SAFECO CORPORATION Common Stock UNDERWRITING AGREEMENT
Exhibit 1.1
$21,236,258
SAFECO CORPORATION
Common Stock
May , 2007
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Pursuant to a Transaction Agreement dated November 6, 2005, as amended March 30, 2007 (the
“Transaction Agreement”) between Safeco Corporation, a Washington corporation (the “Company”), and
Xxxxxx Brothers Finance S.A. (“Xxxxxx Finance” or the “Selling Shareholder”), Xxxxxx Finance is
entitled to receive a Settlement Balance (as defined in the Transaction Agreement) of
$21,236,258 from the Company on the Settlement Date (as defined in the Transaction Agreement). The Settlement
Balance shall be paid by the Company to Xxxxxx Finance in the form of shares of the Company’s
common stock, no par value (the “Common Stock”). Xxxxxx Brothers Inc. (the “Underwriter”) proposes
to sell on behalf of Xxxxxx Finance the shares of Common Stock (the “Shares”) that the Company will
deliver to Xxxxxx Finance to satisfy its obligation to pay the Settlement Balance. This is to
confirm the agreement concerning the sale of the Shares among the Company, Xxxxxx Finance and the
Underwriter.
1. Representations, Warranties and Agreements of the Company. The Company represents, warrants
and agrees with the Underwriter and Xxxxxx Finance that:
(a) A registration statement on Form S-3 (No. 333-141160) relating to the Shares (i) has
been prepared by the Company in conformity with the requirements of the Securities Act of 1933,
as amended (the “Securities Act”), and the rules and regulations (the “Rules and Regulations”)
of the Securities and Exchange Commission (the “Commission”) thereunder; (ii) has been filed
with the Commission under the Securities Act; and (iii) is effective under the Securities Act.
Copies of such registration statement and any amendment thereto have been delivered by the
Company to the Underwriter. As used in this Agreement:
(i) “Applicable Date” means the date on which the Prospectus (as defined below) is first
used to confirm sales of the Shares by the Underwriter;
(ii) “Effective Date” means any date as of which any part of such registration statement
relating to the Shares became, or is deemed to have become, effective under the Securities
Act in accordance with the Rules and Regulations;
(iii) “Issuer Free Writing Prospectus” means each “free writing prospectus” (as defined
in Rule 405 of the Rules and Regulations) prepared by or on behalf of the Company or used or
referred to by the Company in connection with the offering of the Shares;
(iv) “Prospectus” means the final prospectus relating to the Shares, including any
prospectus supplement thereto relating to the Shares, as filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations; and
(v) “Registration Statement” means, collectively, the various parts of such registration
statement, each as amended as of the Effective Date for such part, including the Prospectus
and all exhibits to such registration statement.
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Any reference to the base prospectus filed as part of the Registration Statement or the
Prospectus shall be deemed to refer to and include any documents incorporated by reference
therein pursuant to Form S-3 under the Securities Act. Any reference to any amendment or
supplement to the Prospectus shall be deemed to refer to and include any document filed under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of the
Prospectus, as the case may be, and incorporated by reference in the Prospectus, as the case may
be; and any reference to any amendment to the Registration Statement shall be deemed to include
any annual report of the Company on Form 10-K filed with the Commission pursuant to Section
13(a) or 15(d) of the Exchange Act after the Effective Date that is incorporated by reference in
the Registration Statement. All references to the Registration Statement, the Prospectus or any
amendment or supplement to either of the foregoing shall be deemed to include the copy thereof
filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system (“XXXXX”). The Commission has not issued any order preventing or suspending the use of
the Prospectus or suspending the effectiveness of the Registration Statement, and no proceeding
or examination for such purpose has been instituted or threatened by the Commission. The
Commission has not notified the Company of any objection to the use of the form of the
Registration Statement.
(b) The Company has been since the time of initial filing of the Registration Statement and
continues to be a “well-known seasoned issuer” (as defined in Rule 405) eligible to use Form S-3
for the offering of the Shares, including not having been an “ineligible issuer” (as defined in
Rule 405 under the Rules and Regulations) at any such time or date. The Registration Statement
is an “automatic shelf registration statement” (as defined in Rule 405 of the Rules and
Regulations) and was filed not earlier than the date that is three years prior to the Applicable
Date or any Delivery Date (as defined in Section 4).
(c) The Registration Statement conformed and will conform in all material respects on the
Effective Date, on the date hereof and on each Delivery Date, and any amendment to the
Registration Statement filed after the date hereof will conform in all material respects when
filed, to the requirements of the Securities Act and the Rules and Regulations. The documents
incorporated by reference in the Prospectus conformed, and any further documents so incorporated
will conform, when filed with the Commission, in all material respects to the requirements of
the Exchange Act or the Securities Act, as applicable, and the rules and regulations of the
Commission thereunder.
(d) The Registration Statement did not, as of the Effective Date or on the date hereof,
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 that no
representation or warranty is made as to information contained in or omitted from the
Registration Statement in reliance upon and in conformity with written information furnished to
the Company by the Underwriter or Xxxxxx Finance specifically for inclusion therein, which
information is specified in Section 8(e).
(e) The Prospectus will not, as of its date, the Applicable Date or on any Delivery Date,
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, in the light of the circumstances
under which they were made, not misleading; provided that no representation or warranty is made
as to information contained in or omitted from the Prospectus in reliance upon and in conformity
with written information furnished to the Company by the Underwriter or Xxxxxx Finance
specifically for inclusion therein, which information is specified in Section 8(e).
(f) The documents incorporated by reference in the Prospectus did not, and any further
documents filed and incorporated by reference therein will not, when filed with the Commission,
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, in the light of the circumstances
under which they were made, not misleading.
(g) The Company has not made any offer relating to the Shares that would constitute an
Issuer Free Writing Prospectus.
(h) Each “significant subsidiary” of the Company (as that term is defined in Rule 1-02 of
Regulation S-X) as of the date of this Agreement is identified on Exhibit 21 to the Company’s
Annual Report on Form 10-K filed with the Commission on
February 23, 2007 (each a “Significant
Subsidiary” and collectively, the “Significant
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Subsidiaries”) and the Company has no other subsidiary (as defined in Section 13) that
constitutes a “significant subsidiary” within such Rule 1-02 definition. Each of the Company and
its Significant Subsidiaries has been duly organized, is validly existing and in good standing
(or its local equivalent) as a corporation or other business entity under the laws of its
jurisdiction of organization and is duly qualified to do business and in good standing (or its
local equivalent) as a foreign corporation or other business entity in each jurisdiction in
which its ownership or lease of property or the conduct of its businesses requires such
qualification, except where the failure to be so qualified or in good standing (or its local
equivalent) could not, in the aggregate, reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), results of operations, shareholders’ equity,
properties, business or prospects of the Company and its subsidiaries taken as a whole (a
“Material Adverse Effect”); each of the Company and its Significant Subsidiaries has all
requisite corporate power and authority necessary to own or hold its properties and to conduct
the businesses in which it is engaged.
(i) The Company has an authorized capitalization as set forth in the Prospectus, and all of
the issued shares of capital stock of the Company have been duly authorized and validly issued,
are fully paid and non-assessable, conform to the description thereof contained in the
Prospectus and were issued in compliance with federal and state securities laws and not in
violation of any preemptive right, resale right, right of first refusal or similar right. All of
the Company’s options, warrants and other rights to purchase or exchange any securities for shares of the Company’s capital stock have been duly authorized and validly issued, conform to
the description thereof contained in the Prospectus and were issued in compliance with federal
and state securities laws. All of the issued shares of capital stock of each Significant
Subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and
(except as set forth in the Prospectus) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims, except for such liens, encumbrances,
equities or claims as could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(j) The Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(k) The execution, delivery and performance of this Agreement by the Company will not and
the consummation of the transactions contemplated by this Agreement do not and will not (i)
conflict with or result in a breach or violation of any of the terms or provisions of, impose
any lien, charge or encumbrance upon any property or assets of the Company or any of its
Significant Subsidiaries, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement, license or other agreement or instrument to which the Company or any of its
Significant Subsidiaries is a party or by which the Company or any of its Significant
Subsidiaries is bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, except for such breaches, liens or defaults as could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; (ii) result in any
violation of the provisions of the charter or by-laws (or similar organizational documents) of
the Company or any of its Significant Subsidiaries; or (iii) result in any violation of 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 Significant Subsidiaries or any of their properties
or assets, except for such violations as could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect .
(l) Except as described in the Prospectus, neither the Company nor any of its Significant
Subsidiaries has sustained, since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus, any change in the capital stock or long-term
debt of the Company or any of its Significant Subsidiaries or any adverse change, or any
development involving a prospective adverse change, in or affecting the condition (financial or
otherwise), results of operations, shareholders’ equity, properties, management, business or
prospects of the Company and its Significant Subsidiaries taken as a whole, in each case except
as could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
(m) The historical financial statements (including the related notes and supporting
schedules) included or incorporated by reference in the Prospectus comply as to form in all
material respects with the requirements of Regulation S-X under the Securities Act and present
fairly the financial condition, results of operations and cash flows of the entities purported
to be shown thereby at the dates and for the periods indicated and have been prepared in
conformity with accounting principles generally accepted in the United States applied on a
consistent basis throughout the periods involved.
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(n) Ernst & Young LLP, who have certified certain financial statements of the Company and
its consolidated subsidiaries, whose report appears in the Prospectus or is incorporated by
reference therein, is an independent public accounting firm as required by the Securities Act
and the Rules and Regulations.
(o) Neither the Company nor any subsidiary is, and as of the Applicable Date and each
Delivery Date, none of them will be, (i) an “investment company” within the meaning of such term
under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the
rules and regulations of the Commission thereunder or (ii) a “business development company” (as
defined in Section 2(a)(48) of the Investment Company Act).
(p) Except as described 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 or
assets of the Company or any of its subsidiaries is the subject that could, in the aggregate,
reasonably be expected to have a Material Adverse Effect or could, in the aggregate, reasonably
be expected to have a material adverse effect on the performance of this Agreement or the
consummation of the transactions contemplated hereby; and to the Company’s knowledge, no such
proceedings are threatened or contemplated by governmental authorities or others.
(q) The Company has not taken and will not take, directly or indirectly, any action
designed to or that has constituted or that could reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
Any certificate signed by any officer of the Company and delivered to Xxxxxx Finance, the
Underwriter or counsel for the Underwriter in connection with the offering of the Shares shall be
deemed a representation and warranty by the Company, as to matters covered thereby, to Xxxxxx
Finance and the Underwriter.
2. Satisfaction of Settlement Balance. The Company shall deliver a sufficient number of Shares
under this Agreement so that the net proceeds realized by the Underwriter upon the sale of the
Shares for the account of Xxxxxx Finance shall be in an amount at least equal to the Settlement
Balance. The Underwriter shall advise the Company when it has realized a sufficient net proceeds to
satisfy the Settlement Balance. If, after the Settlement Balance is realized, the Underwriter has
any unsold Shares, it shall promptly return such Shares to the Company. If the net proceeds from
sales of the Shares exceeds the Settlement Balance, Xxxxxx Finance shall promptly pay over the
excess after it has received payment for the applicable Shares. The Company shall provide the
Selling Shareholder with
342,520 shares of Common Stock for delivery to the Underwriters on the
first Delivery Date. If additional shares of Common Stock are required, the Selling Shareholder
shall notify the Company of the number of additional shares requested and the Delivery Date for the
additional shares. Any such notice requesting the delivery of additional shares shall be given at
least three business days before the specified Delivery Date.
3. Offering of Shares by the Underwriter. The Underwriter proposes to offer the Shares for
sale upon the terms and conditions to be set forth in the Prospectus.
4. Delivery of the Shares. The initial delivery of Shares shall be made at 10:00 A.M., New
York City time, on the third full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the Underwriter, the Company and
the Selling Shareholder. This date and delivery of Shares shall be made to the Underwriter through
the facilities of DTC unless the Underwriter shall otherwise instruct. If additional shares of
Common Stock must be delivered by the Company to satisfy its obligation to pay the Settlement
Balance, the Underwriter may specify additional delivery dates on at least three business days’
notice in accordance with Section 2. Each delivery date under this Section 4 is sometimes referred
to as a “Delivery Date.” Time shall be of the essence.
5. Further Agreements of the Company, the Selling Shareholder and the Underwriter. (a) The
Company agrees:
(i) To prepare the Prospectus in a form approved by the Underwriter and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than the earliest time at
which the Commission accepts filings through XXXXX on the Applicable Date; to make no further
amendment or any supplement to the Registration
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Statement or the Prospectus except as provided herein; to advise the Underwriter, promptly
after it receives notice thereof, of the time when any amendment or supplement to the
Registration Statement or the Prospectus has been filed and to furnish the Underwriter 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 subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or sale of the Shares; to
advise the Underwriter, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of the Prospectus,
of the suspension of the qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding or examination for any such purpose, of any
notice from the Commission objecting to the use of the form of the Registration Statement or any
post-effective amendment thereto or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order preventing or suspending the
use of the Prospectus or suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(ii) To pay the applicable Commission filing fees relating to the Shares within the time
required by Rule 456(b)(1) without regard to the proviso therein;
(iii) To furnish promptly to the Underwriter and to counsel for the Underwriter a copy of
the signed Registration Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits filed therewith;
(iv) To deliver promptly to the Underwriter such number of the following documents as the
Underwriter shall reasonably request: (A) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in each case excluding exhibits
other than this Agreement and the computation of per share earnings), (B) the Prospectus and any
amended or supplemented Prospectus, and (C) any document incorporated by reference in the
Prospectus (provided that availability of any such incorporated document through XXXXX shall
constitute delivery to the Underwriter); and, if the delivery of the Prospectus (or in lieu
thereof the notice referred to in Rule 173(a) under the Securities Act) is required at any time
after the date hereof in connection with the offering or sale of the Shares and if at such time
any events 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 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
Securities Act or the Exchange Act, to notify the Underwriter and, upon its request, to file
such document and to prepare and furnish without charge to the Underwriter and to any dealer in
securities as many copies as the Underwriter may from time to time reasonably request of an
amended or supplemented Prospectus that will correct such statement or omission or effect such
compliance;
(v) To file promptly with the Commission any amendment or supplement to the Registration
Statement or the Prospectus that may, in the judgment of the Company or the Underwriter, be
required by the Securities Act or requested by the Commission;
(vi) Prior to filing with the Commission any amendment or supplement to the Registration
Statement or the Prospectus, any document incorporated by reference in the Prospectus or any
amendment to any document incorporated by reference in the Prospectus, to furnish a copy thereof
to the Underwriter and counsel for the Underwriter and obtain the consent of the Underwriter to
the filing, such consent not to be unreasonably withheld;
(vii) Not to make any offer relating to the Shares that would constitute an Issuer Free
Writing Prospectus.
(viii) As soon as practicable after the Effective Date and in any event not later than 16
months after the date hereof, to make generally available to the Company’s security holders and
to deliver to the Underwriter an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations;
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(ix) Promptly from time to time to take such action as the Underwriter may reasonably
request to qualify the Shares for offering and sale under the securities laws of such
jurisdictions as the Underwriter 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 sale of the Shares; provided that in connection therewith the Company shall not
be required to (i) qualify as a foreign corporation in any jurisdiction in which it would not
otherwise be required to so qualify, (ii) file a general consent to service of process in any
such jurisdiction or (iii) subject itself to taxation in any jurisdiction in which it would not
otherwise be subject.
(b) The Underwriter and the Selling Shareholder agree that neither of them shall include any
“issuer information” (as defined in Rule 433) in any “free writing prospectus” (as defined in Rule
405) used or referred to by the Underwriter or the Selling Shareholder without the prior consent of
the Company (any such issuer information with respect to which use the Company has given its
consent, “Permitted Issuer Information”); provided that (i) no such consent shall be required with
respect to any such issuer information contained in any document filed by the Company with the
Commission prior to the use of such free writing prospectus and (ii) “issuer information,” as used
in this Section 5(b), shall not be deemed to include information prepared by or on behalf of the
Underwriter or the Selling Shareholder on the basis of or derived from issuer information.
6. Expenses. The Company agrees, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all costs, expenses, fees and
taxes incident to and in connection with (a) the preparation, printing and filing under the
Securities Act of the Registration Statement (including any exhibits thereto), the Prospectus and
any amendment or supplement thereto; (b) the distribution of the Registration Statement (including
any exhibits thereto), the Prospectus and any amendment or supplement thereto, or any document
incorporated by reference therein, all as provided in this Agreement; (c) the production and
distribution of this Agreement, and any other related documents in connection with the offering,
purchase, sale and delivery of the Shares; (d) any required review by the National Association of
Securities Dealers, Inc. (the “NASD”) of the terms of sale of the Shares (including related fees
and expenses of counsel to the Underwriter); (e) the qualification of the Shares under the
securities laws of the several jurisdictions as provided in Section 5(a)(ix); (f) all other costs
and expenses incident to the performance of the obligations of the Company; (g) all costs and
expenses of the Underwriter, including the costs and expenses of its counsel, any transfer taxes on
the Shares which they may sell and the expenses of advertising any offering of the Shares made by
the Underwriter, and (h) all costs and expenses of the Selling Shareholder, including the fees and
expenses of their counsel, and any transfer taxes payable in connection with the transfer of Shares
to the Underwriter.
7. Further Agreements of the Company. On the Applicable Date, the Company shall provide the
Underwriter and Xxxxxx Finance with the following documents:
(a) A written opinion of the Vice President, Associate General Counsel and Secretary of the
Company, addressed to the Underwriter and Xxxxxx Finance dated the Applicable Date,
substantially in the form attached hereto as Exhibit A-1-A.
(b) A written opinion of Xxxxxxx Coie, outside counsel to the Company, addressed to the
Underwriter and Xxxxxx Finance dated the Applicable Date, substantially in the form attached
hereto as Exhibit A-1-B.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless the Underwriter, its directors, officers
and employees and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Securities Act, and Xxxxxx Finance from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but not limited to,
any loss, claim, damage, liability or action relating to purchases and sales of Shares), to
which the Underwriter, or any of its directors, officers, employees or controlling persons or
Xxxxxx Finance may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in (A) the Registration Statement, the
Prospectus or in any amendment or supplement thereto or (B) any Issuer Free Writing Prospectus
prepared, used or referred to by the Company in violation of Section 1(g) or 5(a)(vii) or (ii)
the omission or alleged omission to state in the Registration Statement, the Prospectus, any
Issuer Free Writing Prospectus prepared, used or referred to by the Company in violation of
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Section 1(g) or 5(a)(vii) or in any amendment or supplement thereto any material fact
required to be stated therein or necessary to make the statements therein not misleading, and
shall reimburse the Underwriter and each such director, officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by the Underwriter,
director, officer, employee or controlling person in connection with investigating or defending
or preparing to defend against any such loss, claim, damage, liability or action 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, liability or action arises out of, or is based
upon, any untrue statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus, or in any such amendment or supplement thereto, in
reliance upon and in conformity with written information concerning the Underwriter or Xxxxxx
Finance furnished to the Company by the Underwriter or Xxxxxx Finance specifically for inclusion
therein, which information consists solely of the information specified in Section 8(e). The
foregoing indemnity agreement is in addition to any liability which the Company may otherwise
have to the Underwriter and Xxxxxx Finance or to any director, officer, employee or controlling
person of the Underwriter.
(b) The Underwriter and Xxxxxx Finance shall indemnify and hold harmless the Company, and
each person, if any, who controls the Company within the meaning of Section 15 of the Securities
Act, from and against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company, or any such controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Prospectus, or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in the Registration Statement the
Prospectus, or in any amendment or supplement thereto any material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information concerning the Underwriter or
Xxxxxx Finance furnished to the Company by the Underwriter or Xxxxxx Finance specifically for
inclusion therein, which information is limited to the information set forth in Section 8(e).
The foregoing indemnity agreement is in addition to any liability that the Underwriter or Xxxxxx
Finance may otherwise have to the Company, or any such controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8 of notice of any
claim or the commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided, further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 8. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from the indemnifying party to
the indemnified party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this Section 8 for any
legal or other expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however, that Lehman
Finance and the Underwriter shall have the right to employ counsel to represent jointly Lehman
Finance, the Underwriter and its directors, officers, employees and controlling persons who may
be subject to liability arising out of any claim in respect of which indemnity may be sought by
Lehman Finance or the Underwriter against the Company under this Section 8 if (i) the
indemnifying party and the Underwriter shall have so mutually agreed; (ii) the indemnifying
party has failed within a reasonable time to retain counsel reasonably satisfactory to the
Underwriter; (iii) Lehman Finance, the Underwriter and its directors, officers, employees and
controlling persons shall have reasonably concluded that there may be legal defenses available
to them that are different from or in addition to those available to the indemnifying party; or
(iv) the named parties in any such proceeding (including any impleaded parties) include both
Lehman Finance, the Underwriter or its directors, officers, employees or controlling persons, on
the one hand, and the indemnifying party, on the other hand, and representation of both sets of
parties by the same counsel would be inappropriate due to actual or potential differing
interests between them, and in any such event the fees and expenses of such separate counsel
shall be paid by the indemnifying party. No indemnifying party shall (i) without the prior
written consent of the
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indemnified parties (which consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action, suit or
proceeding and does not include any findings of fact or admissions of fault or culpability as to
the indemnified party, or (ii) be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but if settled with the
consent of the indemnifying party or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from
and against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any reason be
unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b)
in respect of any loss, claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and Lehman Finance and the
Underwriter on the other hand with respect to the statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, Lehman Finance or the Underwriter,
the intent of the parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, Lehman Finance and the Underwriter
agree that it would not be just and equitable if contributions pursuant to this Section 8(d)
were to be determined by pro rata allocation (even if the Underwriter and Lehman Finance were
treated as one entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 8(d) shall be deemed to include, for purposes of this
Section 8(d), 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 Section 8(d), the Underwriter shall not be required to contribute any amount
in excess of the amount by which the net proceeds from the sale of the Shares exceeds the amount
of any damages that the Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission and the Selling Shareholder
shall not be required to contribute any amount in excess of the amount of its net proceeds
hereunder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) Lehman Finance and the Underwriter confirm and the Company acknowledges and agrees that
the statements in the first sentence of the second paragraph under the caption “Plan of
Distribution” in the Prospectus are correct and constitute the only information concerning the
Underwriter furnished in writing to the Company by or on behalf of the Underwriter specifically
for inclusion in the Registration Statement, the Prospectus, or in any amendment or supplement
thereto and that the Selling Shareholder’s name and the number of shares listed under “Shares
Beneficially Owned Prior to the Offering”, as set forth under the caption “Selling Shareholder”
in the Prospectus are correct and constitute the only information concerning the Selling
Shareholder furnished in writing to the Company by or on behalf of the Selling Shareholder
specifically for inclusion in the Registration Statement, the Prospectus, or in any amendment or
supplement thereto.
9. No Fiduciary Obligation. The Company acknowledges and agrees that in connection with this
offering, sale of the Shares or any other services the Underwriter may be deemed to be providing
hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between the parties
or any oral representations or assurances previously or subsequently made by the Underwriter: (i)
no fiduciary or agency relationship between the Company and the Underwriter exists; (ii) the
Underwriter is not acting as advisor, expert or otherwise, to the Company, including, without
limitation, with respect to the determination of the public offering price of the Shares, and such
relationship between the Company and the Underwriter, is entirely and solely commercial, based on
arms-length negotiations; (iii) any duties and obligations that the Underwriter may have to the
Company shall be limited to those duties and obligations specifically stated herein; and (iv) the
Underwriter and its affiliates may have interests that differ from those of the Company. The
Company hereby waives any claims that the Company may have against the
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Underwriter with respect to any breach of fiduciary duty in connection with this offering.
10. Notices, Etc. All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Underwriter, shall be delivered or sent by mail or facsimile transmission
to Xxxxxx Brothers Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate
Registration (Fax: 000-000-0000), with a copy, in the case of any notice pursuant to Section
8(c)), to the Director of Litigation, Office of the General Counsel, Xxxxxx Brothers Inc.,
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Fax: 000-000-0000);
(b) if to the Company, shall be delivered or sent by mail or facsimile transmission to
the address of the Company set forth in the Registration Statement, Attention: Xxxx Xxxxxx,
Vice President and Treasurer (Fax: 000.000.0000); and
(c) if to Lehman Finance, shall be delivered or sent by mail or facsimile transmission
to Xxxxxx Brothers Finance S.A., c/x Xxxxxx Brothers Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Transaction Management Group (Fax: 000-000-0000).
Any such statements, requests, notices or agreements shall take effect at the time of receipt
thereof.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and
be binding upon the Underwriter, the Company, Lehman Finance and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the directors, officers
and employees of the Underwriter and each person or persons, if any, who control the Underwriter
within the meaning of Section 15 of the Securities Act and (B) the indemnity agreement of the
Underwriter contained in Section 8(b) of this Agreement shall be deemed to be for the benefit of
the Company, and any person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 11, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
12. Survival. The respective indemnities, representations, warranties and agreements of the
Company, Lehman Finance and the Underwriter contained in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
13.
Definition of the Terms “Business Day” and “Subsidiary”. For purposes of this Agreement,
(a) “business day” means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on
which banking institutions in New York are generally authorized or obligated by law or executive
order to close and (b) “subsidiary” has the meaning set forth in Rule 405 under the Securities Act.
14. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
15. Counterparts. This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts shall each be deemed to be an original but
all such counterparts shall together constitute one and the same instrument.
16. Headings. The headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
-9-
If the foregoing correctly sets forth the agreement between the Company, Lehman Finance and
the Underwriter, please indicate your acceptance in the space provided for that purpose below.
| Very truly yours, | ||||||||
| Safeco Corporation | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| Accepted: | ||||||||
| Xxxxxx Brothers Inc. | ||||||||
By: |
||||||||
| Authorized Representative | ||||||||
| Xxxxxx Brothers Finance, S.A. | ||||||||
By: |
||||||||
| Name: | ||||||||
Title: |
||||||||
-10-
EXHIBIT A-1-A
FORM OF OPINION OF VICE PRESIDENT, ASSOCIATE GENERAL COUNSEL AND
SECRETARY OF THE COMPANY
SECRETARY OF THE COMPANY
(i) Each of the Company and its Significant Subsidiaries has been duly organized, is validly
existing and in good standing (or its local equivalent) as a corporation or other business entity
under the laws of its jurisdiction of organization and is duly qualified to do business and is in
good standing (or its local equivalent) as a foreign corporation or other business entity in each
jurisdiction in which its ownership or lease of property or the conduct of its businesses requires
such qualification, except where the failure to be so qualified or in good standing (or its local
equivalent) could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
Each of the Company and its Significant Subsidiaries has all requisite corporate power and
authority necessary to own or hold its properties and conduct the businesses in which it is
engaged.
(ii) The Company has an authorized capitalization as set forth in the Prospectus, and all of
the issued shares of capital stock of the Company have been duly authorized and validly issued, are
fully paid and non-assessable, conform to the description thereof contained in the Prospectus and
were issued in compliance with federal and state securities laws and not in violation of any
preemptive right, resale right, right of first refusal or similar right. All of the Company’s
options, warrants and other rights to purchase or exchange any securities for shares of the
Company’s capital stock have been duly authorized and validly issued, conform to the description
thereof contained in the Prospectus and were issued in compliance with federal and state securities
laws. All of the issued shares of capital stock of each Significant Subsidiary of the Company have
been duly authorized and validly issued, are fully paid and non-assessable and are owned directly
or indirectly by the Company, free and clear of any perfected security interest and, to the
knowledge of such counsel, after due inquiry, any other liens, encumbrances, equities or claims,
except for such liens, encumbrances, equities or claims as could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(iii) The Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement. The execution, delivery and performance of the
Agreement by the Company and the consummation of the transactions contemplated by the Agreement do
not and will not (A) conflict with or result in a breach or violation of any of the terms or
provisions of, impose any lien, charge or encumbrance upon any property or assets of the Company or
any of its Significant Subsidiaries, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, license or other agreement or instrument known to such counsel to which
the Company or any of its Significant Subsidiaries is a party or by which the Company or any of its
Significant Subsidiaries is bound or to which any of the property or assets of the Company or any
of its Significant Subsidiaries is subject, except for such breaches, liens or defaults as could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect; (B) result in any
violation of the provisions of the charter or by-laws (or similar organizational documents) of the
Company or any of its Significant Subsidiaries; or (iii) result in any violation of any statute or
any 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 Agreement (the “Applicable Laws”), or any order
known to such counsel issued by any Washington State or U.S. federal court or governmental agency
or body having jurisdiction over the Company or any of its Significant Subsidiaries or any of their
properties or assets, except for such violations as could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(iv) The documents incorporated by reference in the Prospectus (other than the financial
statements and supporting schedules contained or incorporated by reference therein or omitted
therefrom, as to which such counsel need express no opinion) when they were filed with the
Commission, complied as to form in all material respects with the requirements of the Exchange Act,
and the rules and regulations thereunder; and such counsel has no reason to believe that any of
such documents, when they were filed, 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.
(v) 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 or assets of the Company or any of its subsidiaries is the subject
that could reasonably be expected to have
a Material Adverse Effect or could reasonably be expected to have a material adverse effect on
the performance of the Agreement or the consummation of the transactions contemplated thereby; and,
to such counsel’s knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
In rendering such opinion, such counsel may state that her opinion is limited to matters
governed by the federal laws of the United States of America and the laws of the State of
Washington.
Such counsel shall also have furnished to the Underwriter and the Selling Shareholder a
written statement, addressed to the Underwriter and the Selling Shareholder and dated the date
hereof, in form and substance satisfactory to the Underwriter, to the effect that (x) she, or
attorneys in her office working under her 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 representatives of and counsel to the Underwriters at
which the contents of the Registration Statement, the Prospectus and related matters were
discussed, and (y) although she 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, and has made no independent check or verification thereof, based on the foregoing,
nothing has come to the attention of such counsel that causes her to believe that:
(a) the Registration Statement or any amendment thereto (except for the financial
statements and supporting schedules and other financial data contained or incorporated by
reference therein or omitted therefrom, as to which such counsel need make no statement), as of
the latest Effective Date, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make the statements
therein not misleading; or
(b) the Prospectus (except for the financial statements and supporting schedules and other
financial data contained or incorporated by reference therein or omitted therefrom, as to which
such counsel need make no statement), as of its date and as of the date hereof, contained or
contains any untrue statement of a material fact or omitted or omits to state any material fact
necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
EXHIBIT A-1-B
FORM OF OPINION OF XXXXXXX COIE, OUTSIDE COUNSEL TO THE COMPANY
(i) The Company validly exists as a corporation in good standing under the laws of the State
of Washington.
(ii) The Shares to be delivered under the Agreement on the applicable Delivery Date have been
duly authorized, and conform to the description thereof contained in the Prospectus and, when
issued and delivered in accordance with the Transaction Agreement, will be validly issued, fully
paid and non-assessable.
(iii) The Agreement has been duly and validly authorized, executed and delivered by the
Company.
(iv) The execution, delivery and performance of the Agreement by the Company and the
consummation of the transactions contemplated by the Agreement do not and will not (i) result in
any violation of the provisions of the Articles of Incorporation or Bylaws of
the Company; or (ii) result in any violation of any Applicable Laws or any order known to such
counsel issued by any Washington State or U.S. federal court or governmental agency or body having
jurisdiction over the Company or any of its Significant Subsidiaries or any of their properties or
assets, excluding any Applicable Laws relating to the regulation of insurance companies or any
order issued by any governmental agency or body having jurisdiction over insurance companies, as to
which such counsel need express no opinion.
(v) The Registration Statement became effective under the Securities Act as of the date it was
filed with the Commission, and the Prospectus was filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations. To such counsel’s knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding or examination for
such purpose has been instituted or threatened by the Commission.
(vi) (A) The Registration Statement, excluding the documents incorporated by reference
therein, on the latest Effective Date and on the date hereof, and (B) the Prospectus, excluding the
documents incorporated by reference therein, when filed with the Commission pursuant to Rule 424(b)
and on the date hereof, were, on their face, appropriately responsive, in all material respects, to
the requirements of the Securities Act and the Rules and Regulations, except that in each case such
counsel need express no opinion with respect to the financial statements and supporting schedules
or other financial data contained or incorporated by reference in or omitted from the Registration
Statement or the Prospectus.
In rendering such opinion, such counsel may state that their opinion is limited to matters
governed by the federal laws of the United States of America and the laws of the State of
Washington. 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 the officers of the Company and
its Significant Subsidiaries and certificates of public officials.
Such counsel shall also have furnished to the Underwriter and the Selling Shareholder a
written statement, addressed to the Underwriter and the Selling Shareholder and dated the date
hereof, in form and substance satisfactory to the Underwriter, to the effect that (x) such counsel
have participated in conferences with officers and other representatives of the Company and
representatives of and counsel to the Underwriters at which the contents of the Registration
Statement, the Prospectus and related matters were discussed, and (y) although they are not passing
upon, and do not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus, and have made no independent
check or verification thereof, based on the foregoing, nothing has come to the attention of such
counsel that causes them to believe that:
(a) the Registration Statement or any amendment thereto, excluding the documents
incorporated by reference therein, as of the latest Effective Date (except for the financial
statements and supporting schedules and other financial data contained or incorporated by
reference therein or omitted therefrom, as to which they need make no statement) contained any
untrue statement of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading; or
(b) the Prospectus, excluding the documents incorporated by reference therein, as of its
date and as of the
date hereof, (except for the financial statements and supporting schedules and other
financial data contained or incorporated by reference therein or omitted therefrom, as to which
they need make no statement) contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
