SAFECO CORPORATION
DEBT SECURITIES
UNDERWRITING AGREEMENT
1. INTRODUCTORY. SAFECO Corporation, a Washington
corporation ("Company"), proposes to issue and sell from time to time certain
of its debt securities registered under the registration statement referred to
in Section 2(a) ("Registered Securities"). The Registered Securities will be
issued under an indenture, dated as of March 1, 1995 ("Indenture"), among the
Company, SAFECO Credit Company, Inc. and The Chase Manhattan Bank, N.A., as
Trustee, in one or more series, which series may vary as to interest rates,
maturities, redemption provisions, selling prices and other terms, with all
such terms for any particular series of the Registered Securities being
determined at the time of sale. Particular series of the Registered
Securities will be sold pursuant to a Terms Agreement referred to in Section
7, for resale in accordance with terms of offering determined at the time of
sale.
The Registered Securities involved in any such offering are
hereinafter referred to as the "Securities." The firm or firms which agree to
purchase the Securities are hereinafter referred to as the "Underwriters" of
such Securities, and the representative or representatives of the
Underwriters, if any, specified in a Terms Agreement referred to in Section 3
are hereinafter referred to as the "Representatives"; PROVIDED, HOWEVER,
that if the Terms Agreement does not specify any representative of the
Underwriters, the term "Representatives", as used in this Agreement (other
than in Sections 2(b), 5(c) and 6 and the second sentence of Section 3), shall
mean the Underwriters.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to, and agrees with, each Underwriter that:
(a) A registration statement (No. 33-52863), including a
prospectus, relating to the Registered Securities has been filed with
the Securities and Exchange Commission ("Commission") and has become
effective. Such registration statement, as amended at the time of any
Terms Agreement referred to in Section 3 is hereinafter referred to as
the "Registration Statement", and the prospectus included in such
Registration Statement, as supplemented as contemplated by Section 3 to
reflect the terms of the Securities and the terms of offering thereof,
as first filed with the Commission pursuant to and in accordance with
Rule 424(b) ("Rule 424(b)") under the Securities Act of 1933 ("Act"),
including all material incorporated by reference therein, is hereinafter
referred to as the "Prospectus".
(b) On the effective date of the registration statement relating
to the Securities, such registration statement conformed in all respects
to the requirements of the Act, the Trust Indenture Act of 1939 ("Trust
Indenture Act") and the rules and regulations of the Commission ("Rules
and Regulations") and did not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and on the date
of each Terms Agreement referred to in Section 3, the Registration
Statement and the Prospectus will conform in all respects to the
requirements of the Act, the Trust Indenture Act and the Rules and
Regulations, and neither of such documents will include any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, except that the foregoing does not apply to statements in or
omissions from any of such documents based upon written information
furnished to the Company by any Underwriter through the Representatives,
if any, specifically for use therein.
(c) 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 Securities Exchange Act of 1934, as amended (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 the
foregoing does not apply to statements in or omissions from any of such
documents based upon written information furnished to the Company by any
Underwriter through the Representatives, if any, specifically for use
therein.
(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
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Prospectus 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 material to the Company and its subsidiaries taken as a whole,
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
material change in the capital stock or long-term debt of the Company or
any of its subsidiaries or any material adverse change, or any event or
known trend or uncertainty reasonably likely to result in a material
adverse change, in or affecting the general affairs, management,
financial positions, stockholders' equity or results of operations of
the Company and its subsidiaries taken as a whole.
(e) 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, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction; and each subsidiary of the
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation.
(f) 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 consolidated financial
position, stockholders' 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.
3. PURCHASE AND OFFERING OF SECURITIES. The obligation of
the Underwriters to purchase the Securities will be evidenced by an exchange
of telegraphic or other written communications ("Terms Agreement") at the time
the Company determines to sell the Securities. The Terms Agreement will
incorporate by reference the provisions of this Agreement, except as otherwise
provided therein, and will specify the firm or firms
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which will be Underwriters, the names of any Representatives, the principal
amount to be purchased by each Underwriter, the purchase price to be paid by
the Underwriters and the terms of the Securities not already specified in the
Indenture, including, but not limited to, interest rate, maturity, any
redemption provisions and any sinking fund requirements and whether any of the
Securities may be sold to institutional investors pursuant to Delayed Delivery
Contracts (as defined below). The Terms Agreement will also specify the time
and date of delivery and payment (such time and date, or such other time not
later than seven full business days thereafter as the Representatives and the
Company agree as the time for payment and delivery, being herein and in the
Terms Agreement referred to as the "Closing Date"), the place of delivery and
payment and any details of the terms of offering that should be reflected in
the prospectus supplement relating to the offering of the Securities. The
obligations of the Underwriters to purchase the Securities will be several and
not joint. It is understood that the Underwriters propose to offer the
Securities for sale as set forth in the Prospectus. The Securities delivered
to the Underwriters on the Closing Date may, if the Underwriters so elect, be
in the form of one or more definitive fully registered global Securities,
which will be deposited by the Representatives on behalf of the Underwriters
with The Depository Trust Company, or its nominee, for credit to the
respective accounts of the Underwriters unless otherwise directed by the
Representatives.
If the Terms Agreement provides for sales of Securities pursuant
to delayed delivery contracts, the Company authorizes the Underwriters to
solicit offers to purchase Securities pursuant to delayed delivery contracts
substantially in the form of Annex I attached hereto ("Delayed Delivery
Contracts") with such changes therein as the Company may authorize or approve.
Delayed Delivery Contracts are to be with institutional investors, including
commercial and savings banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. On the Closing Date
the Company will pay, as compensation, to the Representatives for the accounts
of the Underwriters, the fee set forth in such Terms Agreement in respect of
the principal amount of Securities to be sold pursuant to Delayed Delivery
Contracts ("Contract Securities"). The Underwriters will not have any
responsibility in respect of the validity or the performance of Delayed
Delivery Contracts. If the Company executes and delivers Delayed Delivery
Contracts, the Contract Securities will be deducted from the Securities to be
purchased by the several Underwriters and the aggregate principal amount of
Securities to be purchased by each Underwriter will be reduced pro rata in
proportion to the principal amount of Securities set forth opposite each
Underwriter's name in such Terms Agreement, except to the extent that the
Representatives determine that such reduction shall be otherwise than pro rata
and so advise the Company. The Company will advise the Representatives not
later than the business day
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prior to the Closing Date of the principal amount of Contract Securities.
4. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees
with the several Underwriters that it will furnish to O'Melveny & Myers,
counsel for the Underwriters, one signed copy of the registration statement
relating to the Registered Securities, including all exhibits, in the form it
became effective and all amendments thereto and that, in connection with each
offering of Securities:
(a) The Company will file the Prospectus with the Commission
pursuant to and in accordance with Rule 424(b)(2) (or, if applicable and
if consented to by the Representatives, subparagraph (5)) not later than
the second business day following the execution and delivery of the
Terms Agreement.
(b) The Company will advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Representatives a reasonable opportunity
to approve any such proposed amendment or supplement; and the Company
will also advise the Representatives promptly of the filing of any such
amendment or supplement and of the institution by the Commission of any
stop order proceedings in respect of the Registration Statement or of
any part thereof and will use its best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible its lifting, if
issued.
(c) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs 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 to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company promptly will prepare and file with the Commission an
amendment or supplement which will correct such statement or omission or
an amendment which will effect such compliance and the Company will
provide the Representatives with as many copies as the Representatives
may reasonably request of such amendment or supplement. Neither the
Representatives' consent to, nor the Underwriters' delivery of, any such
amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 5.
(d) As soon as practicable, but not later than 16 months, after
the date of each Terms Agreement, the Company will make generally
available to its securityholders an
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earnings statement, as defined in Rule 158(c) under the Act, covering a
period of at least 12 months beginning after the later of (i) the
effective date of the registration statement relating to the Registered
Securities, (ii) the effective date of the most recent post-effective
amendment to the Registration Statement to become effective prior to the
date of such Terms Agreement and (iii) the date of the Company's most
recent Annual Report on Form 10-K filed with the Commission prior to the
date of such Terms Agreement, which will satisfy the provisions of
Section 11(a) of the Act.
(e) The Company will furnish to the Representatives copies of
the Registration Statement, including all exhibits, any related
preliminary prospectus, any related preliminary prospectus supplement,
the Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as are reasonably
requested.
(f) The Company will arrange for the qualification of the
Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as the Representatives
designate and will continue such qualifications in effect so long as
required for the distribution.
(g) During the period of five years after the date of any Terms
Agreement, the Company will furnish to the Representatives and, upon
request, to each of the other Underwriters, if any, as soon as
practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to
the Representatives (i) as soon as available, a copy of each report or
definitive proxy statement of the Company filed with the Commission
under the Exchange Act or mailed to stockholders, and (ii) from time to
time, such other information concerning the Company as the
Representatives may reasonably request.
(h) 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 under
the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, and 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
Blue Sky and Legal Investment Memoranda and any other documents in
connection with the offering, purchase, sale and delivery of the
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Securities; (iii) all expenses in connection with the qualification of
the Securities for offering and sale under state securities laws as
provided in Section 4(f) 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 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 which are not
otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section and Section 8 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.
(i) For a period beginning at the time of execution of the Terms
Agreement and ending 30 days after the Closing Date, without the prior
consent of the Representatives, the Company will not offer, sell,
contract to sell or otherwise dispose of any United States
dollar-denominated debt securities issued or guaranteed by the Company
(excluding any medium-term notes issued by SAFECO Credit Company, Inc.
and guaranteed by the Company) and having a maturity of more than one
year from the date of issue.
5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Securities
will be subject to the accuracy of the representations and warranties on the
part of the Company herein, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional
conditions precedent:
(a) On or prior to the date of the Terms Agreement, the
Representatives shall have received a letter, dated the date of delivery
thereof, of Ernst & Young LLP or any firm of independent auditors which
succeeds Ernst & Young LLP as the outside auditors of the Company,
confirming that they are independent auditors within the meaning of the
Act and the applicable published Rules and Regulations thereunder and
stating in effect that:
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(i) in their opinion, the financial statements and
schedules audited by them and included in the Prospectus contained
in the Registration Statement relating to the Registered
Securities, as amended at the date of such letter, comply in form
in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements of the Company included in the Prospectus,
inquiries of officials of the Company who have responsibility for
financial and accounting matters and the performance of procedures
specified by the American Institute of Certified Public
Accountants for a review of interim financial information as
described in SAS No. 71, INTERIM FINANCIAL INFORMATION, nothing
came to their attention that caused them to believe that the
unaudited financial statements, if any, included in such
prospectus do not comply in form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations or are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in such prospectus;
(iii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information (including but not limited to any earnings release
information) contained in such prospectus and the documents
incorporated therein by reference (in each case to the extent that
such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and
its subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries,
a reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement
with such results, except as otherwise specified in such letter;
and
(iv) on the basis of a reading of the latest available
consolidated financial statements of the Company and any
management reports of the Company showing revenues, inquiries of
officials of the Company who have responsibility for financial and
accounting matters and other records of the Company and other
procedures specified in such letter, (A) at the date of
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the latest available consolidated balance sheet of the Company, or
at a subsequent date not more than five days prior to the date of
the Terms Agreement, there was no change in the capital stock, or
any increase in short-term indebtedness or long-term indebtedness
of the Company and its consolidated subsidiaries, and (B) for the
period from the date of the latest financial statements of the
Company included in the Prospectus to a date not more than five
days prior to the date of the Terms Agreement, there was no
decrease, as compared with the corresponding period in the
previous year, in total revenues of the Company and its
consolidated subsidiaries, in each case except for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
For purposes of this section 5(a), unaudited fourth quarter financial
information filed under Form 8-K does not constitute financial
statements, and it is not to be implied that financial statements are
available on the date of filing of such Form 8-K.
All financial statements and schedules included in material incorporated
by reference into such prospectus shall be deemed included in such
prospectus for purposes of this subsection.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 4(a) of this
Agreement. No stop order suspending the effectiveness of the
Registration Statement or of any part thereof shall have been issued and
no proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or any Underwriter, shall be contemplated by
the Commission.
(c) Subsequent to the execution of the Terms Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position or results of operations of the Company or its
subsidiaries, the effect of which is, in the judgment of the
Underwriters, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or delivery of the Securities
on the terms and in the manner contemplated by the Prospectus as amended
or supplemented; (ii) any downgrading in the rating of any debt
securities of the Company by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the Company
(other than an
9
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any
suspension or limitation of trading in securities generally on the New
York Stock Exchange, or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market; (iv) any
banking moratorium declared by Federal or New York authorities; or (v)
any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
judgment of the Underwriters, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for
the Securities.
(d) The Representatives shall have received an opinion, dated
the Closing Date, of Foster Pepper & Shefelman, counsel for the Company,
to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State
of Washington with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus; each of SAFECO Insurance Company of America and SAFECO
Life Insurance Company is duly qualified to do business as a
foreign corporation in good standing in all of the jurisdictions
identified in Schedule I hereto; and each of SAFECO Insurance
Company of America and SAFECO Life Insurance Company is duly
incorporated as an insurance company authorized to do the
insurance business done by it under the laws of the State of
Washington and is duly licensed to do such business under the laws
of each of the jurisdictions identified in Schedule I hereto;
(ii) The Indenture has been duly authorized, executed and
delivered by the Company and has been duly qualified under the
Trust Indenture Act; the Securities have been duly authorized; the
Securities other than any Contract Securities have been duly
executed, authenticated, issued and delivered; the Indenture and
the Securities other than any Contract Securities constitute, and
any Contract Securities, when executed, authenticated, issued and
delivered in the manner provided in the Indenture and sold
pursuant to Delayed Delivery Contracts, will constitute, valid and
binding obligations of the Company enforceable in accordance with
their terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation, receivership,
conservatorship,
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rehabilitation and other similar laws relating to or affecting
creditors' rights generally or by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); and the Securities other than any
Contract Securities conform, and any Contract Securities, when so
issued and delivered and sold, will conform, to the description
thereof contained in the Prospectus;
(iii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated by
the Terms Agreement (including the provisions of this Agreement)
in connection with the issuance or sale of the Securities by the
Company, 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 and made under the
Act and the Trust Indenture Act and such as may be required under
state securities laws;
(iv) The execution, delivery and performance of the
Indenture, the Terms Agreement (including the provisions of this
Agreement) and any Delayed Delivery Contracts and the issuance and
sale of the Securities and compliance with the terms and
provisions thereof will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order known to such counsel based
on a reasonable investigation of any governmental agency or body
or any court having jurisdiction over the Company or any
subsidiary of the Company or any of their properties or any
agreement or instrument to which the Company or any such
subsidiary is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, or the charter or
by-laws of the Company or any such subsidiary, and the Company has
full power and authority to authorize, issue and sell the
Securities as contemplated by the Terms Agreement (including the
provisions of this Agreement);
(v) The Registration Statement has become effective under
the Act, the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) specified in such opinion on the
date specified therein, and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and
no proceedings for that purpose have been instituted or are
pending or contemplated under
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the Act, and the registration statement relating to the Registered
Securities, as of its effective date, the Registration Statement
and the Prospectus, as of the date of the Terms Agreement and the
Closing Date, and any amendment or supplement thereto, as of its
date and the Closing Date, complied as to form in all material
respects with the requirements of the Act, the Trust Indenture Act
and the Rules and Regulations; the description in the Registration
Statement and Prospectus of statutes, legal and governmental
proceedings and contracts and other documents are accurate and
fairly present the information required to be shown; and such
counsel do not know of any legal or governmental proceedings
required to be described in the Prospectus which are not described
as required or of any contracts or documents of a character
required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration
Statement which are not described and filed as required; it being
understood that such counsel need express no opinion as to the
financial statements or other financial data contained in the
Registration Statement or the Prospectus; and
(vi) The Terms Agreement (including the provisions of this
Agreement) and any Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent accountants for the Company, and the
Representatives and counsel for the Underwriters, at which the contents
of the Registration Statement and Prospectus and related matters were
discussed, and although such counsel is not passing upon and does not
assume any responsibility for the factual accuracy, completeness or
fairness of the statements contained in the Registration Statement and
the Prospectus, such counsel shall state that on the basis of the
foregoing (relying as to materiality to a large extent upon the
representations of officers and other representatives of the Company),
no facts have come to such counsel's attention which would cause them to
believe that the Registration Statement and the prospectus included
therein at the time the Registration Statement became effective
contained any untrue statement of any material fact or omitted to state
any material fact required to be stated therein or necessary in order to
make the statements therein not misleading or that the Prospectus, as of
the date of the Terms Agreement and the Closing Date, contained any
untrue statement of any material fact or omitted to state any material
fact required to be stated therein or
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necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading (other than the
financial statements and supporting schedules and other financial
information included therein, statements in or omissions from any such
documents made in reliance upon and conformity with written information
furnished to the Company by the Underwriters through the Representatives
specifically for use therein or any statements in or omissions from that
part of the Registration Statement which constitutes the Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act
of the Trustee under the Indenture, as to which such counsel need not
comment).
In rendering the opinion to clause (iv), Foster Pepper & Shefelman
may limit their opinion as to agreements and instruments to material
agreements and instruments known to such counsel on the basis of
representations made by representatives of the Company. Foster Pepper &
Shefelman may rely as to all matters governed by New York law on the
opinion of O'Melveny & Myers referred to in Section 5(e).
(e) The Representatives shall have received from O'Melveny &
Myers, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the incorporation of the Company, the
validity of the Securities, the Registration Statement, the Prospectus
and other related matters as they may require, and the Company shall
have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters. In rendering such
opinion, O'Melveny & Myers may rely as to the incorporation of the
Company and all other matters governed by Washington law upon the
opinion of Foster Pepper & Shefelman referred to above.
(f) The Representatives shall have received a certificate, dated
the Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers,
to the best of their knowledge after reasonable investigation, shall
state that the representations and warranties of the Company in this
Agreement are true and correct, that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, that no stop order
suspending the effectiveness of the Registration Statement or of any
part thereof has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission and that,
subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change, or any event or
known trend or uncertainty reasonably likely to result in a material
adverse change, in or affecting the general affairs,
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management, financial positions, stockholders' equity or results of
operations of the Company and its subsidiaries except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(g) The Representatives shall have received a letter, dated the
Closing Date, of Ernst & Young LLP or any firm of independent auditors
which succeeds Ernst & Young LLP as the outside auditors of the Company,
which reconfirms the matters set forth in their letter delivered
pursuant to subsection (a) of this Section and states in effect that:
(i) in their opinion, any financial statements or
schedules audited by them and included in the Prospectus and not
covered by their letter delivered pursuant to subsection (a) of
this Section comply in form and all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements of the Company included in the Prospectus,
inquiries of officials of the Company who have responsibility for
financial and accounting matters and the performance of procedures
specified by the American Institute of Certified Public
Accountants for a review of interim financial information as
described in SAS No. 71, INTERIM FINANCIAL INFORMATION, nothing
came to their attention that caused them to believe that:
(A) the unaudited financial statements, if any,
included in the Prospectus and not covered by their letter
delivered pursuant to subsection (a) of this Section do not
comply in form in all material respects with the applicable
accounting requirements of the Act and the related published
Rules and Regulations or are not in conformity with
generally accepted accounting principles applied on the
basis substantially consistent with that of the audited
financial statements included in the Prospectus;
(B) the unaudited capsule information, if any,
included in the Prospectus does not agree with the amounts
set forth in the unaudited consolidated financial statements
from which it was derived or was not determined on a basis
substantially consistent with that of the audited financial
statements included in the Prospectus; or
14
(C) at the date of the latest available balance
sheet read by such accountants, or at a subsequent specified
date not more than five days prior to the Closing Date,
there was any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company and
consolidated subsidiaries, except for changes or increases
which the Prospectus discloses have occurred or may occur or
which are described in such letter;
(iii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information (including but not limited to any earnings release
information) included in the Prospectus and the documents
incorporated therein by reference and not covered by their letter
delivered pursuant to subsection (a) of this Section (in each case
to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting
records of the Company and its subsidiaries subject to the
internal controls of the Company's accounting system or are
derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results, except
as otherwise specified in such letter; and
(iv) on the basis of a reading of the latest available
consolidated financial statements of the Company and any
management reports of the Company showing revenues, inquiries of
officials of the Company who have responsibility for financial and
accounting matters and other records of the Company and other
procedures specified in such letter, for the period from the date
of the latest financial statements of the Company included in the
Prospectus to a date not more than five days prior to the Closing
Date, there was no decrease, as compared with the corresponding
period in the previous year, in total revenues of the Company and
its consolidated subsidiaries, except for any decrease which the
Prospectus discloses has occurred or may occur or which is
described in such letter.
For purposes of this section 5(g), unaudited fourth quarter financial
information filed under Form 8-K does not constitute financial
statements, and it is not to be implied that financial statements are
available on the date of filing of such Form 8-K.
15
All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included
in the Prospectus for the purposes of this subsection.
The Company will furnish the Representatives with such conformed copies of
such opinions, certificates, letters and documents as they reasonably request.
6. INDEMNIFICATION AND CONTRIBUTION. (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
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus or preliminary
prospectus supplement, 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 from any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
PROVIDED, HOWEVER, that the Company will 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 in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through
the Representatives, if any, specifically for use therein.
(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 any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus or
preliminary prospectus supplement, or arise out of or are based upon the
omission or the 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
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives, if any, specifically
for use therein, and will reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any
16
such loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under subsection (a) or (b) above. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may 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 will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the 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 or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to
17
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of 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 action or claim which
is the subject of this subsection (d). 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 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. The 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 Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 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 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 director of the Company, to each
officer of the Company who has signed the Registration Statement and to each
person, if any, who controls the Company within the meaning of the Act.
7. DEFAULT OF UNDERWRITERS. If any Underwriter or
Underwriters default in their obligations to purchase Securities under the
Terms Agreement and the aggregate principal amount of the Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the total principal amount of the Securities, the
Representatives may make arrangements satisfactory to the Company for the
purchase of such Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by the Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to
their respective commitments under this Agreement and the Terms Agreement, to
purchase the Securities that such defaulting Underwriters agreed but failed to
purchase. If any Underwriter or Underwriters so default and the aggregate
principal amount of the Securities with respect to which such default or
defaults occur exceeds 10% of the total principal amount of the Securities and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Securities by other persons are not made within 36 hours
after such default, such Terms Agreement will terminate without
18
liability on the part of any non-defaulting Underwriter or the Company, except
as provided in Section 8. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section.
Nothing herein will relieve a defaulting Underwriter from liability for its
default. The respective commitments of the several Underwriters for the
purposes of this Section shall be determined without regard to reduction in
the respective Underwriters' obligations to purchase the principal amounts of
the Securities set forth opposite their names in the Terms Agreement as a
result of Delayed Delivery Contracts entered into by the Company.
The foregoing obligations and agreements set forth in this Section
will not apply if the Terms Agreement specifies that such obligations and
agreements will not apply.
8. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter, the Company or any of their
respective representatives, officers or directors or any controlling person
and will survive delivery of and payment for the Securities. If the Terms
Agreement is terminated pursuant to Section 7 or if for any reason the
purchase of the Securities by the Underwriters under the Terms Agreement is
not consummated, the Company shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 4 and the respective obligations
of the Company and the Underwriters pursuant to Section 6 shall remain in
effect. If the purchase of the Securities by the Underwriters is not
consummated for any reason other than solely because of the termination of
this Agreement pursuant to Section 7 or the occurrence of any event specified
in clause (iii), (iv) or (v) of Section 5(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements
of counsel) reasonably incurred by them in connection with the offering of the
Securities.
9. NOTICES. All communications hereunder will be in writing
and, if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to them at their addresses furnished to the Company in writing for
the purpose of communications hereunder or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at SAFECO Plaza, Seattle,
Washington 98185, Attention: General Counsel.
10. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the Company and such Underwriters as are identified in
Terms Agreements and their respective successors and the officers and
directors and controlling persons
19
referred to in Section 6, and no other person will have any right or
obligation hereunder.
11. APPLICABLE LAW. This Agreement and the Terms Agreement
shall be governed by, and construed in accordance with, the laws of the State
of New York.
20
ANNEX I
(THREE COPIES OF THIS DELAYED DELIVERY CONTRACT
SHOULD BE SIGNED AND RETURNED TO THE ADDRESS
SHOWN BELOW SO AS TO ARRIVE NOT LATER THAN
9:00 A.M., NEW YORK TIME ON
_____________ __, 19__*)
DELAYED DELIVERY CONTRACT
[INSERT DATE OF INITIAL]
PUBLIC OFFERING]
SAFECO CORPORATION
c/o [GOLDMAN, SACHS, & CO.]
85 Broad Street
New York, New York 10004
Attention: ]
[MERRILL LYNCH & CO.]
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
North Tower
World Financial Center
New York, New York 10281]
Gentlemen:
The undersigned hereby agrees to purchase from SAFECO Corporation,
a Washington corporation ("Company"), and the Company agrees to sell to the
undersigned, [IF ONE DELAYED CLOSING, INSERT--as of the date hereof, for]
delivery on ________, 19__ ("Delivery Date"),]
$_________
principal amount of the Company's [INSERT TITLE OF SECURITIES]
("Securities"), offered by the Company's Prospectus dated _______, 19__ and a
Prospectus Supplement dated ________, 19__ relating thereto, receipt of copies
of which is hereby acknowledged, at ____% of the principal amount thereof plus
----------------
* INSERT DATE WHICH IS THIRD FULL BUSINESS DAY PRIOR TO CLOSING DATE
UNDER THE TERMS AGREEMENT.
I-1
accrued interest, if any, and on the further terms and conditions set forth in
this Delayed Delivery Contract ("Contract").
[IF TWO OR MORE DELAYED CLOSINGS, INSERT THE FOLLOWING:]
The undersigned will purchase from the Company as of the date
hereof, for delivery on the dates set forth below, Securities in the principal
amounts set forth below:
DELIVERY DATE PRINCIPAL AMOUNT
_________________________ ________________
_________________________ ________________
Each of such delivery dates is hereinafter referred to as a Delivery Date.]
Payment for the Securities that the undersigned has agreed to
purchase for delivery on [the/each] Delivery Date shall be made to the Company
or its order by certified or official bank check in New York Clearing House
(next day) funds in the office of ______________ at _____.M. on [the/such]
Delivery Date upon delivery to the undersigned of the Securities to be
purchased by the undersigned for delivery on such Delivery Date in definitive
fully registered global form and in such denomination and registered in such
name as the undersigned may designate by written or telegraphic communication
addressed to the Company not less than five full business days prior to
[the/such] Delivery Date.
It is expressly agreed that the provisions for delayed delivery
and payment are for the sole convenience of the undersigned; that the purchase
hereunder of Securities is to be regarded in all respects as a purchase as of
the date of this Contract; that the obligation of the Company to make delivery
of and accept payment for, and the obligation of the undersigned to take
delivery of and make payment for, Securities on [the/each] Delivery Date
shall be subject only to the conditions that (1) investment in the Securities
shall not at [the/such] Delivery Date be prohibited under the laws of any
jurisdiction in the United States to which the undersigned is subject and (2)
the Company shall have sold to the Underwriters the total principal amount of
the Securities less the principal amount thereof covered by this and other
similar Contracts. The undersigned represents that its investment in the
Securities is not, as of the date hereof, prohibited under the laws of any
jurisdiction to which the undersigned is subject and which governs such
investment.
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
I-2
by [a copy/copies] of the opinion[s] of counsel for the Company delivered to
the Underwriters in connection therewith.
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.
It is understood that the acceptance of any such Contract is in
the Company's sole discretion and, without limiting the foregoing, 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.
Yours very truly,
_________________________
(Name of Purchaser)
By ______________________
______________________
(Title of Signatory)
______________________
______________________
(Address of Purchaser)
Accepted, as of the above date.
SAFECO CORPORATION
By ____________________
(Insert Title)
I-3
SAFECO CORPORATION
("Company")
Debt Securities
TERMS AGREEMENT
March 22, 1995
SAFECO Corporation
SAFECO Plaza
Seattle, Washington 98185
Attention: General Counsel
Dear Sirs:
We offer to purchase, on and subject to the terms and conditions
of the Underwriting Agreement filed as an exhibit to the Company's
registration statement on Form S-3 (No. 33-52863) ("Underwriting Agreement"),
the following securities ("Securities") on the following terms:
TITLE: 7-7/8% Notes due April 1, 2005.
PRINCIPAL AMOUNT: $200,000,000.
INTEREST: 7-7/8% per annum, from March 29, 1995, payable
semiannually on April 1 and October 1, commencing
October 1, 1995, to holders of record on the
preceding March 15 or September 15, as the case
may be.
MATURITY: April 1, 2005.
OPTIONAL REDEMPTION: Not redeemable prior to April 1, 2003. Thereafter,
redeemable at the option of the Company, in whole
or in part, at 100% of the principal amount of
the Notes redeemed plus accrued interest to the
redemption date.
SINKING FUND: None.
DELAYED DELIVERY CONTRACTS: None.
PURCHASE PRICE: 98.682% of principal amount, plus
1
accrued interest, if any, from March 29, 1995.
EXPECTED REOFFERING PRICE: 99.332% of principal amount, subject to change by
the undersigned.
CLOSING: 7:00 A.M. on March 29, 1995, at the offices of
O'Melveny & Myers, 400 S. Hope Street, Los
Angeles, California 90071, in immediately
available funds.
Names and Addresses of Representatives:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner &
Smith, Incorporated
North Tower
World Financial Center
New York, New York 10281
The respective principal amounts of the Securities to be purchased
by each of the Underwriters are set forth opposite their names in Schedule A
hereto.
The provisions of the Underwriting Agreement are incorporated
herein by reference.
Please signify your acceptance of our offer by signing the
enclosed response to us in the space provided and returning it to us.
Very truly yours,
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By /s/ Goldman, Sachs & Co
--------------------------
(Goldman, Sachs & Co.)
2
SCHEDULE A
PRINCIPAL
UNDERWRITING AMOUNT
------------ ---------
Goldman, Sachs & Co. . . . . . . . . . . . $100,000,000
Merrill Lynch, Pierce, Fenner &
Smith Incorporated . . . . . . . . 100,000,000
------------
Total . . . . . . . . . . . $200,000,000
------------
------------
A-1
To: GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
We accept the offer contained in your letter dated
March 22, 1995, relating to $200,000,000 principal amount of our
7-7/8% Notes due April 1, 2005. We also confirm that, to the best of our
knowledge after reasonable investigation, the representations and warranties
of the undersigned in the Underwriting Agreement filed as an exhibit to the
undersigned's registration statement on Form S-3 (No. 33-52863) ("Underwriting
Agreement") are true and correct, no stop order suspending the effectiveness
of the Registration Statement (as defined in the Underwriting Agreement) or of
any part thereof has been issued and no proceedings for that purpose have been
instituted or, to the knowledge of the undersigned, are contemplated by the
Securities and Exchange Commission and, subsequent to the respective dates of
the most recent financial statements in the Prospectus (as defined in the
Underwriting Agreement), there has been no material adverse change in the
financial position or results of operations of the undersigned and its
subsidiaries except as set forth in or contemplated by the Prospectus.
Very truly yours,
SAFECO Corporation
By /s/ Boh A. Dickey
-----------------
Title: Exec. V.P. & CFO
SCHEDULE I
JURISDICTIONS
-------------
SAFECO Insurance Company of America California
Washington
Oregon
Texas
Illinois
Georgia
Missouri
Tennessee
Idaho
Connecticut
SAFECO Life Insurance Company California
Washington
Oregon
Texas
Illinois
Tennessee
Pennsylvania
Hawaii
Michigan