Principal Financial Group, Inc.



                Series A Non-Cumulative Perpetual Preferred Stock

                      (Ten-Year Initial Fixed Rate Period)

             (Liquidation Preference Equivalent to $100 Per Share of

                            Series A Preferred Stock)



                Series B Non-Cumulative Perpetual Preferred Stock

                     (Thirty-Year Initial Fixed Rate Period)

             (Liquidation Preference Equivalent to $25 Per Share of

                           Series B Preferred Stock)



                              REMARKETING AGREEMENT



                                                            June  17, 2005



Lehman Brothers Inc.

745 7th Avenue

New York, New York 10019



Ladies and Gentlemen:



                  Principal Financial Group, Inc., a Delaware corporation (the

"Company"), is today making the following issuances: (i) 3,000,000 shares of

preferred stock, each representing a share of Series A Non-Cumulative Perpetual

Preferred Stock (Ten-Year Initial Fixed Rate Period) (the "Series A Preferred

Stock") having a liquidation preference equivalent to $100 per share and (ii)

10,000,000 shares of preferred stock, each representing a share of Series B

Non-Cumulative Perpetual Preferred Stock (Thirty-Year Initial Fixed Rate Period)

(the "Series B Preferred Stock", and together with the Series A Preferred Stock,

the "Preferred Stock") having a liquidation preference equivalent to $25 per

share.



                  The certificate of designations, dated June 16, 2005, of the

Company relating to the Series A Preferred Stock (the "Series A Certificate of

Designations") and the certificate of designations, dated June 16, 2005, of the

Company relating to the Series B Preferred Stock (the "Series B Certificate of

Designations", and together with the Series A Certificate of Designations, the

"Certificates of Designations") each provides for the possible Remarketing (as

defined below) of the Preferred Stock, on one or more occasions, at the option

of the Company as contemplated in the Certificates of Designations. As used in

this remarketing agreement (this "Agreement"), the term "Remarketed Securities"

means any share of Preferred Stock offered in a Remarketing; the term

"Remarketing Procedures" means the procedures specified in Section 4 of each of

the Certificates of Designations; and the term "Remarketing" means a remarketing

of the Remarketed Securities pursuant to the Remarketing Procedures.



                  In connection with any Remarketing, the Company will, to the

extent required under the Securities Act of 1933, as amended from time to time,

or any successor statute (the "Securities Act") and the rules and regulations as

promulgated from time to time thereunder or any successor statute to the

Securities Act (the "Rules"), in connection with Remarketings of Remarketed

Securities, prepare and file one or more

<PAGE>

registration statements under the Securities Act with the Securities and

Exchange Commission (the "Commission") relating to Remarketed Securities, and

any necessary amendments thereto, and will prepare one or more prospectuses

(which may be preliminary or final) complying with the requirements of the

Securities Act, and any necessary supplements thereto, and setting forth or

including a description of the applicable terms of the Remarketed Securities,

the terms of the applicable Remarketing, a description of the Company and such

other information as may be required by the Securities Act.



                  Capitalized terms used and not defined in this Agreement shall

have the meanings set forth in the Certificates of Designations, as applicable.

Any reference in this Agreement to any registration statement or to any

preliminary prospectus or final prospectus (or any amendments or supplements to

any of the foregoing) shall be deemed to (i) refer to any such document as it

may at the time be amended or supplemented and (ii) include any document filed

under the Securities Exchange Act of 1934, as amended from time to time and the

rules and regulations promulgated from time to time thereunder, or any successor

statute (the "Exchange Act"), and at the time incorporated by reference therein.



                  Section 1. Appointment and Obligations of the Remarketing

Agent.



                  (a) The Company hereby appoints Lehman Brothers Inc. as

exclusive remarketing agent (the "Remarketing Agent"), and Lehman Brothers Inc.

accepts appointment as Remarketing Agent for the purpose of (i) remarketing

Remarketed Securities on behalf of the holders thereof and (ii) performing such

other duties as are assigned to the Remarketing Agent in the Remarketing

Procedures, all in accordance with and pursuant to the Remarketing Procedures.



                  (b) Upon delivery of notice to the Remarketing Agent by the

Company of the Company's election to conduct a Remarketing in conformity with

the requirements of the Remarketing Procedures, the Remarketing Agent agrees (i)

to use commercially reasonable efforts to remarket the Remarketed Securities

tendered or deemed tendered to the Remarketing Agent in any Remarketing, (ii) to

notify the Company of the new Fixed Rate, if any, established pursuant to any

Remarketing and (iii) to carry out such other duties as are assigned to the

Remarketing Agent in the Remarketing Procedures, all in accordance with the

provisions of the Remarketing Procedures.



                  (c) On any date during which a Remarketing is being conducted,

the Remarketing Agent shall use commercially reasonable efforts to remarket

Remarketed Securities tendered or deemed tendered for purchase at a price equal

to (i) $100 per share, with respect to the Series A Preferred Stock, or (ii) $25

per share, with respect to the Series B Preferred Stock.



                  (d) If, as a result of the Remarketing Agent's efforts

described in Section 1(c), the Remarketing Agent has determined on any date

during which a Remarketing is being conducted that it will be able to remarket

all Remarketed Securities tendered or deemed tendered for purchase at a price of

$100 per share, in the case of





                                       2

<PAGE>

shares of the Series A Preferred Stock (the "Series A Remarketing Purchase

Price"), or $25 per share, in the case of shares of the Series B Preferred Stock

(the "Series B Remarketing Purchase Price"), in each case, prior to 4:00 P.M.,

New York City time, on such date (any such date of determination, a "Remarketing

Date"), the Remarketing Agent shall determine the Fixed Rate resulting from such

Remarketing and to be applicable to the next succeeding Fixed Rate Period, which

shall be the rate per annum (rounded to the nearest one-thousandth (0.01) of one

percent per annum) which the Remarketing Agent determines, in its sole judgment,

to be the lowest rate per annum, if any, that will enable it to remarket all

Remarketed Securities tendered or deemed tendered for Remarketing at the

Remarketing Purchase Price.



                  (e) If any holder of Preferred Stock submits a Notice of

Election to tender some or all of its shares of Preferred Stock in a Remarketing

and separately notifies the Remarketing Agent that such holder desires to

continue to hold a number of shares of Preferred Stock, but only if the Fixed

Rate determined by the applicable Remarketing is not less than a specified rate

per annum, the Remarketing Agent shall give priority to such holder's purchase

of such number of Remarketed Securities in the Remarketing, provided that the

new Fixed Rate is not less than such specified rate.



                  (f) By approximately 4:30 P.M., New York City time, on a

Remarketing Date, the Remarketing Agent shall advise (i) the Clearing Agency

Participant who will receive a credit for the shares of Preferred Stock on the

Clearing Agency's records, the Company and the Calculation Agent of any new

Fixed Rate established pursuant to the Remarketing and the number of Remarketed

Securities sold in the Remarketing, (ii) each purchaser of Remarketed Securities

(or the Clearing Agency Participant thereof) of such new Fixed Rate and the

number of Remarketed Securities such purchaser is to purchase and (iii) each

purchaser to give instructions to its Clearing Agency Participant to pay the

purchase price on the Remarketing Settlement Date in same day funds against

delivery of the Remarketed Securities purchased through the facilities of the

Clearing Agency Participant.



                  (g) If, by 4:00 P.M., New York City time, on the third

business day prior to the Remarketing Settlement Date applicable to the

Remarketing (such third business day, a "Remarketing Expiration Date") the

Remarketing Agent is unable to remarket all Remarketed Securities tendered or

deemed tendered for purchase at the Series A Remarketing Purchase Price or the

Series B Remarketing Purchase Price, as applicable, the Remarketing Agent shall,

by approximately 4:30 P.M., New York City time, on such date, advise the

Clearing Agency Participant, the Company and the Calculation Agent that the

Dividend Rate for the Series A Preferred Stock and/or the Series B Preferred

Stock, as applicable, for the next succeeding Dividend Period will be a Floating

Rate determined in accordance with the Series A Certificate of Designations

and/or the Series B Certificate of Designations, as applicable. In such case, no

shares of Series A Preferred Stock or Series B Preferred Stock, as applicable,

shall be sold in the Remarketing and each holder shall continue to hold its

respective shares at such Floating Rate.





                                       3

<PAGE>

                  Section 2. Representations, Warranties and Agreements of the

Company.



                  (a) The Company represents, warrants and agrees, on and as of

the date hereof, that the representations and warranties made by the Company, as

applicable, in the underwriting agreement, dated June 14, 2005, among the

Company and Lehman Brothers Inc., as representative of the underwriters named

therein (each an "Underwriter," and collectively, the "Underwriters") (the

"Underwriting Agreement"), relating to the Preferred Stock, are true, correct

and complete in all material respects, as if made on the date hereof.



                  (b) In addition, (i) on and as of the date of filing and of

effectiveness of the Registration Statement (as defined in paragraph (II)(A) of

this Section 2(b)) and on and as of the date of any amendment to the

Registration Statement, (ii) on and as of the date of any Final Prospectus (as

defined in paragraph (II)(A) of this Section 2(b)) and on and as of the date of

any supplement thereto distributed in connection with a Remarketing, (iii) on

and as of any Election Date, (iv) on and as of any Remarketing Date, and (v) on

and as of any Remarketing Settlement Date (to the extent applicable):



                  (I) the Company makes each of the representations and

         warranties set forth in paragraphs (d) through (g), (j), (k), (m), (n)

         and (p) through (x) of Section 1 of the Underwriting Agreement, except

         that such representations, warranties and agreements, as made herein,

         shall be deemed to have been amended and shall be read mutatis

         mutandis, as follows:



                      (A) each reference to a Registration Statement,

         Incorporated Documents, Basic Prospectus, Final Prospectus or Interim

         Prospectus shall be deemed to refer to those terms as defined in

         paragraph (II) of this Section 2(b);



                      (B) each reference to "Delivery Date" shall be deemed to

         be to the Remarketing Settlement Date;



                      (C) each reference to PLIC shall be deemed to be to any

         subsidiary of the Company, direct or indirect, that is an Insurance

         Company and a "significant subsidiary" as such term is defined in Rule

         405 of the Rules;



                      (D) each reference to the "issue" or "issue and sale" of

         the Preferred Stock shall be deemed to include the Remarketing and the

         Remarketed Securities; and



                  (II) the Company represents and warrants that:



                       (A) The Company meets the requirements for the use of

         Form S-3 under the Securities Act and the Rules, and has prepared and

         filed with the Securities and Exchange Commission (the "Commission") a

         registration statement on Form S-3 for the registration of the

         Remarketed Securities under the Securities Act, which Registration

         Statement (as defined below) has become





                                       4

<PAGE>

         effective and no stop order suspending the effectiveness of the

         Registration Statement has been issued under the Securities Act and no

         proceedings for that purpose have been instituted or are pending or, to

         its knowledge, are threatened by the Commission, and any request by the

         Commission for additional information has been complied with. The

         Registration Statement meets the requirements set forth in Rule

         415(a)(1)(x) under the Securities Act and complies in all other

         material respects with such rule. The Company proposes to file with the

         Commission pursuant to Rule 424 under the Securities Act ("Rule 424") a

         supplement to the form of prospectus included in the registration

         statement relating to the remarketing of the Remarketed Securities and

         the plan of distribution thereof and has previously advised you of all

         further information (financial and other) with respect to the Company

         to be set forth therein. The term "Registration Statement" means the

         registration statement, as amended at the time of any Election Date,

         including the exhibits thereto, financial statements, and all documents

         incorporated therein by reference pursuant to Form S-3 (the

         "Incorporated Documents"), and such prospectus as then amended,

         including the Incorporated Documents, is hereinafter referred to as the

         "Basic Prospectus"; and such supplemented form of prospectus, in the

         form in which it shall be filed with the Commission pursuant to Rule

         424 (including the Basic Prospectus as so supplemented), is hereinafter

         called the "Final Prospectus". Any preliminary form of a Final

         Prospectus which has heretofore been filed pursuant to Rule 424 is

         hereinafter called the "Interim Prospectus". Any reference herein to

         the Registration Statement, the Basic Prospectus, any Interim

         Prospectus or the Final Prospectus shall be deemed to refer to and

         include the Incorporated Documents which were filed under the

         Securities Exchange Act, on or before the Election Date or the issue

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC