1
EXHIBIT 1.2
[FORM OF UNDERWRITING AGREEMENT]
ALLSTATE FINANCING [III]
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH IN THE
PREFERRED SECURITIES GUARANTEE BY
THE ALLSTATE CORPORATION
______________________
UNDERWRITING AGREEMENT
______________________
__________, ____
[Underwriters]
c/o [ ]
Ladies and Gentlemen:
From time to time Allstate Financing [III], a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), and The Allstate
Corporation, a Delaware corporation (the "Guarantor" and, together with the
Trust, the "Offerors"), as Depositor of the Trust and as Guarantor, propose to
issue and sell certain of the Trust's preferred securities registered under the
Registration Statement referred to in Section 2(a). The Trust and the
Guarantor intend to enter into one or more Pricing Agreements (each a "Pricing
Agreement") in the form of Annex I hereto, with such additions and deletions as
the parties thereto may determine, and, subject to the terms and conditions
stated herein and therein, to issue and sell to the firms named in Schedule I
of the Pricing Agreement (such firms constituting the "Underwriters" with
respect to such Pricing Agreement and the Securities specified therein) the
numbers of _____% _______________ Preferred Securities (liquidation amount of
$_____ per preferred security) of the Trust ("Pre-
2
ferred Securities") specified in Schedule II to the Pricing Agreement.
The Preferred Securities will be guaranteed by the Guarantor with respect
to distributions and payments upon liquidation, redemption and otherwise (the
"Preferred Securities Guarantee") pursuant to the Preferred Securities
Guarantee Agreement (the "Preferred Securities Guarantee Agreement"), dated as
of __________ ___, ____, between the Guarantor and State Street Bank and Trust
Company, as trustee (the "Guarantee Trustee"), and entitled to the benefits of
certain backup undertakings described in the Prospectus with respect to the
Company's agreement pursuant to the Supplemental Indenture (as defined herein)
to pay all expenses relating to administration of the Trust (the
"Undertakings"). The Preferred Securities and the related Preferred Securities
Guarantees are referred to herein as the "Securities."
The Offerors understand that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives (as defined herein)
deem advisable after the Pricing Agreement has been executed and delivered, and
the Declaration (as defined herein), the Indenture (as defined herein), and the
Preferred Securities Guarantee Agreement have been qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The entire
proceeds from the sale of the Securities will be combined with the entire
proceeds from the sale by the Trust to the Guarantor of its common securities
(the "Common Securities")[, as guaranteed by the Guarantor, to the extent set
forth in the Prospectus, with respect to distributions and payments upon
liquidation and redemption (the "Common Securities Guarantee" and together with
the Preferred Securities Guarantee, the "Guarantees") pursuant to the Common
Securities Guarantee Agreement (the "Common Securities Guarantee Agreement"
and, together with the Preferred Securities Guarantee Agreement, the "Guarantee
Agreements"), dated as of __________ ___, ____, by the Guarantor,] and will be
used by the Trust to purchase the $__________ of ____% subordinated debt
securities (the "Subordinated Debt Securities") issued by the Guarantor. The
Preferred Securities and the Common Securities will be issued pursuant to the
amended and restated declaration of trust of the Trust, dated as of __________
___, ____ (the "Declaration"), among the Guarantor, as Depositor, __________,
__________
2
3
and __________, as regular trustees (the "Regular Trustees"), State Street Bank
and Trust Company, a Massachusetts trust company, as property trustee (the
"Property Trustee") and Delaware Trust Capital Management, Inc., as Delaware
trustee (the "Delaware Trustee" and, together with the Regular Trustees and the
Property Trustee, the "Trustees"), and the holders from time to time of
undivided beneficial interests in the assets of the Trust. The Subordinated
Debt Securities will be issued pursuant to an indenture, dated as of __________
___, ____ (the "Base Indenture"), between the Guarantor and State Street Bank
and Trust Company, as trustee (the "Debt Trustee"), and a supplement to the Base
Indenture, dated as of __________ ___, ____ (the "Supplemental Indenture," and
together with the Base Indenture and any other amendments or supplements
thereto, the "Indenture"), between the Guarantor and the Debt Trustee.
1.(a) Sales; Representatives. Particular sales of Securities may be made
from time to time to the Underwriters of such Securities, for whom the firms
designated as representatives of the Underwriters of such Securities in the
Pricing Agreement relating thereto will act as representatives (the
"Representatives"). The term "Representatives" also refers to a single firm
acting as the sole representative of the Underwriters and to Underwriters who
act without any firm being designated as their representative. This
Underwriting Agreement shall not be construed as an obligation of the Trust or
the Guarantor to sell any of the Securities or as an obligation of any of the
Underwriters to purchase any of the Securities.
(b) Pricing Agreements. The obligation of the Trust or the Guarantor to
issue and sell any of the Securities and the obligation of any of the
Underwriters to purchase any of the Securities shall be evidenced by the
Pricing Agreement with respect to the Securities specified therein. Such
Pricing Agreement shall specify the number of Preferred Securities, the initial
public offering price of such Preferred Securities, the purchase price to the
Underwriters of such Preferred Securities, the names of the Underwriters of
such Preferred Securities, the names of the Representatives of such
Underwriters and the number of such Preferred Securities to be purchased by
each Underwriter. In addition, such Pricing Agreement shall set forth the
3
4
date, time and manner of delivery of such Preferred Securities and payment
therefor. Such Pricing Agreement shall also specify (in a manner consistent
with the Declaration and the Registration Statement and prospectus
with respect thereto), the principal terms of such Preferred Securities,
including the terms on which, and the terms of the securities into which, the
Preferred Securities will be exchangeable. A Pricing Agreement shall be in the
form of an executed writing (which may be in counterparts), and may be
evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of communications
transmitted. The obligations of the Underwriters under this Agreement and each
Pricing Agreement shall be several and not joint.
2. Representations and Warranties. The Offerors jointly and severally
represent and warrant to, and agree with, each of the Underwriters that:
(a) The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 under the Securities
Act of 1933, as amended (the "Act") (the file number of which is set forth in
Schedule II to the Pricing Agreement), which has become effective, for the
registration under the Act of, inter alia, the Securities. The Offerors
propose to file with the Commission pursuant to Rule 424 under the Act a
supplement or supplements to the form of prospectus included in such
registration statement relating to the Securities and the plan of distribution
thereof. Such registration statement, including the exhibits thereto, as
amended at the date of this Agreement, is hereinafter called the "Registration
Statement"; such prospectus in the form in which it appears in the Registration
Statement is hereinafter called the "Basic Prospectus"; and such supplemented
form of prospectus, in the form in which it shall be filed with the Commission
pursuant to Rule 424 (including the Basic Prospectus as so supplemented) is
hereinafter called the "Final Prospectus." Any preliminary form of the Final
Prospectus which has heretofore been filed pursuant to Rule 424 is hereinafter
called the "Preliminary Final Prospectus." Any reference herein to the
Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant
4
5
to Item 12 of Form S-3 which were filed under the Securities Exchange Act of
1934 (the "Exchange Act") on or before the date of this Agreement, or the issue
date of the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be; and any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statement, the
Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall
be deemed to refer to and include the filing of any document under the Exchange
Act after the date of this Agreement, or the issue date of the Basic Prospectus,
any Preliminary Final Prospectus or the Final Prospectus, as the case may be,
deemed to be incorporated therein by reference;
(b) As of the date hereof, when the Final Prospectus is first filed or
transmitted for filing pursuant to Rule 424 under the Act, when, prior to the
Closing Date (as hereinafter defined), any amendment to the Registration
Statement becomes effective (including the filing of any document incorporated
by reference in the Registration Statement), when any supplement to the Final
Prospectus is filed with the Commission and at the Closing Date, (i) the
Registration Statement, as amended as of any such time, and the Final
Prospectus, as amended or supplemented as of any such time, and the Indenture,
the Declaration and the Guarantee Agreements will comply in all material
respects with the applicable requirements of the Act, the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), and the Exchange Act and the
respective rules thereunder and (ii) neither the Registration Statement, as
amended as of any such time, nor the Final Prospectus, as amended or
supplemented as of such time, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; provided,
however, that the Offerors make no representations or warranties as to (i) that
part of the Registration Statement which shall constitute the Statements of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act of the
Trustees (the "Form T-1s") or (ii) the information contained in or omitted from
the Registration Statement or the Final Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with information relating
to such Underwriter or the underwriting arrangements furnished in writing to
the Company
5
6
by any Underwriter specifically for use in the Registration Statement and the
Final Prospectus.
(c) Each document incorporated by reference in the Registration Statement
and the Final Prospectus will comply in all material respects, as amended at
the time the Registration Statement becomes effective, with the Exchange Act.
(d) The Common Securities have been duly authorized by the Declaration
and, when issued and delivered by the Trust to [the Guarantor] against payment
therefor as described in the Registration Statement and the Final Prospectus,
will be validly issued and (subject to the terms of the Declaration) fully paid
and non-assessable undivided beneficial interests in the assets of the Trust;
the issuance of the Common Securities is not subject to preemptive or other
similar rights; and at the Closing Time all of the issued and outstanding
Common Securities of the Trust will be directly owned by [the Guarantor] free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(e) The Declaration has been duly authorized by the Guarantor and, at the
Closing Time, will have been duly executed and delivered by the Guarantor and
the Regular Trustees, and assuming due authorization, execution and delivery of
the Declaration by the Property Trustee and the Delaware Trustee, the
Declaration will, at the Closing Time, be a valid and binding obligation of the
Guarantor and the Regular Trustees, enforceable against the Guarantor and the
Regular Trustees in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors rights generally or by
general principles of equity (the "Bankruptcy Exceptions"); and at the Closing
Time, the Declaration will have been duly qualified under the Trust Indenture
Act.
(f) Each of the Guarantee Agreements has been duly authorized by the
Guarantor and, when validly executed and delivered by the Guarantor, and, in
the case of the Preferred Securities Guarantee Agreement, assuming due
authorization, execution and delivery of the Preferred Securities Guarantee
Agreement by the Guarantee Trustee, will constitute a valid and binding
obligation
6
7
of the Guarantor, enforceable against the Guarantor in accordance with its terms
except to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions; and the Preferred Securities Guarantee Agreement, at the Closing
Time, will have been duly qualified under the Trust Indenture Act.
(g) The Preferred Securities have been duly authorized by the Declaration
and, when issued and delivered pursuant to this Agreement against payment of
the consideration set forth in the Pricing Agreement, will be validly issued
and (subject to the terms of the Declaration) fully paid and non-assessable
undivided beneficial interests in the Trust and will be entitled to the
benefits of the Declaration; the issuance of the Preferred Securities is not
subject to preemptive or other similar rights; and (subject to the terms of the
Declaration) holders of Preferred Securities will be entitled to the same
limitation of personal liability under Delaware law as extended to stockholders
of private corporations for profit.
(h) The Indenture has been duly authorized by the Guarantor and, when
validly executed and delivered by the Guarantor, will constitute a valid and
binding agreement of the Guarantor, enforceable against the Guarantor in
accordance with its terms except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions; and at the Closing Time, the Indenture
will have been duly qualified under the Trust Indenture Act.
(i) The Subordinated Debt Securities have been duly authorized by the
Guarantor and, at the Closing Time, will have been duly executed by the
Guarantor and, when authenticated in the manner provided for in the Indenture
and delivered against payment therefor as described in the Final Prospectus,
will constitute valid and binding obligations of the Guarantor, enforceable
against the Guarantor in accordance with their terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions, and will be in
the form contemplated by, and entitled to the benefits of, the Indenture.
(j) Each of the Regular Trustees of the Trust is an employee of the
Guarantor and has been duly
7
8
authorized by the Guarantor to execute and deliver the Declaration; the
Declaration has been duly executed and delivered by the Regular Trustees and is
a valid and binding obligation of each Regular Trustee, enforceable against such
Regular Trustee in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions.
(k) The issue and sale of the Preferred Securities pursuant to the Pricing
Agreement, and compliance by the Offerors with all of the provisions of the
Securities, this Agreement and the Pricing Agreement, the Declaration, the
Indenture, the Subordinated Debt Securities, the Guarantee Agreements and the
Guarantees, will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument for
borrowed money to which the Trust, the Guarantor or any of the subsidiaries
listed in Annex III hereto (each, a "Principal Subsidiary") is a party or by
which the Trust, the Guarantor or any of the Principal Subsidiaries is bound or
to which any of the property or assets of the Trust, the Guarantor or any of the
Principal Subsidiaries is subject, nor will such action result in any violation
of the provisions of the Declaration or Certificate of Trust of the Trust or the
Certificate of Incorporation or By-laws of the Guarantor or any of the Principal
Subsidiaries or any statute or any order, rule or regulation of any court or
insurance regulatory authority or other governmental agency or body having
jurisdiction over the Trust, the Guarantor or any of the Principal Subsidiaries
or any of their properties, in each case other than such breaches, conflicts,
violations or defaults which, individually or in the aggregate, would not have a
material adverse effect on the Trust or the Guarantor and its subsidiaries
considered as a whole, and no authorization, approval, order, consent,
registration or qualification of or with any such court or insurance regulatory
authority or other governmental agency or body is required for the issue or sale
of the Securities, except (i) the registration under the Act of the Securities;
and (ii) such authorizations, approvals, orders, consents, registrations or
qualifications as may be required under the Trust Indenture Act or state or
foreign securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Underwriters, in each
8
9
case other than such authorizations, approvals, orders, consents, registrations
or qualifications which (individually or in the aggregate) the failure to make,
obtain or comply with would not have a material adverse effect on the Trust or
the Guarantor and its subsidiaries considered as a whole.
3. Terms of Sale. Upon the execution of the Pricing Agreement and
authorization by the Representatives of the release of the Preferred
Securities, the several Underwriters propose to offer such Preferred Securities
for sale upon the terms and conditions set forth in the Final Prospectus as
amended or supplemented.
4. Delivery of Preferred Securities. Preferred Securities to be
purchased by each Underwriter pursuant to the Pricing Agreement, in definitive
form to the extent practicable, and in such authorized denominations and
registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Trust and the Guarantor, shall be
delivered by or on behalf of the Trust to the Representatives for the account
of such Underwriter, against payment by such Underwriter or on its behalf of
the purchase price therefor in the funds specified in the Pricing Agreement,
all at the place and time and date specified in the Pricing Agreement or at
such other place and time and date as the Representatives and the Trust and the
Guarantor may agree upon in writing, such time and date being herein called the
"Time of Delivery" for such Securities.
5. Offeror Covenants. The Offerors jointly and severally agree with each
of the Underwriters as follows:
(a) (i) To prepare the Final Prospectus as amended and supplemented in
relation to the Preferred Securities in a form approved by the Representatives
and to timely file such Final Prospectus pursuant to Rule 424(b) under the Act;
(ii) to make no further amendment or any supplement to the Registration
Statement or Final Prospectus as amended or supplemented after the date of the
Pricing Agreement and prior to the Time of Delivery for such Preferred
Securities unless the Representatives for such Preferred Securities shall have
had a reasonable opportunity to review and comment upon any such amendment or
supplement prior to any filing thereof; (iii) to
9
10
advise the Representatives promptly of any such amendment or supplement after
such Time of Delivery and furnish the Representatives with copies thereof; (iv)
to file promptly all reports and any definitive proxy or information statements
required to be filed by the Guarantor with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of such Preferred
Securities, and during such same period to advise the Representatives, promptly
after it receives notice thereof, of (I) the time when any amendment to any
Registration Statement has been filed or becomes effective or any supplement to
the Final Prospectus or any amended Final Prospectus has been filed with the
Commission, (II) the issuance by the Commission of any stop order or of any
order preventing or suspending the use of the Final Prospectus, (III) the
suspension of the qualification of such Preferred Securities for offering or
sale in any jurisdiction or of the initiation or threatening of any proceeding
for any such purpose, or (IV) any request by the Commission for the amending or
supplementing of any Registration Statement or the Final Prospectus or for
additional information; and, in the event of the issuance of any such stop order
or of any such order preventing or suspending the use of the Final Prospectus or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) Promptly from time to time to take such action as the Representatives
may reasonably request to qualify such Preferred Securities (and the Preferred
Securities Guarantee) and the Subordinated Debt Securities for offering and
sale under the securities and insurance securities laws of such jurisdictions
as the Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as long
as may be necessary to complete the distribution of such Preferred Securities,
provided that in connection therewith none of the Offerors shall be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Final Prospectus as
amended or supplemented in such quantities as the Representatives may from time
to time reasonably request, and, if the delivery of a
10
11
prospectus is required at any time in connection with the offering or sale of
such Preferred Securities, and if at such time any event shall have occurred as
a result of which the Final Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made when such Final Prospectus is
delivered, not misleading, or, if for any other reason it shall be necessary
during such period to amend or supplement the Final Prospectus or to file under
the Exchange Act any document incorporated by reference in the Final Prospectus
in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to
notify the Representatives and upon their request to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended Final
Prospectus or a supplement to the Final Prospectus which will correct such
statement or omission or effect such compliance;
(d) The Trust will make generally available to its securityholders as
soon as practicable, but in any event not later than eighteen months after the
effective date of the later filed of the Registration Statements (as defined in
Rule 158(c)), an earnings statement of the Guarantor and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations thereunder (including, at the option of the Guarantor,
Rule 158); and
(e) During the period beginning from the date of the Pricing Agreement
for any Preferred Securities and continuing to and including the latter of (i)
the termination of trading restrictions for Preferred Securities, as notified
to the Guarantor by the Representatives or their counsel and (ii) the Time of
Delivery for such Preferred Securities, not to offer, sell, contract to sell or
otherwise dispose of any Preferred Securities, any security convertible into or
exchangeable into or exercisable for Preferred Securities or the Subordinated
Debt Securities or any debt securities substantially similar to the
Subordinated Debt Securities or equity securities substantially similar to the
Preferred Securities (except for the Subordinated Debt Securities and the
Preferred Securities issued pursuant
11
12
to this Agreement), without the prior written consent of the Representatives,
which consent shall not be unreasonably withheld.
6. Fees and Expenses. The Guarantor covenants and agrees with the
several Underwriters that the Guarantor will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Guarantor's counsel
and accountants in connection with the registration of the Preferred
Securities, the Preferred Securities Guarantee and the Subordinated Debt
Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, Basic
Prospectus, any Preliminary Final Prospectus and the Final Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
this Agreement, the Pricing Agreement, any Blue Sky Survey and any Legal
Investment Memoranda; (iii) all reasonable expenses in connection with the
qualification of the Preferred Securities, the Preferred Securities Guarantee
and the Subordinated Debt Securities for offering and sale under state
securities and insurance securities laws as provided in Section 5(b) hereof,
including the reasonable fees and disbursements of counsel for the Underwriters
in connection with such qualification and in connection with the Blue Sky and
Legal Investment surveys; (iv) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc.; (v)
any fees charged by securities rating services for rating the Preferred
Securities and Subordinated Debt Securities; (vi) the cost of preparing the
Preferred Securities; (vii) the fees and expenses of the Debt Trustee,
including the fees and disbursements of counsel for the Debt Trustee in
connection with the Indenture and the Subordinated Debt Securities; (viii) the
fees and expenses of the Property Trustee, and the Guarantee Trustee, including
the fees and disbursements of counsel for the Property Trustee in connection
with the Declaration and the Certificate of Trust; and (ix) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided in this Section. It is understood, however,
that, except as provided in this Section, Section 8 and Section 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees
of their counsel, transfer taxes on resale
12
13
of any of the Preferred Securities by them, and any advertising expenses
connected with any offers they may make.
7. Conditions to Underwriters' Obligations. The obligations of the
Underwriters hereunder and under the Pricing Agreement shall be subject to the
condition that all representations and warranties of the Offerors herein are,
at and as of the Time of Delivery, true and correct, the condition that the
Offerors shall have performed all of their respective obligations hereunder to
be performed at or before such Time of Delivery, and the following additional
conditions:
(a) The Final Prospectus as amended or supplemented in relation to the
Preferred Securities shall have been filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such filing by the rules
and regulations under the Act and in accordance with Section 5(c) hereof; no
stop order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to the Representatives' reasonable satisfaction;
(b) [ ], counsel for the Guarantor, shall have furnished to you
their written opinion, dated as of Time of Delivery, in form and substance
reasonably satisfactory to you, to the effect that:
(i) The Guarantor is validly existing as a corporation in good
standing under the laws of the State of Delaware, with corporate power
and authority to own its properties and conduct its business as
described in the Final Prospectus as amended and supplemented;
13
14
business as described in the Final Prospectus as amended or supplemented;
(ii) The issue and sale of the Preferred Securities and
the performance by the Offerors of their respective obligations
under this Agreement, the Pricing Agreement, the Declaration,
the Preferred Securities, the Common Securities, the Indenture,
the Subordinated Debt Securities, the Guarantee Agreements and
the Guarantees, and the consummation of the transactions
contemplated herein and therein will not conflict with or result
in a breach of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument relating to the
Trust or the Guarantor or any of its subsidiaries set forth on
Schedule A attached hereto [Schedule A to be a list of material
agreements]; nor will any such action result in any violation of
the provisions of the Certificate of Incorporation or the By-Laws
of the Guarantor or the Declaration or the Certificate of Trust of
the Trust or any applicable law or statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Guarantor, its subsidiaries or any of their
respective properties, provided, that the foregoing opinion is
limited to those statutes, laws, rules and regulations of the
United States of America, the State of Delaware and the State of
Illinois, in each case, which, in such counsel's opinion, are
normally applicable to transactions of the type contemplated by
this Agreement, and provided further, that no opinion need be
given with respect to (i) the Act, the Exchange Act, the Trust
Indenture Act, the rules and regulations issued pursuant to each
such act, or any order, rule or regulation made or established by
any insurance official or regulatory authority or the National
Association of Securities Dealers, Inc., (ii) any state securities
or Blue Sky laws in connection with the purchase and distribution
of the Preferred
14
15
Securities by the Underwriters or (iii) conflicts, breaches or violations
which individually and in the aggregate both are not material to the
Trust or the Guarantor and its subsidiaries taken as a whole and would
not have a material adverse effect on the sale or ownership of the
Preferred Securities.
(iii) No consent, approval, authorization, order, registration or
qualification of or with any United Sates court or governmental agency or
body is required for the issuance and sale of the Common Securities or
the offering of the Preferred Securities, the Subordinated Debt
Securities or the Guarantees or the consummation by the Company of the
transactions contemplated by this Agreement, except that we express no
opinion with respect to such consents, approvals, authorizations, orders,
registrations or qualifications (i) as may be required under the Act, the
Exchange Act, the Trust Indenture Act, the rules and regulations issued
pursuant to each such act, any order, rule or regulation made or
established by any insurance official or regulatory authority or the
National Association of Securities Dealers, Inc., or (ii) as may be
required under state securities or Blue Sky laws, (iii) the absence of
which individually or in the aggregate both are not material to the
Guarantor and its subsidiaries taken as a whole and would not have a
material adverse effect on the sale or ownership of the Preferred
Securities or (iv) as may be required under foreign laws in connection
with the purchase and distribution of the Preferred Securities by any
international managers; provided, that the foregoing opinion is limited
to those consents, approvals, authorizations, orders, registrations and
qualifications under laws of the United States of America, the State of
Delaware and the State of Illinois which, in our experience, are normally
applicable to transactions of the type contemplated by this Agreement;
(iv) This Agreement and the Pricing Agreement have been
duly authorized,
15
16
executed and delivered by each of the Trust and the Guarantor;
(v) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware
Act; all filings required under the laws of the State of
Delaware with respect to the formation and valid existence of
the Trust as a business trust have been made; the Trust has all
necessary trust power and authority to own property and to conduct
its business as described in the Registration Statement and the
Final Prospectus and to enter into and perform its obligations
under this Agreement, the Pricing Agreement, the Preferred
Securities and the Common Securities;
(vi) The Common Securities have been duly authorized for
issuance and, when issued, delivered and paid for in accordance
with the Declaration and as described in the Prospectus,
will be validly issued and fully paid and non-assessable
undivided beneficial interests in the assets of the Trust, and
the issuance of the Common Securities is not subject to
preemptive or other similar rights;
(vii) The Preferred Securities have been duly authorized
for issuance and, when issued, delivered and paid for in
accordance with the Declaration and this Agreement, will be
validly issued, fully paid and non-assessable undivided
beneficial interests in the assets of the Trust; the holders of
the Preferred Securities will be entitled to the same limitation
of personal liability under Delaware law as is extended to
stockholders of private corporations for profit; and the issu-
16
17
ance of the Preferred Securities is not subject to preemptive or other
similar rights. We bring to your attention that the Preferred Securities
holders may be obligated, pursuant to the Declaration, to (a) provide
indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers of Preferred Securities and
the issuance of replacement Preferred Securities, and (b) provide
security and indemnity in connection with requests of or directions to
the Property Trustee to exercise its rights and powers under the
Declaration; and the Declaration has been duly qualified under the Trust
Indenture Act; and
(viii) As such counsel, such counsel reviewed the
Registration Statement and Final Prospectus as amended or
supplemented, participated in discussions with representatives
of the Underwriters and of the Guarantor and its accountants at
which contents of the Registration Statement and Final
Prospectus as amended or supplemented and related matters
17
18
were discussed; on the basis of the information that such counsel gained
in the course of the performance of their services referred to above,
although such counsel shall not be deemed to be passing upon and shall
not assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Final
Prospectuses and not be required to have made an independent check or
verification thereof, on the basis of the foregoing, no facts have come
to the attention of such counsel in the course of such review which have
led such counsel to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the
Guarantor prior to such Time of Delivery (other than the financial
statements and the financial, accounting and statistical data and related
schedules incorporated by reference or included therein or excluded
therefrom, or the exhibits to the Registration Statement including the
Form T-1s, as to which such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Final Prospectus as amended
or supplemented or any further amendment or supplement thereto made by
the Guarantor prior to the Time of Delivery (other than the financial
statements and financial, accounting and statistical data and related
schedules incorporated by reference or included therein or excluded
therefrom, or the exhibits to the Registration Statement including the
Form T-1s, as to which such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made not misleading.
(c) ▇▇▇▇▇▇ ▇. ▇▇▇▇, Vice President, Secretary and General Counsel of the
Guarantor, shall have furnished to you his written opinion, dated each
18
19
Time of Delivery, in form and substance reasonably satisfactory to you, to the
effect that:
(i) Each Principal Subsidiary has been duly incorporated
and is validly existing as an insurance corporation under the
laws of its jurisdiction of incorporation;
(ii) All of the issued shares of capital stock of each
Principal Subsidiary have been duly and validly authorized and
issued, are fully paid and nonassessable, and are owned of
record directly or indirectly by the Guarantor;
(iii) Each Principal Subsidiary is duly licensed or
authorized as an insurer or reinsurer in each jurisdiction
where it is required to be so licensed, except where the failure
to be so licensed or authorized in any such jurisdiction does
not have a material adverse effect on the financial condition,
business or properties of the Guarantor and its subsidiaries
considered as a whole;
(iv) The Guarantor and each Principal Subsidiary have made all
required filings under applicable insurance holding company statutes,
and each is duly licensed or authorized as an insurance holding company
in each jurisdiction where it is required to be so licensed, except
where the failure to have made such filings or to be so licensed or
authorized in any such jurisdiction does not have a material adverse
effect on the financial condition, business or properties of the
Guarantor and its subsidiaries considered as a whole;
19
20
(v) None of the Guarantor or any Principal Subsidiary has received any
notification from any insurance regulatory authority to the effect
that any additional authorization, approval, order, consent,
registration or qualification from such insurance regulatory
authority is needed to be obtained by any of the Guarantor or
any Principal Subsidiary in any case where it could be reasonably
expected that (x) the Guarantor or any Principal Subsidiary would
in fact be required either to obtain any such additional authorization,
approval, order, consent, registration or qualification or cease
or otherwise limit writing certain business and (y) obtaining
such authorization, approval, order, consent, license,
certificate, permit, registration or qualification or limiting
such business would have a material adverse effect on the
business, financial position or results of operations of the
Guarantor and its subsidiaries, considered as a whole;
(vi) To the best of such counsel's knowledge, each Principal
Subsidiary is in compliance with the requirements of the insurance laws
and regulations of its state of incorporation and the insurance laws and
regulations of other jurisdiction which are applicable to such Principal
Subsidiary,
20
21
except for such failures which do not have a material adverse effect on
the financial condition, business or properties of the Guarantor and its
subsidiaries taken as a whole;
(vii) To the best of such counsel's knowledge and other than
as set forth in the Final Prospectus as amended or supplemented,
there are no legal or governmental proceedings pending to which
the Guarantor or any of its subsidiaries is a party or to which
any property of the Guarantor or any of its subsidiaries is the
subject which, if determined adversely to the Guarantor or any
of its subsidiaries, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on the
financial condition, business or properties of the Guarantor and
its subsidiaries considered as a whole;
(viii) The issue and sale of the Preferred Securities, and the
performance by the Offerors of their respective obligations under the
Preferred Securities, this Agreement, the Pricing Agreement, the
Declaration, the Common Securities, the Indenture, the Subordinated Debt
Securities, the Guarantee Agreements and the Guarantees, and the
consummation of the transactions contemplated herein and therein will not
result in any violation of any order, rule or regulation known to such
counsel of any insurance regulatory authority having jurisdiction over
the Guarantor or any of its subsidiaries or any of their properties which
are normally applicable to transactions of the type contemplated by this
Agreement, other than such breaches, conflicts, violations or defaults
which, individually or in the aggregate, would not have a material
adverse effect on the financial condition, business or properties of
21
22
the Guarantor and its subsidiaries considered as a whole;
(ix) To the best of such counsel's knowledge, the Trust
and the Guarantor and its subsidiaries, as applicable, have filed all
notices, reports, documents or other information required to be filed
pursuant to, and have obtained all authorizations, approvals, orders,
consents, registrations or qualifications required to be obtained under,
and have otherwise complied with all requirements of, all applicable
insurance laws and regulations known to such counsel to be normally
applicable to the transactions contemplated by this Agreement in
connection with the issuance and sale of the Preferred Securities, except
such filings, authorizations, approvals, orders, consents, registrations
or qualifications which (individually or in the aggregate) the failure to
make, obtain or comply with would not have a material adverse effect on
the financial condition, business or properties of the Guarantor and its
subsidiaries considered as a whole;
22
23
(x) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Guarantor; the
Preferred Securities Guarantee Agreement, assuming it is duly
authorized, executed, and delivered by the Guarantee Trustee,
constitutes a valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms,
except to the extent that enforcement thereof may be limited by
Bankruptcy Exceptions; and the Preferred Securities Guarantee
Agreement has been duly qualified under the Trust Indenture Act;
(xi) The Indenture has been duly executed and delivered by
the Guarantor and, assuming due authorization, execution, and
delivery thereof by the Debt Trustee, is a valid and binding
obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions,
and the Indenture has been duly qualified under the Trust
Indenture Act;
(xii) The Subordinated Debt Securities are in the form
contemplated by the Indenture, have been duly authorized,
executed and delivered by the Guarantor and, when authenticated
by the Debt Trustee in the manner provided for in the Indenture
and delivered against payment therefor, will constitute valid
and binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their terms, except to the extent
that enforcement thereof may be limited by the Bankruptcy
Exceptions;
(xiii) The Declaration has been duly authorized, executed
and delivered by the Guarantor and each of the Regular Trustees
and constitutes a valid and binding obligation of the Guarantor
and each of the Regular Trustees, enforceable against the
Guarantor and each of the Regular Trustees in accordance with
its terms, except to the extent that the enforce-
23
24
ment thereof may be limited by the Bankruptcy Exceptions;
(xiv) As general counsel to the Guarantor, such counsel
reviewed the Registration Statement and Final Prospectus as
amended or supplemented and participated in various discussions
with representatives of the Underwriters and of the Guarantor
and its accountants at which contents of the Registration
Statement and Final Prospectus as amended or supplemented were
discussed. On the basis of the information that such counsel
gained in the course of his activities referred to in the first
sentence of this clause (xiv), such counsel confirms
(A) that the Registration Statement, as of its effective
date, and the Final Prospectus, as amended or
supplemented (in each case other than with respect to the
financial statements, financial and accounting data and related
schedules therein, as to which such counsel need express no
opinion or belief), appeared on their face to be appropriately
responsive in all material respects to the requirements of the
Act and the applicable rules and regulations of the Commission
thereunder; and,
(B) that 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 and Final Prospectus as amended or
supplemented (except as expressly set forth in such opinion), on
the basis of the foregoing, no facts have come to the attention
of such counsel in the course of such review which has caused
such counsel to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by
the Offerors prior to such Time of Delivery (other than the
financial statements and financial and accounting data and
related schedules therein and other than information under the
captions "Description of Debt Securities," "Description of Debt
Warrants," "Description of Preferred Stock," "Description of
Preferred Securities," "Description of Preferred Securities
Guarantees" and "Plan of Distribution" in the Basic Prospectus
and in the descriptions of Preferred
24
25
Securities, Preferred Securities Guarantees, Subordinated Debt Securities
and underwriting matters contained in the Final Prospectus as amended or
supplemented, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statement
therein not misleading;
Such counsel shall be entitled to rely in respect of the above opinions
upon opinions of local or in-house counsel and in respect of matters of
fact upon certificates of officers of the Guarantor or its subsidiaries,
provided that such counsel shall state that he believes that both you
and he are justified in relying upon such opinions and certificates).
25
26
(d) [ ], counsel of State Street Bank and Trust Company, as
Property Trustee under the Declaration, and Guarantee Trustee under the
Preferred Securities Guarantee Agreements, shall have furnished to you their
written opinion, dated as of the Time of Delivery, in form and substance
reasonably satisfactory to you, to the effect that:
(i) State Street Bank and Trust Company is a Massachusetts
trust company with trust powers, duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts with all necessary power and authority to
execute and deliver, and to carry out and perform its
obligations under the terms of the Declaration and the Preferred
Securities Guarantee Agreement;
(ii) The execution, delivery and performance by the
Property Trustee of the Declaration and the execution, delivery
and performance by the Guarantee Trustee of the Preferred
Securities Guarantee Agreement have been duly authorized by all
necessary corporate
26
27
action on the part of the Property Trustee, in the case of the
Declaration, and the Guarantee Trustee, in the case of the Preferred
Securities Guarantee Agreement. The Declaration and the Preferred
Securities Guarantee Agreement have been duly executed and delivered by
the Property Trustee, in the case of the Declaration, and the Guarantee
Trustee, in the case of the Preferred Securities Guarantee Agreement, and
constitute the legal, valid and binding obligations of the Property
Trustee, in the case of the Declaration, and the Guarantee Trustee, in
the case of the Preferred Securities Guarantee Agreement, enforceable
against the Property Trustee, in the case of the Declaration, and the
Guarantee Trustee, in the case of the Preferred Securities Guarantee
Agreement, in accordance with their terms, except as enforcement thereof
may be limited by the Bankruptcy Exceptions;
(iii) The execution, delivery and performance of the
Declaration and the Preferred Securities Guarantee Agreement by
the Property Trustee, in the case of the Declaration, and the
Guarantee Trustee, in the case of the Preferred Securities
Guarantee Agreement, does not conflict with or constitute a
breach of the Articles of Organization or Bylaws of the Property
Trustee, in the case of the Declaration, or the Guarantee
Trustee, in the case of the Preferred Securities Guarantee
Agreement; and
(iv) No consent, approval or authorization of, or
registration with or notice to, any Massachusetts or federal
banking authority is required for the execution, delivery or
performance by the Property Trustee of the Declaration or by the
Guarantee Trustee of the Preferred Securities Guarantee
Agreement.
(e) [ ], counsel of Delaware Trust Capital Management, Inc., as
Delaware Trustee under the Declaration, shall have furnished to you their
written opinion, dated as of the Time of Delivery, in form
27
28
and substance reasonably satisfactory to you, to the effect that:
(i) Delaware Trust Capital Management, Inc. is a Delaware
banking corporation with trust powers, duly organized, validly
existing and in good standing under the laws of the State of
Delaware with all necessary power and authority to execute and
deliver, and to carry out and perform its obligations under the
terms and the Declaration;
(ii) The execution, delivery and performance by the
Delaware Trustee of the Declaration has been duly authorized by
all necessary corporate action on the part of the Delaware
Trustee. The Declaration has been duly executed and delivered
by the Delaware Trustee and constitutes the legal, valid and
binding obligations of the Delaware Trustee, enforceable against
the Delaware Trustee, in accordance with its terms, except as
enforcement thereof may be limited by the Bankruptcy Exceptions;
(iii) The execution, delivery and performance of the
Declaration by the Delaware Trustee does not conflict with or
constitute a breach of the Articles of Organization or Bylaws of
the Delaware Trustee; and
(iv) No consent, approval or authorization of, or
registration with or notice to, any banking or trust authority
of the State of Delaware or federal banking authority governing
the banking and trust powers of the Delaware Trustee is required
for the execution, delivery or performance by the Delaware
Trustee of the Declaration.
(f) The opinion of [ ], special tax counsel to the Guarantor
and the Trust, generally to the effect that:
(i) Under current law, the Trust will be classified for
United States federal income tax purposes as a grantor trust
28
29
and not as an association taxable as a corporation; accordingly,
for United States federal income tax purposes, each holder of
Preferred Securities generally will be considered the owner of
an undivided interest in the Subordinated Debt Securities, and
each holder will be required to include in its gross income any
original issue discount accrued with respect to its allocable
share of the Subordinated Debt Securities;
(ii) Under current law the Subordinated Debt Securities will be
classified for United States federal income tax purposes as indebtedness
of the Guarantor; and
(iii) The discussion set forth in the Final Prospectus under the
heading "United States Federal Income Taxation" is a fair and accurate
summary of the matters addressed therein, based upon current law and the
assumptions stated or referred to therein.
Such opinion may be conditioned on, among other things, the initial and
continuing accuracy of the facts, financial and other information, covenants and
representations set forth in certificates of officers of the Guarantor and the
Trust and other documents deemed necessary for such opinion.
(g) At or before the Time of Delivery, Deloitte & Touche LLP shall have
furnished to the Representatives a letter, to the effect set forth in Annex II
hereto.
(h) (i) Neither the Guarantor nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Final Prospectus as
29
30
amended or supplemented any material adverse change in the financial condition,
business or properties of the Guarantor and its subsidiaries considered as a
whole, otherwise than as set forth or contemplated in the Final Prospectus as
amended or supplemented (and other than a catastrophe not meeting the threshold
contemplated by (w) below), and (ii) since the respective dates as of which
information is given in the Final Prospectus as amended or supplemented there
shall not have been (w) any catastrophe or any impending catastrophe which, in
the Company's judgment, is highly probable to result in gross underwriting
losses in excess of $[500 million] pursuant to insurance coverage written by the
Guarantor's subsidiaries, (x) any material addition, or any development
involving a prospective material addition, to either the Guarantor's
consolidated reserve for property-liability insurance claims and claims expense
or the Guarantor's consolidated reserve for life insurance policy benefits or
(y) any material increase in the consolidated long-term debt of the Guarantor.
(i) On or after the date of the Pricing Agreement (i) no downgrading
shall have occurred in the rating accorded the Guarantor's debt securities or
financial strength or claims paying ability by any of ▇▇▇▇▇'▇ Investor
Services, Inc., Standard & Poor's Corporation or A.M. Best & Co. and (ii) no
such organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of the
Guarantor's debt securities or financial strength or claims paying ability, the
effect of which, in any such case described in Clause (i) or (ii), is in your
judgment (after consultation with the Guarantor) so material and adverse as to
make it impracticable or inadvisable to proceed with the pubic offering or the
delivery of the Securities on the terms and in the manner contemplated in the
Final Prospectus as amended or supplemented;
(j) On or after the date of the Pricing Agreement there shall not have
occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; or (iii) the material outbreak or
escalation of hostilities involving the United States or
30
31
the declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iii) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in the manner
contemplated by the Final Prospectus as amended or supplemented; and
(k) The Guarantor shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery certificates of officers of the
Guarantor reasonably satisfactory to the Representatives as to the accuracy of
the representations and warranties of the Guarantor herein at and as of such
Time of Delivery, as to the performance by the Guarantor of all of its
obligations hereunder to be performed at or prior to such Time of Delivery, as
to the matters set forth in subsections (a) and (h) of this Section and as to
such other matters as the Representatives may reasonably request.
8.(a) Indemnification and Contribution. The Offerors will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Final Prospectus, the Registration Statement, the Final
Prospectus as amended or supplemented and any other prospectus relating to the
Securities, or any amendment or supplement (when considered together with the
document to which such supplement relates) thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Offerors shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Final Prospectus, the Registration Statement, the Final
Prospectus as amended or sup-
31
32
plemented and any other prospectus relating to the Securities, or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Offerors by any Underwriter of Securities through
the Representatives expressly for use in the Final Prospectus as amended or
supplemented relating to such Securities and, provided, further, that the
Offerors shall not be liable to any Underwriter under the indemnity agreement in
this subsection (a) with respect to any Preliminary Final Prospectus, the Final
Prospectus or the Final Prospectus as amended or supplemented, as the case may
be, to the extent that any such loss, claim, damage or liability of such
Underwriter results from the fact such Underwriter sold Securities to a person
to whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Final Prospectus or of the Final Prospectus as then
amended or supplemented, whichever is most recent, if the Guarantor had
previously furnished copies thereof to such Underwriter and the loss, claim,
damage or liability of such Underwriter results from an untrue statement or
omission of a material fact contained in the Preliminary Final Prospectus which
was corrected in the Final Prospectus (or the Final Prospectus as amended or
supplemented).
(b) Each Underwriter will indemnify and hold harmless the Offerors
against any losses, claims, damages or liabilities to which the Offerors may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Final Prospectus, the Registration Statement, the
Final Prospectus as amended or supplemented and any other prospectus relating
to the Securities, or any amendment or supplement (when considered together
with the document to which such supplement relates) thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Final Prospectus, the Registration Statement, the
Final Prospectus as amended or supplemented and any other prospectus
32
33
relating to the Securities, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Offerors by such
Underwriter through the Representatives expressly for use therein; and will
reimburse the Offerors for any legal or other expenses reasonably incurred by
the Offerors in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the failure to promptly notify the
indemnifying party shall not relieve it from any liability which it may have
to any indemnified party except to the extent it is prejudiced thereby. In
case any such action shall be brought against any indemnified party, the
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly, with any other indemnifying party
similar notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party and
who may act in respect of actions involving more than one indemnified
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. Without the
prior written consent of the Indemnifying Party (not to be unreasonably
withheld), no Indemnified Party shall settle or compromise any action as to
which it has sought or will seek, indemnification hereunder. Without the
prior written consent of each Indemnified Party (not to be unreasonably
withheld), no Indemnifying Party shall settle or compromise any action as to
which such Indemnified Party has sought indemnification hereunder.
33
34
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Offerors on the one hand and the Underwriters of the Securities on the
other from the offering of the Securities to which any such loss, claim, damage
or liability (or action in respect thereof) relates. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Offerors on the one hand and the Underwriters of the Securities on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable consideration. The relative benefits received
by the Offerors on the one hand and such Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from such offering
(before deducting expenses) received by the Offerors bear to the total
underwriting discounts and commissions received by such Underwriters, in each
case as set forth in the table on the cover page of the Prospectus relating to
such Securities. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Offerors on the one hand or such Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such
34
35
statement or omission. With respect to any such Underwriter, such relative
fault shall also be determined by reference to the extent (if any) to which such
losses, claims, damages or liabilities (or actions in respect thereof) with
respect to any Preliminary Final Prospectus result from the fact that such
Underwriter sold Securities to a person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the Final
Prospectus or of the Final Prospectus as then amended or supplemented, if the
Offerors had previously furnished copies thereof to such Underwriter. The
Offerors and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the
Underwriters of Securities in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations with respect to such
Securities and not joint.
(e) The obligations of the Offerors under this Section 8 shall be in
addition to any liability which the Offerors may otherwise have and shall
extend upon the same terms and conditions, to each person, if any, who controls
any Underwriters within the meaning of the Act; and the obligations of the
Underwriters under
35
36
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Guarantor (including any person
who, with his consent, is named in the Registration Statement as about to become
a director of the Guarantor), to each trustee of the Trust and to each person,
if any, who controls an Offeror within the meaning of the Act.
9.(a) Defaulting Underwriters. If any Underwriter shall default in its
obligation to purchase the Securities which it has agreed to purchase under the
Pricing Agreement, the Representatives may in their discretion arrange for
themselves or another party or other parties to purchase the Securities on the
terms contained herein. If within thirty-six hours after such default by any
Underwriter the Representatives do not arrange for the purchase of such
Securities, then the Offerors shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to the Representatives to purchase such Securities on such terms.
In the event that, within the respective prescribed periods, the Representatives
notify the Offerors that the Representatives have so arranged for the purchase
of such Securities, or the Offerors notify the Representatives that they have so
arranged for the purchase of such Securities, the Representatives or the
Offerors shall have the right to postpone the Time of Delivery for such
Securities for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the Final
Prospectus as amended or supplemented, or in any other documents or
arrangements, and the Offerors agree to file promptly any amendments to the
Registration Statement or the Final Prospectus which in the opinion of the
Representatives may thereby be made necessary. The term "Underwriter" as used
in this Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to the Pricing
Agreement.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of any defaulting Underwriter or Underwriters by the Representatives
and the Offerors as provided in subsection (a)
36
37
above, the aggregate principal amount of such Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Securities, then the Offerors shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Securities which
such Underwriter agreed to purchase under the Pricing Agreement and, in
addition, to require each nondefaulting Underwriter to purchase its pro rata
share (based on the principal amount of Securities which such Underwriter agreed
to purchase under such Pricing Agreement;) of the Securities of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by the Representatives
and the Offerors as provided in subsection (a) above, the aggregate principal
amount of Securities which remains unpurchased exceeds one-eleventh of the
aggregate principal amount of Securities, as referred to in subsection (b)
above, or if the Offerors shall not exercise the right described in subsection
(b) above to require non-defaulting Underwriters to purchase Securities of a
defaulting Underwriter or Underwriters, then the Pricing Agreement shall
thereupon terminate, without liability on the part of any nondefaulting
Underwriter or the Offerors, except for the expenses to be borne by the
Guarantor and the Underwriters as provided in Section 6 hereof and the indemnity
and contribution agreements in Section 8 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
10. Survival. The respective indemnities, agreements, representations,
warranties and other statements of the Offerors and the several Underwriters,
as set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless
of any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter, or the Offerors or any officer or director or
controlling person of the Offerors and shall survive delivery of and payment
for the Securities.
37
38
11. Effect of Termination of Pricing Agreement or Nondelivery of
Securities. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Offerors shall not then be under any liability to any Underwriter
with respect to the Securities except as provided in Section 6 and Section 8
hereof; but, if for any other reason, Securities are not delivered by or on
behalf of the Offerors as provided herein, the Guarantor will reimburse the
Underwriters through the Representatives for all out-of-pocket expenses
approved in writing by the Representatives, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of such Securities, but the Offerors shall then be
under no further liability to any Underwriter in respect of such Securities
except as provided in Section 6 and Section 8 hereof.
12. Reliance Upon Representatives. In all dealings hereunder, the
Representatives shall act on behalf of the Underwriters of Securities and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such of the
Representatives, if any, as may be designated for such purpose in the Pricing
Agreement.
13. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Underwriters shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Representatives as
set forth in the Pricing Agreement; if to the Guarantor and the Trust, shall be
delivered or sent by mail, telex or facsimile transmission to their respective
addresses set forth in the Registration Statement; provided, however, that any
notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Offerors by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
14. Successors and Assigns. This Agreement and each Pricing Agreement
shall be binding upon, and
38
39
inure solely to the benefit of, the Underwriters, the Offerors, and, to the
extent provided in Sections 8 and 10 hereof, the officers and directors of the
Guarantor, the trustees of the Trust and each person who controls an Offeror or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement or any such Pricing Agreement. No
purchaser of any of the Securities from any Underwriter shall be deemed a
successor or assign by reason merely of such purchase.
15. Time; "Business Day." Time shall be of the essence of each Pricing
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
16. GOVERNING LAW. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
17. Counterparts. This Agreement and each Pricing Agreement may be
executed by any one or more of the parties hereto and thereto in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
39
40
If the foregoing is in accordance with your understanding, please sign and
return to us [ ] counterparts hereof.
Very truly yours,
THE ALLSTATE CORPORATION
By: ______________________________
Name:
Title:
ALLSTATE FINANCING [III]
By: ______________________________
Name:
Title:
Accepted as of the date hereof:
[Underwriters]
40
41
ANNEX I TO
UNDERWRITING
AGREEMENT
PRICING AGREEMENT
_________, ____
[ ]
As representatives of the
several Underwriters
named in Schedule I hereto
c/o [ ]
Ladies and Gentlemen:
Allstate Financing [III], a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), and The Allstate Corporation, a
Delaware corporation (the "Guarantor" and, together with the Trust, the
Offerors"), propose, subject to the terms and conditions stated herein and in
the Underwriting Agreement, dated ___________, ____ (the "Underwriting
Agreement"), among the Offerors on the one hand and
_________________________________________________________ on the other hand, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Securities specified in Schedule II hereto (the
"Securities"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Final Prospectus in Section 2 of the Underwriting Agreement shall be deemed to
be a representation or warranty as of the date of the Underwriting Agreement in
relation to the Final Prospectus (as therein defined) and also a representation
and warranty as of the date of this Pricing Agreement in relation to the Final
Prospectus as amended or supplemented relating to the Securities which are the
subject of this Pricing Agreement. Each
I-1
42
reference to the Representatives herein and in the provisions of the
Underwriting Agreement so incorporated by reference shall be deemed to refer to
you. Unless otherwise defined herein, terms defined in the Underwriting
Agreement are used herein as therein defined. The Representatives designated to
act on behalf of the Representatives and on behalf of each of the Underwriters
of the Securities pursuant to Section ___ of the Underwriting Agreement and the
address of the Representatives referred to in such Section ___ are set forth at
the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the Final
Prospectus, as the case may be, relating to the Securities, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Offerors agree to
sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Trust, at the time and place
and at the purchase price to the Underwriters set forth in Schedule II hereto,
the number of Securities set forth opposite the name of such Underwriter in
Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us [ ] counterparts hereof, and upon acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof, including the provisions of the Underwriting Agreement incorporated
herein by reference, shall constitute a binding agreement among each of the
Underwriters and the Offerors. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Offerors for examination upon request, but
without warranty on the part of
I-2
43
the Representatives as to the authority of the signers thereof.
Very truly yours,
THE ALLSTATE CORPORATION
By: _______________________________
Name:
Title:
ALLSTATE FINANCING [III]
By: ________________________________
Name:
Title:
Accepted as of the date hereof:
[ ]
On behalf of each of the Underwriters
I-3
44
SCHEDULE I TO ANNEX I
Number
of
Securities to
Underwriters Be Purchased
------------ -------------
_______________________ . . . . . . . .
_______________________ . . . . . . . .
_______________________ . . . . . . . .
_______________________ . . . . . . . .
[Names of Underwriters]
Total . . . . . . . . . ------------
I-4
45
SCHEDULE II TO ANNEX I
UNDERWRITING AGREEMENT DATED ______________, ____
REGISTRATION STATEMENT NO. __________
TITLE, PURCHASE PRICE AND DESCRIPTION OF SECURITIES
Title: _____ % _____________________ Preferred Securities (" ")
(Liquidation Amount of $Per Security)
Number:
Price to Public:
Purchase Price per Security to be Paid by Underwriters:
Compensation Per Security to be Paid by the Guarantor to the
Underwriters:
Other Provisions:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Representatives:
Address for Notices, etc.:
I-5
46
ANNEX II TO
UNDERWRITING
AGREEMENT
Pursuant to Section 7(g) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Guarantor and its subsidiaries within the meaning
of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and financial
statement schedules, audited by them and included or incorporated by
reference in the Final Prospectus as amended or supplemented or the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published rules and regulations thereunder; and, if applicable, they have
performed a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
consolidated interim financial statements included or incorporated by
reference in the Final Prospectus, as amended or supplemented, or the
Registration Statement, for the periods specified in such letter, and, as
indicated in their report thereon, copies of which have been furnished to
the representatives of the Underwriters (the "Representatives");
(iii) On the basis of limited procedures, not constituting
an audit in accordance with generally accepted auditing
standards, consisting of a reading of the unaudited ▇▇▇▇▇-
II-1
47
cial statements and other information referred to below, a reading of the
latest available interim financial statements of the Guarantor and its
subsidiaries, inspection of the minute books of the Guarantor and its
subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Final Prospectus as amended
or supplemented, inquiries of officials of the Guarantor and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited consolidated
statements of income, consolidated balance
sheets and consolidated statements of cash
flows included or incorporated by reference in
the Final Prospectus as amended or supplemented
do not comply as to form in all material
respects with the applicable accounting
requirements of the Act and the related
published rules and regulations thereunder and
generally accepted accounting principles;
(B) any other income statement data and
balance sheet items annotated by the Representatives
included or incorporated by reference in the
Final Prospectus as amended or supplemented
do not agree with the corresponding items in
the audited consolidated financial statements,
notes thereto or financial statement schedules,
or other accounting information from which such
data and items were derived;
II-2
48
(C) the unaudited financial statements
which were not included or incorporated by
reference in the Final Prospectus as amended
or supplemented were not determined on a basis
substantially consistent with the basis for the
audited consolidated financial statements included
or incorporated by reference in the Final
Prospectus as amended or supplemented;
(D) any unaudited pro forma
consolidated condensed financial statements
included or incorporated by reference in the
Final Prospectus as amended or supplemented
do not comply as to form in all material
respects with the applicable accounting
requirements of the Act and the published
rules and regulations thereunder or the pro
forma adjustments have not been properly
applied to the historical amounts in the
compilation of those statements.
(E) as of a specified date not more
than five business days prior to the date of
such letter, there have been any
II-3
49
changes in the consolidated capital stock or any
increase in the consolidated borrowings or
consolidated reserve for property-liability
insurance claims and claims expense or
consolidated reserve for life insurance policy
benefits, or asset reserves of the Guarantor
and its subsidiaries, or any decreases in
consolidated fixed income securities
available for sale, consolidated equity
securities, consolidated investments or
shareholder equity, or any decrease in AIC's
or ▇▇▇▇'▇ statutory capital and surplus, or
other items specified by the
Representatives, in each case as compared
with amounts shown in the latest balance
sheet included or incorporated by reference
in the Final Prospectus as amended or
supplemented, except in each case for
changes, increases or decreases which the
Final Prospectus discloses have occurred or
may occur or which are described in such
letter; and
(F) for the period from the date of
the latest financial statements included or
incorporated by reference in the Final
Prospectus as amended or supplemented to the
specified date referred to in Clause (E)
there were any decreases in consolidated
premiums earned, consolidated net investment
income, or other items specified by the
Representatives, or any increases in any
items specified by the Representatives, in
each case as compared with the comparable
period of the preceding year and
II-4
50
with any other period of corresponding length
specified by the Representatives, except in
each case for decreases or increases which
the Final Prospectus discloses have occurred
or may occur or which are described in such
letter; and
(iv) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Final
Prospectus as amended or supplemented and the limited
procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (ii) and (iii) above, they
have carried out certain procedures as specified in their
letter, not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the
Representatives, which are derived from the general accounting
records of the Guarantor and its subsidiaries, which appear or
are incorporated by reference in the Final Prospectus as amended
or supplemented or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives,
and have compared certain of such specified amounts, percentages
and financial information with the accounting records of the
Guarantor and its subsidiaries and have found them to be in
agreement.
II-5
51
ANNEX III TO
UNDERWRITING
AGREEMENT
PRINCIPAL JURISDICTION
SUBSIDIARIES OF INCORPORATION
---------------------------------- ----------------
Allstate Insurance Company ....... Illinois
Allstate Life Insurance Company .. Illinois
III-1