Exhibit 1.2
SAFECO CORPORATION
DEBT SECURITIES
UNDERWRITING AGREEMENT
January 27, 2003
Xxxxxxx, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Banc of America Securities LLC,
0 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
X.X. Xxxxxx Securities Inc.,
000 Xxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
U.S. Bancorp Xxxxx Xxxxxxx Inc.,
000 XX Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxx, Xxxxxx 00000.
Ladies and Gentlemen:
From time to time SAFECO Corporation, a Washington corporation (the
"Company"), proposes to enter into one or more Pricing Agreements (each, a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, to issue and sell to the firms named in
Schedule I to the applicable Pricing Agreement (such firms constituting the
"Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain of its debt securities (the "Securities"), some of
which, if so designated, may be convertible into shares of its Common Stock (the
"Issuable Shares", and such securities, the "Convertible Securities"), specified
in Schedule II to such Pricing Agreement (with respect to such Pricing
Agreement, the "Designated Securities"), less the principal amount of Designated
Securities covered by Delayed Delivery Contracts, if any, as provided in Section
3 hereof and as may be specified in Schedule II to such Pricing Agreement (with
respect to such Pricing Agreement, any Designated Securities to be covered by
Delayed Delivery Contracts are herein sometimes referred to as "Contract
Securities" and the Designated Securities to be purchased by the Underwriters
(after giving effect to the deduction, if any, for Contract Securities) are
herein sometimes referred to as "Underwriters' Securities").
The terms and rights of any particular issuance of Designated Securities
shall be as specified in the Pricing Agreement relating thereto and in or
pursuant to the indenture (the "Indenture") identified in such Pricing
Agreement.
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1. Particular sales of Designated Securities may be made from time to time
to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to purchase any of the
Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial public
offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the principal amount of such Designated Securities to be
purchased by each Underwriter and whether any of such Designated Securities
shall be covered by Delayed Delivery Contracts (as defined in Section 3 hereof)
and whether any such Designated Securities are Convertible Securities and shall
set forth the date, time and manner of delivery of such Designated Securities
and payment therefor. The Pricing Agreement shall also specify (to the extent
not set forth in the Indenture and the registration statement and prospectus
with respect thereto) the terms of such Designated Securities. A Pricing
Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communications
or any other rapid transmission device designed to produce a written record of
communications transmitted. The obligations of the Underwriters under this
Agreement and each Pricing Agreement shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-102298)(the
"Initial Registration Statement"), in respect of the Securities and, in
the case of Convertible Securities, the Issuable Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered or to be delivered to the
Representatives and, excluding exhibits to the Initial Registration
Statement, but including all documents incorporated by reference in the
prospectus included therein, to the Representatives for each of the other
Underwriters have been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the
offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which
became effective upon filing, no other document with respect to the
Initial Registration Statement or document incorporated by reference
therein has heretofore been filed, or transmitted for filing, with the
Commission (other than prospectuses filed pursuant to Rule 424(b) of the
rules and regulations of the Commission under the Act, each in the form
heretofore delivered to the Representatives); and no stop order suspending
the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose has
been initiated or threatened by the Commission (any
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preliminary prospectus included in the Initial Registration Statement or
filed with the Commission pursuant to Rule 424(a) under the Act, is
hereinafter called a "Preliminary Prospectus"; the various parts of the
Initial Registration Statement, any post-effective amendment thereto and
the Rule 462(b) Registration Statement, if any, including all exhibits
thereto and the documents incorporated by reference in the prospectus
contained in the Initial Registration Statement at the time such part of
the Initial Registration Statement became effective but excluding any Form
T-1, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statement"; the prospectus relating
to the Securities, in the form in which it has most recently been filed,
or transmitted for filing, with the Commission on or prior to the date of
this Agreement, is hereinafter called the "Prospectus"; any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to the applicable form under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any reference to
any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment to the Initial Registration Statement shall be deemed to refer
to and include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the Initial
Registration Statement that is incorporated by reference in the
Registration Statement; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as amended or
supplemented in relation to the applicable Designated Securities in the
form in which it is filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof, including any
documents incorporated by reference therein as of the date of such
filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter of
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Designated Securities through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Company by an Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Securities;
(d) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus; and, since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company and
its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Washington,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing (or the local equivalent) under the laws of each
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, except where the failure so
to qualify or to be in good standing would not individually or in the
aggregate have a material adverse effect on the current or future general
affairs, management, financial position, shareholders' equity or results
of operations of the Company and its subsidiaries, taken as a whole;
(f) Each "significant subsidiary" of the Company (as such term is
defined in Rule 1-02 of Regulation S-X) as of the date of this Agreement
is identified on Annex IV hereto (each a "Significant Subsidiary" and
collectively, the "Significant Subsidiaries") and the Company has no other
subsidiary that constitutes a "significant subsidiary" within such Rule
1-02 definition; each Significant Subsidiary has been duly organized and
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, with power and authority (corporate
and other) to own its
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properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing (or the local equivalent) under the laws
of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, except where
the failure so to qualify or to be in good standing would not individually
or in the aggregate have a material adverse effect on the current or
future general affairs, management, financial position, shareholders'
equity or results of operations of the Company and its subsidiaries, taken
as a whole;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
and each Significant Subsidiary have been duly and validly authorized and
issued and are fully paid and non-assessable; and, except as otherwise set
forth in the Prospectus, all of the issued shares of capital stock of the
Significant Subsidiaries are owned by the Company either directly or
through wholly-owned subsidiaries free and clear of any perfected security
interest or any other security interests, claims, liens, or encumbrances;
(h) The Securities have been duly authorized, and, when Designated
Securities are issued and delivered pursuant to this Agreement and the
Pricing Agreement with respect to such Designated Securities and, in the
case of any Contract Securities, pursuant to Delayed Delivery Contracts
(as defined in Section 3 hereof) with respect to such Contract Securities,
such Designated Securities will have been duly executed, authenticated,
issued and delivered and will constitute valid and legally binding
obligations of the Company, subject, as to enforcement, to (a) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other laws relating to or affecting creditors' rights generally or (b)
general principles of equity (regardless of whether considered in a
proceeding in equity or law), including those relating to the availability
of the remedy of specific performance or injunctive relief (collectively,
the "Enforceability Exceptions"), and are entitled to the benefits
provided by the Indenture, which will be substantially in the form filed
as an exhibit to the Registration Statement; in the case of Convertible
Securities, the Issuable Shares have been duly and validly authorized and
reserved for issuance and, when issued and delivered in accordance with
the provisions of the Convertible Securities and the Indenture, will be
duly and validly issued and fully paid and non-assessable, and will
conform to the description thereof in the Registration Statement; the
Indenture has been duly authorized and duly qualified under the Trust
Indenture Act and, at the Time of Delivery for such Designated Securities
(as defined in Section 4 hereof), the Indenture will constitute a valid
and legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to the Enforceability Exceptions; and the
Indenture conforms, and the Designated Securities will conform, to the
descriptions thereof contained in the Prospectus as amended or
supplemented with respect to such Designated Securities;
(i) The issue and sale of the Securities and, in the case of
Convertible Securities, the Issuable Shares and the compliance by the
Company with all of the provisions of the Securities, the Indenture, each
of the Delayed Delivery Contracts, this Agreement and any Pricing
Agreement, and the consummation of the transactions herein and therein
contemplated will not conflict with or result in
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a breach or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company is a party or by which
the Company is bound or to which any of the property or assets of the
Company is subject, nor will such actions result in any violation of the
provisions of the Articles of Incorporation or Bylaws of the Company or
any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
properties; and no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Securities or the consummation
by the Company of the transactions contemplated by this Agreement or any
Pricing Agreement or the Indenture or any Delayed Delivery Contract,
except for the receipt of a solicitation permit from the Insurance
Commissioner of the State of Washington (which has been received) and
except such as have been, or will have been prior to the Time of Delivery,
obtained under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Underwriters;
(j) In the event any of the Securities are purchased pursuant to
Delayed Delivery Contracts, each of such Delayed Delivery Contracts has
been duly authorized by the Company and, when executed and delivered by
the Company and the purchaser named therein, will constitute a valid and
legally binding agreement of the Company enforceable in accordance with
its terms, subject, as to enforcement, to the Enforceability Exceptions;
and any Delayed Delivery Contracts conform to the description thereof in
the Prospectus;
(k) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject, which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future financial
position, shareholders' equity or results of operations of the Company and
its subsidiaries, taken as a whole; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(l) Neither the Company nor any of the Significant Subsidiaries is in
violation of its Articles of Incorporation or Bylaws or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party
or by which it or any of its properties may be bound;
(m) Each insurance company subsidiary of the Company (each, an
"Insurance Subsidiary" and collectively, the "Insurance Subsidiaries") is
duly licensed as an insurance company in its jurisdiction of organization
and is duly licensed or authorized as an insurer in each jurisdiction
outside its jurisdiction of organization where it is required to be so
licensed or authorized to conduct its business as described in the
Registration Statement and the Prospectus, except where the failure to be
so licensed or authorized would not individually or in the aggregate have
a material adverse effect on the current or future financial
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position, shareholders' equity or results of operations of the Company and
its subsidiaries, taken as a whole;
(n) Each of the Company and its Insurance Subsidiaries is in
compliance with the requirements of the insurance laws of the jurisdiction
of its incorporation or domicile and any applicable regulations thereunder
and has filed all reports, registrations, documents or other information
required to be filed thereunder, except where the failure to so comply or
file would not individually or in the aggregate have a material adverse
effect on the current or future financial position, shareholders' equity
or results of operations of the Company and its subsidiaries, taken as a
whole; and each of the Insurance Subsidiaries is in compliance with the
insurance laws and regulations of each other jurisdiction that is
applicable to such Insurance Subsidiary, except where the failure to so
comply would not individually or in the aggregate have a material adverse
effect on the current or future financial position, shareholders' equity
or results of operations of the Company and its subsidiaries, taken as a
whole;
(o) All ceded reinsurance treaties, contracts, agreements and
arrangements to which the Company or any of its Insurance Subsidiaries is
a party are in full force and effect and neither the Company nor any of
its Insurance Subsidiaries is in violation of, or in default in the
performance, observance or fulfillment of, any obligation, agreement,
covenant or condition contained therein, except for such violations or
defaults which would not individually or in the aggregate have a material
adverse effect on the current or future financial position, shareholders'
equity or results of operations of the Company and its subsidiaries, taken
as a whole; and neither the Company nor any of its Insurance Subsidiaries
has received any notice from any of the other parties to such treaties,
contracts, agreements or arrangements that such other party intends not to
perform in any material respect its obligations thereunder and none of
them has any reason to believe that any such other party will be unable to
perform its obligations thereunder, except to the extent that (i) the
Company or such Insurance Subsidiary has established appropriate reserves
for such nonperformance on its financial statements or (ii) such
nonperformance would not individually or in the aggregate have a material
adverse effect on the current or future financial position, shareholders'
equity or results of operations of the Company and its subsidiaries, taken
as a whole;
(p) The statutory annual and quarterly statements of the Insurance
Subsidiaries required to be filed and the statutory balance sheets and
income statements included in such statutory annual and quarterly
statements, as most recently filed in each jurisdiction, have been
prepared in conformity with required or permitted statutory accounting
principles or practices consistently followed, except as may otherwise be
indicated in the notes thereto, and present fairly the financial position
of the Insurance Subsidiaries (on a statutory basis) for the periods
covered thereby;
(q) The statements set forth in the Prospectus under the captions
"Description of Debt Securities", "Description of Convertible Debt
Securities", "Description of Capital Stock" in the case of Convertible
Securities and "Use of Global Securities", insofar as they purport to
constitute a summary of the terms of the Securities and any Issuable
Shares, and under the captions "Plan of Distribution" and "ERISA
Considerations", insofar as they purport to describe the
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provisions of the laws and documents referred to therein, are accurate,
complete and fair;
(r) The Company is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company", as such term
is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(s) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075 of the Florida Statutes; and
(t) Ernst & Young LLP, who have audited certain financial statements
of the Company and its subsidiaries, are independent auditors as required
by the Act and the rules and regulations of the Commission thereunder.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
such Underwriters' Securities, the several Underwriters propose to offer such
Underwriters' Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
The Company may specify in Schedule II to the Pricing Agreement applicable
to any Designated Securities that the Underwriters are authorized to solicit
offers to purchase Designated Securities from the Company pursuant to delayed
delivery contracts (herein called "Delayed Delivery Contracts"), substantially
in the form of Annex III attached hereto but with such changes therein as the
Representatives and the Company may authorize or approve. If so specified, the
Underwriters will endeavor to make such arrangements, and as compensation
therefor the Company will pay to the Representatives, for the accounts of the
Underwriters, at the Time of Delivery (as defined in Section 4 hereof), such
commission, if any, as may be set forth in such Pricing Agreement. Delayed
Delivery Contracts, if any, are to be with investors of the types described in
the Prospectus and subject to other conditions therein set forth. The
Underwriters will not have any responsibility with respect to the validity or
performance of any Delayed Delivery Contracts.
The principal amount of Contract Securities to be deducted from the
principal amount of Designated Securities to be purchased by each Underwriter as
set forth in Schedule I to the Pricing Agreement applicable to such Designated
Securities shall be, in each case, the principal amount of Contract Securities
which the Company has been advised by the Representatives have been attributed
to such Underwriter, provided that, if the Company has not been so advised, the
amount of Contract Securities to be so deducted shall be, in each case, that
proportion of Contract Securities which the principal amount of Designated
Securities to be purchased by such Underwriter under such Pricing Agreement
bears to the total principal amount of the Designated Securities (rounded as the
Representatives may determine). The total principal amount of Underwriters'
Securities to be purchased by all the Underwriters pursuant to such Pricing
Agreement shall be the total principal amount of Designated Securities set forth
in Schedule I to such Pricing Agreement less the principal amount of the
Contract Securities. The Company will deliver to the Representatives not later
than 3:30 p.m., New York City time, on the third business day preceding the Time
of Delivery specified in the applicable Pricing Agreement (or such other time
and date as the Representatives and the Company may agree upon in writing), a
written notice setting forth the principal amount of Contract Securities.
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4. Underwriters' Securities to be purchased by each Underwriter pursuant
to the Pricing Agreement relating thereto, in the form specified in such Pricing
Agreement and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice to
the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to the
Representatives at least forty-eight hours in advance or at such other place and
time and date as the Representatives and the Company may agree upon in writing,
such time and date being herein called the "Time of Delivery" for such
Securities.
Concurrently with the delivery of and payment for the Underwriters'
Securities, the Company will deliver to the Representatives for the accounts of
the Underwriters a check payable to the order of the party designated in the
Pricing Agreement relating to such Securities in the amount of any compensation
payable by the Company to the Underwriters in respect of any Delayed Delivery
Contracts as provided in Section 3 hereof and the Pricing Agreement relating to
such Securities.
5. The Company agrees with each of the Underwriters of any Designated
Securities:
(a) To prepare the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing Agreement relating
to such Securities and prior to the Time of Delivery for such Securities
which shall be disapproved by the Representatives for such Securities
promptly after reasonable notice thereof; to advise the Representatives
promptly of any such amendment or supplement after such Time of Delivery
and furnish the Representatives with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of such
Securities, and during such same period to advise the Representatives,
promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed with
the Commission, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any prospectus relating to
the Securities, of the suspension of the qualification of such Securities
or any Issuable Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any such stop order or of any such order
preventing or suspending the use of any prospectus relating to the
Securities or suspending
9
any such qualification, to promptly use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities and any
Issuable Shares for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of such Securities, provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the business day next
succeeding the date of this Agreement and from time to time, to furnish
the Underwriters with written and electronic copies of the Prospectus in
New York City as amended or supplemented in such quantities as the
Representatives may reasonably request, and, if the delivery of a
prospectus is required at any time in connection with the offering or sale
of the Securities or any Issuable Shares and if at such time any event
shall have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act, the Exchange
Act or the Trust Indenture Act, to notify the Representatives and upon
their request to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many written
and electronic copies as the Representatives may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and
the rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(e) During the period beginning from the date of the Pricing
Agreement for such Designated Securities and continuing to and including
the later of (i) the termination of trading restrictions for such
Designated Securities, as notified to the Company by the Representatives
and (ii) the Time of Delivery for such Designated Securities, not to
offer, sell, contract to sell or otherwise dispose of any securities of
the Company that are substantially similar to (y) the Designated
Securities which mature more than one year after such Time of Delivery and
(z) in the case of Convertible Securities, the Issuable Shares, including
but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Common Stock or
any such substantially similar securities (other than pursuant to director
or employee stock option or benefit plans existing on, or upon the
conversion or exchange of convertible or
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exchangeable securities outstanding as of, the date of this Agreement), in
either case without the prior written consent of the Representatives;
(f) If the Company elects to rely upon Rule 462(b), to file a Rule
462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement, and at the time of filing either to pay the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the
Act; and
(g) In the case of Convertible Securities, to reserve and keep
available at all times, free of preemptive rights, shares of Common Stock
for the purpose of enabling the Company to satisfy any obligations to
issue Issuable Shares.
6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Securities and any Issuable Shares under the Act and all
other expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, any Pricing Agreement, any
Indenture, any Delayed Delivery Contracts, any Blue Sky and Legal Investment
Memoranda, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (iii) all expenses in connection with the qualification of the
Securities and any Issuable Shares for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky and Legal Investment Surveys; (iv) any fees charged
by securities rating services for rating the Securities; (v) any filing fees
incident to, and the fees and disbursements of counsel for the Underwriters in
connection with, any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of
preparing the Securities; (vii) the fees and expenses of any Trustee and any
agent of any Trustee and the fees and disbursements of counsel for any Trustee
in connection with any Indenture and the Securities; and (viii) all other costs
and expenses incident to the performance of its obligations hereunder and under
any Delayed Delivery Contracts which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Securities by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities under
the Pricing Agreement relating to such Designated Securities shall be subject,
in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Company in or
incorporated by reference in the Pricing Agreement relating to such Designated
Securities are, at and as of the Time of Delivery for such Designated
Securities, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
11
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the Representatives'
reasonable satisfaction;
(b) Counsel for the Underwriters shall have furnished to the
Representatives such written opinion or opinions (a draft of each such opinion
is attached as Annex II(a) hereto), dated the Time of Delivery for such
Designated Securities, with respect to the due incorporation of the Company, the
validity of the Designated Securities and any Issuable Shares, the due
authorization and execution of this Agreement, certain matters related to the
Registration Statement and the Prospectus and such other related matters as the
Representatives may reasonably request (in giving such opinion, such counsel may
rely as to matters of Washington law on the opinions of counsel to the Company
referred to below), and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c)(1) Counsel for the Company satisfactory to the Representatives shall
have furnished to the Representatives their written opinion (a draft of such
opinion is attached as Annex II(b) hereto), dated the Time of Delivery for such
Designated Securities, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Company is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation;
(ii) This Agreement and the Pricing Agreement with respect to
the Designated Securities have been duly authorized, executed and
delivered by the Company;
(iii) The Designated Securities have been duly authorized; the
Underwriters' Securities have been duly executed, authenticated,
issued and delivered and constitute valid and legally binding
obligations of the Company, subject, as to enforcement, to the
Enforceability Exceptions, and are entitled to the benefits provided
by the Indenture; the Contract Securities, if any, when executed,
authenticated, issued and delivered pursuant to the Indenture and
Delayed Delivery Contracts, if any, will constitute valid and legally
binding obligations of the Company, subject, as to enforcement, to
the Enforceability Exceptions, and are entitled to the benefits
provided by the Indenture; in the case of Convertible Securities, the
Issuable Shares have been duly and validly authorized and reserved
for issuance and, when issued and delivered in accordance with the
provisions of the Convertible Securities and the Indenture, will be
duly and validly issued and fully paid and non-assessable, and will
conform to the description thereof contained in the Prospectus as
amended or supplemented; and the Designated Securities and the
Indenture conform to the descriptions thereof in the Prospectus as
amended or supplemented;
12
(iv) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to the Enforceability Exceptions; and the
Indenture has been duly qualified under the Trust Indenture Act;
(v) The issue and sale of the Designated Securities and, in the
case of Convertible Securities, the Issuable Shares and the
compliance by the Company with all of the provisions of the
Designated Securities, the Indenture, each of the Delayed Delivery
Contracts, if any, this Agreement and the Pricing Agreement with
respect to the Designated Securities and the consummation of the
transactions herein and therein contemplated will not conflict with
or result in a breach or violation of the provisions of the Articles
of Incorporation or Bylaws of the Company or any Applicable Laws (as
defined below) or any judgment, order or decree known to such counsel
of any court or governmental agency or body having jurisdiction over
the Company or any of its properties;
(vi) Except as previously made or obtained, as the case may be,
and except for any Governmental Approval pursuant to laws, rules and
regulations governing insurance companies, as to which such counsel
has not been requested to render an opinion, no Governmental Approval
is required for the issue and sale of the Designated Securities or
the consummation by the Company of the transactions contemplated by
this Agreement or such Pricing Agreement or the Indenture or any of
such Delayed Delivery Contracts, except such as have been obtained
under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, orders, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Designated Securities by
the Underwriters; the term "Governmental Approval" means any filing
with, or authorization, approval, consent, license, order,
registration, qualification or decree of any Governmental Authority
pursuant to Applicable Laws (as defined below); the term "Applicable
Laws" means only those laws, rules and regulations of the State of
Washington and of the United States of America which, in such
counsel's experience, are ordinarily applicable to transactions of
the type contemplated by this Agreement; the term "Governmental
Authority" means any Washington or federal legislative, judicial,
administrative or regulatory body under Applicable Laws;
(vii) The statements set forth in the Prospectus as amended or
supplemented under the captions "Description of Notes", "Description
of Debt Securities", "Description of Convertible Debt Securities",
"Description of Capital Stock" in the case of Convertible Securities
and "Use of Global Securities" insofar as they purport to constitute
a summary of the terms of the Securities and any Issuable Shares, and
under the captions "Description of Capital Stock" (excluding the
subsection captioned "Insurance Regulations Concerning Change of
Control"), "Underwriting", "Plan of Distribution" and "ERISA
Considerations", insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate, complete
and fair;
13
(viii) In the event any of the Designated Securities are to be
purchased pursuant to Delayed Delivery Contracts, each of such
Delayed Delivery Contracts has been duly authorized, executed and
delivered by the Company and, assuming such Contract has been duly
executed and delivered by the purchaser named therein, constitutes a
valid and legally binding agreement of the Company enforceable in
accordance with its terms, subject, as to enforcement, to the
Enforceability Exceptions, and any Delayed Delivery Contracts conform
to the description thereof in the Prospectus as amended or
supplemented;
(ix) The Company is not an "Investment Company", as such term
is defined in the Investment Company Act; and
(x) The Registration Statement and the Prospectus as amended or
supplemented and any further amendments and supplements thereto made
by the Company prior to the Time of Delivery for the Designated
Securities (other than the financial statements and related schedules
therein (whether directly included or incorporated by reference) and
any documents incorporated by reference therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the Trust Indenture Act
and the rules and regulations thereunder;
In addition, such counsel shall state that they have participated in the
preparation of the Registration Statement and the Prospectus as amended or
supplemented and participated in conferences with representatives of the Company
and its independent auditors and your representatives and counsel, at which the
contents of the Registration Statement and the Prospectus as amended or
supplemented and related matters were discussed. Such counsel shall further
state that they did not participate in the preparation of the documents
incorporated by reference in the Registration Statement and Prospectus (but
have, however, reviewed such documents and discussed the business and affairs of
the Company with officers and other representatives of the Company). Although
such counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus as amended or supplemented and has made
no independent check or verification thereof, except for those referred to in
the opinion in subsection (vii) of this Section 7(c)(1), no facts have come to
the attention of such counsel that have led such counsel to believe that, as of
its effective date, the Registration Statement or any further amendment thereto
made by the Company prior to the Time of Delivery (other than financial
statements and related schedules included or incorporated by reference therein,
as to which such counsel need express no opinion) contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that, as
of its date, the Prospectus as amended or supplemented or any further amendment
or supplement thereto made by the Company prior to the Time of Delivery (other
than the
14
financial statements and related schedules therein, as to which such counsel
need express no opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or that, as of the Time of Delivery, either the
Registration Statement or the Prospectus as amended or supplemented or any other
further amendment or supplement thereto made by the Company prior to the Time of
Delivery (other than the financial statements and related schedules therein, as
to which such counsel need express no opinion) contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; nor have any facts come to the attention of such counsel that have
led such counsel to believe that there is any amendment to the Registration
Statement required to be filed or any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus as amended or
supplemented or required to be described in the Registration Statement or the
Prospectus as amended or supplemented which are not filed or incorporated by
reference or described as required;
The opinion of such counsel shall be limited to the laws of the United
States and the States of Washington and New York, and may rely on the
certificate or certificates to be delivered pursuant to Section 7(j) below to
the extent necessary to furnish such counsel's opinion and, as to matters
involving New York law, on the opinion of counsel for the Underwriters rendered
pursuant to Section 7(b). Such counsel may also state that insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries and
certificates of public officials;
(c)(2) Xxxxx X. Xxxxx, Esq., General Counsel of the Company, shall have
furnished to the Representatives his written opinion (a draft of such opinion is
attached as Annex II(c) hereto), dated the Time of Delivery for such Designated
Securities, in form and substance satisfactory to the Representatives, to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business
as described in the Prospectus as amended or supplemented, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing (or the local equivalent) under the
laws of each jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, except
where the failure to be so qualified or in good standing would not
individually or in the aggregate have a material adverse effect on
the current or future general affairs, management, financial
position, shareholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole;
(ii) Each of the Company's Significant Subsidiaries has been
duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus as amended
or supplemented, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
(or the local equivalent) under the laws of each other jurisdiction
in which it owns or leases properties or conducts any business so as
to require such qualification, except where the failure to be so
qualified or in good standing would not individually or in the
aggregate have a material adverse effect on the current or future
general affairs, management, financial position, shareholders'
equity or results of operations of the Company and its subsidiaries,
taken as a whole;
15
(iii) The Company has an authorized capitalization as set forth
in the Prospectus as amended or supplemented, and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable, and,
except as otherwise set forth in the Prospectus as amended or
supplemented, all of the issued shares of capital stock of the
Significant Subsidiaries have been duly and validly authorized and
issued and are fully paid and non-assessable and are owned by the
Company either directly or through wholly-owned subsidiaries free and
clear of any perfected security interest and, to the knowledge of
such counsel, after due inquiry, any other security interests,
claims, liens or encumbrances;
(iv) To the best of such counsel's knowledge and other than as
set forth in or incorporated by reference in the Prospectus, there
are no legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on
the current or future general affairs, management, financial
position, shareholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole; and, to the best of
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(v) The issue and sale of Designated Securities and, in the case
of Convertible Securities, the Issuable Shares and the compliance by
the Company with all of the provisions of the Designated Securities,
the Indenture, each of the Delayed Delivery Contracts, if any, this
Agreement and the Pricing Agreement with respect to the Designated
Securities and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which the
Company is a party or by which the Company is bound or to which any
of the property or assets of the Company is subject, except where
such conflict, breach, violation or default would not individually or
in the aggregate have a material adverse effect on the current or
future general affairs, management, financial position, shareholders'
equity or results of operations of the Company and its subsidiaries,
taken as a whole, nor will such actions result in any violation of
the provisions of the Articles of Incorporation or Bylaws of the
Company or any statute, rule or regulation of the State of Washington
or the United States of America or any governmental agency or body
thereof which, in such counsel's experience, is ordinarily applicable
to transactions of the type contemplated by the Pricing Agreement or,
if applicable, any Delayed Delivery Contract, or any judgment, order
or decree known to such counsel of any Washington State or U.S.
federal court or governmental agency or body having jurisdiction over
the Company or any of its properties;
(vi) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issue and sale of the Designated Securities or the
16
consummation by the Company of the transactions contemplated by this
Agreement or such Pricing Agreement or the Indenture or any such
Delayed Delivery Contracts, except for the receipt of a solicitation
permit from the Insurance Commissioner of the State of Washington
(which has been received) and except such as have been obtained under
the Act and the Trust Indenture Act and such consents, approvals,
authorizations, orders, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Designated Securities by the
Underwriters;
(vii) Neither the Company nor any of its Significant
Subsidiaries is in violation of its Articles of Incorporation or
Bylaws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any
of its properties may be bound;
(viii) The statements set forth in the Prospectus as amended or
supplemented under the caption "Risk Factors" in the subsections
captioned "Our businesses are heavily regulated and changes in
regulation may reduce our profitability and limit our growth",
"Assessments and other surcharges for guaranty funds and
second-injury funds and other mandatory pooling arrangements may
reduce our profitability" and "Changes in federal tax laws and
regulations could make some of our products less attractive to
consumers", insofar as they purport to describe the provisions of the
laws and documents referred to therein, are accurate, complete and
fair;
(ix) The documents incorporated by reference in the Prospectus
as amended or supplemented (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and such counsel has no reason to believe that any of
such documents, when they became effective or were filed, as the case
may be, contained, in the case of a registration statement which
became effective under the Act, an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
or, in the case of other documents which were filed under the Act or
the Exchange Act with the Commission, contained an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so
filed, not misleading; and
(x) The Registration Statement and the Prospectus as amended or
supplemented and any further amendments and supplements thereto made
by the Company prior to the Time of Delivery for the Designated
Securities (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Act and
the Trust Indenture Act and the rules and regulations thereunder;
17
In addition, such counsel shall state that he, or attorneys in his office
working under his direction, have participated in conferences with officers and
other representatives of the Company, outside counsel for the Company,
representatives of the independent auditors for the Company and your
representatives and counsel at which the contents of the Registration Statement
and the Prospectus as amended or supplemented and related matters were
discussed. Although such counsel is not passing upon, and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus as amended or
supplemented, and has made no independent check or verification thereof except
for those referred to in the opinion in subsection (viii) of this Section
7(c)(2), on the basis of the foregoing, no facts have come to such counsel's
attention that have led him to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the Company
prior to the Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus as amended or supplemented or
any further amendment or supplement thereto made by the Company prior to the
Time of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or that, as of the Time of Delivery, either the
Registration Statement or the Prospectus as amended or supplemented or any
further amendment or supplement thereto made by the Company prior to the Time of
Delivery (other than the financial statements and related schedules therein, as
to which such counsel need express no opinion) contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; nor have any facts come to such counsel's attention that have led
him to believe that there is any amendment to the Registration Statement
required to be filed or any contracts or other documents of a character required
to be filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus as amended or supplemented or
required to be described in the Registration Statement or the Prospectus as
amended or supplemented which are not filed or incorporated by reference or
described as required;
The opinion of such counsel shall be limited to the laws of the United
States and the State of Washington, and he may rely on the certificate or
certificates to be delivered pursuant to Section 7(j) below to the extent
necessary to furnish his opinion;
(d) On the date of the Pricing Agreement for such Designated Securities at
a time prior to the execution of the Pricing Agreement with respect to such
Designated Securities and at the Time of Delivery for such Designated
Securities, the independent auditors of the Company who have audited the
financial statements of the Company and its subsidiaries included or
incorporated by reference in the Registration Statement shall have furnished to
the Representatives a letter, dated the effective date of the Registration
Statement or the date of the most recent report filed with the Commission
containing financial statements and incorporated by reference in the
Registration Statement, if the date of such report is later than such effective
date, and a letter dated such Time of Delivery, respectively, to the effect set
forth in Annex II hereto, and with respect to such letter dated such Time of
Delivery, as to such other matters as the Representatives may reasonably request
and in form and substance satisfactory to the
18
Representatives (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(a) hereto and a draft of the
form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus as amended prior to the date of the
Pricing Agreement relating to the Designated Securities any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus
as amended prior to the date of the Pricing Agreement relating to the Designated
Securities, and (ii) since the respective dates as of which information is given
in the Prospectus as amended prior to the date of the Pricing Agreement relating
to the Designated Securities there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any change,
or any development involving a prospective change, in or affecting the general
affairs, management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise than
as set forth or contemplated in the Prospectus as amended prior to the date of
the Pricing Agreement relating to the Designated Securities, the effect of
which, in any such case described in clause (i) or (ii), is in the judgment of
the Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Underwriters' Securities on the terms and in the manner contemplated in the
Prospectus as first amended or supplemented relating to the Designated
Securities;
(f) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities or preferred stock or the Company's
financial strength or claims paying ability by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities or
preferred stock or the Company's financial strength or claims paying ability;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange or on NASDAQ; (ii) a suspension or material limitation in
trading in the Company's securities on NASDAQ; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York State
authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States; (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war or (v) the occurrence of any other
calamity or crisis or any change in financial, political or economic conditions
in the United States or elsewhere, if the effect of any such event specified in
clause (iv) or (v) in the judgment of the Representatives makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Underwriters' Securities on the terms and in the manner contemplated in the
Prospectus as first amended or supplemented relating to the Designated
Securities;
19
(h) In the case of Convertible Securities, the Issuable Shares shall
have been approved for quotation on NASDAQ;
(i) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the business day next
succeeding the date of this Agreement; and
(j) The Company shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery for the Designated Securities a
certificate or certificates of officers of the Company satisfactory to the
Representatives as to the accuracy of the representations and warranties of the
Company herein at and as of such Time of Delivery, as to the performance by the
Company of all of its obligations hereunder to be performed at or prior to such
Time of Delivery, as to the matters set forth in subsections (a) and (e) of this
Section and as to such other matters as the Representatives may reasonably
request.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
of Designated Securities through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any such
20
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include any statement as
to or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters of the Designated Securities
on the other from the offering of the Designated Securities to which such loss,
claim, damage or liability (or action in respect thereof) relates. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters of the Designated
Securities on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and such Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by the Company bear to
the total
21
underwriting discounts and commissions received by such Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or such Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this subsection
(d) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the applicable Designated Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the Underwriters
of Designated Securities in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations with respect to such
Securities and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Underwriters' Securities which it has agreed to purchase under the Pricing
Agreement relating to such Underwriters' Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Underwriters' Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Underwriters' Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to the Representatives to
purchase such Underwriters' Securities on such terms. In the event that, within
the respective prescribed period, the Representatives notify the Company that
they have so arranged for the purchase of such Underwriters' Securities, or the
Company notifies the Representatives that it has so arranged for the purchase of
such Underwriters' Securities, the Representatives or the Company shall have the
right to postpone the Time of Delivery for such Underwriters' Securities for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus as
amended or supplemented, or in any other documents or arrangements, and the
Company agrees to file promptly any
22
amendments or supplements to the Registration Statement or the Prospectus which
in the opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to the Pricing Agreement with respect to such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Underwriters' Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Underwriters' Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Underwriters'
Securities which such Underwriter agreed to purchase under the Pricing Agreement
relating to such Designated Securities and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of Designated Securities which such Underwriter agreed to
purchase under such Pricing Agreement) of the Underwriters' Securities of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Underwriters' Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Underwriters' Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of the Designated
Securities, as referred to in subsection (b) above, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Underwriters' Securities of a defaulting Underwriter or
Underwriters, then the Pricing Agreement relating to such Designated Securities
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by the Company
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
with respect to the Designated Securities covered by such Pricing Agreement
except as provided in Sections 6 and 8 hereof; but, if for any other reason
Designated Securities are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities, but the Company shall then
23
be under no further liability to any Underwriter with respect to such Designated
Securities except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: General Counsel; provided, however, that any
notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or any such Pricing Agreement. No purchaser of any of the Securities
from any Underwriter shall be deemed a successor or assign by reason merely of
such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, the term "business day" shall mean any day when the Commission's
office in Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
17. The Company is authorized, subject to applicable law, to disclose any
and all aspects of this potential transaction that are necessary to support any
U.S. federal income tax benefits expected to be claimed with respect to such
transaction, and all materials of any kind (including tax opinions and other tax
analyses) related to those benefits, without the Underwriters imposing any
limitation of any kind.
24
If the foregoing is in accordance with your understanding, please sign and
return to us seven counterparts hereof.
Very truly yours,
SAFECO Corporation
By:
-----------------------------------
Name:
Title:
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
Banc of America Securities LLC
X.X. Xxxxxx Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
By:
-----------------------------------
(Xxxxxxx, Sachs & Co.)
By: Banc of America Securities LLC
By:
-----------------------------------
Name:
Title:
As Representatives of the several Underwriters
25
ANNEX I
PRICING AGREEMENT
Xxxxxxx, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Banc of America Securities LLC,
0 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
[Name(s) and Address(es) of
Other Co-Representative(s)]
As Representatives of the several
Underwriters named in Schedule I hereto
_____ __, 2003
Ladies and Gentlemen:
SAFECO Corporation, a Washington corporation (the "Company"), proposes,
subject to the terms and conditions stated herein and in the Underwriting
Agreement, dated January 27, 2003 (the "Underwriting Agreement"), between the
Company on the one hand and Xxxxxxx, Sachs & Co., Banc of America Securities
LLC, X.X. Xxxxxx Securities Inc. and U.S. Bancorp Xxxxx Xxxxxxx Inc. on the
other hand, to issue and sell to the Underwriters named in Schedule I hereto
(the "Underwriters") the Securities specified in Schedule II hereto (the
"Designated Securities"). Each of the provisions of the Underwriting Agreement
is incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities which are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and on behalf
of each of the Underwriters of the Designated Securities pursuant to Section 12
of the Underwriting Agreement and the address of the Representatives referred to
in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the time and place
and at the purchase price to the Underwriters set forth in Schedule II hereto,
the principal amount of Designated Securities set forth opposite the name of
such Underwriter in Schedule I hereto, less the principal amount of Designated
Securities covered by Delayed Delivery Contracts, if any, as may be specified in
Schedule II.
2
If the foregoing is in accordance with your understanding, please sign and
return to us [five] counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is or will be pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company for examination upon request, but without warranty on the part of
the Representatives as to the authority of the signers thereof.
Very truly yours,
SAFECO Corporation
By:
-----------------------------------
Name:
Title:
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
Banc of America Securities LLC
[Name(s) of Co-Representative(s)]
By:
-----------------------------------
(Xxxxxxx, Sachs & Co.)
By: Banc of America Securities LLC
By:
-----------------------------------
Name:
Title:
As Representatives of the several Underwriters
3
SCHEDULE I
PRINCIPAL
AMOUNT OF
DESIGNATED
SECURITIES
TO BE
UNDERWRITER PURCHASED
Xxxxxxx, Xxxxx & Co........................................ $
Banc of America Securities LLC.............................
[Names of other Underwriters]..............................
-----------
Total......................................... $
===========
4
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
[ %] [Floating Rate] [Zero Coupon] [Convertible] [Notes] due ,
AGGREGATE PRINCIPAL AMOUNT:
[$]
PRICE TO PUBLIC:
% of the principal amount of the Designated Securities, plus
accrued interest[, if any,] from to [and
accrued amortization[, if any,] from to ]
PURCHASE PRICE BY UNDERWRITERS:
% of the principal amount of the Designated Securities, plus
accrued interest from
to [and accrued amortization[, if any,]
from to ]
FORM OF DESIGNATED SECURITIES:
[Definitive form to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery at the office of [The
Depository Trust Company or its designated custodian] [the
Representatives]]
[Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated
custodian, to be made available for checking by the Representatives at
least twenty-four hours prior to the Time of Delivery at the office of
DTC.]
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Federal (same day) funds
[IF CONVERTIBLE SECURITIES, DESCRIBE ANY BLACKOUT PROVISIONS WITH RESPECT TO
THE DESIGNATED SECURITIES]
[IF CONVERTIBLE SECURITIES, DESCRIBE ANY OVERALLOTMENT PROVISIONS]
TIME OF DELIVERY:
a.m. (New York City time), , 20
INDENTURE:
Indenture dated , 20 , between the Company
and , as Trustee
MATURITY:
INTEREST RATE:
[ %] [Zero Coupon] [See Floating Rate Provisions]
5
INTEREST PAYMENT DATES:
[months and dates, commencing....................., 20..]
REDEMPTION PROVISIONS:
[No provisions for redemption]
[The Designated Securities may be redeemed, otherwise than through the
sinking fund, in whole or in part at the option of the Company, in the
amount of [$ ] or an integral multiple thereof,
[on or after , at the following redemption prices (expressed
in percentages of principal amount). If [redeemed on or before ,
%, and if] redeemed during the 12-month period
beginning ,
REDEMPTION
YEAR PRICE
and thereafter at 100% of their principal amount, together in each case
with accrued interest to the redemption date.]
[on any interest payment date falling on or after , , at the
election of the Company, at a redemption price equal to the principal
amount thereof, plus accrued interest to the date of redemption.]]
[Other possible redemption provisions, such as mandatory redemption upon
occurrence of certain events or redemption for changes in tax law]
[Restriction on refunding]
SINKING FUND PROVISIONS:
[No sinking fund provisions]
[The Designated Securities are entitled to the benefit of a sinking fund to
retire [$ ] principal amount of Designated Securities on in each
of the years through at 100% of their principal
amount plus accrued interest[, together with [cumulative] [noncumulative]
redemptions at the option of the Company to retire an additional [$ ]
principal amount of Designated Securities in the years through at
100% of their principal amount plus accrued interest.]
[If Designated Securities are extendable debt securities, insert --
EXTENDABLE PROVISIONS:
Designated Securities are repayable on , [insert date and
years], at the option of the holder, at their principal amount with accrued
interest. The initial annual interest rate will be %, and thereafter
the annual interest rate will be adjusted on , and to a rate
not less than % of the effective annual interest rate on U.S.
Treasury obligations with -year maturities as of the [insert date 15
days prior to maturity date] prior to such [insert maturity date].]
[If Designated Securities are floating rate debt securities, insert --
FLOATING RATE PROVISIONS:
6
Initial annual interest rate will be % through [and thereafter will be
adjusted [monthly] [on each , , and ] [to an annual
rate of % above the average rate for -year [month]
[securities][certificates of deposit] issued by and
[insert names of banks].] [and the annual interest rate [thereafter]
[from through ] will be the interest yield equivalent of the
weekly average per annum market discount rate for -month Treasury
bills plus % of Interest Differential (the excess, if any, of (i) the
then current weekly average per annum secondary market yield for
-month certificates of deposit over (ii) the then current interest
yield equivalent of the weekly average per annum market discount rate for
-month Treasury bills); [from and thereafter the rate will be the
then current interest yield equivalent plus % of Interest
Differential].]
DEFEASANCE PROVISIONS:
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
DELAYED DELIVERY:
[None] [Underwriters' commission shall be .......% of the principal amounT
of Designated Securities for which Delayed Delivery Contracts have been
entered into. Such commission shall be payable to the order of ....]
ADDITIONAL CLOSING CONDITIONS:
Paragraph 7(g) of the Underwriting Agreement should be modified in the event
that the Securities are denominated in, indexed to, or principal or interest
are paid in, a currency other than the U.S. dollar, more than one currency or
in a composite currency. The country or countries issuing such currency
should be added to the banking moratorium and hostilities clauses and the
following additional clause should be added to the paragraph (the entire
paragraph should be restated, as amended):
"; ( ) the imposition of the proposal of exchange controls by any
governmental authority in [insert the country or countries issuing such
currency, currencies or composite currency]".
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
[OTHER TERMS]* :
------------------------
* A description of particular tax, accounting or other unusual features (such as
the addition of event risk provisions) of the Designated Securities should be
set forth, or referenced to an attached and accompanying description, if
necessary, to ensure agreement as to the terms of the Designated Securities to
be purchased and sold. Such a description might appropriately be in the form in
which such features will be described in the Prospectus Supplement for the
offering.
7
ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, the auditors shall
furnish letters to the Underwriters to the effect that:
(i) They are independent auditors with respect to the Company and its
subsidiaries within the meaning of the Act and the applicable published
rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) audited by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data,
pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's quarterly reports on Form 10-Q
incorporated by reference into the Prospectus; and on the basis of
specified procedures including inquiries of officials of the Company who
have responsibility for financial and accounting matters regarding whether
the unaudited condensed consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 6 of the Company's Annual
Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for such five fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter nothing came
to their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, inspection of the minute books of the
Company and its subsidiaries since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or incorporated
by reference in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and regulations,
or (ii) any material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the
Prospectus or included in the Company's Quarterly Reports on Form
10-Q incorporated by reference in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding
2
on the date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated assets or shareholders' equity, or any increases or
decreases in other items that the representative or representatives
of the Underwriters (the "Representatives", such term to include an
Underwriter or Underwriters who act without any firm being
designated as its or their representatives) reasonably request to be
covered in such letter, in each case as compared with amounts shown
in the latest balance sheet included or incorporated by reference in
the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in clause (E) there were any decreases
in consolidated revenues or the total or per share amounts of
consolidated net income, or any increases or decreases in other items
that the Representatives reasonably request to be covered in such
letter, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length
reasonably specified by the Representatives, except in each case for
increases or decreases which the Prospectus discloses have occurred
or may occur or which are described in such letter; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives
which are derived from the general accounting records of the Company and
its subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives or in
documents incorporated by reference in the Prospectus specified by the
Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
All references in this Annex II to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement as of the date of the letter delivered on
the date of the Pricing Agreement for purposes of such letter and to the
Prospectus as amended or supplemented (including the documents incorporated by
reference therein) in relation to the applicable Designated Securities for
purposes of the letter delivered at the Time of Delivery for such Designated
Securities.
3
ANNEX III
DELAYED DELIVERY CONTRACT
SAFECO Corporation,
c/o Goldman, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Attention:......................
c/o Banc of America Securities LLC,
0 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Attention:......................
............. , 2003
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from SAFECO Corporation
(hereinafter called the "Company"), and the Company agrees to sell to the
undersigned,
$.........
principal amount of the Company's [Title of Designated Securities] (hereinafter
called the "Designated Securities"), offered by the Company's Prospectus, dated
______ __, 2003, as amended or supplemented, receipt of a copy of which is
hereby acknowledged, at a purchase price of .....% of the principal amount
thereof, plus accrued interest from the date from which interest accrues as set
forth below, and on the further terms and conditions set forth below.
The undersigned will purchase the Designated Securities from the
Company on.............., 20.. (the "Delivery Date") and interest on the
Designated Securities so purchased will accrue from.............., 20...
[The undersigned will purchase the Designated Securities from the Company
on the delivery date or dates and in the principal amount or amounts set forth
below:
PRINCIPAL DATE FROM WHICH
DELIVERY DATE AMOUNT INTEREST ACCRUES
..................,20.. $............. ..................,20..
..................,20.. $............. ..................,20..
Each such date on which Designated Securities are to be purchased hereunder is
hereinafter referred to as a "Delivery Date."]
Payment for the Designated Securities which the undersigned has agreed to
purchase on [the][each] Delivery Date shall be made to the Company or its order
by certified or official bank check in .......... Clearing House funds at the
office of ..........,
.........., .........., or by wire transfer to a bank account specified by the
Company, on [the][such] Delivery Date upon delivery to the undersigned of the
Designated Securities then to be purchased by the undersigned in definitive
fully registered form and in such denominations and registered in such names as
the undersigned may designate by written, telex or facsimile communication
addressed to the Company not less than five full business days prior to
[the][such] Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
Designated Securities on [the][each] Delivery Date shall be subject to the
condition that the purchase of Designated Securities to be made by the
undersigned shall not on [the][such] Delivery Date be prohibited under the laws
of the jurisdiction to which the undersigned is subject. The obligation of the
undersigned to take delivery of and make payment for Designated Securities shall
not be affected by the failure of any purchaser to take delivery of and make
payment for Designated Securities pursuant to other contracts similar to this
contract.
[The undersigned understands that Underwriters (the "Underwriters") are
also purchasing Designated Securities from the Company, but that the obligations
of the Undersigned hereunder are not contingent on such purchases]. Promptly
after completion of the sale to the Underwriters the Company will mail or
deliver to the undersigned at its address set forth below notice to such effect,
accompanied by a copy of the Opinion of Counsel for the Company delivered to the
Underwriters in connection therewith.
The undersigned represents and warrants that, as of the date of this
contract, the undersigned is not prohibited from purchasing the Designated
Securities hereby agreed to be purchased by it under the laws of the
jurisdiction to which the undersigned is subject.
This contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
This contract may be executed by either of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
2
It is understood that the acceptance by the Company of any Delayed
Delivery Contract (including this contract) is in the Company's sole discretion
and that, without limiting the foregoing, acceptances of such contracts need not
be on a first-come, first-served basis. If this contract is acceptable to the
Company, it is requested that the Company sign the form of acceptance below and
mail or deliver one of the counterparts hereof to the undersigned at its address
set forth below. This will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered by the Company.
Yours very truly,
....................................
By:...........................
(Authorized Signature)
Name:
Title:
....................................
(Address)
Accepted: ....................., 20..
SAFECO Corporation
By:.................................
Name:
Title:
3
ANNEX IV
SIGNIFICANT SUBSIDIARIES
SAFECO Life Insurance Company
SAFECO Insurance Company of America
General Insurance Company of America
American States Insurance Company
American Economy Insurance Company
