EXHIBIT 1.1
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SERVICE CORPORATION INTERNATIONAL
(a Texas corporation)
SENIOR NOTES DUE 2016
PURCHASE AGREEMENT
Dated: March 30, 2004
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SERVICE CORPORATION INTERNATIONAL
(a Texas corporation)
$250,000,000
SENIOR NOTES DUE 2016
PURCHASE AGREEMENT
March 30, 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Banc of America Securities LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Credit Lyonnais Securities (USA) Inc.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
as Representatives of the several Initial Purchasers
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Service Corporation International, a Texas corporation (the "Company"),
confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Initial Purchasers
named in Schedule A hereto (collectively, the "Initial Purchasers", which term
shall also include any initial purchaser substituted as hereinafter provided in
Section 11 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, Banc of America Securities LLC, ▇.▇.
▇▇▇▇▇▇ Securities Inc., Credit Lyonnais Securities (USA) Inc., ▇▇▇▇▇▇ Brothers
Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. are acting as Representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the Initial Purchasers, acting severally and not
jointly, of the respective principal amounts set forth in said Schedule A of
$250,000,000 aggregate principal amount of the Company's Senior Notes due 2016
(the "Securities"). The Securities are to be issued pursuant to an indenture
dated as of February 1, 1993 between the Company and The Bank of New York, as
trustee (the "Trustee"), as supplemented by a supplemental indenture dated as of
March ___, 2004 (the "Supplemental Indenture") between the Company and the
Trustee (the indenture as so supplemented, the "Indenture"). Securities issued
in book-entry form will be issued to Cede & Co. as nominee of The Depository
Trust Company ("DTC") pursuant to a letter agreement (the "DTC Agreement") among
the Company, the Trustee and DTC.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after this Agreement has been executed and delivered.
The Securities are to be offered and sold through the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "1933 Act"),
in reliance upon exemptions therefrom. Pursuant to the terms of the Securities
and the Indenture, investors that acquire Securities may only resell or
otherwise transfer such
Securities if such Securities are hereafter registered under the 1933 Act or if
an exemption from the registration requirements of the 1933 Act is available
(including the exemption afforded by Rule 144A ("Rule 144A") or Regulation S
("Regulation S") of the rules and regulations promulgated under the 1933 Act by
the Securities and Exchange Commission (the "Commission")).
The Company has prepared and delivered to each Initial Purchaser copies of
a preliminary offering memorandum dated March 26, 2004 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to each Initial
Purchaser, on the date hereof or the next succeeding day, copies of a final
offering memorandum dated March 30, 2004 (the "Final Offering Memorandum"), each
for use by such Initial Purchaser in connection with its solicitation of
purchases of, or offering of, the Securities. "Offering Memorandum" means, with
respect to any date or time referred to in this Agreement, the most recent
offering memorandum (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document),
including exhibits thereto and any documents incorporated therein by reference,
which has been prepared and delivered by the Company to the Initial Purchasers
in connection with their solicitation of purchases of, or offering of, the
Securities.
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the Offering
Memorandum (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Offering Memorandum; and all references in
this Agreement to amendments or supplements to the Offering Memorandum shall be
deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934 (the "1934 Act") which is, or portions of which are,
incorporated by reference in the Offering Memorandum.
SECTION 1. Representations and Warranties by the Company.
(a) Representations and Warranties. The Company represents and warrants
to each Initial Purchaser as of the date hereof and as of Closing Time referred
to in Section 2(b) hereof, and agrees with each Initial Purchaser, as follows:
(i) Offering Memorandum. The Offering Memorandum does not, and at
Closing Time will not, include an 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 that this representation, warranty and agreement
shall not apply to statements in or omissions from the Offering Memorandum
made in reliance upon and in conformity with written information furnished
to the Company by any Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly
for use in the Offering Memorandum.
(ii) Incorporated Documents. The Offering Memorandum as delivered
from time to time shall incorporate by reference the most recent Annual
Report of the Company on Form 10-K filed with the Commission and the
Current Report of the Company on Form 8-K filed with the Commission on
March 24, 2004. The documents incorporated or deemed to be incorporated by
reference in the Offering Memorandum at the time they were or hereafter
are filed with the Commission complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations"),
and, when read together with the other information in the Offering
Memorandum, at the time the Offering Memorandum was issued and at Closing
Time, did not and will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Offering
Memorandum are independent public accountants with respect to the Company
and its subsidiaries within the meaning of Regulation S-X under the 1933
Act.
(iv) Financial Statements. The financial statements of the Company,
together with the related schedules and notes, included in the Offering
Memorandum present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Offering Memorandum present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in
the Offering Memorandum present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the Offering Memorandum.
(v) Proforma Financial Information. The pro forma financial
information of the Company and its subsidiaries and the related notes
thereto included in or incorporated by reference into the Offering
Memorandum present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly compiled
on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein.
(vi) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Offering Memorandum, except
as otherwise stated or incorporated by reference therein, (A) there has
been no material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not arising
in the ordinary course of business (a "Material Adverse Effect"), (B)
there have been no transactions entered into by the Company or any of its
subsidiaries, other than those arising in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(vii) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Texas and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(viii) Good Standing of Designated Subsidiaries. Each "significant
subsidiary" of the Company, which entities are listed on Schedule C hereto
(each a "Designated Subsidiary" and, collectively, the "Designated
Subsidiaries"), has been duly organized and is validly existing as a
corporation, partnership or limited liability company, as the case may be,
in good standing under the laws of the jurisdiction of its incorporation
or organization, has the power and authority
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(corporate, partnership or other, as the case may be) to own, lease and
operate its properties and to conduct its business as described in the
Offering Memorandum and is duly qualified as a foreign corporation,
partnership or limited liability company, as the case may be, to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure to so
qualify or to be in good standing would not result in a Material Adverse
Effect; except as otherwise disclosed in the Offering Memorandum, all of
the issued and outstanding capital stock, limited partnership interests or
membership interests, as the case may be, of each Designated Subsidiary
has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; none of the outstanding shares of
capital stock, limited partnership interests or membership interests, as
the case may be, of the Designated Subsidiaries was issued in violation of
any preemptive or similar rights of any securityholder of such Designated
Subsidiary.
(ix) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Offering Memorandum in the
column entitled "As Reported" under the caption "Capitalization" (except
for subsequent issuances, if any, pursuant to reservations, agreements,
employee benefit plans referred to in the Offering Memorandum or pursuant
to the exercise of convertible securities or options referred to in the
Offering Memorandum). The shares of issued and outstanding capital stock
of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; none of the outstanding shares of capital stock
of the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(xi) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and, when the Supplemental Indenture has been
executed and delivered by the Company and the Trustee, the Indenture will
constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject
to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xii) Authorization of the Securities. The Securities have been duly
authorized and, at Closing Time, will have been duly executed by the
Company and, when authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in this Agreement, will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers) reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law), and will be in the form contemplated by, and entitled to the
benefits of, the Indenture.
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(xiii) Description of the Securities and the Indenture. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Offering
Memorandum.
(xiv) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which it or any of them may be bound, or to which any of the property
or assets of the Company or any of its subsidiaries is subject
(collectively, "Agreements and Instruments") except for such defaults that
would not result in a Material Adverse Effect; and the execution, delivery
and performance of this Agreement, the Indenture and the Securities and
any other agreement or instrument entered into or issued or to be entered
into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Offering Memorandum and the
consummation of the transactions contemplated herein and in the Offering
Memorandum (including the issuance and sale of the Securities and the use
of the proceeds from the sale of the Securities as described in the
Offering Memorandum under the caption "Use of Proceeds") and compliance by
the Company with its obligations hereunder have been duly authorized by
all necessary corporate action and (a) do not and will not, whether with
or without the giving of notice or passage of time or both, (1) conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
properties, assets or operations of the Company or any of its subsidiaries
pursuant to, or (2) constitute a Repayment Event (as defined below) under,
the Agreements and Instruments, nor (b) will such action result in any
violation of the provisions of the charter or by-laws of the Company or
any charters, bylaws and similar organizational documents of its
subsidiaries or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any of
its subsidiaries or any of their assets, properties or operations, except
in the case of clause (a), subclause (1) above, for any conflict, breach,
default, lien, charge or encumbrance as would not result in a Material
Adverse Effect. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any of its subsidiaries.
(xv) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any of its
subsidiaries' principal suppliers, manufacturers, customers or
contractors, which, in either case, would result in a Material Adverse
Effect.
(xvi) Absence of Proceedings. Except as described in or incorporated
by reference into the Offering Memorandum, there is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any of its subsidiaries which might result in a Material Adverse Effect,
or which might materially and adversely affect the properties, assets or
operations of the Company or any of its subsidiaries or the consummation
of the transactions contemplated by this Agreement or the Indenture, or
the performance by the Company of its obligations hereunder and
thereunder. The aggregate of all pending legal or governmental proceedings
to which the Company or any of its subsidiaries is a party or of which any
of their respective properties, assets or operations is the subject which
are
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not described in or incorporated by reference into the Offering
Memorandum, including ordinary routine litigation incidental to the
business, would not result in a Material Adverse Effect.
(xvii) Absence of Manipulation. Neither the Company nor any
affiliate of the Company has taken, nor will the Company or any affiliate
take, directly or indirectly, any action which is designed to or which has
constituted or which would be expected to cause or result in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(xviii) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") reasonably necessary to carry on
the business now operated by them, except where the failure to own or
possess such Intellectual Property would not, singly or in the aggregate,
result in a Material Adverse Effect, and neither the Company nor any of
its subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xix) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
domestic or foreign, is necessary or required for the performance by the
Company of its obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, or for the due execution,
delivery or performance of the Indenture by the Company, except such as
have been already obtained.
(xx) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure to possess such Governmental Licenses would not, singly or in the
aggregate, result in a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, result in a Material Adverse Effect; all of
the Governmental Licenses are valid and in full force and effect, except
where the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not, singly or
in the aggregate, result in a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xxi) Title to Property. The Company and its subsidiaries have good
and indefeasible title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except (a) are described
in the Offering Memorandum or (b) those which do not, singly or in the
aggregate, materially affect the value of
6
such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries; and all
of the leases and subleases material to the business of the Company and
its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Offering Memorandum, are in full force and effect, and neither the Company
nor any of its subsidiaries has received any notice of any material claim
of any sort that has been asserted by anyone adverse to the rights of the
Company or any of its subsidiaries under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or
such subsidiary of the continued possession of the leased or subleased
premises under any such lease or sublease.
(xxii) Environmental Laws. Except as described in the Offering
Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any federal, state, local
or foreign statute, law, rule, regulation, ordinance, code, policy or rule
of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products,
asbestos-containing materials or mold (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, "Environmental Laws"), (B) neither the Company nor any of
its subsidiaries fails to possess any permit, authorization or approval
required under any applicable Environmental Laws or to be in compliance
with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) there are no events or
circumstances that would reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xxiii) Investment Company Act. The Company is not required, and
upon the issuance and sale of the offered Securities as herein
contemplated and the application of the net proceeds therefrom as
described in the Offering Memorandum will not be required, to register as
an "investment company" under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xxiv) Similar Offerings. Neither the Company nor any of its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
(each, an "Affiliate"), has, directly or indirectly, solicited any offer
to buy, sold or offered to sell or otherwise negotiated in respect of, or
will solicit any offer to buy, sell or offer to sell or otherwise
negotiate in respect of, in the United States or to any United States
citizen or resident, any security which is or would be integrated with the
sale of the Securities in a manner that would require the offered
Securities to be registered under the 1933 Act.
(xxv) Rule 144A Eligibility. The Securities are eligible for resale
pursuant to Rule 144A and will not be, at Closing Time, of the same class
as securities listed on a national securities exchange registered under
Section 6 of the 1934 Act, or quoted in a U.S. automated interdealer
quotation system.
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(xxvi) No General Solicitation. None of the Company, its Affiliates
or any person acting on its or any of their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has engaged or
will engage, in connection with the offering of the offered Securities, in
any form of general solicitation or general advertising within the meaning
of Rule 502(c) under the 1933 Act.
(xxvii) No Registration Required. Subject to compliance by the
Initial Purchasers with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the offered
Securities to the Initial Purchasers and to each Subsequent Purchaser in
the manner contemplated by this Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended (the "1939 Act").
(xxviii) Reporting Company. The Company is subject to the reporting
requirements of Section 13 or Section 15(d) of the 1934 Act.
(xxix) No Directed Selling Efforts. With respect to those offered
Securities sold in reliance on Regulation S, (A) none of the Company, its
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation) has
engaged or will engage in any directed selling efforts within the meaning
of Regulation S and (B) each of the Company and its Affiliates and any
person acting on its or their behalf (other than the Initial Purchasers,
as to whom the Company makes no representation) has complied and will
comply with the offering restrictions requirement of Regulation S.
(xxx) Statistical and Market Data. The statistical and
market-related data included or incorporated by reference in the Offering
Memorandum are based on or derived from sources which the Company believes
to be reliable and accurate or represent the Company's good faith
estimates that are made on the basis of data derived from such sources.
(xxxi) Finders' Fee. The Company knows of no outstanding claims for
services, in the nature of a finder's fee or origination fee or other
similar claim, with respect to the transactions contemplated hereby, other
than the fees and compensation to be paid to the Initial Purchasers in
accordance with this Agreement.
(xxxii) Payment of Taxes. All United States federal income tax
returns of the Company and its Subsidiaries required by law to be filed
have been filed and all taxes shown by such returns or otherwise assessed,
which are due and payable, have been paid, except assessments against
which appeals have been or will be promptly taken and as to which adequate
reserves have been provided. The United States federal income tax returns
of the Company through the fiscal year ended December 31, 1998 have been
settled and no assessment in connection therewith has been made against
the Company. The Company and its subsidiaries have filed all other tax
returns that are required to have been filed by them pursuant to
applicable foreign, state, local or other law except insofar as the
failure to file such returns would not result in a Material Adverse
Effect, and has paid all taxes due pursuant to such returns or pursuant to
any assessment received by the Company and its subsidiaries, except for
such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and reserves
on the books of the Company in respect of any income and corporation tax
liability for any years not finally determined are adequate to meet any
assessments or re-assessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy that would not
result in a Material Adverse Effect.
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(xxxiii) Internal Controls. Except as described in or incorporated
by reference into the Offering Memorandum, the Company and its
subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for
assets, (C) access to assets is permitted only in accordance with
management's general or specific authorization and (D) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxxiv) Insurance. Except as described in or incorporated by
reference into the Offering Memorandum, the Company and its Subsidiaries
carry or are entitled to the benefits of insurance, with financially sound
and reputable insurers, in such amounts and covering such risks as is
generally maintained by companies of established repute engaged in the
same or similar business, and all such insurance is in full force and
effect.
(xxxv) Offering Materials. The Company has not distributed and,
prior to the later to occur of (i) the Closing Time and (ii) completion of
the distribution of the Securities, will not distribute any offering
material in connection with the offering and sale of the Securities other
than the Preliminary Offering Memorandum, the Final Offering Memorandum or
other materials, if any, approved by the Representatives.
(xxxvi) Suppliers. No supplier of merchandise to the Company or any
of its subsidiaries has ceased shipments of merchandise to the Company,
other than in the normal and ordinary course of business consistent with
past practices, which cessation would not result in a Material Adverse
Effect.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Initial Purchasers shall be deemed a representation and warranty
by the Company to each Initial Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, severally and not jointly, and
each Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate principal amount of
Securities set forth in Schedule A opposite the name of such Initial Purchaser,
plus any additional principal amount of Securities which such Initial Purchaser
may become obligated to purchase pursuant to the provisions of Section 11
hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.P., 2300 First City Tower, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 9:00 a.m. (Texas time) on the tenth business day after the date hereof
(unless postponed in accordance with the provisions of Section 11), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representatives and the Company (such time and date of payment and
delivery being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives, through the facilities of
9
DTC, for the respective accounts of the Initial Purchasers of the Securities to
be purchased by them. It is understood that each Initial Purchaser has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Securities which it has
agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Initial Purchasers, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any Initial Purchaser whose
funds have not been received by Closing Time, but such payment shall not relieve
such Initial Purchaser from its obligations hereunder.
(c) Denominations; Registration. Certificates for the Securities shall
be in global form and registered in the name of Cede & Co., as nominee of DTC,
with separate certificates for Securities sold pursuant to Rule 144A and those
sold pursuant to Regulation S, in each case in the aggregate principal amounts
as ▇▇▇▇▇▇▇ ▇▇▇▇▇ may advise the Company before the Closing Time. The
certificates representing the Securities shall be delivered to the Trustee, as
custodian for DTC, at the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Offering Memorandum and any amendments and supplements thereto and documents
incorporated by reference therein as such Initial Purchaser may reasonably
request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the offered Securities by the Initial Purchasers as evidenced by a
notice in writing from the Initial Purchasers to the Company, any material
changes in or affecting the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise that (i) make any statement in the Offering
Memorandum false or misleading or (ii) are not disclosed in the Offering
Memorandum. In such event or if during such time any event shall occur as a
result of which it is necessary, in the reasonable opinion of any of the
Company, its counsel, the Initial Purchasers or counsel for the Initial
Purchasers, to amend or supplement the Offering Memorandum in order that the
Offering Memorandum not include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company will
forthwith amend or supplement the Offering Memorandum by preparing and
furnishing to each Initial Purchaser an amendment or amendments of, or a
supplement or supplements to, the Offering Memorandum (in form and substance
satisfactory in the reasonable opinion of counsel for the Initial Purchasers) so
that, as so amended or supplemented, the Offering Memorandum will not include an
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
existing at the time it is delivered to a Subsequent Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement without
the consent of the Initial Purchasers. Neither the consent of the Initial
Purchasers, nor the Initial Purchaser's delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
offered Securities for offering and sale under the
10
applicable securities laws of such states and other jurisdictions as the Initial
Purchasers may designate and to maintain such qualifications in effect as long
as required for the sale of the Securities; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject.
(e) Rating of Securities. The Company shall take all reasonable action
necessary to enable Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ("S&P"), and ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's") to provide their respective credit ratings of the Securities.
(f) DTC. The Company will cooperate with the Initial Purchasers and use
its best efforts to permit the offered Securities to be eligible for clearance
and settlement through the facilities of DTC.
(g) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds".
(h) Restriction on Sale of Securities. During a period of 90 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, issue, sell, offer or
agree to sell, grant any option for the sale of, or otherwise dispose of, any
other debt securities of the Company or securities of the Company that are
convertible into, or exchangeable for, the offered Securities or such other debt
securities.
(i) PORTAL Designation. The Company will use its best efforts to permit
the Securities to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market.
(j) Reporting Requirements. Until the offering of the Securities is
complete, the Company will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by the 1934
Act and the 1934 Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of the
Offering Memorandum (including financial statements and any schedules or
exhibits and any document incorporated therein by reference) and of each
amendment or supplement thereto, (ii) the preparation, printing and delivery to
the Initial Purchasers of this Agreement, any Agreement among Initial
Purchasers, the Indenture and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Initial Purchasers, including any transfer taxes, any
stamp or other duties payable upon the sale, issuance and delivery of the
Securities to the Initial Purchasers and any charges of DTC in connection
therewith, (iv) the fees and disbursements of the Company's counsel, accountants
and other advisors, (v) the qualification of the Securities under securities
laws in accordance with the provisions of Section 3(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Initial
Purchasers in connection therewith and in connection with the preparation of the
Blue Sky Survey, any supplement thereto, (vi) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities, (vii) the costs and expenses
of the Company relating to investor presentations on any "road show" undertaken
in connection with the marketing of the Securities including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any
11
consultants engaged in connection with the road show presentations, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants, and the cost of aircraft and other transportation chartered in
connection with the road show and (viii) any fees payable in connection with the
rating of the Securities, and (ix) any fees and expenses payable in connection
with the initial and continued designation of the Securities as PORTAL
securities under the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations
of the several Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Opinion of Counsel for Company. At Closing Time, the Representatives
shall have received the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Company, in form and substance satisfactory
to counsel for the Initial Purchasers, together with signed or reproduced copies
of such letter for each of the other Initial Purchasers to the effect set forth
in Exhibit A hereto and to such further effect as counsel to the Initial
Purchasers may reasonably request.
(b) Opinion of General Counsel of Company. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇ ▇. Shelger, General Counsel of the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters, to the effect set
forth in Exhibit B hereto and to such further effect as counsel to the
Underwriters may reasonably request.
(c) Opinion of Counsel for Initial Purchasers. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Initial Purchasers, together
with signed or reproduced copies of such letter for each of the other Initial
Purchasers with respect to the matters set forth in (i), (ii), (v) through
(viii), inclusive, (xiv) and the penultimate paragraph of Exhibit A hereto. In
giving such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York, the law of
the State of Texas, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that, insofar
as such opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company and its subsidiaries
and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Final Offering Memorandum (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, and the Representatives shall have received a certificate of the
President or a Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the effect that
(i) there has been no such material adverse change, (ii) the representations and
warranties in Section 1 hereof are true and correct with the same force and
effect as
12
though expressly made at and as of Closing Time, and (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time.
(e) Accountants' Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers containing statements and information of
the type ordinarily included in accountants' "comfort letters" to Initial
Purchasers with respect to the financial statements and certain financial
information contained in the Offering Memorandum.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) Maintenance of Rating. At Closing Time, the Securities shall be
rated at least B1 by Moody's and BB- by S&P, and the Company shall have
delivered to the Representatives a letter dated Closing Time, from each such
rating agency, or other evidence satisfactory to the Representatives, confirming
that the Securities have such ratings; and since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to the
Securities or any of the Company's other debt securities by any "nationally
recognized statistical rating agency", as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the 1933 Act, and no such securities rating
agency shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of the Securities or any of the
Company's other debt securities.
(h) PORTAL. At Closing Time, the Securities shall have been designated
for trading on PORTAL.
(i) Additional Documents. At Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may require for the purpose of enabling them to pass upon the issuance and sale
of the Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Representatives and counsel
for the Initial Purchasers.
(j) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 7, 8 and 9 shall survive any such termination and remain
in full force and effect.
SECTION 6. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales. Offers and sales of the Securities shall be
made to such persons and in such manner as is contemplated by the Offering
Memorandum. Each Initial Purchaser severally agrees that it will not
offer, sell or deliver any of the Securities in any jurisdiction
13
outside the United States except under circumstances that will result in
compliance with the applicable laws thereof, and that it will take at its
own expense whatever action is required to permit its purchase and resale
of the Securities in such jurisdictions.
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the ▇▇▇▇ ▇▇▇) will be
used in the United States in connection with the offering or sale of the
Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, each third party shall, in the judgment of the applicable
Initial Purchaser, be an Institutional Accredited Investor or a "qualified
institutional buyer" within the meaning of Rule 144A under the 1933 Act (a
"Qualified Institutional Buyer") or a non-U.S. person outside the United
States.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the 1933
Act in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be
offered, sold or otherwise transferred except (1) to the Company, (2)
outside the United States in accordance with Regulation S, or (3) inside
the United States in accordance with (x) Rule 144A to a person whom the
seller reasonably believes is a Qualified Institutional Buyer that is
purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer, sale
or transfer is being made in reliance on Rule 144A or (y) pursuant to
another available exemption from registration under the 1933 Act.
(v) Minimum Principal Amount. No sale of the Securities to any one
Subsequent Purchaser will be for less than U.S. $1,000 principal amount
and no Security will be issued in a smaller principal amount. If the
Subsequent Purchaser is a non-bank fiduciary acting on behalf of others,
each person for whom it is acting must purchase at least U.S. $1,000
principal amount of the Securities.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) Integration. The Company agrees that it will not and will cause
its Affiliates not to, directly or indirectly, solicit any offer to buy,
sell or make any offer or sale of, or otherwise negotiate in respect of,
securities of the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the 1933 Act, such offer or
sale would render invalid (for the purpose of (i) the sale of the offered
Securities by the Company to the Initial Purchasers, (ii) the resale of
the offered Securities by the Initial Purchasers to Subsequent Purchasers
or (iii) the resale of the offered Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements of
the 1933 Act provided by Section 4(2) thereof or by Rule 144A or by
Regulation S thereunder or otherwise.
(ii) Rule 144A Information. The Company agrees that, in order to
render the offered Securities eligible for resale pursuant to Rule 144A
under the 1933 Act, while any of the offered Securities remain
outstanding, it will make available, upon request, to any holder of
offered Securities or prospective purchasers of Securities the information
specified in Rule 144A(d)(4),
14
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act.
(iii) Restriction on Repurchases. Until the expiration of two years
after the original issuance of the offered Securities, the Company will
not, and will cause its Affiliates not to, resell any offered Securities
which are "restricted securities" (as such term is defined under Rule
144(a)(3) under the 1933 Act), whether as beneficial owner or otherwise
(except as agent acting as a securities broker on behalf of and for the
account of customers in the ordinary course of business in unsolicited
broker's transactions).
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a Qualified Institutional Buyer and an "accredited investor" within the meaning
of Rule 501(a) under the 1933 Act (an "Accredited Investor").
(d) Resale Pursuant to Rule 903 of Regulation S or Rule 144A. Each
Initial Purchaser understands that the offered Securities have not been and will
not be registered under the 1933 Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the 1933 Act or pursuant to an exemption from
the registration requirements of the 1933 Act. Each Initial Purchaser severally
represents and agrees, that, except as permitted by Section 6(a) above, it has
offered and sold Securities and will offer and sell Securities (i) as part of
their distribution at any time and (ii) otherwise until 40 days after the later
of the date upon which the offering of the Securities commences and Closing
Time, only in accordance with Rule 903 of Regulation S, Rule 144A under the 1933
Act or another applicable exemption from the registration requirements of the
1933 Act. Accordingly, neither the Initial Purchasers, their affiliates nor any
persons acting on their behalf have engaged or will engage in any directed
selling efforts with respect to Securities sold hereunder pursuant to Regulation
S, and the Initial Purchasers, their affiliates and any person acting on their
behalf have complied and will comply with the offering restriction requirements
of Regulation S. Each Initial Purchaser severally agrees that, at or prior to
confirmation of a sale of offered Securities pursuant to Regulation S it will
have sent to each distributor, dealer or person receiving a selling concession,
fee or other remuneration that purchases offered Securities from it or through
it during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to or for the
account or benefit of U.S. persons (i) as part of their distribution
at any time and (ii) otherwise until forty days after the later of
the date upon which the offering of the Securities commenced and the
date of closing, except in either case in accordance with Regulation
S or Rule 144A under the Securities Act. Terms used above have the
meaning given to them by Regulation S."
Terms used in the above paragraph have the meanings given to them by Regulation
S.
SECTION 7. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser, its affiliates, as such term
is defined in Rule 501(b) under the 1933 Act (each, an "Affiliate"), its selling
agents and each person, if any, who controls any Initial Purchaser within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
15
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Offering Memorandum or the Final Offering Memorandum (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; provided that (subject to
Section 7(d) below) any such settlement is effected with the written
consent of the Company; and
(iii) from and against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Offering Memorandum (or any amendment thereto).
(b) Indemnification of Company. Each Initial Purchaser severally agrees
to indemnify and hold harmless the Company, its directors and executive officers
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Offering Memorandum in reliance upon and in conformity with written information
furnished to the Company by such Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇
expressly for use in the Offering Memorandum.
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
16
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section or Section 8
hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
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Notwithstanding the provisions of this Section, no Initial Purchaser shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities purchased and sold by it hereunder exceeds the
amount of any damages which such Initial Purchaser has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an Initial
Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act and each Initial Purchaser's Affiliates and selling agents shall have
the same rights to contribution as such Initial Purchaser, and each director of
the Company, each executive officer of the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The Initial Purchasers' respective obligations to contribute pursuant to this
Section are several in proportion to the principal amount of Securities set
forth opposite their respective names in Schedule A hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Initial Purchaser or its
Affiliates or selling agents, any person controlling any Initial Purchaser, its
officers or directors or any person controlling the Company and shall survive
delivery of and payment for the Securities.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Final Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representatives, impracticable or inadvisable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Commission or the New York Stock Exchange, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the NASDAQ System has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States or
with respect to Clearstream or Euroclear systems in Europe, or (v) if a banking
moratorium has been declared by Federal, New York or Texas authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and
18
provided further that Sections 1, 7, 8 and 9 shall survive such termination and
remain in full force and effect.
SECTION 11. Default by One or More of the Initial Purchasers. If one or
more of the Initial Purchasers shall fail at Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), then the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Initial Purchasers, or any other initial purchasers, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the aggregate principal amount of the Securities to be
purchased hereunder, each of the non-defaulting Initial Purchasers
shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the
aggregate principal amount of the Securities to be purchased
hereunder, this Agreement shall terminate without liability on the
part of any non-defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Company shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangements. As used herein, the term "Initial Purchaser" includes any
person substituted for an Initial Purchaser under this Section.
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇ ▇▇▇▇▇, notices to the Company shall
be directed to it at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, attention of
▇▇▇▇▇▇ ▇▇▇▇▇▇.
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
19
SECTION 15. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT
AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
SECTION 16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
SECTION 17. Effect of Headings. The Section headings herein and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
20
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
SERVICE CORPORATION INTERNATIONAL
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Operating
Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
BANC OF AMERICA SECURITIES LLC
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
CREDIT LYONNAIS SECURITIES (USA) INC.
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Authorized Signatory (Director)
For themselves and as Representatives of the other Initial Purchasers
named in Schedule A hereto.
- SIGNATURE PAGE -
SCHEDULE A
Principal
Amount of
Name of Initial Purchaser Securities
-------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ....................... $ 137,500,000
Banc of America Securities LLC............................................ 25,000,000
▇.▇. ▇▇▇▇▇▇ Securities Inc................................................ 25,000,000
Credit Lyonnais Securities (USA) Inc...................................... 25,000,000
▇▇▇▇▇▇ Brothers Inc....................................................... 25,000,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc........................................... 12,500,000
-------------
Total............................................................... $ 250,000,000
=============
Sch A-1
SCHEDULE B
SERVICE CORPORATION INTERNATIONAL
$250,000,000 Senior Notes due 2016
1. The initial public offering price of the Securities shall be 99.50%
of the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 97.50% of the principal amount thereof.
3. The interest rate on the Securities shall be 6.75% per annum.
4. The Securities may be redeemed by the Company at any time upon at
least 30 days' and not more than 60 days' notice to the holders, at a redemption
price equal to the greater of (i) 100% of the principal amount, and (ii) as
determined by ▇▇▇▇▇▇▇ ▇▇▇▇▇ (and its successors) in its capacity as Quotation
Agent (as defined in the Offering Memorandum), the sum of the present values of
the remaining scheduled payments of principal and interest thereon (not
including any portion of such payments of interest accrued as of the date of the
redemption) discounted to the date of the redemption on a semi annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate ( as defined in the Offering Memorandum) plus 50 basis points
plus, in each case, accrued interest thereon to the date of the redemption.
Sch B-1
SCHEDULE C
SUBSIDIARY NAME JURISDICTION OF INCORPORATION
--------------- -----------------------------
SCI Funeral Services, Inc. Iowa
SCI California Funeral Services, Inc. California
SCI Texas Funeral Services, Inc. Delaware
SCI Special, Inc. Delaware
Remembrance Memorial Traditions, LLC Delaware
SCI Funeral & Cemetery Purchasing Cooperative, Inc. Delaware
SCI Administrative Services, LLC Delaware
SCI Management L.P. Delaware
SCI Western Operations HQ, Inc. California
SCI Eastern Operations HQ Services, L.P. Texas
SCI Executive Services, Inc. Delaware
SCI International Limited Delaware
SCI Latin America Ltd. Cayman Islands
Service Corporation International Chile Limitada Chile
Service Corporation International (Canada) Limited Canada-Federal
Sch C-1