordance with its terms) or the Guarantor denies or disaffirms its obligations under the Guarantee.

 

ARTICLE II

GUARANTEE

 

SECTION 2.1.            Guarantee .

 

The Guarantor shall fully and unconditionally guarantee the Senior Notes pursuant to a guarantee in substantially the form set forth in Exhibit B hereto.

 

ARTICLE III

MISCELLANEOUS

 

SECTION 3.1.            Recitals by the Company .

 

The recitals in this First Supplemental Indenture are made by the Company and the Guarantor only and not by the Trustee, and all of the provisions contained in the Original Indenture in respect of the rights, privileges, immunities, powers and duties of

 

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the Trustee shall be applicable in respect of the Senior Notes and of this First Supplemental Indenture as fully and with like effect as if set forth herein in full.

 

SECTION 3.2.            Application of Supplemental Indenture .

 

Each and every term and condition contained in this First Supplemental Indenture that modifies, amends or supplements the terms and conditions of the Original Indenture shall apply to the Senior Notes created hereby and not to any future series of Securities established under the Original Indenture.

 

SECTION 3.3.            Executed in Counterparts .

 

This First Supplemental Indenture may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute one and the same instrument.

 

SECTION 3.4.            Governing Law; Waiver of Jury Trial.

 

THIS FIRST SUPPLEMENTAL INDENTURE AND THE SENIOR NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS FIRST SUPPLEMENTAL INDENTURE, THE SENIOR NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

 

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IN WITNESS WHEREOF, each party hereto has caused this First Supplemental Indenture to be duly executed as of the day and year first above written.

 

 

	PRINCIPAL FINANCIAL GROUP, INC.
	By:	/s/ Terrance J. Lillis
	Name: Terrance J. Lillis
	Title: Senior Vice President and Chief Financial Officer
	PRINCIPAL FINANCIAL SERVICES, INC., as guarantor
	By:	/s/ Terrance J. Lillis
	Name: Terrance J. Lillis
	Title: Senior Vice President and Chief Financial Officer
	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
	By:	/s/ Roxane Ellwanger
	Name: Roxane Ellwanger
	Title: Assistant Vice President

 

 

[Signature page to First Supplemental Indenture]

 

 

EXHIBIT A

 

[FORM OF GLOBAL NOTE]

(FORM OF FACE OF SECURITY)

 

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“ DTC ”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF DTC OR A NOMINEE THEREOF.  THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN DTC OR SUCH NOMINEE, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

PRINCIPAL FINANCIAL GROUP, INC.
7.875% Senior Notes due 2014

 

	CUSIP:
No.	$[              ]

 

PRINCIPAL FINANCIAL GROUP, INC., a corporation organized and existing under the laws of Delaware (hereinafter called the “ Company ”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of [                                ] Dollars on May 15, 2014, and to pay interest thereon from May 21, 2009 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on May 15 and November 15 in each year, commencing November 15, 2009, at the rate of 7.875% per annum, on the basis of a 360-day year

 

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consisting of twelve 30-day months, until the principal hereof is paid or duly provided for or made available for payment.

 

The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the May 1 or November 1 (whether or not a Business Day) immediately preceding such Interest Payment Date.  Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

 

Payment of the principal of (and premium, if any) and any interest on this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this p