-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Ho4CXyo5rWWTyvOpKTGKv5zZ2bkmv62KfIXNnJ85x0F9h9E8iaka+9gf5lctqPUR B60Jtq2H6RMCg2LaZ9TWQQ== 0000950130-95-000661.txt : 19950414 0000950130-95-000661.hdr.sgml : 19950412 ACCESSION NUMBER: 0000950130-95-000661 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19950406 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEICO CORP CENTRAL INDEX KEY: 0000277795 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 521135801 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-58459 FILM NUMBER: 95527372 BUSINESS ADDRESS: STREET 1: GEICO PLZ CITY: WASHINGTON STATE: DC ZIP: 20076 BUSINESS PHONE: 3019862027 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 1995 REGISTRATION NO. 33- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- GEICO CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) --------------- DELAWARE 52-1135801 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.) OF INCORPORATION OR ORGANIZATION) ONE GEICO PLAZA WASHINGTON, D.C. 20076-0001 (301) 986-3000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- CHARLES R. DAVIES VICE PRESIDENT AND GENERAL COUNSEL GEICO CORPORATION ONE GEICO PLAZA WASHINGTON, D.C. 20076-0001 (301) 986-2652 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------- COPIES TO: SAMUEL C. BUTLER CRAVATH, SWAINE & MOORE WORLDWIDE PLAZA 825 EIGHTH AVENUE NEW YORK, NEW YORK 10019 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the 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, please check the following box: [X] --------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION TO BE REGISTERED REGISTERED PER UNIT* OFFERING PRICE* FEE - -------------------------------------------------------------------------------------------------- Notes.............. $100,000,000 100% $100,000,000 $34,483
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- *Estimated solely for purposes of calculating the registration fee. --------------- 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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- EXPLANATORY NOTE This Registration Statement contains a Prospectus relating to the offering (the "Offering") of $100,000,000 aggregate principal amount of % Notes Due 2005 (the "Notes") of GEICO Corporation, together with separate Prospectus pages relating to certain market-making transactions in the Notes. The complete Prospectus for the Offering follows immediately after this Explanatory Note. Following such Prospectus are certain pages of the Prospectus for the market- making transactions, which include an alternate cover page, an alternate inside front cover page, a "Plan of Distribution" section which replaces the "Underwriting" and "Legal Matters" sections and an alternate back cover page. The market-making Prospectus will not contain a "Capitalization" or "Use of Proceeds" section. All other pages of the Prospectus for the Offering are to be used in the Prospectus for the market-making transactions (with certain pagination differences). In order to register under Rule 415 those Notes which will be offered and sold in market-making transactions, the appropriate box on the cover page of the Registration Statement has been checked and the undertakings required by Item 512(a) of Regulation S-K have been included in Item 17 of Part II. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED APRIL 6, 1995 PROSPECTUS $100,000,000 GEICO CORPORATION % NOTES DUE 2005 The % Notes Due 2005 (the "Notes") will mature on , 2005. Interest on the Notes is payable semiannually on and , commencing , 199 . The Notes will not be entitled to any sinking fund. GEICO Corporation (the "Company") currently has no intention to list the Notes on any securities exchange, and there can be no assurance given as to the liquidity of the trading market for the Notes. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - --------------------------------------------------------------------------------
PROCEEDS TO PRICE TO UNDERWRITING COMPANY (1) PUBLIC (1) DISCOUNT (2) Per Note................................. % % % Total.................................... $ $ $
- -------------------------------------------------------------------------------- (1) Plus accrued interest, if any, from , 1995. (2) Before deducting expenses payable by the Company estimated to be $235,000. The Notes are offered subject to receipt and acceptance by the Underwriter, to prior sale and to the Underwriter's right to reject any order in whole or in part and to withdraw, cancel or modify the offer without notice. It is expected that delivery of the Notes will be made at the office of Salomon Brothers Inc, Seven World Trade Center, New York, New York, or through the facilities of The Depository Trust Company, on or about , 1995. SALOMON BROTHERS INC - ---------------------------------------------------------------- The date of this Prospectus is , 1995. ----------------------- IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA HAS NEITHER APPROVED NOR DISAPPROVED OF THE OFFERING IN QUESTION, NOR HAS THE COMMISSIONER ACTED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ---------------- AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), pursuant to Sections 13 and 15(d) thereof and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and other information can also be inspected at the offices of the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York 10005, and the Pacific Stock Exchange Incorporated ("PSE"), 115 Sansome Street, 2nd Floor, San Francisco, California 94104. The Company's Common Stock is listed on both the NYSE and the PSE. The Company has filed with the Commission a registration statement on Form S- 3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Act"), with respect to the Notes. As permitted by the rules and regulations of the Commission, this Prospectus does not contain all the information set forth in the Registration Statement and the exhibits and schedules thereto. For further information, reference is made to the Registration Statement. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents of the Company heretofore filed by it with the Commission are hereby incorporated herein by reference: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the "1994 Form 10-K"); and (b) The Company's Form SE dated March 30, 1995. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the Offering of the Notes are incorporated herein by reference and such documents shall be deemed to be a part hereof from the date of filing of such documents. Any statements contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 2 The Company will provide without charge to each person to whom this Prospectus is delivered, upon request of any such person, a copy of any or all of the foregoing documents incorporated herein by reference (other than the exhibits to such documents unless such exhibits are specifically incorporated by reference herein). Requests for such copies should be directed to Rosalind A. Phillips, Secretary, GEICO Corporation, One GEICO Plaza, Washington, D.C. 20076-0001 (Telephone: (301) 986-2077). GEICO CORPORATION GEICO Corporation (the "Company"), which was organized as a Delaware corporation in 1978, is the parent corporation of various subsidiaries which are in the business of providing insurance and financial services. In 1979, the Company became the parent of Government Employees Insurance Company ("GEICO"), its principal subsidiary. The Company's principal business is personal lines property and casualty insurance. Private passenger automobile insurance accounted for approximately 93% of the Company's total premiums earned in the fiscal year ended December 31, 1994. Based on earned premiums in 1993, GEICO and the other direct and indirect subsidiaries of the Company (as a group) are the sixth largest overall provider of private passenger automobile insurance in the United States. The Company's principal executive offices are located at One GEICO Plaza, Washington, D.C. 20076-0001 (Telephone: (301) 986-3000). Unless indicated otherwise, the term the "Company" as used herein refers to GEICO Corporation and its consolidated subsidiaries. PROPERTY AND CASUALTY INSURANCE GEICO was founded in 1936 to provide private passenger automobile insurance to government employees and military personnel. In 1958 GEICO began to insure all eligible preferred-risk drivers. In 1987, GEICO returned to marketing new automobile policies to preferred-risk government employees and military personnel only, while a subsidiary, GEICO General Insurance Company ("GEICO General"), began writing private passenger automobile insurance for new preferred-risk applicants not associated with the government or military. GEICO and GEICO General, which serve the preferred-risk market, accounted for approximately 92% of the Company's total premiums earned in the fiscal year ended December 31, 1994. GEICO also writes homeowners, personal umbrella liability, boat owners and fire insurance. GEICO Indemnity Company ("GEICO Indemnity"), also a subsidiary of the Company, writes standard-risk private passenger automobile and motorcycle insurance. GEICO Casualty Company ("GEICO Casualty"), a subsidiary of GEICO Indemnity, writes nonstandard-risk private passenger automobile insurance. As of April 3, 1995, GEICO, GEICO General, GEICO Indemnity and GEICO Casualty have an A.M. Best rating of A++ (Superior) and a Standard & Poor's claims- paying ability rating of AAA (Superior). REINSURANCE Resolute Reinsurance Company, a subsidiary of Resolute Group, Inc. ("Resolute"), which is in turn a subsidiary of the Company, wrote property and casualty reinsurance in the domestic and international 3 markets until late 1987 when it suspended writing new and renewal reinsurance. Resolute is in the process of running off its claim obligations. Resolute Reinsurance Company is not currently rated. LIFE INSURANCE AND ANNUITIES Criterion Life Insurance Company was formed by GEICO in 1991 to offer structured settlement single premium annuities to claimants of its property/casualty company affiliates. On December 31, 1991 it assumed all the structured settlement annuity business in force from Garden State Life Insurance Company which was also wholly-owned by GEICO until it was sold in June 1992. Criterion Life also has an A.M. Best rating at A++ (Superior). OTHER INSURANCE-RELATED SUBSIDIARIES Other active subsidiaries of the Company and GEICO involved in the sale of insurance and insurance-related products include: The Top Five Club, Inc., which offers travel-related benefits to military personnel in the top five enlisted pay grades; International Insurance Underwriters, Inc., which provides various insurance services to military personnel as they are transferred overseas or back to the United States; GEICO Financial Services, GmbH, which sells automobile policies to American military personnel through offices in Germany and through agents in England, Germany, Italy, Portugal and Turkey; Insurance Counselors, Inc. and Insurance Counselors of Texas, Inc., formed primarily to facilitate the marketing of insurance products; and Safe Driver Motor Club, Inc., which offers motor club services to customers of subsidiaries of the Company and sponsors of motor clubs. FINANCE The Company offers additional financial services through its subsidiary, Government Employees Financial Corporation ("GEFCO"), which, directly or through one or more of its own subsidiaries, is in the business of consumer and business lending and loan servicing. The Company is in the process of winding down GEFCO and has signed an agreement to sell approximately $40 million of GEFCO's remaining loans receivable and other assets. BUSINESS SEGMENTS The Company's dominant business segment, pursuant to Statement of Financial Accounting Standards No. 14, is property and casualty insurance, reflecting a reduction in the Company's reinsurance, life insurance and annuities, and finance business in recent years. REGULATION Each of the Company's insurance company subsidiaries is subject to regulation and supervision of its insurance businesses in each of the jurisdictions in which it does business. In general, such regulation is for the protection of policyholders rather than shareholders. Legislation has been introduced in recent sessions of Congress proposing modification or repeal of the McCarran- Ferguson Act which reaffirms the proposition that it is the responsibility of state governments to regulate the insurance industry and provides a limited exemption to the "business of insurance" from federal anti-trust laws. Whether any changes to the current statute will be made and the effect of such changes, if any, cannot be determined. The Congress and certain state legislatures are also considering the effects of the use of sex, age, marital status, rating territories and other traditional rating criteria as a basis for rating classification; certain of such criteria no longer can be used in some states, and have been and are being challenged in the courts of other states. Clinton administration proposals to integrate the medical benefits portion of both workers compensation and automobile insurance into a general health care insurance system were not enacted during 1994 and, in fact, met with a certain amount of public resistance. The Company believes these recommendations were without merit but, at this time, cannot predict with certainty whether similar proposals will be forthcoming from the newly seated Congress. Additionally, some individual states are considering various health care reform proposals and the Company cannot predict the outcome of such initiatives at this time. 4 RECENT DEVELOPMENTS The Company announced on April 4, 1995 that Aetna Life & Casualty Company will offer coverage to homeowners insurance customers of GEICO as GEICO phases out its homeowners business over the next three years. The agreement will be ongoing, does not represent a one-time business sale by the Company and will have no significant impact on the Company's earnings in 1995. In 1994 homeowners' insurance policies constituted approximately 6% of the Company's premiums earned. 5 SELECTED FINANCIAL DATA The following table sets forth selected financial information for the Company and its consolidated subsidiaries. The data in the following table should be read in conjunction with the Company's consolidated financial statements and related notes thereto contained in the 1994 Form 10-K, which is incorporated by reference in this Prospectus.
YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 1994 1993 1992 1991 1990 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS) OPERATING RESULTS Premiums................ $2,476,276 $2,283,488 $2,084,502 $1,888,368 $1,692,518 Net investment income... 201,790 201,851 201,526 191,226 177,087 Realized gains on investments............ 12,898 120,584 98,535 29,331 19,587 Interest on loans receivable............. 10,347 11,519 16,528 20,019 23,606 Equity in earnings of unconsolidated affiliates............. -- 3,306 2,292 4,139 3,303 Other revenue........... 14,698 17,552 16,619 13,944 18,776 ---------- ---------- ---------- ---------- ---------- Total revenue........... 2,716,009 2,638,300 2,420,002 2,147,027 1,934,877 Total benefits and expenses............... 2,507,194 2,351,873 2,247,229 1,950,647 1,726,436 ---------- ---------- ---------- ---------- ---------- Net income before cumulative effect of changes in accounting principles............. 208,815 286,427 172,773 196,380 208,441 Cumulative effect of changes in accounting principles............. (1,051) (12,749) -- -- -- ---------- ---------- ---------- ---------- ---------- Net income.............. $ 207,764 $ 273,678 $ 172,773 $ 196,380 $ 208,441 ========== ========== ========== ========== ========== WEIGHTED AVERAGE SHARES OUTSTANDING............ 69,992 71,417 72,387 72,855 76,397 PER SHARE RESULTS Net income(1)........... $ 2.97 $ 3.83 $ 2.39 $ 2.70 $ 2.73 Common Stock dividends.. $ 1.00 $ .680 $ .600 $ .456 $ .400 FINANCIAL CONDITION Assets.................. $4,998,105 $4,831,440 $4,525,091 $4,242,193 $3,719,019 Short-term debt......... $ 91,848 $ 83,093 $ 96,608 $ 105,990 $ 68,895 Long-term debt.......... $ 299,530 $ 334,992 $ 190,399 $ 193,091 $ 211,904 Shareholders' equity.... $1,445,941 $1,534,579 $1,292,511 $1,184,261 $ 970,008 Common shares outstanding............ 68,291 70,834 71,184 71,047 74,253 Book value per share.... $ 21.17 $ 21.66 $ 18.16 $ 16.67 $ 13.06 SIGNIFICANT STATUTORY INDICATORS PROPERTY AND CASUALTY OPERATIONS (2) Surplus for protection of policyholders....... $1,039,930 $ 916,943 $ 968,286 $1,104,564 $ 811,628 Ratio of twelve months written premiums to surplus................ 2.4:1 2.2:1 2.2:1 1.7:1 2.1:1 Loss ratio.............. 82.1% 81.9% 84.8% 79.0% 80.8% Expense ratio (3)....... 14.3% 17.2% 15.3% 15.9% 15.2% Underwriting ratio...... 96.4% 99.1% 100.1% 94.9% 96.0% Underwriting ratio after policyholder dividends. 96.4% 99.1% 100.1% 96.4% 96.4% Adjusted ratios (4) Expense ratio.......... 15.6% Underwriting ratio..... 97.5%
- -------- (1) The cumulative effect of changes in accounting reduced net income by $.01 in 1994 and $.18 in 1993. (2) Property and Casualty includes GEICO, GEICO General, GEICO Indemnity, GEICO Casualty and Resolute. (3) Expense ratios are calculated using underwriting expenses less net service charges, as related to premiums written. (4) Adjusted ratios in 1993 are calculated to eliminate the effect of the change in accounting for advance premiums. 6 CAPITALIZATION The following table sets forth the capitalization of the Company and its consolidated subsidiaries as of December 31, 1994, and as adjusted for the issuance of, and the application of the net proceeds to the Company from, the sale of the Notes offered hereby. See "Use of Proceeds."
AS ACTUAL ADJUSTED ---------- ---------- (IN THOUSANDS) Short-term debt: Short-term bank loans GEFCO (1)........................................... $ 51,000 $ 51,000 Company (2)......................................... 30,000 -- Current portion of long-term debt..................... 10,848 10,848 ---------- ---------- Total short-term debt............................. 91,848 61,848 ---------- ---------- Long-term debt, net of current portion: Bank loans of Employee Stock Ownership Plan (1)(3).... 39,902 39,902 7.35% Debentures...................................... 149,485 149,485 9.15% Debentures...................................... 99,643 99,643 Mortgage note......................................... 10,500 10,500 Notes offered hereby.................................. -- 100,000 ---------- ---------- Total long-term debt.............................. 299,530 399,530 ---------- ---------- Shareholders' equity: Common Stock.......................................... 71,565 71,565 Paid-in surplus....................................... 169,084 169,084 Unrealized appreciation of investments................ 91,167 91,167 Retained earnings..................................... 1,330,022 1,330,022 Treasury Stock, at cost (4)........................... (167,115) (167,115) Unearned Employee Stock Ownership Plan shares (3)..... (48,782) (48,782) ---------- ---------- Total shareholders' equity........................ 1,445,941 1,445,941 ---------- ---------- Total capitalization.............................. $1,837,319 $1,907,319 ========== ==========
- -------- (1) Guaranteed by the Company. (2) Short-term bank loans of the Company totaled $79.0 million at March 31, 1995. (3) On March 31, 1995 the Employee Stock Ownership Plan borrowed an additional $15.0 million and used the funds to purchase $15.0 million of GEICO Corporation shares for the Employee Stock Ownership Plan. (4) Subsequent to December 31, 1994 and as of March 31, 1995, the Company had purchased a net additional 333,354 shares of Treasury Stock for $16.0 million. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges of the Company for the years and periods indicated:
YEARS ENDED DECEMBER 31, ----------------------------- 1994 1993 1992 1991 1990 ---- ----- ---- ---- ---- 8.66 15.41 7.44 7.45 6.95
For purposes of computing the foregoing ratios, earnings consist of net income before taxes less undistributed earnings of less than 50%-owned affiliates plus an adjustment to include 100% of pretax losses of unconsolidated subsidiaries plus fixed charges (excluding capitalized interest). Fixed charges consist of interest (whether capitalized or expensed), amortization of debt discount and debt issuance expense, and a portion of rent representative of interest ( 1/3 of rent expense). 7 USE OF PROCEEDS The aggregate net proceeds to the Company from the sale of the Notes are estimated to be approximately $ . The Company intends to use a portion of the net proceeds to repay a 6.4% $30 million bank note due June 22, 1995, which was outstanding at December 31, 1994, and to repay short-term borrowings subsequent to December 31, 1994 under its existing line of credit consisting of a 6.36% $15 million borrowing due April 11, 1995 and a weighted average 6.37% $15 million borrowing due June 22, 1995. The Company has used this short-term debt in part to fund the purchase of the Company's Common Stock under the Company's current authorization to buy shares from time to time depending on market conditions. The remaining portion of the net proceeds would be available for investment in marketable securities and for other general corporate purposes, which may include purchases of the Company's Common Stock. Although, except as set forth in the preceding sentence, the Company has not identified the future uses of the net proceeds from the sale of the Notes, potential applications include, among other things, capital contributions to the insurance subsidiaries of the Company, which may be made in the event of large catastrophe losses due, in part, to the unavailability of reinsurance at what the Company considers a reasonable cost, and the repayment or repurchase of outstanding debt of the Company. Pending the foregoing applications, the net proceeds from the sale of the Notes will be invested in marketable securities. DESCRIPTION OF NOTES GENERAL The Notes are to be issued under an Indenture dated as of , 1995 (the "Indenture"), between the Company and United States Trust Company of New York, as trustee (the "Trustee"). A copy of the form of the Indenture has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The following summary of certain provisions of the Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture and the Notes, including the definitions therein of terms not defined in this Prospectus. Wherever particular provisions of the Indenture or terms defined therein are referred to, such provisions or definitions are incorporated by reference as a part of the statements made. The Notes will be unsecured obligations of the Company limited to $100,000,000 aggregate principal amount and will be pari passu with all other unsecured senior indebtedness of the Company. The Notes will be issued in fully registered form, without coupons, in denominations of $1,000 or integral multiples thereof and will bear interest from , 1995, at a rate of % per annum. The Notes will mature on , 2005. Interest on the Notes will be payable semiannually in arrears on and of each year, commencing , 1995, to holders of record of the Notes at the close of business on the or immediately preceding such or . Interest on the Notes will be computed on the basis of a 360- day year of twelve 30-day months. Principal and interest are payable at the office of the Paying Agent, but, at the option of the Company, interest may be paid by check mailed to the registered holders at their registered addresses. The Notes are transferable and exchangeable at the office of the Registrar. The Company has initially appointed the Trustee as the Paying Agent and the Registrar. The Trustee's current address is 114 West 47th Street (15th Floor), New York, N.Y. 10036. The Company does not intend to apply for listing of the Notes on any securities exchange. The Company has no sinking fund obligations with respect to the Notes. The Company primarily conducts its operations through its subsidiaries. The rights of the Company and its creditors, including the holders of the Notes offered hereby, to participate in the assets of any subsidiary upon the latter's liquidation or reorganization will be subject to the prior claims of the subsidiary's creditors except to the extent that the Company may itself be a creditor with recognized claims against the subsidiary. As of December 31, 1994, the Company's subsidiaries had total aggregate assets (excluding equity investments made by such subsidiaries in other such subsidiaries) of approximately $4,393,500,000 and total aggregate liabilities of approximately $3,149,200,000. 8 CERTAIN COVENANTS Consolidation, Merger and Sale of Assets. The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets as an entirety to, another person, unless (i) the resulting, surviving or transferee person (if not the Company) is a person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and such person (if not the Company) expressly assumes by supplemental indenture all the obligations of the Company under the Notes and the Indenture; (ii) immediately after giving effect to such transaction, no Default has occurred and is continuing; and (iii) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture comply with the Indenture. Upon any such consolidation, merger or transfer, the resulting, surviving or transferee person shall succeed to, and may exercise every right and power of, the Company under the Indenture. (Section 4.01.) The term "substantially all the assets" of the Company is not defined in the Indenture, but under New York law such term is generally interpreted to mean assets substantially in excess of 50% of the total assets of the Company and its consolidated subsidiaries. Limitations on Disposition of Stock of Restricted Subsidiaries. The Indenture provides that the Company will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of any shares of capital stock of any Restricted Subsidiary (or of any Subsidiary having direct or indirect control of any Restricted Subsidiary) except for, subject to the covenant relating to consolidations, mergers and sales and conveyances of assets described in the immediately preceding paragraph, (i) a sale, transfer or other disposition of any capital stock of any Restricted Subsidiary (or of any Subsidiary having direct or indirect control of any Restricted Subsidiary) to a wholly owned Subsidiary of the Company; (ii) a sale, transfer or other disposition of the entire capital stock of any Restricted Subsidiary (or of any Subsidiary having direct or indirect control of any Restricted Subsidiary) held by the Company and its Subsidiaries for at least fair value (as determined by the Board of Directors of the Company acting in good faith); or (iii) a sale, transfer or other disposition of any capital stock of any Restricted Subsidiary (or of any Subsidiary having direct or indirect control of any Restricted Subsidiary) for at least fair value (as determined by the Board of Directors of the Company acting in good faith) if, after giving effect thereto, the Company and its Subsidiaries would own at least 80% of the issued and outstanding voting stock of such Restricted Subsidiary (or Subsidiary). (Section 3.04.) The Company is not required pursuant to the Indenture to redeem or otherwise repurchase the Notes, in whole or in part, with the proceeds of any sale, transfer or other disposition of any shares of capital stock of any Restricted Subsidiary (or of any Subsidiary having direct or indirect control of any Restricted Subsidiary). Furthermore, the Indenture does not provide for any restrictions on the Company's use of any such proceeds. Limitations upon Liens. The Indenture provides that the Company will not, nor will it permit any Restricted Subsidiary to, incur, issue, assume or guarantee any indebtedness for borrowed money (all such indebtedness for borrowed money issued, assumed or guaranteed being "Debt") if such Debt is secured by a Lien upon any property or assets, whether now owned or hereafter acquired, of the Company or any Restricted Subsidiary or upon any shares of stock of a Restricted Subsidiary without in any such case effectively providing that the Notes (together with, if the Company shall so determine, any other Debt (or any bonds, debentures, notes, or other similar evidences of indebtedness, whether or not for borrowed money) of the Company or such Restricted Subsidiary then existing or thereafter created which is not subordinated to the Notes) shall be secured equally and ratably with or prior to such Debt, so long as such Debt shall be so secured, except that the foregoing restriction shall not apply to (i) Liens on property of, or on any shares of stock of, any corporation existing at the time such corporation becomes a Restricted Subsidiary; (ii) Liens on property or shares of stock existing at the time of acquisition thereof by the Company or any Restricted Subsidiary; (iii) Liens on property or shares of stock hereafter acquired (or, in the case of property, constructed (including construction of improvements or additions to improvements on existing 9 property)) by the Company or any Restricted Subsidiary and created prior to, at the time of, or within one year after such acquisition (or, in the case of property, the completion of such construction (including construction of improvements or additions to improvements on existing property) or commencement of commercial operation of such property, whichever is later) to secure or provide for the payment of all or any part of the purchase price (or, in the case of property (including construction of improvements or additions to improvements on existing property), the construction price) thereof; (iv) Liens in favor of the Company or any Restricted Subsidiary; (v) Liens in favor of the United States of America, any State thereof or the District of Columbia, or any political subdivision, agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute; (vi) Liens on property of a person existing at the time such person is merged into or consolidated with the Company or a Restricted Subsidiary; and (vii) any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Lien referred to in the foregoing clauses (i) to (vi), inclusive; provided, however, that (x) such extension, renewal or replacement Lien shall be limited to all or a part of the same property or shares of stock that secured the Lien extended, renewed or replaced (plus improvements (including additions to improvements) on such property) and (y) the Debt secured by such Lien at such time is not increased (except, with respect to a Lien on property, to the extent that additional Debt was incurred to provide for the payment of all or any part of the construction price of improvements or additions to improvements on such property). Notwithstanding the above, the Company and one or more Restricted Subsidiaries may, without securing the Notes, issue, assume or guarantee secured Debt which would otherwise be subject to the foregoing restrictions, provided that after giving effect thereto the aggregate amount of such Debt secured pursuant to such exception (not including secured Debt permitted under the foregoing exceptions) at such time does not exceed 10% of Consolidated Tangible Net Worth. (Section 3.03.) Based on the Company's December 31, 1994 balance sheet included in the 1994 Form 10-K, as of the date of this Prospectus the amount of Debt which the Company and its Restricted Subsidiaries would be permitted to secure pursuant to the exception set forth in the last sentence of the preceding paragraph would be approximately $144,433,000. The following definitions apply to the covenants described above: "Consolidated Tangible Net Worth" means, at any date, the total assets appearing on the most recently prepared consolidated balance sheet of the Company and its Subsidiaries as at the end of a fiscal quarter of the Company, prepared in accordance with generally accepted accounting principles consistently applied, less (a) the total liabilities appearing on such balance sheet, and (b) intangible assets. "Intangible assets" means the value (net of any applicable reserves), as shown on or reflected in such balance sheet, of: (i) all trade names, trademarks, licenses, patents, copyrights and goodwill; (ii) organizational and development costs (other than deferred policy acquisition costs); and (iii) unamortized debt discount and expense, less unamortized premium. "Lien" means any mortgage, pledge, security interest, conditional sale or other title retention agreement or other similar lien. "Restricted Subsidiary" means any Subsidiary which is incorporated under the laws of the United States of America, any State thereof or the District of Columbia, and which is a regulated insurance company principally engaged in one or more of the property, casualty and life insurance businesses; provided, however, that no Subsidiary shall be a Restricted Subsidiary if the total assets of such Subsidiary are less than 10% of the total assets of the Company and its consolidated Subsidiaries (including such Subsidiary) in each case as set forth on the most recently 10 prepared balance sheets of such Subsidiary and the Company and its consolidated Subsidiaries, respectively, as at the end of a fiscal quarter of the Company or such Subsidiary, as applicable, and computed in accordance with generally accepted accounting principles. "Subsidiary" means a corporation of which a majority of the capital stock having voting power under ordinary circumstances to elect a majority of the board of directors is owned by (i) the Company, (ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries. (Section 1.01.) Based on the Company's December 31, 1994 balance sheet included in the 1994 Form 10-K, as of the date of this Prospectus GEICO is the Company's only Restricted Subsidiary. As of December 31, 1994, GEICO held approximately 76% of the Company's consolidated total assets, and GEICO's net income for the year ended December 31, 1994 represented approximately 96% of the Company's consolidated net income during such period. AMENDMENT AND WAIVER Subject to certain exceptions, the Indenture may be amended with the written consent of the holders of at least a majority in principal amount of the Notes then outstanding, and any past default or compliance with any provision may be waived with the consent of the holders of at least a majority in principal amount of the Notes then outstanding. However, without the consent of each holder of an outstanding Note affected thereby, no amendment may, among other things, (i) reduce the amount of Notes whose holders must consent to an amendment; (ii) reduce the rate of or extend the time for payment of interest on any Note; (iii) reduce the principal of or extend the fixed maturity of any Note; (iv) change the currency for payment of principal of or premium or interest on any Note; (v) impair the right to institute suit for the enforcement of any payment on or with respect to any Note; or (vi) waive certain payment defaults with respect to the Notes. (Section 8.02.) Without the consent of any holder of the Notes, the Company and the Trustee may amend the Indenture (A) to cure any ambiguity, omission, defect or inconsistency, (B) to provide for the assumption by a successor corporation of the obligations of the Company under the Indenture, (C) to provide for uncertificated Notes in addition to or in place of certificated Notes so long as such uncertificated Notes are in registered form for the purposes of the Internal Revenue Code, (D) to add guarantees of the Notes, (E) to add to the covenants of the Company for the benefit of the holders of the Notes or to surrender any right or power conferred upon the Company, (F) to comply with any requirement of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act of 1939, as amended, and (G) to make any change that does not adversely affect the rights of any holder of the Notes. (Section 8.01.) TRANSFER The Notes will be issued in registered form and will be transferable only upon the surrender to the Registrar of the Notes being transferred for registration of transfer. (Section 2.06.) EVENTS OF DEFAULT An Event of Default as defined in the Indenture includes the occurrence of any of the following: (i) a default in the payment of principal of any Note when due at its stated maturity, upon declaration or otherwise; (ii) a default in the payment of interest on any Note when due, and such default continues for 30 days; (iii) a failure by the Company for 15 days after notice to comply with its obligations under the covenants described above under "Certain Covenants-- Consolidation, Merger and Sale of Assets" and "Certain Covenants--Limitations on Disposition of Stock of Restricted Subsidiaries"; (iv) a failure by the Company for 60 days after notice to comply with its other agreements contained in the Indenture; (v) the principal amount of any indebtedness of the Company or any Restricted Subsidiary 11 for borrowed money is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of an event of default, the total amount of such indebtedness for borrowed money unpaid or accelerated exceeds $25,000,000 and such default continues for 15 days after notice; or (vi) certain events of bankruptcy, insolvency or reorganization of the Company or a Restricted Subsidiary. (Section 5.01.) If an Event of Default occurs and is continuing with respect to the Indenture, the Trustee or the holders of 25% in principal amount of the outstanding Notes may declare the principal of and accrued interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest will be due and payable immediately. Under certain circumstances, the holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to such Notes and its consequences. (Section 5.02.) Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. Subject to such provisions for indemnification and certain limitations contained in the Indenture, the holders of a majority in principal amount of the Notes at the time outstanding have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. (Section 5.05.) No holder of any Note may pursue any remedy with respect to the Indenture or the Notes, unless (i) such holder shall have given to the Trustee written notice of a continuing Event of Default with respect to the Notes; (ii) the holders of at least 25% in principal amount of the outstanding Notes shall have made written request to the Trustee to pursue the remedy, and shall have offered the Trustee reasonable security or indemnity against any loss, liability or expense; (iii) within 60 days following the receipt of such request and offer of security and indemnity, the Trustee shall not have received from the holders of a majority in principal amount of the outstanding Notes a direction inconsistent with such request; and (iv) the Trustee shall have failed to comply with such request within such 60-day period. (Section 5.06.) Notwithstanding any other provision of the Indenture, the right of a holder of a Note to receive payment of the principal of and interest on such Note on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment, shall not be impaired or affected without the consent of such holder. (Section 5.07.) The Company will deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating whether such Officers have knowledge of any Default which may have occurred during such fiscal year. The Officers' Certificate shall describe such Default, its status and what action the Company is taking or proposes to take with respect thereto. (Section 3.05.) SATISFACTION AND DISCHARGE OF THE INDENTURE The Indenture provides that when (i) the Company delivers to the Trustee all outstanding Notes for cancellation or (ii) all outstanding Notes have become due and payable and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity all outstanding Notes, including interest thereon, and if in either case the Company pays all other sums payable under the Indenture by the Company, then the Indenture shall cease to be of further effect, except for certain obligations, including those respecting the obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a Registrar and Paying Agent in respect of the Notes. The Trustee shall acknowledge satisfaction and discharge of the Indenture on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company. (Section 7.01.) DEFEASANCE The Indenture provides that the Company at any time may terminate its obligations under the Indenture and the Notes ("defeasance"), except for certain obligations, including those respecting 12 the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a Registrar and Paying Agent in respect of the Notes. (Section 7.01.) If the Company exercises its defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. (Section 7.01.) In order to exercise its defeasance option, the Company must (i) irrevocably deposit in trust with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Notes to maturity; (ii) deliver to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Notes to maturity; (iii) deliver to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; (iv) comply with certain other conditions; and (v) deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes have been complied with. (Section 7.02.) GOVERNING LAW The Indenture provides that it will be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. (Section 9.09.) CONCERNING THE TRUSTEE United States Trust Company of New York will act as Trustee for the Notes issued under the Indenture. UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement, the Company has agreed to sell to Salomon Brothers Inc (the "Underwriter"), and the Underwriter has agreed to purchase from the Company, all the Notes. The Underwriting Agreement provides that, subject to the terms and conditions set forth therein, the Underwriter will be obligated to purchase all the Notes offered hereby if any Notes are purchased. The Underwriter has advised the Company that the Underwriter proposes initially to offer the Notes to the public at the public offering price set forth on the cover page of this Prospectus and to certain dealers at such price less a concession not in excess of . % of the principal amount of the Notes. The Underwriter may allow and such dealers may reallow to certain other dealers a concession not in excess of . % of such principal amount. After the initial public offering, the public offering price and such concessions may be changed. The Underwriting Agreement provides that the Company will indemnify the Underwriter against certain liabilities, including liabilities under the Securities Act of 1933, or contribute to payments the Underwriter may be required to make in respect thereof. The Underwriter has advised the Company that it intends to make a market in the Notes, but it is not obligated to do so and may discontinue making a market at any time without notice. The Company currently has no intention to list the Notes on any securities exchange, and there can be no assurance given as to the liquidity of the trading market for the Notes. 13 Warren E. Buffett, a Director and Chairman of the Executive Committee of the Underwriter, is the Chairman of the Board and Chief Executive Officer of Berkshire Hathaway Inc. ("Berkshire"). Berkshire and its subsidiaries own 6,633,600 shares of Common Stock and all the outstanding shares of Series A Cumulative Convertible Preferred Stock (the "Preferred Stock") of Salomon Inc, the parent of the Underwriter. The Preferred Stock is entitled to 18,421,053 votes and, together with the Common Stock, constitutes approximately 24% of the votes entitled to be cast by the outstanding voting securities of Salomon Inc. The Preferred Stock is convertible into 18,421,053, or approximately 17%, of the outstanding shares of Common Stock of Salomon Inc. According to the most recent information available to the Company, Berkshire, through several of its subsidiaries, owns 34,250,000 shares, or approximately 50.2%, of the Company's outstanding Common Stock. According to the most recent information available to the Company, Mr. Buffett, his wife and a trust of which Mr. Buffett is a trustee, but in which he has no economic interest, own approximately 43.8% of the outstanding shares of Berkshire. In addition, Louis A. Simpson, Director and President and Chief Executive Officer--Capital Operations of the Company, is a Director of Salomon Inc. Mr. Simpson and members of his family own 950,119 shares, or approximately 1.4%, of the Company's outstanding Common Stock. Mr. Simpson also owns 25,000 shares of the Common Stock of Salomon Inc. As a result of the foregoing, the Underwriter may be deemed to be an affiliate of the Company. However, both the Underwriter and the Company disclaim such affiliate status. The Underwriter is nevertheless offering the Notes in compliance with the applicable provisions of Schedule E of the By-Laws of the National Association of Securities Dealers, Inc. The Underwriter has informed the Company that neither it nor the dealers will confirm sales to discretionary accounts without the prior specific written approval of the customer. LEGAL MATTERS The validity of the Notes offered hereby will be passed upon for the Company by Charles R. Davies, Esq., Vice President and General Counsel of the Company. Certain legal matters will be passed upon for the Underwriter by Cravath, Swaine & Moore, New York, New York. Mr. Davies owns 8,929 shares of Common Stock of the Company. Samuel C. Butler is a director, and the Chairman of the Executive Committee and Human Resources Committee of the Board of Directors, of the Company and is a partner in the law firm of Cravath, Swaine & Moore. Mr. Butler, a member of his family, trusts for the benefit of members of his family and trusts of which he is a trustee own 55,000 shares of Common Stock of the Company. EXPERTS The consolidated financial statements of GEICO Corporation at December 31, 1994 and 1993, and for each of the three years in the period ended December 31, 1994, incorporated in this Prospectus by reference to the Annual Report on Form 10-K of the Company for the year ended December 31, 1994, have been audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in their report, which includes an explanatory paragraph regarding the adoption of certain new accounting standards in 1994 and 1993, incorporated in this Prospectus by reference to the Annual Report on Form 10-K of the Company for the year ended December 31, 1994, and have been so incorporated in reliance upon the authority of such firm as experts in accounting and auditing. 14 NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITER. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. --------------- TABLE OF CONTENTS
PAGE ---- Available Information...................................................... 2 Incorporation of Certain Documents by Reference............................ 2 GEICO Corporation.......................................................... 3 Selected Financial Data.................................................... 6 Capitalization............................................................. 7 Ratio of Earnings to Fixed Charges......................................... 7 Use of Proceeds............................................................ 8 Description of Notes....................................................... 8 Underwriting............................................................... 13 Legal Matters.............................................................. 14 Experts.................................................................... 14
$100,000,000 GEICO CORPORATION % NOTES DUE 2005 - ----------------------------------- SALOMON BROTHERS INC - ------------------------------------------- PROSPECTUS DATED , 1995 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ [ALTERNATE PAGE] SUBJECT TO COMPLETION, DATED APRIL 6, 1995 PROSPECTUS $100,000,000 GEICO CORPORATION % NOTES DUE 2005 The % Notes Due 2005 (the "Notes") will mature on , 2005. Interest on the Notes is payable semiannually on and , commencing , 199 . The Notes will not be entitled to any sinking fund. GEICO Corporation (the "Company") currently has no intention to list the Notes on any securities exchange, and there can be no assurance given as to the liquidity of the trading market for the Notes. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This Prospectus is to be used by Salomon Brothers Inc ("Salomon") in connection with offers and sales of the Notes in market-making transactions in the over- the-counter market, in private transactions or otherwise at negotiated prices related to prevailing market prices at the time of sale. Salomon may act as principal or agent in such transactions. SALOMON BROTHERS INC - ---------------------------------------------------------------- The date of this Prospectus is , 1995. ----------------------- [ALTERNATE PAGE] THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA HAS NEITHER APPROVED NOR DISAPPROVED OF THE OFFERING IN QUESTION, NOR HAS THE COMMISSIONER ACTED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ---------------- AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), pursuant to Sections 13 and 15(d) thereof and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and other information can also be inspected at the offices of the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York 10005, and the Pacific Stock Exchange Incorporated ("PSE"), 115 Sansome Street, 2nd Floor, San Francisco, California 94104. The Company's Common Stock is listed on both the NYSE and the PSE. The Company has filed with the Commission a registration statement on Form S- 3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Act"), with respect to the Notes. As permitted by the rules and regulations of the Commission, this Prospectus does not contain all the information set forth in the Registration Statement and the exhibits and schedules thereto. For further information, reference is made to the Registration Statement. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents of the Company heretofore filed by it with the Commission are hereby incorporated herein by reference: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the "1994 Form 10-K"); and (b) The Company's Form SE dated March 30, 1995. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the Offering of the Notes are incorporated herein by reference and such documents shall be deemed to be a part hereof from the date of filing of such documents. Any statements contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 2 [ALTERNATE PAGE] PLAN OF DISTRIBUTION This Prospectus is to be used by Salomon in connection with offers and sales of the Notes in market-making transactions in the over-the-counter market, in private transactions or otherwise at negotiated prices related to prevailing market prices at the time of sale. Salomon may act as principal or agent in such transactions. Warren E. Buffett, a Director and Chairman of the Executive Committee of the Underwriter, is the Chairman of the Board and Chief Executive Officer of Berkshire Hathaway Inc. ("Berkshire"). Berkshire and its subsidiaries own 6,633,600 shares of Common Stock and all the outstanding shares of Series A Cumulative Convertible Preferred Stock (the "Preferred Stock") of Salomon Inc, the parent of the Underwriter. The Preferred Stock is entitled to 18,421,053 votes, and, together with the Common Stock, constitutes approximately 24% of the votes entitled to be cast by the outstanding voting securities of Salomon Inc. The Preferred Stock is convertible into 18,421,053, or approximately 17% of the outstanding shares of Common Stock of Salomon Inc. According to the most recent information available to the Company, Berkshire, through several of its subsidiaries, owns 34,250,000 shares, or approximately 50.2%, of the Company's outstanding Common Stock. According to the most recent information available to the Company, Mr. Buffett, his wife and a trust of which Mr. Buffett is a trustee, but in which he has no economic interest, own approximately 43.8% of the outstanding shares of Berkshire. In addition, Louis A. Simpson, Director and President and Chief Executive Officer--Capital Operations of the Company, is a Director of Salomon Inc. Mr. Simpson and members of his family own 950,119 shares, or approximately 1.4%, of the Company's outstanding Common Stock. Mr. Simpson also owns 25,000 shares of the Common Stock of Salomon Inc. As a result of the foregoing, the Underwriter may be deemed to be an affiliate of the Company. However, both the Underwriter and the Company disclaim such affiliate status. The Underwriter is nevertheless offering the Notes in compliance with the applicable provisions of Schedule E of the National Association of Securities Dealers, Inc. By-Laws. The Underwriter has informed the Company that neither they nor the dealers will confirm sales to discretionary accounts without the prior specific written approval of the customer. Salomon acted as the underwriter in connection with the original offering of the Notes and received an underwriting discount in the aggregate amount of $ . 3 [ALTERNATE PAGE] NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY SALOMON. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. --------------- TABLE OF CONTENTS
PAGE ---- Available Information...................................................... Incorporation of Certain Documents by Reference............................ GEICO Corporation.......................................................... Selected Financial Data.................................................... Ratio of Earnings to Fixed Charges......................................... Description of Notes....................................................... Plan of Distribution....................................................... Experts....................................................................
$100,000,000 GEICO CORPORATION % NOTES DUE 2005 - ---------------------------------- SALOMON BROTHERS INC - ------------------------------------------------ PROSPECTUS DATED , 1995 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Securities and Exchange Commission registration fee............. $ 34,483 National Association of Securities Dealers, Inc. filing fee..... 10,500 Trustee's fees and expenses..................................... 25,000* Printing and engraving expenses................................. 15,200* Rating Agency fees.............................................. 90,000* Accountants' fees and expenses.................................. 35,000* Blue Sky fees and expenses...................................... 5,000* Miscellaneous................................................... 20,000* -------- Total....................................................... $235,000* ========
- -------- *Estimated ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Subsection (a) of Section 145 of the General Corporation Law of the State of Delaware provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Subsection (b) of Section 145 provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 145 further provides that to the extent a director, officer, employee or agent of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145 or in the defense of any claim, issue or matter therein, he shall II-1 be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers a corporation to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the power to indemnify him against such liabilities under Section 145. Article Xl of the Company's Bylaws provides that the Company shall, to the fullest extent permitted by applicable law as then in effect, indemnify any person (an "Indemnitee") who is or was a director or officer of the Company and who is or was involved in any manner (including, without limitation, as a party or witness) or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action, suit or proceeding by or in the right of the Company to procure a judgment in its favor) (a "Proceeding") by reason of the fact that such person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan) against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding (except with respect to a Proceeding that was commenced by such director or officer (with certain exceptions)). The Bylaws further provide that such indemnification shall be a contract right and shall include the right to receive payment in advance of any expenses incurred by an Indemnitee in connection with such Proceeding, consistent with the provisions of applicable law as then in effect. The Company maintains directors' and officers' liability insurance against certain liabilities in the amount of $15,000,000. Reference is made to Section 8 of the Form of Underwriting Agreement filed as Exhibit 1 to this Registration Statement. ITEM 16. EXHIBITS
EXHIBIT NO. DESCRIPTION - ----------- ----------- 1 Form of Underwriting Agreement 4(a) Form of Indenture between the Company and United States Trust Company of New York, as Trustee 4(b) Form of Notes (included in Exhibit 4(a)) 5 Opinion of Charles R. Davies, Esq., as to validity of Notes 12 Statement of Computation of Ratio of Earnings to Fixed Charges 23(a) Consent of Charles R. Davies, Esq. (included in Exhibit 5) 23(b) Consent of Coopers & Lybrand L.L.P., independent public accountants 24 Power of Attorney (included on signature page of this Registration Statement) 25 Statement of Eligibility of Trustee 28 Information from reports furnished to state insurance regulatory authorities (incorporated by reference to Exhibit 29 (filed pursuant to a Form SE dated March 30, 1995, filed on March 30, 1995) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-8012))
II-2 ITEM 17. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes: (1) That, for the purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (2) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (3) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (4) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (a) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (b) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (c) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that the undertakings set forth in paragraphs (a) and (b) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to either Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement. (5) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (6) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE COUNTY OF MONTGOMERY, STATE OF MARYLAND, ON THE 6TH DAY OF APRIL, 1995. GEICO Corporation /s/ Olza M. Nicely By __________________________________ Olza M. Nicely President and Chief Executive Officer-- Insurance Operations /s/ Louis A. Simpson By __________________________________ Louis A. Simpson President and Chief Executive Officer-- Capital Operations POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS BELOW CONSTITUTES AND APPOINTS CHARLES R. DAVIES, OLZA M. NICELY, LOUIS A. SIMPSON AND ROSALIND A. PHILLIPS, AND EACH OF THEM, HIS OR HER TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM OR HER AND IN HIS OR HER NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS, INCLUDING ANY POST-EFFECTIVE AMENDMENTS, TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND AGENTS FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE OR SHE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-IN-FACT AND AGENTS, OR THEIR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ Olza M. Nicely President and Chief - ------------------------------------ Executive Officer-- April 6, 1995 OLZA M. NICELY Insurance Operations and Director /s/ Louis A. Simpson President and Chief - ------------------------------------ Executive Officer--Capital April 6, 1995 LOUIS A. SIMPSON Operations and Director /s/ W. Alvon Sparks, Jr. Executive Vice President and - ------------------------------------ Chief Financial Officer April 6, 1995 W. ALVON SPARKS, JR. (Principal Financial Officer) and Director /s/ Thomas M. Wells Group Vice President and - ------------------------------------ Controller (Principal April 6, 1995 THOMAS M. WELLS Accounting Officer)
II-4
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ John H. Bretherick, Jr. - ------------------------------------ JOHN H. BRETHERICK, JR. Director April 6, 1995 /s/ Norma E. Brown - ------------------------------------ NORMA E. BROWN Director April 6, 1995 /s/ Samuel C. Butler - ------------------------------------ SAMUEL C. BUTLER Director April 6, 1995 - ------------------------------------ JAMES E. CHEEK Director April , 1995 /s/ A. James Clark - ------------------------------------ A. JAMES CLARK Director April 6, 1995 /s/ Delano E. Lewis - ------------------------------------ DELANO E. LEWIS Director April 6, 1995 /s/ Coleman Raphael - ------------------------------------ COLEMAN RAPHAEL Director April 6, 1995 - ------------------------------------ WILLIAM J. RUANE Director April , 1995 - ------------------------------------ W. REID THOMPSON Director April , 1995
II-5 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION ----------- ----------- 1 Form of Underwriting Agreement 4(a) Form of Indenture between the Company and United States Trust Company of New York, as Trustee 4(b) Form of Notes (included in Exhibit 4(a)) 5 Opinion of Charles R. Davies, Esq., as to validity of Notes 12 Statement of Computation of Ratio of Earnings to Fixed Charges 23(a) Consent of Charles R. Davies, Esq. (included in Exhibit 5) 23(b) Consent of Coopers & Lybrand L.L.P., independent public accountants 24 Power of Attorney (included on signature page of this Registration Statement) 25 Statement of Eligibility of Trustee 28 Information from reports furnished to state insurance regulatory authorities (incorporated by reference to Exhibit 29 (filed pursuant to a Form SE dated March 30, 1995, filed on March 30, 1995) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-8012))
EX-1 2 UNDERWRITING AGREEMENT EXHIBIT 1 GEICO Corporation $100,000,000 _____% Notes Due 2005 Underwriting Agreement New York, New York ___________, 1995 Salomon Brothers Inc Seven World Trade Center New York, New York 10048 Dear Sirs: GEICO Corporation, a Delaware corporation (the "Company"), proposes to sell to you (the "Underwriter"), $100,000,000 principal amount of its ______% Notes Due 2005 (the "Securities"), to be issued under an indenture (the "Indenture") to be dated as of _________, 1995, between the Company and United States Trust Company of New York, as trustee (the "Trustee"). 1. Representations and Warranties. The Company represents and ------------------------------- warrants to, and agrees with, the Underwriter as set forth below in this Section 1. Certain terms used in this Section 1 are defined in paragraph (c) hereof. (a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933 (the "Act") and has filed with the Securities and Exchange Commission (the "Commission") a registration statement (file number 33-_________) on such Form, including a related preliminary prospectus, for the registration under the Act of the offering and sale of the Securities. The Company may have filed one or more amendments thereto, including the related preliminary prospectus, each of which has previously been furnished to the Underwriter. The Company will next file with the Commission one of the following: (i) prior to effectiveness of such registration statement, a further amendment to such registration statement, including the form of final prospectus or (ii) a final prospectus in accordance with Rules 430A and 424(b)(1) or (4). In the case of clause (ii), the Company has included in such 2 registration statement, as amended at the Effective Date, all information (other than Rule 430A Information) required by the Act and the rules thereunder to be included in the Prospectus with respect to the Securities and the offering thereof. As filed, such amendment and form of final prospectus, or such final prospectus, shall contain all Rule 430A Information, together with all other such required information, with respect to the Securities and the offering thereof and, except to the extent the Underwriter shall agree in writing to a modification, shall be in all substantive respects in the form furnished to the Underwriter prior to the Execution Time or, to the extent not completed at the Execution Time, shall contain only such specific additional information and other changes (beyond that contained in the latest Preliminary Prospectus) as the Company has advised the Underwriter, prior to the Execution Time, will be included or made therein. (b) On the Effective Date, the Registration Statement did or will, and when the Prospectus is first filed (if required) in accordance with Rule 424(b) and on the Closing Date, the Prospectus (and any supplements thereto) will, comply in all material respects with the applicable requirements of the Act, the Securities Exchange Act of 1934 (the "Exchange Act") and the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the respective rules thereunder; on the Effective Date, the Registration Statement did not or will not 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; on the Effective Date and on the Closing Date the Indenture did or will comply in all material respects with the requirements of the Trust Indenture Act and the rules thereunder; and, on the Effective Date, the Prospectus, if not filed pursuant to Rule 424(b), did not or will not, and on the date of any filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus (together with any supplement thereto) will not, include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the -------- ------- Company makes no representations or warranties as to (i) that part of the Registration Statement which 3 shall constitute the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of the Trustee or (ii) the information contained in or omitted from the Registration Statement or the Prospectus (or any supplement thereto) in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of the Underwriter specifically for inclusion in the Registration Statement or the Prospectus (or any supplement thereto). (c) The terms which follow, when used in this Agreement, shall have the meanings indicated. The term "the Effective Date" shall mean each date that the Registration Statement and any post-effective amendment or amendments thereto became or become effective. "Execution Time" shall mean the date and time that this Agreement is executed and delivered by the parties hereto. "Preliminary Prospectus" shall mean any preliminary prospectus referred to in paragraph (a) above and any preliminary prospectus included in the Registration Statement at the Effective Date that omits Rule 430A Information. "Prospectus" shall mean the prospectus relating to the Securities that is first filed pursuant to Rule 424(b) after the Execution Time or, if no filing pursuant to Rule 424(b) is required, shall mean the form of final prospectus relating to the Securities included in the Registration Statement at the Effective Date. "Registration Statement" shall mean the registration statement referred to in paragraph (a) above, including incorporated documents, exhibits and financial statements, as amended at the Execution Time (or, if not effective at the Execution Time, in the form in which it shall become effective) and, in the event any post-effective amendment thereto becomes effective prior to the Closing Date (as hereinafter defined), shall also mean such registration statement as so amended. Such term shall include any Rule 430A Information deemed to be included therein at the Effective Date as provided by Rule 430A. "Rule 424", "Rule 430A" and "Regulation S- K" refer to such rules or regulation under the Act. "Rule 430A Information" means information with respect to the Securities and the offering thereof permitted to be omitted from the Registration Statement when it becomes effective pursuant to Rule 430A. Any reference herein to the Registration Statement, a Preliminary Prospectus or the Prospectus shall be deemed to refer to and 4 include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or before the Effective Date of the Registration Statement or the issue date of such Preliminary Prospectus or the Prospectus, as the case may be; and any reference herein to the terms "amend", "amendment" or "supplement" with respect to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the Effective Date of the Registration Statement, or the issue date of any Preliminary Prospectus or the Prospectus, as the case may be, deemed to be incorporated therein by reference. 2. Purchase and Sale. Subject to the terms and conditions and in ------------------ reliance upon the representations and warranties herein set forth, the Company agrees to sell to the Underwriter, and the Underwriter agrees to purchase from the Company, at a purchase price of _________% of the principal amount thereof, plus accrued interest on the Securities from __________, 1995, to the Closing Date, $100,000,000 principal amount of the Securities. 3. Delivery and Payment. Delivery of and payment for the Securities --------------------- shall be made at 10:00 AM, New York City time, on _______, 1995, or such later date (not later than _________, 1995) as the Underwriter shall designate, which date and time may be postponed by agreement between the Underwriter and the Company (such date and time of delivery and payment for the Securities being herein called the "Closing Date"). Delivery of the Securities shall be made to the Underwriter for the account of the Underwriter against payment by the Underwriter of the purchase price thereof to or upon the order of the Company by certified or official bank check or checks drawn on or by a New York Clearing House bank and payable in next day funds. Delivery of the Securities shall be made at such location as the Underwriter shall reasonably designate at least one business day in advance of the Closing Date and payment for the Securities shall be made at the office of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York. Certificates for the Securities shall be registered in such names and in such denominations as the Underwriter may request not less than three full business days in advance of the Closing Date. 5 The Company agrees to have the Securities available for inspection, checking and packaging by the Underwriter in New York, New York, not later than 1:00 PM on the business day prior to the Closing Date. 4. Offering by Underwriter. It is understood that the Underwriter ------------------------ proposes to offer the Securities for sale to the public as set forth in the Prospectus. 5. Agreements. The Company agrees with the Underwriter that: ----------- (a) The Company will use its best efforts to cause the Registration Statement, if not effective at the Execution Time, and any amendment thereof, to become effective. Prior to the termination of the offering of the Securities, the Company will not file any amendment of the Registration Statement or supplement to the Prospectus unless the Company has furnished the Underwriter a copy for its review prior to filing and will not file any such proposed amendment or supplement to which the Underwriter reasonably objects. Subject to the foregoing sentence, if the Registration Statement has become or becomes effective pursuant to Rule 430A, or filing of the Prospectus is otherwise required under Rule 424(b), the Company will cause the Prospectus, properly completed, and any supplement thereto to be filed with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed and will provide evidence satisfactory to the Underwriter of such timely filing. The Company will promptly advise the Underwriter (i) when the Registration Statement, if not effective at the Execution Time, and any amendment thereto, shall have become effective, (ii) when the Prospectus, and any supplement thereto, shall have been filed (if required) with the Commission pursuant to Rule 424(b), (iii) when, prior to termination of the offering of the Securities, any amendment to the Registration Statement shall have been filed or become effective, (iv) of any request by the Commission for any amendment of the Registration Statement or supplement to the Prospectus or for any additional information, (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (vi) of the receipt by the Company of any notification with respect to the 6 suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. (b) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend the Registration Statement or supplement the Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, the Company promptly will prepare and file with the Commission, subject to the second sentence of paragraph (a) of this Section 5, an amendment or supplement which will correct such statement or omission or effect such compliance. (c) As soon as practicable, the Company will make generally available to its security holders and to the Underwriter an earnings statement or statements of the Company and its subsidiaries which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. (d) The Company will furnish to the Underwriter and counsel for the Underwriter, without charge, signed copies of the Registration Statement (including exhibits thereto) and, so long as delivery of a prospectus by the Underwriter or dealer may be required by the Act, as many copies of each Preliminary Prospectus and the Prospectus and any supplement thereto as the Underwriter may reasonably request. The Company will pay the expenses of printing or other production of all documents relating to the offering. (e) The Company will arrange for the qualification of the Securities for sale under the laws of such jurisdictions as the Underwriter may designate, will maintain such qualifications in effect so long as required for the distribution of the Securities and 7 will arrange for the determination of the legality of the Securities for purchase by institutional investors. (f) The Company will not, on or prior to the Closing Date, without prior written consent of the Underwriter, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce the offering of, any debt securities issued or guaranteed by the Company (other than the Securities). 6. Conditions to the Obligations of the Underwriter. The obligations ------------------------------------------------- of the Underwriter to purchase the Securities shall be subject to the accuracy of the representations and warranties on the part of the Company contained herein as of the Execution Time and the Closing Date, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) If the Registration Statement has not become effective prior to the Execution Time, unless the Underwriter agrees in writing to a later time, the Registration Statement will become effective not later than (i) 6:00 PM New York City time, on the date of determination of the public offering price, if such determination occurred at or prior to 3:00 PM New York City time on such date or (ii) 12:00 Noon on the business day following the day on which the public offering price was determined, if such determination occurred after 3:00 PM New York City time on such date; if filing of the Prospectus, or any supplement thereto, is required pursuant to Rule 424(b), the Prospectus, and any such supplement, will be filed in the manner and within the time period required by Rule 424(b); and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or threatened. (b) The Company shall have furnished to the Underwriter the opinion of Charles R. Davies, Vice President and General Counsel of the Company, dated the Closing Date, to the effect that: (i) each of the Company, Government Employees Insurance Company ("GEICO Insurance"), GEICO General Insurance Company ("GEICO General"), GEICO 8 Indemnity Company ("GEICO Indemnity") and GEICO Casualty Company ("GEICO Casualty" and, together with GEICO Insurance, GEICO General and GEICO Casualty, the "Subsidiaries") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business; (ii) all the outstanding shares of capital stock of each Subsidiary have been duly and validly authorized and issued and are fully paid and nonassessable, and, except as otherwise set forth in the Prospectus, (A) all outstanding shares of capital stock of GEICO Insurance and GEICO Indemnity are owned by the Company directly, (B) all outstanding shares of capital stock of GEICO General are owned by GEICO Insurance directly and (C) all outstanding shares of capital stock of GEICO Casualty are owned by GEICO Indemnity directly, in each case free and clear of any perfected security interest and any other security interests, claims, liens or encumbrances; (iii) the Company's authorized equity capitalization is as set forth in the Prospectus; and the Securities conform to the description thereof contained in the Prospectus; (iv) the Indenture has been duly authorized, executed and delivered, has been duly qualified under the Trust Indenture Act, and constitutes a legal, valid and binding instrument of the Company; and the Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriter pursuant to this Agreement, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture; 9 (v) to the best 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 which is not adequately disclosed in the Prospectus, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Prospectus, or to be filed as an exhibit, which is not described or filed as required; (vi) the Registration Statement has become effective under the Act; any required filing of the Prospectus, and any supplements thereto, pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b); to the best knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued, no proceedings for that purpose have been instituted or threatened and the Registration Statement and the Prospectus (other than the financial statements and other financial and statistical information contained therein as to which such counsel need express no opinion) comply as to form in all material respects with the applicable requirements of the Act, the Exchange Act and the Trust Indenture Act and the respective rules thereunder; and such counsel has no reason to believe that at the Effective Date the Registration Statement contained any 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 Prospectus includes any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (vii) this Agreement has been duly authorized, executed and delivered by the Company; 10 (viii) no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated herein, except such as have been obtained under the Act and such as may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriter and such other approvals (specified in such opinion) as have been obtained; (ix) neither the issue and sale of the Securities, nor the consummation of any other of the transactions herein contemplated nor the fulfillment of the terms hereof will conflict with, result in a breach or violation of, or constitute a default under any law or the charter or by-laws of the Company or the terms of any indenture or other agreement or instrument known to such counsel and to which the Company or any of its subsidiaries is a party or bound or any judgement, order or decree known to such counsel to be applicable to the Company or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its subsidiaries; and (x) no holders of securities of the Company have rights to the registration of such securities under the Registration Statement. In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the State of Delaware or the United States, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Underwriter and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. References to the Prospectus in this paragraph (b) include any supplements thereto at the Closing Date. (c) The Underwriter shall have received from Cravath, Swaine & Moore, counsel for the Underwriter, such opinion or opinions or letters, dated the Closing 11 Date, with respect to the issuance and sale of the Securities, the Indenture, the Registration Statement, the Prospectus (together with any supplement thereto) and other related matters as the Underwriter may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (d) The Company shall have furnished to the Underwriter a certificate of the Company, signed by either President and Chief Executive Officer and the principal financial or accounting officer of the Company, dated the Closing Date, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Prospectus, any supplement to the Prospectus and this Agreement and that: (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Company's knowledge, threatened; and (iii) since the date of the most recent financial statements included in the Prospectus (exclusive of any supplement thereto), there has been no material adverse change in the condition (financial or other), earnings, business or properties of the Company and its subsidiaries, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto). (e) At the Execution Time and at the Closing Date, Coopers & Lybrand L.L.P. shall have furnished to the Underwriter a letter or letters, dated respectively as of the Execution Time and as of the Closing Date, in 12 form and substance satisfactory to the Underwriter, confirming that they are independent accountants within the meaning of the Act and the respective applicable published rules and regulations thereunder and stating in effect that: (i) in their opinion the audited financial statements and financial statement schedules included or incorporated in the Registration Statement and the Prospectus and reported on by them comply in form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations; (ii) on the basis of a reading of the latest unaudited financial statements made available by the Company and its subsidiaries; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the meetings of the stockholders, directors and Executive, Audit and Finance committees of the Company and the Subsidiaries; and inquiries of certain officials of the Company who have responsibility for financial and accounting matters of the Company and its subsidiaries as to transactions and events subsequent to December 31, 1994, nothing came to their attention which caused them to believe that: (1) any unaudited financial statements included or incorporated in the Registration Statement and the Prospectus do not comply in form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect to financial statements included or incorporated in quarterly reports on Form 10-Q under the Exchange Act; and said unaudited financial statements are not in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included or incorporated in the Registration Statement and the Prospectus; or 13 (2) with respect to the period subsequent to December 31, 1994, there were, at a specified date not more than five business days prior to the date of the letter, any increases in the debt of the Company and its subsidiaries or any changes capital stock of the Company or decreases in the shareholders' equity of the Company as compared with the amounts shown on the December 31, 1994, consolidated balance sheet included or incorporated in the Registration Statement and the Prospectus, (b) for the period from January 1, 1995 to March 31, 1995, there was, as compared with the immediately preceding quarter, any decrease in total revenues in excess of five percent, or decrease in net income before income taxes, net income or net income per share in excess of twenty percent, of the Company and its subsidiaries on a consolidated basis, or (c) for the period from January 1, 1995, to such specified date there were any decreases, as compared with the corresponding period in the preceding year in total revenue or net income before income taxes or in total or per share amounts of net income of the Company and its subsidiaries, except in all instances for changes or decreases set forth in such letter, in which case the letter shall be accompanied by an explanation by the Company as to the significance thereof unless said explanation is not deemed necessary by the Underwriter; (iii) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company and its subsidiaries) set forth in the Registration Statement and the Prospectus and in Exhibit 12 to the Registration Statement, including the information set forth under the captions "Selected Financial Data", "Capitalization", "Ratio of Earnings to Fixed Charges" and "Use Of Proceeds" in the Prospectus, the information included or incorporated in Items 1, 6, 7 and 11 of the Company's Annual Report on Form 10-K, incorporated in the Registration Statement and the Prospectus, agrees with the accounting records of the Company and its subsidiaries, excluding any questions of legal interpretation; 14 References to the Prospectus in this paragraph (e) include any supplement thereto at the date of the letter. (f) Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Registration Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of any supplement thereto), there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraph (e) of this Section 6 or (ii) any change, or any development involving a prospective change, in or affecting the business or properties of the Company and its subsidiaries the effect of which, in any case referred to in clause (i) or (ii) above, is, in the judgment of the Underwriter, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Securities as contemplated by the Registration Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of any supplement thereto). (g) Subsequent to the Execution Time, there shall not have been any decrease in the rating of any of the Company's debt securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act) or any notice given of any intended or potential decrease in any such rating or of a possible change in any such rating that does not indicate the direction of the possible change. (h) Prior to the Closing Date, the Company shall have furnished to the Underwriter such further information, certificates and documents as the Underwriter may reasonably request. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Underwriter and counsel for the Underwriter, this Agreement and all obligations of the Underwriter hereunder may be canceled at, or at any time prior to, the Closing Date by the Underwriter. Notice of such cancellation shall be given to the Company in writing or by telephone or telegraph confirmed in writing. 15 7. Reimbursement of Underwriter's Expenses. If the sale of the ---------------------------------------- Securities provided for herein is not consummated because any condition to the obligations of the Underwriter set forth in Section 6 hereof is not satisfied, because of any termination pursuant to Section 9 hereof or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof other than by reason of a default by the Underwriter, the Company will reimburse the Underwriter upon demand for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by it in connection with the proposed purchase and sale of the Securities. 8. Indemnification and Contribution. (a) The Company agrees to --------------------------------- indemnify and hold harmless the Underwriter, the directors, officers, employees and agents of the Underwriter and each person who controls the Underwriter within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement for the registration of the Securities as originally filed or in any amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the -------- ------- Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Underwriter specifically for inclusion therein. This indemnity agreement will be in addition to any liability which the Company may otherwise have. 16 (b) The Underwriter agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement, and each person who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Underwriter, but only with reference to written information relating to the Underwriter furnished to the Company by or on behalf of the Underwriter specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which the Underwriter may otherwise have. The Company acknowledges that the statements set forth in the last paragraph of the cover page and under the heading "Underwriting" (except for the fifth, sixth, seventh and eighth sentences of the last paragraph under such heading) in any Preliminary Prospectus and the Prospectus constitute the only information furnished in writing by or on behalf of the Underwriter for inclusion in any Preliminary Prospectus or the Prospectus, and the Underwriter confirms that such statements are correct. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be -------- ------- satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the 17 reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and the Underwriter agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively, "Losses") to which the Company and the Underwriter may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company and by the Underwriter from the offering of the Securities; provided, however, that in no case shall the -------- ------- Underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the Securities purchased by the Underwriter hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and the Underwriter shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and of the Underwriter in 18 connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses), and benefits received by the Underwriter shall be deemed to be equal to the total underwriting discounts and commissions, in each case as set forth on the cover page of the Prospectus. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or the Underwriter. The Company and the Underwriter agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), 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. For purposes of this Section 8, each person who controls the Underwriter within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of the Underwriter shall have the same rights to contribution as the Underwriter, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). 9. Termination. This Agreement shall be subject to termination in ------------ the absolute discretion of the Underwriter, by notice given to the Company prior to delivery of and payment for the Securities, if prior to such time (i) trading in the Company's Common Stock shall have been suspended by the Commission or the New York Stock Exchange or trading in securities generally on the New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such Exchange, (ii) a banking moratorium shall have been declared either by Federal or New York State authorities or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the judgment of the Underwriter, impracticable or inadvisable to proceed 19 with the offering or delivery of the Securities as contemplated by the Prospectus (exclusive of any supplement thereto). 10. Market Making. The Company will, until ________, 1995: -------------- (a) (i) Amend the Registration Statement or supplement the Prospectus when necessary to reflect any material changes in the information provided therein; and (ii) amend the Registration Statement when required to do so in order to comply with Section 10(a)(3) of the Act as described in Part II, Item 17, of the Registration Statement (subject to the proviso set forth therein); provided, however, that (A) prior to filing any post-effective -------- ------- amendment to the Registration Statement or any supplement to the Prospectus, the Company will furnish to each of Cravath, Swaine & Moore, acting as counsel to the Underwriter, and the Underwriter copies of all such documents proposed to be filed, which documents will be subject to the review of such Underwriter's counsel and the Underwriter, (B) the Company will not file any post-effective amendment to the Registration Statement or any supplement to the Prospectus to which such Underwriter's counsel or the Underwriter shall object, and (C) the Company will provide such Underwriter's counsel and the Underwriter with copies of each amendment or supplement filed. (b) Notify the Underwriter's counsel and the Underwriter and (if requested by any such person) confirm such advice in writing, (i) when any Prospectus supplement or amendment or post-effective amendment has been filed, and, with respect to any post-effective amendment, when the same has become effective; (ii) of any request by the Commission for any post-effective amendment or supplement to the Registration Statement, any supplement or amendment to the Prospectus or for additional information; (iii) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Debentures for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; and (v) of the happening of any event which makes any statement made in the Registration Statement, the Prospectus or any amendment or supplement thereto untrue or which requires the making of any changes in the Registration Statement, the Prospectus or 20 any amendment or supplement thereto, in order to make the statements therein not misleading. (c) Furnish to the Underwriter's counsel and the Underwriter, without charge, (i) at least one conformed copy of any post-effective amendment to the Registration Statement; and (ii) as many copies of any amendment or supplement to the Prospectus as each such person may request. (d) Consent to the use of the Prospectus or any amendment or supplement thereto by the Underwriter in connection with the offering and sale of the Debentures. (e) Agree to indemnify the Underwriter, and, if applicable, contribute to the Underwriter, in a manner similar to that specified in Section 8. 11. Representations and Indemnities to Survive. The respective ------------------------------------------- agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the Underwriter set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Underwriter or the Company or any of the officers, directors or controlling persons referred to in Section 8 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this Agreement. 12. Notices. All communications hereunder will be in writing and -------- effective only on receipt, and, if sent to the Underwriter, will be mailed, delivered or telegraphed and confirmed to it at Seven World Trade Center, New York, New York, 10048; or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at One GEICO Plaza, Washington, D.C. 20076, attention of the legal department. 13. Successors. This Agreement will inure to the benefit of and be ----------- binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8 hereof, and no other person will have any right or obligation hereunder. 14. Applicable Law. This Agreement will be governed by and construed --------------- in accordance with the laws of the State of New York. 21 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company and the Underwriter. Very truly yours, GEICO Corporation By: ....................... Title: Executive Vice President and Chief Financial Officer The foregoing Agreement is hereby confirmed and accepted as of the date first above written. Salomon Brothers Inc By: ............................ Title: EX-4.(A) 3 INDENTURE EXHIBIT 4(a) GEICO CORPORATION % ------ Notes Due 2005 ------------ Dated as of ____________, 1995 ------------ UNITED STATES TRUST COMPANY OF NEW YORK, Trustee TABLE OF CONTENTS
Page ---- ARTICLE 1 Definitions and Incorporation by Reference ------------------------------------------ SECTION 1.01. Definitions........................................... 1 SECTION 1.02. Other Definitions..................................... 4 SECTION 1.03. Incorporation by Reference of Trust Indenture Act..... 4 SECTION 1.04. Rules of Construction................................. 5 ARTICLE 2 The Securities -------------- SECTION 2.01. Form and Dating....................................... 5 SECTION 2.02. Execution and Authentication.......................... 5 SECTION 2.03. Registrar and Paying Agent............................ 6 SECTION 2.04. Paying Agent To Hold Money in Trust................... 7 SECTION 2.05. Securityholder Lists.................................. 7 SECTION 2.06. Transfer and Exchange................................. 7 SECTION 2.07. Replacement Securities................................ 8 SECTION 2.08. Outstanding Securities................................ 8 SECTION 2.09. Temporary Securities.................................. 9 SECTION 2.10. Cancelation........................................... 9 SECTION 2.11. Defaulted Interest.................................... 9 ARTICLE 3 Covenants --------- SECTION 3.01. Payment of Securities................................. 10 SECTION 3.02. SEC Reports........................................... 10 SECTION 3.03. Limitation of Liens................................... 11 SECTION 3.04. Limitation on Disposition of Stock of Restricted Subsidiaries......................................... 13 SECTION 3.05. Compliance Certificate................................ 13 SECTION 3.06. Further Instruments and Acts.......................... 14
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Page ---- ARTICLE 4 Successor Company ----------------- SECTION 4.01. When Company May Merge or Transfer Assets............. 14 ARTICLE 5 Defaults and Remedies --------------------- SECTION 5.01. Event of Default...................................... 15 SECTION 5.02. Acceleration.......................................... 17 SECTION 5.03. Other Remedies........................................ 17 SECTION 5.04. Waiver of Past Defaults............................... 17 SECTION 5.05. Control by Majority................................... 17 SECTION 5.06. Limitation on Suits................................... 18 SECTION 5.07. Rights of Holders To Receive Payment.................. 18 SECTION 5.08. Collection Suit by Trustee............................ 19 SECTION 5.09. Trustee May File Proofs of Claim, etc. ............... 19 SECTION 5.10. Priorities............................................ 19 SECTION 5.11. Undertaking for Costs................................. 20 SECTION 5.12. Waiver of Stay or Extension Laws...................... 20 ARTICLE 6 Trustee ------- SECTION 6.01. Duties of Trustee..................................... 20 SECTION 6.02. Rights of Trustee..................................... 22 SECTION 6.03. Individual Rights of Trustee.......................... 22 SECTION 6.04. Trustee's Disclaimer.................................. 22 SECTION 6.05. Notice of Defaults.................................... 23 SECTION 6.06. Reports by Trustee to Holders......................... 23 SECTION 6.07. Compensation and Indemnity............................ 23 SECTION 6.08. Replacement of Trustee................................ 24 SECTION 6.09. Successor Trustee by Merger........................... 25 SECTION 6.10. Eligibility; Disqualification......................... 26 SECTION 6.11. Preferential Collection of Claims Against Company..... 26
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Page ---- ARTICLE 7 Discharge of Indenture; Defeasance ---------------------------------- SECTION 7.01. Discharge of Liability on Securities; Defeasance...... 26 SECTION 7.02. Conditions to Defeasance.............................. 27 SECTION 7.03. Application of Trust Money............................ 28 SECTION 7.04. Repayment to Company.................................. 28 SECTION 7.05. Indemnity for Government Obligations.................. 28 SECTION 7.06. Reinstatement......................................... 29 ARTICLE 8 Amendments ---------- SECTION 8.01. Without Consent of the Holders........................ 29 SECTION 8.02. With Consent of Holders............................... 30 SECTION 8.03. Compliance with Trust Indenture Act................... 31 SECTION 8.04. Revocation and Effect of Consents and Waivers......... 31 SECTION 8.05. Notation on or Exchange of Securities................. 31 SECTION 8.06. Trustee To Sign Amendments............................ 32 ARTICLE 9 Miscellaneous ------------- SECTION 9.01. Trust Indenture Act Controls.......................... 32 SECTION 9.02. Notices............................................... 32 SECTION 9.03. Communication by Holders with Other Holders........... 33 SECTION 9.04. Certificate and Opinion as to Conditions Precedent.... 33 SECTION 9.05. Statements Required in Certificate or Opinion......... 33 SECTION 9.06. When Securities Disregarded........................... 34 SECTION 9.07. Rules by Trustee, Paying Agent and Registrar.......... 34 SECTION 9.08. Legal Holidays........................................ 34 SECTION 9.09. Governing Law......................................... 34
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Page ---- SECTION 9.10. No Recourse Against Others............................ 35 SECTION 9.11. Successors............................................ 35 SECTION 9.12. Multiple Originals.................................... 35 SECTION 9.13. Table of Contents; Headings........................... 35 Exhibit A--Form of Security
iv CROSS-REFERENCE TABLE 1/
TIA Indenture Section Section - ------- --------- 310(a)(1) ......................................... 6.10 (a)(2) ......................................... 6.10 (a)(3) ......................................... N.A. (a)(4) ......................................... N.A. (b) ......................................... 6.08; 6.10 (c) ......................................... N.A. 311(a) ......................................... 6.11 (b) ......................................... 6.11 (c) ......................................... N.A. 312(a) ......................................... 2.05 (b) ......................................... 9.03 (c) ......................................... 9.03 313(a) ......................................... 6.06 (b)(1) ......................................... N.A. (b)(2) ......................................... 6.06 (c) ......................................... 6.06; 9.02 (d) ......................................... 6.06 314(a) ......................................... 3.02; 3.05; 9.02 (b) ......................................... N.A. (c)(1) ......................................... 9.04 (c)(2) ......................................... 9.04 (c)(3) ......................................... N.A. (d) ......................................... N.A. (e) ......................................... 9.05 (f) 315(a) ......................................... 6.01 (b) ......................................... 6.05; 9.02 (c) ......................................... 6.01 (d) ......................................... 6.01 (e) ......................................... 5.11 316(a)(1)(A) ......................................... 5.05 (a)(1)(B) ......................................... 5.04 (a)(2) ......................................... N.A. (a)(last sentence) ................................ 9.06 (b) ......................................... 5.07 (c)
- ---------- 1/ Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of the Indenture. 2 317(a)(1) ........................................ 5.08 (a)(2) ........................................ 5.09 (b) ........................................ 2.04 318(a) ........................................ 9.01
N.A. means Not Applicable INDENTURE dated as of __________, 1995, between GEICO CORPORATION, a Delaware corporation (the "Company"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New York banking corporation (the "Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's ____% Notes Due __________, 2005 (the "Securities"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions. ------------ "Affiliate" means any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. "Business Day" means each day which is not a Legal Holiday. "Capital Stock" means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) corporate stock, including any Preferred Stock. "Company" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor under the indenture securities. "Consolidated Tangible Net Worth" means, at any date, the total assets appearing on the most recently prepared consolidated balance sheet of the Company and its Subsidiaries as at the end of a fiscal quarter of the Company, prepared in accordance with generally accepted accounting principles consistently applied, less (a) the total liabilities appearing on such balance sheet, and (b) intangible assets. "Intangible assets" means the value (net of any applicable reserves), as shown on or reflected in such balance sheet, of: (i) all trade names, trademarks, licenses, patents, copyrights and goodwill; (ii) organizational and development costs (other than deferred policy 2 acquisition costs); and (iii) unamortized debt discount and expense, less unamortized premium. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder" or "Securityholder" means the person in whose name a Security is registered on the Registrar's books. "Indenture" means this Indenture as amended or supplemented from time to time. "Lien" means any mortgage, pledge, security interest, conditional sale or other title retention agreement or other similar lien. "Officer" means either President and Chief Executive Officer, any Vice President, the Treasurer or the Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers. "Opinion of Counsel" means a written opinion acceptable to the Trustee from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Preferred Stock", as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "principal" of a Security means the principal of the Security payable on the Security which is due or overdue or is to become due at the relevant time. 3 "Restricted Subsidiary" means any Subsidiary which is incorporated under the laws of the United States of America, any State thereof or the District of Columbia, and which is a regulated insurance company principally engaged in one or more of the property, casualty and life insurance businesses; provided, -------- however, that no Subsidiary shall be a Restricted Subsidiary if the total assets - ------- of such Subsidiary are less than 10% of the total assets of the Company and its consolidated Subsidiaries (including such Subsidiary) in each case as set forth on the most recently prepared balance sheets of such Subsidiary and the Company and its consolidated Subsidiaries, respectively, as at the end of a fiscal quarter of the Company or such Subsidiary, as applicable, prepared in accordance with generally accepted accounting principles. "SEC" means the Securities and Exchange Commission. "Securities" means the Securities issued under this Indenture. "Subsidiary" means a corporation of which a majority of the Capital Stock having voting power under ordinary circumstances to elect a majority of the board of directors is owned by (i) the Company, (ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date of this Indenture. "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. "Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer this Indenture. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option. "Voting Stock" means, with respect to any Subsidiary, stock of any class or classes (or equivalent interest) the 4 holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of the directors (or persons performing similar functions) of such Subsidiary, even though the right to so vote has been suspended by the happening of such a contingency. SECTION 1.02. Other Definitions. ------------------
Defined in Term Section ---- ---------- "Bankruptcy Law".......................... 5.01 "Custodian"............................... 5.01 "Debt".................................... 3.03 "defeasance option"....................... 7.01(b) "Event of Default"........................ 5.01 "Legal Holiday"........................... 9.08 "Paying Agent"............................ 2.03 "Registrar"............................... 2.03
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. -------------------------------------------------- Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. 5 SECTION 1.04. Rules of Construction. Unless the contest otherwise ---------------------- requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time; (3) "or" is not exclusive; (4) "including" means including, without limitation; (5) words in the singular include the plural and words in the plural include the singular; and (6) unsecured debt shall not be deemed to be subordinate or junior to secured debt merely by virtue of its nature as unsecured debt. ARTICLE 2 THE SECURITIES SECTION 2.01. Form and Dating. The Securities and the Trustee's ---------------- certificate of authentication shall be substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The terms of the Securities set forth in Exhibit A are part of the terms of this Indenture. SECTION 2.02. Execution and Authentication. Two Officers shall sign the ----------------------------- Securities for the Company by manual or facsimile signature. The Company's seal shall be impressed, affixed, imprinted or reproduced on the Securities and may be in facsimile form. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee 6 authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate and deliver Securities for original issue in an aggregate principal amount of $100,000,000, upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated. The aggregate principal amount of Securities outstanding at any time may not exceed that amount except as provided in Section 2.07. SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an --------------------------- office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA and the relevant provisions of this Indenture and shall not otherwise be inconsistent with this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 6.07. The Company or any Subsidiary or Affiliate may act as Paying Agent, Registrar, co-registrar or transfer agent. The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securities. 7 SECTION 2.04. Paying Agent To Hold Money in Trust. On or prior to each ------------------------------------ due date of the interest on any Security, the Company shall deposit with the Paying Agent a sum sufficient to pay such interest when so becoming due. At least one Business Day prior to each due date of the principal of any Security, the Company shall deposit with the Paying Agent a sum (which may be next-day funds) sufficient to pay such principal when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as --------------------- current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. SECTION 2.06. Transfer and Exchange. The Securities shall be issued in ---------------------- registered form and shall be transferable only upon the surrender of a Security for registration of transfer. When a Security is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested. When Securities are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities at the Registrar's or co-registrar's request. The Company may require payment of a sum 8 sufficient to pay all taxes, assessments or other governmental charges. Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. The Company shall not be required to make and the Registrar need not register transfers or exchanges of Securities selected for redemption (except, in the case of Securities to be redeemed in part, the portion thereof not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed. Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary. SECTION 2.07. Replacement Securities. If a mutilated Security is ----------------------- surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if neither the Trustee nor the Company has notice that such Security has been acquired by a bona fide purchaser and the Holder satisfies any other reasonable requirements of the Trustee and the Company. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security. Every replacement Security is an additional obligation of the Company. SECTION 2.08. Outstanding Securities. Securities outstanding at any time ----------------------- are all Securities authenticated by the Trustee except for those canceled by it, those delivered 9 to it for cancelation and those described in this Section as not outstanding. A Security does not cease to be outstanding because the Company or an affiliate of the Company holds the Security. If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser. If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities maturing then on and after that date such Securities cease to be outstanding and interest on them ceases to accrue. SECTION 2.09. Temporary Securities. Until definitive Securities are ready --------------------- for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and deliver them in exchange for temporary Securities. SECTION 2.10. Cancelation. The Company at any time may deliver Securities ------------ to the Trustee for cancelation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and destroy (subject to the record retention requirements of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or cancelation and deliver a certificate of such destruction to the Company unless the Company directs the Trustee to deliver canceled Securities to the Company. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancelation. SECTION 2.11. Defaulted Interest. If the Company defaults in a payment of ------------------- interest on the Securities, the Company shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the persons who are Securityholders on a subsequent special record date, which date shall be at least five Business Days 10 prior to the payment date. The Company shall fix or cause to be fixed any such special record date and payment date, and, at least 15 days before any such special record date, the Company shall mail or cause to be mailed by first-class mail to each Securityholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. Notwithstanding the foregoing, the Company may make payment of any defaulted interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of such proposed method of payment, such payment shall be deemed practicable by the Trustee in its sole discretion. ARTICLE 3 COVENANTS SECTION 3.01. Payment of Securities. The Company shall promptly pay the ---------------------- principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the rate borne by the Securities plus 1% per annum to the extent lawful. SECTION 3.02. SEC Reports. The Company shall (a) file with the Trustee, ------------ within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and 11 regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (b) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; (c) transmit to all Holders, to the extent and in the manner required by TIA (S) 313(c), such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission; and (d) comply with all other provisions of TIA (S) 314(a). SECTION 3.03. Limitation on Liens. Except as provided in this Section, -------------------- the Company will not itself, and will not permit any Restricted Subsidiary to, incur, issue, assume or guarantee any indebtedness for borrowed money (all such indebtedness for borrowed money incurred, issued, assumed or guaranteed being hereinafter in this Section called "Debt") secured by a Lien on any property or assets, whether now owned or hereafter acquired, of the Company or any Restricted Subsidiary, or any shares of stock of any Restricted Subsidiary, without effectively providing that the Securities (together with, if the Company shall so determine, any other Debt (or any bonds, debentures, notes or other similar evidences of indebtedness, whether or not for borrowed money) of the Company or such Restricted Subsidiary then existing or thereafter created which is not subordinated to the Securities) shall be secured equally and ratably with (or prior to) such Debt, so long as such Debt shall be so secured, unless, after giving effect thereto, the aggregate amount of all such secured Debt of the Company and its Restricted Subsidiaries would not exceed 10% of Consolidated Tangible Net Worth of the Company and its Restricted Subsidiaries; provided, however, that this Section shall not apply to, and there shall be excluded from 12 secured Debt in any computation under this Section, Debt secured by: (1) Liens on property of, or on any shares of stock of, any corporation existing at the time such corporation becomes a Restricted Subsidiary; (2) Liens on property or shares of stock existing at the time of acquisition thereof by the Company or any Restricted Subsidiary; (3) Liens on property or shares of stock hereafter acquired (or, in the case of property, constructed (including construction of improvements or additions to improvements on existing property)) by the Company or any Restricted Subsidiary and created prior to, at the time of, or within one year after such acquisition (or, in the case of property, the completion of such construction (including construction of improvements or additions to improvements on existing property) or commencement of commercial operation of such property, whichever is later) to secure or provide for the payment of all or any part of the purchase price (or, in the case of property (including construction of improvements or additions to improvements on existing property), the construction price) thereof; (4) Liens in favor of the Company or any Restricted Subsidiary; (5) Liens in favor of the United States of America, any State thereof or the District of Columbia, or any political subdivision, agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provisions of any statute; (6) Liens on property of a person existing at the time such person is merged into or consolidated with the Company or a Restricted Subsidiary; or (7) any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Lien referred to in the foregoing clauses (1) to (6), inclusive, provided, however, that (i) such extension, renewal or replacement Lien shall be limited to all or a part of the same property or shares of stock that secured the 13 Lien extended, renewed or replaced (plus improvements (including additions to improvements) on such property) and (ii) the Debt secured by such Lien at such time is not increased (except, with respect to a Lien on property, to the extent that additional Debt was incurred to provide for the payment of all or any part of the construction price of improvements or additions to improvements on such property). SECTION 3.04. Limitation on Disposition of Stock of Restricted ------------------------------------------------ Subsidiaries. The Company will not, and will not permit any Subsidiary to, - ------------- sell, transfer or otherwise dispose of any shares of Capital Stock of any Restricted Subsidiary (or of any Subsidiary having direct or indirect control of any Restricted Subsidiary) except for, subject to Article 4, (i) a sale, transfer or other disposition of any Capital Stock of any Restricted Subsidiary (or of any Subsidiary having direct or indirect control of any Restricted Subsidiary) to a wholly owned Subsidiary of the Company; (ii) a sale, transfer or other disposition of the entire Capital Stock of any Restricted Subsidiary (or of any Subsidiary having direct or indirect control of any Restricted Subsidiary) held by the Company and its Subsidiaries for at least fair value (as determined by the Board of Directors of the Company acting in good faith); or (iii) a sale, transfer or other disposition of any Capital Stock of any Restricted Subsidiary (or of any Subsidiary having direct or indirect control of any Restricted Subsidiary) for at least fair value (as determined by the Board of Directors of the Company acting in good faith) if, after giving effect thereto, the Company and its Subsidiaries would own at least 80% of the issued and outstanding Voting Stock of such Restricted Subsidiary (or Subsidiary). SECTION 3.05. Compliance Certificate. The Company shall deliver to the ----------------------- Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default by the Company and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA (S) 314(a)(4). 14 SECTION 3.06. Further Instruments and Acts. Upon request of the Trustee, ----------------------------- the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. ARTICLE 4 SUCCESSOR COMPANY SECTION 4.01. When Company May Merge or Transfer Assets. The Company ------------------------------------------ shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets as or entirety to, any person, unless: (1) the resulting, surviving or transferee person (if not the Company) shall be a person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and such person (if not the Company) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Securities and this Indenture; (2) immediately after giving effect to such transaction, no Default shall have occurred and be continuing; and (3) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. The resulting, surviving or transferee person shall be the successor Company, but the predecessor Company in the case of a transfer or lease shall not be released from the obligation to pay the principal of and interest on the Securities. 15 ARTICLE 5 DEFAULTS AND REMEDIES SECTION 5.01. Event of Default. An "Event of ----------------- Default" occurs if: (1) the Company defaults in any payment of interest on any Security when the same becomes due and payable, and such default continues for a period of 30 days; (2) the Company defaults in the payment of the principal of any Security when the same becomes due and payable at its stated maturity, upon declaration or otherwise; (3) the Company fails to comply with Section 3.04 or Section 4.01, and such failure continues for 15 days after the notice specified below; (4) the Company fails to comply with any of its agreements in the Securities or this Indenture (other than those referred to in (1), (2) or (3) above) and such failure continues for 60 days after the notice specified below; (5) the principal amount of any indebtedness for borrowed money (other than the Securities) of the Company or any Restricted Subsidiary is not paid within any applicable grace period after the final maturity of such indebtedness or is accelerated by the holders thereof because of an event of default, the total amount of such indebtedness for borrowed money unpaid or accelerated exceeds $25,000,000 and such default continues for 15 days after the notice specified below; (6) the Company or any Restricted Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; 16 (C) consents to the appointment of a Custodian of it or for any substantial part of its property; or (D) makes a general assignment for the benefit of its creditors; or (7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company or any Restricted Subsidiary in an involuntary case; (B) appoints a Custodian of the Company or any Restricted Subsidiary or for any substantial part of its property; or (C) orders the winding up or liquidation of the Company or any Restricted Subsidiary; and the order or decree remains unstayed and in effect for 90 days. The term "Bankruptcy Law" means Title 11, United States Code, or any other ------------------ Federal or state bankruptcy, insolvency, reorganization or other similar law. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. A Default under clause (3), (4) or (5) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the Securities notify the Company of the Default and the Company does not cure such Default within the time specified after receipt of such Notice. Such Notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any event which constitutes an Event of Default or which with the giving of notice or the lapse of time or both would become an Event of Default under clause (3), (4) or (5), its status and what action the Company is taking or proposes to take with respect thereto. 17 SECTION 5.02. Acceleration. If an Event of Default occurs and is ------------- continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the Securities by notice to the Company and the Trustee, may declare the principal of and accrued interest on all the Securities to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. The Holders of a majority in principal amount of the Securities by notice to the Trustee and the Company may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 5.03. Other Remedies. If an Event of Default occurs and is --------------- continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 5.04. Waiver of Past Defaults. The Holders of a majority in ------------------------ principal amount of the Securities by notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the principal of or interest on a Security or (ii) a Default in respect of a provision that under Section 8.02 cannot be amended without the consent of each Securityholder affected. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 5.05. Control by Majority. The Holders of a majority in principal -------------------- amount of the Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the 18 Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 6.01, that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking or not taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 5.06. Limitation on Suits. A Securityholder may not pursue any -------------------- remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; (2) the Holders of at least 25% in principal amount of the Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and (5) the Holders of a majority of principal amount of the Securities do not give the Trustee a direction inconsistent with the request during such 60-day period. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. SECTION 5.07. Rights of Holders To Receive Payment. Notwithstanding any ------------------------------------- other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Securities held by such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. 19 SECTION 5.08. Collection Suit by Trustee. If an Event of Default in --------------------------- payment of interest or principal specified in Section 5.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal and interest remaining unpaid (together with interest on such unpaid interest to the extent lawful) and the amounts provided for in Section 6.07. SECTION 5.09. Trustee May File Proofs of Claim, etc. The Trustee may file -------------------------------------- such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 6.07. SECTION 5.10. Priorities. If the Trustee collects any money pursuant to ----------- this Article 5, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 6.07; SECOND: to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and Third: to the Company. The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section. At least 15 days before such record date, the Company shall mail or cause to be mailed by first-class mail to each 20 Securityholder and the Trustee a notice that states the record date, the payment date and amount to be paid. SECTION 5.11. Undertaking for Costs. In any suit for the enforcement of ---------------------- any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 5.07 or a suit by Holders of more than 10% in principal amount of the Securities. SECTION 5.12. Waiver of Stay or Extension Laws. The Company (to the --------------------------------- extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 6 TRUSTEE SECTION 6.01. Duties of Trustee. (a) If an Event of Default has occurred ------------------ and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations 21 shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (b) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.05. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 22 (h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. SECTION 6.02. Rights of Trustee. (a) The Trustee may rely on any document ------------------ believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee's conduct does not constitute wilful misconduct, negligence or bad faith. (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. SECTION 6.03. Individual Rights of Trustee. The Trustee in its individual ----------------------------- or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co- paying agent may do the same with like rights. However, the Trustee must comply with Sections 6.10 and 6.11. SECTION 6.04. Trustee's Disclaimer. The Trustee shall not be responsible --------------------- for and makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the 23 proceeds from the Securities, and it shall not be responsible for any statement of the Company in the Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication. SECTION 6.05. Notice of Defaults. If a Default occurs and is continuing ------------------- and a Trust Officer has actual knowledge thereof, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a Default in payment of principal of or interest on any Security, the Trustee may withhold the notice if and so long as its Board of Directors, the Executive Committee of its Board of Directors or a trust committee of its Board of Directors or Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders. SECTION 6.06. Reports by Trustee to Holders. As promptly as practicable ------------------------------ after each May 15 beginning with the May 15 following the date of this Indenture, and in any event prior to July 15 in each year, the Trustee shall, to the extent so required by TIA (S) 313(a), mail to each Securityholder a brief report dated as of such May 15 that complies with TIA (S) 313(a). The Trustee also shall comply with TIA (S) 313(b) and TIA (S) 313(c). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof. SECTION 6.07. Compensation and Indemnity. The Company shall pay to the --------------------------- Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including, but not limited to, costs of collection, costs of preparing and reviewing reports, certificates and other documents, costs of preparation and mailing of notices to Securityholders and reasonable costs of counsel retained by the Trustee in connection with the delivery of an Opinion of Counsel or otherwise, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and 24 expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Company shall indemnify the Trustee against any and all loss, liability or expense (including attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder, including the costs and expenses of enforcing this Indenture (including this Section 6.07) and of defending itself against any claims (whether asserted by any Securityholder, the Company or otherwise). The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee may have separate counsel and the Company shall pay the fees and expenses of such counsel. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee's own wilful misconduct, negligence or bad faith. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities. The Trustee's right to receive payment of any amounts due under this Section 6.07 shall not be subordinate to any other liability or indebtedness of the Company. The Company's payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(6) or (7), the expenses are intended to constitute expenses of administration under the Bankruptcy Law. SECTION 6.08. Replacement of Trustee. The Trustee may resign at any time ----------------------- by so notifying the Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if: (1) the Trustee fails to comply with Section 6.10; (2) the Trustee is adjudged bankrupt or insolvent; 25 (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 6.07. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 6.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 6.07 shall continue for the benefit of the retiring Trustee. SECTION 6.09. Successor Trustee by Merger. If the Trustee consolidates ---------------------------- with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. 26 In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have. SECTION 6.10. Eligibility; Disqualification. The Trustee shall at all ------------------------------ times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA (S) 310(b); provided, however, that there shall be excluded from the operation of TIA (S) 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA (S) 310(b)(1) are met. SECTION 6.11. Preferential Collection of Claims Against Company. The -------------------------------------------------- Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be subject to TIA (S) 311(a) to the extent indicated. ARTICLE 7 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 7.01. Discharge of Liability on Securities; Defeasance. (a) When ------------------------------------------------- (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancelation or (ii) all outstanding Securities have become due and payable and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity all outstanding Securities, including interest thereon (other than Securities replaced pursuant to Section 2.07), and if in either case the Company 27 pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Sections 7.01(c) and 7.06, cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company. (b) Subject to Sections 7.01(c), 7.02 and 7.06, the Company at any time may terminate all its obligations under the Securities and this Indenture ("defeasance option"). If the Company exercises its defeasance option, payment of the Securities may not be accelerated because of an Event of Default. Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates. (c) Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 6.07, 6.08, 7.04, 7.05 and 7.06 shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 6.07, 7.04 and 7.05 shall survive. SECTION 7.02. Conditions to Defeasance. The Company may exercise its ------------------------- defeasance option only if: (1) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to maturity; (2) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity; (3) 91 days pass after the deposit is made and during the 91-day period no Default specified in 28 Section 5.01(6) or (7) with respect to the Company occurs which is continuing at the end of the period; (4) no Default has occurred and is continuing on the date of such deposit and after giving effect thereto; (5) the deposit does not constitute a default under any other agreement binding on the Company; (6) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; and (7) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article 7 have been complied with. SECTION 7.03. Application of Trust Money. The Trustee shall hold in trust --------------------------- money or U.S. Government Obligations deposited with it pursuant to this Article 7. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities. The Trustee shall not be required to reinvest any payments of principal or interest received by the Trustee in respect of any U.S. Government Obligations. SECTION 7.04. Repayment to Company. Subject to Section 6.07, the Trustee --------------------- and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look to the Company for payment as general creditors. SECTION 7.05. Indemnity for Government Obligations. The Company shall pay ------------------------------------- and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed 29 against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations. SECTION 7.06. Reinstatement. If the Trustee or Paying Agent is unable to -------------- apply any money or U.S. Government Obligations in accordance with this Article 7 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article 7 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 7; provided, however, that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE 8 AMENDMENTS SECTION 8.01. Without Consent of the Holders. The Company and the ------------------------------- Trustee may amend this Indenture or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, omission, defect or inconsistency; (2) to comply with Article 4; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Internal Revenue Code of 1986, as amended, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Internal Revenue Code of 1986, as amended; 30 (4) to add guarantees with respect to the Securities; (5) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; (6) to comply with any requirements of the SEC in connection with qualifying this Indenture under the TIA; or (7) to make any change that does not adversely affect the rights of any Securityholder. After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 8.02. With Consent of Holders. The Company and the Trustee may ------------------------ amend this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a minority in principal amount of the Securities. However, without the consent of each Securityholder affected, an amendment may not: (1) reduce the amount of Securities whose Holders must consent to an amendment; (2) reduce the rate of or extend the time for payment of interest on any Security; (3) reduce the principal of or extend the fixed maturity of any Security; (4) make any Security payable in a currency other than that stated in the Security; or (5) make any change in Section 5.04 or 5.07 or this Section. It shall not be necessary for the consent of the Holders under this Section 8.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. 31 After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 8.03. Compliance with Trust Indenture Act. Every amendment to ------------------------------------ this Indenture or the Securities shall comply with the TIA as then in effect. SECTION 8.04. Revocation and Effect of Consents and Waivers. A consent to ---------------------------------------------- an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Securityholder. The Company shall fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described above and the Company shall give the Trustee written notice of such date. Notwithstanding the immediately preceding paragraph, those persons who were Securityholders at such record date (or their duly designated proxies), and only those persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. SECTION 8.05. Notation on or Exchange of Securities. If an amendment -------------------------------------- changes the terms of a Security, the Company may require the Holder of the Security to deliver it to the Trustee. The Company may cause the Trustee to place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. 32 SECTION 8.06. Trustee To Sign Amendments. The Trustee shall sign any --------------------------- amendment authorized pursuant to this Article 8 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 6.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture. ARTICLE 9 MISCELLANEOUS SECTION 9.01. Trust Indenture Act Controls. If any provision of this ----------------------------- Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 9.02. Notices. Any notice or communication shall be in writing -------- and delivered in person or mailed by first-class mail addressed as follows: if to the Company: GEICO Corporation One GEICO Plaza Washington, D.C. 20076-0001 Attention: Corporate Secretary if to the Trustee: United States Trust Company of New York 114 West 47th Street (15th Floor) New York, N.Y. 10036 Attention: Corporate Trust Department The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. 33 Any notice or communication mailed to a Securityholder shall be mailed to the Securityholder at the Security-holder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 9.03. Communication by Holders with Other Holders. -------------------------------------------- Securityholders may communicate pursuant to TIA (S) 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA (S) 312(c). SECTION 9.04. Certificate and Opinion as to Conditions Precedent. Upon --------------------------------------------------- any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 9.05. Statements Required in Certificate or Opinion. Each ---------------------------------------------- certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the 34 statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such covenant or condition has been complied with. SECTION 9.06. When Securities Disregarded. In determining whether the ---------------------------- Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether a Trust Officer shall be protected in relying on any such direction, waiver or consent, only Securities which a Trust Officer actually knows are so owned shall be so disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination. SECTION 9.07. Rules by Trustee, Paying Agent and Registrar. The Trustee --------------------------------------------- may make reasonable rules for action by or a meeting of Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 9.08. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday --------------- or a day on which banking institutions are not required to be open in the State of New York. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. SECTION 9.09. Governing Law. This Indenture and the Securities shall be -------------- governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. 35 SECTION 9.10. No Recourse Against Others. A director, officer, employee --------------------------- or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. SECTION 9.11. Successors. All agreements of the Company in this ----------- Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 9.12. Multiple Originals. The parties may sign any number of ------------------- copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 9.13. Table of Contents; Headings. The table of contents, cross- ---------------------------- reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. GEICO CORPORATION, Attest: by - --------------------------- --------------------------- Name: Rosalind A. Phillips Name: W. Alvon Sparks, Jr. Title: Corporate Secretary Title: Executive Vice President and Chief Financial Officer 36 UNITED STATES TRUST COMPANY OF NEW YORK, Attest: by - ------------------------------ ------------------------------ Name: Name: Title: Title: EXHIBIT A [FORM OF FACE OF SECURITY] NO. $ ___ % NOTE DUE 2005 GEICO Corporation, a Delaware corporation, promises to pay to , or registered assigns, the principal sum of Dollars on _______, 2005. Interest Payment Dates: Each _______ and ________. Record Dates: Each _______ and _______. Additional provisions of this Security are set forth on the other side of this Security. Dated: GEICO CORPORATION, BY _____________________________ President and Chief Executive Officer-Insurance Operations _____________________________ President and Chief Executive Officer-Capital Operations _____________________________ Secretary A-1 TRUSTEE'S CERTIFICATE OF AUTHENTICATION UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies that this is [Seal] one of the Securities referred to in the Indenture. by_______________________ Authorized Signatory A-2 [FORM OF REVERSE SIDE OF SECURITY] ___ % NOTE DUE 2005 1. Interest -------- GEICO Corporation, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semiannually on ________ and ________ of each year. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from __________, 1995. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the rate borne by the Securities plus 1% per annum to the extent lawful. 2. Method of Payment ----------------- The Company will pay interest on the Securities (except defaulted interest) to the persons who are registered holders of Securities at the close of business on the ________ or ________ next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal and interest by check payable in such money. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar -------------------------- Initially, United States Trust Company of New York, a New York banking corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar at any time and shall promptly notify the Securityholders thereof. The Company or A-3 any of its Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. Indenture --------- The Company issued the Securities under an Indenture dated as of _________, 1995 ("Indenture"), between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general unsecured obligations of the Company limited to $100,000,000 aggregate principal amount (subject to Section 2.07 of the Indenture). The Indenture imposes certain limitations on the creation of Liens by the Company and the Restricted Subsidiaries. 5. Denominations; Transfer; Exchange --------------------------------- The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. 6. Persons Deemed Owners --------------------- The registered holder of this Security may be treated as the owner of it for all purposes. 7. Unclaimed Money --------------- If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an A-4 abandoned property law designates another person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 8. Defeasance ---------- Subject to certain conditions, the Company at any time may terminate certain of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to maturity. 9. Amendment, Waiver ----------------- Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 4 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to comply with the Act or to add additional covenants or surrender Company rights, or to make any change that does not adversely affect the rights of any Securityholder. 10. Defaults and Remedies --------------------- Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other indebtedness of the Company or any Restricted Subsidiary if the amount accelerated (or so unpaid) exceeds $25,000,000 and continues for 15 days after the required notice to the Company; and (v) certain A-5 events of bankruptcy or insolvency. Subject to certain exceptions, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest. 11. Trustee Dealings with the Company --------------------------------- Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its affiliates and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not Trustee. 12. No Recourse Against Others -------------------------- A director, officer, employee or stockholder, as such, of the Company or the Trustee shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 13. Authentication -------------- This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. A-6 14. Abbreviations ------------- Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 15. CUSIP Numbers ------------- Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to: GEICO Corporation One GEICO Plaza Washington, D.C. 20076-0001 Attention of Corporate Secretary A-7 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to _____________________________________________________ (Print or type assignee's name, address and zip code) _____________________________________________ (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint ____________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: __________________ Your Signature: ____________________ Sign exactly as your name appears on the other side of this Security. A-8 EX-5 4 OPINION REGARDING LEGALITY EXHIBIT 5 Charles R. Davies Vice President And General Counsel April , 1995 GEICO Corporation GEICO Plaza Washington, D.C. 20076 Dear Sirs: I am Vice President and General Counsel of GEICO Corporation, a Delaware corporation (the "Company"), and in such capacity have represented the Company in connection with a Registration Statement on Form S-3 (the "Registration Statement") relating to the proposed public offering of the Company's Notes Due 2005 (the "Notes"). I have examined the Certificate of Incorporation and Bylaws of the Company, such records of the corporate proceedings as I have deemed relevant, the Registration Statement in the form in which it is to be filed with the Securities and Exchange Commission, the proposed form of Underwriting Agreement to be entered into between the Company and Salomon Brothers Inc (the "Underwriting Agreement"), the proposed form of Indenture to be entered into between the Company and United States Trust Company of New York, as Trustee (the "Trustee") (the "Indenture"), and such other certificates, records and documents as I deemed necessary for the purpose of this opinion. Based on the foregoing, I am of the opinion that the Notes, when duly executed by the Company, authenticated by the Trustee in accordance with the terms of the Indenture and duly issued and delivered by the Company against payment therefor in accordance with the Underwriting Agreement will be duly issued and will constitute valid and binding obligations of the Company entitled to the benefits of the Indenture. I know that I am referred to under the heading "Legal Matters" in the Prospectus forming a part of the Registration Statement, and I consent to such use of my name in the Registration Statement and to the use of this opinion for filing as an exhibit to the Registration Statement. Very truly yours, Charles R. Davies EX-12 5 STATEMENT REGARDING COMPUTATION OF RATIOS EXHIBIT 12 GEICO CORPORATION AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (In thousands, except ratios)
Year Ended December 31, ------------------------------------------------ 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- Net income before taxes and cumulative effects of accounting changes $251,194 $378,620 $218,001 $240,994 $222,808 Loss undistributed earnings of less than 50% owned affiliates - (2,937) (1,382) (3,539) (2,940) Adjustment to include 100% of pretax losses of unconsolidated subsidiaries - (251) (331) (437) (374) Add fixed charges, excluding capitalized interest 32,605 24,529 33,259 36,720 36,869 -------- -------- -------- -------- -------- Adjusted earnings 283,799 399,961 249,547 273,738 256,363 -------- -------- -------- -------- -------- Interest expense 27,696 19,975 27,669 30,097 30,923 Interest capitalized 166 1,429 267 - - Portion of rent representative of interest (one-third of rent expense) 4,909 4,554 5,590 6,623 5,946 -------- -------- -------- -------- -------- Fixed Charges 32,771 25,958 33,526 36,720 36,869 -------- -------- -------- -------- -------- Ratio of earnings to fixed charges 8.66 15.41 7.44 7.45 6.95 ======== ======== ======== ======== ========
EX-23.(B) 6 CONSENT OF EXPERTS AND COUNSEL EXHIBIT 23(b) CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statement of GEICO Corporation (the Company) on Form S-3 of our report dated February 17, 1995, on our audit of the consolidated financial statements of the Company and its subsidiaries as of December 31, 1994 and 1993, and for the three years in the period ended December 31, 1994, which appears on page 27 of the Company's 1994 Annual Report to Shareholders and is incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1994, and of our report dated February 17, 1995 on the related Financial Statement Schedules, which appears on page 17 of such Annual Report on Form 10-K. We also consent to the reference to our Firm under the heading "Experts" in such registration statement. Coopers & Lybrand L.L.P. Washington, D.C. April 6, 1995 EX-25 7 STATEMENT OF ELIGIBILITY OF TRUSTEE SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 __________________________ FORM T-1 STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE __________________________ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _______ __________________________ UNITED STATES TRUST COMPANY OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5459866 (Jurisdiction of incorporation (I. R. S. Employer if not a U. S. national bank) Identification No.) 114 West 47th Street 10036 New York, New York (Zip Code) (Address of principal executive offices) __________________________ GEICO Corporation (Exact name of OBLIGOR as specified in its charter) Delaware 52-1135801 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) One Geico Plaza Washington, DC 20076-0001 (Address of principal executive offices) (Zip code) __________________________ $100,000,000 ____% Notes Due 2005 (Title of the indenture securities) - 2 - GENERAL 1. General Information ------------------- Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Reserve Bank of New York (2nd District), New York, New York (Board of Governors of the Federal Reserve System). Federal Deposit Insurance Corporation, Washington, D. C. New York State Banking Department, Albany, New York (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. 2. Affiliations with the Obligor ----------------------------- If the obligor is an affiliate of the trustee, describe each such affiliation. None. 3. Voting Securities of the Trustee -------------------------------- 2,999,020 shares of Common Stock - Par Value $5 per share 4. Trusteeships under Other Indentures ----------------------------------- If the trustee is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the obligor are outstanding, furnish the following information: (a) Title of the securities outstanding under each such indenture. GEICO Corporation 9.15% Debentures due 2021 GEICO Corporation 7.35% Debentures due 2023. (b) A brief statement of the facts relied upon as a basis for the claim that no conflicting interest within the meaning of Section 310(b)(1) of the Act arises as a result of the trusteeship under any such indenture, including a statement as to how the indenture - 3 - securities will rank as compared with the securities issued under such other indenture. The facts relied upon as a basis that no conflicting interest within the meaning of Section 310(b)(1) of the Act arises as a result of trusteeships under the indenture dated as of September 15, 1991 under which the 9.15% Debentures due 2021 were issued and under the indenture dated as of July 1, 1993 under which the 7.35% Debentures due 2023 were issued (the "other indentures") under which the GEICO Corporation Notes due 2005 (the "indenture to be qualified") will be issued is that the indenture to be qualified and the other indentures are wholly unsecured. The securities to be issued under the indenture to be qualified will rank equally as to the right of payment with the other indentures. 5. Interlocking Directorates and Similar Relationships with the Obligor or ----------------------------------------------------------------------- Underwriters ------------ Not applicable 6. Voting Securities of the Trustee Owned by the Obligor or its Officials ---------------------------------------------------------------------- Not applicable 7. Voting Securities of the Trustee Owned by Underwriters or their Officials ------------------------------------------------------------------------- Not applicable 8. Securities of the Obligor Owned or Held by the Trustee ------------------------------------------------------ Not applicable 9. Securities of Underwriters Owned or Held by the Trustee ------------------------------------------------------- Not applicable 10. Ownership or Holdings by the Trustee of Voting Securities of Certain -------------------------------------------------------------------- Affiliates or Security Holders of the Obligor --------------------------------------------- Not applicable - 4 - 11. Ownership or Holdings by the Trustee of any Securities of a Person Owning ------------------------------------------------------------------------- 50 Percent or More of the Voting Securities of the Obligor ---------------------------------------------------------- Not applicable. 12. Indebtedness of the Obligor to the Trustee ------------------------------------------ Not applicable. 13. Defaults by the Obligor ----------------------- Not applicable. 14. Affiliations with the Underwriters ---------------------------------- Not applicable. 15. Foreign Trustee --------------- Not applicable. 16. List of Exhibits ---------------- T-1.1 -- "Chapter 204, Laws of 1853, An Act to Incorporate the United States Trust Company of New York, as Amended", is incorporated by reference to Exhibit T-1.1 to Form T-1 filed on September 20, 1991 with the Securities and Exchange Commission (the "Commission") pursuant to the Trust Indenture Act of 1939 (Registration No. 2221291). - 5 - 16. List of Exhibits ---------------- (cont'd) T-1.2 -- The trustee was organized by a special act of the New York Legislature in 1853 prior to the time that the New York Banking Law was revised to require a Certificate of authority to commence business. Accordingly, under New York Banking Law, the Charter (Exhibit T-1.1) constitutes an equivalent of a certificate of authority to commence business. T-1.3 -- The authorization of the trustee to exercise corporate trust powers is contained in the Charter (Exhibit T-1.1). T-1.4 -- The By-laws of the United States Trust Company of New York, as amended to date, are incorporated by reference to Exhibit T- 1.4 to Form T-1 filed on September 20, 1991 with the Commission pursuant to the Trust Indenture Act of 1939 (Registration No. 2221291). T-1.6 -- The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939. T-1.7 -- A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. - 6 - NOTE As of March 31, 1995, the trustee had 2,999,020 shares of Common Stock outstanding, all of which are owned by its parent company, U. S. Trust Corporation. The term "trustee" in Item 2, refers to each of United States Trust Company of New York and its parent company, U. S. Trust Corporation. In answering Item 2 in this statement of eligibility, as to matters peculiarly within the knowledge of the obligor or its directors, the trustee has relied upon information furnished to it by the obligor and will rely on information to be furnished by the obligor and the trustee disclaims responsibility for the accuracy or completeness of such information. _____________________ Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, United States Trust Company of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and State of New York, on the 6th day of April, 1995. UNITED STATES TRUST COMPANY OF NEW YORK, Trustee /s/ Patricia Stermer By: _______________________________________ Patricia Stermer Assistant Vice President PST/pg 033195 EXHIBIT T-1.6 - ------------- The consent of the trustee required by Section 321(b) of the Act. United States Trust Company of New York 114 West 47th Street New York, NY 10036 March 19, 1992 Securities and Exchange Commission 450 5th Street, N.W. Washington, DC 20549 Gentlemen: Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, and subject to the limitations set forth therein, United States Trust Company of New York ("U.S. Trust") hereby consents that reports of examinations of U.S. Trust by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. Very truly yours, UNITED STATES TRUST COMPANY OF NEW YORK By: /s/ Gerard F. Ganey --------------------- S/Gerard F. Ganey Senior Vice President EXHIBIT T-1.7 Consolidated Report of Condition of UNITED STATES TRUST COMPANY OF NEW YORK and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business on December 31, 1994, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS ASSETS IN THOUSANDS Cash and balances due from depository institutions: a. Noninterest bearing balances and currency and coin: $ 164,610 b. Interest bearing balances: 21,524 Securities: 1,033,526 Federal funds sold and securities purchased under agreements to resell 120,000 Loans 1,626,898 LESS: Allowance credit losses 14,699 Net Loans 1,612,199 Premises and Equipment: 109,346 Other assets: 162,006 ---------- TOTAL ASSETS: $3,223,211 ========== LIABILITIES Deposits: $2,440,371 (1) Non interest bearing: 1,031,538 (2) Interest bearing: 1,408,833 Federal funds purchased, securities sold under agreements to repurchase and other borrowings: 350,515 Accounts Payable & Accrued Liabilities 148,078 Long Term Debt 60,924 ---------- TOTAL LIABILITIES: $2,999,888 ========== EQUITY CAPITAL Common Stock: $ 11,581 Capital Surplus: 72,605 Treasury Stock, at cost: (86,139) Loan to ESOP (16,171) Net unrealized holding gains (losses) on available-for-sale securities (3,192) TOTAL EQUITY CAPITAL: $ 223,323 ---------- TOTAL LIABILITY AND EQUITY CAPITAL: $3,223,211 ==========
I, RICHARD E. BRINKMANN, SENIOR VICE PRESIDENT & CONTROLLER, of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. RICHARD E. BRINKMANN, SVP & CONTROLLER December 31, 1994 We, the undersigned directors, attest the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. H. MARSHALL SCHWARZ ) Directors JEFFREY S. MAURER ) FREDERICK S. WONHAM ) PST/pg 033195 -----END PRIVACY-ENHANCED MESSAGE-----