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 2007-117, 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
