EXHIBIT 1.4
SAFECO CORPORATION
DEBT SECURITIES
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UNDERWRITING AGREEMENT
August 20, 2002
Goldman, Sachs & Co.,
Banc of America Securities LLC,
J.P. Morgan Securities Inc.,
U.S. Bancorp Piper Jaffray Inc.,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
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.
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. 333-87686),
as amended by Amendment No. 1 thereto (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
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
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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
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,
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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 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,
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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 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
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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 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
6
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
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");
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(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.
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
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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 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
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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
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
10
(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:
(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
11
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;
(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
12
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;
(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;
13
(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 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;
14
The opinion of such counsel shall be limited to the laws of the United
States and the State of Washington, 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. 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) James W. Ruddy, 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;
(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;
15
(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 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 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
16
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;
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
17
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 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
18
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;
(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
19
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
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
20
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 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
21
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 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
22
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 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.
23
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:
Goldman, Sachs & Co.
Banc of America Securities LLC
J.P. Morgan Securities Inc.
U.S. Bancorp Piper Jaffray Inc.
By:
----------------------------------
(Goldman, Sachs & Co.)
25
ANNEX I
PRICING AGREEMENT
Goldman, Sachs & Co.,
[Name(s) of Co-Representative(s),]
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
_____ __, 2002
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 August 20, 2002 (the "Underwriting Agreement"), between the
Company on the one hand and Goldman, Sachs & Co., Banc of America Securities
LLC, J.P. Morgan Securities Inc. and U.S. Bancorp Piper Jaffray 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 [four] 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:
Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]
By:
------------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
3
SCHEDULE I
PRINCIPAL
AMOUNT OF
DESIGNATED
SECURITIES
TO BE
UNDERWRITER PURCHASED
----------- ---------
Goldman, Sachs & Co.............................................. $
[Name(s) of Co-Representative(s)]................................
[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, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Attention: ..................................
..................., 2002
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
______ __, 2002, 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