Exhibit 99.2
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 A Preferred Stock)
CALCULATION AGENT AGREEMENT
THIS AGREEMENT dated as of June 17, 2005, among Principal Financial
Group, Inc. (hereinafter called the "Company"), a Delaware corporation having
its principal office at 000 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000, and
Computershare Trust Company, Inc. a Colorado corporation (hereinafter sometimes
called the "Calculation Agent," which term shall, unless the context shall
otherwise require, include its successors and assigns), having its principal
corporate trust office at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000.
Recitals of the Company
The Company is issuing on the date hereof (i) 3,000,000 shares of
preferred stock, each representing a share of the 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 the
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 Series A Preferred Stock was issued by the
Company pursuant to the terms of the certificate of designations dated as of
June 16, 2005 (the "Series A Certificate of Designations") and the Series B
Preferred Stock was issued by the Company pursuant to the terms of the
certificate of designations dated as of June 16, 2005 (the "Series B Certificate
of Designations", and together with the Series A Certificate of Designations,
the "Certificates"). Capitalized terms used in this Agreement and not otherwise
defined herein are used as defined in the Certificates, as applicable.
The Initial Dividend Rates on the Series A Preferred Stock and the
Series B Preferred Stock will be 5.563 % per annum from June 17, 2005 until the
Dividend Payment Date in June 2015 and 6.518% per annum from June 17, 2005 until
the Dividend Payment Date in June 2035, respectively (each, an "Initial Fixed
Rate Period"). Thereafter, the Dividend Rates for the Preferred Stock may be at
Fixed Rates determined through Remarketing of the Preferred Stock for specific
periods of varying lengths not less than six months or may be at Floating Rates
reset quarterly equal to the Adjustable Rate (as defined below) plus (i) 1.45%,
in the case of the Series A Preferred Stock and (ii) 2.10%, in the case of the
Series B Preferred Stock. The Company
desires to engage the Calculation Agent to perform certain services in
connection with the Preferred Stock while the Preferred Stock bears interest at
Floating Rates.
NOW IT IS HEREBY, AGREED THAT:
1. The Company hereby appoints Computershare Trust Company, Inc. at its
corporate trust office in The City of New York, as Calculation Agent (in such
capacity, the "Calculation Agent") for the Preferred Stock, upon the terms and
subject to the conditions herein mentioned, and Computershare Trust Company,
Inc. hereby accepts such appointment. The Calculation Agent shall act as an
agent of the Company for the purpose of determining the Floating Rates on the
Preferred Stock.
2. The Company has delivered to the Calculation Agent (i) a copy of the
form of the global stock certificate representing the Series A Preferred Stock
and a copy of the Series A Certificate of Designations, including copies of all
terms and conditions relating to the determination of the Floating Rates
thereunder and (ii) a copy of the form of the global stock certificate
representing the Series B Preferred Stock and a copy of the Series B Certificate
of Designations, including copies of all terms and conditions relating to the
determination of the Floating Rates thereunder. The Calculation Agent hereby
acknowledges its receipt of and acceptance of (i) the form of the Series A
Preferred Stock and of the Series A Certificate of Designations, to the extent
relating to the determination of the Floating Rates on the Series A Preferred
Stock and (ii) the form of the Series B Preferred Stock and of the Series B
Certificate of Designations, to the extent relating to the determination of the
Floating Rates on the Series B Preferred Stock. The Company agrees to give the
Calculation Agent written notice of the commencement of a Floating Rate Period
immediately after the Company has determined that, or is aware that, such
Floating Rate Period is to commence with respect to either the Series A
Preferred Stock or the Series B Preferred Stock. The Calculation Agent shall
have no liability for any failure to determine a Floating Rate on a timely basis
if such written notice is given to it on or after the Floating Rate
Determination Date preceding the commencement of the first Dividend Period in a
new Floating Rate Period. The Company agrees to give the Calculation Agent
prompt written notice of the termination of a Floating Rate Period.
3. The Company hereby notifies the Calculation Agent that the Preferred
Stock are being issued on the date hereof and acknowledges that it has delivered
to the Calculation Agent the information, if any, required to be provided by the
Company for the calculation of the Floating Rate thereunder. The Calculation
Agent shall calculate the Floating Rate as follows:
Except as provided below, the Floating Rate for any Floating Rate Period
for the Preferred Stock will be equal to the Adjustable Rate plus (i) 1.45%, in
the case of the Series A Preferred Stock and (ii) 2.10%, in the case of the
Series B Preferred Stock. The "Adjustable Rate" for any Dividend Period will be
equal to the highest of the 3-month LIBOR Rate, the 10-year Treasury CMT and the
30-year Treasury CMT (each as defined below and collectively referred to as the
"Benchmark Rates") for such Dividend Period during the Floating Rate Period. In
the event that the Calculation Agent determines in good faith that for any
reason:
-2-
(1) any one of the Benchmark Rates cannot be determined for
any Dividend Period, the Adjustable Rate for such
Dividend Period will be equal to the higher of whichever
two of such rates can be so determined;
(2) only one of the Benchmark Rates can be determined for
any Dividend Period, the Adjustable Rate for such
Dividend Period will be equal to whichever such rate can
be so determined; or
(3) none of the Benchmark Rates can be determined for any
Dividend Period, the Adjustable Rate for the preceding
Dividend Period will be continued for such Dividend
Period, provided that if such preceding Dividend Period
was a Fixed Rate Period, the Fixed Rate for the
preceding Dividend Period will be continued for such
Dividend Period.
The "3-month LIBOR Rate" means, with respect to any Dividend Period, the rate
(expressed as a percentage per annum) for deposits in U.S. dollars for a 3-month
period commencing on the first day of that Dividend Period that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the Dividend Determination
Date for that Dividend Period. If such rate does not appear on Telerate Page
3750, 3-month LIBOR Rate will be determined on the basis of the rates at which
deposits in U.S. dollars for a 3-month period commencing on the first day of
that Dividend Period and in a principal amount of not less than $1,000,000 are
offered to prime banks in the London interbank market by four major banks in the
London interbank market selected by the Calculation Agent, at approximately
11:00 a.m., London time on the Dividend Determination Date for that Dividend
Period. The Calculation Agent will request the principal London office of each
of such banks to provide a quotation of its rate. If at least two such
quotations are provided, 3-month LIBOR Rate with respect to that Dividend Period
will be the arithmetic mean (rounded upward if necessary to the nearest 0.00001
of 1%) of such quotations. If fewer than two quotations are provided, 3-month
LIBOR Rate with respect to that Dividend Period will be the arithmetic mean
(rounded upward if necessary to the nearest 0.00001 of 1%) of the rates quoted
by three major banks in New York City selected by the Calculation Agent, at
approximately 11:00 a.m., New York City time, on the first day of that Dividend
Period for loans in U.S. dollars to leading European banks for a 3-month period
commencing on the first day of that Dividend Period and in a principal amount of
not less than $1,000,000. However, if the banks selected by the Calculation
Agent to provide quotations are not quoting as described above, 3-month LIBOR
Rate for that Dividend Period will be the same as 3-month LIBOR Rate as
determined for the previous Dividend Period. The establishment of 3-month LIBOR
Rate for each Dividend Period by the Calculation Agent shall (in the absence of
manifest error) be final and binding.
"The 10-year Treasury CMT" means the rate determined in accordance with
the following provisions:
(1) With respect to any Dividend Determination Date and the
Dividend Period that begins immediately thereafter, the
10-Year
-3-
Treasury CMT means the rate per annum for deposits for a
10-year period commencing on the Dividend Determination
Date displayed on the Bloomberg interest rate page most
nearly corresponding to Telerate Page 7051 containing
the caption "...Treasury Constant Maturities... Federal
Reserve Board Release H.15...Mondays Approximately 3:45
P.M.," and the column for the Designated CMT Maturity
Index.
(2) If such rate is no longer displayed on the relevant
page, or is not so displayed by 3:00 P.M., New York City
time, on the applicable Dividend Determination Date,
then the 10-year Treasury CMT for such Dividend
Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index as
is published in H.15(519).
(3) If such rate is no longer displayed on the relevant
page, or if not published by 3:00 P.M., New York City
time, on the applicable Dividend Determination Date,
then the 10-year Treasury CMT for such Dividend
Determination Date will be such constant maturity
treasury rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT
Maturity Index) for the applicable Dividend
Determination Date as may then be published by either
the Board of Governors of the Federal Reserve System or
the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the
rate formerly displayed on the Bloomberg interest rate
page most nearly corresponding to Telerate Page 7051 and
published in H.15(519).
(4) If such information is not provided by 3:00 P.M., New
York City time, on the applicable Dividend Determination
Date, then the 10-year Treasury CMT for such Dividend
Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the
arithmetic mean of the secondary market offered rates as
of approximately 3:30 P.M., New York City time, on such
Dividend Determination Date reported, according to their
written records, by three leading primary United States
government securities dealers in The City of New York
(each, a "Reference Dealer") selected by the Calculation
Agent (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation
(or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one
of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States
("Treasury
-4-
Debentures") with an original maturity of approximately
the Designated CMT Maturity Index and a remaining term
to maturity of not less than such Designated CMT
Maturity Index minus one year.
(5) If the Calculation Agent is unable to obtain three such
Treasury Debentures quotations, the 10-year Treasury CMT
for the applicable Dividend Determination Date will be
calculated by the Calculation Agent and will be a yield
to maturity based on the arithmetic mean of the
secondary market offered rates as of approximately 3:30
P.M., New York City time, on the applicable Dividend
Determination Date of three Reference Dealers in The
City of New York (from five such Reference Dealers
selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of
the highest) and the lowest quotation (or, in the event
of equality, one of the lowest)), for Treasury
Debentures with an original maturity of the number of
years that is the next highest to the Designated CMT
Maturity Index and a remaining term to maturity closest
to the Designated CMT Maturity Index and in an amount of
at least $100 million.
(6) If three or four (and not five) of such Reference
Dealers are quoting as set forth above, then the 10-year
Treasury CMT will be based on the arithmetic mean of the
offered rates obtained and neither the highest nor
lowest of such quotes will be eliminated; provided,
however, that if fewer than three Reference Dealers
selected by the Calculation Agent are quoting as set
forth above, the 10-year Treasury CMT with respect to
the applicable Dividend Determination Date will remain
the 10-year Treasury CMT for the immediately preceding
Dividend Period. If two Treasury Debentures with an
original maturity as described in the second preceding
sentence have remaining terms to maturity equally close
to the Designated CMT Maturity Index, then the quotes
for the Treasury Debentures with the shorter remaining
term to maturity will be used.
The "30-year Treasury CMT" has the meaning specified under the
definition of 10-year Treasury CMT, except that (i) each reference to "10-year"
in the definition of the "10-year Treasury CMT" will be "30-year" for the
purposes of the "30-year Treasury CMT" and (ii) the Designated CMT Maturity
Index for the 30-year Treasury CMT shall be 30 years.
Each of the 10-year Treasury CMT and the 30-year Treasury CMT shall each
be rounded to the nearest hundredth (0.01) of one percent per annum and the
3-month LIBOR Rate shall be rounded to the nearest one-hundred-thousandth
(0.00001) of one percent per annum.
-5-
The Floating Rate with respect to each Dividend Period that occurs
within a Floating Rate Period will be calculated as promptly as practicable by
the Calculation Agent according to the appropriate method described above.
"Bloomberg" means Bloomberg Financial Markets Commodities News.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday or Friday
on which banking institutions in the City of New York are not authorized or
obligated by law, regulation or executive order to close.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities with respect to which the 10-year Treasury CMT or
the 30-year Treasury CMT, as applicable, will be calculated (which are ten years
and thirty years, respectively).
"Dividend Determination Date" means the second London Banking Day
immediately preceding the first day of the relevant Dividend Period in the
Floating Rate Period.
"London Banking Day" means any day on which commercial banks are open
for general business (including dealings in deposits in U.S. dollars) in London.
"Telerate Page 3750" means the display page so designated on the
Moneyline/Telerate Service (or such other page as may replace that page on that
service, or such other service as may be nominated as the information vendor,
for the purpose of displaying rates or prices comparable to London Interbank
Offered Rate for U.S. dollar deposits).
"Telerate Page 7051" means the display page so designated on the
MoneyLine/Telerate Service (or any successor service), on such page (or any
other page as may replace such page on that service), for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519).
4. Promptly following the determination of each change to the Floating
Rate applicable to the Series A Preferred Stock or the Series B Preferred Stock,
as applicable, the Calculation Agent will cause to be forwarded to the Company
information regarding such Floating Rate.
5. The Calculation Agent shall be entitled to such compensation for its
services under this Agreement as the Calculation Agent and the Company may
agree, and the Company shall pay such compensation and shall reimburse the
Calculation Agent for all reasonable expenses, including fees and expenses of
its counsel, disbursements and advances incurred or made by the Calculation
Agent in connection with the services rendered by it under this Agreement, upon
receipt of such invoices as the Company shall reasonably require.
6. Notwithstanding any redemption of the Series A Preferred Stock or the
Series B Preferred Stock, as applicable, the Company will indemnify the
Calculation Agent and its nominees against any losses, liabilities, costs,
claims, actions or demands which it may incur or
-6-
sustain or which may be made against it in connection with its appointment or
the exercise of its powers and duties hereunder as well as the reasonable costs,
including the reasonable expenses and fees of counsel, in defending any claim,
action or demand, except such as may result from the negligence, willful
misconduct or bad faith of the Calculation Agent or any of its employees. Except
as provided in the preceding sentence, the Calculation Agent shall incur no
liability and shall be indemnified and held harmless by the Company for, or in
respect of, any actions taken or suffered to be taken in good faith by the
Calculation Agent or its nominees in reliance upon (i) the written opinion or
advice of counsel or (ii) written instructions from the Company.
7. The Calculation Agent accepts its obligations herein set forth upon
the terms and conditions hereof, including the following, to all of which the
Company agrees:
(i) in acting under this Agreement and in connection with the
Preferred Stock, the Calculation Agent, acting as agent for the Company,
does not assume any obligation towards, or any relationship of agency or
trust for or with, any of the purchasers of the Preferred Stock;
(ii) unless herein otherwise specifically provided, any order,
certificate, notice, request or communication from the Company made or
given under any provision of this Agreement shall be sufficient if
signed by any person whom the Calculation Agent reasonably believes to
be a duly authorized officer or attorney-in-fact of the Company;
(iii) the Calculation Agent shall be obligated to perform only
such duties as are set forth specifically herein, and no other duties or
obligations on the part of the Calculation Agent, in its capacity as
such, shall be implied by this Agreement;
(iv) the Calculation Agent shall be protected and shall incur no
liability for or in respect of any action taken or omitted to be taken
or anything suffered by it or its nominees in reliance upon anything
contained in the Preferred Stock, the Certificates or any information
supplied to it in writing by the Company pursuant to this Agreement,
including the information supplied pursuant to paragraph 3 above;
(v) the Calculation Agent, whether acting for itself or in any
other capacity, may become the owner or pledgee of the Preferred Stock
with the same rights as it would have had if it were not acting
hereunder as Calculation Agent;
(vi) the Calculation Agent or its nominees shall incur no
liability hereunder except for loss sustained by reason of its
negligence, willful misconduct or bad faith;
(vii) The Calculation Agent shall have the right, but not the
obligation, to consult with counsel of its choice and shall not be
liable for action taken or
-7-
omitted to be taken in accordance with the advice of such counsel, which
may be in-house counsel;
(viii) The Calculation Agent shall have the right to perform any
of its duties hereunder through agents, attorneys, custodians or
nominees; and
(ix) in no event shall the Calculation Agent or its nominees be
liable for special, punitive, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits) even
if the Calculation Agent has been advised of the likelihood of such loss
or damage and regardless of the form of action.
8.
(a) The Calculation Agent or its nominees shall not be
responsible to the Company or any third party for any failure of any bank or
financial institution selected by the Calculation Agent (after consultation with
the Company) for the purpose of quoting rates in accordance with the terms of
the Preferred Stock and the Certificates to fulfill their duties or meet their
obligations to provide such rates or as a result of the Calculation Agent having
acted (except in the event of negligence, willful misconduct or bad faith) on
any quotation or other information given by any such bank or financial
institution which subsequently may be found to be incorrect.
(b) Except as provided below, the Calculation Agent may at any
time resign as Calculation Agent by giving written notice to the Company of such
intention on its part, specifying the date on which its desired resignation
shall become effective, provided that such notice shall be given not less than
60 days prior to the said effective date unless the Company otherwise agrees in
writing. Except as provided below, the Calculation Agent may be removed by the
filing with it of an instrument in writing signed by the Company specifying such
removal and the date when it shall become effective (such effective date being
at least 20 days after said filing). Any such resignation or removal shall take
effect upon:
(i) the appointment by the Company as hereinafter provided of a
successor Calculation Agent; and
(ii) the acceptance of such appointment by such successor
Calculation Agent;
provided, however, that in the event the Calculation Agent has given not less
than 60 days' prior notice of its desired resignation, and during such 60 days
there has not been acceptance by a successor Calculation Agent of its
appointment as successor Calculation Agent, the Calculation Agent so resigning
may petition any court of competent jurisdiction for the appointment of a
successor Calculation Agent. The Company covenants that it shall appoint a
successor Calculation Agent as soon as practicable after receipt of any notice
of resignation hereunder. Upon its resignation or removal becoming effective,
the retiring Calculation Agent shall be
-8-
entitled to the payment of its compensation and the reimbursement of all
reasonable expenses, (including reasonable counsel fees) incurred by such
retiring Calculation Agent pursuant to paragraph 5 hereof to the date such
resignation or removal becomes effective.
(c) If at any time the Calculation Agent (i) shall resign or be
removed, or (ii) shall become incapable of acting or shall be adjudged bankrupt
or insolvent, or liquidated or dissolved, or an order is made or an effective
resolution is passed to wind up the Calculation Agent, or if the Calculation
Agent shall file a voluntary petition in bankruptcy or make an assignment for
the benefit of its creditors, or shall consent to the appointment of a receiver,
administrator or other similar official of all or any substantial part of its
property, or shall admit in writing its inability to pay or meet its debts as
they mature, or if a receiver, administrator or other similar official of the
Calculation Agent or of all or any substantial part of its property shall be
appointed, or if any order of any court shall be entered approving any petition
filed by or against the Calculation Agent under the provisions of any applicable
bankruptcy or insolvency law, or if any public officer shall take charge or
control of the Calculation Agent or its property or affairs for the purpose of
rehabilitation, conservation or liquidation (the Calculation Agent hereby
agreeing to give the Company prompt notice of any of the foregoing events
referred to in this clause (ii)), then a successor Calculation Agent shall be
appointed by the Company by an instrument in writing filed with the successor
Calculation Agent. Upon the appointment as aforesaid of a successor Calculation
Agent and acceptance by the latter of such appointment, the former Calculation
Agent shall cease to be Calculation Agent hereunder.
(d) Any successor Calculation Agent appointed hereunder shall
execute and deliver to its predecessor and the Company an instrument accepting
such appointment hereunder, and thereupon such successor Calculation Agent,
without any further act, deed or conveyance, shall become vested with all the
authority, rights, powers, immunities, duties and obligations of such
predecessor with like effect as if originally named as the Calculation Agent
hereunder, and such predecessor, upon payment of its compensation, charges and
disbursements then unpaid, shall thereupon become obliged to transfer and
deliver, and such successor Calculation Agent shall be entitled to receive,
copies of any relevant records maintained by such predecessor Calculation Agent.
(e) Any corporation into which the Calculation Agent may be
merged or converted or any corporation with which the Calculation Agent may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Calculation Agent shall be a party or any corporation
to which the Calculation Agent may otherwise transfer all or substantially all
of its corporate trust business shall, to the extent permitted by applicable
law, be the successor Calculation Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. Prompt notice of any such merger, conversion, consolidation or
transfer shall forthwith be given to the Company.
(f) The provisions of paragraphs 5 and 6 hereof shall survive
any resignation or removal hereunder.
-9-
(g) The Calculation Agent shall not be responsible or liable for
any failure or delay in the performance of its obligations under this Agreement
or arising out of or caused directly or indirectly, by circumstances beyond its
reasonable control, including acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; epidemics; riot; interruptions, loss
or malfunctions of utilities, or communications service; accidents; labor
disputes; acts of civil or military authorities or governmental actions; it
being understood that the Calculation Agent shall use its best efforts to resume
performance as soon as practicable under the circumstances.
9. Any notice or other communication required to be given hereunder
shall be delivered in person against written receipt, sent by letter or telex or
telecopy or communicated by telephone (subject, in the case of communication by
telephone, to confirmation dispatched within two business days by letter, telex
or telecopy), in the case of the Company, to it at the address of the Company
set forth in the heading of this Agreement, Attention: Corp. Trust Admin.; in
the case of the Calculation Agent, to it at the address set forth below; or, in
any case, to any other address of which the party receiving notice shall have
notified the party giving such notice in writing.
Calculation Agent: Computershare Trust Company, Inc.
c/o Computershare Trust Company, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Corp Trust. Admin.
10. This Agreement may be amended only by a writing duly executed and
delivered by each of the parties signing below.
11. The provisions of this Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
12. This Agreement may be executed in counterparts and the executed
counterparts shall together constitute a single instrument.
13. Except as provided herein, this Agreement is solely for the benefit
of the parties hereto and their successors and assigns and no other person shall
acquire or have any rights under or by virtue hereof (whether or not the Series
A Preferred Stock or the Series B Preferred Stock are issued).
-10-
14. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
-11-
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the day and year first above written.
PRINCIPAL FINANCIAL GROUP, INC.
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
COMPUTERSHARE TRUST COMPANY, INC.
By: ___________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
