<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER , 1997
REGISTRATION NO. 333-33927
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SAFECO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
WASHINGTON 91-0742146
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
4333 BROOKLYN AVENUE N.E.
SEATTLE, WASHINGTON 98185
(206) 545-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JAMES W. RUDDY
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
4333 BROOKLYN AVENUE N.E.
SEATTLE, WASHINGTON 98185
(206) 545-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF PROCESS)
COPIES TO:
<TABLE>
<S> <C>
EVELYN CRUZ SROUFE SUSAN J. SUTHERLAND
STEPHANIE G. DALEY-WATSON SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
PERKINS COIE 919 THIRD AVENUE
1201 THIRD AVENUE, 40TH FLOOR NEW YORK, NEW YORK 10022
SEATTLE, WASHINGTON 98101-3099 (212) 735-3000
(206) 583-8888
</TABLE>
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_] _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in
connection with the offering of the Common Stock being registered hereby. All
amounts shown are estimates, except the Securities and Exchange Commission
(the "Commission") registration fee and the Nasdaq additional listing fee:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $ 227,273
Nasdaq Additional Listing Fee.................................... 17,500
Blue Sky Fees and Expenses....................................... 5,000
Printing and Engraving Expenses.................................. 200,000
Legal Fees and Expenses.......................................... 250,000
Accounting Fees and Expenses..................................... 200,000
Transfer Agent Expenses.......................................... 5,000
Miscellaneous.................................................... 95,227
----------
Total.......................................................... $1,000,000
==========
</TABLE>
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of U.S. Underwriting Agreement
1.2 Form of International Underwriting Agreement
2.1 Agreement and Plan of Merger dated as of June 6, 1997 (incorporated by
reference to the registrant's Current Report on Form 8-K filed with the
Commission on June 24, 1997 (File No. 1-6563))
2.2 Voting, Support, and Indemnification Agreement, dated June 6, 1997, by
and among SAFECO Corporation and Lincoln National Corporation
(incorporated by reference to the registrant's Schedule 13D dated June
6, 1997)
3.1 Amended and Restated Articles of Incorporation (incorporated by
reference to the registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 filed with the Commission on August 14,
1997 (File No. 1-6563) (the "Quarterly Report"))
3.2 Bylaws (incorporated by reference to the Quarterly Report)
4.1 Indenture, dated as of July 15, 1997, between the registrant and The
Chase Manhattan Bank, as Trustee (incorporated by reference to the
Quarterly Report)
4.2 Form of Junior Subordinated Deferrable Interest Debenture (included in
the Indenture incorporated by reference to Exhibit 4.1 to this
Registration Statement and to the Quarterly Report)
4.3 Certificate of Trust of SAFECO Capital Trust I (the "Trust") dated June
18, 1997 (incorporated by reference to the Quarterly Report)
4.4 Amended and Restated Declaration of Trust of the Trust, dated as of July
15, 1997, among the registrant, as sponsor, the Administrators thereof,
Chase Manhattan Bank Delaware, as Delaware Trustee, The Chase Manhattan
Bank, as Property Trustee and the holders from time to time of
undivided interests in the assets of the Trust (incorporated by
reference to the Quarterly Report)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
4.5 Form of Capital Security Certificate for the Trust (included in the
Amended and Restated Declaration of Trust incorporated by reference to
Exhibit 4.4 to this Registration Statement) (incorporated by reference
to the Quarterly Report)
4.6 Capital Securities Guarantee Agreement, dated as of July 15, 1997,
between the registrant and The Chase Manhattan Bank, as Guarantee
Trustee (incorporated by reference to the Quarterly Report)
5.1 Opinion of Perkins Coie regarding legality of shares
8.1 Opinion of Perkins Coie as to tax matters
23.1 Consent of Ernst & Young LLP
23.2 Consent of Perkins Coie (included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (1)
</TABLE>
- --------
(1) Previously filed.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Seattle, State of Washington, on
this 8th day of October, 1997.
SAFECO CORPORATION
By /s/ Roger H. Eigsti
----------------------------------
Roger H. Eigsti
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities indicated below on the 8th day of October, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
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<C> <S>
/s/ Roger H. Eigsti Chairman of the Board and Chief Executive
____________________________________ Officer (Principal Executive Officer)
Roger H. Eigsti
/s/ Boh A. Dickey President, Chief Operating Officer and
____________________________________ Director
Boh A. Dickey
Rod A. Pierson* Senior Vice President, Chief Financial
____________________________________ Officer and Secretary (Principal
Rod A. Pierson Financial Officer)
H. Paul Lowber* Vice President and Controller (Principal
____________________________________ Accounting Officer)
H. Paul Lowber
Director
____________________________________
Phyllis J. Campbell
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
Robert S. Cline* Director
____________________________________
Robert S. Cline
John W. Ellis* Director
____________________________________
John W. Ellis
William P. Gerberding* Director
____________________________________
William P. Gerberding
Joshua Green III* Director
____________________________________
Joshua Green III
William W. Krippaehne, Jr.* Director
____________________________________
William W. Krippaehne, Jr.
William G. Reed, Jr.* Director
____________________________________
William G. Reed, Jr.
Judith M. Runstad* Director
____________________________________
Judith M. Runstad
Paul W. Skinner* Director
____________________________________
Paul W. Skinner
George H. Weyerhaeuser* Director
____________________________________
George H. Weyerhaeuser
*By: /s/ Boh A. Dickey
_________________________________
Boh A. Dickey
Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Form of U.S. Underwriting Agreement
1.2 Form of International Underwriting Agreement
2.1 Agreement and Plan of Merger dated as of June 6, 1997 (incorporated by
reference to the registrant's Current Report on Form 8-K filed with the
Commission on June 24, 1997 (File No. 1-6563))
2.2 Voting, Support, and Indemnification Agreement, dated June 6, 1997, by
and among SAFECO Corporation and Lincoln National Corporation
(incorporated by reference to the registrant's Schedule 13D dated June
6, 1997)
3.1 Amended and Restated Articles of Incorporation (incorporated by reference
to the registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997 filed with the Commission on August 14, 1997 (File No. 1-
6563) (the "Quarterly Report"))
3.2 Bylaws (incorporated by reference to the Quarterly Report)
4.1 Indenture, dated as of July 15, 1997, between the registrant and The
Chase Manhattan Bank, as Trustee (incorporated by reference to the
Quarterly Report)
4.2 Form of Junior Subordinated Deferrable Interest Debenture (included in
the Indenture incorporated by reference to Exhibit 4.1 to this
Registration Statement and to the Quarterly Report)
4.3 Certificate of Trust of SAFECO Capital Trust I (the "Trust") dated June
18, 1997 (incorporated by reference to the Quarterly Report)
4.4 Amended and Restated Declaration of Trust of the Trust, dated as of July
15, 1997, among the registrant, as sponsor, the Administrators thereof,
Chase Manhattan Bank Delaware, as Delaware Trustee, The Chase Manhattan
Bank, as Property Trustee and the holders from time to time of undivided
interests in the assets of the Trust (incorporated by reference to the
Quarterly Report)
4.5 Form of Capital Security Certificate for the Trust (included in the
Amended and Restated Declaration of Trust incorporated by reference to
Exhibit 4.4 to this Registration Statement) (incorporated by reference
to the Quarterly Report)
4.6 Capital Securities Guarantee Agreement, dated as of July 15, 1997,
between the registrant and The Chase Manhattan Bank, as Guarantee
Trustee (incorporated by reference to the Quarterly Report)
5.1 Opinion of Perkins Coie regarding legality of shares
8.1 Opinion of Perkins Coie as to tax matters
23.1 Consent of Ernst & Young LLP
23.2 Consent of Perkins Coie (included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (1)
</TABLE>
- --------
(1) Previously filed.
<PAGE>
EXHIBIT 1.1
10,160,000 Shares
SAFECO CORPORATION
Common Stock
U.S. UNDERWRITING AGREEMENT
---------------------------
October , 1997
SMITH BARNEY INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
FOX-PITT, KELTON INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
As Representatives of the Several U.S. Underwriters
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
SAFECO Corporation, a Washington corporation (the "Company"), proposes to
issue and sell an aggregate of 10,160,000 shares of its common stock, no par
value (the "Firm Shares"), to the several Underwriters named in Schedule I
hereto (the "U.S. Underwriters") for whom Smith Barney Inc., Credit Suisse First
Boston Corporation, Fox-Pitt, Kelton Inc., Goldman, Sachs & Co. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated are acting as representatives (the
"Representatives"). In addition, solely for the purpose of covering over-
allotments, the Company proposes to sell to the U.S. Underwriters, upon the
terms and conditions set forth in Section 2 hereof, up to an additional
[1,905,000] shares (the "Additional Shares") of the Company's common stock. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "Shares." The Company's common stock, no par value, including the Shares
and the International Shares (as defined herein), is hereinafter referred to as
the "Common Stock."
It is understood that the Company is concurrently entering into an
International Underwriting Agreement, dated the date hereof (the "International
Underwriting Agreement"), providing for the sale by the Company of 2,540,000
shares of the Common Stock (the "International Shares") through arrangements
with certain underwriters outside the United States and Canada (the "Managers"),
for whom Smith Barney Inc., Credit Suisse First Boston (Europe) Limited, Fox-
Pitt, Kelton N.V., Goldman Sachs International and Merrill Lynch International
are acting as lead managers (the "Lead
1
<PAGE>
Managers"). The International Shares and the Shares, collectively, are herein
called the "Underwritten Shares."
The Company also understands that the Representatives and the Lead Managers
have entered into an agreement (the "Agreement Between U.S. Underwriters and
Managers") contemplating the coordination of certain transactions between the
U.S. Underwriters and the Managers and that, pursuant thereto and subject to the
conditions set forth therein, the U.S. Underwriters may purchase from the
Managers a portion of the International Shares or sell to the Managers a portion
of the Shares. The Company understands that any such purchases and sales between
the U.S. Underwriters and the Managers shall be governed by the Agreement
Between U.S. Underwriters and Managers and shall not be governed by the terms of
this Agreement or the International Underwriting Agreement.
The Company wishes to confirm as follows its agreements with you and the
other several U.S. Underwriters on whose behalf you are acting, in connection
with the several purchases of the Shares by the U.S. Underwriters.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 (Registration No. 333-33927),
including prospectuses subject to completion, relating to the Underwritten
Shares. The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended at the time it becomes effective, and as thereafter amended by post-
effective amendment. If an abbreviated registration statement is prepared and
filed with the Commission in accordance with Rule 462(b) under the Act (an
"Abbreviated Registration Statement"), the term "Registration Statement" as used
in this Agreement includes the Abbreviated Registration Statement. The term
"Prospectuses" as used in this Agreement means the prospectuses in the forms
included in the Registration Statement, or, if the prospectuses included in the
Registration Statement omit information in reliance on Rule 430A under the Act
and such information is included in prospectuses filed with the Commission
pursuant to Rule 424(b) under the Act, the term "Prospectuses" as used in this
Agreement means the prospectuses in the forms included in the Registration
Statement as supplemented by the addition of the Rule 430A information contained
in the prospectuses filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectuses" as used in this Agreement means the prospectuses
subject to completion in the forms included in the Registration Statement at the
time of the initial filing of the Registration Statement with the Commission,
and as such prospectuses shall have been amended from time to time prior to the
date of the Prospectuses.
2
<PAGE>
It is understood that two forms of Prepricing Prospectus and two forms of
Prospectus are to be used in connection with the offering and sale of the
Underwritten Shares: a Prepricing Prospectus and a Prospectus relating to the
Shares that are to be offered and sold in the United States (as defined herein)
or Canada (as defined herein) to U.S. or Canadian Persons (the "U.S. Prepricing
Prospectus" and the "U.S. Prospectus," respectively), and a Prepricing
Prospectus and a Prospectus relating to the International Shares which are to be
offered and sold outside the United States or Canada to persons other than U.S.
or Canadian Persons (the "International Prepricing Prospectus" and the
"International Prospectus," respectively). The U.S. Prospectus and the
International Prospectus are herein collectively called the "Prospectuses," and
the U.S. Prepricing Prospectus and the International Prepricing Prospectus are
herein collectively called the "Prepricing Prospectuses." For purposes of this
Agreement: "Rules and Regulations" means the rules and regulations adopted by
the Commission under either the Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable; "U.S. or Canadian Person" means any
resident or national of the United States or Canada, any corporation,
partnership or other entity created or organized in or under the laws of the
United States or Canada or any estate or trust the income of which is subject to
United States or Canadian income taxation regardless of the source of its income
(other than the foreign branch of any U.S. or Canadian Person), and includes any
United States or Canadian branch of a person other than a U.S. or Canadian
Person; "United States" means the United States of America (including the states
thereof and the District of Columbia) and its territories, its possessions and
other areas subject to its jurisdiction; and "Canada" means Canada and its
territories, its possessions and other areas subject to its jurisdiction. Any
reference in this Agreement to the Registration Statement, the Prepricing
Prospectuses or the Prospectuses shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of the Registration Statement, such Prepricing
Prospectus or such Prospectus, as the case may be, and any reference to any
amendment or supplement to the Registration Statement, any Prepricing Prospectus
or the Prospectuses shall be deemed to refer to and include any documents filed
after such date under the Exchange Act which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As used
herein, the term "Incorporated Documents" means the documents which at the time
referred to, are incorporated by reference in the Registration Statement, any
Prepricing Prospectus, the Prospectuses or any amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of the representations,
warranties and agreements contained herein and subject to all the terms and
conditions set forth herein and to such adjustments as you may determine to
avoid fractional shares, the Company hereby agrees to issue and sell to each
U.S.
3
<PAGE>
Underwriter and each U.S. Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $ per share (the "purchase
price per share"), the number of Firm Shares that bears the same proportion to
the aggregate number of Firm Shares to be issued and sold by the Company as the
number of Firm Shares set forth opposite the name of such U.S. Underwriter in
Schedule I hereto (or such number of Firm Shares increased as set forth in
Section 10 hereof) bears to the aggregate number of Firm Shares to be sold by
the Company.
Upon the basis of the representations, warranties and agreements contained
herein and subject to all the terms and conditions set forth herein, the Company
also agrees to sell to the U.S. Underwriters, and the U.S. Underwriters shall
have the right to purchase from the Company, at the purchase price per share,
pursuant to an option (the "over-allotment option") which may be exercised prior
to 5:00 p.m., New York City time, on the 30th day after the date of the U.S.
Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday, on
the next business day thereafter when the New York Stock Exchange is open for
trading), up to an aggregate of [1,905,000] Additional Shares from the Company.
Additional Shares may be purchased only for the purpose of covering over-
allotments made in connection with the offering of the Firm Shares.
Each U.S. Underwriter represents, warrants, covenants and agrees that,
except as contemplated under Section 2 of the Agreement Between U.S.
Underwriters and Managers, dated the date hereof, (i) it is not purchasing any
Shares for the account of anyone other than a U.S. or Canadian Person, (ii) it
has not offered or sold, and will not offer, sell, resell or deliver, directly
or indirectly, any Shares or distribute any U.S. Prospectus outside the United
States or Canada or to anyone other than a U.S. or Canadian Person and (iii) any
offer of Shares in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the relevant province of Canada in which
such offer is made.
3. TERMS OF PUBLIC OFFERING. The Company has been advised by you that the
U.S. Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the U.S. Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the U.S.
Underwriters of and payment for the Firm Shares shall be made at the office of
Smith Barney Inc., 388 Greenwich Street, New York, New York 10013, at 10:00
A.M., New York City time, on October , 1997 (the "Closing Date"). The place of
closing for the Firm Shares and the Closing Date may be varied by agreement
between you and the Company.
4
<PAGE>
Delivery to the U.S. Underwriters of and payment for any Additional Shares
to be purchased by the U.S. Underwriters shall be made at the aforementioned
office of Smith Barney Inc. at such time on such date (the "Option Closing
Date"), which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor earlier than two nor later than ten business
days after the giving of the notice hereinafter referred to, as shall be
specified in a written notice from you on behalf of the U.S. Underwriters to the
Company of the U.S. Underwriters' determination to purchase a number, specified
in such notice, of Additional Shares. The place of closing for any Additional
Shares and the Option Closing Date for such Shares may be varied by agreement
between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request by written notice, it being understood that a facsimile
transmission shall be deemed written notice, prior to 9:30 A.M., New York City
time, on the second business day preceding the Closing Date or any Option
Closing Date, as the case may be. Such certificates shall be made available to
you in New York City for inspection and packaging not later than 9:30 A.M., New
York City time, on the business day next preceding the Closing Date or the
Option Closing Date, as the case may be. The certificates evidencing the Firm
Shares and any Additional Shares to be purchased hereunder shall be delivered to
you on the Closing Date or the Option Closing Date, as the case may be, against
payment of the purchase price therefor in immediately available funds.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several U.S.
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
or any Abbreviated Registration Statement to be declared effective before the
offering of the Shares may commence, the Company will endeavor to cause the
Registration Statement or such post-effective amendment to become effective as
soon as possible and will advise you promptly and, if requested by you, will
confirm such advice in writing, when the Registration Statement or such post-
effective amendment has become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectuses or the Prospectuses or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the
5
<PAGE>
initiation of any proceeding for such purpose; and (iii) within the period of
time referred to in paragraph (f) below, of any change in the Company's
condition (financial or otherwise), earnings, business or operations, or of the
happening of any event, including the filing of any information, documents or
reports pursuant to the Exchange Act, that makes any statement of a material
fact made in the Registration Statement or the Prospectuses (as then amended or
supplemented) untrue or which requires the making of any additions to or changes
in the Registration Statement or the Prospectuses (as then amended or
supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectuses (as then amended or supplemented) to comply with the Act or any
other law. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to you upon your request, without charge,
three signed copies of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits to the Registration Statement, and will also furnish to you, without
charge, such number of conformed copies of the Registration Statement as
originally filed and of each amendment thereto, but without exhibits, as you may
reasonably request.
(d) The Company will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectuses of which you
shall not previously have been advised or to which you shall reasonably object
in writing after being so advised or (ii) so long as, in the written opinion of
counsel for the U.S. Underwriters (a copy of which shall be delivered to the
Company), a prospectus is required to be delivered in connection with sales by
any U.S. Underwriter or dealer, file any information, documents or reports
pursuant to the Exchange Act, without delivering a copy of such information,
documents or reports to you, as Representatives of the U.S. Underwriters, prior
to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the Company
has delivered or will deliver to you, without charge, in such quantities as you
have reasonably requested or may hereafter reasonably request, copies of each
form of the U.S. Prepricing Prospectus. The Company consents to the use, in
accordance with the provisions of the Act and with the securities or blue sky
laws of the jurisdictions in which the Shares are offered by the several U.S.
Underwriters and by dealers, prior to the date of the U.S. Prospectus, of each
U.S. Prepricing Prospectus so furnished by the Company.
6
<PAGE>
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the written
opinion of counsel for the U.S. Underwriters a U.S. Prospectus is required by
the Act to be delivered in connection with sales by any U.S. Underwriter or
dealer, the Company will expeditiously deliver to each U.S. Underwriter and each
dealer, without charge, as many copies of the U.S. Prospectus (and of any
amendment or supplement thereto) as you may reasonably request. The Company
consents to the use of the U.S. Prospectus (and of any amendment or supplement
thereto) in accordance with the provisions of the Act and with the securities or
blue sky laws of the jurisdictions in which the Shares are offered by the
several U.S. Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of time
thereafter as the U.S. Prospectus is required by the Act to be delivered in
connection with sales by any U.S. Underwriter or dealer. If, during such period
of time any event shall occur that in the judgment of the Company or in the
written opinion of counsel for the U.S. Underwriters is required to be set forth
in the U.S. Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the U.S. Prospectus to comply with the Act or any other
law, the Company will forthwith prepare and, subject to the provisions of
paragraph (d) above, file with the Commission an appropriate supplement or
amendment thereto and will expeditiously furnish to the U.S. Underwriters and
dealers a reasonable number of copies thereof.
(g) The Company will cooperate with you and with counsel for the U.S.
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several U.S. Underwriters and by dealers under the
securities or blue sky laws of such jurisdictions as you may reasonably
designate and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or qualification;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction where it
is not now so subject.
(h) The Company will make generally available to its securityholders a
consolidated earnings statement, which need not be audited, covering a twelve-
month period commencing after the effective date of the Registration Statement
and ending not later than 15 months thereafter, as soon as reasonably
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act.
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(i) During the period of two years hereafter, the Company will furnish
to you (i) if requested, a copy of each report of the Company mailed to
stockholders or filed with the Commission or the Nasdaq National Market and (ii)
from time to time such other information concerning the Company as you may
reasonably request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating this
Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by the U.S. Underwriters because of any failure or refusal
on the part of the Company to comply, in any material respect, with the terms
of, or to fulfill, in any material respect, any of the conditions of, this
Agreement, the Company agrees to reimburse the Representatives for all
reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel for the U.S. Underwriters) incurred by you in connection herewith, but
the Company shall not in any event be liable to the U.S. Underwriters for damage
on account of loss of anticipated profits from the sale by any of them of the
Shares.
(k) The Company will use the net proceeds received by it from the sale
of the Shares to be sold by it hereunder in substantially the manner described
in the Registration Statement and the Prospectuses under the caption "Use of
Proceeds".
(l) If Rule 430A of the Act is employed, the Company will timely file
the Prospectuses pursuant to Rule 424(b) under the Act and will advise you of
the time and manner of such filing.
(m) For a period of 90 days after the date of the Prospectuses,
without the prior written consent of Smith Barney Inc. the Company will not
(and, except as may be disclosed in the Prospectuses, will not announce or
disclose any intention to) offer, sell, contract to sell or otherwise dispose of
any Common Stock (or any securities convertible into or exercisable or
exchangeable for Common Stock) or grant any options or warrants to purchase
Common Stock, except for (i) sales to the U.S. Underwriters pursuant to this
Agreement and the Managers pursuant to the International Underwriting Agreement
and (ii) options or Common Stock issued pursuant to stock options or grants
under the Company's Long-term Incentive Plan of 1997 and the Company's Incentive
Plan of 1987.
(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current executive officers and directors.
(o) Except as stated in this Agreement and in the International
Underwriting Agreement and in the Prepricing Prospectuses and Prospectuses, the
Company has not taken, nor will
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it take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its commercially reasonable best efforts to
have the Underwritten Shares listed, subject to notice of issuance, on the
Nasdaq National Market concurrently with the effectiveness of the Registration
Statement.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each U.S. Underwriter that:
(a) Each U.S. Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act; provided that
this representation and warranty shall not apply to statements in or omissions
from such U.S. Prepricing Prospectus (or any amendment or supplement thereto)
made in reliance upon and in conformity with information relating to any U.S.
Underwriter or Manager furnished to the Company in writing by a U.S. Underwriter
through the Representatives or by a Manager through the Lead Managers expressly
for use therein. The Commission has not issued any order preventing or
suspending the use of any Prepricing Prospectus.
(b) The Registration Statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectuses and any supplement
or amendment thereto when filed with the Commission under Rule 424(b) under the
Act, complied or will comply in all material respects with the provisions of the
Act and will not at any such times contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided that this representation
and warranty shall not apply to statements in or omissions from the Registration
Statement or the Prospectuses made in reliance upon and in conformity with
information relating to any U.S. Underwriter or Manager furnished to the Company
in writing by a U.S. Underwriter through the Representatives or by a Manager
through the Lead Managers expressly for use therein.
(c) All the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and are free of
any preemptive or similar rights; the Shares to be issued and sold by the
Company have been duly authorized and, when issued and delivered to the U.S.
Underwriters against payment therefor in accordance with the terms hereof, will
be validly issued, fully paid and nonassessable and free of any preemptive or
similar rights; and the capital stock of the Company
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<PAGE>
conforms to the description thereof in the Registration Statement and the
Prospectuses.
(d) 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 Schedule II hereto (each a "Significant Subsidiary" and
collectively, the "Significant Subsidiaries"); the Company and each Significant
Subsidiary has been duly incorporated and is validly existing as a corporation
in good standing, or the local equivalent thereof, under the laws of the
jurisdiction of its incorporation, and has full power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses and, in the case of the Company, to
enter into and perform its obligations under each of this Agreement and the
International Underwriting Agreement; each of the Company and the Significant
Subsidiaries is duly qualified and in good standing, or the local equivalent
thereof, as a foreign corporation in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not have a material adverse effect on the condition
(financial or otherwise), earnings, business or operations of the Company and
its subsidiaries, considered as one enterprise; all of the outstanding shares of
capital stock of each Significant Subsidiary have been duly authorized and
validly issued, are fully paid and are owned by the Company, directly or through
its subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equitable right; none of the outstanding shares of
capital stock of the Significant Subsidiaries was issued in violation of any
preemptive or similar rights arising by operation of law, or under the charter
or by-laws of any Significant Subsidiary or under any agreement to which the
Company or any Significant Subsidiary is a party. Other than the subsidiaries
identified on Schedule II hereto, none of the Company's subsidiaries constitutes
a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X.
(e) Other than as previously publicly disclosed in its filings with
the Commission, there is no pending or, to the knowledge of the Company,
threatened action, suit or proceeding before any court or governmental agency,
authority or body or any arbitration involving the Company or any of its
subsidiaries of a character required to be described in the Registration
Statement or the Prospectuses or to be filed as an exhibit to the Registration
Statement which is not adequately described or filed as required by the Act or
the Exchange Act, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or the
Prospectuses or to be filed as an exhibit to the Registration Statement which is
not described or filed as required.
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(f) None of the Company nor any of its Significant Subsidiaries is (i)
in violation of its charter or by-laws, (ii) to the knowledge of the Company, in
violation of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of its Significant Subsidiaries or
of any decree of any court or governmental agency or body having jurisdiction
over the Company or any of its Significant Subsidiaries, except for such
violations that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business or operations of the Company and
its subsidiaries, considered as one enterprise or (iii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, deed of trust, mortgage, license, permit,
loan or credit agreement, note, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which any of them may be
bound or to which any of the property or assets of the Company or any of its
subsidiaries may be subject, except for such defaults that would not have a
material adverse effect on the condition (financial or otherwise), earnings,
business or operations of the Company and its subsidiaries, considered as one
enterprise; the execution and delivery of this Agreement and the International
Underwriting Agreement by the Company, the issuance and delivery of the Shares,
the consummation by the Company of the transactions contemplated in this
Agreement and the International Underwriting Agreement and the compliance by the
Company with the terms of this Agreement and the International Underwriting
Agreement have been duly authorized by all necessary corporate action on the
part of the Company and do not and will not, whether with or without the giving
of notice or passage of time or both, (i) result in any violation of the charter
or by-laws of the Company or any of its subsidiaries or (ii) result in a breach
of any of the terms or provisions of, or constitute a default or Repayment Event
(as defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries under (A) any indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it may be bound or to which any of its properties may be
subject, except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business or operations of the Company and
its subsidiaries considered as one enterprise or (B) any existing applicable
law, rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets or properties, except
for such conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business or operations of the Company and its subsidiaries
considered as one enterprise. As used herein, a "Repayment Event" means any
event or condition which
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gives the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any of its subsidiaries.
(g) The accountants, Ernst & Young LLP, who have certified or shall
certify the financial statements filed or to be filed as part of the
Registration Statement or the Prospectuses (or any amendment or supplement
thereto) are independent public accountants as required by the Act.
(h) The financial statements of the Company and its consolidated
subsidiaries, together with the related schedules and notes, included in the
Registration Statement and the Prospectuses (and any amendment or supplement
thereto), present fairly the financial position of the Company and its
consolidated subsidiaries, at the dates indicated and the results of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified, and the financial statements of American
States Financial Corporation, an Indiana corporation ("ASFC"), and its
consolidated subsidiaries, together with the related schedules and notes,
included in the Registration Statement and the Prospectuses (and any amendment
or supplement thereto), present fairly the financial position of ASFC and its
consolidated subsidiaries at the dates indicated and the results of operations,
stockholders' equity and cash flows of ASFC and its consolidated subsidiaries
for the periods specified. The foregoing financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved except as disclosed therein.
The pro forma financial statements and other pro forma financial information
included in the Registration Statement and the Prospectuses (and any amendment
or supplement thereto) present fairly the information shown therein, have been
prepared in all material respects in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described therein and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(i) Since the respective dates as of which information is given in the
Registration Statement and the Prospectuses (or any amendment or supplement
thereto), except as otherwise stated therein, there has not been (i) any
material adverse change or any development that the Company has reasonable cause
to believe will involve a prospective material adverse change in the condition
(financial or otherwise), earnings, business or operations of the Company and
its subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, (ii) any
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<PAGE>
transaction entered into by the Company or any of its subsidiaries, other than
in the ordinary course of business, that is material to the Company and its
subsidiaries, considered as one enterprise or (iii) any dividend or distribution
of any kind declared, paid or made by the Company on any class of its capital
stock (other than any regular quarterly dividends payable on the common stock of
the Company).
(j) The Company and each of its subsidiaries has good and marketable
title to all properties and assets described in the Registration Statement and
the Prospectuses as being owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as (i) are described in the
Registration Statement and the Prospectuses or in a document filed as an exhibit
to the Registration Statement, (ii) are liens for taxes not yet due or (iii) are
neither material in amount singly or in the aggregate nor materially significant
in relation to the business of the Company and its subsidiaries considered as
one enterprise; and all of the leases and subleases material to the business of
the Company and its subsidiaries considered as one enterprise, and under which
the Company or any of its subsidiaries holds properties described in the
Registration Statement and the Prospectuses, are in full force and effect, and
neither the Company nor any of its subsidiaries has any notice of any material
claim of any sort that has been asserted by anyone adverse to the rights of the
Company or any of its subsidiaries under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or any of
its subsidiaries to the continued possession of the leased or subleased premises
and assets under any such lease or sublease.
(k) Each insurance company subsidiary of the Company (collectively,
the "Insurance Subsidiaries") is duly licensed as an insurance or reinsurance
company, as the case may be, in its jurisdiction of organization and is duly
licensed or authorized as an insurer or reinsurer, as the case may be, 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 Prospectuses, except where the failure to be so
licensed or authorized would not result in a material adverse effect on the
condition (financial or otherwise), earnings, business or operations of the
Company and its subsidiaries, considered as one enterprise.
(l) Each of the Company and each Insurance Subsidiary is in compliance
with the requirements of the insurance laws of the jurisdiction of its
incorporation or domicile and any applicable regulations thereunder and has
filed all reports, registrations, documents or other information required to be
filed thereunder, except where the failure to comply or file would not have a
material adverse effect on the condition (financial or otherwise), earnings,
business or operations of the Company and its subsidiaries, considered as one
enterprise; and each of the
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<PAGE>
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 comply would not have a material adverse effect on
the condition (financial or otherwise), earnings, business or operations of the
Company and its subsidiaries, considered as one enterprise.
(m) 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 could not
reasonably be expected, singly or in the aggregate, to have a material adverse
effect on the condition (financial or otherwise), earnings, business or
operations of the Company and its subsidiaries, considered as one enterprise;
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 of the other parties to such treaties, contracts, agreements or
arrangements will be unable to perform its obligations thereunder, except to the
extent that (i) the Company or such Insurance Subsidiary has established
appropriate reserves on its financial statements or (ii) such nonperformance
could not reasonably be expected, singly or in the aggregate, to have a material
adverse effect on the condition (financial or otherwise), earnings, business or
operations of the Company and its subsidiaries, considered as one enterprise.
(n) The statutory annual and quarterly statements of the Insurance
Subsidiaries required to file such statutory statements and the statutory
balance sheets and income statements included in such statutory annual and
quarterly statements, 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 period covered thereby.
(o) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date or the Option Closing Date, if any, and (ii) completion
of the distribution of the Shares, will not distribute any offering material in
connection with the offering and sale of the Shares other than the Registration
Statement, the Prepricing Prospectuses, the Prospectuses or other materials, if
any, permitted by the Act.
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(p) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the Company
of its obligations under this Agreement or the International Underwriting
Agreement, in connection with the issuance and sale of the Shares or the
consummation of the transactions contemplated by this Agreement and the
International Underwriting Agreement, except for (i) the registration of the
Underwritten Shares under the Act (which has been completed), (ii) the receipt
of a solicitation permit from the Insurance Commissioner of the State of
Washington (which has been received), and (iii) such as may be required under
the securities or blue sky laws of any jurisdiction.
(q) The Company and each of its subsidiaries owns, possesses or has
obtained all material governmental licenses, permits, certificates, consents,
orders, approvals and other authorizations necessary to own or lease, as the
case may be, and to operate its properties and to carry on its business as
presently conducted, and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to revocation or modification of any
such licenses, permits, certificates, consents, orders, approvals or
authorizations that, in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could materially adversely affect the condition
(financial or otherwise), earnings, business or operations of the Company and
its subsidiaries, considered as one enterprise.
(r) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s) To the Company's knowledge, neither the Company nor any of its
subsidiaries nor any employee or agent of the Company or any subsidiary has made
any payment of funds of the Company or any subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the
Prospectuses.
(t) The Company and each of the subsidiaries have filed all material
tax returns required to be filed, which returns are true and correct in all
material respects, and neither the Company nor any of its subsidiaries is in
default in the payment of any
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<PAGE>
taxes which were payable pursuant to said returns or any assessments with
respect thereto, except where such default in payment would not have a material
adverse effect on the condition (financial or otherwise), earnings, business or
operations of the Company and its subsidiaries, considered as one enterprise.
(u) The Company is not and, upon sale of the Shares to be issued and
sold in accordance herewith and, upon use of the net proceeds to the Company
from such sale as described in the Registration Statement and the Prospectuses
under the caption "Use of Proceeds," will not be an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
(v) None of the Company or its subsidiaries does business with the
government of Cuba or with any person located in Cuba.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless you and each other U.S. Underwriter and each person, if any,
who controls any U.S. Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any U.S. Prepricing Prospectus or in the
Registration Statement or the U.S. Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information relating to such U.S. Underwriter or any Manager furnished in
writing to the Company by or on behalf of any U.S. Underwriter through you or by
or on behalf of any Manager through the Lead Managers expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any U.S. Prepricing Prospectus shall not
inure to the benefit of any U.S. Underwriter (or to the benefit of any person
controlling such U.S. Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by such U.S.
Underwriter to any person if it shall be established that a copy of the U.S.
Prospectus shall not have been delivered or sent to such person within the time
required by the Act and the regulations thereunder, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such U.S. Prepricing Prospectus was corrected in the U.S.
Prospectus and such correction would have cured the defect giving rise to such
loss, claim, damage, liability or expense, provided that the Company has
delivered the U.S. Prospectus to the
16
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several U.S. Underwriters in requisite quantity on a timely basis to permit such
delivery or sending.
(b) If any action, suit or proceeding shall be brought against any
U.S. Underwriter or any person controlling any U.S. Underwriter in respect of
which indemnity may be sought against the Company, such U.S. Underwriter or such
controlling person shall promptly notify the Company, and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such U.S. Underwriter or any such controlling person
shall have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such U.S. Underwriter or such
controlling person unless (i) the Company has agreed in writing to pay such fees
and expenses, (ii) the Company has failed to assume the defense and employ
counsel or (iii) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both such U.S. Underwriter or such
controlling person and the indemnifying parties and such U.S. Underwriter or
such controlling person shall have been advised by its counsel in writing that
representation of such indemnified party and the Company by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been proposed) due
to actual or potential differing interests between them (in which case the
Company shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such U.S. Underwriter or such controlling person). It is
understood, however, that the Company shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such U.S. Underwriters and controlling persons not
having actual or potential differing interests with you or among themselves,
which firm shall be designated in writing by Smith Barney Inc., and that all
such fees and expenses shall be reimbursed on a monthly basis as provided in
paragraph (a) hereof. The Company shall not be liable for any settlement of any
such action, suit or proceeding effected without its written consent, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the Company agrees to
indemnify and hold harmless any U.S. Underwriter and any such controlling
person, to the extent provided in the preceding paragraph, from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each U.S. Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and any person who
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controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing indemnity from
the Company to each U.S. Underwriter, but only with respect to information
relating to such U.S. Underwriter furnished in writing by or on behalf of such
U.S. Underwriter through you expressly for use in the Registration Statement,
the U.S. Prospectus or any U.S. Prepricing Prospectus, or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Company, any of its directors, any such officer or any such controlling
person based on the Registration Statement, the U.S. Prospectus or any U.S.
Prepricing Prospectus, or any amendment or supplement thereto, and in respect of
which indemnity may be sought against any U.S. Underwriter pursuant to this
paragraph (c), such U.S. Underwriter shall have the rights and duties given to
the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof such U.S. Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such U.S.
Underwriter's expense), and the Company, its directors, any such officer and any
such controlling person, shall have the rights and duties given to the U.S.
Underwriters by paragraph (b) above.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof or
insufficient in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the U.S. Underwriters on
the other hand from the offering of the Shares 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 U.S. Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the U.S.
Underwriters on the other hand shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Firm Shares (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the U.S. Underwriters, in each case computed on the
basis of the amounts set forth on the cover page of the U.S. Prospectus;
provided that, in the event that the U.S. Underwriters shall have purchased any
Additional Shares hereunder, any determination of the relative benefits received
by the Company or the U.S. Underwriters from the offering of the Shares shall
include the net proceeds (before deducting expenses) received by
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the Company, and the underwriting discounts and commissions received by the U.S.
Underwriters, from the sale of such Additional Shares, in each case computed on
the basis of the respective amounts set forth in the notes to the table on the
cover page of the U.S. Prospectus. The relative fault of the Company on the one
hand and the U.S. Underwriters on the other hand 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 by the U.S.
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the U.S. Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
a pro rata allocation (even if the U.S. Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no U.S.
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price of the Shares underwritten by it and distributed to the
public exceeds the amount of any damages which such U.S. 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 U.S. Underwriters' obligations to contribute pursuant to
this Section 7 are several in proportion to the respective numbers of Firm
Shares set forth opposite their names in Schedule I hereto (or such numbers of
Firm Shares increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or
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contribution under this Section 7 shall be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any U.S. Underwriter or any person
controlling any U.S. Underwriter, the Company, its directors or officers or any
person controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder and (iii) any termination of this Agreement. A successor to
any U.S. Underwriter or any person controlling any U.S. Underwriter, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
8. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The several obligations of
the U.S. Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
or an Abbreviated Registration Statement to be declared effective before the
offering of the Shares may commence, the Registration Statement or such post-
effective amendment or Abbreviated Registration Statement shall have become
effective not later than 5:30 P.M. New York City time, on the date hereof, or at
such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any U.S. Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectuses or
otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, that would have a material adverse effect on the condition (financial or
otherwise), earnings, business or operations of the Company and its
subsidiaries, considered as one enterprise, not contemplated by the
Prospectuses, which in your opinion, as Representatives of the several U.S.
Underwriters, would materially, adversely affect the market for the Shares or
(ii) any event or development relating to or involving the Company or any
officer or director of the Company which makes any statement made in the
Prospectuses untrue or which, in the opinion of the Company and its counsel or
the U.S. Underwriters and their counsel, requires the making of any addition to
or change in
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the Prospectuses in order to state a material fact required by the Act or any
other law to be stated therein or necessary in order to make the statements
therein not misleading, if amending or supplementing the Prospectuses to reflect
such event or development would, in your opinion, as Representatives of the
several U.S. Underwriters, materially adversely affect the market for the
Shares.
(c) You shall have received on the Closing Date an opinion of Perkins
Coie, counsel for the Company, dated the Closing Date and addressed to you, as
Representatives of the several U.S. Underwriters, to the effect that:
(i) The Company is a corporation validly existing and in good
standing under the laws of the State of Washington.
(ii) This Agreement has been duly authorized, executed and
delivered by the Company.
(iii) The Underwritten Shares have been duly authorized and when
issued and delivered to the U.S. Underwriters and Managers against payment
therefor in accordance with the terms of this Agreement and the
International Underwriting Agreement, will be validly issued, fully paid
and nonassessable and free of any preemptive rights.
(iv) The form of certificates for the Shares conforms to the
requirements of the Washington Business Corporation Act.
(v) The Registration Statement and all post-effective amendments,
if any, have become effective under the Act and, to the best knowledge of
such counsel after reasonable inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectuses pursuant to Rule
424(b) has been made in accordance with Rule 424(b).
(vi) The statements in the Registration Statement and the
Prospectuses under the captions "Description of Capital Stock," "Certain
U.S. Federal Income Tax Considerations for Non-U.S. Holders" and
"Information Not Required in Prospectus -- Indemnification of Directors and
Officers," to the extent that such statements constitute matters of law or
legal conclusions, have been reviewed by such counsel and are accurate in
all material respects and fairly present the information disclosed therein.
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(vii) Except as previously made or obtained, as the case may be,
under the Act or as may be required under securities or blue sky laws of
any jurisdiction governing the purchase and distribution of the
Underwritten Shares, 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 necessary or required in connection with the execution or
delivery by the Company of this Agreement or the Shares, as applicable, or
the performance by the Company of the transactions contemplated thereby.
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.
(viii) The Registration Statement and the Prospectuses and any
supplements or amendments thereto (except for the financial statements,
schedules, and notes thereto and other financial and statistical data
included therein, as to which such counsel need not express any opinion)
comply as to form in all material respects with the requirements of the
Act.
(ix) The Company is not, and following the issuance of the Shares
and the consummation of the transactions contemplated hereby (including the
use of the proceeds of the sale of the Shares, as described in the
Registration Statement and the Prospectuses under the caption "Use of
Proceeds") will not be, an "investment company" or an entity "controlled"
by an "investment company" which is required to be registered under the
1940 Act.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, counsel for
the Company, representatives of the independent accountants for the Company and
you and your counsel at which the contents of the Registration Statement and the
Prospectuses 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 but have, however,
reviewed such documents and discussed the business and affairs of the Company
and ASFC with officers and other representatives of the Company. Although such
counsel is not passing upon, and does not assume any responsibility
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for, the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectuses and has made no independent check or
verification thereof (other than as set forth in clause (vi) of such counsel's
opinion), on the basis of the foregoing, no facts have come to such counsel's
attention that have led such counsel to believe that the Registration Statement,
at the time it became effective under the Act, contained an untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectuses, as of the dates of the Prospectuses and as of the date of such
opinion, contained or contain an untrue statement of a material fact or omitted
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that such counsel need express no opinion or belief with
respect to the financial statements, schedules and other financial and
accounting data included or incorporated by reference therein or excluded
therefrom or the exhibits to the Registration Statement.
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 certificates to be
delivered pursuant to Section 8(g) and Section 8(h) 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.
(d) You shall have received on the Closing Date an opinion from James
W. Ruddy, Esq., General Counsel of the Company, dated the Closing Date and
addressed to you, as Representatives of the several U.S. Underwriters, to the
effect that:
(i) Each of the Company and the Significant Subsidiaries has been
duly incorporated and is validly existing and in good standing, or the
local equivalent thereof, under the laws of its jurisdiction of
incorporation.
(ii) Each of the Company and the Significant Subsidiaries has
full corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and
the Prospectuses and, in the case of the Company, to enter into and perform
its obligations under this Agreement and the International Underwriting
Agreement including, without limitation, the issuance of the Shares.
(iii) Each of the Company and the Significant Subsidiaries is
duly qualified and in good standing, or the local equivalent thereof, as a
foreign corporation in each jurisdiction in which the conduct of its
business or its
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ownership or leasing of real property makes such qualification necessary,
except for those failures to be so qualified or in good standing that will
not in the aggregate have a material adverse effect upon the Company and
its subsidiaries, considered as one enterprise.
(iv) None of the Company nor any of its Significant Subsidiaries
is (A) in violation of its charter or by-laws, (B) to the best knowledge of
such counsel, in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of its
Significant Subsidiaries or of any decree of any court or governmental
agency or body having jurisdiction over the Company or any of its
Significant Subsidiaries, except for such violations that would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business or operations of the Company and its subsidiaries,
considered as one enterprise or (C) to the best knowledge of such counsel,
in default in the performance or observance of any obligation, covenant or
condition contained in any contract, indenture, deed of trust, mortgage,
license, permit, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which any of them may be bound or to which any of the property or assets
of the Company or any of its subsidiaries may be subject, except for such
defaults that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business or operations of the Company
and its subsidiaries, considered as one enterprise.
(v) (A) The Company had at the date indicated a duly authorized
capitalization as set forth in the Prospectuses, (B) all of the outstanding
shares of capital stock of the Company and the Significant Subsidiaries
have been duly authorized and validly issued and are fully paid and, in the
case of the Company, non-assessable, (C) the stockholders of the Company
have no preemptive rights or, to the best knowledge of such counsel,
similar rights that entitle or will entitle any person to acquire any
shares of Common Stock upon the issuance of the Underwritten Shares by the
Company and (D) the Company owns, directly or through a subsidiary, all of
the outstanding shares of capital stock of each of the Significant
Subsidiaries free and clear of any perfected security interest or, to such
counsel's knowledge, any other security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right.
(vi) Other than as previously publicly disclosed in its filings
with the Commission, to the knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of
its
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subsidiaries, of a character required to be disclosed in the Registration
Statement or the Prospectuses which is not adequately disclosed in the
Registration Statement or the Prospectuses, and there is no franchise,
contract or other document of a character required to be described in the
Registration Statement or the Prospectuses or to be filed as an exhibit to
the Registration Statement which is not described or filed as an exhibit as
required by the Act or the Exchange Act, as the case may be.
(vii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the
performance by the Company of its obligations hereunder, in connection with
the issuance and sale of the Shares or the consummation of the transactions
contemplated by each of this Agreement and the International Underwriting
Agreement, except for (i) such as has been obtained under the Act, (ii) the
receipt of a solicitation permit from the Insurance Commissioner of the
State of Washington (which has been received) and (iii) such as may be
required under the securities or blue sky laws of any jurisdiction.
(viii) The Incorporated Documents (except for the financial
statements and other financial or accounting data included therein or
omitted therefrom, and except to the extent that any statement therein is
modified or superseded in the Registration Statement and the Prospectuses),
as of the dates they were filed with the Commission and as of the date of
this Agreement, complied as to form in all material respects with the
requirements of the Exchange Act and the Rules and Regulations.
(ix) The execution and delivery of this Agreement and the
International Underwriting Agreement by the Company, the issuance and
delivery of the Underwritten Shares, the consummation by the Company of the
transactions contemplated in this Agreement and the International
Underwriting Agreement, compliance by the Company with the terms of this
Agreement and the International Underwriting Agreement, and the application
of the net proceeds of the purchase of the Underwritten Shares in the
manner set forth under the caption "Use of Proceeds" in the Prospectuses
have been duly authorized by all necessary corporate action on the part of
the Company and do not, and will not, whether with or without the giving of
notice or passage of time or both, (A) result in any violation of the
charter or by-laws of the Company or (B) conflict with, or result in a
breach of any of the terms or provisions of, or constitute a default or
Repayment Event under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the
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Company or any Significant Subsidiary under (x) any indenture, mortgage,
loan agreement, note, lease or any other agreement or instrument to which
the Company or any Significant Subsidiary is a party or by which it may be
bound or to which any of its properties may be subject which, in the event
of any such conflict, breach, default or imposition of lien, charge or
encumbrance, could result in a material adverse change in the condition
(financial or otherwise), or in the earnings, business or operations of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, (y) any existing law, rule or
regulation of the State of Washington or the United States of America
which, in such counsel's experience, is ordinarily applicable to
transactions of the type contemplated by this Agreement or the
International Underwriting Agreement or (z) any judgment, order or decree
of any Washington State or U.S. federal court having jurisdiction over the
Company or any of its subsidiaries.
(x) The statements in the Registration Statement and the
Prospectuses under the caption "Risk Factors -- Insurance Regulation," to
the extent that such statements constitute matters of law or legal
conclusions, have been reviewed by such counsel and are accurate in all
material respects and fairly present the information disclosed therein.
In addition, such counsel shall state that he has participated in
conferences with officers and other representatives of the Company, outside
counsel for the Company, representatives of the independent accountants for the
Company and you and your counsel at which the contents of the Registration
Statement and the Prospectuses 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 Prospectuses and has made no independent check or
verification thereof (other than as set forth in clause (x) of such counsel's
opinion), on the basis of the foregoing, no facts have come to such counsel's
attention that have led him to believe that the Registration Statement, at the
time it became effective under the Act, contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectuses, as of the dates of the Prospectuses and as of the date of such
opinion, contained or contain an untrue statement of a material fact or omitted
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that such counsel need express no opinion or belief with
respect to the financial statements, schedules and other financial and
accounting data included or incorporated by reference therein or excluded
therefrom or the exhibits to the Registration Statement.
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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 certificates to be
delivered pursuant to Section 8(g) and Section 8(h) below to the extent
necessary to furnish such counsel's opinion.
(e) You shall have received on the Closing Date an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, counsel for the U.S. Underwriters, dated the
Closing Date, in form and substance reasonably satisfactory to you. 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.
(f) You shall have received letters addressed to you, as
Representatives of the several U.S. Underwriters, and dated the date hereof and
the Closing Date, from Ernst & Young LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission at or prior to the Closing Date; (ii) there shall not have been any
material change in the capital stock of the Company nor any material increase in
the short-term or long-term debt of the Company (other than in the ordinary
course of business) from that set forth or contemplated in the Registration
Statement or the Prospectuses (or any amendment or supplement thereto); (iii)
there shall not have been, since the respective dates as of which information is
given in the Registration Statement and the Prospectuses (or any amendment or
supplement thereto), except as may otherwise be stated in the Registration
Statement and the Prospectuses (or any amendment or supplement thereto), any
material adverse change in the condition (financial or otherwise), or in the
earnings, business or operations of the Company and its subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of business;
and (iv) all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer or the chief operating officer and the chief financial officer of the
Company (or such other officers as are acceptable to you), to the effect set
forth in this Section 8(g) and in Section 8(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its
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agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(i) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably requested.
(j) The Underwritten Shares shall have been listed or approved for
listing subject to notice of issuance on the Nasdaq National Market.
(k) The closing under the International Underwriting Agreement shall
have occurred concurrently with the closing hereunder on the Closing Date.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, as Representatives of the U.S. Underwriters, or to counsel for
the U.S. Underwriters, shall be deemed a representation and warranty by the
Company to each U.S. Underwriter as to the statements made therein.
The several obligations of the U.S. Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in this Section 8 shall be dated the Option Closing Date in
question and the opinions or letters called for by paragraphs (c), (d), (e) and
(f) shall be revised to reflect the sale of Additional Shares.
9. EXPENSES. The Company agrees to pay the following costs and expenses and
all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each Prepricing Prospectus and Prospectus and
each amendment or supplement to any of them; (ii) the printing (or reproduction)
and delivery (including postage, air freight charges and charges for counting
and packaging) of such copies of the Registration Statement, each Prepricing
Prospectus, the Prospectus, and all amendments or supplements to any of them as
may be reasonably requested for use in connection with the offering and sale of
the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in connection
with the original issuance and sale of the Shares; (iv) the printing (or
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reproduction) and delivery of this Agreement, the U.S. Underwriting Agreement,
the Supplemental Agreement Among U.S. Underwriters, the Agreement Among
Managers, the Agreement Between U.S. Underwriters and Managers, the
International Selling Agreement, the Blue Sky Memorandum and all other
agreements or documents printed (or reproduced) and delivered in connection with
the original issuance and sale of the Shares; (v) the listing of the
Underwritten Shares on the Nasdaq National Market; (vi) the registration or
qualification of the Shares for offer and sale under the securities or blue sky
laws of the several states as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of the Blue
Sky Memorandum and such registration and qualification); (vii) the
transportation and other expenses incurred by or on behalf of representatives of
the Company in connection with presentations to prospective purchasers of the
Shares; and (viii) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective (i)
upon the execution and delivery hereof by the parties hereto or (ii) if, at the
time this Agreement is executed and delivered, it is necessary for the
Registration Statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the Registration Statement or such post-effective amendment
has been released by the Commission. Until such time as this Agreement shall
have become effective, it may be terminated by the Company, by notifying you, or
by you, as Representatives of the several U.S. Underwriters, by notifying the
Company.
If on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the U.S. Underwriters shall fail or refuse to purchase Shares
which it or they are obligated to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting U.S. Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than one-
tenth of the aggregate number of Shares which the U.S. Underwriters are
obligated to purchase on such date, each non-defaulting U.S. Underwriter shall
be obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule I hereto (or Option Shares, as the case may
be) bears to the aggregate number of Firm Shares set forth opposite the names of
all non-defaulting U.S. Underwriters or in such other proportion as you may
specify in accordance with Section 20 of the Master Agreement Among Underwriters
of Smith Barney Inc., to purchase the Shares which such defaulting U.S.
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the U.S. Underwriters shall fail or refuse to purchase Shares
which it or they are obligated to purchase on the Closing Date or on an Option
Closing Date, as the case may be, and the aggregate number
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of Shares with respect to which such default occurs is more than one-tenth of
the aggregate number of Shares which the U.S. Underwriters are obligated to
purchase on the Closing Date and arrangements satisfactory to you and the
Company for the purchase of such Shares by one or more non-defaulting U.S.
Underwriters or other party or parties approved by you and the Company are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting U.S. Underwriter or the Company. In
any such case which does not result in termination of this Agreement, either you
or the Company shall have the right to postpone the Closing Date or an Option
Closing Date, as the case may be, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and the
Prospectuses or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting U.S. Underwriter
from liability in respect of any such default of any such Underwriter under this
Agreement. The term "U.S. Underwriter" as used in this Agreement includes, for
all purposes of this Agreement, any party not listed in Schedule I hereto who,
with your approval and the approval of the Company, purchases Shares which a
defaulting U.S. Underwriter is obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
U.S. Underwriter to the Company, by notice to the Company, if prior to the
Closing Date or any Option Closing Date (if different from the Closing Date and
then only as to the Additional Shares), as the case may be, (i) trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market shall have been suspended or materially limited,
(ii) a general moratorium on commercial banking activities in New York shall
have been declared by either federal or state authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities or other international
or domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable or inadvisable to commence
or continue the offering of the Shares at the offering price to the public set
forth on the cover page of the U.S. Prospectus or to enforce contracts for the
resale of the Shares by the U.S. Underwriters.
Notice of such termination may be given by telegram, telecopy or telephone
and shall be subsequently confirmed by letter.
12. INFORMATION FURNISHED BY THE U.S. UNDERWRITERS. The statements set
forth in the last paragraph on the cover page, the
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stabilization legend on the inside front cover page, and the statements in the
first through third, seventh through tenth, thirteenth and fourteenth paragraphs
under the caption "Underwriting" in any U.S. Prepricing Prospectus and in the
U.S. Prospectus constitute the only information furnished by or on behalf of the
U.S. Underwriters through you as such information is referred to in Sections
6(b) and 7 hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and 11
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, to SAFECO Plaza, 4333
Brooklyn Avenue N.E., Seattle, Washington 98185, Attention: Rodney A. Pierson,
with a copy to Perkins Coie, 1201 Third Avenue, 40th Floor, Seattle, Washington
98101-3099, Attention: Evelyn C. Sroufe, Esq.; or (ii) if to you, as
Representatives of the several U.S. Underwriters, care of Smith Barney Inc., 388
Greenwich Street, New York, New York 10013, Attention: Manager, Investment
Banking Division, with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022, Attention: Susan J. Sutherland, Esq.
This Agreement has been and is made solely for the benefit of the several
U.S. Underwriters, the Company, its directors and officers and the other
controlling persons referred to in Section 7 hereof, to the extent provided
herein, and no other person shall acquire or have any right under or by virtue
of this Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from any U.S.
Underwriter of any of the Shares in his or her status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
31
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several U.S. Underwriters.
Very truly yours,
SAFECO CORPORATION
By _________________________________
Name:
Title:
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
U.S. Underwriters named in
Schedule I hereto.
SMITH BARNEY INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
FOX-PITT, KELTON INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
As Representatives of the Several U.S. Underwriters
By SMITH BARNEY INC.
By ________________________________
Name:
Title:
32
<PAGE>
SCHEDULE I
SAFECO CORPORATION
------------------
<TABLE>
<CAPTION>
Number of
Underwriter Firm Shares
- ----------- -----------
<S> <C>
Smith Barney Inc.
Credit Suisse First Boston
Corporation
Fox-Pitt, Kelton, Inc.
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
----------
Total 10,160,000
==========
</TABLE>
<PAGE>
SCHEDULE II
SIGNIFICANT SUBSIDIARIES
------------------------
o SAFECO Insurance Company of America
o General Insurance Company of America
o SAFECO Life Insurance Company
o American States Financial Corporation
o American States Insurance Company
o American Economy Insurance Company
<PAGE>
EXHIBIT 1.2
2,540,000 Shares
SAFECO CORPORATION
Common Stock
INTERNATIONAL UNDERWRITING AGREEMENT
------------------------------------
October , 1997
SMITH BARNEY INC.
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
FOX-PITT, KELTON N.V.
GOLDMAN SACHS INTERNATIONAL
MERRILL LYNCH INTERNATIONAL
As Lead Managers for the Several Managers
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
SAFECO Corporation, a Washington corporation (the "Company"), proposes to
issue and sell an aggregate of 2,540,000 shares of its common stock, no par
value (the "Shares"), to the several Underwriters named in Schedule I hereto
(the "Managers") for whom Smith Barney Inc., Credit Suisse First Boston (Europe)
Limited, Fox-Pitt, Kelton N.V., Goldman Sachs International and Merrill Lynch
International are acting as representatives (the "Lead Managers"). The Company's
common stock, no par value, including the Shares and the U.S. Shares (as defined
herein), is hereinafter referred to as the "Common Stock."
It is understood that the Company is concurrently entering into a U.S.
Underwriting Agreement, dated the date hereof (the "U.S. Underwriting
Agreement"), providing for the sale of 10,160,000 shares of the Common Stock
(the "Firm U.S. Shares"), (plus an option granted by the Company to purchase up
to an additional [1,905,000] shares of Common Stock (the "Additional U.S.
Shares") solely for the purpose of covering over-allotments) through
arrangements with certain underwriters in the United States and Canada (the
"U.S. Underwriters"), for whom Smith Barney Inc., Credit Suisse First Boston
Corporation, Fox-Pitt, Kelton Inc., Goldman, Sachs & Co. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated are acting as representatives (the
"Representatives"). All shares of Common Stock proposed to be offered to the
U.S.
1
<PAGE>
Underwriters pursuant to the U.S. Underwriting Agreement, including the
Firm U.S. Shares and the Additional U.S. Shares, are herein called the "U.S.
Shares"; the U.S. Shares and the Shares, collectively, are herein called the
"Underwritten Shares."
The Company also understands that the Lead Managers and the
Representatives have entered into an agreement (the "Agreement Between U.S.
Underwriters and Managers") contemplating the coordination of certain
transactions between the Managers and the U.S. Underwriters and that, pursuant
thereto and subject to the conditions set forth therein, the Managers may
purchase from the U.S. Underwriters a portion of the U.S. Shares or sell to the
U.S. Underwriters a portion of the Shares. The Company understands that any such
purchases and sales between the Managers and the U.S. Underwriters shall be
governed by the Agreement Between U.S. Underwriters and Managers and shall not
be governed by the terms of this Agreement or the U.S. Underwriting Agreement.
The Company wishes to confirm as follows its agreements with you and
the other several Managers on whose behalf you are acting, in connection with
the several purchases of the Shares by the Managers.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 (Registration No. 333-33927),
including prospectuses subject to completion, relating to the Underwritten
Shares. The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended at the time it becomes effective, and as thereafter amended by
post-effective amendment. If an abbreviated registration statement is prepared
and filed with the Commission in accordance with Rule 462(b) under the Act (an
"Abbreviated Registration Statement"), the term "Registration Statement" as used
in this Agreement includes the Abbreviated Registration Statement. The term
"Prospectuses" as used in this Agreement means the prospectuses in the forms
included in the Registration Statement, or, if the prospectuses included in the
Registration Statement omit information in reliance on Rule 430A under the Act
and such information is included in prospectuses filed with the Commission
pursuant to Rule 424(b) under the Act, the term "Prospectuses" as used in this
Agreement means the prospectuses in the forms included in the Registration
Statement as supplemented by the addition of the Rule 430A information contained
in the prospectuses filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectuses" as used in this Agreement means the prospectuses
subject to completion in the forms included in the Registration Statement at the
time of the initial filing of the Registration Statement with the Commission,
and as
2
<PAGE>
such prospectuses shall have been amended from time to time prior to the
date of the Prospectuses.
It is understood that two forms of Prepricing Prospectus and two forms
of Prospectus are to be used in connection with the offering and sale of the
Underwritten Shares: a Prepricing Prospectus and a Prospectus relating to the
U.S. Shares that are to be offered and sold in the United States (as defined
herein) or Canada (as defined herein) to U.S. or Canadian Persons (the "U.S.
Prepricing Prospectus" and the "U.S. Prospectus," respectively), and a
Prepricing Prospectus and a Prospectus relating to the Shares which are to be
offered and sold outside the United States or Canada to persons other than U.S.
or Canadian Persons (the "International Prepricing Prospectus" and the
"International Prospectus," respectively). The U.S. Prospectus and the
International Prospectus are herein collectively called the "Prospectuses," and
the U.S. Prepricing Prospectus and the International Prepricing Prospectus are
herein collectively called the "Prepricing Prospectuses." For purposes of this
Agreement: "Rules and Regulations" means the rules and regulations adopted by
the Commission under either the Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act") as applicable; "U.S. or Canadian Person" means any
resident or national of the United States or Canada, any corporation,
partnership or other entity created or organized in or under the laws of the
United States or Canada or any estate or trust the income of which is subject to
United States or Canadian income taxation regardless of the source of its income
(other than the foreign branch of any U.S. or Canadian Person), and includes any
United States or Canadian branch of a person other than a U.S. or Canadian
Person; "United States" means the United States of America (including the states
thereof and the District of Columbia) and its territories, its possessions and
other areas subject to its jurisdiction; and "Canada" means Canada and its
territories, its possessions and other areas subject to its jurisdiction. Any
reference in this Agreement to the Registration Statement, the Prepricing
Prospectuses or the Prospectuses shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of the Registration Statement, such Prepricing
Prospectus or such Prospectus, as the case may be, and any reference to any
amendment or supplement to the Registration Statement, any Prepricing Prospectus
or the Prospectuses shall be deemed to refer to and include any documents filed
after such date under the Exchange Act which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As used
herein, the term "Incorporated Documents" means the documents which at the time
referred to, are incorporated by reference in the Registration Statement, any
Prepricing Prospectus, the Prospectuses or any amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of the representations,
warranties and agreements contained herein and
3
<PAGE>
subject to all the terms and conditions set forth herein and to such adjustments
as you may determine to avoid fractional shares, the Company hereby agrees to
issue and sell to each Manager and each Manager agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $ per share
(the "purchase price per share"), the number of Shares that bears the same
proportion to the aggregate number of Shares to be issued and sold by the
Company as the number of Shares set forth opposite the name of such Manager in
Schedule I hereto (or such number of Shares increased as set forth in Section 10
hereof) bears to the aggregate number of Shares to be sold by the Company.
Each Manager represents, warrants, covenants and agrees that, except
as contemplated under the Agreement Between U.S. Underwriters and Managers,
dated the date hereof, (i) it is not purchasing any International Shares for the
account of any U.S. or Canadian Person and (ii) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any
International Shares or distribute any International Prospectus in the United
States or Canada or to any U.S. or Canadian Person.
3. TERMS OF PUBLIC OFFERING. The Company has been advised by you that
the Managers propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the International Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Managers of and payment for the Shares shall be made at the office of Smith
Barney Inc., 388 Greenwich Street, New York, New York 10013, at 10:00 A.M., New
York City time, on October , 1997 (the "Closing Date"). The place of closing for
the Shares and the Closing Date may be varied by agreement between you and the
Company.
Certificates for the Shares to be purchased hereunder shall be
registered in such names and in such denominations as you shall request by
written notice, it being understood that a facsimile transmission shall be
deemed written notice, prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date. Such certificates shall be made
available to you in New York City for inspection and packaging not later than
9:30 A.M., New York City time, on the business day next preceding the Closing
Date. The certificates evidencing the Shares to be purchased hereunder shall be
delivered to you on the Closing Date against payment of the purchase price
therefor in immediately available funds.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Managers as follows:
4
<PAGE>
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective amendment
thereto or any Abbreviated Registration Statement to be declared effective
before the offering of the Shares may commence, the Company will endeavor to
cause the Registration Statement or such post-effective amendment to become
effective as soon as possible and will advise you promptly and, if requested by
you, will confirm such advice in writing, when the Registration Statement or
such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectuses or the Prospectuses or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or otherwise),
earnings, business or operations, or of the happening of any event, including
the filing of any information, documents or reports pursuant to the Exchange
Act, that makes any statement of a material fact made in the Registration
Statement or the Prospectuses (as then amended or supplemented) untrue or which
requires the making of any additions to or changes in the Registration Statement
or the Prospectuses (as then amended or supplemented) in order to state a
material fact required by the Act or the regulations thereunder to be stated
therein or necessary in order to make the statements therein not misleading, or
of the necessity to amend or supplement the Prospectuses (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you upon your request, without
charge, three signed copies of the Registration Statement as originally filed
with the Commission and of each amendment thereto, including financial
statements and all exhibits to the Registration Statement, and will also furnish
to you, without charge, such number of conformed copies of the Registration
Statement as originally filed and of each amendment thereto, but without
exhibits, as you may reasonably request.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectuses
of which you shall not previously have been advised or to which you shall
reasonably object in writing after being so advised or (ii) so long as, in the
written opinion of counsel for
5
<PAGE>
the Managers (a copy of which shall be delivered to the Company), a prospectus
is required to be delivered in connection with sales by any Manager or dealer,
file any information, documents or reports pursuant to the Exchange Act, without
delivering a copy of such information, documents or reports to you, as Lead
Managers for the Managers, prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the Company
has delivered or will deliver to you, without charge, in such quantities as you
have reasonably requested or may hereafter reasonably request, copies of each
form of the International Prepricing Prospectus. The Company consents to the
use, in accordance with the provisions of the Act and with the securities laws
of the jurisdictions in which the Shares are offered by the several Managers and
by dealers, prior to the date of the International Prospectus, of each
International Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the written
opinion of counsel for the Managers an International Prospectus is required by
the Act to be delivered in connection with sales by any Manager or dealer, the
Company will expeditiously deliver to each Manager and each dealer, without
charge, as many copies of the International Prospectus (and of any amendment or
supplement thereto) as you may reasonably request. The Company consents to the
use of the International Prospectus (and of any amendment or supplement thereto)
in accordance with the provisions of the Act and with the securities laws of the
jurisdictions in which the Shares are offered by the several Managers and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the International
Prospectus is required by the Act to be delivered in connection with sales by
any Manager or dealer. If, during such period of time any event shall occur that
in the judgment of the Company or in the written opinion of counsel for the
Managers is required to be set forth in the International Prospectus (as then
amended or supplemented) or should be set forth therein in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the
International Prospectus to comply with the Act or any other law, the Company
will forthwith prepare and, subject to the provisions of paragraph (d) above,
file with the Commission an appropriate supplement or amendment thereto and will
expeditiously furnish to the Managers and dealers a reasonable number of copies
thereof.
(g) The Company will cooperate with you and with counsel for
the Managers in connection with the registration or qualification of the Shares
for offering and sale by the several Managers and by dealers under the
securities laws of such
6
<PAGE>
jurisdictions as you may reasonably designate and will file such consents to
service of process or other documents necessary or appropriate in order to
effect such registration or qualification; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of the
Shares, in any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its
securityholders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as reasonably practicable after the end of such period, which consolidated
earnings statement shall satisfy the provisions of Section 11(a) of the Act.
(i) During the period of two years hereafter, the Company will
furnish to you (i) if requested, a copy of each report of the Company mailed to
stockholders or filed with the Commission or the Nasdaq National Market and (ii)
from time to time such other information concerning the Company as you may
reasonably request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating this
Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by the Managers because of any failure or refusal on the
part of the Company to comply, in any material respect, with the terms of, or to
fulfill, in any material respect, any of the conditions of, this Agreement, the
Company agrees to reimburse the Lead Managers for all reasonable out-of-pocket
expenses (including reasonable fees and expenses of counsel for the Managers)
incurred by you in connection herewith, but the Company shall not in any event
be liable to the Managers for damage on account of loss of anticipated profits
from the sale by any of them of the Shares.
(k) The Company will use the net proceeds received by it from
the sale of the Shares to be sold by it hereunder in substantially the manner
described in the Registration Statement and the Prospectuses under the caption
"Use of Proceeds".
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectuses pursuant to Rule 424(b) under the Act and will
advise you of the time and manner of such filing.
(m) For a period of 90 days after the date of the Prospectuses,
without the prior written consent of Smith Barney Inc. the Company will not
(and, except as may be disclosed in the Prospectuses, will not announce or
disclose any intention to)
7
<PAGE>
offer, sell, contract to sell or otherwise dispose of any Common Stock (or any
securities convertible into or exercisable or exchangeable for Common Stock) or
grant any options or warrants to purchase Common Stock, except for (i) sales to
the Managers pursuant to this Agreement and the U.S. Underwriters pursuant to
the U.S. Underwriting Agreement and (ii) options or Common Stock issued pursuant
to stock options or grants under the Company's Long-term Incentive Plan of 1997
and the Company's Incentive Plan of 1987.
(n) The Company has furnished or will furnish to you "lock up"
letters, in form and substance satisfactory to you, signed by each of its
current executive officers and directors.
(o) Except as stated in this Agreement and in the U.S. Underwriting
Agreement and in the Prepricing Prospectuses and Prospectuses, the Company has
not taken, nor will it take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
(p) The Company will use its commercially reasonable best efforts to
have the Underwritten Shares listed, subject to notice of issuance, on the
Nasdaq National Market concurrently with the effectiveness of the Registration
Statement.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each Manager that:
(a) Each International Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act; provided that
--------
this representation and warranty shall not apply to statements in or omissions
from such International Prepricing Prospectus (or any amendment or supplement
thereto) made in reliance upon and in conformity with information relating to
any Manager furnished to the Company in writing by a Manager through the Lead
Managers or by a U.S. Underwriter through the Representatives expressly for use
therein. The Commission has not issued any order preventing or suspending the
use of any Prepricing Prospectus.
(b) The Registration Statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectuses and any supplement
or amendment thereto when filed with the Commission under Rule 424(b) under the
Act, complied or will comply in all material respects with the provisions of the
Act and will not at any such times contain an untrue statement of a material
fact or omit to state a material fact required to be
8
<PAGE>
stated therein or necessary to make the statements therein not misleading;
provided that this representation and warranty shall not apply to statements in
or omissions from the Registration Statement or the Prospectuses made in
reliance upon and in conformity with information relating to any Manager
furnished to the Company in writing by a Manager through the Lead Managers or by
a U.S. Underwriter through the Representatives expressly for use therein.
(c) All the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and are free of
any preemptive or similar rights; the Shares to be issued and sold by the
Company have been duly authorized and, when issued and delivered to the Managers
against payment therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights; and the capital stock of the Company conforms to the description thereof
in the Registration Statement and the Prospectuses.
(d) 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 Schedule II hereto (each a "Significant Subsidiary" and
collectively, the "Significant Subsidiaries"); the Company and each Significant
Subsidiary has been duly incorporated and is validly existing as a corporation
in good standing, or the local equivalent thereof, under the laws of the
jurisdiction of its incorporation, and has full power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses and, in the case of the Company, to
enter into and perform its obligations under each of this Agreement and the U.S.
Underwriting Agreement; each of the Company and the Significant Subsidiaries is
duly qualified and in good standing, or the local equivalent thereof, as a
foreign corporation in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, business or operations of the Company and its
subsidiaries, considered as one enterprise; all of the outstanding shares of
capital stock of each Significant Subsidiary have been duly authorized and
validly issued, are fully paid and are owned by the Company, directly or through
its subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equitable right; none of the outstanding shares of
capital stock of the Significant Subsidiaries was issued in violation of any
preemptive or similar rights arising by operation of law, or under the charter
or by-laws of any Significant Subsidiary or under any agreement to which the
Company or any Significant Subsidiary is a party. Other than the subsidiaries
identified on Schedule II hereto, none of the Company's subsidiaries constitutes
a
9
<PAGE>
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X.
(e) Other than as previously publicly disclosed in its filings
with the Commission, there is no pending or, to the knowledge of the Company,
threatened action, suit or proceeding before any court or governmental agency,
authority or body or any arbitration involving the Company or any of its
subsidiaries of a character required to be described in the Registration
Statement or the Prospectuses or to be filed as an exhibit to the Registration
Statement which is not adequately described or filed as required by the Act or
the Exchange Act, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or the
Prospectuses or to be filed as an exhibit to the Registration Statement which is
not described or filed as required.
(f) None of the Company nor any of its Significant Subsidiaries is
(i) in violation of its charter or by-laws, (ii) to the knowledge of the
Company, in violation of any law, ordinance, administrative or governmental rule
or regulation applicable to the Company or any of its Significant Subsidiaries
or of any decree of any court or governmental agency or body having jurisdiction
over the Company or any of its Significant Subsidiaries, except for such
violations that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business or operations of the Company and
its subsidiaries, considered as one enterprise or (iii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, deed of trust, mortgage, license, permit,
loan or credit agreement, note, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which any of them may be
bound or to which any of the property or assets of the Company or any of its
subsidiaries may be subject, except for such defaults that would not have a
material adverse effect on the condition (financial or otherwise), earnings,
business or operations of the Company and its subsidiaries, considered as one
enterprise; the execution and delivery of this Agreement and the U.S.
Underwriting Agreement by the Company, the issuance and delivery of the Shares,
the consummation by the Company of the transactions contemplated in this
Agreement and the U.S. Underwriting Agreement and the compliance by the Company
with the terms of this Agreement and the U.S. Underwriting Agreement have been
duly authorized by all necessary corporate action on the part of the Company and
do not and will not, whether with or without the giving of notice or passage of
time or both, (i) result in any violation of the charter or by-laws of the
Company or any of its subsidiaries or (ii) result in a breach of any of the
terms or provisions of, or constitute a default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries under (A) any indenture, mortgage, loan agreement, note, lease or
other agreement or
10
<PAGE>
instrument to which the Company or any of its subsidiaries is a party or by
which it may be bound or to which any of its properties may be subject, except
for such conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business or operations of the Company and its subsidiaries
considered as one enterprise or (B) any existing applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets or properties, except
for such conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business or operations of the Company and its subsidiaries
considered as one enterprise. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any of its subsidiaries.
(g) The accountants, Ernst & Young LLP, who have certified or shall
certify the financial statements filed or to be filed as part of the
Registration Statement or the Prospectuses (or any amendment or supplement
thereto) are independent public accountants as required by the Act.
(h) The financial statements of the Company and its consolidated
subsidiaries, together with the related schedules and notes, included in the
Registration Statement and the Prospectuses (and any amendment or supplement
thereto), present fairly the financial position of the Company and its
consolidated subsidiaries, at the dates indicated and the results of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified, and the financial statements of American
States Financial Corporation, an Indiana corporation ("ASFC"), and its
consolidated subsidiaries, together with the related schedules and notes,
included in the Registration Statement and the Prospectuses (and any amendment
or supplement thereto), present fairly the financial position of ASFC and its
consolidated subsidiaries at the dates indicated and the results of operations,
stockholders' equity and cash flows of ASFC and its consolidated subsidiaries
for the periods specified. The foregoing financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved except as disclosed therein.
The pro forma financial statements and other pro forma financial information
included in the Registration Statement and the Prospectuses (and any amendment
or supplement thereto) present fairly the information shown therein, have been
prepared in all material respects in accordance with the Commission's rules and
guidelines with respect to pro forma
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financial statements, have been properly compiled on the pro forma bases
described therein and, in the opinion of the Company, the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(i) Since the respective dates as of which information is given in
the Registration Statement and the Prospectuses (or any amendment or supplement
thereto), except as otherwise stated therein, there has not been (i) any
material adverse change or any development that the Company has reasonable cause
to believe will involve a prospective material adverse change in the condition
(financial or otherwise), earnings, business or operations of the Company and
its subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, (ii) any transaction entered into by the Company or
any of its subsidiaries, other than in the ordinary course of business, that is
material to the Company and its subsidiaries, considered as one enterprise or
(iii) any dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock (other than any regular quarterly
dividends payable on the common stock of the Company).
(j) The Company and each of its subsidiaries has good and marketable
title to all properties and assets described in the Registration Statement and
the Prospectuses as being owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as (i) are described in the
Registration Statement and the Prospectuses or in a document filed as an exhibit
to the Registration Statement, (ii) are liens for taxes not yet due or (iii) are
neither material in amount singly or in the aggregate nor materially significant
in relation to the business of the Company and its subsidiaries considered as
one enterprise; and all of the leases and subleases material to the business of
the Company and its subsidiaries considered as one enterprise, and under which
the Company or any of its subsidiaries holds properties described in the
Registration Statement and the Prospectuses, are in full force and effect, and
neither the Company nor any of its subsidiaries has any notice of any material
claim of any sort that has been asserted by anyone adverse to the rights of the
Company or any of its subsidiaries under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or any of
its subsidiaries to the continued possession of the leased or subleased premises
and assets under any such lease or sublease.
(k) Each insurance company subsidiary of the Company (collectively,
the "Insurance Subsidiaries") is duly licensed as an insurance or reinsurance
company, as the case may be, in its jurisdiction of organization and is duly
licensed or authorized as an insurer or reinsurer, as the case may be, 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
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the Registration Statement and the Prospectuses, except where the failure to be
so licensed or authorized would not result in a material adverse effect on the
condition (financial or otherwise), earnings, business or operations of the
Company and its subsidiaries, considered as one enterprise.
(l) Each of the Company and each Insurance Subsidiary is in compliance
with the requirements of the insurance laws of the jurisdiction of its
incorporation or domicile and any applicable regulations thereunder and has
filed all reports, registrations, documents or other information required to be
filed thereunder, except where the failure to comply or file would not have a
material adverse effect on the condition (financial or otherwise), earnings,
business or operations of the Company and its subsidiaries, considered as one
enterprise; 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 comply would not have a
material adverse effect on the condition (financial or otherwise), earnings,
business or operations of the Company and its subsidiaries, considered as one
enterprise.
(m) 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 could not
reasonably be expected, singly or in the aggregate, to have a material adverse
effect on the condition (financial or otherwise), earnings, business or
operations of the Company and its subsidiaries, considered as one enterprise;
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 of the other parties to such treaties, contracts, agreements or
arrangements will be unable to perform its obligations thereunder, except to the
extent that (i) the Company or such Insurance Subsidiary has established
appropriate reserves on its financial statements or (ii) such nonperformance
could not reasonably be expected, singly or in the aggregate, to have a material
adverse effect on the condition (financial or otherwise), earnings, business or
operations of the Company and its subsidiaries, considered as one enterprise.
(n) The statutory annual and quarterly statements of the Insurance
Subsidiaries required to file such statutory statements and the statutory
balance sheets and income statements included in such statutory annual and
quarterly statements, most recently filed in each jurisdiction, have been
prepared in conformity with
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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 period covered thereby.
(o) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, the Prepricing
Prospectuses, the Prospectuses or other materials, if any, permitted by the
Act.
(p) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the Company
of its obligations under this Agreement or the U.S. Underwriting Agreement, in
connection with the issuance and sale of the Shares or the consummation of the
transactions contemplated by this Agreement and the U.S. Underwriting Agreement,
except for (i) the registration of the Underwritten Shares under the Act (which
has been completed), (ii) the receipt of a solicitation permit from the
Insurance Commissioner of the State of Washington (which has been received), and
(iii) such as may be required under the securities or blue sky laws of any
jurisdiction.
(q) The Company and each of its subsidiaries owns, possesses or has
obtained all material governmental licenses, permits, certificates, consents,
orders, approvals and other authorizations necessary to own or lease, as the
case may be, and to operate its properties and to carry on its business as
presently conducted, and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to revocation or modification of any
such licenses, permits, certificates, consents, orders, approvals or
authorizations that, in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could materially adversely affect the condition
(financial or otherwise), earnings, business or operations of the Company and
its subsidiaries, considered as one enterprise.
(r) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(s) To the Company's knowledge, neither the Company nor any of its
subsidiaries nor any employee or agent of the Company or any subsidiary has made
any payment of funds of the Company or any subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the
Prospectuses.
(t) The Company and each of the subsidiaries have filed all material
tax returns required to be filed, which returns are true and correct in all
material respects, and neither the Company nor any of its subsidiaries is in
default in the payment of any taxes which were payable pursuant to said returns
or any assessments with respect thereto, except where such default in payment
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business or operations of the Company and its
subsidiaries, considered as one enterprise.
(u) The Company is not and, upon sale of the Shares to be issued and
sold in accordance herewith and, upon use of the net proceeds to the Company
from such sale as described in the Registration Statement and the Prospectuses
under the caption "Use of Proceeds," will not be an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
(v) None of the Company or its subsidiaries does business with the
government of Cuba or with any person located in Cuba.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless you and each other Manager and each person, if any, who
controls any Manager within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any International Prepricing Prospectus or in the
Registration Statement or the International Prospectus or in any amendment or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to such Manager or any U.S. Underwriter furnished
in writing to the Company by or on behalf of any Manager through you or by or on
behalf of any U.S. Underwriter through the Representatives expressly for use in
connection therewith; provided, however, that the indemnification
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contained in this paragraph (a) with respect to any International Prepricing
Prospectus shall not inure to the benefit of any Manager (or to the benefit of
any person controlling such Manager) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by such Manager to any
person if it shall be established that a copy of the International Prospectus
shall not have been delivered or sent to such person within the time required by
the Act and the regulations thereunder, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
such International Prepricing Prospectus was corrected in the International
Prospectus and such correction would have cured the defect giving rise to such
loss, claim, damage, liability or expense, provided that the Company has
delivered the International Prospectus to the several Managers in requisite
quantity on a timely basis to permit such delivery or sending.
(b) If any action, suit or proceeding shall be brought against any
Manager or any person controlling any Manager in respect of which indemnity may
be sought against the Company, such Manager or such controlling person shall
promptly notify the Company, and the Company shall assume the defense thereof,
including the employment of counsel and payment of all fees and expenses. Such
Manager or any such controlling person shall have the right to employ separate
counsel in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Manager or such controlling person unless (i) the Company has agreed in
writing to pay such fees and expenses, (ii) the Company has failed to assume the
defense and employ counsel or (iii) the named parties to any such action, suit
or proceeding (including any impleaded parties) include both such Manager or
such controlling person and the indemnifying parties and such Manager or such
controlling person shall have been advised by its counsel in writing that
representation of such indemnified party and the Company by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been proposed) due
to actual or potential differing interests between them (in which case the
Company shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Manager or such controlling person). It is
understood, however, that the Company shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Managers and controlling persons not having
actual or potential differing interests with you or among themselves, which firm
shall be designated in writing by Smith Barney Inc., and that all such fees and
expenses shall be reimbursed on a monthly basis as provided in paragraph (a)
hereof. The Company shall not be liable for any settlement of any such action,
suit or proceeding effected without
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its written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
Company agrees to indemnify and hold harmless any Manager and any such
controlling person, to the extent provided in the preceding paragraph, from and
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
(c) Each Manager agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and any person who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Manager, but only with respect to
information relating to such Manager furnished in writing by or on behalf of
such Manager through you expressly for use in the Registration Statement, the
International Prospectus or any International Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer or any such
controlling person based on the Registration Statement, the International
Prospectus or any International Prepricing Prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought against any
Manager pursuant to this paragraph (c), such Manager shall have the rights and
duties given to the Company by paragraph (b) above (except that if the Company
shall have assumed the defense thereof such Manager shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such Manager's
expense), and the Company, its directors, any such officer and any such
controlling person shall have the rights and duties given to the Managers by
paragraph (b) above.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof or
insufficient in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Managers on the other
hand from the offering of the Shares 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
Managers on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and
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the Managers on the other hand shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Shares (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Managers, in each case computed on the basis of the
amounts set forth on the cover page of the International Prospectus. The
relative fault of the Company on the one hand and the Managers on the other hand
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 by the Managers on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Company and the Managers agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by a pro
rata allocation (even if the Managers were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Manager shall be required to contribute any
amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Manager 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 Managers' obligations to contribute
pursuant to this Section 7 are several in proportion to the respective numbers
of Shares set forth opposite their names in Schedule I hereto (or such numbers
of Shares increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
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(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Manager or any person controlling any
Manager, the Company, its directors or officers or any person controlling the
Company, (ii) acceptance of any Shares and payment therefor hereunder and (iii)
any termination of this Agreement. A successor to any Manager or any person
controlling any Manager, or to the Company, its directors or officers or any
person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
7.
8. CONDITIONS OF MANAGERS' OBLIGATIONS. The several obligations of the
Managers to purchase the Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
or an Abbreviated Registration Statement to be declared effective before the
offering of the Shares may commence, the Registration Statement or such post-
effective amendment or Abbreviated Registration Statement shall have become
effective not later than 5:30 P.M. New York City time, on the date hereof, or at
such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Manager, threatened
by the Commission, and any request of the Commission for additional information
(to be included in the Registration Statement or the Prospectuses or otherwise)
shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, that would have a material adverse effect on the condition (financial or
otherwise), earnings, business or operations of the Company and its
subsidiaries, considered as one enterprise, not contemplated by the
Prospectuses, which in your opinion, as Lead Managers of the several Managers,
would materially, adversely affect the market for the Shares or (ii) any event
or development relating to or involving the Company or any officer or director
of the Company which makes any statement made in the Prospectuses untrue or
which, in the opinion of the Company and its counsel or the Managers and their
counsel, requires
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the making of any addition to or change in the Prospectuses in
order to state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectuses to reflect such event or development
would, in your opinion, as Lead Managers for the several Managers, materially
adversely affect the market for the Shares.
(c) You shall have received on the Closing Date an opinion of
Perkins Coie, counsel for the Company, dated the Closing Date and addressed to
you, as Lead Managers for the several Managers, to the effect that:
(i) The Company is a corporation validly existing and in good
standing under the laws of the State of Washington.
(ii) This Agreement has been duly authorized, executed and
delivered by the Company.
(iii) The Underwritten Shares have been duly authorized and when
issued and delivered to the Managers and U.S. Underwriters against payment
therefor in accordance with the terms of this Agreement and the U.S.
Underwriting Agreement, will be validly issued, fully paid and
nonassessable and free of any preemptive rights.
(iv) The form of certificates for the Shares conforms to the
requirements of the Washington Business Corporation Act.
(v) The Registration Statement and all post-effective amendments,
if any, have become effective under the Act and, to the best knowledge of
such counsel after reasonable inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectuses pursuant to Rule
424(b) has been made in accordance with Rule 424(b).
(vi) The statements in the Registration Statement and the
Prospectuses under the captions "Description of Capital Stock," "Certain
U.S. Federal Income Tax Considerations for Non-U.S. Holders" and
"Information Not Required in Prospectus-- Indemnification of Directors and
Officers," to the extent that such statements constitute matters of law or
legal conclusions, have been reviewed by such counsel and are accurate in
all material respects and fairly present the information disclosed
therein.
(vii) Except as previously made or obtained, as the case may be,
under the Act or as may be required under securities or blue sky laws of
any jurisdiction governing the purchase and distribution of the
Underwritten Shares, and except for any
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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 necessary or required in
connection with the execution or delivery by the Company of this Agreement
or the Shares, as applicable, or the performance by the Company of the
transactions contemplated thereby. 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.
(viii) The Registration Statement and the Prospectuses and any
supplements or amendments thereto (except for the financial statements,
schedules, and notes thereto and other financial and statistical data
included therein, as to which such counsel need not express any opinion)
comply as to form in all material respects with the requirements of the
Act.
(ix) The Company is not, and following the issuance of the Shares
and the consummation of the transactions contemplated hereby (including
the use of the proceeds of the sale of the Shares, as described in the
Registration Statement and the Prospectuses under the caption "Use of
Proceeds") will not be, an "investment company" or an entity "controlled"
by an "investment company" which is required to be registered under the
1940 Act.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, counsel for
the Company, representatives of the independent accountants for the Company and
you and your counsel at which the contents of the Registration Statement and the
Prospectuses 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 but have, however,
reviewed such documents and discussed the business and affairs of the Company
and ASFC 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 Prospectuses and has made no independent check or
verification thereof (other than as set forth in clause (vi) of such counsel's
opinion), on the basis of the foregoing, no facts have come to such counsel's
attention that have led such counsel to believe that the Registration Statement,
at the time it became effective under the Act, contained an untrue statement of
a material fact or omitted to state any
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material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectuses, as of the dates of the
Prospectuses and as of the date of such opinion, contained or contain an untrue
statement of a material fact or omitted or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that such counsel need
express no opinion or belief with respect to the financial statements, schedules
and other financial and accounting data included or incorporated by reference
therein or excluded therefrom or the exhibits to the Registration Statement.
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 certificates
to be delivered pursuant to Section 8(g) and Section 8(h) 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.
(d) You shall have received on the Closing Date an opinion from James
W. Ruddy, Esq., General Counsel of the Company, dated the Closing Date and
addressed to you, as Lead Managers for the several Managers, to the effect that:
(i) Each of the Company and the Significant Subsidiaries has been
duly incorporated and is validly existing and in good standing, or the
local equivalent thereof, under the laws of its jurisdiction of
incorporation.
(ii) Each of the Company and the Significant Subsidiaries has
full corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and
the Prospectuses and, in the case of the Company, to enter into and perform
its obligations under this Agreement and the U.S. Underwriting Agreement
including, without limitation, the issuance of the Shares.
(iii) Each of the Company and the Significant Subsidiaries is
duly qualified and in good standing, or the local equivalent thereof, as a
foreign corporation in each jurisdiction in which the conduct of its
business or its ownership or leasing of real property makes such
qualification necessary, except for those failures to be so qualified or in
good standing that will not in the aggregate have a material adverse effect
upon the Company and its subsidiaries, considered as one enterprise.
(iv) None of the Company nor any of its Significant Subsidiaries
is (A) in violation of its charter or by-laws, (B) to the best knowledge of
such counsel, in violation of any law, ordinance, administrative or
governmental rule or regulation
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applicable to the Company or any of its Significant Subsidiaries or of any
decree of any court or governmental agency or body having jurisdiction over
the Company or any of its Significant Subsidiaries, except for such
violations that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business or operations of the Company
and its subsidiaries, considered as one enterprise or (C) to the best
knowledge of such counsel, in default in the performance or observance of
any obligation, covenant or condition contained in any contract, indenture,
deed of trust, mortgage, license, permit, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them may be bound or to which
any of the property or assets of the Company or any of its subsidiaries may
be subject, except for such defaults that would not have a material adverse
effect on the condition (financial or otherwise), earnings, business or
operations of the Company and its subsidiaries, considered as one
enterprise.
(v) (A) The Company had at the date indicated a duly authorized
capitalization as set forth in the Prospectuses, (B) all of the outstanding
shares of capital stock of the Company and the Significant Subsidiaries
have been duly authorized and validly issued and are fully paid and, in the
case of the Company, non-assessable, (C) the stockholders of the Company
have no preemptive rights or, to the best knowledge of such counsel,
similar rights that entitle or will entitle any person to acquire any
shares of Common Stock upon the issuance of the Underwritten Shares by the
Company and (D) the Company owns, directly or through a subsidiary, all of
the outstanding shares of capital stock of each of the Significant
Subsidiaries free and clear of any perfected security interest or, to such
counsel's knowledge, any other security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right.
(vi) Other than as previously publicly disclosed in its filings
with the Commission, to the knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries, of a character required to be disclosed in the
Registration Statement or the Prospectuses which is not adequately
disclosed in the Registration Statement or the Prospectuses, and there is
no franchise, contract or other document of a character required to be
described in the Registration Statement or the Prospectuses or to be filed
as an exhibit to the Registration Statement which is not described or filed
as an exhibit as required by the Act or the Exchange Act, as the case may
be.
(vii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or
23
<PAGE>
required for the performance by the Company of its obligations hereunder,
in connection with the issuance and sale of the Shares or the consummation
of the transactions contemplated by each of this Agreement and the U.S.
Underwriting Agreement, except for (i) such as has been obtained under the
Act, (ii) the receipt of a solicitation permit from the Insurance
Commissioner of the State of Washington (which has been received) and (iii)
such as may be required under the securities or blue sky laws of any
jurisdiction.
(viii) The Incorporated Documents (except for the financial
statements and other financial or accounting data included therein or
omitted therefrom, and except to the extent that any statement therein is
modified or superseded in the Registration Statement and the Prospectuses),
as of the dates they were filed with the Commission and as of the date of
this Agreement, complied as to form in all material respects with the
requirements of the Exchange Act and the Rules and Regulations.
(ix) The execution and delivery of this Agreement and the U.S.
Underwriting Agreement by the Company, the issuance and delivery of the
Underwritten Shares, the consummation by the Company of the transactions
contemplated in this Agreement and the U.S. Underwriting Agreement,
compliance by the Company with the terms of this Agreement and the U.S.
Underwriting Agreement, and the application of the net proceeds of the
purchase of the Underwritten Shares in the manner set forth under the
caption "Use of Proceeds" in the Prospectuses have been duly authorized by
all necessary corporate action on the part of the Company and do not, and
will not, whether with or without the giving of notice or passage of time
or both, (A) result in any violation of the charter or by-laws of the
Company or (B) conflict with, or result in a breach of any of the terms or
provisions of, or constitute a default or Repayment Event under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Significant Subsidiary under (x)
any indenture, mortgage, loan agreement, note, lease or any other agreement
or instrument to which the Company or any Significant Subsidiary is a party
or by which it may be bound or to which any of its properties may be
subject which, in the event of any such conflict, breach, default or
imposition of lien, charge or encumbrance, could result in a material
adverse change in the condition (financial or otherwise), or in the
earnings, business or operations of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course
of business, (y) any existing law, rule or regulation of the State of
Washington or the United States of America which, in such counsel's
experience, is ordinarily applicable to transactions of the type
contemplated by this Agreement or the U.S. Underwriting Agreement or (z)
any judgment, order or decree of any Washington State or U.S. federal court
having jurisdiction over the Company or any of its subsidiaries.
24
<PAGE>
(x) The statements in the Registration Statement and the
Prospectuses under the caption "Risk Factors -- Insurance Regulation," to
the extent that such statements constitute matters of law or legal
conclusions, have been reviewed by such counsel and are accurate in all
material respects and fairly present the information disclosed therein.
In addition, such counsel shall state that he has participated in
conferences with officers and other representatives of the Company, outside
counsel for the Company, representatives of the independent accountants for the
Company and you and your counsel at which the contents of the Registration
Statement and the Prospectuses 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 Prospectuses and has made no independent check or
verification thereof (other than as set forth in clause (x) of such counsel's
opinion), on the basis of the foregoing, no facts have come to such counsel's
attention that have led him to believe that the Registration Statement, at the
time it became effective under the Act, contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectuses, as of the dates of the Prospectuses and as of the date of such
opinion, contained or contain an untrue statement of a material fact or omitted
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that such counsel need express no opinion or belief with
respect to the financial statements, schedules and other financial and
accounting data included or incorporated by reference therein or excluded
therefrom or the exhibits to the Registration Statement.
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 certificates to be
delivered pursuant to Section 8(g) and Section 8(h) below to the extent
necessary to furnish such counsel's opinion.
(e) You shall have received on the Closing Date an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Managers, dated the
Closing Date, in form and substance reasonably satisfactory to you. 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.
(f) You shall have received letters addressed to you, as Lead Managers
for the several Managers, and dated the date hereof and the Closing Date from
Ernst & Young LLP, independent certified
25
<PAGE>
public accountants, substantially in the forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission at or prior to the Closing Date; (ii) there shall not have been any
material change in the capital stock of the Company nor any material increase in
the short-term or long-term debt of the Company (other than in the ordinary
course of business) from that set forth or contemplated in the Registration
Statement or the Prospectuses (or any amendment or supplement thereto); (iii)
there shall not have been, since the respective dates as of which information is
given in the Registration Statement and the Prospectuses (or any amendment or
supplement thereto), except as may otherwise be stated in the Registration
Statement and the Prospectuses (or any amendment or supplement thereto), any
material adverse change in the condition (financial or otherwise), or in the
earnings, business or operations of the Company and its subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of business;
and (iv) all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer or the chief operating officer and the chief financial officer of the
Company (or such other officers as are acceptable to you), to the effect set
forth in this Section 8(g) and in Section 8(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(i) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably requested.
(j) The Shares shall have been listed or approved for listing subject
to notice of issuance on the Nasdaq National Market.
(k) The closing under the U.S. Underwriting Agreement shall have
occurred concurrently with the closing hereunder on the Closing Date.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and your counsel.
26
<PAGE>
Any certificate or document signed by any officer of the Company and
delivered to you, as Lead Managers for the several Managers, or to counsel for
the Managers, shall be deemed a representation and warranty by the Company to
each Manager as to the statements made therein.
9. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each Prepricing Prospectus and Prospectus and
each amendment or supplement to any of them; (ii) the printing (or reproduction)
and delivery (including postage, air freight charges and charges for counting
and packaging) of such copies of the Registration Statement, each International
Prepricing Prospectus, the International Prospectus, and all amendments or
supplements to any of them as may be reasonably requested for use in connection
with the offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the Shares;
(iv) the printing (or reproduction) and delivery of this Agreement, the U.S.
Underwriting Agreement, the Supplemental Agreement Among U.S. Underwriters, the
Agreement Among Managers, the Agreement Between U.S. Underwriters and Managers,
the International Selling Agreement, the Blue Sky Memorandum and all other
agreements or documents printed (or reproduced) and delivered in connection with
the original issuance and sale of the Shares; (v) the listing of the
Underwritten Shares on the Nasdaq National Market; (vi) the registration or
qualification of the Shares for offer and sale under the securities laws of the
several jurisdictions as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the U.S. Underwriters
and Managers relating thereto); (vii) the transportation and other expenses
incurred by or on behalf of representatives of the Company in connection with
presentations to prospective purchasers of the Shares; and (viii) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective
(i) upon the execution and delivery hereof by the parties hereto or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
Registration Statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the Registration Statement or such post-effective amendment
has been released by the Commission. Until such time as this Agreement shall
have become effective, it may be terminated by the Company, by notifying you, or
by you, as Lead Managers for the several Managers, by notifying the Company.
27
<PAGE>
If any one or more of the Managers shall fail or refuse to purchase Shares
which it or they are obligated to purchase hereunder on the Closing Date, and
the aggregate number of Shares which such defaulting Manager or Managers are
obligated but fail or refuse to purchase is not more than one-tenth of the
aggregate number of Shares which the Managers are obligated to purchase on the
Closing Date, each non-defaulting Manager shall be obligated, severally, in the
proportion which the number of Shares set forth opposite its name in Schedule I
hereto bears to the aggregate number of Shares set forth opposite the names of
all non-defaulting Managers or in such other proportion as you may specify in
accordance with Section 20 of the Master Agreement Among Underwriters of Smith
Barney Inc., to purchase the Shares which such defaulting Manager or Managers
are obligated, but fail or refuse, to purchase. If any one or more of the
Managers shall fail or refuse to purchase Shares which it or they are obligated
to purchase on the Closing Date and the aggregate number of Shares with respect
to which such default occurs is more than one-tenth of the aggregate number of
Shares which the Managers are obligated to purchase on the Closing Date and
arrangements satisfactory to you and the Company for the purchase of such Shares
by one or more non-defaulting Managers or other party or parties approved by you
and the Company are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Manager or
the Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectuses or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Manager from liability in respect of
any such default of any such Manager under this Agreement. The term "Manager" as
used in this Agreement includes, for all purposes of this Agreement, any party
not listed in Schedule I hereto who, with your approval and the approval of the
Company, purchases Shares which a defaulting Manager is obligated, but fails or
refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Manager to the Company, by notice to the Company, if prior to the Closing Date
(i) trading in securities generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking activities
in New York shall have been declared by either federal or state authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities or
other international or
28
<PAGE>
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable or inadvisable to commence
or continue the offering of the Shares at the offering price to the public set
forth on the cover page of the International Prospectus or to enforce contracts
for the resale of the Shares by the Managers.
Notice of such termination may be given by telegram, telecopy or telephone
and shall be subsequently confirmed by letter.
12. INFORMATION FURNISHED BY THE MANAGERS. The statements set forth in the
last paragraph on the cover page, the stabilization legend on the inside front
cover page, and the statements in the first through third, seventh through
tenth, thirteenth and fourteenth paragraphs under the caption "Underwriting" in
any International Prepricing Prospectus and in the International Prospectus
constitute the only information furnished by or on behalf of the Managers
through you as such information is referred to in Sections 6(b) and 7 hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and 11
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, to SAFECO Plaza, 4333
Brooklyn Avenue N.E., Seattle, Washington 98185, Attention: Rodney A. Pierson,
with a copy to Perkins Coie, 1201 Third Avenue, 40th Floor, Seattle, Washington
98101-3099, Attention: Evelyn C. Sroufe, Esq. or (ii) if to you, as Lead
Managers for the several Managers, care of Smith Barney Inc., 388 Greenwich
Street, New York, New York 10013, Attention: Manager, Investment Banking
Division, with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York 10022, Attention: Susan J. Sutherland, Esq.
This Agreement has been and is made solely for the benefit of the several
Managers, the Company, its directors and officers and the other controlling
persons referred to in Section 7 hereof, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns" as
used in this Agreement shall include a purchaser from any Manager of any of the
Shares in his or her status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered
29
<PAGE>
on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Managers.
Very truly yours,
SAFECO CORPORATION
By ________________________________
Name:
Title:
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Managers named in Schedule I
hereto.
SMITH BARNEY INC.
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
FOX-PITT, KELTON N.V.
GOLDMAN SACHS INTERNATIONAL
MERRILL LYNCH INTERNATIONAL
As Lead Managers for the Several Managers
By SMITH BARNEY INC.
By _________________________________
Name:
Title:
30
<PAGE>
SCHEDULE I
SAFECO CORPORATION
------------------
<TABLE>
<CAPTION>
Number
Underwriter of Shares
- ----------- ---------
<S> <C>
Smith Barney Inc.
Credit Suisse First
Boston (Europe) Limited
Fox-Pitt, Kelton N.V.
Goldman Sachs
International
Merrill Lynch
International
---------
Total 2,540,000
=========
</TABLE>
<PAGE>
SCHEDULE II
SIGNIFICANT SUBSIDIARIES
------------------------
o SAFECO Insurance Company of America
o General Insurance Company of America
o SAFECO Life Insurance Company
o American States Financial Corporation
o American States Insurance Company
o American Economy Insurance Company
<PAGE>
EXHIBIT 5.1
PERKINS COIE
A Law Partnership Including Professional Corporations
1201 Third Avenue, 40th Floor Seattle, Washington 98101-3099
Telephone: 206 583-8888 Facsimile: 206 583-8500
October 7, 1997
SAFECO Corporation
4333 Brooklyn Avenue N.E.
Seattle, WA 98185
RE: REGISTRATION OF SHARES OF COMMON STOCK OF SAFECO CORPORATION
Ladies and Gentlemen:
We have acted as counsel to you in connection with the authorization and
issuance by SAFECO Corporation (the "Company") of up to 12,700,000 shares of the
Company's common stock, having no par value (the "Common Stock"), together with
a number of additional shares of Common Stock that will be issued if and to the
extent the underwriters exercise an over-allotment option granted by the Company
(collectively, the "Shares"), and the preparation and filing of a registration
statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended, which you are filing with the Securities and Exchange
Commission with respect to the Shares. The total number of Shares, including the
Shares subject to the over-allotment option granted by the Company, when issued
at the price to public set forth on the cover page of the Prospectus contained
in the Registration Statement, will not result in the total Price to Public set
forth in footnote 3 to the table on the cover page of such Prospectus exceeding
$750,000,000.
We have examined the Registration Statement and such documents and records
of the Company and other documents as we have deemed necessary for the purpose
of this opinion. Based upon the foregoing, we are of the opinion that upon the
happening of the following events:
(a) the effectiveness of the Registration Statement and any amendments
thereto,
(b) due execution by the Company and registration by its registrar of the
Shares,
(c) the offering and sale of the Shares as contemplated by the
Registration Statement, and
(d) receipt by the Company of the consideration required for the Shares as
contemplated by the Registration Statement,
the Shares will be duly authorized, validly issued, fully paid and
nonassessable.
<PAGE>
SAFECO Corporation
October 7, 1997
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Prospectus which
forms a part of the Registration Statement under the heading "Legal Matters." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
PERKINS COIE
<PAGE>
EXHIBIT 8.1
PERKINS COIE
A Law Partnership Including Professional Corporations
1201 Third Avenue, 40th Floor Seattle, Washington 98101-3099
Telephone: 206 583-8888 Facsimile: 206 583-8500
October 7, 1997
SAFECO CORPORATION
4333 Brooklyn Avenue N.E.
Seattle, WA 98185
RE: SAFECO CORPORATION COMMON STOCK
Ladies and Gentlemen:
We have acted as counsel to you in connection with the offer and sale by
SAFECO Corporation, a Washington corporation (the "Corporation"), of up to
12,700,000 shares of the Corporation's common stock, having no par value (the
"Common Stock"), as described in a registration statement on Form S-3
(Registration No. 333-33927) filed with the Securities and Exchange Commission
on August 19, 1997 and the Prospectus contained therein (together with
amendments thereto, the "Registration Statement"). Capitalized terms used herein
without definition have the respective meanings specified in the Registration
Statement.
In connection with this opinion, we have examined the Registration
Statement and such other documents as we have deemed necessary. Furthermore, we
have relied upon certain statements and representations made by officers of the
Corporation and others. We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such other documents, certificates
and records as we have deemed necessary or appropriate as a basis for the
opinion set forth herein.
In rendering our opinion, we have participated in the preparation of the
Registration Statement. Our opinion is conditioned on, among other things, the
initial and continuing accuracy of the facts, information, covenants and
representations set forth in the documents referred to above and the statements
and representations made by officers of the Corporation and others. In our
examination, we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of
<PAGE>
SAFECO CORPORATION
October 7, 1997
Page 2
all documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents. We also have assumed that the
transactions related to the issuance and sale of the Common Stock will be
consummated in the manner contemplated by the Registration Statement.
In rendering our opinion, we have considered the provisions of the Internal
Revenue Code of 1986, as amended, Treasury Regulations promulgated thereunder,
judicial decisions, and Internal Revenue Service rulings, all as in effect on
the date hereof and all of which are subject to change, which changes may be
retroactively applied. A change in the authorities upon which our opinion is
based could affect our conclusions.
Based upon and subject to the foregoing, and subject to the discussion and
limitations set forth in the Registration Statement under the heading "CERTAIN
U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS," we are of the
opinion that, although the discussion set forth in the Registration Statement
under the heading "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S.
HOLDERS" does not purport to discuss all possible United States federal income
tax consequences of the purchase, ownership and disposition of Common Stock by a
Non-U.S. Holder, such discussion constitutes a fair and accurate summary of the
material United States federal income tax considerations (other than
considerations that are material to a Non-U.S. Holder based on such Non-U.S.
Holder's particular tax situation) for Non-U.S. Holders of the Common Stock
under current law.
Except as set forth above, we express no opinion to any party as to the tax
consequences, whether federal, state, local or foreign, of the issuance or sale
of the Common Stock or any transactions related to or contemplated by such
issuance or sale. We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and any amendment thereto. In giving such consent,
we do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
<PAGE>
SAFECO CORPORATION
October 7, 1997
Page 3
We disclaim any undertaking to advise you of any subsequent changes of the facts
assumed herein or any subsequent changes in applicable law.
Very truly yours,
PERKINS COIE
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the headings "Selected Financial
Information" and "Experts" in Amendment 1 to the Registration Statement (Form
S-3 No. 333-33927) and related Prospectus of SAFECO Corporation and to the
incorporation by reference therein of our report dated February 14, 1997, with
respect to the consolidated financial statements of SAFECO Corporation and
subsidiaries incorporated by reference in its Annual Report (Form 10-K) for the
year ended December 31, 1996 and the related financial statement schedules
included in the Annual Report, filed with the Securities and Exchange
Commission, and to the incorporation by reference therein of our report dated
January 28, 1997 with respect to the consolidated financial statements and
schedules of American States Financial Corporation and subsidiaries included in
its Annual Report (Form 10-K, Form 10-K/A(1) and Form 10-K/A(2)) for the year
ended December 31, 1996, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Seattle, Washington
October 8, 1997
