Document:

exv10w2

 

GUARANTEE

     FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in connection with
that certain funding agreement (the “Funding Agreement”), entered into by and between Principal
Life Insurance Company, an Iowa insurance company (“Principal Life”), and Principal Life Income
Fundings Trust 2006-27, a New York common law trust (the “Trust”), relating to the notes (the
“Notes”) issued by the Trust, Principal Financial Group, Inc., a Delaware corporation and the
indirect parent company of Principal Life (the “Guarantor”), hereby furnishes to the Trust its full
and unconditional guarantee of the Guaranteed Amounts (as hereinafter defined) as follows:

	1.	 	Guarantee.

          (a) The Guarantor hereby fully, irrevocably, absolutely and unconditionally guarantees, as a
guarantee of payment and not merely as a guarantee of collection, immediate payment when due to the
Trust any payments required to be made by Principal Life to the Trust under the Funding Agreement
which shall become due and payable regardless of whether such payment is due at maturity, on an
interest payment date or as a result of redemption or otherwise (the “Scheduled Payments”) but
shall be unpaid by Principal Life (the “Guaranteed Amounts”). Notwithstanding anything to the
contrary contained herein, in no event shall the Guaranteed Amounts exceed the Deposit (as defined
in the Funding Agreement) of the Funding Agreement, plus accrued but unpaid interest and any other
amounts due and owing under the Funding Agreement, less any amounts paid by Principal Life to the
Trust.

          (b) In the event that Principal Life fails to make a Scheduled Payment in full when due (the
“Payment Notice Date”), then the Trust or Citibank, N.A., as indenture trustee for the benefit of
the holders of the Notes (the “Indenture Trustee”), pursuant to the indenture (the “Indenture”)
between the Trust and the Indenture Trustee, may present the Guarantor with notice (each, a
“Payment Notice”) of such failure in writing on or after the Payment Notice Date. The Payment
Notice shall identify (1) the Funding Agreement, (2) the Trust, (3) the Payment Notice Date and (4)
the amount of the Scheduled Payments not paid by Principal Life to the Trust as of the Payment
Notice Date. Upon receipt of such Payment Notice, the Guarantor will immediately pay the
Guaranteed Amounts pursuant to Section 7.

          (c) In the event that, after receipt of a Payment Notice from the Trust, the Guarantor fails
to make immediate payment to the Trust or the Indenture Trustee of the Guaranteed Amounts, then
the Trust and the Indenture Trustee may enforce the obligations of the Guarantor under this
Guarantee, including by immediately bringing suit directly against the Guarantor (without first
bringing suit against Principal Life) for the Guaranteed Amounts not paid to the Trust as of the
Payment Notice Date.

          (d) This Guarantee is an unsecured, unsubordinated and contingent obligation of the Guarantor
and ranks equally with all other unsecured and unsubordinated obligations of the Guarantor.

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     2. Termination. This Guarantee is a continuing and irrevocable guarantee of the
Guaranteed Amounts now or hereafter existing and shall terminate and be of no further force and
effect with respect to the Funding Agreement and the Notes upon the full payment of the Scheduled
Payments or upon the earlier extinguishment of the obligations of Principal Life under the Funding
Agreement.

     3. Amendments. Subject to the trust agreement relating to the Trust and the Indenture, no
provision of this Guarantee may be waived, amended, supplemented or modified, except by a written
instrument executed by the Trust and the Guarantor.

     4. Assignment; Governing Law. This Guarantee shall inure to the benefit of the Trust and its
successors, assigns and pledgees. This Guarantee shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to conflict of law principles.

     5. Notices. All notices given pursuant to this Guarantee shall be in writing, and shall
either be delivered, mailed or telecopied to the locations listed below or at such other address or
to the attention of such other persons as such party shall have designated for such purpose in a
written notice complying as to delivery with the terms of this Section 5. Each such notice shall
be effective (i) if given by telecopy, when transmitted to the applicable number so specified in
this Section 5 (such notice shall also be sent by mail, with first class postage prepaid), (ii) if
given by mail, three days after deposit in the mails with first class postage prepaid, or (iii) if
given by any other means, when actually delivered at such address.

If to the Guarantor:

Principal Financial Group, Inc.

711 High Street

Des Moines, Iowa 50392

Attention: General Counsel

Telephone: (515) 247-5111

Facsimile: (515) 248-3011

With a copy to:

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392

Attention: Jim Fifield

Telephone: (515) 248-9196

Facsimile: (866) 496-6527

If to the Trust:

Principal Life Income Fundings Trust (followed by the number of the Trust specified in this Guarantee)

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c/o U.S. Bank Trust National Association

100 Wall Street, 16th Floor

New York, New York 10005

Attention: Thomas E. Tabor

Telephone: (212) 361-6184

Facsimile: (212) 809-5459

With a copy to:

Citibank, N.A.

Citibank Agency and Trust

388 Greenwich Street, 14th Floor

New York, New York 10013

Attention: Nancy Forte

Telephone: (212) 816-5685

Facsimile: (212) 816-5527

     6. Representations and Warranties. The Guarantor represents and warrants that: (i) it is duly
organized and in good standing under the laws of the jurisdiction of its organization and has full
capacity and right to make and perform this Guarantee, and all necessary authority has been
obtained; (ii) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors’ rights and general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law; (iii) the making and performance of this
Guarantee does not and will not violate the provisions of any applicable law, regulation or order,
and does not and will not result in the breach of, or constitute a default under, any material
agreement, instrument or document to which it is a party or by which it or any of its property may
be bound or affected, except to the extent disclosed in the registration statement registering the
issuance of this Guarantee and the Funding Agreement, as amended, supplemented or modified from
time to time (the “Registration Statement”), and to the extent that any such violation, breach or
default does not result in a material adverse effect on the Guarantor; and (iv) all consents,
approvals, licenses and authorizations of, and filings and registrations with, any governmental
authority required under applicable law and regulations for the making and performance of this
Guarantee have been obtained or made and are in full force and effect, except to the extent
disclosed in the Registration Statement and to the extent that the failure to acquire any such
consent, approval, license, authorization, filing or registration does not result in a material
adverse effect on the Guarantor.

     7. Notice of, and Consent to, Security Interest. The Trust hereby notifies the Guarantor that
it has granted to the Indenture Trustee, on behalf of the holders of the Notes, a security interest
in the Collateral (as defined in the Indenture), including, but not limited to, any and all payment
to be made by the Guarantor to the Trust under this Guarantee. The Trust hereby notifies the
Guarantor that it has collaterally assigned to the Indenture Trustee, for the benefit of the
holders of the Notes, this Guarantee. The Guarantor, by executing this Guarantee, hereby (i)
affirms that it has made or simultaneously will make changes to its books and records to reflect
such security interest and collateral assignment, (ii) consents to the security interest

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granted, and collateral assignment made, by the Trust to the Indenture Trustee of this
Guarantee, (iii) agrees to make all payments due under this Guarantee to the Collection Account (as
defined in the Indenture) or any other account designated in writing to the Guarantor by the
Indenture Trustee and (iv) agrees to comply with all orders of the Indenture Trustee with respect
to this Guarantee without any further consent from the Trust.

     8. WAIVER OF JURY TRIAL; FINAL AGREEMENT. TO THE EXTENT ALLOWED BY APPLICABLE LAW, THE
GUARANTOR WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON OR ARISING
OUT OF THIS GUARANTEE. THIS GUARANTEE REPRESENTS THE FINAL AGREEMENT BETWEEN THE GUARANTOR AND THE
TRUST AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS AMONG SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

PRINCIPAL FINANCIAL GROUP, INC.

			
	By:	 	/s/ Elizabeth D. Swanson 

			
	Name:	 	Elizabeth D. Swanson 

			
	Title:	 	Counsel 

			
	Date:	 	The Effective Date (as defined in the Funding Agreement)

Acknowledged and Agreed:

THE PRINCIPAL LIFE INCOME FUNDINGS

TRUST DESIGNATED IN THIS GUARANTEE

			
	By:     	 	U.S. Bank Trust National Association,
not in its individual capacity, but solely in its
capacity as trustee

			
	By:     	 	Bankers Trust Company, N.A.,
under Limited Power of Attorney, dated February 16, 2006

			
	By:	 	/s/ Diana L. Cook 

			
	Name:	 	Diana L. Cook 

			
	Title:	 	Vice President 

			
	Date:	 	The Effective Date (as defined in the Funding
Agreement)

4<PAGE>

                                                                     EXHIBIT 4.1

                             SUPPLEMENTAL INDENTURE

     SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of May 23,
2006, among Neenah Foundry Company, a Wisconsin corporation (the "Company"), the
Subsidiary Guarantors under the indenture referred to below, and The Bank of New
York Trust Company, N.A., as successor trustee under the indenture referred to
below (the "Trustee").

                                   WITNESSETH

     WHEREAS, the Company and the Subsidiary Guarantors have heretofore executed
and delivered to the Trustee an indenture (the "Indenture"), dated as of October
8, 2003 providing for the issuance of 13% Senior Subordinated Notes due 2013
(the "Notes");

     WHEREAS, Section 4.21 of the Indenture and Section 12 of the Notes provide
that, if a Change of Control (as defined in the Indenture) occurs, each Holder
of Notes will have the right to require the Company to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes,
at an offer price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon to the payment date;

     WHEREAS, Section 9.1(iv) of the Indenture and Section 10 of the Notes
provide that the Company, the Subsidiary Guarantors and the Trustee may amend or
supplement the Indenture or the Notes without the consent of any Holder of Notes
to, among other things, make any change that does not adversely affect the legal
rights of any Holder of a Note;

     WHEREAS, the Company and the Subsidiary Guarantors desire that Section 4.21
of the Indenture and Section 12 of the Notes be amended to provide that the
obligation to repurchase Notes in the event of a Change of Control may be
satisfied not only by a purchase by the Company but also by a purchase by a
designee of the Company, as more fully described in Exhibit A and Exhibit B
hereto.

     NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
mutually covenant and agree as follows:

     1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.

     2. AMENDMENT OF INDENTURE AND NOTES. Section 4.21 of the Indenture is
hereby amended to read as provided in Exhibit A hereto. Section 12 of the notes
is hereby amended to read as provided in Exhibit B hereto. The validity and
enforceability of the foregoing amendments shall not be affected by the fact
that they may not be affixed to or restated in any particular Note.

     3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     4. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.

     5. EFFECT OF HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.

     6. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Company and the Subsidiary Guarantors.

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the date first above written.

                                       Neenah Foundry Company

                                       By: /s/ Gary LaChey
                                           -------------------------------------
                                       Name: Gary LaChey
                                       Title: Corporate Vice President - Finance
                                              & CFO

                                       Advanced Cast Products, Inc.
                                       Dalton Corporation
                                       Dalton Corporation, Warsaw Manufacturing
                                       Facility
                                       Dalton Corporation, Stryker Machining
                                       Facility Co.
                                       Dalton Corporation, Ashland Manufacturing
                                       Facility
                                       Dalton Corporation, Kendallville
                                       Manufacturing Facility
                                       Deeter Foundry, Inc.
                                       Gregg Industries, Inc.
                                       Mercer Forge Corporation
                                       A&M Specialties, Inc.
                                       Neenah Transport, Inc.
                                       Cast Alloys, Inc.
                                       Belcher Corporation
                                       Peerless Corporation
                                           As Subsidiary Guarantors

                                       By: /s/ Gary LaChey
                                           -------------------------------------
                                       Name: Gary LaChey
                                       Title: Corporate Vice President - Finance
                                              & CFO

                                       The Bank of New York Trust Company, N.A.,
                                       as Trustee

                                       By: Roxane Ellwanger
                                           -------------------------------------
                                           Authorized Signatory

<PAGE>

                                                                       Exhibit A

          Section 4.21 of the Indenture is hereby amended to read as follows
(changes are indicated by underlining):

SECTION 4.21. CHANGE OF CONTROL.

     (a) In the event that a Change of Control occurs, each Holder shall have
the right, at such Holder's option, subject to the terms and conditions of this
Indenture, to require the Company to repurchase OR CAUSE ITS DESIGNEE TO
PURCHASE all or any part of such Holder's Notes (provided, that the principal
amount of such Notes must be $1,000 or an integral multiple thereof) on a date
to be established by the Company (the "Change of Control Payment Date") after
the occurrence of such Change of Control, at a cash price (the "Change of
Control Repurchase Price") equal to 101% of the aggregate principal amount
thereof, together with accrued and unpaid interest thereon to, but excluding,
the Change of Control Payment Date.

     (b) In the event that, pursuant to this Section 4.21, the Company shall be
required to commence an offer to purchase Notes (the "Change of Control Offer"),
the Company shall follow the procedures set forth in this Section 4.21 as
follows:

          (1) the Company shall prepare and mail, with a copy to the Trustee, or
at the option of the Company and at the expense of the Company, mail by the
Trustee, the Change of Control Offer to each Holder of Notes, within 30 days
following the completion of the Senior Secured Notes Offer to Purchase, or if no
Senior Secured Notes are outstanding at such time, within 30 days following a
Change of Control;

          (2) the Change of Control Offer shall remain open for at least 30 and
not more than 40 days (unless otherwise required by applicable law) following
its commencement, except to the extent that a longer period is required by
applicable law;

          (3) upon the expiration of a Change of Control Offer, the Company OR
ITS DESIGNEE shall purchase all Notes tendered in response to the Change of
Control Offer;

          (4) if the Change of Control Payment Date is on or after an interest
payment record date and on or before the related Interest Payment Date, any
accrued interest will be paid to the Person in whose name a Note is registered
at the close of business on such record date, and no additional interest will be
payable to Noteholders who tender Notes pursuant to the Change of Control Offer;

          (5) the Company shall provide the Trustee with notice of the Change of
Control Offer at least five Business Days before the commencement of any Change
of Control Offer; and

          (6) on or before the commencement of any Change of Control Offer, the
Company or the Trustee (upon the request and at the expense of the Company)
shall send, by first-class mail, a notice to each of the Noteholders, which (to
the extent consistent with this Indenture) shall govern the terms of the Change
of Control Offer and shall state:

                    (i)  that the Change of Control Offer is being made pursuant
                         to such notice and this Section 4.21 and that all
                         Notes, or portions thereof, tendered will be accepted
                         for payment;

                    (ii) the Change of Control Repurchase Price (including the
                         amount of accrued and unpaid interest) the Change of
                         Control Payment Date and the Change of Control Put
                         Date;

                    (iii) that any Note, or portion thereof, not tendered or
                         accepted for payment will continue to accrue interest;

<PAGE>

                    (iv) that, unless the Company (OR ITS DESIGNEE) defaults in
                         depositing Cash with the Paying Agent in accordance
                         with the last paragraph of this clause (b) or such
                         payment is prevented pursuant to Article XI, any Note,
                         or portion thereof, accepted for payment pursuant to
                         the Change of Control Offer (OTHER THAN THOSE NOTES
                         PURCHASED BY THE COMPANY'S DESIGNEE) shall cease to
                         accrue interest after the Change of Control Payment
                         Date;

                    (v)  that Holders electing to have a Note, or portion
                         thereof, purchased pursuant to a Change of Control
                         Offer will be required to surrender the Note, with the
                         form entitled "Option of Holder to Elect Purchase" on
                         the reverse of the Note completed, to the Paying Agent
                         (which may not for purposes of this Section 4.21,
                         notwithstanding anything in this Indenture to the
                         contrary, be the Company or any Affiliate of the
                         Company) at the address specified in the notice prior
                         to the close of business on the earlier of (a) the
                         third Business Day prior to the Change of Control
                         Payment Date and (b) the third Business Day following
                         the expiration of the Change of Control Offer (such
                         earlier date being the "Change of Control Put Date");

                    vi)  that Holders will be entitled to withdraw their
                         election, in whole or in part, if the Paying Agent
                         (which may not for purposes of this Section 4.21,
                         notwithstanding anything in this Indenture to the
                         contrary, be the Company or any Affiliate of the
                         Company) receives, up to the close of business on the
                         Change of Control Put Date, a telegram, telex,
                         facsimile transmission or letter setting forth the name
                         of the Holder, the principal amount of the Notes the
                         Holder is withdrawing and a statement that such Holder
                         is withdrawing his election to have such principal
                         amount of Notes purchased; and

                    (vii) a brief description of the events resulting in such
                         Change of Control.

     On or before the Change of Control PAYMENT Date, the Company OR ITS
DESIGNEE shall (i) accept for payment Notes or portions thereof properly
tendered pursuant to the Change of Control Offer on or before the Change of
Control Payment Date, (ii) deposit with the Paying Agent Cash sufficient to pay
the Change of Control Repurchase Price of all Notes or portions thereof so
tendered and (iii) deliver to the Trustee Notes so accepted together with an
Officers' Certificate listing the Notes or portions thereof being purchased by
the Company OR ITS DESIGNEE. The Paying Agent shall promptly mail to Holders of
Notes so accepted payment in an amount equal to the Change of Control Repurchase
Price (together with accrued and unpaid interest), and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new Note or Notes
equal in principal amount to any unpurchased portion of the Notes surrendered.
Any Notes not so accepted shall be promptly mailed or delivered by the Company
OR ITS DESIGNEE to the Holder thereof. The Company will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.

     The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws, rules and regulations thereunder to
the extent such laws, rules and regulations are applicable in connection with
the repurchase of Notes pursuant to Change of Control Offer.

<PAGE>

                                                                       Exhibit B

     Section 12 of the Notes is hereby amended to read as follows (changes are
indicated by underlining):

12. Change of Control.

     In the event of a Change of Control of the Company, each Holder of Notes
will have the right to require the Company to repurchase (OR CAUSE ITS DESIGNEE
TO REPURCHASE) all or any part (equal to $1,000 or an integral multiple thereof)
of such Holder's Notes, at an offer price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon to the Change
of Control Payment Date.

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