PRINCIPAL FINANCIAL GROUP, INC., Issuer And PRINCIPAL FINANCIAL SERVICES, INC., Guarantor And THE BANK OF NEW YORK, Trustee FIRST SUPPLEMENTAL INDENTURE Dated as of October 16, 2006 6.05% Senior Notes Due 2036
Exhibit 4.2
PRINCIPAL FINANCIAL GROUP, INC.,
Issuer
Issuer
And
PRINCIPAL FINANCIAL SERVICES, INC.,
Guarantor
Guarantor
And
THE BANK OF NEW YORK,
Trustee
Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of October 16, 2006
$500,000,000
6.05% Senior Notes Due 2036
TABLE OF CONTENTS
| Page | ||||||
| ARTICLE I | ||||||
| The Series of Securities | ||||||
SECTION 1.1.
|
Establishment | 1 | ||||
SECTION 1.2.
|
Definitions | 2 | ||||
SECTION 1.3.
|
Payment of Principal, Premium, if any, and Interest | 2 | ||||
SECTION 1.4.
|
Denominations | 2 | ||||
SECTION 1.5.
|
No Sinking Fund | 3 | ||||
SECTION 1.6.
|
Global Securities | 3 | ||||
SECTION 1.7.
|
Transfer | 3 | ||||
SECTION 1.8.
|
Defeasance | 3 | ||||
SECTION 1.9.
|
Optional Redemption | 3 | ||||
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 | 6 | ||||
SECTION 3.3.
|
Executed in Counterparts | 6 | ||||
Exhibit A
|
Form of Global Note | |||||
Exhibit B
|
Form of Guarantee | |||||
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FIRST SUPPLEMENTAL INDENTURE, dated as of October 16, 2006, among PRINCIPAL FINANCIAL GROUP,
INC., a Delaware corporation (the “Company”), PRINCIPAL FINANCIAL SERVICES, INC., an Iowa
corporation (the “Guarantor”) and THE BANK OF NEW YORK, a New York banking corporation, as trustee
(the “Trustee”):
WHEREAS, the Company has heretofore entered into an Indenture, dated as of October 11, 2006
(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:
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 6.05% Senior Notes due 2036 (the “Senior Notes”).
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The initial limit upon the aggregate principal amount of the Senior Notes that may be
authenticated and delivered under the Indenture (except for 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) is $500,000,000;
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 April 15 and October 15 of each year, commencing April 15, 2007.
“Regular Record Date” mean, the April 1st or October 1st of each year
immediately preceding the related Interest Payment Date.
SECTION 1.3. Payment of Principal, Premium, if any, and Interest.
The Senior Notes will mature on October 15, 2036. The Senior Notes shall bear interest at the
rate of 6.05% per annum from October 16, 2006. Interest shall be paid semi-annually on each
Interest Payment Date, commencing April 15, 2007, to the Person in whose name the Senior Notes are
registered on the Regular Record Date for 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.
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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 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 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.
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 20 basis
3
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 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 that is acceptable to the Trustee.
“Reference Treasury Dealer” means each of Xxxxxxx, Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated, Xxxxxx Xxxxxxx & Co. Incorporated and two other primary U.S government
securities dealers (each, a “Primary Treasury Dealer”), as specified by the Company; provided that
if any of Xxxxxxx, Sachs & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Xxxxxx Xxxxxxx
& Co. Incorporated 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 and
if the Company fails to select a substitute within a reasonable period of time, then the substitute
will be a Primary Treasury Dealer selected by the Trustee after consultation with the Company.
4
“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 Notes under the Guarantee by the Guarantor; | ||
| • | default in the payment of principal of the Notes, or premium, if any, when due under the Guarantee by the Guarantor; | ||
| • | 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 |
5
| • | 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 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.
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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/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | Sr. Vice President & Corporate Secretary | |||
| PRINCIPAL FINANCIAL SERVICES, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | Sr. Vice President & Corporate Secretary | |||
| THE BANK OF NEW YORK, as Trustee |
||||
| By: | /s/ Van X. Xxxxx | |||
| Name: | Van X. Xxxxx | |||
| Title: | Vice President | |||
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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.
6.05% Senior Notes due 2036
6.05% Senior Notes due 2036
| CUSIP: 74251V AA 0 ISIN: US74251VAA08 |
||
| No. | $[•] | |
PRINCIPAL FINANCIAL GROUP, INC., a corporation organized and existing under the laws of
Delaware (hereinafter called the “Company”, which term includes any successor corporation 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 October 15, 2036, and to pay
interest thereon from October 16, 2006 or from the most recent Interest Payment Date to which
interest has been paid or
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duly provided for, semi-annually on April 15 and October 15 in each year, commencing April 15,
2007, at the rate of 6.05% per annum, on the basis of a 360-day year 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 April 1st or October 1st of each year
(whether or not a Business Day) next 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 place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
A-2
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
| PRINCIPAL FINANCIAL GROUP, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
| THE BANK OF NEW YORK, | ||||||
| as Trustee | ||||||
| By: | ||||||
| Authorized Signatory | ||||||
Dated: October 16, 2006
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(FORM OF REVERSE OF SECURITY)
This Security is one of a duly authorized issue of securities of the Company (herein called
the “Securities”) issued and to be issued in one or more series under a Senior Indenture, dated as
of October 11, 2006 as supplemented and amended from time to time (herein called the “Indenture”),
between the Company and The Bank of New York, as trustee (herein called the “Trustee”, which term
includes any successor trustee under the Indenture), including by the First Supplemental Indenture
thereto dated as of October 16, 2006 among the Company, Principal Financial Services, Inc (the
“Guarantor”) and the Trustee (the “Supplemental Indenture”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof, initially limited in
aggregate principal amount to $500,000,000.
All terms used in this Security that are defined in the Indenture shall have the meaning
assigned to them in the Indenture.
The Securities of this series will be redeemable, at the option of the Company, as set forth
in Section 1.9 of the Supplemental Indenture.
The Indenture contains provisions for satisfaction, discharge and defeasance of the entire
indebtedness on this security, upon compliance by the Company with certain conditions set forth
therein.
If an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture. Upon payment of the amount of principal so
declared due and payable and of interest on any overdue principal and overdue interest at the rate
per annum applicable to the Securities of this series set forth on the face hereof (in each case to
the extent that the payment of such interest shall be legally enforceable), all of the Company’s
obligations in respect of the payment of the principal of and interest, if any, on the Securities
of this series shall terminate.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of each series at the
time Outstanding,
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on behalf of the Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and premium, if any) and interest on this Security at the times, place and rate,
and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any place where the
principal of (and premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities of this series, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in
denominations of $2,000 and in multiples of $1,000 in excess thereof. As provided in the Indenture
and subject to certain limitations therein set forth, Securities of this series are exchangeable
for a like aggregate principal amount of Securities of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes, whether or not this
Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
The obligations of the Company under the Indenture and the Securities of this series,
including payment of principal of, and premium, if any, and interest on the Securities of this
series, will be fully and unconditionally guaranteed by the Guarantor pursuant to the Guarantee
dated as of October 16, 2006.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
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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 THE INDENTURE, THIS SECURITY OR THE TRANSACTION CONTEMPLATED HEREBY.
A-6
EXHIBIT B
FORM OF GUARANTEE
GUARANTEE
from
PRINCIPAL FINANCIAL SERVICES, INC., as Guarantor
to
THE BANK OF NEW YORK, as Trustee
Dated as of October 16, 2006
B-1
GUARANTEE
This Guarantee (this “Guarantee”) is made and entered into as of October 16, 2006, from
PRINCIPAL FINANCIAL SERVICES, INC., a corporation duly organized and existing under the laws of the
State of Iowa and having its principal office at 000 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000, as
guarantor (the “Guarantor”), to THE BANK OF NEW YORK, a New York banking corporation, as trustee
(the “Trustee”). Defined terms used herein without definition shall have the meanings given to them
in the Senior Indenture, dated as of October 11, 2006 between Principal Financial Group, Inc., a
Delaware corporation (the “Company”), and the Trustee, as supplemented by the First Supplemental
Indenture, dated as of October 16, 2006, among the Company, the Guarantor and the Trustee with
respect to the Securities as defined below (the “Indenture”).
RECITALS
The Guarantor is a wholly-owned subsidiary of the Company and has duly authorized the
execution and delivery of this Guarantee to provide for the guarantee by the Guarantor for the
benefit of the Holders of the Company’s 6.05% Senior Notes due 2036 (the “Securities”) issued
pursuant to the Indenture.
For and in consideration of the premises and the purchase of the Securities by the Holders
thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the
Holders of the Securities:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
SECTION 1.1 Guarantor Representations and Warranties.
The Guarantor does hereby represent and warrant that it is a corporation duly incorporated and
in good standing under the laws of the State of Iowa, has the power to enter into and perform this
Guarantee and to own its corporate property and assets, has duly authorized the execution and
delivery of this Guarantee by proper corporate action and neither this Guarantee, the
authorization, execution, delivery and performance hereof, the performance of the agreements herein
contained nor the consummation of the transactions herein contemplated will violate in any material
respect any provision of law, any order of any court or agency of government or any agreement,
indenture or other instrument to which the Guarantor is a party or by which it or its property is
bound, or in any material respect be in conflict with or result in a breach of or constitute a
default under any indenture, agreement or other instrument or any provision of its certificate of
B-2
incorporation, bylaws or any requirement of law. This Guarantee constitutes the legal, valid
and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its
terms, except as the enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors generally and by
general equitable principles.
ARTICLE II
GUARANTEE OF OBLIGATIONS
SECTION 2.1 Obligations Guaranteed.
The Guarantor hereby unconditionally guarantees (a) to each Holder of a Security authenticated
and delivered by the Trustee or Authenticating Agent, (i) the full and prompt payment of the
principal of, and premium, if any, and interest on, and any Redemption Price with respect to, such
Security, when, where and as the same shall become due and payable, whether at the stated maturity
thereof, by acceleration, call for redemption or otherwise in accordance with the terms of such
Security and the Indenture and (ii) the full and prompt payment of interest on the overdue
principal and interest, if any, on such Security, at the rate specified in such Security and to the
extent lawful and (b) to the Trustee the full and prompt payment upon written demand therefor of
all amounts due it in accordance with the terms of the Indenture (collectively the “Guaranteed
Obligation”). If for any reason the Company shall fail punctually to pay any such Guaranteed
Obligation, the Guarantor hereby agrees to cause any such Guaranteed Obligation to be made
punctually when, where and as the same shall become due and payable, whether at the stated maturity
thereof, by acceleration, call for redemption or otherwise. All payments by the Guarantor hereunder
shall be paid in lawful money of the United States of America. This Guarantee is unsecured and
ranks equally in right of payment with all of the Guarantor’s existing and future senior
indebtedness.
SECTION 2.2 Obligations Unconditional.
The obligations of the Guarantor under this Guarantee shall be absolute, unconditional and
irrevocable and shall constitute a continuing guarantee of payment and not of collectability. Such
obligations shall remain in full force and effect until this Guarantee shall terminate in
accordance with the provisions of Section 5.1 hereof, and, to the maximum extent permitted by
applicable law, such obligations shall not be affected, modified, released or impaired by any state
of facts or the happening from time to time of any event, including, without limitation, any of the
following, whether or not with notice to, or the consent of, the Guarantor:
(a) the waiver, compromise, settlement, release or termination of any or all of the
obligations, covenants or agreements of the Company contained in the Securities or the Indenture,
or of the payment, performance or observance thereof;
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(b) the failure to give notice to the Guarantor of the occurrence of any default or an Event
of Default under the terms and provisions of the Securities or the Indenture;
(c) the assignment or purported assignment of any of the obligations, covenants and agreements
contained in this Guarantee;
(d) the extension of the time for payment of any principal of, premium, if any, or interest
on, or any Redemption Price with respect to the Securities or of the time for performance of any
obligations, covenants or agreements under or arising out of the Securities or the Indenture or the
extension or the renewal of any thereof;
(e) the modification or amendment (whether material or otherwise) of any obligation, covenant
or agreement set forth in the Securities or the Indenture;
(f) the taking or the omission to take any of the actions referred to in this Guarantee or in
the Indenture;
(g) any failure, omission or delay on the part of, or the inability of, the Trustee or the
Holders of the Securities to enforce, assert or exercise any right, power or remedy conferred on
the Trustee, such Holders or any other person in this Guarantee or in the Indenture for any reason;
(h) the voluntary or involuntary liquidation, dissolution, merger, consolidation, sale or
other disposition of all or substantially all the assets, marshaling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors or readjustment of, or other similar proceedings affecting
the Company or any or all of its assets, or any allegation or contest of the validity of the
Securities or the Indenture or the disaffirmance of the Securities or the Indenture in any such
proceeding; it being specifically understood, consented and agreed to that this Guarantee shall
remain and continue in full force and effect and shall be enforceable against the Guarantor to the
same extent and with the same force and effect as if such proceedings had not been instituted, and
it is the intent and purpose of this Guarantee that the Guarantor shall and does hereby waive, to
the maximum extent permitted by applicable law, all rights and benefits which might accrue to the
Guarantor by reason of any such proceedings;
(i) any event or action that would, in the absence of this clause, result in the release or
discharge by operation of law of the Guarantor from the performance or observance of any
obligation, covenant or agreement contained in this Guarantee;
(j) the default or failure of the Guarantor fully to perform any of its obligations set forth
in this Guarantee;
(k) the release, substitution or replacement of any security pledged for the benefit of the
Holders of the Securities under the Indenture;
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(l) the disposition by the Guarantor of any or all of its interest in any capital stock of the
Company, or any change, restructuring or termination of the corporate structure, ownership,
corporate existence or any rights or franchises of the Company;
(m) any other circumstances which might otherwise constitute a legal or equitable discharge or
defense of a surety or a guarantor; or
(n) any other occurrence whatsoever, whether similar or dissimilar to the foregoing.
SECTION 2.3 No Waiver or Set-Off.
The Guarantor agrees that, to the maximum extent permitted by law, (a) no act of commission or
omission of any kind or at any time on the part of the Trustee or any Holder of the Securities, or
their successors and assigns, in respect of any matter whatsoever shall in any way impair the
rights of the Trustee or such Holders to enforce any right, power or benefit under this Guarantee,
and (b) no set-off, counterclaim, reduction, or diminution of any obligation, or any defense of any
kind or nature (other than performance), which the Guarantor or the Company has or may have against
the Trustee or such Holders or any assignee or successor thereof shall be available hereunder to
the Guarantor.
SECTION 2.4 Waiver of Notice; Expenses.
The Guarantor hereby expressly waives notice from the Trustee or the Holders of the Securities
of their acceptance and reliance on this Guarantee. The Guarantor further waives, to the maximum
extent permitted by law, any right that it may have (a) to require the Trustee or the Holders of
the Securities to take action or otherwise proceed against the Company, (b) to require the Trustee
or the Holders of the Securities to proceed against or exhaust any security pledged for the benefit
of the Holders of the Securities under the Indenture or (c) to require the Trustee or the Holders
of the Securities otherwise to enforce, assert or exercise any other right, power or remedy that
may be available to the Trustee or such Holders. The Guarantor agrees to pay all costs, expenses
and fees, including all reasonable attorneys’ fees and expenses, that may be incurred by the
Trustee in enforcing or attempting to enforce this Guarantee or protecting the rights of the
Trustee or the Holders of the Securities following any default on the part of the Guarantor
hereunder, whether the same shall be enforced by suit or otherwise.
SECTION 2.5 Subrogation of Guarantor; Subordination.
Notwithstanding any payment or payments made by the Guarantor, the Guarantor agrees that it
will not enforce, by reason of subrogation, contribution, indemnity or otherwise, any rights the
Trustee or the Holders of the Securities may have against the Company until all of the Guaranteed
Obligations shall have been finally, indefeasibly and unconditionally paid in full. Any claim of
the Guarantor against the Company arising from payments made by the Guarantor by reason of this
Guarantee shall be in all respects subordinated to the final, indefeasible, unconditional, full and
complete payment or discharge of all of the Guaranteed Obligations guaranteed hereby.
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SECTION 2.6 Reinstatement.
This Guarantee shall continue to be effective, or be automatically reinstated, as the case may
be, if at any time payment, or any part thereof, made by or on behalf of the Company or the
Guarantor in respect of any of the Securities is rescinded or must otherwise be restored or
returned by the Trustee or any Holder of such Securities for any reason whatsoever, whether upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company, or upon or
as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for the Company or any substantial part of its properties, or otherwise, all as though such
payment had not been made.
SECTION 2.7 Rights of Holders.
The Guarantor expressly acknowledges that the Trustee has the right to enforce this Guarantee
on behalf of the Holders of the Securities in accordance with and subject to the provisions of the
Indenture.
ARTICLE III
COVENANTS OF THE GUARANTOR
SECTION 3.1 Consolidation or Merger of the Guarantor.
The Guarantor may merge or consolidate with or into any other Person or sell, convey, transfer
or otherwise dispose of all or substantially all of its assets to any Person, if (a) (i) in the
case of a merger or consolidation, the Guarantor or the Company is the surviving Person or (ii) in
the case of a merger or consolidation where the Guarantor or the Company is not the surviving
Person and in the case of any sale, conveyance, transfer or other disposition, the resulting,
surviving or transferee Person is organized and existing under the laws of the United States or a
State thereof or the District of Columbia and such Person expressly assumes by supplemental
agreement all the obligations of the Guarantor under this Guarantee, (b) immediately after giving
effect to such transaction, no Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have happened and be continuing and (c) the
Guarantor shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel
each stating that such merger, consolidation, sale, conveyance, transfer or other disposition
complies with this Section and that all conditions precedent herein provided for relating to such
transaction have been complied with. In the event of the assumption by a successor Person of the
obligations of the Guarantor as provided in clause (a)(ii) of the immediately preceding sentence,
such successor Person shall succeed to and be substituted for the Guarantor hereunder and all such
obligations of the Guarantor shall terminate.
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SECTION 3.2 Reports by the Guarantor.
During the term hereof, the Guarantor covenants:
(a) to file with the Trustee, within 30 days after the Guarantor is required to file the same
with the Commission, copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the Commission may from time to time
by rules and regulations prescribe) which the Guarantor may be required to file with the Commission
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if
the Guarantor is not required to file information, documents or reports pursuant to either of such
sections, then to file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission pursuant to Section 314(a) of the Trust
Indenture Act such of the supplementary and periodic information, documents and reports which may
be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect
of a security listed and registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with the rules and regulations
prescribed from time to time by the Commission pursuant to Section 314(a) of the Trust Indenture
Act such additional information, documents and reports with respect to compliance by the Guarantor
with the conditions and covenants provided for in this Guarantee and the Indenture, as may be
required from time to time by such rules and regulations;
(c) to transmit to all Holders of the Securities within 30 days after the filing thereof with
the Trustee, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act,
such summaries of any information, documents and reports required to be filed by the Guarantor
pursuant to subsections (a) and (b) of this Section 3.2, as may be required by rules and
regulations prescribed from time to time by the Commission pursuant to Section 314(a) of the Trust
Indenture Act; and
(d) to deliver to the Trustee, within 120 days after the end of each fiscal year of the
Guarantor, a brief certificate from the principal executive officer, principal financial officer,
or principal accounting officer as to his or her knowledge of the Guarantor’s compliance with all
conditions and covenants under this Guarantee. For purposes of this Section 3.2, such compliance
shall be determined without regard to any period of grace or requirement of notice provided under
this Guarantee.
ARTICLE IV
NOTICES
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SECTION 4.1 Notices.
All notices, certificates or other communications to the Guarantor hereunder shall be
sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid, to
the Guarantor addressed to it at Principal Financial Services, Inc. 000 Xxxx Xxxxxx, Xxx Xxxxxx,
Xxxx 00000, Attention: General Counsel, or at any other address previously furnished in writing to
the Trustee by the Guarantor.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Effective Date; Termination.
The obligations of the Guarantor hereunder shall arise absolutely and unconditionally upon the
date of the initial delivery of and authentication of the Securities. Subject to Section 2.6, this
Guarantee shall terminate on such date as the Indenture is discharged and satisfied.
SECTION 5.2 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide the Trustee with such evidence of compliance with such conditions
precedent, if any, provided for in this Guarantee that relate to the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers’ Certificate.
SECTION 5.3 Remedies Not Exclusive.
No remedy herein conferred upon or reserved to the Trustee or Holders of the Securities is
intended to be exclusive of any other available remedy or remedies, but, to the maximum extent
permitted by law, each and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Guarantee or now or hereafter existing at law or in equity. No delay
or omission to exercise any right or power accruing upon any default, omission or failure of
performance hereunder shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Trustee and Holders of the Securities to exercise any
remedy reserved to any of them in this Guarantee, to the maximum extent permitted by applicable
law, it shall not be necessary to give any notice. In the event any provision contained in this
Guarantee should be breached, and thereafter duly waived, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach hereunder. To the
maximum extent permitted by applicable law, no waiver, amendment, release or modification of this
Guarantee shall be established by conduct, custom or course of dealing, but solely by an instrument
in writing duly executed by the parties to this Guarantee and consistent with the terms of the
Indenture.
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SECTION 5.4 Limitation of Guarantor’s Liability.
Any term or provision of this Guarantee notwithstanding, the Guarantee shall not exceed the
maximum amount that can be guaranteed by the Guarantor without rendering the Guarantee voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
SECTION 5.5 Entire Agreement; Counterparts.
This Guarantee constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the subject matter
hereof and may be executed simultaneously in several counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same instrument.
SECTION 5.6 Severability.
To the maximum extent permitted by applicable law, the invalidity or unenforceability of any
one or more phrases, sentences, clauses or sections contained in this Guarantee shall not affect
the validity or enforceability of the remaining portions of this Guarantee, or any part thereof.
SECTION 5.7 Governing Law.
THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF. This Guarantee is subject to the
Trust Indenture Act and if any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required by the Trust Indenture Act to be a part of and govern this
Guarantee, the latter provision shall control. If any provision of this Guarantee modifies or
excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Guarantee as so modified, or to be excluded, as the case
may be, whether or not such provision of this Guarantee refers expressly to such provision of the
Trust Indenture Act. The Guarantor shall be an “obligor” with respect to the Securities as such
term is defined in and solely for the purposes of the Trust Indenture Act and shall comply with
those provisions of the Indenture compliance with which is required by an “obligor” under the Trust
Indenture Act.
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IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly executed.
| PRINCIPAL FINANCIAL SERVICES, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
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