Document:

exv4w1

 

OMNIBUS INSTRUMENT

     WHEREAS, the parties named herein desire to enter into certain Program Documents contained
herein, each such document dated as of this 11th day of February, 2005, relating to the
issuance by Principal Life Income Fundings Trust 2005-13 (the “Trust”) of Notes to investors under
Principal Life’s secured notes program;

     WHEREAS, the Trust is a trust and will be organized under and its activities will be governed
by the provisions of the Trust Agreement (set forth in Section A of this Omnibus Instrument), dated
as of the date of the Pricing Supplement (attached to this Omnibus Instrument as Exhibit D)
(the “Pricing Supplement”), by and between the parties thereto indicated in Section F herein;

     WHEREAS, certain expense and indemnification arrangements between Principal Life and the
Trustee, on behalf of itself and on behalf of the Trust, are governed pursuant to the provisions of
the Expense and Indemnity Agreement dated as of March 5, 2004, by and between Principal Life and
the Trustee;

     WHEREAS, certain licensing arrangements between the Trust and Principal Financial Services,
Inc. will be governed pursuant to the provisions of the License Agreement (set forth in Section B
of this Omnibus Instrument), dated as of the date of the Pricing Supplement, by and between the
parties thereto indicated in Section F herein;

     WHEREAS, certain custodial arrangements of the Funding Agreement and the Guarantee will be
governed pursuant to the provisions of the Custodial Agreement (the “Custodial Agreement”) dated as
of March 5, 2004 by and among Bankers Trust Company, N.A., acting as custodian (the “Custodian”),
the Indenture Trustee and the Trustee, on behalf of the Trust;

     WHEREAS, the Notes will be issued pursuant to the Indenture (set forth in Section C of this
Omnibus Instrument), dated as of the Original Issue Date, by and between the parties thereto
indicated in Section F herein;

     WHEREAS, the sale of the Notes will be governed by the Terms Agreement (set forth in Section D
of this Omnibus Instrument), dated the date of the Pricing Supplement, by and among the parties
thereto indicated in Section F herein; and

     WHEREAS, certain agreements relating to the Notes, the Funding Agreement and the Guarantee are
set forth in the Coordination Agreement (set forth in Section E of this Omnibus Instrument), dated
as of the date of the Pricing Supplement, by and among the parties thereto indicated in Section F
herein.

     All capitalized terms used herein and not otherwise defined will have the meanings set forth
in the Indenture.

[Remainder of Page Left Intentionally Blank.]

 

 

SECTION A

TRUST AGREEMENT

     This TRUST AGREEMENT (this “Trust Agreement”), dated as of the date of the
Pricing Supplement, is entered into by and between GSS Holdings II, Inc., a
Delaware corporation, as trust beneficial owner (the “Trust Beneficial Owner”),
and U.S. Bank Trust National Association, a national banking association, as
Trustee (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Trust Beneficial Owner and the Trustee desire to authorize
the issuance of a Trust Beneficial Interest and a series of Notes in connection
with the entry into this Trust Agreement;

     WHEREAS, all things necessary to make this Trust Agreement a valid and
legally binding agreement of the Trustee and the Trust Beneficial Owner,
enforceable in accordance with its terms, have been done;

     WHEREAS, the parties intend to provide for, among other things, (i) the
issuance and sale of the Notes (pursuant to the Indenture, the Distribution
Agreement and the related Terms Agreement) and the Trust Beneficial Interest,
(ii) the use of the proceeds of the sale of the Notes and Trust Beneficial
Interest to acquire the Funding Agreement, the payment obligations of which
will be fully and unconditionally guaranteed by the Guarantee, and (iii) all
other actions deemed necessary or desirable in connection with the transactions
contemplated by this Trust Agreement; and

     WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard Trust Terms, dated as of March 5, 2004, and attached to the
Omnibus Instrument as Exhibit A (the “Standard Trust Terms”) and all
capitalized terms not otherwise defined herein (including the recitals hereof)
shall have the meanings set forth in the Standard Trust Terms (the Standard
Trust Terms and this Trust Agreement, collectively, the “Trust Agreement”).

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which are hereby acknowledged, each party hereby agrees as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard Trust Terms (except to the extent
expressly modified herein) are hereby incorporated herein by reference with the
same force and effect as though fully set forth herein. To the extent that the
terms set forth in Article 2 of this Trust Agreement are inconsistent with the
terms of the Standard Trust Terms, the terms set forth in Article 2 herein
shall apply.

A-1

 

ARTICLE 2

     Section 2.01 Name. The Trust created and governed by the Trust Agreement
shall be the trust specified in the Omnibus Instrument. The name of the Trust
shall be the name specified in the first paragraph of the Omnibus Instrument,
as such name may be modified from time to time by the Trustee following written
notice to the Trust Beneficial Owner.

     Section 2.02 Jurisdiction. The Trust is hereby organized in, and formed
under and pursuant to, the laws of the State of New York.

     Section 2.03 Initial Capital Contribution and Ownership. The Trust
Beneficial Owner has paid or has caused to be paid to, or to an account at the
direction of, the Trustee, on the date hereof, the sum of $15 (or, in the case
of Notes issued with original issue discount, such amount multiplied by the
issue price of the Notes). The Trustee hereby acknowledges receipt in trust
from the Trust Beneficial Owner, as of the date hereof, of the foregoing
contribution, which shall be used along with the proceeds from the sale of the
series of Notes to purchase the Funding Agreement. Upon the creation of the
Trust and the registration of the Trust Beneficial Interest in the Securities
Register (as defined in the Trust Agreement) by the Registrar in the name of
the Trust Beneficial Owner, the Trust Beneficial Owner shall be the sole
beneficial owner of the Trust.

     Section 2.04 Acknowledgment. The Trustee, on behalf of the Trust,
expressly acknowledges its duties and obligations set forth in the Standard
Trust Terms incorporated herein.

     Section 2.05 Additional Terms.

     None

     Section 2.06 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to the Trust Agreement will enter into the Trust Agreement by
executing the Omnibus Instrument.

     By executing the Omnibus Instrument, the Trustee and the Trust Beneficial
Owner hereby agree that the Trust Agreement will constitute a legal, valid and
binding agreement between the Trustee and the Trust Beneficial Owner.

     All terms relating to the Trust or the series of Notes not otherwise
included in the Trust Agreement will be as specified in the Omnibus Instrument
or Pricing Supplement, as indicated herein.

A-2

 

     Section 2.07 Governing Law. The Trust Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.

     Section 2.08 Counterparts. The Trust Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

[Remainder of Page Left Intentionally Blank.]

A-3

 

SECTION B

LICENSE AGREEMENT

     This LICENSE AGREEMENT (this “License Agreement”), dated as of the date of
the Pricing Supplement, is entered into by and between Principal Financial
Services, Inc., an Iowa corporation with its principal place of business at 711
High Street, Des Moines, Iowa 50392 (the “Licensor”), and the Principal Life
Income Fundings Trust specified in the Omnibus Instrument (the “Licensee”).

W I T N E S S E T H:

     WHEREAS, the Licensor is the owner of certain trademarks and service marks
and registrations and pending applications therefor, and may acquire additional
trademarks and service marks in the future, all as described more fully below;

     WHEREAS, the Licensee desires to use certain of the Licensor’s trademarks
and service marks in connection with the Licensee’s activities, as described
more fully below;

     WHEREAS, the Licensor and the Licensee wish to formalize the agreement
between them regarding the Licensee’s use of the Licensor’s marks; and

     WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard License Agreement Terms, dated March 5, 2004, and attached to
the Omnibus Instrument as Exhibit B (the “Standard License Agreement Terms”)
and all capitalized terms not otherwise defined herein (including the recitals
hereof) shall have the meanings set forth in the Standard License Agreement
Terms (the Standard License Agreement Terms and this License Agreement,
collectively, the “License Agreement”).

     NOW, THEREFORE, in consideration of the mutual promises set forth herein
and for other good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, each party hereby agrees as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard License Agreement Terms (except to the
extent expressly modified herein) are hereby incorporated herein by reference
with the same force and effect as though fully set forth herein. To the extent
that the terms set forth in Article 2 of this License Agreement are
inconsistent with the terms of the Standard License Agreement Terms, the terms
set forth in Article 2 herein shall apply.

ARTICLE 2

     Section 2.01 Additional Terms.

     None

B-1

 

     Section 2.02 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to the License Agreement will enter into the License Agreement
by executing the Omnibus Instrument.

     By executing the Omnibus Instrument, the Licensor and the Licensee hereby
agree that the License Agreement will constitute a legal, valid and binding
agreement between the Licensor and the Licensee.

     All terms relating to the Trust or the Notes not otherwise included in the
License Agreement will be as specified in the Omnibus Instrument or Pricing
Supplement, as indicated herein.

     Section 2.03 Counterparts. The License Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

[Remainder of Page Left Intentionally Blank.]

B-2

 

SECTION C

INDENTURE

     This INDENTURE (this “Indenture”) is entered into as of the Original Issue
Date by and between the Principal Life Income Fundings Trust specified in the
Omnibus Instrument (the “Trust”) and Citibank, N.A., as indenture trustee (the
“Indenture Trustee”).

     Citibank, N.A., in its capacity as indenture trustee, hereby accepts its
role as Registrar, Paying Agent, Transfer Agent and Calculation Agent
hereunder.

     References herein to “Indenture Trustee,” “Registrar,” “Transfer Agent,”
“Paying Agent” or “Calculation Agent” shall include the permitted successors
and assigns of any such entity from time to time.

W I T N E S S E T H:

     WHEREAS, the Trust has duly authorized the execution and delivery of this
Indenture to provide for the issuance of Notes;

     WHEREAS, all things necessary to make this Indenture a valid and legally
binding agreement of the Trust and the other parties to this Indenture,
enforceable in accordance with its terms, have been done, and the Trust
proposes to do all things necessary to make the Notes, when executed by the
Trust and authenticated and delivered pursuant hereto, valid and legally
binding obligations of the Trust as hereinafter provided; and

     WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard Indenture Terms, dated as of March 5, 2004, and attached to
the Omnibus Instrument as Exhibit C (the “Standard Indenture Terms”) and all
capitalized terms not otherwise defined herein (including the recitals hereof)
shall have the meanings set forth in the Standard Indenture Terms (the Standard
Indenture Terms and this Indenture, collectively, the “Indenture”).

     NOW, THEREFORE, for and in consideration of the premises and the purchase
of the Notes by the Holders thereof, it is mutually covenanted and agreed by
each of the parties hereto as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard Indenture Terms (except to the extent
expressly modified herein) are hereby incorporated herein by reference (with
the same force and effect as though fully set forth herein). To the extent
that the terms set forth in Article 2 of this Indenture are inconsistent with
the terms of the Standard Indenture Terms, the terms set forth in Article 2
herein shall apply.

C-1

 

ARTICLE 2

     Section 2.01 Agreement to be Bound. Each of the Trust, the Indenture
Trustee, the Registrar, the Transfer Agent, the Paying Agent and the
Calculation Agent hereby agrees to be bound by all of the terms, provisions and
agreements set forth in the Indenture, with respect to all matters contemplated
in the Indenture, including, without limitation, those relating to the issuance
of the below-referenced Notes.

     Section 2.02 Designation of the Trust, the Notes, the Funding Agreement
and the Guarantee. The Trust created by the Trust Agreement and referred to in
the Indenture is the Principal Life Income Fundings Trust specified in the
Omnibus Instrument. The Notes issued by the Trust and governed by the
Indenture shall be the Notes specified in the Pricing Supplement. The Funding
Agreement designated hereby is the Funding Agreement designated in the Pricing
Supplement dated as of the Original Issue Date between the Trust and Principal
Life. The Guarantee designated hereby is the Guarantee dated as of the Original
Issue Date of PFG.

     Section 2.03 Additional Terms.

     None

     Section 2.04 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to the Indenture will enter into the Indenture by executing
the Omnibus Instrument.

     By executing the Omnibus Instrument, the Indenture Trustee, the Registrar,
the Transfer Agent, the Paying Agent, the Calculation Agent and the Trust
hereby agree that the Indenture will constitute a legal, valid and binding
agreement between the Indenture Trustee, the Registrar, the Transfer Agent, the
Paying Agent, the Calculation Agent and the Trust.

     All terms relating to the Trust or the Notes not otherwise included in the
Indenture will be as specified in the Omnibus Instrument or Pricing Supplement,
as indicated herein.

     Section 2.05 Counterparts. The Indenture, through the Omnibus Instrument,
may be executed in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute one
and the same instrument.

[Remainder of Page Left Intentionally Blank.]

C-2

 

SECTION D

TERMS AGREEMENT

     This TERMS AGREEMENT (this “Terms Agreement”) is entered into as of the
Original Issue Date by and among Principal Life Insurance Company (“Principal
Life”), Principal Financial Group, Inc. (“PFG”), the Principal Life Income
Fundings Trust specified in the Omnibus Instrument (the “Trust”) and the
Purchasing Agent specified in the Pricing Supplement (the “Purchasing Agent”).

W I T N E S S E T H:

     WHEREAS, Principal Life, PFG and the agents named therein, including the
Purchasing Agent have entered into that certain Distribution Agreement dated
March 5, 2004 (the “Distribution Agreement”).

     NOW, THEREFORE, in consideration of the mutual promises set forth herein
and other good and valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, each of the parties hereby agrees as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. The provisions of the
Distribution Agreement and the related definitions (unless otherwise specified
herein) are incorporated by reference herein and shall be deemed to have the
same force and effect as if set forth in full herein.

ARTICLE 2

     Section 2.01 Addition of Trust as Party to Distribution Agreement.

     Pursuant to Section 1 of the Distribution Agreement, each of the
undersigned parties hereby acknowledges and agrees that the Trust, upon
execution hereof by the Trust and the other parties to the Distribution
Agreement (other than any other trusts organized in connection with the
Registration Statement that are party thereto as of the date hereof), shall
become a Trust for purposes of the Distribution Agreement in accordance with
the terms thereof, in respect of the Notes, with all the authority, rights,
powers, duties and obligations of a Trust under the Distribution Agreement.
The Trust confirms that any agreement, covenant, acknowledgment, representation
or warranty under the Distribution Agreement applicable to the Trust is made by
the Trust at the date hereof, unless another time or times are specified in the
Distribution Agreement, in which case such agreement, covenant, acknowledgment,
representation or warranty shall be deemed to be confirmed by the Trust at such
specified time or times.

     Section 2.02 Purchase of Notes as Principal.

     (a) Subject in all respects to the terms and conditions of the
Distribution Agreement, the Trust hereby agrees to sell to the Purchasing Agent
and the Purchasing Agent hereby agrees to purchase the Notes having the terms
specified in the Pricing Supplement relating to such Notes.

D-1

 

     (b) In connection with any purchase of Notes from the Trust by the
Purchasing Agent as principal, the parties agrees that the items specified on
Schedule I of the Omnibus Instrument will be delivered as of the Settlement
Date.

     Section 2.03 Termination. Upon the termination of this Terms Agreement
pursuant to Section 13(b) of the Distribution Agreement the undersigned parties
hereby agree to that the expenses reasonably incurred prior to or in connection
with such termination will be borne by Principal Life and PFG.

     Section 2.04 Governing Law. This Terms Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to the principles of conflicts of laws thereof.

     Section 2.05 Notices. For purposes of Section 14 of the Distribution
Agreement, the Trust’s communications details are as set forth in Section E of
the Omnibus Instrument.

     Section 2.06 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to this Terms Agreement will enter into this Terms Agreement
by executing the Omnibus Instrument.

     By executing the Omnibus Instrument, each party hereto agrees that this
Terms Agreement will constitute a legal, valid and binding agreement by and
among such parties.

     All terms relating to the Trust or the Notes not otherwise included in
this Terms Agreement will be as specified in the Omnibus Instrument or Pricing
Supplement, as indicated herein.

     Section 2.07 Counterparts. This Terms Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

[Remainder of Page Left Intentionally Blank.]

D-2

 

SECTION E

COORDINATION AGREEMENT

     This COORDINATION AGREEMENT (this “Coordination Agreement”), dated as of
the date of the Pricing Supplement, is entered into by and among Principal Life
Insurance Company (“Principal Life”), Principal Financial Group, Inc. (“PFG”),
the Principal Life Income Fundings Trust specified in the Omnibus Instrument
(the “Trust”), Principal Financial Services, Inc. (“PFSI”), Bankers Trust
Company, N.A. and Citibank, N.A., as indenture trustee (the “Indenture
Trustee”).

W I T N E S S E T H

     WHEREAS, the Trust will enter into the Funding Agreement with Principal
Life dated as of the Original Issue Date specified in the Pricing Supplement;

     WHEREAS, PFG will issue a Guarantee to the Trust as of the Original Issue
Date specified in the Pricing Supplement, which will fully and unconditionally
guarantee the payment obligations of Principal Life under the Funding
Agreement;

     WHEREAS, the Purchasing Agent (as defined in the Distribution Agreement)
have agreed to sell the Notes in accordance with the Registration Statement;

     WHEREAS, the Trust intends to issue the Notes in accordance with the
Indenture, to collaterally assign to, and grant a security interest in, the
Funding Agreement and the Guarantee to and in favor of the Indenture Trustee in
accordance with the Indenture to secure payment of the Notes;

     WHEREAS, the Custodian will hold the Funding Agreement and the Guarantee
on behalf of the Indenture Trustee pursuant to the terms of the Custodial
Agreement; and

     WHEREAS, certain licensing arrangements between the Trust and PFSI will be
governed pursuant to the provisions of the License Agreement.

     NOW, THEREFORE, to give effect to the agreements and arrangements
established under the Terms Agreement included in the Omnibus Instrument, as
applicable, the Trust Agreement, the Indenture and the Notes, and in
consideration of the agreements and obligations set forth herein and for other
good and valuable consideration, the sufficiency of which are hereby
acknowledged, each party hereby agrees as follows:

ARTICLE 1

     Section 1.01 Delivery of the Funding Agreement and the Guarantee. The
Trust hereby authorizes the Custodian, on behalf of the Indenture Trustee, to
receive the Funding Agreement from Principal Life and the Guarantee from PFG
pursuant to the assignment of the Funding Agreement and Guarantee (the
“Assignment”), to be entered into on the Original Issue Date, included in the
closing instrument dated as of the Original Issue Date (the “Closing
Instrument”).

E-1

 

     Section 1.02 Issuance and Purchase of the Notes.

     (a) Delivery of the Funding Agreement and the Guarantee to the Custodian,
on behalf of the Indenture Trustee, pursuant to the Assignment or execution of
the cross receipt contained in the Closing Instrument shall be confirmation of
payment by the Trust for the Funding Agreement.

     (b) The Trust hereby directs the Indenture Trustee, upon receipt by the
Custodian, on behalf of the Indenture Trustee, of the Funding Agreement
pursuant to the Assignment and upon receipt by the Custodian, on behalf of the
Indenture Trustee, of the Guarantee, (i) to authenticate the certificates
representing the Notes (the “Notes Certificates”) in accordance with the
Indenture and (ii) to (A) deliver each relevant Notes Certificate to the
clearing system or systems identified in each such Notes Certificate, or to the
nominee of such clearing system, or the custodian thereof, for credit to such
accounts as the Purchasing Agent may direct, or (B) deliver each relevant Notes
Certificate to the purchasers thereof as identified by the Purchasing Agent.

ARTICLE 2

     Section 2.01 Directions Regarding Periodic Payments. As registered owner
of the Funding Agreement and the Guarantee as collateral securing payments on
the Notes, the Indenture Trustee will receive payments on the Funding Agreement
and the Guarantee on behalf of the Trust. The Trust hereby directs the
Indenture Trustee to use such funds to make payments on behalf of the Trust
pursuant to the Trust Agreement and the Indenture.

     Section 2.02 Maturity of the Funding Agreement. Upon the maturity of the
Funding Agreement and the return of funds thereunder, the Trust hereby directs
the Indenture Trustee to set aside from such funds an amount sufficient for the
repayment of the outstanding principal on the Notes and Trust Beneficial
Interest when due.

ARTICLE 3

     Section 3.01 Certificates. Principal Life hereby agrees to deliver an
Officer’s Certificate, a copy of which is attached hereto as Exhibit E, on a
quarterly basis to any rating agency currently rating the Program. The Trust
hereby agrees to deliver an Officer’s Certificate, a copy of which is attached
hereto as Exhibit F, on a quarterly basis to any rating agency currently rating
the Program.

     Section 3.02 Filings. Principal Life hereby covenants to file, or cause
to be filed, in a timely manner on behalf of the Trust all reports,
certifications or similar filings required under the Securities Exchange Act of
1934, as amended.

ARTICLE 4

     Section 4.01 No Additional Liability. Nothing in this Coordination
Agreement shall impose any liability or obligation on the part of any party to
this Coordination Agreement to make any payment or disbursement in addition to
any liability or obligation such party has under the Program Documents, except
to the extent that a party has actually received funds which it is obligated to
disburse pursuant to this Coordination Agreement.

E-2

 

     Section 4.02 No Conflict. This Coordination Agreement is intended to be
in furtherance of the agreements reflected in the documents related to the
Program Documents, and not in conflict. To the extent that a provision of this
Coordination Agreement conflicts with the provisions of one or more Program
Documents, the provisions of such Program Documents shall govern.

     Section 4.03 Governing Law. This Coordination Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to the principles of conflicts of laws thereof.

     Section 4.04 Severability. If any provision in this Coordination
Agreement shall be invalid, illegal or unenforceable, such provision shall be
deemed severable from the remaining provisions of this Coordination Agreement
and shall in no way affect the validity or enforceability of such other
provisions of this Coordination Agreement.

     Section 4.05 Severability. If any provision in this Coordination
Agreement shall be invalid, illegal or unenforceable, such provision shall be
deemed severable from the remaining provisions of this Coordination Agreement
and shall in no way affect the validity or enforceability of such other
provisions of this Coordination Agreement.

     Section 4.06 Notices. All demands, notices and communications under this
Coordination Agreement shall be in writing and shall be deemed to have been
duly given upon receipt at the addresses set forth below:

	 	 	 
	To the Trust:
	 	 
	 
	

	 	Principal Life Income Fundings
Trust (followed by the number set forth in the Omnibus Instrument)
	

	 	c/o U.S. Bank Trust National Association
	

	 	100 Wall Street, 16th Floor
	

	 	New York, New York 10005
	

	 	Attention: Corporate Trust Administration
	

	 	Telephone: (212) 361-2458
	

	 	Facsimile: (212) 809-5459 and (212) 509-3384
	 
	To the Indenture Trustee:
	 	 
	 
	

	 	Citibank, N.A.
	

	 	Citibank Agency & Trust
	

	 	388 Greenwich Street, 14th Floor
	

	 	New York, New York 10013
	

	 	Attention: Nancy Forte
	

	 	Telephone: (212) 816-5685
	

	 	Facsimile: (212) 816-5527

E-3

 

	 	 	 
	To Principal Life:

	 
	

	 	Principal Life Insurance Company
	

	 	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: (515) 235-9353
	 
	To PFG:

	 
	

	 	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: (515) 235-9353
	 
	To Principal Financial
Services, Inc.:
	 	 
	 
	

	 	Principal Financial Services, Inc.
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: General Counsel
	

	 	Telephone: (515) 247-5111
	

	 	Facsimile: (515) 248-3011

E-4

 

	 	 	 
	 	 	With a copy to:
	 	 
	 
	

	 	Principal Life Insurance Company
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: Jim Fifield
	

	 	Telephone: (515) 248-9196
	

	 	Facsimile: (515) 235-9353
	 
	To Bankers Trust Company, N.A:
	 	 
	 
	

	 	Bankers Trust Company, N.A.
	

	 	665 Locust Street
	

	 	Des Moines, Iowa 50309-3702
	

	 	Attention: Angela C. Brick
	

	 	Telephone: (515) 245-2820
	

	 	Facsimile: (515) 247-2101

or at such other address as shall be designated by any such party in a written
notice to the other parties.

ARTICLE 5

     Section 5.01 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to this Coordination Agreement will enter into this
Coordination Agreement by executing the Omnibus Instrument.

     By executing the Omnibus Instrument, each party hereto agrees that this
Coordination Agreement will constitute a legal, valid and binding agreement by
and among the Trust, Principal Life, PFG, PFSI, the Custodian and the Indenture
Trustee.

     All terms relating to the Trust or the Notes not otherwise included in
this Coordination Agreement will be as specified in the Omnibus Instrument or
Pricing Supplement, as indicated herein.

     Section 5.02 Acknowledgment. Principal Life hereby acknowledges Section
2.10 of the Indenture and Section 6.1 of the Custodial Agreement. The Trust
hereby acknowledges and agrees to the terms of the Custodial Agreement.

     Section 5.03 Counterparts. This Coordination Agreement, through the
Omnibus Instrument, may be executed in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.

     Section 5.04 Capitalized Terms. All capitalized terms used herein and not
otherwise defined in this Coordination Agreement will have the meanings set
forth in the Indenture.

[Remainder of Page Left Intentionally Blank.]

E-5

 

SECTION F

MISCELLANEOUS AND EXECUTION PAGES

     This Omnibus Instrument may be executed by each of the parties hereto in any number of
counterparts, and by each of the parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

     Each signatory, by its execution hereof, does hereby become a party to each of the agreements
or indenture identified for such party as of the date specified in such agreements or indenture.

     IN WITNESS WHEREOF, the undersigned have executed this Omnibus Instrument with respect to the
Notes as of the date first written above.

	 	 	 	 	 
	 	PRINCIPAL LIFE INSURANCE COMPANY (in executing below
agrees and becomes a party to (i) the Terms Agreement
set forth in Section D herein and (ii) the Coordination
Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Christopher P. Freese
 	 
	 	 	Name:  	Christopher P. Freese 	 
	 	 	Title:  	Officer 	 
	 
	 	PRINCIPAL FINANCIAL GROUP, INC. (in executing below
agrees and becomes a party to (i) the Terms Agreement
set forth in Section D herein and (ii) the Coordination
Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Elizabeth D. Swanson
 	 
	 	 	Name:  	Elizabeth D. Swanson 	 
	 	 	Title:  	Counsel 	 
	 
	 	PRINCIPAL FINANCIAL SERVICES, INC. (in executing below
agrees and becomes a party to (i) the License Agreement
set forth in Section B herein and (ii) the Coordination
Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Elizabeth D. Swanson
 	 
	 	 	Name:  	Elizabeth D. Swanson 	 
	 	 	Title:  	Counsel 	 
	 

[Execution Page 1 of 3]

 

 

	 	 	 	 	 
	 	THE PRINCIPAL LIFE INCOME FUNDINGS TRUST DESIGNATED IN
THIS OMNIBUS INSTRUMENT (in executing below agrees and
becomes a party to (i) the License Agreement set forth
in Section B herein, (ii) the Indenture set forth in
Section C herein, (iii) the Terms Agreement set forth
in Section D herein and (iv) the Coordination Agreement
set forth in Section E herein)

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

 	 
	 	By:  	/s/
Thomas E. Tabor
 	 
	 	 	Name:  	Thomas E. Tabor 	 
	 	 	Title:  	Vice President 	 
	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION (in executing
below agrees and becomes a party to the Trust Agreement
set forth in Section A herein), as Trustee

 	 
	 	By:  	/s/
Thomas E. Tabor
 	 
	 	 	Name:  	Thomas E. Tabor 	 
	 	 	Title:  	Vice President 	 
	 
	 	GSS HOLDINGS II, INC. (in executing below agrees and
becomes a party to the Trust Agreement set forth in
Section A herein), as Trust Beneficial Owner

 	 
	 	By:  	/s/ Andrew L. Stidd
 	 
	 	 	Name:  	Andrew L. Stidd 	 
	 	 	Title:  	President 	 
	 
	 	CITIBANK, N.A. (in executing below agrees and becomes a
party to (i) the Indenture set forth in Section C
herein, as Indenture Trustee, Registrar, Transfer
Agent, Paying Agent and Calculation Agent and (ii) the
Coordination Agreement set forth in Section E herein),
as Indenture Trustee, Registrar, Transfer Agent, Paying
Agent and Calculation Agent

 	 
	 	By:  	/s/ Nancy Forte
 	 
	 	 	Name:  	Nancy Forte 	 
	 	 	Title:  	Assistant Vice President 	 
	 

[Execution Page 2 of 3]

 

 

	 	 	 	 	 
	 	BANKERS TRUST COMPANY, N.A. (in executing below agrees
and becomes a party to the Coordination Agreement set
forth in Section E herein)

 	 
	 	By:  	/s/ Patty Ashbaugh
 	 
	 	 	Name:  	Patty Ashbaugh 	 
	 	 	Title:  	Vice President 	 
	 
	 	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (in
executing below agrees and becomes a party to the Terms
Agreement set forth in Section D herein)

 	 
	 	By:  	/s/ Sabina Ceddia
 	 
	 	 	Name:  	Sabina Ceddia 	 
	 	 	Title:  	Duly Authorized Attorney 	 
	 

[Execution Page 3 of 3]

 

 

INDEX OF EXHIBITS AND SCHEDULES TO THE OMNIBUS INSTRUMENT

	 	 	 
	Exhibit A

	 	Standard Trust Terms – Incorporated herein by reference to Exhibit
4.6 to Principal Life Insurance Company’s and Principal Financial
Group, Inc.’s Registration Statement on Form S-3 (Registration
Nos. 333-110499 and 333-110499-01).
	 
	 	 
	Exhibit B

	 	Standard License Agreement Terms – Incorporated herein by
reference to Exhibit 99.1 to Principal Life Insurance Company’s
Current Report on Form 8-K, filed on March 29, 2004.
	 
	 	 
	Exhibit C

	 	Standard Indenture Terms – Incorporated herein by reference to
Exhibit 4.1 to Principal Life Insurance Company’s and Principal
Financial Group, Inc.’s Registration Statement on Form S-3
(Registration Nos. 333-110499 and 333-110499-01).
	 
	 	 
	Exhibit D

	 	Pricing Supplement – Incorporated herein by reference to the
Pricing Supplement with respect to Principal Life Income Fundings
Trust 2005-13, filed on February 14, 2005, with the Securities and
Exchange Commission pursuant to Rule 424(b)(5) under the
Securities Act of 1933, as amended.
	 
	 	 
	Exhibit E

	 	Principal Life Insurance Company Officer’s Certificate
	 
	 	 
	Exhibit F

	 	Principal Life Income Fundings Trusts Trustee Officer’s Certificate
	 
	 	 
	Schedule I

	 	Terms Agreement Specifications

 

 

EXHIBIT E

Principal Life Insurance Company

Officer’s Certificate

     The undersigned, an officer of Principal Life Insurance Company, an Iowa
stock life insurance company (“Principal Life”), does hereby certify to
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc., in such capacity and on behalf of Principal Life, to the knowledge of the
undersigned and after reasonable inquiry, that:

	 	 	 
	1.

	 	each of the representations and warranties of Principal Life
contained in each Expense and Indemnity Agreement entered into in
connection with the Registration Statement (defined below), and each
Funding Agreement issued in connection with the Program (the
“Specified Agreements”) (other than any representation or warranty
expressly made as of a date prior to the date hereof) are true and
correct on and as of the date hereof, with the same effect as though
such representation or warranty had been made on and as of the date
hereof;
	 
	2.

	 	no default under any of the Specified Agreements and no event
or any condition which, with notice or lapse of time or both, would
become a default, has occurred and is continuing as of the date
hereof;
	 
	3.

	 	Principal Life has performed and complied with, respectively,
in all material respects, all of the agreements, covenants,
obligations and conditions applicable to Principal Life required by
the Specified Agreements to be performed or complied with by
Principal Life on or before the date hereof;
	 
	4.

	 	the Registration Statement filed on Form S-3 (File Nos.
333-110499 and 333-110499-01) (the “Registration Statement”) by
Principal Life and Principal Financial Group, Inc. has been declared
effective by the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the
“Act”) and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been commenced by or are pending before or contemplated
by the Commission;
	 
	5.

	 	all filings, if any, required by Rule 424 and Rule 430A under
the Act have been made in a timely manner;
	 
	6.

	 	since
     , the Trusts organized in connection with the
program contemplated by the Registration Statement have issued the
following series of Notes:
	 
	

	 	[List each series of Notes.] [(collectively, the “Designated Notes”)]; and
	 
	7.

	 	the Funding Agreements issued in connection with the Designated
Notes have been executed and delivered by Principal Life in accordance
with the terms and conditions of the Program Documents.

E-1

 

          Capitalized terms used herein and not otherwise defined herein shall have the meanings set
forth in the Standard Indenture Terms attached as Exhibit 4.1 to the
Registration Statement.

     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
the • day of •, 200•.

	 	 	 
	

	[Name], [in his/her] capacity as an
authorized officer of Principal Life
	 
	 	By:
	 
	 	 	

	

	 	Name:
	

	 	Title:

	 	 	 	 	 

E-2

 

EXHIBIT F

Principal Life Income Fundings Trusts

Trustee Officer’s Certificate

     U.S. Bank Trust National Association, not in its individual capacity but
solely in its capacity as trustee acting on behalf of each common law trust
organized under the laws of the State of New York (in such capacity, the
“Trustee,” and each such common law trust being referred to herein as, a
“Trust”) in connection with the program contemplated by Registration Statement
Nos. 333-110499 and 333-110499-01 filed on Form S-3 (the “Registration
Statement”) by Principal Life Insurance Company and Principal Financial Group,
Inc. with the Securities and Exchange Commission, does hereby certify to
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc., in such capacity and on behalf of each Trust, to the knowledge of the
Trustee, that:

	 	 	 
	1.

	 	each of the representations and warranties of each Trust
contained in the Notes issued in connection with the Program, each
Indenture entered into in connection with the Registration Statement
and the Expense and Indemnity Agreement concerning the Trusts (the
“Specified Agreements”) (other than any representation or warranty
expressly made as of a date prior to the date hereof) are true and
correct on and as of the date hereof, with the same effect as though
such representation or warranty had been made on and as of the date
hereof;
	 
	2.

	 	no default under any of the Specified Agreements and no event
or any condition which, with notice or lapse of time or both, would
become a default, has occurred and is continuing as of the date
hereof;
	 
	3.

	 	each Trust has performed and complied with, respectively, in
all material respects, all of the agreements, covenants, obligations
and conditions applicable to such Trust required by the Specified
Agreements to be performed or complied with by such Trust on or
before the date hereof;
	 
	4.

	 	the Notes issued in connection with the Program, have been
issued, in all material respects, in accordance with the terms and
conditions of the Program Documents; and
	 
	5.

	 	each Funding Agreement has been executed and delivered by the
related Trust in accordance with the terms and conditions of the
Program Documents.

     Capitalized terms used herein and not otherwise defined herein shall have
the meanings set forth in the Standard Indenture Terms attached as Exhibit 4.1
to the Registration Statement. In no event shall U.S. Bank Trust National
Association in its personal corporate capacity have any liability for any of
the certifications or statements contained in this Trustee Officer’s
Certificate, such liability being solely that of each Trust.

F-1

 

     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
the • day of •, 200•.

	 	 	 
	

	 	U.S. Bank Trust National Association, not
in its capacity but solely in its capacity
as Trustee acting on behalf of each Trust
	 
	 	By:
	 
	 	 	

	

	 	Name:
	

	 	Title:

F-2

 

SCHEDULE I

Terms Agreement Specifications

     In connection with Section 3(a)(iv) of the Distribution Agreement, the
Program under which the Notes are issued is rated Aa2 by Moody’s Investors
Service, Inc. (“Moody’s”) and AA by Standard & Poor’s Rating Services, a
division of The McGraw-Hill Companies, Inc. (“S&P”). Principal Life and PFG
expect that the Notes will be rated Aa2 by Moody’s. The Company’s financial
strength rating is Aa2 by Moody’s and AA by S&P.

     In accordance with Section 2.02(b) of the Terms Agreement and in
connection with the purchase of Notes from the Trust by the Purchasing Agent as
principal, the following items will be delivered on the Settlement Date:

	 	•	 	Opinion of Sidley Austin Brown & Wood LLP regarding the
enforceability of the Guarantee and the Notes.

     All capitalized terms used herein and not otherwise defined herein will
have the meanings set forth in the Distribution Agreement.

I-1exv10w1

 

EXHIBIT 10.1

SHAREHOLDER AGREEMENT

     This Shareholder Agreement, dated February 15, 2005 (this “Agreement”), by and between GenCorp
Inc., an Ohio corporation (the “Company”), and Steel Partners II, L.P., a Delaware limited
partnership (“Steel”), for itself and its Affiliates (collectively, “Shareholder”).

RECITALS

     A. As of the date of this Agreement, Shareholder Beneficially Owns 3,973,100 shares (the
“Owned Shares”) of Common Stock, par value $0.10 per share, of the Company (the “Common Shares”).

     B. The Company and Shareholder desire to provide for certain agreements with respect to the
election of directors, the release of certain Claims, the Common Shares Beneficially Owned by
Shareholder and other matters.

     NOW, THEREFORE, in consideration of the covenants herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and
Shareholder hereby agree as follows:

SECTION 1. DEFINITIONS

     1.1 Certain Definitions. In addition to any other terms defined in this Agreement,
for purposes of this Agreement, the following terms have the following meanings when used herein
with the initial capital letters:

         
      (a) “Affiliate” has the meaning ascribed thereto in Rule 12b-2 under the Exchange Act.

         
      (b) “Associate” has the meaning ascribed thereto in Rule 12b-2 under the Exchange Act.

      
         (c) “Beneficial Owner” and “Beneficially Own” are defined in accordance with the term
“beneficial ownership” as defined in Rule 13d-3 under the Exchange Act, and a Person will also be
deemed to be the Beneficial Owner of, and to Beneficially Own, Common Shares that such Person or
any Affiliate of such Person has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights, warrants, options or
otherwise.

       
        (d) “Board” means the Directors of the Company in their capacity as such.

 

       
        (e) “Claim” means any action, claim, complaint, right or cause of action, debt, demand or suit
of any kind or nature whatsoever, statutory, equitable or legal, foreseen or unforeseen, known or
unknown, matured or unmatured.

        
       (f) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.

       
        (g) “Holding Period” means the period beginning on the date of this Agreement and ending on
February 15, 2007, provided, however, the Holding Period will end on February 15,
2006 if Shareholder irrevocably waives its rights under Section 2.2 hereof in writing on or
prior to December 31, 2005 (such waiver, the “Holding Period Termination Notice”).

       
        (h) “Independent Director” means an individual (1) who qualifies as an “independent director”
of the Company under the rules of the New York Stock Exchange, as such rules may be amended,
supplemented or replaced from time to time, and (2) who is not an Affiliate or an Associate of
Shareholder.

         
      (i) “New Director” means an individual who qualifies as an Independent Director and is a
recognized corporate governance expert elected or nominated for election by the Board based on the
recommendation of the Board’s nominating committee (the “Nominating Committee”) following
consultation with Steel.

         
      (j) “Observer” means Warren G. Lichtenstein or Jack L. Howard or if both Messrs. Lichtenstein
or Howard cease to serve as an Observer or to be affiliated with the general partner of Steel (the
“Steel GP”) for any reason, any senior executive of the Steel GP designated by Shareholder and
reasonably acceptable to the Company after consultation with the Nominating Committee.

        
       (k) “Person” has the meaning given to such term in Section 3(a)(9) of the Exchange
Act, as supplemented by the rules and regulations thereunder.

         
      (l) “2005 Annual Meeting” means the annual meeting of the Company’s shareholders to be held
during the 2005 calendar year, and the “2006 Annual Meeting” and “2007 Annual Meeting” mean the
annual meetings of shareholders of the Company in the consecutive calendar years.

SECTION 2. DIRECTORS; GOVERNANCE; SHAREHOLDER PROPOSALS

     2.1 New Director. The Company will seek in good faith to identify and cause to be
elected a New Director as promptly as reasonably practicable. In connection therewith, Steel may
nominate individuals for consideration by the Nominating Committee, and the Company will consult in
good faith with Steel prior to the initial appointment of the New Director. If a New Director has
not been elected to the Board by June 30, 2005, then, notwithstanding any other provision hereof
(but subject to Section 7.10), upon notice from Shareholder this Agreement will terminate.

2

 

     2.2 Observer. (a) During the Holding Period, the Observer will (1) receive copies of
all notices and written information furnished to the Board at substantially the same time they are
so furnished, (2) be permitted to be present at all meetings of the Board (whether by phone or in
person), subject to the Chairman of the Board’s (the “Chairman”) right to exclude the Observer from
being present at any executive session of the Board, any session in which the chief executive
officer is excused and at any session during which matters that the Chairman determines in good
faith that Shareholder has an interest that is in addition to or different from the interests of
the Company’s shareholders generally, and (3) be reimbursed for all out-of-pocket expenses incurred
in attending any such meeting on the same basis as the Directors of the Company, but not be
entitled to Directors’ fees or other compensation in connection therewith.

               (b) Shareholder (1) acknowledges that the U.S. securities laws prohibit any person who has
access to material nonpublic information from trading while in possession of such information or
providing that information to others in certain circumstances, and agrees to comply with these
requirements, and (2) will maintain in strict confidence all nonpublic information it receives
whether by virtue of this Section 2.2 or otherwise; provided, however, that
nothing in this clause (2) will prohibit Shareholder from disclosing any such information to its
attorneys, accountants or financial or other advisors in connection with its assessment of its
investment in the Company. Shareholder will cause all such Persons to maintain the confidentiality
of information as if they were direct parties hereto and be responsible for any failure by any such
Person to do so.

               (c) Shareholder hereby withdraws all of its prior proposals under Rule 14a-8 under the
Exchange Act, including without limitation Steel’s November 2, 2004 shareholder proposals
thereunder (the “11-2-04 Proposal”).

     2.3 Voting. At any meeting of shareholders at which directors are to be elected
during the Holding Period (including at the 2005 Annual Meeting and, if applicable, the 2006 Annual
Meeting), Shareholder shall take such action as may be required so that all Common Shares
Beneficially Owned by Shareholder as of the record dates for such meetings are voted for the
election of the slate of nominees for election to the Board selected by a majority of the
directors.

     2.4 Quorum. A representative or representatives of Shareholder will be present, in
person or by proxy, at any meeting of shareholders of the Company during the Holding Period so that
all Common Shares Beneficially Owned by Shareholder may be counted for the purpose of determining
the existence of a quorum at such meeting.

     2.5 Governance Structures; Committees. During the Holding Period, (a) the Company
agrees to take such steps as are necessary to establish or designate a committee comprised solely
of Independent Directors, including the New Director, to conduct an annual review of the Company’s
governance structures, including its constituent documents and the matters referenced in the
11-2-04 Proposal, and (b) the

3

 

number of directors will not exceed ten. The 2006 Annual Meeting and 2007 Annual Meeting will
be held no earlier than February 16th of the relevant year.

SECTION 3. RELEASES

     3.1 Company Release. The Company, on behalf of itself, its directors, officers,
employees, representatives and agents, (collectively, the “Company Releasors”) does hereby, fully
and forever, release and discharge Shareholder, its partners, directors, officers, employees,
attorneys, representatives and agents (collectively, the “Shareholder Releasees”) from any and all
Claims that the Company Releasors have, may have or might claim to have against the Shareholder
Releasees through the date hereof.

     3.2 Shareholder Release. The Shareholder, on behalf of itself, its partners,
directors, officers, employees, representatives and agents, (collectively, the “Shareholder
Releasors”) does hereby, fully and forever, release and discharge the Company, its directors,
officers, employees, attorneys, representatives and agents (collectively, the “Company Releasees”)
from any and all Claims that the Shareholder Releasors have, may have or might claim to have
against the Company Releasees through the date hereof.

     3.3 No Admission of Liability, Etc. The releases provided for herein are given and
received for the purpose of compromising disputed claims. The giving and receiving of such
releases are not, and may not be construed to be, admissions of liability on the part of any Person
but are made for the purpose of terminating among the parties hereto all disputes and any other
actions or causes of action of every kind and nature, legal or equitable, relating to or arising
out of Steel’s letter to the Company dated November 11, 2004. Notwithstanding any other provision
hereof, the Company’s release in Section 3.1 does not constitute a release of, or otherwise
effect, any claim by or on behalf of any shareholder of the Company; provided that (a) the Company
will not of its own volition assist any shareholder in asserting any such claim, and (b)
Shareholder will not of its own volition assist any other Person in asserting any claim against any
Company Releasee.

SECTION 4. AGREEMENTS REGARDING VOTING AND SECURITIES

     During the Holding Period and for 10 calendar days thereafter:

     4.1 Acquisition of Securities. Shareholder may not (and may not enter into any
discussions or arrangements with any Person to), directly or indirectly, acquire, or offer or
propose to acquire, Beneficial Ownership of any Common Shares or securities convertible into or
exercisable or exchangeable for Common Shares (“Convertible Securities”), in each case now or
hereafter outstanding (collectively, “Securities,” and all Securities Beneficially Owned by
Shareholder, including the Owned Shares, being referred to herein as “Restricted Securities”), if
the effect of such acquisition would be to increase the aggregate Beneficial Ownership of
Restricted Securities of Shareholder

4

 

to 19.9% or more of the total number of Common Shares then outstanding (the “Percentage
Limitation”).

     4.2 Proxy Solicitations. Subject to Section 4.10, Shareholder may not (and
may not enter into any discussions or arrangements with any Person to), directly or indirectly,
solicit proxies or initiate, propose or become a “participant” in a “solicitation” (as such terms
are defined in Regulation 14A under the Exchange Act) in opposition to any matter that has been
recommended by a majority of the directors of the Company or in favor of any matter that has not
been approved by a majority of the directors of the Company or seek to advise, encourage or
influence any Person with respect to the voting of Securities in such manner, or initiate or
encourage or attempt to encourage any Person to initiate, any shareholder proposal relating to the
Company.

     4.3 Group Participation. Subject to Section 4.10, Shareholder may not (and
may not enter into any discussions or arrangements with any Person to) form, join or in any way
participate in a group (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to
any securities of the Company, including for the purpose of acquiring, holding, voting or disposing
of Securities, except as otherwise required by this Agreement.

     4.4 Voting Trust or Arrangement. Shareholder may not deposit any Restricted
Securities in a voting trust or subject any Restricted Securities to any arrangement or agreement
with respect to the voting of such Restricted Securities unless such voting trust, arrangements or
agreements comply with and are subject to the provisions of this Agreement.

     4.5 Shareholder List. Subject to Section 4.10, without the express prior
written approval of the Company, Shareholder may not, directly or indirectly, seek, request or
obtain, or assist any other Person in seeking, requesting or obtaining, the stock ledger, any list
of security holders of the Company or any other books and records of the Company.

     4.6 Shareholder Meetings. Subject to Section 4.10, without the express prior
written approval of the Company, Shareholder will not, directly or indirectly, call or seek to have
called, or assist any other Person in calling or seeking to call, any special meeting of the
shareholders of the Company for any reason or execute any written consent with respect to the
Company’s Securities.

     4.7 Other Transactions. Shareholder may not, no director or executive officer of
Shareholder may, and Shareholder will cause its other officers, employees or agents (including
investment bankers) not to, (i) induce or attempt to induce or give encouragement to any Person, or
enter into any serious substantive discussions or negotiations with any Person, in furtherance of
any tender offer, merger or any other form of business acquisition or combination transaction in
which Securities would be acquired or (ii) make any public announcement with respect to, or submit
any proposal for, the acquisition of Beneficial Ownership of any Securities if the effect of such
acquisition would be to cause the Beneficial Ownership of Shareholder to exceed the

5

 

Percentage Limitation, or for or with respect to any extraordinary transaction or merger,
consolidation, sale of substantial assets or business combination involving the Company or any of
its Affiliates, whether or not any Persons other than partners or members of Shareholder are
involved and whether or not such proposal might require the making of a public announcement by the
Company (“Business Combination”); provided, however, that nothing in this
Section 4.7 will, or will be construed, directly or indirectly, to limit any rights of
Shareholder to offer, sell or otherwise dispose of shares of Restricted Securities pursuant to any
transaction effected in accordance with Section 4.8. Subject to Section 4.10,
Shareholder may not, no director or executive officer of Shareholder may, and Shareholder will
cause its other officers, employees or agents (including investment bankers) not to, (x) without
the prior written consent of the Company signed by the Chairman or CEO, propose any individual for
election to the Board or submit any shareholder proposal to the Company, (y) without the prior
written consent of the Chairman or CEO, seek the removal of any Director of the Company, or (z)
otherwise act alone or in concert with others to seek to control or influence the management or
policies of the Company or any of its Affiliates, including, without limitation, taking any action
to seek to obtain representation on the Board or the board of directors of any Affiliate of the
Company or to seek the removal of any director or a change in the size of the Board or the board of
directors of any Affiliate of the Company. Subject to Section 4.10, Shareholder will not,
directly or indirectly, enter into any discussions or arrangements with any Person with respect to
any of the agreements set forth in this Section 4.7; provided, however,
that (a) nothing herein will prohibit Shareholder from making a proposal to the Board to enter into
a Business Combination that (1) is made confidentially and not publicly disclosed, whether in a
press release, SEC filing or otherwise, (2) is expressly conditioned on the continuing maintenance
of its confidentiality and is not intended to, or made in circumstances in which it could
reasonably be expected to, result in its public disclosure by the Company, and (3) is subject to
approval by the Board, and (b) this Section 4.7 will terminate (i) on the date of any
public announcement by the Company that the Company is negotiating a Business Combination with a
third party to the date such negotiations cease, or (ii) following the public announcement by the
Company that it has entered into an agreement for a Business Combination with a third party.

     4.8 Dispositions. (a) Except as otherwise permitted by this Agreement or with the
express prior written approval of the Company, Shareholder may not (and may not enter into any
discussions or arrangements with any Person to), directly or indirectly, offer, sell, dispose of,
transfer or hypothecate (“Transfer”) any Restricted Securities other than a Permitted Transfer or
in privately negotiated transactions in which Restricted Securities are not Transferred to any
other Person or group who or which would immediately thereafter, to the actual knowledge of
Shareholder after reasonable inquiry, Beneficially Own more than 5% of the total number of Common
Shares then outstanding or in open market transactions.

               (b) The term “Permitted Transfer” will mean and include any of the following: (i) any Transfer
to or through a nationally recognized broker-dealer so long as there is no agreement, understanding
or knowledge as to the identity of the purchaser(s); (ii) any Transfer pursuant to a transaction
effected on the floor of the New

6

 

York Stock Exchange or any other national exchange, Nasdaq, or any inter-dealer quotation
system in which Shareholder has no knowledge that the purchaser is a person who, after giving
effect to such Transfer, would beneficially own 5% or more of the outstanding Common Shares; or
(iii) any Transfer pursuant to a tender or exchange offer.

     4.9 Amendment and Waiver. Shareholder may not (and may not enter into any discussions
or arrangements with any Person to), directly or indirectly, request that the Company (or any of
its officers, directors, representatives, trustees, employees, attorneys, advisers, agents,
Affiliates or associates) waive, amend or modify in any material respect any restrictions contained
in this Agreement (or waive, amend or modify this Section 4.9), it being understood that no
request whatsoever may be made that (a) is disclosed, or is required to be disclosed, by
Shareholder to any Person or in any filing under the Exchange Act (including, without limitation,
under Section 13(d) thereof) or (b) the Company might be required to publicly disclose.

     4.10 Permitted Activity. Nothing contained in this Agreement shall limit Shareholder
from taking any of the actions otherwise prohibited in Sections 4.2 or 4.5 of this Agreement in
connection with any annual or special meeting of shareholders scheduled to take place at any time
following the expiration of the Holding Period (including the 2006 Annual Meeting or 2007 Annual
Meeting, as applicable, if Shareholder has given the Holding Period Termination Notice by December
31, 2005), including, without limitation, nominating directors requesting a shareholder list and
related information, or taking any other action related to the solicitation of proxies or written
consents or making any public filings or announcements in furtherance thereof.

     4.11 Other Requirements. For the avoidance of doubt, the covenants in this Agreement,
including without limitation this Section 4, are not intended to be and will not be interpreted as
being an approval by the Board of any acquisition of stock by Steel Partners or its Affiliates for
purposes of any provision of Ohio law.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to Shareholder as follows:

     5.1 Corporate Existence of, and Due Authorization and Execution by, the Company. The
Company is a corporation duly organized, validly existing and in good standing under the laws of
the State of Ohio, with full corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder, and to consummate the transactions contemplated hereby. This
Agreement and the consummation of the transactions contemplated hereby have been duly authorized by
all necessary corporate action of the Company. This Agreement has been duly executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.

7

 

     5.2 No Conflicts. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby do not conflict with, or result in any violation of or
default under, any provision of the Amended Articles of Incorporation or Amended Code of
Regulations of the Company.

SECTION 6. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER

     Shareholder represents and warrants to the Company as follows:

     6.1 Existence of, and Due Authorization and Execution by, Shareholder. Shareholder is
a limited partnership duly organized, validly existing, and in good standing under the laws of the
State of Delaware, with full power and authority to execute and deliver this Agreement, to perform
its obligations hereunder, and to consummate the transactions contemplated hereby. This Agreement
and the consummation of the transactions contemplated hereby have been duly authorized by all
necessary action of Shareholder. This Agreement has been duly executed and delivered by
Shareholder and constitutes a legal, valid and binding obligation of Shareholder, enforceable
against Shareholder in accordance with its terms.

     6.2 No Conflicts. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby do not conflict with, or result in any violation of or
default under, any provision of any partnership agreement or other constituent documents of
Shareholder or of any agreement or instrument binding upon Shareholder.

     6.3 Beneficial Ownership of Common Shares. As of the date of this Agreement, (a)
Shareholder Beneficially Owns the Owned Shares and no other Securities, and (b) to the actual
knowledge of Shareholder, no Affiliate of Shareholder Beneficially Owns any Securities.

SECTION 7. MISCELLANEOUS

     7.1 Specific Enforcement. The parties acknowledge that the Company would be
irreparably damaged in the event any provision of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed that the Company will
be entitled to an injunction or injunctions to prevent breaches of this Agreement and to
specifically enforce this Agreement and the terms and provisions thereof in any action instituted
in any court of the United States or any state thereof having subject matter jurisdiction, in
addition to any other remedy to which the Company may be entitled, at law or in equity.

     7.2 Modification; Waiver. (a) This Agreement may be modified in any manner and at any
time by written instrument executed by the parties and (b) any of the terms, covenants and
conditions of this Agreement may be waived at any time by the party entitled to the benefit of such
term, covenant or condition.

8

 

     7.3 Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing and will be delivered by electronic transmission:

	 	 	 	 	 
	

	 	(a)
	 	if to the Company, to:
	 
	 	 	 	 
	

	 	 	 	GenCorp Inc.
	

	 	 	 	Highway 50 and Aerojet Road
	

	 	 	 	Rancho Cordova, California 95670
	

	 	 	 	Facsimile: (916) 351-8665
	

	 	 	 	Attention: Mark A. Whitney, Vice President, Deputy General Counsel
and Assistant Secretary
	

	 	 	 	Email: mark.whitney@gencorp.com
	 
	 	 	 	 
	

	 	 	 	with a copy to:
	 
	 	 	 	 
	

	 	 	 	Jones Day
	

	 	 	 	222 East 41st Street
	

	 	 	 	New York, New York 10017
	

	 	 	 	Facsimile: (212) 755-7306
	

	 	 	 	Attention: Robert A. Profusek, Esq.
	

	 	 	 	Email: raprofusek@jonesday.com
	 
	 	 	 	 
	

	 	(b)
	 	if to Shareholder, to:
	 
	 	 	 	 
	

	 	 	 	Steel Partners II, L.P.
	

	 	 	 	590 Madison Avenue
	

	 	 	 	32nd Floor
	

	 	 	 	New York, New York 10022
	

	 	 	 	Facsimile: (212) 758-5789
	

	 	 	 	Attention: Warren G. Lichtenstein
	

	 	 	 	Email: warren@steelpartners.com
	 
	 	 	 	 
	

	 	 	 	with a copy to:
	 
	 	 	 	 
	

	 	 	 	Olshan Grundman Frome Rosenzweig & Wolosky LLP
	

	 	 	 	Park Avenue Tower
	

	 	 	 	65 East 55th Street
	

	 	 	 	New York, New York 10022
	

	 	 	 	Facsimile: (212) 451-2222
	

	 	 	 	Attention: Steven Wolosky, Esq.
	

	 	 	 	Email: swolosky@olshanlaw.com

               (c) or, in each case, at such other address or to such other Person as may be specified in
writing to the other party.

               (d) Notwithstanding any other provision hereof, any Holding Period Termination Notice will be
operative for purposes of this Agreement only if it is given in

9

 

accordance with this Section and expressly states that it is effective when delivered as
herein provided.

     7.4 Parties in Interest; Assignment. This Agreement and all the provisions hereof are
binding upon and will inure to the benefit of the parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests and obligations
hereunder may be assigned or delegated by either party without the prior written consent of the
other party. Nothing in this Agreement, whether expressed or implied, may be construed to give any
Person other than the parties any legal or equitable right, remedy or claim under or in respect of
this Agreement.

     7.5 Counterparts. This Agreement may be executed in one or more counterparts, all of
which will constitute one and the same instrument.

     7.6 Headings; References. The section headings of this Agreement are for convenience
of reference only and will not be deemed to alter or affect the meaning or interpretation of any
provisions hereof. Unless otherwise specified, references to “Sections” are to Sections of this
Agreement.

     7.7 Governing Law, Etc. This Agreement is governed by and construed in accordance
with the internal laws of the State of New York applicable to contracts made and to be performed
therein, without regard to the conflict of laws principles. Each party submits to exclusive
jurisdiction and venue of federal or state courts in New York, New York and agrees not to institute
litigation in any other forums in respect of the interpretation or enforcement of this Agreement
(except for proceedings to obtain enforcement of an order of a New York, New York federal or state
court).

     7.8 Severability. If one or more of the provisions of this Agreement are held by a
court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the
provisions of this Agreement will remain in full force and effect.

     7.9 Press Release. Immediately following the execution and delivery of this
Agreement, the Company and Shareholder shall issue the joint press release attached hereto as
Schedule A (the “Press Release”). None of the parties hereto will knowingly make any public
statements (including in any filing with the Securities and Exchange Commission or any other
regulatory or governmental agency, including any stock exchange) that are inconsistent in any
material respect with the statements in the Press Release issued pursuant to this Section
7.9. Following the date hereof, Shareholder shall not issue or cause the publication of any
press release or other public announcement with respect to this Agreement, the Company, its
management or the Board or the Company’s business without prior written consent of the Company;
provided, however, that Shareholder may file an amendment to its Schedule 13D with
respect to its investment in the Company and either party may otherwise make such public
announcements as its counsel reasonably determines are required by law as a result of a statement,
fact or development that itself does not breach or conflict with the terms of this Agreement so
long as the other party is afforded reasonable advance notice thereof and an opportunity to comment
on the form and substance thereof.

10

 

     7.10 Survival. Sections 2.2(b) and 3 will survive the termination of this Agreement
and/or the expiration of the Holding Period.

     7.11 Expenses. Promptly after the receipt of reasonable substantiating documentation,
the Company will reimburse the Shareholder for up to $50,000 of its reasonable costs and expenses
incurred in connection with its negotiation of this Agreement.

[Signatures on following page]

11

 

     IN WITNESS WHEREOF, each party has caused its respective duly authorized representative to
execute this Shareholder Agreement as of the date first above written.

	 	 	 	 	 
	 	 	GENCORP INC.
	 
	 	 	 	 
	

	 	By:     	      /s/ Terry L. Hall	 	 
	

	 	 	 	 
	

	 	 	 	Terry L. Hall, Chairman of the Board,

	

	 	 	 	Chief Executive Officer and President
	 
	 	 	 	 
	 	 	STEEL PARTNERS II, L.P.
	 
	 	 	 	 
	 	 	By: Steel Partners, L.L.C., its General Partner
	 
	 	 	 	 
	

	 	By:     	      /s/ Warren G. Lichtenstein	 	 
	

	 	 	 	 
	

	 	 	 	Warren G. Lichtenstein, Managing Member

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