-----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, Ztv0Q81VP391C/wAR4Ro7huqLXPu+Uo8I1q0UBHVPJgcuIbjvdsNytRcGWgDS9vo wuqJlZa6ImCr8XS7Rk/IfQ== 0000950123-94-001654.txt : 19941020 0000950123-94-001654.hdr.sgml : 19941020 ACCESSION NUMBER: 0000950123-94-001654 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 20 FILED AS OF DATE: 19941019 SROS: AMEX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICE CORPORATION INTERNATIONAL CENTRAL INDEX KEY: 0000089089 STANDARD INDUSTRIAL CLASSIFICATION: 7200 IRS NUMBER: 741488375 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-56069 FILM NUMBER: 94553956 BUSINESS ADDRESS: STREET 1: 1929 ALLEN PKWY STREET 2: P O BOX 130548 CITY: HOUSTON STATE: TX ZIP: 77219 BUSINESS PHONE: 7135225141 MAIL ADDRESS: STREET 1: P.O. BOX 130548 CITY: HOUSTON STATE: TX ZIP: 77219-0548 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCI FINANCE LLC CENTRAL INDEX KEY: 0000931498 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-56069-01 FILM NUMBER: 94553957 BUSINESS ADDRESS: STREET 1: 1929 ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77014 BUSINESS PHONE: 7135225141 MAIL ADDRESS: STREET 1: 1929 ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77014 S-3 1 SERVICE CORPORATION INTERNATIONAL FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 1994 REGISTRATION NO. 33- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ------------------------ SERVICE CORPORATION INTERNATIONAL AND SCI FINANCE LLC (EXACT NAME OF EACH REGISTRANT AS SPECIFIED IN ITS CHARTER) TEXAS -- SERVICE CORPORATION INTERNATIONAL TEXAS -- SCI FINANCE LLC (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 1929 ALLEN PARKWAY HOUSTON, TEXAS 77019 (713) 522-5141 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES) 74-1488375 -- SERVICE CORPORATION INTERNATIONAL 76-0449139 -- SCI FINANCE LLC (I.R.S. EMPLOYER IDENTIFICATION NO.) ------------------------ JAMES M. SHELGER, ESQ. SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY SERVICE CORPORATION INTERNATIONAL 1929 ALLEN PARKWAY HOUSTON, TEXAS 77019 (713) 522-5141 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ Copies to: SETH A. KAPLAN, ESQ. GERALD S. TANENBAUM, ESQ. WACHTELL, LIPTON, ROSEN & KATZ CAHILL GORDON & REINDEL 51 WEST 52ND STREET EIGHTY PINE STREET NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10005 (212) 403-1000 (212) 701-3000
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, AS DETERMINED BY MARKET CONDITIONS. ------------------------ 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 reinvestment plans, check the following box. /X/ CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- AMOUNT PROPOSED MAXIMUM PROPOSED MINIMUM TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF OF SECURITIES TO BE REGISTERED REGISTERED(1)(2) PER UNIT(3) PRICE(2)(3)(4) REGISTRATION FEE - --------------------------------------------------------------------------------------------------------------------------- Debt Securities - ------------------------------------------------- Preferred Stock - ------------------------------------------------- Common Stock Warrants {$1,000,000,000 100% $1,000,000,000 $344,828} - ------------------------------------------------- Common Stock(1) - ------------------------------------------------- Series C Junior Participating Preferred Stock Purchase Rights (currently traded with Common Stock)(1) - ------------------------------------------------- LLC Preferred Securities - ------------------------------------------------- Guarantee of LLC Preferred Securities(5) - --------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------
(1) There are being registered hereunder such presently indeterminate number of shares of Common Stock and Series C Junior Participating Preferred Stock Purchase Rights into which certain series of the Debt Securities, Preferred Stock and LLC Preferred Securities may be converted and for which no separate consideration will be received and for which Common Stock Warrants may be exercised. (2) In U.S. dollars or the equivalent in foreign currency or currency units. (3) Estimated pursuant to Rule 457 solely for the purpose of calculating the registration fee. (4) Exclusive of accrued interest or dividends, if any. (5) No separate consideration will be received for the Guarantee of LLC Preferred Securities. THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 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. PROSPECTUS Subject to Completion October 18, 1994 $1,000,000,000 SERVICE CORPORATION INTERNATIONAL Debt Securities, Common Stock, Preferred Stock and Common Stock Warrants SCI FINANCE LLC LLC Preferred Securities Service Corporation International (the "Company" or "SCI") may from time to time offer (i) Debt Securities consisting of debentures, notes and/or other unsecured evidences of indebtedness, (ii) Common Stock, par value $1.00 per share ("Common Stock" or "SCI Common Stock"), along with Series C Junior Participating Preferred Stock Purchase Rights, (iii) Preferred Stock, par value $1.00 per share ("Preferred Stock"), and (iv) Common Stock Warrants. SCI Finance LLC ("SCI Finance") may from time to time offer LLC Preferred Securities in one or more series with the payment of dividends and the payments on liquidation or redemption of the LLC Preferred Securities guaranteed on a subordinated basis by SCI to the extent described herein or in the accompanying Prospectus Supplement. See "Description of the LLC Preferred Securities -- Description of the Guarantee" and "-- Description of the Loans" for a description of various contractual backup undertakings of SCI with respect to the LLC Preferred Securities. The Debt Securities, the Common Stock, along with Series C Junior Participating Preferred Stock Purchase Rights, the Preferred Stock, the Common Stock Warrants and the LLC Preferred Securities are collectively referred to as the "Securities," and will have an aggregate initial offering price of up to $1,000,000,000 (or the equivalent thereof if Debt Securities are denominated in a currency other than U.S. dollars or in currency units). The Securities may be offered as separate series, in amounts, at prices and on terms to be determined at the time of sale. The accompanying Prospectus Supplement sets forth with regard to the Securities in respect of which this Prospectus is being delivered the terms of such Securities, including, where applicable, (i) in the case of Debt Securities, the specific title (including whether senior, senior subordinated or subordinated and whether or not convertible), aggregate principal amount, denominations (which may be in U.S. dollars, in any other currency or in composite currencies), maturity (which may be fixed or extendible), interest rate, if any (which may be fixed or variable), and time of payment of any interest, any terms for redemption at the option of the Company or the holder, any terms for sinking fund payments, any class or classes of stock into which the Debt Securities are convertible and other conversion terms, if any, any covenants or events of default that are in addition to or different from those described herein, any listing on a securities exchange, the initial public offering price and any other terms in connection with the offering and sale of such Debt Securities, (ii) in the case of Common Stock, the initial public offering price, (iii) in the case of Preferred Stock, the specific title, any dividend, liquidation and other rights, any class or classes of stock into which the Preferred Stock is convertible and other conversion terms, if any, any redemption provisions, any sinking fund provisions, any covenants, any listing on a securities exchange, the initial public offering price and any other terms in connection with the offering and sale of such Preferred Stock, (iv) in the case of Common Stock Warrants, the duration, exercise price, initial public offering price and any other terms in connection with the offering and sale of such Common Stock Warrants and (v) in the case of the LLC Preferred Securities, any dividend, conversion and other rights, any listing on a securities exchange, the initial public offering price and any other terms in connection with the offering and sale of such LLC Preferred Securities. The Company and SCI Finance may sell Securities to or through underwriters, and also may sell Securities directly to other purchasers or through agents. The accompanying Prospectus Supplement sets forth the names of any underwriters or agents involved in the sale of the Securities in respect of which this Prospectus is being delivered, the principal amounts, if any, to be purchased by underwriters and the compensation, if any, of such underwriters or agents. SEE "CERTAIN INVESTMENT CONSIDERATIONS" FOR INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. 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. , 1994 3 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS, IF ANY, MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES AND, IF THE SECURITIES ARE CONVERTIBLE, THE OUTSTANDING CLASS OR CLASSES OF STOCK OF THE COMPANY INTO WHICH THEY ARE CONVERTIBLE, AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON ANY SECURITIES EXCHANGE ON WHICH SUCH SECURITIES MAY BE LISTED, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. No person has been authorized to give any information or to make any representation not contained or incorporated by reference in this Prospectus or the accompanying Prospectus Supplement and, if given or made, such information or representation must not be relied upon as having been authorized by the Company or any underwriter, dealer or agent. Neither this Prospectus nor the accompanying Prospectus Supplement constitutes an offer to sell or a solicitation of an offer to buy Securities in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. In this Prospectus, references to "dollar" and "$" are to United States dollars, and the terms "United States" and "U.S." mean the United States of America, its states, its territories, its possessions and all areas subject to its jurisdiction. TABLE OF CONTENTS
PAGE ---- Available Information................ 3 Incorporation of Certain Documents by Reference.......................... 4 The Company.......................... 5 SCI Finance.......................... 5 Certain Investment Considerations.... 6 Use of Proceeds...................... 6 Description of Debt Securities....... 7 Description of Preferred Stock....... 22 Description of Common Stock Warrants........................... 25 Description of the LLC Preferred Securities......................... 28 Certain Federal Income Tax Considerations Regarding the LLC Preferred Securities............... 45 Plan of Distribution................. 49 Legal Matters........................ 50 Experts.............................. 50
2 4 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities of the Commission at 450 Fifth Street N.W., Washington, D.C. 20549; 500 West Madison Street, Chicago, Illinois 60661; and 7 World Trade Center, New York, New York 10048. Copies of such material can also be obtained from the public reference section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, such material can be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Additional information regarding the Company, SCI Finance and the Securities is contained in the Registration Statement of which this Prospectus is a part and the exhibits relating thereto (the "Registration Statement") filed with the Commission under the Securities Act of 1933, as amended (the "Act"). For further information pertaining to the Company, SCI Finance and the Securities reference is made to the Registration Statement, which may be inspected without charge at the office of the Commission at 450 Fifth Street N.W., Washington, D.C. 20549, and copies thereof may be obtained from the Commission at prescribed rates. This Prospectus and the accompanying Prospectus Supplement do not contain all the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Statements made in this Prospectus and the accompanying Prospectus Supplement as to the contents of any contract, agreement or other document referred to are not necessarily complete. With respect to each such contract, agreement or other document filed as an exhibit to the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference. No separate financial statements of SCI Finance have been included or incorporated by reference herein. SCI Finance and SCI do not consider that such financial statements would be material to holders of the LLC Preferred Securities, because SCI Finance is a newly-organized special purpose entity, has no operating history and no independent operations and is not engaged in any activity other than the issuance of its preferred interests (the "LLC Preferred Shares"), such as the LLC Preferred Securities, and its common interests (the "LLC Common Shares"), and the lending of 99% of the proceeds thereof to SCI International Limited, a wholly-owned subsidiary of SCI ("SCI Limited"), and because SCI will guarantee SCI Finance's obligations under the terms of the LLC Preferred Securities to the extent set forth herein. See "SCI Finance." SCI Finance is a limited liability company organized under the laws of the State of Texas and will be managed by SCI, as manager (sometimes referred to herein as the "Manager"). SCI owns all of the LLC Common Shares, which are nontransferable. 3 5 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed by SCI with the Commission are incorporated herein by reference: 1. SCI's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, as amended on Form 10-K/A, dated April 5, 1994; 2. SCI's Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 1994 and June 30, 1994; 3. The Company's Current Report on Form 8-K dated October 18, 1994; 4. Description of the Company's capital stock set forth under the caption "Item 1. Description of Securities to be Registered -- Capital Stock" in the Form 8, Amendment No. 3, dated September 15, 1982, to the Company's Registration Statement on Form 8-A; and 5. Description of the Company's preferred share purchase rights contained in the Company's Registration Statement on Form 8-A dated July 26, 1988, as amended by Amendment No. 1 thereto filed under cover of Form 8 and dated May 11, 1990. 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 Securities shall be deemed to be incorporated by reference in this Prospectus and to be part hereof from the date of filing such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein (or in any other subsequently filed document which also is incorporated by reference herein) modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed to constitute a part hereof except as so modified or superseded. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, upon the request of any such person, a copy of any or all of the documents which are incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests should be directed to Service Corporation International, 1929 Allen Parkway, Houston, Texas 77019, Attention: James M. Shelger, Senior Vice President, General Counsel and Secretary (Tel. (713) 522-5141). 4 6 THE COMPANY The Company is the largest publicly-held provider of funeral and cemetery services and products in the world. Giving effect to the recent acquisitions of Great Southern Group plc ("GSG") and Plantsbrook Group plc ("PG"), as of September 30, 1994, the Company owned and operated 1,431 funeral homes, 213 cemeteries (including 92 funeral home and cemetery combinations) and 99 crematoria located in 40 U.S. states, the District of Columbia, Australia, Canada and the United Kingdom. The Company was incorporated in Texas on July 5, 1962. The Company's principal executive offices are located at 1929 Allen Parkway, Houston, Texas 77019, telephone number (713) 522-5141. As used herein, unless the context indicates otherwise, the terms "Company" and "SCI" refer to the Company and its subsidiaries. SCI FINANCE SCI Finance is a limited liability company organized under the laws of the State of Texas. The address of SCI Finance's principal executive offices is 1929 Allen Parkway, Houston, Texas 77019. SCI owns all of the LLC Common Shares, which are nontransferable. SCI Finance exists for the sole purpose of issuing LLC Common Shares and LLC Preferred Shares and lending 99% of the proceeds thereof to SCI Limited. The remaining 1% of the proceeds from the issuance of LLC Common Shares and LLC Preferred Shares will be invested by SCI Finance in Eligible Investments (as defined in SCI Finance's Articles of Organization (the "LLC Articles")). See "Use of Proceeds." 5 7 CERTAIN INVESTMENT CONSIDERATIONS In evaluating an investment in the Securities, prospective purchasers should carefully consider the following factor, together with (i) other information included in the accompanying Prospectus Supplement (which may include additional factors and may contain information modifying or superseding the factor set forth below), (ii) information included elsewhere in this Prospectus, and (iii) information incorporated herein by reference (which may modify or supersede the factor set forth below). SECURITIES AND EXCHANGE COMMISSION INVESTIGATION The staff of the Division of Enforcement of the Commission has advised SCI that it is considering recommending to the Commission that it institute an administrative proceeding pursuant to Section 21C of the Exchange Act seeking cease and desist orders against SCI, R. L. Waltrip, Chairman of the Board and Chief Executive Officer, L. William Heiligbrodt, President and Chief Operating Officer, and Samuel W. Rizzo, Executive Vice President and Chief Financial Officer/Treasurer, for violations of certain reporting and disclosure requirements of the Exchange Act and the regulations promulgated thereunder. The recommendation under consideration by the staff arises out of the informal private investigation previously disclosed by SCI relating to, among other things, the change in SCI's accountants and SCI's Form 8-K dated March 31, 1993, as amended in April 1993, reporting such change. See Items 3 and 9 of SCI's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. The staff has offered SCI and the named individuals the opportunity to make a presentation with respect to the recommendation under consideration. USE OF PROCEEDS Except as may be otherwise set forth in the Prospectus Supplement accompanying this Prospectus, the net proceeds to the Company from the sale or sales of the Securities other than LLC Preferred Securities will be used for general corporate purposes. Except as set forth in the Prospectus Supplement accompanying this Prospectus, 99% of the proceeds from any offering of the LLC Preferred Securities will be lent by SCI Finance to SCI Limited (the "Loans"), which will use such proceeds in connection with SCI's foreign acquisition program, and the remaining 1% will be invested by SCI Finance in Eligible Investments. 6 8 DESCRIPTION OF DEBT SECURITIES The Debt Securities will constitute either senior, senior subordinated or subordinated debt of the Company and will be issued, in the case of Debt Securities that will be senior debt ("Senior Debt Securities"), under a Senior Indenture (the "Senior Debt Indenture") dated as of February 1, 1993, between the Company and The Bank of New York, as trustee; in the case of Debt Securities that will be senior subordinated debt ("Senior Subordinated Debt Securities"), under a Senior Subordinated Indenture (the "Senior Subordinated Debt Indenture") dated as of , 1994 between the Company and Texas Commerce Bank National Association ("Texas Commerce Bank"), as trustee; and, in the case of Debt Securities that will be subordinated debt ("Subordinated Debt Securities" and, together with the Senior Subordinated Debt Securities, the "Subordinated Securities") under a Subordinated Indenture (the "Subordinated Debt Indenture" and, together with the Senior Subordinated Debt Indenture, the "Subordinated Indentures") dated as of September 1, 1991 between the Company and Texas Commerce Bank, as trustee. The Senior Debt Indenture, the Senior Subordinated Debt Indenture and the Subordinated Debt Indenture are sometimes hereinafter referred to individually as an "Indenture" and collectively as the "Indentures." Each of The Bank of New York and Texas Commerce Bank (and any successors thereto as trustees under the respective Indentures) is hereinafter referred to as the "Trustee" with respect to the Indenture under which it acts as Trustee. The Indentures are filed as exhibits to the Registration Statement. The following summaries of certain provisions of the Indentures and the Debt Securities do not purport to be complete, and such summaries are subject to the detailed provisions of the applicable Indenture to which reference is hereby made for a full description of such provisions, including the definition of certain capitalized terms used herein but not otherwise defined herein. Whenever defined terms of the applicable Indenture are referred to, such defined terms are incorporated herein by reference as part of the statement made, and the statement is qualified in its entirety by such reference. The Indentures are substantially identical, except for certain covenants of the Company, events of default and provisions relating to subordination and conversion. The Debt Securities may be issued from time to time in one or more series. The following description of the Debt Securities sets forth certain general terms and provisions of the Debt Securities of all series. The particular terms of each series of Debt Securities offered by any Prospectus Supplement will be described therein. PROVISIONS APPLICABLE TO SENIOR, SENIOR SUBORDINATED AND SUBORDINATED DEBT SECURITIES General. The Debt Securities will be unsecured senior, senior subordinated or subordinated obligations of the Company and may be issued from time to time in one or more series. The Indentures will not limit the amount of Debt Securities, Senior Indebtedness, debentures, notes or other types of indebtedness that may be issued by the Company or any of its Subsidiaries nor will they restrict transactions between the Company and its Affiliates, the payment of dividends or the making of investments by the Company or the transfer of assets by the Company to its Subsidiaries. The Company currently conducts substantially all its operations through Subsidiaries. Consequently, the rights of the Company to receive assets of any Subsidiary (and thus the ability of holders of Debt Securities to benefit indirectly from such assets) are subject to the prior claims of creditors of that Subsidiary. Other than as may be set forth in any Prospectus Supplement, the Indentures and the Debt Securities will not contain any covenants or other provisions that are intended to afford holders of the Debt Securities special protection in the event of a highly leveraged transaction by the Company. As of June 30, 1994, the Company had outstanding approximately $714 million of secured debt or Senior Indebtedness (including approximately $34 million principal amount of guarantees) and approximately $471 million of unsecured subordinated debt. Reference is made to the Prospectus Supplement relating to any Debt Securities for the following terms of and information relating to such Debt Securities (to the extent such terms are applicable thereto): (i) the title of such Debt Securities; (ii) classification as Senior Debt Securities, Senior Subordinated Debt Securities or Subordinated Debt Securities, aggregate principal amount, purchase price and denomination; (iii) whether such Debt Securities that constitute Senior Subordinated Debt Securities or Subordinated Debt Securities are convertible into Common Stock and, if so, the terms and conditions upon which such conversion will be effected including the initial conversion price or conversion rate and any adjustments thereto in addition to or different from those described herein, the conversion period and other conversion provisions in addition to or in lieu of 7 9 those described herein; (iv) the date or dates on which such Debt Securities will mature; (v) the method by which amounts payable in respect of principal of or premium, if any, or interest, if any, on or upon the redemption of such Debt Securities may be calculated; (vi) the interest rate or rates (or the method by which such will be determined), and the dates from which such interest, if any, will accrue; (vii) the date or dates on which any such interest will be payable; (viii) the place or places where and the manner in which the principal of and premium, if any, and interest, if any, on such Debt Securities will be payable and the place or places where such Debt Securities may be presented for transfer and, if applicable, conversion; (ix) the obligations, if any, of the Company to redeem, repay or purchase such Debt Securities pursuant to any sinking fund or analogous provisions or at the option of a holder thereof or the right, if any, of the Company to redeem, repay or purchase such Debt Securities at its option and the period or periods within which, the price or prices at which and the terms and conditions upon which such Debt Securities will be redeemed, repaid or purchased pursuant to any such obligation or right (including the form or method of payment thereof if other than cash); (x) any terms applicable to such Debt Securities issued at an original issue discount below their stated principal amount, including the issue price thereof and the rate or rates at which such original issue discount shall accrue; (xi) any index used to determine the amount of payments of principal of and any premium and interest on such Debt Securities; (xii) any special United States federal income tax consequences; and (xiii) any other specified terms of such Debt Securities, including any additional or different events of default or remedies or any additional covenants provided with respect to such Debt Securities, and any terms which may be required by or advisable under applicable laws or regulations. Unless otherwise specified in any Prospectus Supplement, the Debt Securities will be issued only in fully registered form and in denominations of $1,000 and any integral multiple thereof. No service charge will be made for any transfer or exchange of any Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Debt Securities may bear interest at a fixed rate or a floating rate. Debt Securities bearing no interest or interest at a rate that at the time of issuance is below the prevailing market rate may be sold at a discount below their stated principal amount. Special United States federal income tax considerations applicable to any such discounted Debt Securities or to certain Debt Securities issued at par that are treated as having been issued at a discount for United States federal income tax purposes will be described in the applicable Prospectus Supplement. The Indentures and the Debt Securities will be governed by Texas law. Global Securities. The Debt Securities of a series may be issued in whole or in part in the form of one or more global securities ("Global Securities") that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the Prospectus Supplement relating to such series. Global Securities may be issued only in fully registered form and in either temporary or permanent form. Unless and until it is exchanged in whole or in part for the individual Debt Securities represented thereby, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to the nominee of the Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. The specific terms of the depositary arrangement with respect to a series of Debt Securities will be described in the Prospectus Supplement relating to such series. The Company anticipates that the following provisions will generally apply to depositary arrangements. Upon the issuance of a Global Security, the Depositary for such Global Security or its nominee will credit, on its book-entry registration and transfer system, the respective principal amounts of the individual Debt Securities represented by such Global Security to the accounts of persons that have accounts with such Depositary. Such accounts shall be designated by the dealers, underwriters or agents with respect to such Debt Securities or by the Company if such Debt Securities are offered and sold directly by the Company. Ownership of beneficial interests in a Global Security will be limited to persons that have accounts with the applicable Depositary ("participants") or persons that may hold interests through participants. Ownership of beneficial interests in such Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the applicable Depositary or its nominee (with respect to interests of participants) and the 8 10 records of participants (with respect to interests of persons other than participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Security. So long as the Depositary for a Global Security or its nominee is the registered owner of such Global Security, such Depositary or its nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities of the series represented by such Global Security for all purposes under the Indenture governing such Debt Securities. Except as provided below, owners of beneficial interests in a Global Security will not be entitled to have any of the individual Debt Securities of the series represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of any such Debt Securities in definitive form and will not be considered the owners or holders thereof under the Indenture governing such Debt Securities. Payments of principal of and premium, if any, and interest, if any, on individual Debt Securities represented by a Global Security registered in the name of a Depositary or its nominees will be made to the Depositary or its nominee, as the case may be, as the registered owner of the Global Security representing such Debt Securities. Neither the Company, the Trustee for such Debt Securities, any paying agent nor the registrar for such Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the Global Security for such Debt Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that the Depositary for a series of Debt Securities or its nominee, upon receipt of any payment of principal, premium or interest in respect of a Global Security representing any such Debt Securities, immediately will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Security for such Debt Securities as shown on the records of such Depositary or its nominee. The Company also expects that payments by participants to owners of beneficial interests in such Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name." Such payments will be the responsibility of such participants. If the Depositary for a series of Debt Securities is at any time unwilling, unable or ineligible to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will issue individual Debt Securities of such series in exchange for the Global Security representing such series of Debt Securities. In addition, the Company may at any time and in its sole discretion, subject to any limitations described in the Prospectus Supplement relating to such Debt Securities, determine not to have any Debt Securities of a series represented by one or more Global Securities and, in such event, will issue individual Debt Securities of such series in exchange for the Global Security or Securities representing such series of Debt Securities. Further, if the Company so specifies with respect to the Debt Securities of a series, an owner of a beneficial interest in a Global Security representing Debt Securities of such series may, on terms acceptable to the Company and the Depositary for such Global Security, receive individual Debt Securities of such series in exchange for such beneficial interests, subject to any limitations described in the Prospectus Supplement relating to such Debt Securities. In any such instance, an owner of a beneficial interest in a Global Security will be entitled to a physical delivery of individual Debt Securities of the series represented by such Global Security equal in principal amount to such beneficial interest and to have such Debt Securities registered in its name. Individual Debt Securities of such series so issued will be issued in denominations, unless otherwise specified by the Company, of $1,000 and integral multiples thereof. Consolidation, Merger, Sale. Each Indenture provides that the Company may consolidate or merge with or into any other corporation, and may sell, lease, exchange or otherwise dispose of all or substantially all of its property and assets to any other corporation authorized to acquire and operate the same, provided that in any such case (i) immediately after such transaction the Company or such other corporation formed by or surviving any such consolidation or merger, or to which such sale, lease, exchange or other disposition shall have been made, will not be in default in the performance or observance of any of the terms, covenants and conditions in the Indenture to be kept or performed by the Company, (ii) the corporation (if other than the Company) formed by or surviving any such consolidation or merger, or to which such sale, lease exchange or other disposition shall have been made, shall be a corporation organized under the laws of the United States of America, any state 9 11 thereof or the District of Columbia, and (iii) the corporation (if other than the Company) formed by such consolidation, or into which the Company shall have been merged, or the corporation which shall have acquired or leased such property and assets, shall assume, by a supplemental indenture, the Company's obligations under such Indenture. In case of any such consolidation, merger, sale, lease, exchange or other disposition and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Company, with the same effect as if it had been named in such Indenture as the Company and subject to the conditions set forth in the Indenture, and the Company shall be relieved of any further obligation under such Indenture and any Debt Securities issued thereunder. Discharge and Defeasance. The Company may discharge or defease its obligations with respect to each series of Debt Securities as set forth below. The Company may discharge all of its obligations (except those set forth below) to holders of any series of Debt Securities issued under any Indenture, which Debt Securities have not already been delivered to the Trustee for cancellation and which either have become due and payable or are by their terms due and payable within one year (or are to be called for redemption within one year) by depositing with the Trustee cash or U.S. Government Obligations, or a combination thereof, as trust funds in an amount certified to be sufficient to pay when due the principal of and premium, if any, and interest, if any, on all outstanding Debt Securities of such series and to make any mandatory sinking fund payments thereon when due. Unless otherwise provided in the applicable Prospectus Supplement, the Company may also discharge at any time all of its obligations (except those set forth below) to holders of any series of Debt Securities issued under any Indenture (other than convertible Debt Securities) ("defeasance") if, among other things: (i) the Company irrevocably deposits with the Trustee cash or U.S. Government Obligations, or a combination thereof, as trust funds in an amount certified to be sufficient to pay the principal of and premium, if any, and interest, if any, on all outstanding Debt Securities of such series when due and to make any mandatory sinking fund payments thereon when due, and such funds have been so deposited for 91 days; (ii) such deposit will not result in a breach or violation of, or cause a default under, any agreement or instrument to which the Company is a party or by which it is bound; and (iii) the Company delivers to the Trustee an opinion of counsel to the effect that the holders of such series of Debt Securities will not recognize income, gain or loss for United States federal income tax purposes as a result of such defeasance, and that such defeasance will not otherwise alter the United States federal income tax treatment of principal and interest payments on such series of Debt Securities. Such opinion of counsel must be based on a ruling of the Internal Revenue Service or a change in United States federal income tax law occurring after the date of the Indenture relating to the Debt Securities of such series, since such a result would not occur under current tax law. In the event of such discharge and defeasance of a series of Debt Securities, the holders thereof would be entitled to look only to such trust funds for payment of the principal of and any premium and interest on such Debt Securities. Notwithstanding the foregoing, no discharge or defeasance described above shall affect the following obligations to or rights of the holders of any series of Debt Securities: (i) rights of registration of transfer and exchange of Debt Securities of such series; (ii) rights of substitution of mutilated, defaced, destroyed, lost or stolen Debt Securities of such series; (iii) rights of holders of Debt Securities of such series to receive payments of principal thereof and interest, if any, thereon when due and to receive mandatory sinking fund payments, if any, thereon when due from the trust funds held by the Trustee; (iv) the rights, obligations, duties and immunities of the Trustee; (v) the rights of holders of Debt Securities of such series as beneficiaries with respect to property deposited with the Trustee payable to all or any of them; (vi) the obligations of the Company to maintain an office or agency in respect of Debt Securities of such series; and (vii) if applicable, the obligations of the Company with respect to the conversion of Debt Securities of such series into Common Stock. Modification of the Indenture. Each Indenture provides that the Company and the Trustee may enter into supplemental indentures without the consent of the holders of the Debt Securities to (i) evidence the assumption by a successor corporation of the obligations of the Company under such Indenture, (ii) add covenants or new events of default for the protection of the holders of such Debt Securities, (iii) cure any ambiguity or correct any inconsistency in the Indenture, (iv) establish the form and terms of any series of Debt Securities and to 10 12 provide for adjustment of conversion rights, (v) evidence the acceptance of appointment by a successor trustee, (vi) amend the Indenture in any other manner which the Company may deem necessary or desirable and which will not adversely affect the interests of the holders of Debt Securities issued thereunder or (vii) in the case of Senior Debt Securities, secure such Debt Securities. Each Indenture also contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Debt Securities then Outstanding of each series affected by such supplemental Indenture, to add any provisions to, or change in any manner or eliminate any of the provisions of, such Indenture or modify in any manner the rights of the holders of the Debt Securities of such series; provided that the Company and the Trustee may not, without the consent of the holder of each outstanding Debt Security affected thereby, (i) extend the stated maturity of the principal of any Debt Security, reduce the principal amount thereof, reduce the rate or extend the time of payment of any interest thereon, reduce or alter the method of computation of any amount payable on redemption, repayment or purchase thereof, reduce the portion of the principal amount of any Original Issue Discount Security payable upon acceleration or provable in bankruptcy, change the coin or currency in which principal and interest, if any, are payable, impair or affect the right to institute suit for the enforcement of any payment, repayment or purchase thereof or, if applicable, adversely affect the right to convert Debt Securities, any right of repayment at the option of the holder or (solely with respect to the Senior Subordinated Debt Indenture) change, amend or modify the subordination provisions of such Indenture or any of the definitions used in the subordination provisions of such Indenture or consent to the departure from any of the terms of the subordination provisions of such Indenture in each case in any manner that would adversely affect the holders of any of the Senior Subordinated Debt Securities issued thereunder or (ii) reduce the percentage in aggregate principal amount of Debt Securities of any series issued under such Indenture, the consent of the holders of which is required for any such modification. The Senior Subordinated Debt Indenture may not be amended to alter the subordination of any outstanding Senior Subordinated Debt Securities, and the Subordinated Debt Indenture may not be amended to alter the subordination of any outstanding Subordinated Debt Securities, in each case without the consent of each holder of Senior Indebtedness then outstanding that would be adversely affected thereby. Each of the Indentures provides that the term "Original Issue Discount Security" means any Debt Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to the terms of the Indenture. In each of the Indentures, the definition of the term "Outstanding," with reference to Debt Securities, provides that in determining whether the holders of the requisite aggregate principal amount of Outstanding Debt Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver under the applicable Indenture, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the portion of the principal amount thereof that would be due and payable as of the date of such determination (as certified by the Company to the Trustee) upon a declaration of acceleration of the maturity thereof pursuant to the terms of the Indenture. PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES General. Senior Debt Securities will be issued under the Senior Debt Indenture, and each series will rank pari passu as to the right of payment of principal, premium, if any, and interest, if any, with each other series and with all other Senior Indebtedness of the Company. Events of Default. Unless otherwise specified in the Prospectus Supplement, an Event of Default is defined under the Senior Debt Indenture with respect to the Senior Debt Securities of any series issued thereunder as being any one or more of the following events: (i) default in the payment of any installment of interest upon any of the Senior Debt Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or (ii) default in the payment of the principal of any of the Senior Debt Securities of such series as and when the same shall become due and payable either at maturity, upon redemption, by declaration or otherwise; or 11 13 (iii) default in the payment or satisfaction of any sinking fund or other purchase obligation with respect to Senior Debt Securities of such series, as and when such obligation shall become due and payable; or (iv) failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Senior Debt Securities of such series or in the Senior Debt Indenture continued for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Company by the Trustee by registered or certified mail, or to the Company and the Trustee by the holders of at least 25 percent in aggregate principal amount of the Senior Debt Securities of such series then Outstanding; or (v) without the consent of the Company a court having jurisdiction shall enter an order for relief with respect to the Company under the Bankruptcy Code or without the consent of the Company a court having jurisdiction shall enter a judgment, order or decree adjudging the Company a bankrupt or insolvent, or enter an order for relief for reorganization, arrangement, adjustment or composition of or in respect of the Company under the Bankruptcy Code or applicable state insolvency law and the continuance of any such judgment, order or decree is unstayed and in effect for a period of 60 consecutive days; or (vi) the Company shall institute proceedings for entry of an order for relief with respect to the Company under the Bankruptcy Code or for an adjudication of insolvency, or shall consent to the institution of bankruptcy or insolvency proceedings against it, or shall file a petition seeking, or seek or consent to, reorganization, arrangement, composition or relief under the Bankruptcy Code or any applicable state law, or shall consent to the filing of such petition or to the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator or similar official of the Company or of substantially all of its property, or the Company shall make a general assignment for the benefit of creditors as recognized under the Bankruptcy Code; or (vii) default under any bond, debenture, note or other evidence of Indebtedness for money borrowed by the Company or any Subsidiary or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any Subsidiary (other than Non-Recourse Indebtedness), whether such Indebtedness exists on the date of the Senior Debt Indenture or shall thereafter be created, which default shall have resulted in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, or any default in payment of such Indebtedness (after the expiration of any applicable grace periods and the presentation of any debt instruments, if required), if the aggregate amount of all such Indebtedness which has been so accelerated and with respect to which there has been such a default in payment shall exceed $5,000,000, without each such default and acceleration having been rescinded or annulled within a period of 30 days after there shall have been given to the Company by the Trustee by registered mail, or to the Company and the Trustee by the holders of at least 25 percent in aggregate principal amount of the Senior Debt Securities of such series then Outstanding, a written notice specifying each such default and requiring the Company to cause each such default and acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" under the Senior Debt Indenture; or (viii) any other Event of Default provided with respect to the Senior Debt Securities of such series. If an Event of Default with respect to Senior Debt Securities of any series then Outstanding occurs and is continuing, then and in each and every such case, unless the principal of all of the Senior Debt Securities of such series shall have already become due and payable, either the Trustee or the holders of not less than 25 percent in aggregate principal amount of the Senior Debt Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the unpaid principal amount (or, if the Senior Debt Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all the Senior Debt Securities of such series and the interest, if any, accrued thereon to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in the Senior Debt Indenture or in the Senior Debt Securities of such series contained to the contrary notwithstanding. This provision, however, is subject to the condition that, if at any time after the unpaid principal amount (or such specified amount) of the Senior Debt Securities of such series shall have been so declared due and payable and before any judgment or 12 14 decree for the payment of the moneys due shall have been obtained or entered, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest, if any, upon all of the Senior Debt Securities of such series and the principal of any and all Senior Debt Securities of such series which shall have become due otherwise than by acceleration (with interest on overdue installments of interest, if any, to the extent that payment of such interest is enforceable under applicable law and on such principal at the rate borne by the Senior Debt Securities of such series to the date of such payment or deposit) and the reasonable compensation, disbursements, expenses and advances of the Trustee, and any and all defaults under the Senior Debt Indenture, other than the nonpayment of such portion of the principal amount of and accrued interest, if any, on Senior Debt Securities of such series which shall have become due by acceleration, shall have been cured or shall have been waived in accordance with the Senior Debt Indenture or provision deemed by the Trustee to be adequate shall have been made therefor -- then and in every such case the holders of a majority in aggregate principal amount of the Senior Debt Securities of such series then Outstanding, by written notice to the Company and to the Trustee, may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. If any Event of Default with respect to the Company specified in clause (v) or (vi) above occurs, the unpaid principal amount (or, if the Senior Debt Securities of any series then Outstanding are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of each such series) and accrued interest on all Senior Debt Securities of each series then Outstanding shall ipso facto become and be immediately due and payable without any declaration or other act by the Trustee or any Securityholder. If the Trustee shall have proceeded to enforce any right under the Senior Debt Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Trustee and the Securityholders shall be restored respectively to their several positions and rights under the Senior Debt Indenture, and all rights, remedies and powers of the Company, the Trustee and the Securityholders shall continue as though no such proceeding had been taken. Except with respect to an Event of Default pursuant to clause (i), (ii) or (iii) above, the Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to the Trustee by the Company, a Paying Agent or any Securityholder. The Senior Debt Indenture provides that, subject to the duty of the Trustee during default to act with the required standard of care, the Trustee will be under no obligation to exercise any of its rights or powers under the Senior Debt Indenture at the request or direction of any of the holders of Senior Debt Securities issued under the Senior Debt Indenture, unless such holders shall have offered to the Trustee reasonable security or indemnity. No holder of any Senior Debt Securities of any series then Outstanding shall have any right by virtue of or by availing of any provision of the Senior Debt Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to the Senior Debt Indenture or the Senior Debt Securities or for the appointment of a receiver or trustee or similar official, or for any other remedy under the Senior Debt Indenture or under the Senior Debt Securities, unless such holder previously shall have given to the Trustee written notice of default and of the continuance thereof, and unless the holders of not less than 25 percent in aggregate principal amount of the Senior Debt Securities of such series then Outstanding shall have made written request to the Trustee to institute such action, suit or proceeding in its own name as Trustee and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding. Notwithstanding any other provisions in the Senior Debt Indenture, however, the right of any holder of any Senior Debt Security to receive payment of the principal of and interest, if any, on such Senior Debt Security, on or after the respective due dates expressed in such Senior Debt Security, or to institute 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. The holders of at least a majority in aggregate principal amount of the Senior Debt Securities of any series then Outstanding shall 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 with respect to Senior Debt Securities of such series; provided, however, that (subject to certain exceptions) the Trustee shall have the 13 15 right to decline to follow any such direction if the Trustee shall determine upon advice of counsel that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith shall determine that the action or proceeding so directed would involve the Trustee in personal liability. The holders of 66 2/3% in aggregate principal amount of the Senior Debt Securities of any series then Outstanding may on behalf of the holders of all of the Senior Debt Securities of such series waive any past default or Event of Default and its consequences except a default in the payment of interest, if any, on, or the principal of, the Senior Debt Securities of such series. Upon any such waiver the Company, the Trustee and the holders of the Senior Debt Securities of such series shall be restored to their former positions and rights under the Senior Debt Indenture, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Whenever any default or Event of Default shall have been waived as permitted, said default or Event of Default shall for all purposes of the Senior Debt Securities and the Senior Debt Indenture be deemed to have been cured and to be not continuing. The Trustee shall, within 90 days after the occurrence of a default, with respect to Senior Debt Securities of any series then Outstanding, mail to all holders of Senior Debt Securities of such series, as the names and the addresses of such holders appear upon the Senior Debt Securities register, notice of all defaults known to the Trustee with respect to such series, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purpose of these provisions being hereby defined to be the events specified in clauses (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) of "-- Provisions Applicable Solely to Senior Debt Securities -- Events of Default" above, not including periods of grace, if any, provided for therein and irrespective of the giving of the written notice specified in said clause (iv) or (vii) but in the case of any default of the character specified in said clause (iv) or (vii) no such notice to Securityholders shall be given until at least 60 days after the giving of written notice thereof to the Company pursuant to said clause (iv) or (vii), as the case may be); provided, however, that, except in the case of default in the payment of the principal of or interest, if any, on any of the Senior Debt Securities, or in the payment or satisfaction of any sinking fund or other purchase obligation, the Trustee shall be protected in withholding such notice if and so long as the Trustee in good faith determines that the withholding of such notice is in the best interests of the Securityholders. The Company is required to furnish to the Trustee annually a statement as to the fulfillment by the Company of all of its obligations under the Senior Debt Indenture. Limitation on Liens. The Company may not, nor may any Subsidiary, mortgage, pledge, encumber or subject to any lien or security interest to secure any obligation of the Company or any obligation of any Subsidiary (other than obligations owing to the Company or a wholly-owned Subsidiary) any assets, whether owned as of the date the Senior Debt Indenture was executed or thereafter acquired, without effectively providing that the Senior Debt Securities shall be secured equally and ratably with (or prior to) such obligation, unless, after given effect thereto, the aggregate amount of all such secured debt of the Company and its Subsidiaries (excluding secured Indebtedness existing as of the date the Senior Debt Indenture was executed and any extensions, renewals or refundings thereof that do not increase the principal amount of Indebtedness so extended, renewed or refunded and excluding secured Indebtedness incurred pursuant to clauses (a), (b), (c) and (d) set forth below) would not exceed 10% of Consolidated Net Worth of the Company and its Subsidiaries; provided, however, that this restriction will not prevent the Company or any Subsidiary: (a) from acquiring and retaining property subject to mortgages, pledges, encumbrances, liens or security interests existing thereon at the date of acquisition thereof, or from creating within one year of such acquisition mortgages, pledges, encumbrances or liens upon property acquired by it after the date of the Senior Debt Indenture, as security for purchase money obligations incurred by it in connection with the acquisition of such property, whether payable to the person from whom such property is acquired or otherwise; (b) from mortgaging, pledging, encumbering or subjecting to any lien or security interest Current Assets to secure Current Liabilities; (c) from extending, renewing or refunding any Indebtedness secured by a mortgage, pledge, encumbrance, lien or security interest on the same property theretofore subject thereto, provided that the principal amount of such Indebtedness so extended, renewed or refunded shall not be increased; or (d) from securing the payment of workmen's compensation or insurance premiums or from making good faith pledges or deposits in connection with bids, tenders, contracts (other than contracts for the payment of money) or leases, deposits to secure public or statutory obligations, deposits to secure surety or 14 16 appeal bonds, pledges or deposits in connection with contracts made with or at the request of the United States Government or any agency thereof, or pledges or deposits for similar purposes in the ordinary course of business. "Consolidated Net Worth" means, at any date, the sum of (i) the par value (or value stated on the books of the Company) of the capital stock of all classes of the Company (including preferred stock), plus (or minus in the case of a deficit) (ii) the amount of the consolidated surplus, whether capital or earned, of the Company and its Subsidiaries, determined in accordance with generally accepted accounting principles. "Current Assets" of any Person includes all assets of such Person which would be classified as current assets in accordance with generally accepted accounting principles. "Current Liabilities" of any Person includes all liabilities of such Person which would be classified as current liabilities in accordance with generally accepted accounting principles. Limitation on Sale and Leaseback Transactions. Neither the Company nor any Subsidiary will enter into any transaction with any bank, insurance company or other lender or investor, or to which any such lender or investor is a party, providing for the leasing to the Company or a Subsidiary of any real property (except a lease for a temporary period not to exceed three years by the end of which it is intended that the use of such real property by the lessee will be discontinued) which has been or is to be sold or transferred by the Company or such Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such real property unless either: (1) such transaction is the substantial equivalent of a mortgage, pledge, encumbrance, lien or security interest which the Company or any Subsidiary would have been permitted to create under the "Limitation on Liens" covenant without equally and ratably securing the Senior Debt Securities, or (2) the Company within 120 days after such transaction applied (and in any such case the Company covenants that it will so apply) an amount equal to the greater of (i) the net proceeds of the sale of the real property leased pursuant to such transaction or (ii) the fair value of the real property so leased at the time of entering into such transaction (as determined by the Board of Directors), to the retirement of Funded Debt of the Company; provided that the amount to be applied to the retirement of Funded Debt of the Company shall be reduced by: (a) the principal amount of any Senior Debt Securities (for this purpose if the Senior Debt Securities of that series are Original Issue Discount Securities, the principal amount of the Outstanding Senior Debt Securities of that series shall be computed and adjusted as may be specified in the terms of that series) delivered within 120 days after such sale to the Trustee for retirement and cancellation and (b) the principal amount of Funded Debt, other than Senior Debt Securities, voluntarily retired by the Company within 120 days after such sale; provided that no retirement referred to in this clause (2) may be effected by payment at maturity or pursuant to any mandatory sinking fund payment or any mandatory prepayment provision. "Funded Debt" means Indebtedness for money borrowed which by its terms matures at or is extendible or renewable at the option of the obligor to a date more than 12 months after the date of the creation of such Indebtedness. PROVISION APPLICABLE SOLELY TO SENIOR SUBORDINATED DEBT SECURITIES Prohibition on Incurrence of Senior Subordinated Debt. The Company will not incur or suffer to exist Indebtedness that is or purports to be, pursuant to its terms or the terms of any agreement relating thereto, senior in right of payment to the Senior Subordinated Debt Securities and subordinate or junior in right of payment to any other Indebtedness of the Company, provided that no Indebtedness of the Company shall be deemed to be subordinate to any other Indebtedness of the Company solely by virtue of any such other Indebtedness being secured or otherwise having the benefit of any lien or security interest. 15 17 PROVISIONS APPLICABLE SOLELY TO SENIOR SUBORDINATED AND SUBORDINATED DEBT SECURITIES Events of Default. Unless otherwise specified in the Prospectus Supplement, an Event of Default is defined under each of the Subordinated Indentures with respect to the Subordinated Securities of any series issued under such Indenture as being as one or more of the following events: (i) default in the payment of any installment of interest upon any of the Subordinated Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or (ii) default in the payment of the principal of any of the Subordinated Securities of such series as and when the same shall become due and payable either at maturity, upon redemption, by declaration or otherwise; or (iii) default in the payment or satisfaction of any sinking fund or other purchase obligation with respect to Subordinated Securities of such series, as and when such obligation shall become due and payable; or (iv) failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Subordinated Securities of such series or in the Subordinated Indenture applicable to such series continued for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Company by the Trustee by registered mail, or to the Company and the Trustee by the holders of at least 25 percent in aggregate principal amount of the Subordinated Securities of such series issued under the applicable Subordinated Indenture then Outstanding; or (v) without the consent of the Company a court having jurisdiction shall enter an order for relief with respect to the Company under the Bankruptcy Code or without the consent of the Company a court having jurisdiction shall enter a judgment, order or decree adjudging the Company a bankrupt or insolvent, or enter an order for relief for reorganization, arrangement, adjustment or composition of or in respect of the Company under the Bankruptcy Code or applicable state insolvency law and the continuance or any such judgment, order or decree is unstayed and in effect for a period of 60 consecutive days; or (vi) the Company shall institute proceedings for entry of an order for relief with respect to the Company under the Bankruptcy Code or for an adjudication of insolvency, or shall consent to the institution of bankruptcy or insolvency proceedings against it, or shall file a petition seeking, or seek or consent to reorganization, arrangement composition or relief under the Bankruptcy Code or any applicable state law, or shall consent to filing of such petition or to the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator or similar official of the Company or of substantially all of its property, or the Company shall make a general assignment for the benefit of creditors as recognized under the Bankruptcy Code; or (vii) default under any bond, debenture, note or other evidence of Indebtedness for money borrowed by the Company or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company, whether such Indebtedness exists on the date of such Subordinated Indenture or shall thereafter be created, which default shall have resulted in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, or any default in payment of such Indebtedness (after the expiration of any applicable grace periods and the presentation of any debt instrument, if required), if the aggregate amount of all such Indebtedness which has been so accelerated and with respect to which there has been such a default in payment shall exceed $5,000,000, without each such default and acceleration having been rescinded or annulled within a period of 30 days after there shall have been given to the Company by the Trustee by registered mail, or to the Company and the Trustee by the holders of at least 25 percent in aggregate principal amount of the Subordinated Securities of such series then Outstanding, a written notice specifying each such default and requiring the Company to cause each such default and acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" under the applicable Subordinated Indenture; or (viii) any other Event of Default provided with respect to the Subordinated Securities of such series under the applicable Subordinated Indenture. If an Event of Default with respect to Subordinated Securities of any series then Outstanding occurs and is continuing, then and in each and every such case, unless the principal of all of the Subordinated Securities of 16 18 such series shall have already become due and payable, either the Trustee or the holders of not less than 25 percent in aggregate principal amount of the Subordinated Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the unpaid principal amount (or, if the Subordinated Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all the Subordinated Securities of such series and the interest, if any, accrued thereon to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in the applicable Subordinated Indenture or in the Subordinated Securities of such series contained to the contrary notwithstanding. This provision, however, is subject to the condition that, if at any time after the unpaid principal amount (or such specified amount) of the Subordinated Securities of such series shall have been so declared due and payable and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest, if any, upon all of the Subordinated Securities of such series and the principal of any and all Subordinated Securities of such series which shall have become due otherwise than by acceleration (with interest on overdue installments of interest, if any, to the extent that payment of such interest is enforceable under applicable law and on such principal at the rate borne by the Subordinated Securities of such series to the date of such payment or deposit) and the reasonable compensation, disbursements, expenses and advances of the Trustee, its agents, attorneys and counsel, and any and all defaults under the applicable Subordinated Indenture, other than the nonpayment of such portion of the principal amount of and accrued interest, if any, on Subordinated Securities of such series which shall have become due by acceleration, shall have been cured or shall have been waived in accordance with the applicable Subordinated Indenture or provision deemed by the Trustee to be adequate shall have been made therefor -- then and in every such case the holders of a majority in aggregate principal amount of the Subordinated Securities of such series then Outstanding, by written notice to the Company and to the Trustee, may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. If any Event of Default with respect to the Company specified in clause (v) or (vi) above occurs, the unpaid principal amount (or, if the Subordinated Securities of any series then Outstanding are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of each such series) and accrued interest on all Subordinated Securities of each series then Outstanding shall ipso facto become and be immediately due and payable without any declaration or other act by the Trustee or any Securityholder. If the Trustee shall have proceeded to enforce any right under the applicable Subordinated Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Trustee and the Securityholders shall be restored respectively to their several positions and rights under the applicable Subordinated Indenture, and all rights, remedies and powers of the Company, the Trustee and the Securityholders shall continue as though no such proceeding had been taken. Except with respect to an Event of Default pursuant to clause (i), (ii) or (iii) above, the Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to the Trustee by the Company, a Paying Agent or any Securityholder. Each of the Subordinated Indentures provides that, subject to the duty of the Trustee during default to act with the required standard of care, the Trustee will be under no obligation to exercise any of its rights or powers under such Subordinated Indenture at the request or direction of any of the holders or Subordinated Securities issued under the such Subordinated Indenture, unless such holders shall have offered to the Trustee reasonable security or indemnity. No holder of any Subordinated Securities of any series then Outstanding shall have any right by virtue of or by availing of any provision of the applicable Subordinated Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to such Subordinated Indenture or the Subordinated Securities issued under such Subordinated Indenture or for the appointment of a receiver or trustee or similar official, or for any other remedy under such Subordinated Indenture or thereunder, unless such holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as provided in such Subordinated Indenture, and unless the holders of not less than 25 percent in aggregate principal amount of the Subordinated Securities of such series then Outstanding shall have made written request to the Trustee to institute such 17 19 action, suit or proceeding in its own name as Trustee under such Subordinated Indenture and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding. Notwithstanding any other provisions in the applicable Subordinated Indenture, but subject to the subordination provisions of the applicable Subordinated Indenture, the right of any holder of any Subordinated Security to receive payment of the principal of and interest, if any, on such Subordinated Security, on or after the respective due dates expressed in such Subordinated Security, or, if applicable, to convert such Subordinated Security as provided in the applicable Subordinated Indenture, or to institute suit for the enforcement of any such payment on or after such respective dates or for the enforcement of any such right to convert shall not be impaired or affected without the consent of such holder. The holders of a majority in aggregate principal amount of the Subordinated Securities of any series then Outstanding shall 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 with respect to Subordinated Securities of such series; provided, however, that (subject to certain exceptions) the Trustee shall have the right to decline to follow any such direction if the Trustee shall determine upon advice of counsel that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith shall determine that the action or proceeding so directed would involve the Trustee in personal liability. The holders of a majority in aggregate principal amount of the Subordinated Securities of any series then Outstanding may on behalf of the holders of all of the Subordinated Securities of such series waive any past default or Event of Default under the applicable Subordinated Indenture and its consequences except a default in the payment of interest, if any, on, or the principal of, the Subordinated Securities of such series. Upon any such waiver the Company, the Trustee and the holders of the Subordinated Securities of such series shall be restored to their former positions and rights under the applicable Subordinated Indenture, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Whenever any default or Event of Default shall have been waived as permitted, said default or Event of Default shall for all purposes of the applicable Subordinated Securities and the applicable Subordinated Indenture be deemed to have been cured and to be not continuing. The Trustee shall, within 90 days after the occurrence of a default, with respect to Subordinated Securities of any series then Outstanding, mail to all holders of Subordinated Securities of such series, as the names and the addresses of such holders appear upon the applicable Subordinated Security register, notice of all defaults known to the Trustee with respect to such series, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purpose of these provisions being hereby defined to be the events specified in clauses (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) of " -- Provisions Applicable Solely to Senior Subordinated and Subordinated Debt Securities -- Events of Default" above, not including periods of grace, if any, provided for therein and irrespective of the giving of the written notice specified in said clause (iv) or (vii) but in the case of any default of the character specified in said clause (iv) or (vii) no such notice to Securityholders shall be given until at least 60 days after the giving of written notice thereof to the Company pursuant to said clause (iv) or (vii), as the case may be); provided, however, that, except in the case of default in the payment of the principal of or interest, if any, on any of the Subordinated Securities, or in the payment or satisfaction of any sinking fund or other purchase obligation, the Trustee shall be protected in withholding such notice if and so long as the Trustee in good faith determines that the withholding of such notice is in the best interests of the Securityholders. The Company is required to furnish to the Trustee annually a statement as to the fulfillment by the Company of all of its obligations under the applicable Subordinated Indenture. Subordination. The Subordinated Securities will be subordinate and junior in right to payment, to the extent set forth in the applicable Subordinated Indenture, to all Senior Indebtedness (as defined below for each of the Subordinated Indentures) of the Company. If the Company should default in the payment of any principal of or premium or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Indebtedness or any trustee therefor and subject to 18 20 certain rights of the Company to dispute such default and subject to proper notification of the Trustee, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) will be made or agreed to be made for principal of or premium, if any, or interest, if any, on the applicable Subordinated Securities, or in respect of any redemption, retirement, purchase or other acquisition of the applicable Subordinated Securities other than those made in capital stock of the Company (or cash in lieu of fractional shares thereof) pursuant to any conversion right of the Subordinated Securities or otherwise made in capital stock of the Company. "Senior Indebtedness" is defined in the Senior Subordinated Debt Indenture as Indebtedness of the Company outstanding at any time except (a) any Indebtedness of the Company that pursuant to its terms or the terms of any agreement relating thereto or by operation of law is subordinate or junior in right of payment to any other Indebtedness of the Company, provided that no Indebtedness of the Company shall be deemed to be subordinate to any other Indebtedness of the Company solely by virtue of any such other Indebtedness being secured or otherwise having the benefit of any lien or security interest, (b) any Indebtedness as to which, by the terms of the instrument creating or evidencing the same, it is provided that such Indebtedness is not senior in right of payment to the Senior Subordinated Debt Securities, (c) the Senior Subordinated Debt Securities, (d) the Company's subordinated indebtedness existing on the date of the Senior Subordinated Debt Indenture, (e) any Indebtedness of the Company to a wholly-owned Subsidiary of the Company, (f) interest accruing after the filing of a petition initiating certain bankruptcy or insolvency proceedings unless such interest is an allowed claim enforceable against the Company in a proceeding under federal or state bankruptcy laws and (g) trade accounts payable. "Senior Indebtedness" is defined in the Subordinated Debt Indenture as Indebtedness of the Company outstanding at any time except (a) any Indebtedness as to which, by the terms of the instrument creating or evidencing the same, it is provided that such Indebtedness is not senior in right of payment to the Subordinated Debt Securities, (b) the Subordinated Debt Securities, (c) the Company's subordinated indebtedness existing on the date of the Subordinated Debt Indenture, (d) any Indebtedness of the Company to a wholly owned Subsidiary of the Company, (e) interest accruing after the filing of a petition initiating certain bankruptcy or insolvency proceedings unless such interest is an allowed claim enforceable against the Company in a proceeding under federal or state bankruptcy laws and (f) trade accounts payable. "Indebtedness" is defined in each Subordinated Indenture as, with respect to any Person, (a)(i) the principal of and premium and interest, if any, on indebtedness for money borrowed of such Person evidenced by bonds, notes, debentures or similar obligations, including any guaranty by such person of any indebtedness for money borrowed of any other Person, whether any such indebtedness or guaranty is outstanding on the date of such Subordinated Indenture or is thereafter created, assumed or incurred, (ii) the principal of and premium and interest, if any, on indebtedness for money borrowed, incurred, assumed or guaranteed by such Person in connection with the acquisition by it or any of its subsidiaries of any other businesses, properties or other assets and (iii) lease obligations which such Person capitalizes in accordance with Statement of Financial Accounting Standards No. 13 promulgated by the Financial Accounting Standards Board or such other generally accepted accounting principles as may be from time to time in effect, (b) any other indebtedness of such Person, including any indebtedness representing the deferred and unpaid balance of the purchase price of any property or interest therein, including any such balance that constitutes a trade account payable, and any guaranty, endorsement or other contingent obligation of such Person in respect of any indebtedness of another, which is outstanding on the date of such Subordinated Indenture or is thereafter created, assumed or incurred by such Person and (c) any amendments, modifications, refundings, renewals or extensions of any indebtedness or obligation described as Indebtedness in clause (a) or (b) above. If (i) without the consent of the Company a court having jurisdiction shall enter (A) an order for relief with respect to the Company under the United States federal bankruptcy laws, (B) a judgment, order or decree adjudging the Company as bankrupt or insolvent or (C) an order for relief for reorganization, arrangement, adjustment or composition of or in respect of the Company under the United States federal bankruptcy laws or state insolvency laws or (ii) the Company shall institute proceedings for the entry of an order for relief with respect to the Company under the United States federal bankruptcy laws or for an adjudication of insolvency, or shall consent to the institution of bankruptcy or insolvency proceedings against it, or shall file a petition 19 21 seeking, or seek or consent to reorganization, arrangement, composition or similar relief under the United States federal bankruptcy laws or any applicable state law, or shall consent to the filing of such petition or to the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator or similar official in respect of the Company or of substantially all of its property, or the Company shall make a general assignment for the benefit of creditors, then all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) will first be paid in full before any payment or distribution, whether in cash, securities or other property, is made on account of the principal of or premium, if any, or interest, if any, on the applicable Subordinated Securities. In such event, any payment or distribution on account of the principal of or premium, if any, or interest, if any, on the applicable Subordinated Securities, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in the subordination provisions with respect to the applicable Subordinated Securities, to the payment of all Senior Indebtedness then outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for the subordination provisions) be payable or deliverable in respect of the applicable Subordinated Securities will be paid or delivered directly to the holders of Senior Indebtedness in accordance with the priorities then existing among such holders until all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) has been paid in full. In the event of any such proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the holders of Subordinated Securities, together with the holders of any obligations of the Company ranking on a parity with the Subordinated Securities issued under the applicable Subordinated Indenture, will be entitled to be repaid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of or any premium or any interest on the Subordinated Securities issued under the applicable Subordinated Indenture and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or obligations of the Company ranking junior to the Subordinated Securities issued under the applicable Subordinated Indenture and such other obligations. If, notwithstanding the foregoing, any payment or distribution on the Subordinated Securities issued under the applicable Subordinated Indenture of any character, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in the subordination provisions with respect to the Subordinated Securities issued under the applicable Subordinated Indenture, to the payment of all Senior Indebtedness then outstanding and to any securities issued in respect thereof under any such plan or reorganization or readjustment), shall be received by the Trustee or any holder of any Subordinated Securities issued under the applicable Subordinated Indenture in contravention of any of the terms of the applicable Subordinated Indenture, such payment or distribution will be received in trust for the benefit of, and will be paid over or delivered and transferred to, the holders of the Senior Indebtedness then outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all such Senior Indebtedness in full. In the event of the failure of the Trustee or any holder to endorse or assign any such payment, distribution or security, each holder of Senior Indebtedness is irrevocably authorized to endorse or assign the same. Each of the Subordinated Indentures will provide that Senior Indebtedness shall not be deemed to have been paid in full unless the holders thereof shall have received cash, securities or other property equal to the amount of such Senior Indebtedness then outstanding. Upon the payment in full of all Senior Indebtedness, the holders of Subordinated Securities of each series shall be subrogated to all rights of any holders of Senior Indebtedness to receive any further payments or distributions applicable to such Senior Indebtedness until the indebtedness evidenced by the Subordinated Securities of such series shall have been paid in full, and such payments or distributions received by such holders, by reason of such subrogation, of cash, securities or other property which otherwise would be paid or distributed to the holders of Senior Indebtedness with respect to such Series, shall, as between the Company and its creditors other than the holders of such Senior Indebtedness, on the one hand, and such holders, on the other hand, be deemed to be a payment by the Company on account of such Senior Indebtedness, and not on account of the Subordinated Securities of such series. 20 22 By reason of such subordination, in the event of the insolvency of the Company, holders of Senior Indebtedness and holders of other obligations of the Company that are not subordinated to Senior Indebtedness may receive more, ratably, than holders of the Subordinated Securities. Such subordination will not prevent the occurrence of an Event of Default or limit the right of acceleration in respect of the Subordinated Securities. Conversion. Each of the Subordinated Indentures will provide that a series of Subordinated Securities may be convertible into Common Stock (or cash in lieu thereof). The following provisions will apply to Debt Securities that are convertible Subordinated Securities unless otherwise provided in the Prospectus Supplement for such Debt Securities. The holder of any convertible Subordinated Securities will have the right exercisable at any time prior to maturity, subject to prior redemption by the Company, to convert such Subordinated Securities into shares of Common Stock at the conversion price or conversion rate set forth in the Prospectus Supplement, subject to adjustment. The holder of convertible Subordinated Securities may convert any portion thereof which is $1,000 in principal amount or any integral multiple thereof. In certain events, the conversion price or conversion rate will be subject to adjustment as set forth in the applicable Subordinated Indenture. Such events include issuance of shares of Common Stock as a dividend or distribution on the Common Stock; subdivisions, combinations and reclassifications of the Common Stock; redemption of the preferred share purchase rights associated with the Common Stock; the issuance to all holders of Common Stock of rights or warrants entitling the holders thereof (for a period not exceeding 45 days) to subscribe for or purchase shares of Common Stock at a price per share less than the then current market price per share of Common Stock (as determined pursuant to the applicable Subordinated Indenture); and the distribution to substantially all holders of Common Stock of evidences of indebtedness, equity securities (including equity interests in the Company's Subsidiaries) other than Common Stock, or other assets (excluding cash dividends paid from surplus) or subscription rights or warrants (other than those referred to above). No adjustment of the conversion price or conversion rate will be required unless an adjustment would require a cumulative increase or decrease of at least 1% in such price or rate. The Company has been advised by its counsel that certain adjustments in the conversion price or conversion rate in accordance with the foregoing provisions may result in constructive distributions to either holders of the Subordinated Securities issued under the applicable Subordinated Indenture or holders of Common Stock which would be taxable pursuant to Treasury Regulations issued under Section 305 of the Internal Revenue Code of 1986. The amount of any such taxable constructive distribution will be the fair market value of the Common Stock that is treated as having been constructively received, such value being determined as of the time the adjustment resulting in the constructive distribution is made. Fractional shares of Common Stock will not be issued upon conversion, but, in lieu thereof, the Company will pay a cash adjustment based on the then current market price for the Common Stock. Upon conversion, no adjustments will be made for accrued interest or dividends, and therefore convertible Subordinated Securities surrendered for conversion between the record date for an interest payment and the interest payment date (except convertible Subordinated Securities called for redemption on a redemption date during such period) must be accompanied by payment of an amount equal to the interest thereon which the registered holder is to receive. In the case of any consolidation or merger of the Company (with certain exceptions) or any sale, lease, exchange or other disposition of all or substantially all the property and assets of the Company, the holder of convertible Subordinated Securities, after the consolidation, merger, sale, lease, exchange or other disposition, will have the right to convert such convertible Subordinated Securities into the kind and amount of securities, cash and other property which the holder would have been entitled to receive upon or in connection with such consolidation, merger, sale, lease, exchange or other disposition, if the holder had held the Common Stock issuable upon conversion of such convertible Subordinated Securities issued under the applicable Subordinated Indenture immediately prior to such consolidation, merger, sale, lease, exchange or other disposition. 21 23 CONCERNING THE TRUSTEES Each of the Trustees is a depositary for funds of, makes loans to and performs other services for the Company in the normal course of business. In addition to serving as Trustee under the Senior Subordinated Indenture and the Subordinated Indenture, Texas Commerce Bank also serves as Trustee under (i) the Debenture Indenture (the "Debenture Indenture") dated as of June 15, 1992, between the Company and Texas Commerce Bank, as trustee, and (ii) the Guarantees of Notes of Subsidiaries Indenture (the "Guarantees Indenture") dated as of May 1, 1970, between the Company and Texas Commerce Bank, as trustee. Debt of the Company issued pursuant to the Debenture Indenture and the Guarantees Indenture constitutes Senior Indebtedness. As of June 30, 1994, the Company had outstanding approximately $26 million principal amount of Senior Indebtedness issued pursuant to the Debenture Indenture and approximately $34 million principal amount of guarantees issued pursuant to the Guarantees Indenture. Pursuant to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), a trustee under an indenture may be deemed to have a conflicting interest, and may, under certain circumstances set forth in the Trust Indenture Act, be required to resign as trustee under such indenture, if the securities issued under such indenture are in default (as such term is defined in such indenture) and the trustee is the trustee under another indenture under which any other securities of the same obligor are outstanding, subject to certain exceptions set forth in the Trust Indenture Act. In such event, the obligor must take prompt steps to have a successor trustee appointed in the manner provided in the indenture from which the trustee has resigned. Pursuant to the Trust Indenture Act, Texas Commerce Bank, as trustee under the Senior Subordinated Indenture, the Subordinated Indenture, the Debenture Indenture and the Guarantees Indenture, could be required to resign as trustee under one or more of such indentures should a default occur under one or more of such indentures. In such event, the Company would be required to take prompt steps to have a successor trustee or successor trustees appointed in the manner provided in the applicable indenture or indentures. DESCRIPTION OF PREFERRED STOCK Under SCI's Restated Articles of Incorporation, as amended (the "Articles"), SCI has the authority to issue 1,000,000 shares of preferred stock, $1.00 par value per share (the "Preferred Stock"). The Preferred Stock may be divided into such amounts and issued from time to time in one or more series as may be fixed and determined by the Board of Directors. The relative rights and preferences among each series of Preferred Stock shall be such as are provided in any resolutions adopted by the Board of Directors providing for the issue of such series of Preferred Stock (each such resolution, a "Directors' Resolution"). The Board of Directors is authorized to fix and determine such variations and the relative rights and preferences as between series as shall be stated in a Directors' Resolution. The preemptive rights of shareholders of Preferred Stock to acquire authorized but unissued shares, or to acquire treasury shares, is expressly denied. There are no shares of any series of SCI Preferred Stock currently outstanding. However, in connection with the adoption of the Company's shareholders' rights plans the Company has designated and reserved for issuance upon exercise of rights granted to its shareholders 600,000 shares of Series C Junior Participating Preferred Stock. The Preferred Stock may be issued or sold to such persons and for such consideration as may be determined from time to time by the Board of Directors and, whether or not convertible into Common Stock, need not first be offered to the holders of Common Stock, and when issued such shares of Preferred Stock shall be considered fully paid and non-assessable. The following summaries of certain provisions of the Preferred Stock do not purport to be complete and are subject, and are qualified in their entirety by reference, with respect to any particular series of Preferred Stock, to the description of the terms thereof included in the applicable Prospectus Supplement and to the applicable 22 24 provisions of the Articles and the Company's Bylaws (the "Bylaws"). The accompanying Prospectus Supplement with respect to any series of Preferred Stock will set forth the following terms: (a) The designation of such series; (b) The number of shares constituting such series; (c) The rate of dividends; (d) The price at and the terms and conditions on which shares of such series may be redeemed; (e) The amount payable upon shares of such series in the event of involuntary liquidation; (f) The amount payable upon shares of each series in the event of voluntary liquidation; (g) Sinking fund provisions for the redemption or purchase of such series; (h) The terms and conditions on which shares of such series may be converted; and (i) Any special rights of the shares of such series (and the accompanying Prospectus Supplement may state that any of the terms set forth herein is inapplicable to such series). DIVIDENDS The Preferred Stock of each series will be entitled to receive dividends, when and as declared by the Board of Directors, at the rate and on such other terms and conditions as may be fixed for such series, in preference to dividends on the Common Stock or on other shares of capital stock of the Company ranking junior to the Preferred Stock as to dividends ("Junior Stock"). DIVIDEND PREFERENCE Subject to such further conditions or restrictions as may be imposed in any Directors' Resolution, so long as any shares of Preferred Stock are outstanding, the Company will not declare or pay any dividend, in cash or stock or otherwise (other than dividends payable in shares of Junior Stock), on any shares of Junior Stock or make any distribution upon or purchase or redeem or otherwise acquire for a valuable consideration any shares of Junior Stock (a) unless all dividends for Preferred Stock for all past dividend periods will have been paid or declared and a sum sufficient for the payment thereof set apart for payment and be in the process of payment, and the full dividend thereon for the current dividend period will have been paid or declared, and (b) unless, as to each series of the Preferred Stock for which a sinking fund will have been provided, the Company will have retired the number of shares of Preferred Stock of such series required to have been retired for the sinking fund or otherwise will have met the obligations of said sinking fund. REDEMPTION Subject to such further conditions or restrictions as may be imposed in any Directors' Resolution, the shares of any series of Preferred Stock will be subject to redemption in whole or in part at the applicable redemption price as provided for such series on the terms and conditions and upon notice as set forth in the applicable Prospectus Supplement. Notice of any such redemption will be given to each holder of shares being called, either personally or by mail, not less than 20 nor more than 50 days before the date fixed for redemption. If mailed, such notice will be deemed to be delivered when deposited in the United States mail addressed to the shareholder at the address as it appears on the stock transfer book of the Company, with postage thereon prepaid. If less than all outstanding shares of the series are to be redeemed, the shares to be redeemed will be selected for redemption ratably or by lot in such manner as may be prescribed by resolution of the Board of Directors. The notice of redemption will set forth the designation of the series of which the shares to be redeemed constitute a part, the date fixed for redemption, the redemption price, the place at which the shareholders may obtain payment of the redemption price upon the surrender of their respective share certificates and will include a 23 25 statement with respect to the existence of any right of conversion with respect to the shares to be redeemed and the period within which such right may be exercised. The Company may, on or prior to the date fixed for redemption of any shares of Preferred Stock, deposit with any bank or trust company in Texas, or any bank or trust company in the United States, duly appointed and acting as transfer agent for the Company, as a trust fund, a sum sufficient to redeem shares called for redemption with irrevocable instructions and authority to such bank or trust company to give or complete the notice of redemption thereof and to pay, on or after the date fixed for such redemption, to the respective holders of the shares as evidenced by a list of holders, the redemption price upon the surrender of their respective share certificates. Thereafter, from and after the date fixed for redemption, such shares will be redeemed and dividends thereon will cease to accrue after such date fixed for redemption. Such deposit will be deemed to constitute full payment of such shares to their holders. Thereafter, such shares will no longer be deemed to be outstanding, and the holders thereof will cease to be shareholders with respect to such shares, and will have no rights with respect thereto except the right to receive from the bank or trust company payment of the redemption price of such shares without interest, upon the surrender of their respective certificates therefor, and any right to convert such shares which may exist. In case the holders of such shares will not, within six years after such deposit, claim the amount deposited for redemption thereof, such bank or trust company will upon demand pay over to the Company the balance of such amounts so deposited to be held in trust in such bank or trust company and such trust company thereupon will be relieved of all responsibility to the holders thereof. Any shares of Preferred Stock which are redeemed or purchased by the Company and cancelled will be restored to the status of authorized but unissued shares and may be reissued as shares of another series. VOTING The holders of the Preferred Stock together with the holders of the Common Stock, all voting as one class, will possess voting power for the election of directors and for all other purposes, subject to such limitations as may be imposed by law and by any provision of the Articles. In the exercise of its voting power, the Preferred Stock will be entitled to one vote for each share held. SPECIAL DIRECTORS Whenever, at any time or times, dividends payable on any series of Preferred Stock are in arrears in an aggregate amount equivalent as to such series to six full dividends, there will be vested in the holders of shares of all outstanding Preferred Stock, voting as one class and with one vote for each share, the right to elect two directors of the Company. Such right of the holders of Preferred Stock to vote for the election of two directors may be exercised at any annual meeting or at any special meeting called for such purpose, or at any adjournment thereof, until all arrearages and dividends on the outstanding shares of Preferred Stock have been paid in full or declared and funds sufficient for the payment thereof deposited in trust, and when so paid or provided for, then such right will cease. So long as such right to vote continues, the Secretary of the Company may call, and upon written request of the holders of record of ten per cent or more of the outstanding Preferred Stock, addressed to the Secretary at the principal office of the Company, will call a special meeting of the holders of Preferred Stock for the election of such two directors. Such meeting will be held within 50 days after delivery of such request to such Secretary, at the place and upon the notice provided by law and in the Bylaws for the holding of meeting of its shareholders. If at any such meeting or any adjournment thereof the holders of at least a majority of the then outstanding shares of Preferred Stock then entitled to vote in such election are present or represented by proxy, then, by vote of the holders of at least a majority of all such shares of Preferred Stock present or represented in such meeting, the then authorized number of directors of the Company will be increased by two and the holders of such shares of Preferred Stock will be entitled to elect such two additional directors. Directors so elected will serve until the next annual meeting or until their successors are elected and will qualify; provided, however, that whenever all arrearages and dividends on all outstanding shares of Preferred Stock have been paid or declared and funds sufficient for the payment thereof deposited in trust, the term of the office of the persons so elected as directors will forthwith terminate, and the number of the whole Board of Directors of the Company will be reduced accordingly. In case of any vacancy occurring among the directors so elected, the remaining director who has been so elected may appoint a successor to hold office for the unexpired term of the director whose place is 24 26 vacant. If both directors so elected by the holders of the Preferred Stock cease to serve as directors before their term expires, the holders of Preferred Stock then outstanding may, at a special meeting of such holders called as provided in the Articles, elect successors to hold office for the unexpired terms of the directors whose places are vacant. In any vote for directors as provided in the Articles, each share of Preferred Stock will be entitled to vote. APPROVAL OF CHANGES The Company will not, without the approval (by vote at a meeting or by consent in writing) of the holders of at least two-thirds of the outstanding shares of Preferred Stock and subject to the provisions in the Articles with respect to certain additional supermajority voting requirements: (i) Amend or repeal any provision of, or add any provision to the Articles or Bylaws if such action would alter or change the preferences, rights, privileges or powers of, or the restrictions provided for the benefit of, the Preferred Stock; or (ii) Authorize or create shares of any class of stock having any preference or priority as to dividends, assets or other characteristics superior to the Preferred Stock, or authorize or create shares of stock of any class or any bonds, indentures, notes or other obligations convertible into or exchangeable for or having option or rights to purchase, any shares of stock having any such preference or priority; or (iii) Reclassify any Junior Stock into Preferred Stock or into shares having any preference or priority as to dividends, assets or any other characteristics superior to the Preferred Stock; or (iv) Increase the aggregate number of authorized shares of Preferred Stock or create a new class of shares having rights and preferences equal to the shares of Preferred Stock. LIQUIDATION PREFERENCE In the event of any liquidation, dissolution or winding up of the Company, the Preferred Stock of each series shall be entitled to payment of such amount or amounts in preference to any payment on Junior Stock as shall be provided in the Directors' Resolution providing for the issuance of such shares of Preferred Stock. In any such event, if the assets available for distribution shall be insufficient to permit payment of the full preferential amount to all holders of Preferred Stock, then distribution shall be made ratably among such holders according to the amount due to each. DESCRIPTION OF COMMON STOCK WARRANTS The Company may issue warrants (which may be titled either "options" or "warrants") for the purchase of Common Stock (the "Common Stock Warrants"). The Common Stock Warrants may be issued independently or together with any Securities offered by any Prospectus Supplement and may be attached to or separate from such Securities. Each series of Common Stock Warrants will be issued under a separate warrant agreement (a "Warrant Agreement") to be entered into between the Company and a bank or trust company, as Warrant Agent, all as set forth in the Prospectus Supplement relating to the particular issue of offered Common Stock Warrants. The Warrant Agent will act solely as an agent of the Company in connection with the Common Stock Warrant Certificates and will not assume any obligation or relationship of agency or trust for or with any holders of Common Stock Warrant Certificates or beneficial owners of Common Stock Warrants. The form of Warrant Agreement, including the form of Common Stock Warrant Certificate representing the Common Stock Warrants, is filed as an exhibit to the Registration Statement to which this Prospectus pertains. The following summaries of certain provisions of the form of Warrant Agreement and Common Stock Warrant Certificate do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Warrant Agreement and the Common Stock Warrant Certificate. 25 27 GENERAL Reference is made to the accompanying Prospectus Supplement relating to the Common Stock Warrants for the following terms of the Common Stock Warrants: (i) the offering price; (ii) the number of shares of Common Stock purchasable upon exercise of each such Common Stock Warrant and the price at which such number of shares of Common Stock may be purchased upon such exercise; (iii) the date on which the right to exercise such Common Stock Warrants shall commence and the date on which such right shall expire (the "Expiration Date"); and (iv) any other terms of such Common Stock Warrants (and the accompanying Prospectus Supplement may state that any of the terms set forth herein is inapplicable to such series). Common Stock Warrants for the purchase of Common Stock will be offered and exercisable for U.S. dollars only and will be in registered form only. Common Stock Warrant Certificates may be exchanged for new Common Stock Warrant Certificates of different denominations, may (if in registered form) be presented for registration or transfer, and may be exercised at the corporate trust office of the Warrant Agent or any other office indicated in the applicable Prospectus Supplement. Prior to the exercise of any Common Stock Warrants, holders of such Common Stock Warrants will not have any rights of holders of the Common Stock purchasable upon such exercise, including the right to receive payments of dividends, if any, on the Common Stock purchasable upon such exercise or to exercise any applicable right to vote. EXERCISE OF COMMON STOCK WARRANTS Each Common Stock Warrant will entitle the holder thereof to purchase such shares of Common Stock at such exercise price as shall in each case be set forth in, or calculable from, the Prospectus Supplement relating to the offered Common Stock Warrants. After the close of business on the Expiration Date (or such later date to which such Expiration Date may be extended by the Company) unexercised Common Stock Warrants will become void. Common Stock Warrants may be exercised by delivering to the Warrant Agent payment as provided in the applicable Prospectus Supplement of the amount required to purchase the Common Stock purchasable upon such exercise together with certain information set forth on the reverse side of the Common Stock Warrant Certificate. Common Stock Warrants will be deemed to have been exercised upon receipt of payment of the exercise price, subject to the receipt, within five business days, of the Common Stock Warrant Certificate evidencing such Common Stock Warrants. Upon receipt of such payment and the Common Stock Warrant Certificate properly completed and duly executed at the corporate trust office of the Warrant Agent or any other office indicated in the applicable Prospectus Supplement, the Company will, as soon as practicable, issue and deliver the Common Stock purchasable upon such exercise. If fewer than all of the Common Stock Warrants represented by such Common Stock Warrant Certificate are exercised, a new Common Stock Warrant Certificate will be issued for the remaining amount of Common Stock Warrants. AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT The Warrant Agreement for a series of Common Stock Warrants may be amended or supplemented without the consent of the holders of the Common Stock Warrants issued thereunder to effect changes that are not inconsistent with the provisions of the Common Stock Warrants and that do not adversely affect the interests of the holders of the Common Stock Warrants. COMMON STOCK WARRANT ADJUSTMENTS Unless otherwise indicated in the applicable Prospectus Supplement, the exercise price of, and the number of shares of Common Stock covered by, a Common Stock Warrant are subject to adjustment in certain events, 26 28 including: (i) the issuance of Common Stock as a dividend or distribution on the Common Stock; (ii) subdivisions and combinations of the Common Stock; (iii) the issuance to all holders of Common Stock of certain rights or warrants entitling them to subscribe for or purchase Common Stock within 45 days after the date fixed for the determination of the stockholders entitled to receive such rights or warrants, at less than the current market price (as defined in the Warrant Agreement for such series of Common Stock Warrants); and (iv) the distribution to all holders of Common Stock of evidences of indebtedness or assets of the Company (excluding certain cash dividends and distributions described below) or rights or warrants (excluding those referred to above). In the event that the Company shall distribute any rights or warrants to acquire capital stock pursuant to clause (iv) above (the "Capital Stock Rights"), pursuant to which separate certificates representing such Capital Stock Rights will be distributed subsequent to the initial distribution of such Capital Stock Rights (whether or not such distribution shall have occurred prior to the date of the issuance of a series of Common Stock Warrants), such subsequent distribution shall be deemed to be the distribution of such Capital Stock Rights; provided that the Company may, in lieu of making any adjustment in the exercise price of, and the number of shares of Common Stock covered by, a Common Stock Warrant upon a distribution of separate certificates representing such Capital Stock Rights, make proper provision so that each holder of such a Common Stock Warrant who exercises such Common Stock Warrant (or any portion thereof) (a) before the record date for such distribution of separate certificates shall be entitled to receive upon such exercise shares of Common Stock issued with Capital Stock Rights and (b) after such record date and prior to the expiration, redemption or termination of such Capital Stock Rights shall be entitled to receive upon such exercise, in addition to the shares of Common Stock issuable upon such exercise, the same number of such Capital Stock Rights as would a holder of the number of shares of Common Stock that such Common Stock Warrant so exercised would have entitled the holder thereof to acquire in accordance with the terms and provisions applicable to the Capital Stock Rights if such Common Stock Warrant was exercised immediately prior to the record date for such distribution. Common Stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment required pursuant to clause (iv) above. No adjustment in the exercise price of, and the number of shares of Common Stock covered by, a Common Stock Warrant will be made for regular quarterly or other periodic or recurring cash dividends or distributions or for cash dividends or distributions to the extent paid from retained earnings. No adjustment will be required unless such adjustment would require a change of at least 1% in the exercise price then in effect; provided that any such adjustment not so made will be carried forward and taken into account in any subsequent adjustment; and provided further that any such adjustment not so made shall be made no later than three years after the occurrence of the event requiring such adjustment to be made or carried forward. Except as stated above, the exercise price of, and the number of shares of Common Stock covered by, a Common Stock Warrant will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock, or securities carrying the right to purchase any of the foregoing. In the case of (i) a reclassification or change of the Common Stock, (ii) a consolidation or merger involving the Company or (iii) a sale or conveyance to another corporation of the property and assets of the Company as an entirety or substantially as an entirety, in each case as a result of which holders of the Company's Common Stock shall be entitled to receive stock, securities, other property or assets (including cash) with respect to or in exchange for such Common Stock, the holders of the Common Stock Warrants then outstanding will be entitled thereafter to convert such Common Stock Warrants into the kind and amount of shares of stock and other securities or property which they would have received upon such reclassification, change, consolidation, merger, sale or conveyance had such Common Stock Warrants been exercised immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. 27 29 DESCRIPTION OF THE LLC PREFERRED SECURITIES The following is a summary of certain terms and provisions of the LLC Preferred Securities offered hereby. Reference is made to the LLC Articles, the Regulations of SCI Finance (the "LLC Regulations") and the amendment to the LLC Regulations adopted or to be adopted by the Manager establishing the rights, preferences, privileges, limitations and restrictions relating to the LLC Preferred Securities (the "Declaration"). The summaries set forth below and in the accompanying Prospectus Supplement address the material terms of the LLC Preferred Securities of any particular series but do not purport to be complete and are subject to, and qualified in their entirety by reference to, the LLC Articles, the LLC Regulations and the Declaration. Capitalized terms used in the summaries below and not otherwise defined herein have the respective meanings set forth in the LLC Articles, the LLC Regulations and the Declaration. GENERAL SCI Finance is authorized to issue up to 7,000,000 LLC Preferred Shares, in one or more series or classes, with such dividend rights, liquidation preferences per share, redemption provisions, voting rights, conversion or exchange rights and other rights, preferences, privileges, limitations and restrictions as are set forth in the LLC Articles, the LLC Regulations and the Declaration adopted or to be adopted by the Manager. All of the LLC Preferred Shares which may be issued in one or more series or classes, including the LLC Preferred Securities, will rank pari passu with each other with respect to participation in profits and assets. The LLC Articles and the LLC Regulations as currently in effect do not permit the issuance of any preference interests ranking, as to participation in the profits or the assets of SCI Finance, senior to the LLC Preferred Shares. Reference is made to the accompanying Prospectus Supplement relating to the LLC Preferred Securities for the following terms of the LLC Preferred Securities: (a) title; (b) the dividend terms (when dividends will accrue and be payable); (c) the optional redemption provisions and the Redemption Price; (d) the liquidation preference per LLC Preferred Security; (e) the conversion rights for, and conversion price per share of, SCI Common Stock; (f) certain provisions relating to Non-Stock or Common Stock Fundamental Changes (as defined below); (g) the initial Reference Market Price (as defined below); (h) book entry provisions, if other than as set forth below; and (i) any other terms of the series (and the accompanying Prospectus Supplement may state that any of the terms set forth herein is inapplicable to such series). DIVIDENDS Cumulative dividends on the LLC Preferred Securities will accrue and be payable as set forth in the accompanying Prospectus Supplement, when, as and if declared by SCI Finance, except as otherwise described below. The annual dividend payable on each LLC Preferred Security will be fixed as set forth in the accompanying Prospectus Supplement. The amount of dividends is computed on the basis of twelve 30-day months and a 360-day year and, for any period shorter than a full monthly dividend period, will be computed on the basis of the actual number of days elapsed in such period. Payment of dividends generally is limited to the amount of funds held by SCI Finance and legally available therefor. Dividends declared on the LLC Preferred Securities are payable to the record holders thereof as they appear on the register for the LLC Preferred Securities on the record date, which will be one Business Day prior to the relevant payment date. In the event that any date on which dividends are payable on the LLC Preferred 28 30 Securities is not a Business Day, then payment of the dividend payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The term "Business Day" shall mean any day other than a day on which banking institutions in The City of New York are authorized or required by law to close. Dividends on the LLC Preferred Securities of any series will be cumulative (whether or not declared and whether or not there are profits, surplus or other funds legally available for the payment of dividends). Dividends on the LLC Preferred Securities must be declared by SCI Finance, by action of the Manager, in any calendar year or portion thereof to the extent that the Manager reasonably anticipates that at the time of payment SCI Finance will have, and must be paid by SCI Finance to the extent that at the time of proposed payment SCI Finance has, (x) funds legally available for the payment of such dividends and (y) cash on hand sufficient to permit such payments. It is anticipated that SCI Finance's earnings will result almost exclusively from payments under the Loans of proceeds from the sale of the LLC Preferred Securities and the issuance of LLC Common Shares (as described under "-- Description of the Loans"). SCI Limited will have the right to extend interest payments on the Loans for up to 60 monthly interest payment periods over the term of the Loans. Interest shall accrue on and be payable in respect of any dividend payment on the LLC Preferred Securities which is in arrears at the interest rate payable in respect of the Loans to the extent permitted by applicable law. CERTAIN RESTRICTIONS ON SCI FINANCE If dividends have not been paid in full on the LLC Preferred Securities, SCI Finance may not: (i) pay, or declare and set aside for payment, any dividends on any other LLC Preferred Shares ranking pari passu with the LLC Preferred Securities as regards participation in profits of SCI Finance ("SCI Finance Dividend Parity Shares"), unless the amount of any dividends declared on any SCI Finance Dividend Parity Shares is paid on SCI Finance Dividend Parity Shares and the LLC Preferred Securities on a pro rata basis on the date such dividends are paid on such SCI Finance Dividend Parity Shares, so that (x)(a) the aggregate amount of dividends paid on the LLC Preferred Securities bears the same ratio to (b) the aggregate amount of dividends paid on such SCI Finance Dividend Parity Shares as (y)(a) the aggregate amount of all accumulated arrears of unpaid dividends in respect of the LLC Preferred Securities bears to (b) the aggregate amount of all accumulated arrears of unpaid dividends in respect of such SCI Finance Dividend Parity Shares; (ii) pay, or declare and set aside for payment, any dividends on any interests in SCI Finance ranking junior to the LLC Preferred Securities as to dividends ("SCI Finance Dividend Junior Shares"); or (iii) call for redemption or redeem, purchase or otherwise acquire any SCI Finance Dividend Parity Shares or SCI Finance Dividend Junior Shares or any LLC Preferred Securities other than (x) the redemption of all outstanding LLC Preferred Securities at the Redemption Price (as defined below), (y) pursuant to a pro rata redemption of the LLC Preferred Securities at the Redemption Price or (z) pursuant to a purchase or exchange offer made on the same terms to all holders of the LLC Preferred Securities, it being understood that this provision shall not limit the rights of holders of LLC Preferred Securities to exercise their conversion rights until, in each case, such time as all accumulated arrears of unpaid dividends (whether or not declared) on the LLC Preferred Securities shall have been paid in full for all dividend periods terminating on or prior to, in the case of clauses (i) and (ii), such payment, and in the case of clause (iii), the date of such call, redemption, purchase or acquisition. As of the date of this Prospectus, SCI Finance has no SCI Finance Dividend Parity Shares outstanding and has no plans to issue such shares. 29 31 MANDATORY REDEMPTION The proceeds from any prepayment or repayment of principal on the Loans to SCI Limited of proceeds from the issuance and sale of LLC Preferred Securities and LLC Common Shares must be applied to redeem the LLC Preferred Securities at the Redemption Price upon not less than 30 nor more than 60 days' notice in writing by SCI Finance to the holders of the LLC Preferred Securities except at final maturity of the Loans, in which case the redemption of LLC Preferred Securities will occur as soon as practicable thereafter. OPTIONAL REDEMPTION The LLC Preferred Securities are redeemable, at the option of SCI Finance subject to the prior consent of the Manager, in whole or in part from time to time, on or after the date and subject to the terms set forth in the accompanying Prospectus Supplement, upon not less than 30 nor more than 60 days' notice in writing by SCI Finance to the holders of LLC Preferred Securities, at the prices set forth in the accompanying Prospectus Supplement (the "Redemption Price"), in each case plus accrued and unpaid dividends (whether or not declared) to the date fixed for redemption. In the event that fewer than all the outstanding LLC Preferred Securities are to be redeemed, the LLC Preferred Securities to be redeemed will be selected as described under "-- Book-Entry Issuance; the Depository Trust Company" below, pro rata as nearly as practicable or by lot, or by such other method as the Paying and Conversion Agent may determine to be fair and appropriate. In the event that any monthly dividend payable on the LLC Preferred Securities is in arrears, LLC Preferred Securities may not be redeemed unless by conversion of LLC Preferred Securities into shares of SCI Common Stock, and neither SCI nor SCI Finance nor any other subsidiary of SCI may purchase or acquire any of such shares otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of record of the LLC Preferred Securities. If SCI Finance gives a notice of redemption in respect of LLC Preferred Securities, then, by 12:00 noon, New York time, on the redemption date, SCI Finance will irrevocably deposit with the Paying and Conversion Agent or the Depository Trust Company ("DTC"), as the case may be, funds sufficient to pay the Redemption Price and will give the Paying and Conversion Agent or DTC, as the case may be, irrevocable instructions and authority to pay the Redemption Price to the holders thereof. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of holders of LLC Preferred Securities so called for redemption will cease, except the right of the holders of such shares to receive the Redemption Price, but without interest, and such shares will cease to be outstanding. In the event that any date on which any payment in respect of the redemption of LLC Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of LLC Preferred Securities is improperly withheld or refused and not paid either by SCI Finance or by SCI pursuant to the Guarantee (as defined below), dividends on such shares will continue to accrue, at the then- applicable rate, from the original redemption date to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. Subject to the foregoing, SCI or its subsidiaries may at any time and from time to time purchase outstanding LLC Preferred Securities by tender, in the open market or by private agreement. TAX EVENT REDEMPTION If a Tax Event (as defined below) shall occur and be continuing, the LLC Preferred Securities will be subject to redemption, at the option of SCI Finance, in whole but not in part, upon not less than 30 nor more than 60 days' notice in writing by the Company to the holders of such LLC Preferred Securities, such notice to be given within 90 days following the occurrence of such Tax Event at a redemption price or prices set forth in the accompanying Prospectus Supplement. 30 32 "Tax Event" means, with respect to any LLC Preferred Securities, that SCI shall have obtained an opinion of nationally recognized independent tax counsel experienced in such matters to the effect that, on or after the date of the accompanying Prospectus Supplement relating to such LLC Preferred Securities, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) any amendment to, or change in, an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination), (c) any official interpretation or pronouncement that provides for a position with respect to such laws or regulations that differs from the generally accepted position or (d) any action taken by any governmental agency or regulatory authority, which amendment or change is enacted, promulgated, issued or effective or which interpretation or pronouncement is issued or announced or which action is taken, in each case on or after the date of such accompanying Prospectus Supplement, there is more than an insubstantial risk that (i) SCI Finance is subject to federal income tax with respect to interest accrued or received on the Loans or (ii) SCI Finance is subject to liability for more than a de minimis amount of taxes, duties or other governmental charges. LIQUIDATION DISTRIBUTION In the event of any voluntary or involuntary liquidation, dissolution or winding up of SCI Finance, the holders of LLC Preferred Securities at the time outstanding will be entitled to receive out of the assets of SCI Finance legally available for distribution to shareholders, before any distribution of assets is made to holders of the LLC Common Shares or any other class of interests in SCI Finance ranking junior to the LLC Preferred Securities as regards participation in assets of SCI Finance, but together with the holders of every other series of LLC Preferred Shares outstanding, if any, ranking pari passu with the LLC Preferred Securities as regards participation in the assets of SCI Finance ("SCI Finance Liquidation Parity Shares"), an amount equal, in the case of the holders of the LLC Preferred Securities, to the aggregate of the liquidation preference per LLC Preferred Security set forth in the accompanying Prospectus Supplement and all accumulated and unpaid dividends (whether or not declared) to the date of payment (the "Liquidation Distribution"). If, upon any such liquidation, the Liquidation Distribution can be paid only in part because SCI Finance has insufficient assets available to pay in full the aggregate Liquidation Distribution and the aggregate maximum liquidation distributions on SCI Finance Liquidation Parity Shares, then the amounts payable by SCI Finance on the LLC Preferred Securities and on such SCI Finance Liquidation Parity Shares shall be paid on a pro rata basis, so that (i)(x) the aggregate amount paid in respect of the Liquidation Distribution bears the same ratio to (y) the aggregate amount paid as liquidation distributions (including accrued and unpaid dividends) on SCI Finance Liquidation Parity Shares as (ii)(x) the aggregate Liquidation Distribution bears to (y) the aggregate liquidation preference (including accrued and unpaid dividends) on SCI Finance Liquidation Parity Shares. Pursuant to the LLC Regulations, SCI Finance will be considered to have commenced voluntary wind-up and dissolution automatically (i) when the period fixed for the duration of SCI Finance expires, (ii) if the holders of the LLC Common Shares pass a resolution requiring SCI Finance to be wound up and dissolved, (iii) upon the bankruptcy, resignation, withdrawal, expulsion, termination, cessation or dissolution of SCI or the Manager (if other than SCI), (iv) upon the happening of any event that would cause a holder of LLC Common Shares to cease to be a holder thereof or (v) if SCI transfers any LLC Common Shares or if all of the LLC Common Shares are redeemed, repurchased or cancelled by SCI Finance. VOTING RIGHTS Except as provided below and under "-- Description of the Guarantee -- Amendments and Assignments" and "-- Description of the Loans -- Miscellaneous," the holders of the LLC Preferred Securities will have no voting rights. 31 33 If (i) SCI Finance fails to pay dividends in full on the LLC Preferred Securities (whether or not there are funds legally available therefor) for more than 60 consecutive monthly dividend periods, (ii) an Event of Default (as defined in the Loan Agreement relating to the Loans) occurs and is continuing on the Loans or (iii) SCI is in default under any of its payment or other obligations under the Payment, Guarantee and Conversion Agreement entered into by the Company for the benefit of each holder of LLC Securities (the "Guarantee"), then the holders of outstanding LLC Preferred Securities, together with the holders of any other series of LLC Preferred Shares having the right to vote for the appointment of a trustee in such event, acting as a single class, will be entitled, by resolution passed by the holders of a majority in liquidation preference (plus all accrued and unpaid dividends per share) of such shares present in person or represented by proxy at a meeting of such holders convened for such purpose (or by written consent), to appoint and authorize a trustee to enforce SCI Finance's rights as a creditor under the Loans against SCI Limited and SCI (including the acceleration of principal and accrued interest on the Loans), enforce the obligations undertaken by SCI under the Guarantee and the Liability Assumption Agreement (as defined below) and declare and pay dividends on the LLC Preferred Securities. For purposes of determining whether SCI Finance has failed to pay dividends in full for more than 60 consecutive monthly dividend periods, dividends shall be deemed to remain in arrears, notwithstanding any payments in respect thereof, until full cumulative dividends have been or contemporaneously are declared and paid with respect to all monthly dividend periods terminating on or prior to the date of payment of such full cumulative dividends. Not later than 45 days after such entitlement arises, the Manager will convene a meeting for the above purposes. If the Manager fails to convene such meeting within such 45-day period, the holders of 10% in liquidation preference (plus all accrued and unpaid dividends per share) of the outstanding LLC Preferred Securities and such other LLC Preferred Shares will be entitled to convene such meeting. The provisions of the LLC Regulations regarding the convening and conduct of meetings will apply with respect to any such meeting. Any trustee so appointed shall vacate office immediately with respect to the LLC Preferred Securities, if SCI Finance (or SCI pursuant to the Guarantee) shall have paid in full all accrued and unpaid dividends on the LLC Preferred Securities or such default or breach by SCI shall have been cured. If any resolution is presented to the members of SCI Finance providing for, or the Manager otherwise proposes to effect (it being understood that the automatic dissolution and liquidation events described in clauses (iii), (iv) and (v) under "-- Liquidation Distribution" above will not be deemed to be a proposal by the Manager, and are not subject to the approval procedures described in this paragraph), (x) any amendment of the LLC Articles, the LLC Regulations, the Declaration or other action that adversely varies or abrogates the rights, preferences or privileges of the LLC Preferred Securities (including, without limitation, the authorization or issuance of any interests in SCI Finance ranking, as to participation in the profits or assets of SCI Finance, senior to the LLC Preferred Securities, or the issuance of any debt by SCI Finance), (y) the liquidation, dissolution or winding up of SCI Finance or (z) the modification of the provisions of the LLC Articles and the LLC Regulations which absolutely prohibit transfers of LLC Common Shares, then the holders of outstanding LLC Preferred Shares of all series (and, in the case of a resolution described in clause (x) above which would equally adversely affect the rights, preferences or privileges of any SCI Finance Dividend Parity Shares or any SCI Finance Liquidation Parity Shares, such SCI Finance Dividend Parity Shares or such SCI Finance Liquidation Parity Shares, as the case may be, or, in the case of any resolution described in clause (y) or (z) above, all SCI Finance Liquidation Parity Shares) will be entitled to vote together as a class on such resolution or action of the Manager (but not on any other resolution or action), and such resolution or action shall not be effective except with the approval of the holders of 66 2/3% in liquidation preference (plus all accrued and unpaid dividends) of such outstanding shares; provided, however, that no such approval or ratification shall be required if the liquidation, dissolution and winding up of SCI Finance is proposed or initiated upon the initiation of proceedings, or after proceedings have been initiated, for the liquidation, dissolution or winding up of SCI or the Manager (if other than SCI). No vote or consent of the holders of the LLC Preferred Securities will be required for SCI Finance to redeem and cancel LLC Preferred Securities in accordance with the LLC Regulations and the Declaration. The rights attached to the LLC Preferred Securities will be deemed not to be varied by the creation or issue of, and no vote will be required for the creation of, any further series of LLC Preferred Shares or any other interests in SCI Finance ranking as regards participation in the profits or assets of SCI Finance pari passu with or junior to the LLC Preferred Securities. 32 34 Any required approval of holders of LLC Preferred Securities may be given at a meeting of such holders convened for such purpose, at a general meeting of shareholders of SCI Finance or pursuant to written consent. SCI Finance will cause a notice of any meeting at which holders of the LLC Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of the LLC Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or written consents. Notwithstanding that holders of LLC Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the LLC Preferred Securities and such other LLC Preferred Shares entitled to vote or consent with such LLC Preferred Securities as a single class outstanding at such time that are owned by SCI or any entity owned 50% or more by SCI, either directly or indirectly, shall not be entitled to vote or consent and shall, for the purposes of such vote or consent, be treated as if they were not outstanding. CONVERSION RIGHTS Except as otherwise provided in the Prospectus Supplement, the holders of the LLC Preferred Securities will have the conversion rights as set forth below: Each LLC Preferred Security will be convertible at any time at the option of the holder thereof into such number of whole shares of SCI Common Stock as is equal to the per share liquidation preference of the LLC Preferred Securities surrendered for conversion divided by the initial conversion price per share of SCI Common Stock set forth in the accompanying Prospectus Supplement, subject to adjustment as described below. LLC Preferred Securities called for redemption will not be convertible after the close of business on the second Business Day preceding the date fixed for redemption, unless SCI Finance defaults in payment of the applicable Redemption Price or SCI defaults in its obligation to deliver SCI Common Stock in exchange for shares of LLC Preferred Securities previously surrendered for conversion. No fractional shares of SCI Common Stock will be issued as a result of conversion, but in lieu thereof, in the sole discretion of SCI, either (i) such fractional interest will be rounded upon the next whole share or (ii) an appropriate amount will be paid in cash by SCI. The initial conversion price is subject to adjustment (under formulae set forth in the Declaration) in certain events, including: (i) the issuance of SCI Common Stock as a dividend or distribution on SCI Common Stock; (ii) certain subdivisions and combinations of the SCI Common Stock; (iii) the issuance to all holders of SCI Common Stock of certain rights or warrants to purchase SCI Common Stock; (iv) the distribution to all holders of SCI Common Stock of (A) shares of capital stock of SCI (other than SCI Common Stock), (B) evidences of indebtedness of SCI and/or (C) other assets (including securities, but excluding any rights or warrants referred to in clause (iii) above, any dividends or distributions in connection with the liquidation, dissolution or winding-up of SCI, any dividends payable solely in cash that may from time to time be fixed by the Board of Directors of SCI and any dividends or distributions referred to in clause (i) above); (v) distributions consisting of cash, excluding (a) any cash dividends on the SCI Common Stock to the extent that the aggregate cash dividends per share of SCI Common Stock in any consecutive 12-month period do not exceed the greater of (x) the amount per share of SCI Common Stock of the cash dividends paid on the SCI Common Stock in the immediately preceding 12-month period, to the extent that such dividends for the immediately preceding 12-month period did not require an adjustment of the conversion price pursuant to this clause (v) (as adjusted to reflect subdivisions or combinations of the SCI Common Stock), and (y) 15% of the average of the daily Closing Price (as defined in the Declaration) of the SCI Common Stock for the ten consecutive Trading Days (as defined in the Declaration) immediately prior to the date of declaration of such dividend, and (b) any dividend or distribution in connection with the liquidation, dissolution or winding up of SCI or a redemption of any rights issued under a rights agreement (provided, however that no adjustment shall be made pursuant to this clause (v) if such distribution would otherwise constitute a Fundamental Change (as defined below) and be reflected in a resulting adjustment described below); and (vi) payment in respect of a tender or exchange offer by SCI or any subsidiary of SCI for SCI Common Stock to the extent that the cash and value of any other consideration included in such payment per share of SCI Common Stock exceeds (by more than 10%, with any smaller excess being disregarded in computing the adjustment provided hereby) the first 33 35 reported sale price per share of SCI Common Stock on the Trading Day next succeeding the Expiration Time (as defined in the Declaration) for such tender or exchange offer. If any adjustment is required to be made as set forth in clause (v) above as a result of a distribution which is a dividend described in subclause (a) of clause (v) above, such adjustment would be based upon the amount by which such distribution exceeds the amount of the dividend permitted to be excluded pursuant to such subclause (a) of clause (v). If an adjustment is required to be made as set forth in clause (v) above as a result of a distribution which is not such a dividend, such adjustment would be based upon the full amount of such distribution. If an adjustment is required to be made as set forth in clause (vi) above, such adjustment would be calculated based upon the amount by which the aggregate consideration paid for SCI Common Stock acquired in the tender or exchange offer exceeds the value of such shares based on the first reported sale price of the SCI Common Stock on the Trading Day next succeeding the Expiration Time. In lieu of making such a conversion price adjustment in the case of certain dividends or distributions, SCI may provide that upon the conversion of LLC Preferred Securities the holder converting such LLC Preferred Securities will receive, in addition to the shares of SCI Common Stock of which such holder is entitled, the cash, securities or other property which such holder would have received if such holder had, immediately prior to the record date for such dividend or distribution, converted its LLC Preferred Securities into SCI Common Stock. SCI Finance from time to time may, to the extent permitted by law and with the consent of the Manager, reduce the conversion price by any amount for any period of at least 20 Business Days, in which case SCI Finance shall give at least 15 days' notice of such reduction to the holders of the LLC Preferred Securities. SCI Finance may, at its option and with the consent of the Manager, make such reduction in the conversion price, in addition to those set forth above, as SCI Finance deems advisable to avoid or diminish any income tax to holders of SCI Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for tax purposes or for any other reasons. In the event that SCI shall be a party to any transaction or series of transactions constituting a Fundamental Change, including, without limitation, (i) any recapitalization or reclassification of the SCI Common Stock (other than a change in par value or as a result of a subdivision or combination of the SCI Common Stock); (ii) any consolidation or merger of SCI with or into another corporation as a result of which holders of SCI Common Stock shall be entitled to receive securities or other property or assets (including cash) with respect to or in exchange for the SCI Common Stock (other than a merger which does not result in a reclassification, conversion, exchange or cancellation of outstanding shares of SCI Common Stock); (iii) any sale or transfer of all or substantially all of the assets of SCI; or (iv) any compulsory share exchange, pursuant to any of which holders of SCI Common Stock shall be entitled to receive other securities, cash or other property, then appropriate provision shall be made so that the holder of each LLC Preferred Security then outstanding shall have the right thereafter to convert such security only into (x) if any such transaction constitutes a Non-Stock Fundamental Change (as defined below), the kind and amount of the securities, cash or other property that would have been receivable upon such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of SCI Common Stock issuable upon conversion of such LLC Preferred Security immediately prior to such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange, after giving effect to any adjustment in the conversion price in accordance with clause (i) of the following paragraph, and (y) if any such transaction constitutes a Common Stock Fundamental Change (as defined below), common stock of the kind received by holders of SCI Common Stock as a result of such Common Stock Fundamental Change in an amount determined in accordance with clause (ii) of the following paragraph. The company formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the SCI Common Stock, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. Such certificate or articles of incorporation or other constituent document shall provide for adjustments which, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document, shall be as nearly equivalent as practical to the relevant adjustments provided for in the preceding paragraphs and in this paragraph. 34 36 Notwithstanding any other provision in the preceding paragraphs, if any Fundamental Change (as defined below) occurs, the conversion price in effect will be adjusted immediately after that Fundamental Change as follows: (i) in the case of a Non-Stock Fundamental Change, the conversion price per share of SCI Common Stock immediately following such Non-Stock Fundamental Change will be the lower of (A) the conversion price in effect immediately prior to such Non-Stock Fundamental Change, but after giving effect to any other prior adjustments effected pursuant to the preceding paragraphs, and (B) the result obtained by multiplying the greater of the Applicable Price (as defined below) or the then applicable Reference Market Price (as defined below) by a fraction of which the numerator will be the liquidation preference of the LLC Preference Securities as set forth in the applicable Prospectus Supplement and the denominator of which will be the then current Redemption Price per LLC Preferred Security (or, if such Redemption Price is to be determined prior to the date on which the LLC Preferred Securities may first be called for redemption, the prices set forth in the Prospectus Settlement); and (ii) in the case of a Common Stock Fundamental Change, the conversion price per share of SCI Common Stock immediately following the Common Stock Fundamental Change will be the conversion price in effect immediately prior to the Common Stock Fundamental Change, but after giving effect to any other prior adjustments effected pursuant to the preceding paragraphs, multiplied by a fraction, the numerator of which is the Purchaser Stock Price (as defined below) and the denominator of which is the Applicable Price; provided, however, that in the event of a Common Stock Fundamental Change in which (A) 100% of the value of the consideration received by a holder of SCI Common Stock is common stock of the successor, acquiror or other third party (and cash, if any, paid with respect to any fractional interests in that common stock resulting from the Common Stock Fundamental Change) and (B) all of the SCI Common Stock shall have been exchanged for, converted into, or acquired for, common stock of the successor, acquiror or other third party, the conversion price per share of SCI Common Stock immediately following the Common Stock Fundamental Change shall be the conversion price in effect immediately prior to the Common Stock Fundamental Change multiplied by a fraction, the numerator of which is one (1) and the denominator of which is the number of shares of common stock of the successor, acquiror, or other third party received by a holder of one share of SCI Common Stock as a result of the Common Stock Fundamental Change. Depending upon whether the Fundamental Change is a Non-Stock Fundamental Change or Common Stock Fundamental Change, a holder may receive significantly different consideration upon conversion. In the event of a Non-Stock Fundamental Change, the holder has the right to convert LLC Preferred Securities into the kind and amount of shares of stock and other securities or property or assets (including cash), except as otherwise provided above, as is determined by the number of shares of SCI Common Stock receivable upon conversion at the conversion price as adjusted in accordance with clause (i) of the preceding paragraph. However, in the event of a Common Stock Fundamental Change in which less than 100% of the value of the consideration received by a holder of SCI Common Stock is common stock of the successor, acquiror or other third party, a holder of a LLC Preferred Security who converts such share following the Common Stock Fundamental Change will receive consideration in the form of such common stock only, whereas a holder who converted such share prior to the Common Stock Fundamental Change will have received consideration in the form of such common stock as well as any other securities or assets (which may include cash) issuable upon conversion of such LLC Preferred Security immediately prior to such Common Stock Fundamental Change. The term "Applicable Price" means (i) in the event of a Non-Stock Fundamental Change in which the holders of SCI Common Stock receive only cash, the amount of cash receivable by a holder of one share of SCI Common Stock and (ii) in the event of any other Non-Stock Fundamental Change or any Common Stock Fundamental Change, the average of the reported last sale price for one share of the SCI Common Stock (determined as provided in the Declaration) during the ten Trading Days immediately prior to the record date for the determination of the holders of SCI Common Stock entitled to receive cash, securities, property or other assets in connection with such Non-Stock Fundamental Change or Common Stock Fundamental Change or, if there is no such record date, prior to the date on which the holders of the SCI Common Stock will have the right to receive such cash, securities, property or other assets. 35 37 The term "Common Stock Fundamental Change" means any Fundamental Change in which more than 50% of the value (as determined in good faith by SCI's Board of Directors) of the consideration received by holders of SCI Common Stock pursuant to such transaction consists of common stock that, for the ten consecutive Trading Days immediately prior to such Fundamental Change, has been admitted for listing or admitted for listing subject to notice of issuance on a national securities exchange or quoted on the Nasdaq National Market; provided, however, that a Fundamental Change will not be a Common Stock Fundamental Change unless either (i) SCI continues to exist after the occurrence of such Fundamental Change and the outstanding LLC Preferred Securities continue to exist as outstanding LLC Preferred Securities, or (ii) the outstanding LLC Preferred Securities continue to exist as LLC Preferred Securities and are convertible into common stock of the successor to SCI. The term "Fundamental Change" means the occurrence of any transaction or event or series of transactions or events pursuant to which all or substantially all of the SCI Common Stock is exchanged for, converted into, acquired for or constitutes solely the right to receive cash, securities, property or other assets (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise); provided, however, in the case of a plan involving more than one such transaction or event, for purposes of adjustment of the conversion price, such Fundamental Change will be deemed to have occurred when substantially all of the SCI Common Stock received in such transaction has been exchanged for, converted into, or acquired for or constitutes solely the right to receive cash, securities, property or other assets but the adjustment shall be based upon the consideration that the holders of SCI Common Stock received in the transaction or event as a result of which more than 50% of the SCI Common Stock shall have been exchanged for, converted into, or acquired for, or shall constitute solely the right to receive such cash, securities, properties or other assets; and provided further, that such term does not include (i) any transaction or event in which SCI and/or any of its subsidiaries are the issuers of all the cash, securities, property or other assets exchanged, acquired or otherwise issued in the transaction or event, or (ii) any transaction or event in which the holders of SCI Common Stock receive securities of an issuer other than SCI if, immediately following such transaction or event, holders of SCI Common Stock hold a majority of the securities having the power to vote normally in the election of directors of such other issuer outstanding immediately following such transaction or other event. The term "Non-Stock Fundamental Change" means any Fundamental Change other than a Common Stock Fundamental Change. The term "Purchaser Stock Price" means, with respect to any Common Stock Fundamental Change, the average of the reported last sale prices for one share of the common stock received by holders of SCI Common Stock in such Common Stock Fundamental Change during the ten Trading Days immediately prior to the record date for the determination of the holders of SCI Common Stock entitled to receive such common stock or, if there is no such record date, prior to the date upon which the holders of SCI Common Stock shall have the right to receive the common stock. The term "Reference Market Price" will initially mean the price set forth in the accompanying Prospectus Supplement (which unless otherwise specified in the accompanying Prospectus Supplement will be 66 2/3% of the last reported sale price for SCI Common Stock on the New York Stock Exchange on the date of such Prospectus Supplement) and, in the event of any adjustment to the conversion price other than as a result of a Fundamental Change, the Reference Market Price will also be adjusted so that the ratio of the Reference Market Price to the conversion price after giving effect to any adjustment will always be the same as the ratio of the initial Reference Market Price to the initial conversion price of the LLC Preferred Securities. No adjustment in the conversion price will be required unless the adjustment would require a change of at least 1% in the conversion price then in effect; provided, however, that any adjustment that would otherwise be required to be made shall be carried forward and taken into account in any subsequent adjustment. The holders of LLC Preferred Securities at the close of the business on a dividend payment record date will be entitled to receive the dividend payment on those shares on the corresponding dividend payment date notwithstanding the subsequent conversion thereof or SCI Finance's default in payment of the dividend due on that dividend payment date. A holder of LLC Preferred Securities on a dividend payment record date who (or 36 38 whose transferee) tenders any shares for conversion on a dividend payment date will receive the dividend payable by SCI Finance on LLC Preferred Securities on that date. BOOK-ENTRY ISSUANCE; THE DEPOSITORY TRUST COMPANY DTC will act only as securities depository for the LLC Preferred Securities. The LLC Preferred Securities will be issued as fully-registered in the name of Cede & Co. (DTC's partnership nominee). One or more fully-registered global LLC Preferred Security certificates will be issued, representing in the aggregate the total number of LLC Preferred Securities, and will be deposited with DTC. DTC may act as securities depository for any of the other Securities; if it does so, a description of the applicable book-entry procedures will be set forth in the applicable Prospectus Supplement. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations ("Direct Participants"). DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Commission. Purchases of LLC Preferred Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the LLC Preferred Securities on DTC's records. The ownership interest of each actual purchaser of each LLC Preferred Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmations from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner purchased LLC Preferred Securities. Transfers of ownership interests in the LLC Preferred Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in LLC Preferred Securities, except in the event that use of the book-entry system for the LLC Preferred Securities is discontinued. The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a global LLC Preferred Security certificate. DTC has no knowledge of the actual Beneficial Owners of the LLC Preferred Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such LLC Preferred Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices will be sent to Cede & Co. If less than all of the LLC Preferred Securities are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such series to be redeemed. 37 39 Although voting with respect to the LLC Preferred Securities is limited, in those cases where a vote is required, neither DTC nor Cede & Co. will consent or vote with respect to LLC Preferred Securities. Under its usual procedures, DTC mails an Omnibus Proxy to SCI Finance as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the LLC Preferred Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Dividend payments on the LLC Preferred Securities will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payments on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices and will be the responsibility of such Participant and not of DTC, SCI Finance or SCI, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of dividends to DTC is the responsibility of SCI Finance, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owner will be the responsibility of Direct and Indirect Participants. DTC has advised SCI and SCI Finance that it will take any action permitted to be taken by a holder of LLC Preferred Securities (including, without limitation, the presentation of a LLC Preferred Security certificate for conversion) only at the direction of one or more Participants to whose account with DTC interest in such shares represented by a global certificate are credited and only in respect of such number of LLC Preferred Securities represented by a global certificate as to which such Participant or Participants has or have given such direction. DTC may discontinue providing its services as securities depository with respect to the LLC Preferred Securities at any time by giving reasonable notice to SCI Finance. Under such circumstances, in the event that a successor securities depository is not obtained, LLC Preferred Securities certificates are required to be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that SCI Finance believes to be reliable, but neither SCI Finance, SCI nor any underwriter or agent takes responsibility for the accuracy thereof. MISCELLANEOUS The Transfer Agent, Registrant and Paying and Conversion Agent for the LLC Preferred Securities will be Society National Bank. Registration of transfers of LLC Preferred Securities will be effected without charge by the Transfer Agent, but upon payment (with the giving of such indemnity as the Transfer Agent may require) in respect of any tax or other governmental charges which may be imposed in relation to it. The Transfer Agent will not be required to register or cause to be registered the transfer of LLC Preferred Securities after such shares have been called for redemption. SCI Finance is not subject to any mandatory redemption or sinking fund provisions with respect to the LLC Preferred Securities. Holders of LLC Preferred Securities have no preemptive rights. SCI and SCI Finance will enter into an agreement (the "Liability Assumption Agreement") pursuant to which SCI, in its capacity as Manager and otherwise, agrees to guarantee the payment of any liabilities incurred by SCI Finance (other than obligations to holders of LLC Preferred Securities). The Liability Assumption Agreement expressly provides that such agreement is for the benefit of, and is enforceable by, third parties to whom SCI Finance owes such obligations. DESCRIPTION OF THE GUARANTEE Set forth below is a summary of information concerning the Guarantee which will be executed and delivered by SCI for the benefit of the holders from time to time of the LLC Preferred Securities. 38 40 General SCI will irrevocably and unconditionally agree, to the extent set forth herein, to pay in full, to the holders of LLC Preferred Shares of any series which may be issued by SCI Finance, including the LLC Preferred Securities, the Guarantee Payments (as defined below) (except to the extent paid by SCI Finance), as and when due, regardless of any defense, right of set-off or counterclaim which SCI Finance may have or assert. The following payments constitute the "Guarantee Payments" for the LLC Preferred Shares: (i) any accumulated and unpaid dividends which have been theretofore declared on the LLC Preferred Shares of any series out of monies legally available therefor, (ii) the redemption price (including all accumulated and unpaid dividends) to the date of payment payable with respect to LLC Preferred Shares of any series called for redemption by SCI Finance out of monies legally available therefor, and (iii) upon a liquidation of SCI Finance, the lesser of (a) the aggregate liquidation preference per LLC Preferred Share and all accumulated and unpaid dividends (whether or not declared) to the date of payment and (b) the amount of remaining assets of SCI Finance legally available to holders of LLC Preferred Shares. The Guarantee also requires SCI to deliver upon conversion of any LLC Preferred Shares all shares of SCI Common Stock or other property into which such LLC Preferred Shares are convertible. SCI's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amount by SCI to the holders of LLC Preferred Shares of any series or by causing SCI Finance to pay such amounts to such holders. Certain Covenants of SCI In the Guarantee, SCI will covenant that, so long as any LLC Preferred Shares of any series remain outstanding, SCI shall not declare or pay any dividend on, and SCI shall not, and SCI shall not permit any of its majority-owned subsidiaries to, redeem, purchase, acquire or make a liquidation payment with respect to, any of SCI's capital stock (other than the redemption by the Company of Series C Junior Participating Preferred Stock Purchase Rights in accordance with the Rights Agreement relating thereto and any reacquisition by the Company of any of its stock issued in any acquisition as a result of a purchase price adjustment or settlement of breach of warranties in connection with such acquisition) or make any guarantee payments with respect to the foregoing (other than payments under the Guarantee), if at such time (i) there shall have occurred any event that constitutes an Event of Default under the Loan Agreement, (ii) SCI shall be in default with respect to its payment or other obligations under the Guarantee or the Manager shall be in default under its obligations under the Liability Assumption Agreement or (iii) there shall exist any nonpayment of interest under the Loans, including during any valid extension of the interest payment periods. In the Guarantee, SCI will also covenant that, so long as any LLC Preferred Shares of any series remaining outstanding, it will (i) maintain direct 100% ownership of the LLC Common Shares and any other interests in SCI Finance (other than the LLC Preferred Shares); (ii) cause more than 20% of the total value (initially measured by shareholders' equity determined under generally accepted accounting principles) of SCI Finance and, subject to the preferential rights of the holders of LLC Preferred Securities as to dividends and liquidation distributions, more than 20% of all interests in the capital, income, gain, loss, deduction and credit of SCI Finance to be represented by LLC Common Shares; (iii) not voluntarily dissolve, wind-up or liquidate SCI Finance; (iv) remain the Manager of SCI Finance and timely perform all of its duties as Manager of SCI Finance (including the duty to declare and pay dividends on the LLC Preferred Shares to the extent set forth in the LLC Articles) and (v) use reasonable efforts to cause SCI Finance to remain a limited liability company under the laws of the State of Texas (provided however that SCI Finance may reorganize under the laws of another jurisdiction provided that SCI Finance has received an opinion from nationally recognized legal counsel that such reorganization will not have an adverse effect, including, without limitation, an adverse tax effect, on the holders of the LLC Preferred Securities) and use reasonable efforts to cause SCI Finance to continue to be treated as a partnership for United States Federal income tax purposes. Amendments and Assignments Except with respect to any changes which do not adversely affect the rights of holders of LLC Preferred Shares (in which case no vote will be required), the Guarantee may be changed only with the prior approval of the holders of not less than 66 2/3% in liquidation preference (plus all accrued and unpaid dividends per share) of 39 41 each series of LLC Preferred Shares then outstanding. The manner of obtaining any such approval of holders of LLC Preferred Shares will be as set forth under "Description of the LLC Preferred Securities -- Voting Rights." All guarantees and agreements contained in the Guarantee shall bind the successors, assigns, receivers, trustees and representatives of SCI and shall inure to the benefit of all LLC Preferred Shares then outstanding. Termination of the Guarantee The Guarantee will terminate and be of no further force and effect as to a series of LLC Preferred Shares upon full payment of the redemption price (including all accrued and unpaid dividends), or the retirement or cancellation of all of such series of LLC Preferred Shares, or delivery of all shares of SCI Common Stock or other property required to be delivered upon conversion, with respect to all outstanding LLC Preferred Shares of that series, or shall terminate completely upon full payment of the amounts payable upon liquidation of SCI Finance including the delivery of all shares of SCI Common Stock or other property required to be delivered upon conversion of any LLC Preferred Shares. The Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of LLC Preferred Shares of such series must restore payment of any sums, SCI Common Stock or other property paid under the LLC Preferred Shares of such series or the Guarantee. Status of the Guarantee The Guarantee will constitute an unsecured obligation of SCI and will rank (i) junior in right of payment to all other liabilities of SCI and will be subordinated in right of payment in the same manner and to the same extent as SCI's guarantee of obligations under the Loan Agreement is subordinated to Senior Indebtedness, (ii) senior to the preferred stock of any series issued at or after the date of the Guarantee by SCI and (iii) pari passu with any guarantee entered into at or after the date of the Guarantee by SCI in respect of any preferred or preference stock of any affiliate of SCI. See "-- Description of the Loans -- Subordination." The Guarantee will constitute a guarantee of payment and not of collection. A holder of LLC Preferred Shares may enforce the Guarantee directly against SCI, and SCI will waive any right or remedy to require that any action be brought against SCI Finance or any person or entity before proceeding against SCI. The Guarantee will not be discharged except by payment of the Guarantee Payments in full (to the extent not paid by SCI Finance) and by complete performance of all obligations under the Guarantee. Governing Law The Guarantee will be governed by and construed in accordance with the laws of the State of New York. DESCRIPTION OF THE LOANS Set forth below is a summary of information concerning the Loans from SCI Finance to SCI Limited of 99% of the proceeds from the issuance of (i) the LLC Preferred Securities and (ii) the LLC Common Shares and related capital contributions ("Common Share Payments"). General Pursuant to the Loan Agreement, SCI Finance has agreed to make the Loans to SCI Limited in an aggregate principal amount equal to 99% of the sum of the aggregate liquidation preference of the LLC Preferred Securities issued and sold by SCI Finance and the aggregate Common Share Payments. The entire principal amount of the Loans will become due and payable (together with any accrued and unpaid interest thereon) on the earlier of the date set forth in the accompanying Prospectus Supplement or the date upon which SCI, SCI Limited or SCI Finance shall be dissolved, wound-up or liquidated. The Loans and SCI Limited's obligations under the Loan Agreement (i) will be senior obligations of SCI Limited and will be secured by fifty percent of the outstanding capital stock of Service Corporation International plc, the principal assets of which are the capital stock of GSG and PG, and (ii) will be unconditionally guaranteed by SCI on an unsecured subordinated basis. 40 42 Mandatory Payment If SCI Finance redeems LLC Preferred Securities in accordance with the terms thereof, the Loans will become due and payable in a principal amount equal to the aggregate liquidation preference of the LLC Preferred Securities so redeemed, together with any and all accrued but unpaid interest thereon and any premium in excess of such principal amount. Any payment pursuant to this provision shall be made in immediately available funds prior to 12:00 noon, New York time, on the date fixed for such redemption or at such other time on such earlier date as SCI Finance, SCI Limited and SCI shall agree. Optional Prepayment SCI Limited will have the right to prepay the Loans, in whole or in part (together with (i) a premium computed based on the same percentage as the percentage difference between the then applicable Redemption Price on the LLC Preferred Securities and the stated liquidation preference of the LLC Preferred Securities and (ii) any accrued but unpaid interest), as set forth in the accompanying Prospectus Supplement. Interest The Loans will bear interest at an annual rate as set forth in the accompanying Prospectus Supplement from the date they are made until maturity. Such interest shall be payable on the last day of each calendar month of each year, commencing as set forth in the accompanying Prospectus Supplement. In the event that any date on which interest is payable on the Loans is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date, subject to certain rights of extension described below. Extended Interest Payment Period SCI Limited shall have the right at any time or from time to time during the term of the Loans, so long as SCI Limited is not in default in the payment of interest on the Loans, to extend interest payments under the Loans for up to 60 monthly interest payment periods; and at the end of such extended period SCI Limited shall pay all interest then accrued and unpaid (together with interest thereon at the rate specified for the Loans to the extent permitted by applicable law); provided, however, that, during any such extended interest payment period, or at any time during which there is an Event of Default under the Loans, SCI shall not declare or pay any dividend on, and SCI shall not, and shall not permit any of its majority-owned subsidiaries to, redeem, purchase, acquire or make a liquidation payment with respect to, any of shares of common or preferred stock of SCI (other than the redemption by the Company of Series C Junior Participating Preferred Stock Purchase Rights in accordance with the Rights Agreement relating thereto and any reacquisition by the Company of any of its stock issued in any acquisition as a result of a purchase price adjustment or settlement of breach of warranties in connection with such acquisition) or make any guarantee payments with respect to the foregoing (other than payments under the Guarantee). Prior to the termination of any such extended interest payment period, SCI Limited may further extend the interest payment period, provided, that such extended interest payment period together with all such further extensions thereof may not exceed 60 monthly interest payments in the aggregate over the term of the Loans. SCI Limited shall give SCI Finance notice of its selection of an extended interest payment period at least one Business Day prior to the earlier of (i) the date SCI Finance declares, or would be scheduled to declare, the related dividend or (ii) the date SCI Finance is required to give notice of the record or payment date of such related dividend to any national securities exchange on which the LLC Preferred Securities are listed or other applicable self-regulatory organization or to holders of the LLC Preferred Securities, but in any event not less than two Business Days prior to such record date. SCI shall cause SCI Finance to give such notice of SCI Limited's selection of such extended interest payment period to the holders of the LLC Preferred Securities concurrently therewith. 41 43 Additional Interest If at any time SCI Finance is or will be required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, SCI Limited also will pay as additional interest such amounts as shall be required so that the net amounts received and retained by SCI Finance after paying any such taxes, duties, assessments or governmental charges will not be less than the amounts SCI Finance would have received had no such taxes, duties, assessments or governmental charges been imposed. Method and Date of Payment Each payment by SCI Limited of principal of, premium, if any, and interest on the Loans shall be made to SCI Finance in lawful money of the United States, at such place and to such accounts as may be designated by SCI Finance. Subordination The Loan Agreement provides that SCI's guarantee of the Loans is subordinate and junior in right of payment to all Senior Indebtedness as provided in the Loan Agreement. In this section, the term "Senior Indebtedness" means the principal of, and premium, if any, and interest on (i) all indebtedness of SCI, other than ordinary trade credit and other accounts payable arising in the ordinary course of business, whether outstanding on the date of the Loan Agreement or thereafter created, incurred or assumed, which is for money borrowed, or evidenced by a note or similar instrument given in connection with the acquisition of any business, properties or assets, including securities, (ii) any indebtedness of others of the kinds described in the preceding clause (i) for which SCI is responsible or liable as guarantor and (iii) amendments, renewals, extensions and refundings of any such indebtedness, unless in any instrument or instruments evidencing or securing such indebtedness or pursuant to which the same is outstanding, or in any such amendment, renewal, extension or refunding, it is expressly provided that such indebtedness is not superior in right of payment to SCI's guarantee of the Loans. The Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions of the Loan Agreement irrespective of any amendment, modification or waiver of any term of the Senior Indebtedness or extension or renewal of the Senior Indebtedness. The rights of SCI Limited and its creditors, including SCI Finance as to the Loans, and SCI and its creditors, including SCI Finance pursuant to SCI's guarantee of the Loans and the holders under the Guarantee, to participate in the assets of any subsidiary of SCI Limited or SCI upon any liquidation or reorganization of such subsidiary or otherwise will be subject to the prior claims of creditors of such subsidiary, except to the extent that SCI Limited or SCI may itself be a creditor with recognized claims against the subsidiary. The ability of SCI Limited or SCI to meet its obligations may be dependent upon the payment to it of dividends, interest and other charges by its subsidiaries. The ability of SCI Limited's subsidiaries and SCI's subsidiaries to pay dividends or make other payments to SCI Limited or SCI, as the case may be, is not currently subject to any contractual or legal restriction (except for limitations imposed by applicable state corporation laws) which could materially affect SCI Limited's and SCI's ability to meet their obligations under the Loan Agreement and the Guarantee. Through their ownership of their subsidiaries, SCI Limited and SCI currently control (subject to applicable state corporation laws) such subsidiaries' payment of dividends or other distributions; there can be no assurance, however, that SCI Limited and SCI will continue such ownership and control of their subsidiaries. In the event that (i) SCI shall default in the payment of any principal of, premium, if any, or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or declaration or otherwise or (ii) an event of default occurs with respect to any Senior Indebtedness permitting the holders thereof to accelerate the maturity thereof and written notice of such event of default is given to SCI by the holders of such Senior Indebtedness, then unless and until such default in payment or event of default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) may be made or agreed to be made by SCI on account of SCI's guarantee of the Loans or interest thereon or by SCI in respect of any repayment, redemption, retirement, purchase or other acquisition of the Loans. 42 44 In the event of (i) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceeding relating to SCI or its property or for the benefit of its creditors, (ii) any proceeding for the liquidation, dissolution or other winding up of SCI, voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings, (iii) any assignment by SCI for the benefit of creditors or (iv) any other marshaling of the assets of SCI, all Senior Indebtedness (including, without limitation, interest accruing thereon after the commencement of any such proceeding, assignment or marshaling of assets) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, may be made by SCI on account of its guarantee obligations under the Loan Agreement and the Loans. In any such event, any payment or distribution, whether in cash, securities or other property (other than securities of SCI or any other corporation provided for by a plan of reorganization or a readjustment, the payment of which is subordinate, at least to the extent provided in the subordination provisions relating to SCI's guarantee obligations under the Loan Agreement and the Loans with respect to the indebtedness evidenced by the Loans, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for the subordination provision) be payable or deliverable in respect of SCI's guarantee obligations under the Loan Agreement and the Loans shall be paid or delivered directly to the holders of Senior Indebtedness (or their representative or trustee) in accordance with the priorities then existing among such holders until all Senior Indebtedness shall have been paid in full. No present or future holder of any Senior Indebtedness may be prejudiced in the right to enforce subordination of SCI's guarantee obligations under the Loan Agreement and the Loans by any act or failure to act on the part of SCI. Senior Indebtedness shall not be deemed to have been paid in full unless the holders thereof shall have received cash, securities or other property equal to the amount of such Senior Indebtedness then outstanding. Upon the payment in full of all Senior Indebtedness, SCI Finance shall be subrogated to all the rights of any holders of Senior Indebtedness to receive any further payments or distributions applicable to the Senior Indebtedness until the Loans shall have been paid in full, and such payments or distributions of cash, securities or other property received by SCI Finance, by reason of such subrogation, which otherwise would be paid or distributed to the holders of Senior Indebtedness, shall, as between SCI and its creditors other than the holders of Senior Indebtedness on the one hand, and SCI Finance, on the other, be deemed to be a payment by SCI on account of Senior Indebtedness, and not on account of SCI's guarantee obligations under the Loan Agreement and the Loans. Covenants SCI will covenant that SCI will not declare or pay any dividend on, and SCI will not, and will not permit any of its majority-owned subsidiaries to, redeem, purchase, acquire or make a liquidation payment with respect to, any of SCI's capital stock (other than the redemption by the Company of Series C Junior Participating Preferred Stock Purchase Rights in accordance with the Rights Agreement relating thereto and any reacquisition by the Company of any of its stock issued in any acquisition as a result of a purchase price adjustment or settlement of breach of warranties in connection with such acquisition), or make any guarantee payments with respect to the foregoing (other than payments under the Guarantee), if at such time (i) there shall have occurred any event that constitutes an Event of Default under the Loan Agreement, (ii) SCI shall be in default with respect to its payment or other obligations under the Guarantee or SCI or the Manager shall be in default under its obligations under the Liability Assumption Agreement or (iii) there shall exist any nonpayment of interest under the Loans, including during any valid extension of the interest payment periods. SCI will also covenant (i) to maintain direct 100% ownership of the LLC Common Shares and any other interests of SCI Finance other than the LLC Preferred Shares, (ii) to cause more than 20% of the total value (initially measured by shareholders' equity determined in accordance with generally accepted accounting principles) of SCI Finance and, subject to the preferential rights of the holders of LLC Preferred Shares as to dividends and liquidation distributions, more than 20% of all interests in the capital, income, gain, loss, deduction and credit of SCI Finance to be represented by LLC Common Shares, (iii) not to dissolve, wind-up or liquidate SCI Finance voluntarily, (iv) to remain the Manager of SCI Finance and to timely perform all of its duties as Manager (including the duty to declare and pay dividends on the LLC Preferred Shares as described in "-- Dividends") and (v) to use its reasonable efforts to cause SCI Finance to remain a limited liability company under the laws 43 45 of the State of Texas (provided however that SCI Finance may reorganize under the laws of another jurisdiction provided that SCI Finance has received a legal opinion from nationally recognized legal counsel that such reorganization will not have an adverse effect, including, without limitation, an adverse tax effect, on the holders of the LLC Preferred Securities) and use reasonable efforts to cause SCI Finance to continue to be treated as a partnership for United States Federal income tax purposes. In addition, SCI has agreed to maintain and reserve sufficient authorized but unissued Common Stock sufficient to satisfy all conversion rights under the LLC Preferred Securities and to have available for issuance such other property as may be subject to delivery pursuant to such conversion rights. SCI Finance may not waive compliance or waive any default in compliance by SCI Limited of any covenant or other term in the Loan Agreement or by SCI of its guarantee of the Loans without the approval of the same percentage of the holders of LLC Preferred Securities, obtained in the same manner, as would be required for an amendment of the Loan Agreement to the same effect. Events of Default If one or more of the following events (each an "Event of Default") shall occur and be continuing: (a) default in the payment of any interest on the Loans when due for 10 Business Days; provided, however, that a valid extension of the interest payment period by SCI Limited shall not constitute a default in the payment of interest for this purpose (see "-- Description of the Loans-- Interest"); or (b) default in the payment of principal of or premium of any, on the Loans when due; or (c) failure of SCI to comply with the conversion provisions of the LLC Preferred Securities; or (d) the dissolution, winding-up or liquidation of SCI Finance; or (e) the bankruptcy, insolvency or liquidation of SCI or SCI Limited; or (f) breach by SCI Limited or SCI of any of its covenants under the Loan Agreement continued for 30 days after notice to SCI Limited and SCI from the holders of not less than 25 percent in liquidation preference of the LLC Preferred Securities then outstanding; then, SCI Finance will have the right to declare the principal of and the interest on the Loans (including any interest subject to an extension election) and all other amounts payable under the Loan Agreement to be forthwith due and payable and to enforce its other rights as a creditor with respect to the Loans. Under the terms of the LLC Preferred Securities, the holders of outstanding LLC Preferred Securities will have the rights referred to under "-- Description of the LLC Preferred Securities -- Voting Rights," including the right to appoint a trustee, which trustee will be authorized to exercise SCI Finance's right to accelerate the principal amount of the Loans and to enforce SCI Finance's other creditor rights under the Loans and the Loan Agreement, and SCI Limited and SCI agree to cooperate with such trustee. Miscellaneous SCI Limited will have the right at all times to assign any of its rights or obligations under the Loan Agreement to a direct or indirect wholly-owned subsidiary of SCI; provided, however, that, in the event of any such assignment, SCI Limited will remain jointly and severally liable for all such obligations; and provided further, that SCI Limited shall receive an opinion of legal counsel that the effect of any such assignment does not cause SCI Finance to be considered an "investment company" under the Investment Company Act of 1940, as amended. SCI Finance may not assign any of its rights under the Loan Agreement without the prior written consent of SCI Limited and SCI. Subject to the foregoing, the Loan Agreement will be binding upon and inure to the benefit of SCI Limited, SCI and SCI Finance and their respective successors and assigns. The Loan Agreement provides that it may not otherwise be assigned by SCI Limited, SCI Finance or SCI. The Loan Agreement will provide that neither SCI Limited nor SCI may permit another entity to merge with or into SCI Limited or SCI, as the case may be, unless (i) at such time no Event of Default has occurred and is continuing, or would occur as a result of such merger, and (ii) either (a) SCI Limited or SCI, as the case may 44 46 be, is the survivor of such merger or (b) the survivor is a corporation organized under the laws of the United States or any state thereof and expressly assumes all of the obligations of SCI Limited or SCI, as the case may be, under the Loan Agreement and the Loans and SCI Limited receives an opinion of counsel from nationally recognized legal counsel that the merger will not result in the recognition of taxable gain or loss by the holders of the LLC Preferred Securities. The Loan Agreement will be governed by and construed in accordance with the laws of the State of New York. The Loan Agreement may be amended by mutual consent of the parties in the manner the parties shall agree; provided, however, that, so long as any of the LLC Preferred Securities remain outstanding, no such amendment shall be made that adversely affects the holders of LLC Preferred Securities, no termination of the Loan Agreement shall occur, and no Event of Default or compliance with any covenant under the Loan Agreement may be waived by SCI Finance, without the prior consent of the holders of 66 2/3% in liquidation preference of the outstanding LLC Preferred Securities, in writing or at a duly constituted meeting of such holders. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS REGARDING THE LLC PREFERRED SECURITIES GENERAL In the opinion of Miller & Chevalier, Chartered, special tax counsel to SCI and SCI Finance, the following discussion accurately describes, subject to the qualifications stated herein, the material federal income tax considerations relevant to the purchase, ownership and disposition of the LLC Preferred Securities. This discussion, which may be modified or supplemented in a Prospectus Supplement, is a summary that does not purport to deal with all aspects of federal income taxation that may be relevant to holders of the LLC Preferred Securities, nor to certain types of holders subject to special treatment under the federal income tax laws (for example, banks, life insurance companies, dealers, tax-exempt organizations, persons whose functional currency is not the U.S. dollar, or foreign persons and foreign entities). Unless otherwise stated, this discussion is directed at initial purchasers who acquire the LLC Preferred Securities at original issue and hold the LLC Preferred Securities as capital assets. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations, judicial decisions and Internal Revenue Service ("IRS") rulings and notices currently in effect, all of which are subject to change, which change may possibly be applied in a retroactive manner that could adversely affect a holder of the LLC Preferred Securities. While the discussion is based on the opinion of Miller & Chevalier, Chartered, an opinion of counsel is not binding on the IRS or the courts. Neither SCI nor SCI Finance has sought, or intends to seek, a ruling from the IRS that the positions stated in the discussion will be accepted by the IRS. Moreover, there are no cases or rulings on similar transactions, and there can be no assurance that the IRS will agree with the conclusions expressed below. PROSPECTIVE PURCHASERS OF LLC PREFERRED SECURITIES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE FEDERAL INCOME, ESTATE AND GIFT TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF LLC PREFERRED SECURITIES, AS WELL AS THE TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, FOREIGN COUNTRY OR OTHER JURISDICTION. TAX CLASSIFICATION While the following matters are not free from doubt, Miller & Chevalier, Chartered is of the opinion that (i) SCI Finance will be classified as a partnership for federal income tax purposes and not as an association (or as a publicly traded partnership) taxable as a corporation, and (ii) the Loans will be classified as indebtedness for such purposes. This advice is based upon the terms of the Loans, the LLC Articles, the LLC Regulations and 45 47 related documents and transactions as described in this Prospectus (and assumes ongoing compliance with such documents). Prospective investors and their advisors should be aware, however, that the proper characterization of the arrangement involving SCI Finance, the Loans and the LLC Preferred Securities is not entirely clear, and the IRS has recently announced that it will scrutinize and may challenge transactions with some features that are similar to this arrangement. If, contrary to the opinion of tax counsel, the IRS successfully argued that SCI Finance should be taxable as a corporation, SCI Finance would be subject to federal income tax at corporate rates and distributions to holders of LLC Preferred Securities likely would be taxable as dividend income. Similarly, if, contrary to the opinion of tax counsel, the IRS successfully asserted that the Loans were properly classified as stock or other equity, then payments on the Loans would not be deductible by SCI Limited as interest, but instead likely would be treated as distributions to holders taxable as dividends. Prospective investors should also be aware that the IRS recently issued a proposed Treasury regulation under which the IRS can disregard or recast the form of a partnership transaction if the partnership is formed or availed of in connection with a transaction (or series of related transactions) "with a principal purpose of substantially reducing the present value of the partners' aggregate federal tax liability" in a manner inconsistent with the intent of the partnership provisions of the Code. The regulation is proposed to be effective for all transactions occurring on or after May 12, 1994. In the view of Miller & Chevalier, Chartered, SCI Finance should not be considered to be formed or availed of with the purpose proscribed by the proposed regulation because the transactions involving SCI Finance are not of the type intended to fall within the scope of the proposed regulation. There can be no assurance, however, that the IRS will agree with this view. It also is impossible to predict what changes might be made in the proposed regulation before it is adopted in final form. Unless otherwise noted, the remainder of this summary assumes, in accordance with the opinion of Miller & Chevalier, Chartered, that SCI Finance is properly classified as a partnership and the Loans are properly classified as indebtedness for federal income tax purposes. INCOME FROM LLC PREFERRED SECURITIES As partners in a partnership, each holder of LLC Preferred Securities will be required to include in gross income its distributive share of the net income of SCI Finance, which net income generally will be equal to the amount of interest received or accrued on the Loans. See "Original Issue Discount" below. Any amount so included in a holder's gross income will increase its tax basis in the LLC Preferred Securities, and the amount of distributions of cash or other property by SCI Finance to the holder will reduce such holder's tax basis in the LLC Preferred Securities. No portion of the amounts received on the LLC Preferred Securities will be eligible for the dividends received deduction. SCI Finance does not presently intend to make an election under Section 754 of the Code. As a result, a subsequent purchaser of LLC Preferred Securities will not be permitted to adjust the tax basis in its allocable share of SCI Finance's assets so as to reflect any difference between its purchase price for the LLC Preferred Securities and the underlying tax basis of SCI Finance in its assets. As a result, a holder of LLC Preferred Securities may be required to report a larger or smaller amount of income from holding LLC Preferred Securities than would otherwise be appropriate based upon the holder's purchase price for the LLC Preferred Securities. ORIGINAL ISSUE DISCOUNT Under the terms of the Loans, SCI Limited will have the right to extend interest payments under the Loans for up to 60 monthly interest payment periods. If the payment period is extended, SCI Finance will continue to accrue income, equal to the amount of the interest payment due at the end of the extended payment period, over the length of the extended payment period. As a result, holders of record during an extended interest payment period will include interest in gross income in advance of the receipt of cash, and any such holders who dispose of LLC Preferred Securities prior to the record date for the payment of dividends following such extended interest payment period will include such holder's allocable share of such interest in gross income but will not receive any cash from SCI Finance related thereto. The tax basis of an LLC Preferred Security will be increased by the 46 48 amount of any interest that is included in income without a receipt of cash and will be decreased when and if such cash is subsequently received from SCI Finance. A holder should not be required to allocate a portion of the amount paid for an LLC Preferred Security to any right to convert such LLC Preferred Security into SCI Common Stock and, therefore, should not be required to include any amount in income by reason of original issue discount on the LLC Preferred Security. The IRS might take a contrary view, however, and require holders to allocate a portion of the price paid for a convertible LLC Preferred Security to the right to convert into SCI Common Stock. If the IRS were successful in requiring such an allocation, a holder could be required to include an incremental amount of original issue discount (in addition to stated interest) in income over the life of such LLC Preferred Security. SCI intends to take the position that no allocation that would result in additional original issue discount (in excess of stated interest) is required. USE OF CONVENTION SCI Finance may adopt a convention for allocating all of the net income accrued by SCI Finance in any calendar month, such as by allocating the net income to the holders of record of the LLC Preferred Securities and the Common Shares on the dividend record date. It is unclear whether this convention will be respected for federal income tax purposes. If it is not respected, the distributive share of SCI Finance's net income allocable to LLC Preferred Securities in respect of a month in which such shares are sold may be allocated between the seller and the purchaser on some other basis. Any amount so allocated to the holder of record of the LLC Preferred Securities, whether as seller or purchaser, would be includible in the holder's income and would increase the holder's basis in the LLC Preferred Securities. DISPOSITION OF LLC PREFERRED SECURITIES Gain or loss will be recognized on a sale of LLC Preferred Securities, including a complete redemption for cash, equal to the difference between the amount realized and the holder's tax basis for the LLC Preferred Securities sold. Gain or loss on the sale or exchange of LLC Preferred Securities held for more than one year generally will be taxable as long-term capital gain or loss. The adjusted tax basis of the LLC Preferred Securities sold by a holder will equal the amount paid by such holder for the LLC Preferred Securities, plus the share of partnership income allocated to such holder and reduced by any cash or other property distributed to such holder by SCI Finance. A holder acquiring LLC Preferred Securities at different prices may be required to maintain a single aggregate adjusted tax basis in such LLC Preferred Securities, and, upon sale or other disposition of some of the LLC Preferred Securities, allocate a pro rata portion of such aggregate tax basis to the LLC Preferred Securities sold (rather than maintaining a separate tax basis in each LLC Preferred Security for purposes of computing gain or loss on a sale of that LLC Preferred Security). If a holder of LLC Preferred Securities is required to recognize an aggregate amount of income over the life of the LLC Preferred Securities that exceeds the aggregate cash distributions with respect thereto, such excess generally will result in a capital loss upon the retirement of the LLC Preferred Securities. To the extent SCI Limited is required to pay a prepayment premium to SCI Finance in connection with a prepayment of the Loans, SCI Finance will pay a corresponding redemption premium to holders of LLC Preferred Securities whose LLC Preferred Securities are redeemed. SCI Finance will recognize capital gain on a prepayment of the Loans to the extent of the prepayment premium. SCI Finance's gain will be allocated to the holders whose LLC Preferred Securities are subsequently redeemed by SCI Finance, and the allocated gain should increase such holders' adjusted tax basis in these LLC Preferred Securities. A holder who has a basis increase due to such allocation will not have additional taxable gain attributable to the redemption premium upon SCI Finance's subsequent redemption of the holder's LLC Preferred Securities. CONVERSION OF LLC PREFERRED SECURITIES A holder who converts convertible LLC Preferred Securities into SCI Common Stock will recognize gain or loss in an amount equal to the difference between the tax basis of the LLC Preferred Securities and the fair market value of the SCI Common Stock received plus the amount of cash received in lieu of fractional shares. Such gain 47 49 or loss will be long-term capital gain or loss if the LLC Preferred Securities have been held for more than one year. The holder's tax basis in the SCI Common Stock received in the conversion will equal its fair market value. ADJUSTMENT OF CONVERSION PRICE Treasury regulations under Section 305 of the Code would treat holders of LLC Preferred Securities as having received a constructive distribution from SCI in the event the conversion ratio of convertible LLC Preferred Securities were adjusted if (i) as a result, the proportionate interest of the holders of such LLC Preferred Securities in the assets or earnings and profits of SCI were increased and (ii) the adjustment was not made pursuant to a bona fide, reasonable antidilution formula. An adjustment in the conversion ratio would not be considered made pursuant to such a formula if the adjustment was made to compensate for certain taxable distributions with respect to the stock into which such LLC Preferred Securities are convertible. Thus, under certain circumstances, a reduction in the conversion price for the LLC Preferred Securities is likely to be taxable to the holders thereof as dividend to the extent of the earnings and profits of SCI. INFORMATION RETURNS AND AUDIT PROCEDURES The Manager will furnish each holder with a Schedule K-1 each year setting forth such holder's allocable share of income for the prior calendar year. The Manager is required, under the LLC Regulations, to furnish such Schedule K-1 as soon as practicable following the end of the taxable year, but in any event prior to March 31st of each succeeding year (assuming, as anticipated, that SCI Finance's taxable year is a calendar year). Any person who holds LLC Preferred Securities as nominee for another person is required to furnish to SCI Finance (a) the name, address and taxpayer identification number of the beneficial owner and the nominee; (b) information as to whether the beneficial owner is (i) a person that is not a United States person, (ii) a foreign government, an international organization or any wholly-owned agency or instrumentality of either of the foregoing or (iii) a tax-exempt entity; (c) the amount and description of LLC Preferred Securities held, acquired or transferred for the beneficial owner; and (d) certain information including the dates of acquisitions and transfers, means of such acquisitions and transfers, and acquisition costs for purchases, as well as the amount of net proceeds from sales. Brokers and financial institutions are required to furnish additional information, including whether they are United States persons and certain information on LLC Preferred Securities they acquire, hold or transfer for their own accounts. A penalty of $50 per failure (up to a maximum of $100,000 per calendar year) is imposed by the Code for failure to report such information to SCI Finance. The nominee is required to supply the beneficial owners of the LLC Preferred Securities with the information furnished to SCI Finance. SCI, as the tax matters partner, will be responsible for representing the holders in any dispute with the IRS. The Code provides for administrative examination of a partnership as if the partnership were a separate and distinct taxpayer. Generally, the statute of limitations for partnership items does not expire before three years from the later of the filing or the last date for filing of the partnership information return. Any adverse determination following an audit of the return of SCI Finance by the appropriate taxing authorities could result in an adjustment of the tax returns of the holders, and, under certain circumstances, a holder may be precluded from separately litigating a proposed adjustment to the items of the partnership. An adjustment could also result in an audit of a holder's tax return and adjustments of items not related to the income and losses of SCI Finance. BACKUP WITHHOLDING AND INFORMATION REPORTING In general, information reporting requirements will apply to payments to noncorporate U.S. holders from the sale of LLC Preferred Securities within the United States, and "backup withholding" at a rate of 31% will apply to such payments if the United States holder fails to provide an accurate taxpayer identification number. Payments of the proceeds from the sale by a United States Alien Holder (as defined below) of LLC Preferred Securities made to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that, if the broker is a United States person, a controlled foreign corporation for United States tax purposes, or a foreign person 50% or more of whose gross income is effectively connected with a United States trade or business for a specified three-year period, information reporting may apply to such payments. 48 50 Payments of the proceeds from the sale of LLC Preferred Securities to or through the United States office of a broker is subject to information reporting and backup withholding unless the holder or beneficial owner certifies as to its non-United States status or otherwise establishes an exemption for information reporting and backup withholding. UNITED STATES ALIEN HOLDERS For purposes of this discussion, a "United States Alien Holder" is any holder who or which is (i) a nonresident alien individual or (ii) a foreign corporation, foreign partnership, foreign estate or foreign trust, in any such case not subject to United States federal income tax on a net income basis in respect of an LLC Preferred Security. Under present United States federal income tax law: (i) payments with respect to interest from SCI Limited made to SCI Finance or any of its paying agents to any holder of an LLC Preferred Security who or which is a United States Alien Holder will not be subject to United States federal withholding tax; provided that (a) the beneficial owner of the LLC Preferred Security does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of SCI Limited entitled to vote, (b) the beneficial owner of the LLC Preferred Security is not a controlled foreign corporation that is related to SCI Limited through stock ownership, and (c) either (A) the beneficial owner of the LLC Preferred Security certifies to SCI Finance or its agent, under penalties of perjury, that it is not a United States Holder and provides its name and address or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution") and holds the LLC Preferred Security certifies to SCI Finance or its agent under penalties of perjury that such statement has been received from the beneficial owner by it or by a financial institution between it and the beneficial owner and furnishes the payor with a copy thereof; and (ii) a United States Alien Holder of an LLC Preferred Security will not be subject to United States withholding tax on any gain realized on the sale or exchange of a LLC Preferred Security. PLAN OF DISTRIBUTION The Company and/or SCI Finance may sell Securities to or through underwriters, and also may sell Securities directly to other purchasers or through agents. The distribution of the Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Securities, underwriters may receive compensation from the Company and/or SCI Finance or from purchasers of Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Company and/or SCI Finance and any profit on the resale of Securities by them may be deemed to be underwriting discounts and commissions, under the Act. Any such underwriter or agent will be identified, and any such compensation received from the Company and/or SCI Finance will be described, in the Prospectus Supplement. Under agreements which may be entered into by the Company and/or SCI Finance, underwriters and agents who participate in the distribution of Securities may be entitled to indemnification by the Company and/or SCI Finance against certain liabilities, including liabilities under the Act. If so indicated in the Prospectus Supplement, the Company and/or SCI Finance will authorize underwriters or other persons acting as the Company's and/or SCI Finance's agents to solicit offers by certain institutions to purchase Securities from the Company and/or SCI Finance pursuant to contracts providing for payments and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and 49 51 others, but in all cases such institutions must be approved by the Company and/or SCI Finance. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of the offered Securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts. LEGAL MATTERS The validity of the Securities (other than the Common Stock, the Preferred Stock and the LLC Preferred Securities) offered hereby will be passed upon for the Company by Wachtell, Lipton, Rosen & Katz, New York, New York, special counsel for the Company. The validity of the Common Stock and the Preferred Stock and of the LLC Preferred Securities offered hereby will be passed upon for the Company and SCI Finance, respectively, by Fulbright & Jaworski L.L.P., Houston, Texas, special Texas counsel for the Company. Certain tax matters with respect to the LLC Preferred Securities will be passed upon for the Company and SCI Finance by Miller & Chevalier, Chartered, Washington, D.C., special tax counsel for the Company. Certain legal matters in connection with the Securities will be passed upon for any underwriters by Cahill Gordon & Reindel (a partnership including a professional corporation), New York, New York. EXPERTS The consolidated financial statements of Service Corporation International at December 31, 1993, and for the year then ended appearing in Service Corporation International's Annual Report (Form 10-K) for the year ended December 31, 1993, have been audited by Coopers & Lybrand L.L.P., independent auditors, and at December 31, 1992, and for each of the two years in the period ended December 31, 1992, by Ernst & Young LLP, independent auditors, as set forth in their respective reports thereon incorporated herein by reference in reliance upon such reports given upon the authority of such firms as experts in accounting and auditing. 50 52 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Set forth below is an estimate (except for the SEC registration fee) of the fees and expenses payable by the Company in connection with the distribution of the Securities: SEC registration fee............................................ $344,828 Printing costs.................................................. 300,000 Legal fees and expenses......................................... * Accounting fees and expenses.................................... 55,000 Blue Sky fees and expenses...................................... 20,000 Trustee fees and expenses....................................... 8,600 Paying and Conversion Agent fee................................. 9,000 Rating agency fee............................................... 200,000 Miscellaneous................................................... * -------- Total................................................. $ * ========
- --------------- * To be supplied by amendment. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Company The Company is a Texas corporation. Article 2.02-1 of the Texas Business Corporation Act (the "Act") provides that any director or officer of a Texas corporation may be indemnified against judgments, penalties, fines, settlements and reasonable expenses actually incurred by him in connection with or in defending any action, suit or proceeding in which he is or is threatened to be made a named defendant by reason of his position as director or officer, provided that he conducted himself in good faith and reasonably believed that, in the case of conduct in his official capacity as director or officer, such conduct was in the corporation's best interests, or, in all other cases, that such conduct was not opposed to the corporation's best interests. In the case of any criminal proceeding, a director or officer may be indemnified only if he had no reasonable cause to believe his conduct was unlawful. If a director or officer is wholly successful, on the merits or otherwise, in connection with such a proceeding, such indemnification is mandatory. Under the Company's Restated Articles of Incorporation, as amended (the "Articles"), no director of the registrant will be liable to the registrant or any of its shareholders for monetary damages for an act or omission in the director's capacity as a director, except for liability (i) for any breach of the director's duty of loyalty to the registrant or its shareholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) for any transaction for which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's office, (iv) for acts or omissions for which the liability of a director is expressly provided by statute, or (v) for acts related to an unlawful stock repurchase or dividend payment. The Articles further provide that, if the statutes of Texas are amended to further limit the liability of a director, then the liability of the Company's directors will be limited to the fullest extent permitted by any such provision. The Company's By-laws provide for indemnification of officers and directors of the registrant and persons serving at the request of the registrant in such capacities for other business organizations against certain losses, costs, liabilities and expenses incurred by reason of their positions with the registrant or such other business organizations. The Company also has policies insuring its officers and directors against certain liabilities for actions taken in such capacities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). II-1 53 SCI Finance SCI Finance is a Texas limited liability company. The Texas Limited Liability Company Act provides that a Texas limited liability company shall have power to indemnify managers, officers, employees, agents and others to the same extent a corporation may indemnify directors, employees, agents and others under the Texas Business Corporation Act. See Item 15 above, "The Company". Regulation 25 of SCI Finance's Regulations authorizes SCI Finance to indemnify any officer, director, employee or other agent of the Manager, in such agent's capacity as such, to the fullest extent permitted by law; provided that no amendment to or repeal of the Regulations shall adversely affect any right existing at the time of the amendment of or repeal of the Regulations. Regulation 25 also permits SCI Finance to purchase and maintain insurance on behalf of the Manager and certain other person, whether or not it would have the power under Regulation 25 to indemnify such persons against the related expense, liability or loss. Additionally, Article Nine of the LLC Articles eliminates, to the extent permitted by law, in certain circumstances the monetary liability of any officer, director, employee or other agent of any manager of SCI Finance (each, an "Agent") for an act or omission in such Agent's capacity as an Agent. This provision does not eliminate or limit the liability of any such Agent to the extent such Agent is found liable for (i) a breach of such Agent's duty of loyalty to SCI Finance or its members; (ii) an act or omission not in good faith that constitutes a breach of duty of such Agent to SCI Finance or an act or omission that involves intentional misconduct or a knowing violation of the law; (iii) a transaction from which such Agent received an improper benefit, whether or not the benefit resulted from an action taken within the scope of such Agent's office; or (iv) an act or omission for which the liability of any such Agent is expressly provided for by statute. Any repeal or amendment of Article Nine by the members of SCI Finance is prospective only and will not adversely affect any limitations on the liability of any Agent existing at the time of such repeal or amendment. Reference is made to the Forms of Underwriting Agreements, filed as Exhibits 1.1, 1.2 and 1.3 hereto, which contain provisions for indemnification of each of the registrants, their directors, officers and any controlling persons, by the Underwriters against certain liabilities for information furnished by the Underwriters. For a statement of the registrants' undertakings with respect to indemnification of directors and officers, see Item 17 below. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- *1.1 -- Form of Underwriting Agreement between SCI and the Underwriter(s) with respect to Equity Securities. *1.2 -- Form of Underwriting Agreement between SCI and the Underwriter(s) with respect to Debt Securities. *1.3 -- Form of Underwriting Agreement among SCI Finance, SCI and the Underwriter(s) with respect to LLC Preferred Securities. 3.1 -- Restated Articles of Incorporation, as amended. (Incorporated by reference to Exhibit 3.1 to Registration Statement No. 2-50721 on Form S-1). 3.2 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit (4)(i)1 to Form 10-Q for the fiscal quarter ended July 31, 1982). 3.3 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Form 10-Q for the fiscal quarter ended July 31, 1983). 3.4 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 4.7 to Registration Statement No. 33-8727 on Form S-3).
II-2 54
EXHIBIT NUMBER DESCRIPTION - ------------------- ------------------------------------------------------------------------ 3.5 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 4.1 to Amendment No. 3 to Registration Statement No. 33-16678 on Form S-4). 3.6 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.8 to Registration Statement No. 33-47097 on Form S-4). 3.7 -- Bylaws, as amended. (Incorporated by reference to Exhibit 3.7 to Form 10-K for the fiscal year ended December 31, 1991). *3.8 -- SCI Finance Articles of Organization. *3.9 -- SCI Finance Regulations. *3.10 -- Form of Amendment to the Regulations of SCI Finance. 4.1 -- Senior Indenture, dated as of February 1, 1993, between SCI and the Bank of New York, as Trustee. (Incorporated by reference to Exhibit 4.1 to Form 8-K dated January 26, 1993). *4.2 -- Senior Subordinated Indenture, dated as of , 1994, between SCI and Texas Commerce Bank National Association, as Trustee. 4.3 -- Subordinated Indenture, dated as of September 1, 1991, between SCI and Texas Commerce National Bank Association, as Trustee. (Incorporated by reference to Exhibit 4.1 to Form 8-K dated October 23, 1991). *4.4 -- Form of Common Stock Warrant Agreement (including Form of Warrant). *4.5 -- Forms of Additional Documents establishing the LLC Preferred Securities. *(a) -- Form of SCI Payment, Guarantee and Conversion Agreement. *(b) -- Form of Loan Agreement. *(c) -- Form of Liability Assumption Agreement. 4.6 -- Rights Agreement dated as of July 18, 1988 between the Company and Texas Commerce Bank National Association. (Incorporated by reference to Exhibit 1 to Form 8-K dated July 18, 1988). 4.7 -- Amendment, dated as of May 10, 1990, to the Rights Agreement, dated as of July 18, 1988, between the Company and Texas Commerce Bank National Association. (Incorporated by reference to Exhibit 1 to Form 8-K dated May 10, 1990). 4.8 -- Agreement Appointing a Successor Rights Agent under Rights Agreement, dated as of June 1, 1990, by the Company and Ameritrust Company National Association. (Incorporated by reference to Exhibit 4.1 to Form 10-Q for the fiscal quarter ended June 30, 1990). *4.9 -- Undertaking to furnish instruments relating to long-term debt. **5.1 -- Opinion of Wachtell, Lipton, Rosen & Katz regarding the Securities (other than the Common Stock, the Preferred Stock and LLC Preferred Securities). **5.2 -- Opinion of Fulbright & Jaworski L.L.P. regarding the Common Stock, the Preferred Stock and LLC Preferred Securities. **8 -- Opinion of special tax counsel regarding certain tax matters.
II-3 55
EXHIBIT NUMBER DESCRIPTION - ------------------- ------------------------------------------------------------------------ 12.1 -- Ratio of Earnings to Fixed Charges. (Incorporated by reference to Exhibit 12.1 to Form 10-K for the fiscal year ended December 31, 1993, as amended, and Exhibit 12.1 to Form 10-Q for the fiscal quarter ended June 30, 1994, as amended). *12.2 -- Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividend Requirements. **23.1 -- Consent of Wachtell, Lipton, Rosen & Katz (included in their opinion filed as Exhibit 5.1). **23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in their opinion filed as Exhibit 5.2). **23.3 -- Consent of special tax counsel (included in their opinion filed as Exhibit 8). *23.4 -- Consent of Independent Accountants (Coopers & Lybrand L.L.P.). *23.5 -- Consent of Independent Accountants (Ernst & Young LLP). *24 -- Powers of Attorney. *25.1 -- Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1 with respect to the Senior Debt Securities to be issued pursuant to the Senior Debt Indenture, dated as of February 1, 1993, between SCI and The Bank of New York, as Trustee. *25.2 -- Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1 with respect to the Debt Securities to be issued pursuant to the Senior Subordinated Debt Indenture, dated as of , 1994, between SCI and Texas Commerce Bank National Association, as Trustee. *25.3 -- Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1 with respect to the Subordinated Debt Securities to be issued pursuant to the Subordinated Debt Indenture, dated as of September 1991, between SCI and Texas Commerce Bank National Association, as Trustee.
- --------------- * Included herewith. ** To be filed by amendment. (b) FINANCIAL STATEMENT SCHEDULES. Financial statement schedules for the three years ended December 31, 1993.
SCHEDULE - -------- II Amounts Receivable From Related Parties and Underwriters, Promoters, and Employees Other than Related Parties V Property and Equipment VI Accumulated Depreciation and Amortization of Property and Equipment VIII Valuation and Qualifying Accounts IX Short-Term Borrowings
The Information required by Schedules II, V, VI, VIII and IX for the three years ended December 31, 1993 is incorporated herein by reference to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 31, 1993, as amended. II-4 56 ITEM 17. UNDERTAKINGS. (a) The Undersigned hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) 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; and (iii) 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 paragraphs (a)(1)(i) and (a)(1)(ii) 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 Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) 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. (3) 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. (b) The undersigned hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of SCI's annual report pursuant to Section 13(a) or 15(d) or the Securities Exchange Act of 1934 (and, where applicable, each filing of any 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. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the undersigned pursuant to the foregoing provisions, or otherwise, the undersigned have 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 undersigned of expenses incurred or paid by a director, officer or controlling person of the undersigned 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 undersigned 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 of 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. (d) The undersigned hereby undertake to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. II-5 57 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SERVICE CORPORATION INTERNATIONAL 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 CITY OF HOUSTON, STATE OF TEXAS, ON THIS 18TH DAY OF OCTOBER, 1994. SERVICE CORPORATION INTERNATIONAL By: /s/ JAMES M. SHELGER James M. Shelger Senior Vice President, General Counsel and Secretary PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE - --------------------------------------------- ---------------------------- ------------------ * Chairman of the Board and October 18, 1994 R. L. Waltrip Chief Executive Officer * Executive Vice President October 18, 1994 Samuel W. Rizzo and Chief Financial Officer/Treasurer (Principal Financial Officer) and Director * Managing Director -- Financial October 18, 1994 Wesley T. McRae Reporting (Principal Accounting Officer) * Director October 18, 1994 Anthony L. Coelho * Director October 18, 1994 Douglas M. Conway * Director October 18, 1994 Jack Finkelstein * Director October 18, 1994 A. J. Foyt, Jr. * Director October 18, 1994 James J. Gavin, Jr. * Director October 18, 1994 James H. Greer * Director October 18, 1994 L. William Heiligbrodt
II-6 58
SIGNATURE TITLE DATE --------- ----- ---- * Director October 18, 1994 B. D. Hunter * Director October 18, 1994 John W. Mecom, Jr. * Director October 18, 1994 Clifton H. Morris, Jr. * Director October 18, 1994 E. H. Thornton, Jr. * Director October 18, 1994 W. Blair Waltrip * Director October 18, 1994 Edward E. Williams *By: /s/ JAMES M. SHELGER James M. Shelger Attorney-in-Fact
II-7 59 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SCI FINANCE LLC 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 CITY OF HOUSTON, STATE OF TEXAS, ON THIS 18TH DAY OF OCTOBER, 1994. SCI FINANCE LLC By: Service Corporation International, as Manager By: /s/ JAMES M. SHELGER Name: James M. Shelger Title: Senior Vice President, General Counsel and Secretary PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES WITH THE MANAGER INDICATED AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE - --------------------------------------------- ------------------------------ ----------------- * Chairman of the Board and October 18, 1994 R. L. Waltrip Chief Executive Officer * Executive Vice President October 18, 1994 Samuel W. Rizzo and Chief Financial Officer/Treasurer (Principal Financial Officer) and Director * Managing Director -- Financial October 18, 1994 Wesley T. McRae Reporting (Principal Accounting Officer) * Director October 18, 1994 Anthony L. Coelho * Director October 18, 1994 Douglas M. Conway * Director October 18, 1994 Jack Finkelstein * Director October 18, 1994 A. J. Foyt, Jr. * Director October 18, 1994 James J. Gavin, Jr. * Director October 18, 1994 James H. Greer * Director October 18, 1994 L. William Heiligbrodt * Director October 18, 1994 B. D. Hunter
II-8 60
SIGNATURE TITLE DATE --------- ----- ---- * Director October 18, 1994 John W. Mecom, Jr. * Director October 18, 1994 Clifton H. Morris, Jr. * Director October 18, 1994 E. H. Thornton, Jr. * Director October 18, 1994 W. Blair Waltrip * Director October 18, 1994 Edward E. Williams *By: /s/ JAMES M. SHELGER James M. Shelger Attorney-in-Fact
II-9 61 REGISTRATION NO. 33- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ------------------------ SERVICE CORPORATION INTERNATIONAL AND SCI FINANCE LLC (EXACT NAME OF EACH REGISTRANT AS SPECIFIED IN ITS CHARTER) EXHIBITS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 62 EXHIBIT INDEX
PAGINATION BY SEQUENTIAL EXHIBIT NUMBERING NUMBER DESCRIPTION SYSTEM - ---------- ------------------------------------------------------------------------ ------------- *1.1 -- Form of Underwriting Agreement between SCI and the Underwriter(s) with respect to Equity Securities. *1.2 -- Form of Underwriting Agreement between SCI and the Underwriter(s) with respect to Debt Securities. *1.3 -- Form of Underwriting Agreement among SCI Finance, SCI and the Underwriter(s) with respect to LLC Preferred Securities. 3.1 -- Restated Articles of Incorporation, as amended. (Incorporated by reference to Exhibit 3.1 to Registration Statement No. 2-50721 on Form S-1). 3.2 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit (4)(i)1 to Form 10-Q for the fiscal quarter ended July 31, 1982). 3.3 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Form 10-Q for the fiscal quarter ended July 31, 1983). 3.4 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 4.7 to Registration Statement No. 33-8727 on Form S-3). 3.5 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 4.1 to Amendment No. 3 to Registration Statement No. 33-16678 on Form S-4). 3.6 -- Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.8 to Registration Statement No. 33-47097 on Form S-4). 3.7 -- Bylaws, as amended. (Incorporated by reference to Exhibit 3.7 to Form 10-K for the fiscal year ended December 31, 1991). *3.8 -- SCI Finance Articles of Organization. *3.9 -- SCI Finance Regulations. *3.10 -- Form of Amendment to the Regulations of SCI Finance. 4.1 -- Senior Indenture, dated as of February 1, 1993, between SCI and the Bank of New York, as Trustee. (Incorporated by reference to Exhibit 4.1 to Form 8-K dated January 26, 1993). *4.2 -- Senior Subordinated Indenture, dated as of , 1994, between SCI and Texas Commerce Bank National Association, as Trustee. 4.3 -- Subordinated Indenture, dated as of September 1, 1991, between SCI and Texas Commerce National Bank Association, as Trustee. (Incorporated by reference to Exhibit 4.1 to Form 8-K dated October 23, 1991). *4.4 -- Form of Common Stock Warrant Agreement (including Form of Warrant).
63
PAGINATION BY SEQUENTIAL EXHIBIT NUMBERING NUMBER DESCRIPTION SYSTEM - ---------- ------------------------------------------------------------------------ ------------- *4.5 -- Forms of Additional Documents establishing the LLC Preferred Securities. *(a) -- Form of SCI Payment, Guarantee and Conversion Agreement. *(b) -- Form of Loan Agreement. *(c) -- Form of Liability Assumption Agreement. 4.6 -- Rights Agreement dated as of July 18, 1988 between the Company and Texas Commerce Bank National Association. (Incorporated by reference to Exhibit 1 to Form 8-K dated July 18, 1988). 4.7 -- Amendment, dated as of May 10, 1990, to the Rights Agreement, dated as of July 18, 1988, between the Company and Texas Commerce Bank National Association. (Incorporated by reference to Exhibit 1 to Form 8-K dated May 10, 1990). 4.8 -- Agreement Appointing a Successor Rights Agent under Rights Agreement, dated as of June 1, 1990, by the Company and Ameritrust Company National Association. (Incorporated by reference to Exhibit 4.1 to Form 10-Q for the fiscal quarter ended June 30, 1990). *4.9 -- Undertaking to furnish instruments relating to long-term debt. **5.1 -- Opinion of Wachtell, Lipton, Rosen & Katz regarding the Securities (other than the Common Stock, the Preferred Stock and LLC Preferred Securities). **5.2 -- Opinion of Fulbright & Jaworski L.L.P. regarding the Common Stock, the Preferred Stock and LLC Preferred Securities. **8 -- Opinion of special tax counsel regarding certain tax matters. 12.1 -- Ratio of Earnings to Fixed Charges. (Incorporated by reference to Exhibit 12.1 to Form 10-K for the fiscal year ended December 31, 1993, as amended, and Exhibit 12.1 to Form 10-Q for the fiscal quarter ended June 30, 1994, as amended). *12.2 -- Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividend Requirements. **23.1 -- Consent of Wachtell, Lipton, Rosen & Katz (included in their opinion filed as Exhibit 5.1). **23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in their opinion filed as Exhibit 5.2). **23.3 -- Consent of special tax counsel (included in their opinion filed as Exhibit 8). *23.4 -- Consent of Independent Accountants (Coopers & Lybrand L.L.P.). *23.5 -- Consent of Independent Accountants (Ernst & Young LLP). *24 -- Powers of Attorney. *25.1 -- Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1 with respect to the Senior Debt Securities to be issued pursuant to the Senior Debt Indenture, dated as of February 1, 1993, between SCI and The Bank of New York, as Trustee.
64
PAGINATION BY SEQUENTIAL EXHIBIT NUMBERING NUMBER DESCRIPTION SYSTEM - ---------- ------------------------------------------------------------------------ ------------- *25.2 -- Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1 with respect to the Debt Securities to be issued pursuant to the Senior Subordinated Debt Indenture, dated as of , 1994, between SCI and Texas Commerce Bank National Association, as Trustee. *25.3 -- Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1 with respect to the Subordinated Debt Securities to be issued pursuant to the Subordinated Debt Indenture, dated as of September 1991, between SCI and Texas Commerce Bank National Association, as Trustee.
- --------------- * Included herewith. ** To be filed by amendment. EX-1.1 2 UNDERWRITING AGREEMENT - EQUITY SECURTIES 1 EXHIBIT 1.1 UNDERWRITING AGREEMENT SERVICE CORPORATION INTERNATIONAL Equity Securities ( ), 199( ) To the Underwriter or Underwriters named in the within mentioned Terms Agreement Ladies and Gentlemen: Service Corporation International, a Texas corporation (the "Company"), may issue and sell from time to time shares of the common stock, par value $1.00 per share, of the Company (such shares of common stock, together with the rights (the "Rights") attached thereto to purchase the Company's Series C Junior Participating Preferred Stock (the "Series C Preferred Stock") issued pursuant to a Rights Agreement dated as of July 18, 1988 between the Company and Texas Commerce Bank National Association as rights agent, as amended to date (the "Rights Agreement"), being hereinafter referred to as the "Common Stock") or shares of the Company's preferred stock, par value $1.00 per share (the "Preferred Stock" and together with the Common Stock, the "Equity Securities"). The Equity Securities are registered under the registration statement referred to in Section 4(i) hereof. The Preferred Stock may be issued in one or more series, may have varying dividend and liquidation preferences, voting rights and redemption provisions, and may be convertible, as described in the resolution or resolutions adopted by the board of directors of the Company relating to the Offered Securities (the "Resolution"), into shares of the Common Stock. The basic provisions set forth herein are intended to be incorporated by reference in a terms agreement of the type referred to below relating to, among other things, if applicable, the designation and series of Preferred Stock and the number of shares of Common Stock or Preferred Stock (the "Underwritten Securities") to be issued and sold by the Company pursuant thereto and to be purchased, severally, by the underwriter or several underwriters named therein (the "Underwriters"). The Terms Agreement, which shall be in the form of Exhibit I hereto (the "Terms Agreement"), relating to the Underwritten Securities and such additional shares of Equity Securities that the Underwriters may be granted an option to purchase by the Company to cover over-allotments in connection with any offering of 2 -2- Underwritten Securities (the "Option Securities" and together with the Underwritten Securities, the "Offered Securities"), together with the provisions hereof incorporated therein by reference (which provisions shall not become effective until so incorporated by reference), is herein referred to as this "Agreement." The Terms Agreement may reflect that a portion of the Underwritten Securities are to be sold to the several U.S. underwriters named therein (the "U.S. Underwriters") in connection with the offering and sale of a portion of the Underwritten Securities in the United States and Canada (the "U.S. Underwritten Securities") to United States and Canadian persons (as defined in the instruments governing the coordination of the offering by the U.S. Underwriters and the International Managers (as defined below) named therein) and that the balance of the Underwritten Securities (the "International Underwritten Securities") are to be sold to the several international managers named therein (the "International Managers") in connection with the offering and sale of such International Underwritten Securities outside the United States and Canada to persons other than United States and Canadian persons. In such event, as used herein, the term "Underwriters" refers to the U.S. Underwriters and the International Managers, and the term "Representatives" refers to the U.S. Representatives named therein of the U.S. Underwriters and the International Representatives named therein of the International Managers. If the Underwriters consist only of the firm or firms referred to in the Terms Agreement as the Representative or Representatives, then the terms "Underwriters" and "Representatives," as used herein, shall be deemed to refer to such firm or firms. The obligations of the Underwriters to purchase, and the Company to sell, the Offered Securities are evidenced by the Terms Agreement delivered at the time the Company determines to sell the Offered Securities and, without the execution and delivery of the Terms Agreement, the Company shall not be obligated to sell, and the Underwriters shall not be obligated to purchase, any Equity Securities pursuant to this Agreement. The Terms Agreement specifies the firm or firms which will be Underwriters, the amount of the Offered Securities to be purchased by each Underwriter, the purchase price to be paid by the Underwriters for the Offered Securities, the public offering price, if any, of the Offered Securities and, in the case of Preferred Stock, any terms of the Offered Securities not otherwise specified in the Resolution (including, but not limited to, designations, denominations, conversion or exchange provisions, covenants, dividend rates and payment dates, liquidation preferences and redemption provisions). The Terms Agreement specifies any details of the terms of the offering that should be reflected in a post-effective amendment to 3 -3- the applicable Registration Statement or the Prospectus Supplement (each as hereinafter defined). The terms which follow, when used in this Agreement, shall have the meanings indicated. "Registration Statement" shall mean the registration statement or registration statements relating to the Offered Securities (and such other securities of the Company as may be included therein) which shall be the registration statement on Form S-3 filed under the Securities Act of 1933, as amended (collectively with the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder, the "Securities Act"), referred to in Section 4(i) below, including all documents incorporated therein by reference and all exhibits thereto, as from time to time amended or supplemented pursuant to the Securities Act, the Securities Exchange Act of 1934, as amended (collectively with the rules and regulations of the Commission thereunder, the "Exchange Act"), or otherwise, including as supplemented by the Prospectus Supplement, on or prior to the date of execution and delivery of the Terms Agreement (the "Representation Date") and, in the event any such amendment or supplement is filed prior to the Closing Date (as defined in Section 3 hereof), including by the filing of any Prospectus Supplement or document incorporated by reference, shall also mean such registration statement as so amended or supplemented. "Prospectus" shall mean the prospectus (including the related Prospectus Supplement with respect to the Offered Securities) relating to the Equity Securities (and such other securities of the Company as may be covered thereby), including all documents incorporated therein by reference, as from time to time amended or supplemented pursuant to the Securities Act, the Exchange Act or otherwise; provided, however, that a Prospectus Supplement shall be deemed to have supplemented the Prospectus only with respect to the Offered Securities to which it relates. 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, and on or prior to the completion of the applicable offering and which is deemed to be incorporated therein by reference. 1. Agreements to Sell and Purchase. The Company agrees to issue and sell to each Underwriter as hereinafter provided, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees to purchase at the price per share set forth in the Terms Agreement, severally and not jointly, from the 4 -4- Company the respective number of Underwritten Securities set forth opposite the name of such Underwriter on the annex or annexes to Exhibit 1 hereto (or such number of Underwritten Securities, as the case may be, increased as set forth in Section 9 hereof, subject to such adjustments to eliminate any fractional Offered Securities as the Representatives in their sole discretion may make). If, pursuant to the Terms Agreement, the Company shall have granted the option to the Underwriters to purchase Option Securities, the Company agrees to sell to the Underwriters designated in the Terms Agreement to purchase option Securities (each, an "Option Securities Underwriter" and collectively, the "Option Securities Underwriters") the Option Securities, and the Option Securities Underwriters shall have a one-time right to purchase, severally and not jointly, the Option Securities on the terms set forth in the Terms Agreement. Option Securities may be purchased as provided below solely for the purpose of covering over-allotments made in connection with the offering of the Underwritten Securities. If any Option Securities are to be purchased, each Option Securities Underwriter agrees, severally and not jointly, to purchase the number of Option Securities (subject to such adjustments to eliminate any fractional Offered Securities as the Representatives designated in the Terms Agreement in their sole discretion may make) that bears the same proportion to the total number of Option Securities to be purchased as the number of Underwritten Securities set forth in the annex or annexes to Exhibit 1 hereto opposite the name of such Option Securities Underwriter bears to the total number of Underwritten Securities to be purchased by all Option Securities Underwriters. The Option Securities Underwriters may exercise the option to purchase the Option Securities at any time on or before the thirtieth day following the Representation Date, by written notice from the Representatives designated in the Terms Agreement to the Company. Such notice shall set forth the aggregate number of Option Securities as to which the option is being exercised and the date and time when the Option Securities are to be delivered and paid for, which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than the tenth full Business Day (as hereinafter defined) after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 9 hereof). Such notice shall be given at least two Business Days prior to the date and time of delivery specified therein. 2. Terms of Public Offering. The Company understands that the Underwriters intend (i) to make a public offering of the 5 -5- Offered Securities as soon after the Prospectus Supplement has been filed and the Terms Agreement has been executed and delivered as in the judgment of the Representatives is advisable and (ii) initially to offer the Offered Securities upon the terms set forth in the Prospectus Supplement and the Underwriters will advise the Company as to any alteration in the terms of such offering that would require, pursuant to the Securities Act, any amendment or supplement to the Prospectus Supplement. 3. Delivery of the Offered Securities and Payment Therefor. Payment for the Offered Securities shall be made to the Company or to the Company's order by certified or official bank check or checks payable in New York Clearing House or other next day funds in such location as the Representatives shall designate in the Terms Agreement at, in the case of the Underwritten Securities, such time and date as are specified in the Terms Agreement, or at such other time on the same or such other date, not later than the fifth Business Day (as hereinafter defined) thereafter, as the Representatives and the Company may agree upon in writing or, in the case of the Option Securities, on the date and at the time specified by the Representatives designated in the Terms Agreement to exercise such option in the written notice by such Representatives of the election to purchase such Option Securities by the Option Securities Underwriters. The time and date of such payment for the Underwritten Securities are referred to herein as the "Closing Date" and the time and date for such payment for the Option Securities, if other than the Closing Date, are herein referred to as the "Additional Closing Date". As used herein, the term "Business Day" means any day other than a day on which banks are permitted or required to be closed in New York City. Payment for the Offered Securities to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to the Representatives for the respective accounts of the several Underwriters of the Offered Securities to be purchased on such date registered in such names and in such denominations as the Representatives shall request in writing not later than two full Business Days prior to the Closing Date or the Additional Closing Date, as the case may be, with any transfer taxes payable in connection with the transfer to the Underwriters of the Offered Securities duly paid by the Company. The Company hereby agrees to pay any such transfer taxes. The certificates for the Offered Securities will be made available for inspection and packaging by the Representatives not later than 1:00 P.M., New York City time, on the Business Day prior to the Closing Date or the Additional Closing Date, as the case may be. 6 -6- 4. Representations and Warranties of the Company. The Company represents and warrants to each Underwriter as of the Representation Date and as of the Closing Date that: (i) A registration statement on Form S-3 (Registration No. 33-( )), including a prospectus, with respect to the Equity Securities (and such other securities of the Company as may be covered thereby), (i) has been prepared by the Company in conformity with the requirements of the Securities Act, (ii) has been filed with the Commission and (iii) has become effective. Such Registration Statement and the related prospectus may have been amended or supplemented from time to time prior to the Representation Date; any such amendment to the applicable Registration Statement was so prepared and filed and any such amendment has become effective. A prospectus supplement (the "Prospectus Supplement"), including a prospectus, relating to the Offered Securities has been prepared. The Prospectus Supplement and, if not previously filed, such prospectus will be filed pursuant to Rule 424 under the Securities Act. If the offering of the Offered Securities is to be made by U.S. Underwriters and International Managers, two such prospectus supplements, one relating to the Offered Securities to be sold by the U.S. Underwriters and one relating to the Underwritten Securities to be sold by the International Managers, and each identical to the other except for the cover page, have been so prepared and filed. In such event, the term "Prospectus Supplement" refers to such international and U.S. prospectus supplements. Copies of such Registration Statement and the Prospectus relating thereto, any such amendment or supplement, the Prospectus Supplement and all documents incorporated by reference therein which were filed with the Commission on or prior to the Representation Date (including one fully executed copy of the Registration Statement and of each amendment thereto for counsel for the Underwriters) have been delivered to each of the Representatives. The Company has included in the Registration Statement, as amended at the date the Registration Statement was declared effective (the "Effective Date"), all information (other than information relating specifically to the terms of any particular series of Equity Securities and the offering thereof) required by the Securities Act to be included in the Prospectus with respect to the Offered Securities and the offering and sale thereof. Except to the extent that the Underwriters shall agree in writing to a modification, the Registration Statement and the Prospectus shall be in all substantive respects in the form furnished to the Underwriters prior to the Representation Date or, to the extent not completed at the Representation Date, 7 -7- shall contain only such specific additional information and other changes as the Company has advised the Underwriters, a reasonable time prior to the Representation Date, is to be included or made therein and as to which the Underwriters have not reasonably objected. (ii) The Registration Statement, at the time it became effective, any post-effective amendment thereto, at the time it became effective, the Registration Statement and the Prospectus, as of the Representation Date and at the Closing Date, and any amendment or supplement thereto, conformed or will conform in all material respects to the requirements of the Securities Act; and no such document included or will include an untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading; provided, however, that the Company makes no representation or warranty as to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information relating to any Underwriter furnished to the Company by or on behalf of any Underwriter expressly for use therein. (iii) No order preventing or suspending the use of any preliminary prospectus has been issued by the Commission. (iv) (A) No stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for that purpose are pending before or threatened by the Commission and (B) each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and did not, or will not when so filed, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (v) Ernst & Young and Coopers & Lybrand, who are reporting upon the audited financial statements and the supporting schedules of the Company included or incorporated by reference in the Registration Statement and the Prospectus, in the case of Ernst & Young, were, at the time of their report, and, in the case of Coopers & Lybrand, are, independent public accountants within the meaning of the Securities Act. The financial statements, and the related 8 -8- notes thereto, included or incorporated by reference in the Registration Statement and the Prospectus, present fairly the consolidated financial position of the Company and its consolidated subsidiaries as of the dates indicated and the results of their operations and the changes in their consolidated cash flows for the periods specified; and said financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis, except as set forth therein, and the supporting schedules included or incorporated by reference in the Registration Statement present fairly the information required to be stated therein. If pro forma financial information is included in or incorporated by reference into the Registration Statement and the Prospectus, such pro forma financial information (including, without limitation, the notes thereto) as of the date presented (A) presented fairly in all material respects the information shown therein, (B) was prepared in accordance with applicable requirements of Regulation S-X promulgated under the Exchange Act, (C) was prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and (D) was properly computed on the bases described therein. In the opinion of the Company, the assumptions used in the preparation of any such pro forma financial information (including, without limitation, the notes thereto) were fair and reasonable and the adjustments used therein were appropriate to give effect to the transactions or circumstances referred to therein. No pro forma financial statements or other pro forma financial information is required to be included or incorporated by reference in the Registration Statement and the Prospectus other than those included or incorporated by reference therein. (vi) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Texas, has the corporate power and authority to own its property and to conduct its business as described in the Registration Statement and the Prospectus and to enter into this Agreement and the Terms Agreement, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the 9 -9- Subsidiaries (as hereinafter defined), taken as a whole (each, a "Material Adverse Effect"). (vii) Each direct and indirect foreign and domestic subsidiary of the Company listed on Schedule I hereto, which constitute all of the significant subsidiaries of the Company within the meaning of Rule 1-02 of Regulation S-X under the Exchange Act (each, a "Subsidiary" and collectively, the "Subsidiaries") has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Registration Statement and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so incorporated, be in existence, have such power and authority, be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. All of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and non-assessable, and, except as set forth in the Registration Statement and the Prospectus, are owned by the Company, directly or indirectly, free and clear of all liens, encumbrances, security interests, claims and restrictions on transferability and voting (other than any restrictions on transferability as may arise under state and federal securities laws). Except as set forth in the Registration Statement and the Prospectus, there are no outstanding (i) securities or obligations convertible into or exchangeable or exercisable for any shares of capital stock of, or other interest in, the Company or any Subsidiary, (ii) rights, warrants or options to acquire or purchase any shares of capital stock of, or other interest in, the Company or any Subsidiary or any such convertible, exchangeable or exercisable securities or obligations, or (iii) obligations or understandings to issue or sell any shares of capital stock of, or other interest in, the Company or any Subsidiary, any such convertible, exchangeable or exercisable securities or obligations, or any such warrants, rights or options, except as have been disclosed to the Underwriters in writing prior to the date hereof and except for (A) issuances of shares of Common Stock and options to acquire Common Stock after the date of the most recent information set forth in the Registration Statement and the Prospectus pursuant to the Company's employee benefit plans as in effect on the date hereof and (B) issuances after the date of the most recent 10 -10- information set forth in the Registration Statement and the Prospectus of convertible debentures of the Company and Common Stock pursuant to the Company's Registration Statement on Form S-4 (Registration No. 33-54996) (the "S-4"). (viii) There are no partnerships in which the Company or any of the Subsidiaries has any direct or indirect controlling interest that would constitute a significant subsidiary within the meaning of Rule 1-02 of Regulation S-X under the Exchange Act. Except for the capital stock of the Subsidiaries and except as set forth in the Registration Statement and the Prospectus, the Company does not own, directly or indirectly, any shares of stock or any other equity or long-term debt securities or have any equity interest in any firm, partnership, joint venture or other entity. (ix) This Agreement and the Terms Agreement have been duly and validly authorized, executed and delivered by the Company. (x) Since the date of the latest consolidated financial statements of the Company and the Subsidiaries included in the Registration Statement and the Prospectus, except as set forth in or expressly contemplated by the Registration Statement and the Prospectus, there has not been (A) any change in the Company's issued capital stock or options, except (I) pursuant to the exercise of options or the conversion, exchange or exercise of outstanding convertible, exchangeable or exercisable securities of the Company, (II) issuances of shares of Common Stock and options to acquire Common Stock issued after the date of such financial statements pursuant to the Company's employee benefit plans as in effect on the date hereof and (III) issuances after the date of such financial statements of convertible debentures of the Company and Common Stock pursuant to the S-4, or (B) any material adverse change in the management, condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole (each, a "Material Adverse Change," and any event or state of facts which could, singly or in the aggregate, reasonably be expected to result in a Material Adverse Change is herein referred to as a "Prospective Material Adverse Change"), whether or not arising from transactions or events occurring in the ordinary course of business. (xi) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as set forth therein, (A) there have been no 11 -11- transactions or contracts (written or oral) entered into or agreed to be entered into by the Company or any of the Subsidiaries (other than those in the ordinary course of business) which are material to the Company and the Subsidiaries, taken as a whole and (B) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock, other than regularly scheduled quarterly dividends in accordance with the past practice of the Company. (xii) As of the date of the Prospectus Supplement, the Company has the authorized, issued and outstanding capitalization set forth in the Prospectus under "Capitalization." The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Registration Statement and the Prospectus, and all of the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to any preemptive or similar rights. The Rights Agreement has been duly authorized, executed and delivered by the Company; the Rights outstanding thereunder and, if the Offered Securities include, or are convertible into or exchangeable or exercisable for, shares of Common Stock, to be issued upon issuance of the Offered Securities or the conversion, exchange or exercise thereof, have been duly authorized; the Series C Preferred Stock to be issued upon exercise of the Rights has been duly authorized; and the description of the Rights Agreement and the Rights set forth in the Registration Statement and the Prospectus is accurate in all material respects. (xiii) All corporate action required to be taken for the authorization, issuance and sale of the Offered Securities pursuant to this Agreement and the Terms Agreement has been validly and sufficiently taken. The Offered Securities have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and the Terms Agreement and, when issued and delivered by the Company pursuant to this Agreement and the Terms Agreement against payment of the consideration set forth in the Terms Agreement, the Offered Securities will be validly issued and fully paid and nonassessable; no holder thereof will be subject to personal liability solely by reason of being such a holder; the Offered Securities will not be subject to the preemptive rights of any stockholder of the Company. If the Offered Securities are convertible into, or exchangeable or exercisable for, Common Stock, the Offered Securities are convertible into, or exchangeable or 12 -12- exercisable for, Common Stock in accordance with their terms and the terms of the Resolution. (xiv) If the Offered Securities are convertible into or exchangeable or exercisable for Common Stock, the Common Stock issuable upon conversion, exchange or exercise of the Offered Securities pursuant to the terms of the Resolution has been duly authorized and validly reserved for issuance upon such conversion, exchange or exercise by all necessary corporate action and such Common Stock, when duly issued upon such conversion, exchange or exercise, will be validly issued and fully paid and nonassessable; no holder thereof will be subject to personal liability solely by reason of being such a holder; and the issuance of such Common Stock upon such conversion, exchange or exercise will not be subject to preemptive rights. (xv) The execution and delivery by the Company of, and the full and timely performance by the Company of its obligations under, this Agreement and the Terms Agreement, the filing of the Resolution with the Secretary of State of the State of Texas, the consummation of each of the transactions contemplated herein (including, without limitation, the issuance, sale and delivery of the Offered Securities and, if applicable, the issuance of the Common Stock upon conversion, exchange or exercise of the Offered Securities), therein and, if applicable, in the Resolution, (A) have been duly authorized by all necessary corporate action on the part of the Company, (B) do not and will not result in any violation of the articles of incorporation or by-laws of the Company and (C) do not and will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or give rise to any right to accelerate the maturity or require the prepayment of any indebtedness under, or result in the creation or imposition of any lien, charge or encumbrance upon any material property or assets of the Company or of any Subsidiary under (I) any indenture, mortgage, loan agreement, note, lease, license, partnership agreement, franchise agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them may be bound or affected or to which any of their respective properties or assets may be subject (each, a "Contract" and collectively, the "Contracts"), other than any such conflict, breach, default, acceleration, prepayment, lien, charge or encumbrance that could not, individually or in the aggregate, reasonably be expected to result in any Material Adverse 13 -13- Effect, (II) any existing applicable law, rule or regulation (other than the securities or Blue Sky laws of the various states and other jurisdictions of the United States of America) or (III) any judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Company or any Subsidiary or any of their respective properties or assets. (xvi) No authorization, approval, consent or license of, or filing with, any government, governmental instrumentality or court, domestic or foreign (other than as have been made and obtained and are in full force and effect under the Securities Act or as may be required under the securities or Blue Sky laws of the various states and other jurisdictions of the United States of America) is required for the valid authorization, issuance, sale and delivery of the Offered Securities by the Company, if applicable, the issuance of the Common Stock upon conversion, exchange or exercise of the Offered Securities, if applicable, the filing of the Resolution with the Secretary of State of the State of Texas, the execution and delivery by the Company of, or the full and timely performance by the Company of each of its obligations under, this Agreement and the Terms Agreement. (xvii) There are no contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed or incorporated by reference as exhibits to the Registration Statement that are not described, filed or incorporated as required. (xviii) No holder of any securities of the Company has any rights, not effectively satisfied or waived, to require the Company to register the sale of any securities under the Securities Act in connection with the filing of the Registration Statement or the consummation of the transactions contemplated therein or pursuant to this Agreement or the Terms Agreement. (xix) The Company and the Subsidiaries are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health or the environment or imposing liability or standards of conduct concerning any Hazardous Material (collectively, "Environmental Laws"), except where such noncompliance with Environmental Laws could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. The term "Hazardous Material" means (i) any "hazardous substance" as defined by the Comprehensive Environmental Response, 14 -14- Compensation and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated biphenyl, and (v) any pollutant or contaminant or hazardous, dangerous, or toxic chemical, material, waste or substance regulated under or within the meaning of any other Environmental Law. (xx) Each of the Company and each of the Subsidiaries owns, possesses or has obtained all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all federal, state, local and other governmental authorities (including foreign regulatory agencies), all self-regulatory organizations and all courts and other tribunals, domestic or foreign, necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as conducted as of the date hereof, except in each case where the failure to obtain licenses, permits, certificates, consents, orders, approvals and other authorizations, or to make all declarations and filings, could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect, and neither the Company nor any Subsidiary has received any notice of any proceeding relating to revocation or modification of any such license, permit, certificate, consent, order, approval or other authorization, except as described in the Registration Statement and the Prospectus and except, in each case, where such revocation or modification could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect; and the Company and each Subsidiary are in compliance with all laws and regulations relating to the conduct of their respective businesses as conducted as set forth in the Registration Statement and the Prospectus, except where noncompliance with such laws or regulations could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xxi) To the best knowledge of the Company, each of the Company and the Subsidiaries owns or possesses the patents, patent licenses, trademarks, service marks, trade names, copyrights and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) (collectively, the "Intellectual Property") reasonably necessary to carry on the business conducted by each as conducted on the date hereof, except to the extent that the failure to own or possess such Intellectual Property could not, singly or in the aggregate, 15 -15- reasonably be expected to have a Material Adverse Effect, and, except as set forth in the Registration Statement and the Prospectus, neither the Company nor any Subsidiary has received any notice of infringement of or conflict with asserted rights of others with respect to any Intellectual Property, except for notices the content of which if accurate could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xxii) Except as set forth in the Registration Statement and the Prospectus, no authorization, approval or consent of any governmental authority or agency is required (other than those which have already been obtained) under the laws of any jurisdiction in which the Company or any of the Subsidiaries conduct their respective businesses in connection with the ownership by the Company of capital stock of any Subsidiary, any foreign exchange controls or the repatriation of any amount from or to the Company and the Subsidiaries, except to the extent such authorizations, approvals or consents have been obtained and are in full force and effect and except to the extent that the failure to obtain such authorization, approval or consent could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xxiii) The Company has not taken and will not take, directly or indirectly, any action designed to, or that might be reasonably expected to, cause or result in stabilization or manipulation of the price of the Offered Securities (or the Common Stock, if applicable), and the Company has not distributed and will not distribute any prospectus or other offering material in connection with the offering and sale of the Offered Securities other than any preliminary prospectus filed with the Commission or the Prospectus or other materials permitted under the Securities Act. (xxiv) Except as set forth in the Registration Statement and the Prospectus, there is no action, suit or proceeding before or by any government, governmental or regulatory instrumentality, agency or body or court, domestic or foreign, or any arbitrator, now pending or, to the best knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any affiliate of the Company that, singly or in the aggregate with all such actions, suits and proceedings (i) could reasonably be expected to have a Material Adverse Effect or could reasonably be expected to have a material adverse effect on the consummation of the transactions contemplated in this Agreement or (ii) is required to be 16 -16- described in the Registration Statement or the Prospectus that is not so described. (xxv) Neither the Company nor any Subsidiary (i) is in violation of its articles of incorporation, by-laws or other organizational documents or (ii) is or with the giving of notice or lapse of time or both would be in violation of, or in breach of or in default under or in the performance or observance of, any obligation, agreement, covenant or condition contained in this Agreement, the Terms Agreement or any Contract or of any permit, order, decree, judgment, statute, rule or regulation, foreign or domestic, applicable to the Company or any Subsidiary, except for such violations, breaches or defaults that could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xxvi) The Company is not an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended or a holding company or a subsidiary of a holding company under the Public Utility Holding Company Act of 1935. (xxvii) The Company has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida). (xxviii) The statistical and market-related data included or incorporated by reference in the Registration Statement and the Prospectus 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. (xxix) The Company knows of no outstanding claims for services, either in the nature of a finder's fee or origination fee, with respect to the transactions contemplated hereby and by the Terms Agreement, other than the underwriting fees and compensation to be paid to the Underwriters in accordance with this Agreement. (xxx) No labor disputes exist with employees of the Company or of the Subsidiaries that could, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. Any certificate signed by any officer of the Company and delivered to the Underwriters or to counsel for the Underwriters 17 -17- shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby. 5. Agreements of the Company. The Company covenants and agrees with each Underwriter as follows: (a) To use its reasonable best efforts to cause any amendment to the Registration Statement to become effective at the earliest possible time. (b) To furnish to each of the Representatives, without charge, as many signed copies of the Registration Statement (as originally filed) and each amendment thereto and each document incorporated or deemed incorporated therein, in each case including exhibits filed therewith or incorporated therein, as the Representatives may reasonably request, and to each other Underwriter a conformed copy of the Registration Statement (as originally filed) and each amendment thereto, in each case without exhibits and, during the period mentioned in paragraph (e) below, to each of the Underwriters as many copies of the Prospectus (including all amendments and supplements thereto and documents incorporated by reference therein) as the Representatives may reasonably request. (c) To give the Underwriters prompt notice of the Company's intention to file or prepare any amendment to the Registration Statement or any amendment or supplement to the Prospectus, whether pursuant to the Securities Act, the Exchange Act or otherwise, to furnish the Underwriters and their counsel with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and not to file any such amendment or supplement or use any such prospectus to which the Underwriters or counsel for the Underwriters shall object. Subject to the foregoing sentence, the Company will cause each Prospectus Supplement relating to the Offered Securities to be filed with the Commission pursuant to the applicable paragraph of Rule 424 under the Securities Act within the time period prescribed and will provide evidence satisfactory to the Underwriters of such timely filing. (d) To advise the Representatives and their counsel promptly, and to confirm such advice in writing, (i) when any Prospectus Supplement relating to the Offered Securities shall have been filed with the Commission pursuant to Rule 424 under the Securities Act, (ii) when, prior to the termination of the offering of the Offered Securities, any amendment to the Registration Statement shall have been filed with the 18 -18- Commission or become effective, (iii) of the receipt of any comments from the Commission or of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Prospectus or Prospectus Supplement or the initiation or threatening of any proceeding for that purpose and (v) of the receipt by the Company of any notification with respect to any suspension of the qualification of the Offered Securities for offer and sale in any jurisdiction or the initiation of any proceeding for such purpose; and to use its reasonable best efforts to prevent the issuance of any such stop order or notification and, if issued, to obtain as soon as possible the withdrawal thereof. (e) If, during such period after the first date of the public offering of the Offered Securities as in the opinion of the Underwriters' counsel a prospectus relating to the Offered Securities is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur, information shall become known or condition exist as a result of which it is necessary or advisable to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary or advisable to amend or supplement the Prospectus to comply with law, forthwith, at the sole expense of the Company, to prepare, and, subject to Section 5(c) above, file with the Commission and furnish, without charge, to the Underwriters and to the dealers (whose names and addresses the Representatives will furnish to the Company) to which Offered Securities may have been sold by the Representatives on behalf of the Underwriters and to any other dealers upon request, such amendments or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law. (f) To endeavor to qualify the Offered Securities (and the Common Stock, if applicable) for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives shall request and to continue such qualification in effect so long as required for distribution of the Offered Securities and to pay all fees and expenses (including fees and disbursements of counsel to the 19 -19- Underwriters) incurred in connection with such qualification; provided, however, that the Company shall not be required to file a general consent to service of process in any jurisdiction or subject itself to general taxation in any jurisdiction. (g) To make generally available to its security holders and to the Representatives as soon as practicable, but not later than 15 months, after the date of each Terms Agreement an earnings statement, covering a period of at least 12 months beginning after the later of (i) the effective date of the Registration Statement, (ii) the effective date of the most recent post-effective amendment to the Registration Statement to become effective prior to the date of such Terms Agreement and (iii) the date of the Company's most recent Annual Report on Form 10-K filed with the Commission prior to the date of such Terms Agreement, which will satisfy the provisions of Rule 158 under the Securities Act and Section 11(a) of the Securities Act. (h) For a period of 120 days after the Representation Date, without the prior written consent of the Representative designated in the Terms Agreement, not to, and not cause or permit any Subsidiary to, directly or indirectly, effect any offer, sale or other disposition of, or registration of, any shares of Equity Securities of the same class as the Offered Securities (including, without limitation, any depository shares representing the same) or any securities convertible into or exchangeable or exercisable for shares of Equity Securities of the same class as the Offered Securities, other than (A) the Offered Securities to be sold pursuant to the Terms Agreement, (B) shares of capital stock of the Company issued upon conversion, exchange or exercise of convertible, exchangeable or exercisable securities of the Company or of any Subsidiary outstanding on the Representation Date and (C) shares of Common Stock and options thereunder issued pursuant to employee benefit plans of the Company in place on the Representation Date as in effect on the Representation Date, and other than pursuant to such other exceptions, if any, as are agreed to by the Representatives and set forth in the Terms Agreement. (i) Whether or not the transactions contemplated hereby or by the Terms Agreement are consummated or this Agreement is terminated or shall not become effective, to pay all costs and expenses incident or relating to the performance of the Company's obligations hereunder, including, without limiting the generality of the foregoing, all costs and expenses (i) 20 -20- incurred in connection with the preparation, issuance, execution and delivery of the Offered Securities (including, if applicable, the Common Stock issuable upon conversion, exchange or exercise thereof), (ii) incurred in connection with the preparation, printing and filing under the Securities Act and the Exchange Act of the Registration Statement, the Prospectus, any preliminary prospectus and each Prospectus Supplement (including in each case all exhibits, amendments and supplements thereto and all documents incorporated therein by reference), (iii) incurred in connection with the registration or qualification of the Offered Securities (including, if applicable, the Common Stock issuable upon conversion, exchange or exercise thereof) under the laws of such jurisdictions as the Representatives may request (including filing fees and the fees of counsel for the Underwriters and their disbursements), (iv) in connection with the listing of the Offered Securities on the New York Stock Exchange, (v) relating to any filing with the National Association of Securities Dealers Inc. (the "NASD") in connection with the offering of the Offered Securities, (vi) incurred in connection with the engagement of any qualified independent underwriter as may be required by NASD rules and regulations, (vii) incurred in connection with the rating of the Offered Securities, (viii) incurred in connection with advertising relating to the Offered Securities approved by the Company (which approval shall not be unreasonably withheld or delayed), (ix) relating to the fees and expenses of the transfer agent and registrar for the Offered Securities and (x) relating to or in connection with the printing (including word processing and duplication costs) and delivery of this Agreement, the Terms Agreement, the agreement among underwriters, each other document or instrument relating to the underwriting arrangements and the coordination of the offering of the Offered Securities by the U.S. Underwriters and the International Managers, if applicable, any dealer agreements, the Preliminary and Supplemental Blue Sky Memoranda and the furnishing to the Underwriters and dealers of copies of the Registration Statement, the Prospectus and each Prospectus Supplement, including mailing and shipping, as herein provided. (j) To furnish to the Representatives for a period of five years after the Representation Date copies of all reports or other communications (financial or other) furnished to holders of the Company's capital stock, and copies of any reports and financial statements furnished to or filed with the Commission. 21 -21- (k) To use the net proceeds of the offering of the Offered Securities as set forth in the Prospectus under the caption "Use of Proceeds." (l) During the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act, to file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time period required by the Exchange Act and the Exchange Act Regulations. (m) To use its best efforts to effect the listing of the Offered Securities (including, if applicable, the shares of Common Stock issuable upon the conversion of the Offered Securities) on the New York Stock Exchange on the Representation Date. (n) To reserve and keep available at all times, free of preemptive rights, sufficient shares of Common Stock to satisfy any obligations to issue shares of Common Stock upon conversion, exchange or exercise of all of the Offered Securities that are convertible into or exchangeable or exercisable for the Common Stock. 6. Conditions of Underwriters' Obligations. The several obligations of the Underwriters hereunder to purchase the Underwritten Securities are subject to the following conditions: (a) If any amendment to the Registration Statement filed prior to the Closing Date has not been declared effective as of the Representation Date, such amendment shall have become effective not later than 5:30 P.M. on the Representation Date; and at the Closing Date no stop order suspending the effectiveness of the Registration Statement shall have been issued under the Securities Act or proceedings therefor initiated or threatened by the Commission. The price of the Offered Securities and any price-related information previously omitted from the effective Registration Statement and the Prospectus Supplement shall have been transmitted to the Commission for filing pursuant to Rule 424 under the Securities Act within the prescribed time period and prior to the Closing Date the Company shall have provided evidence satisfactory to the Underwriters of such timely filing. (b) The representations and warranties of the Company contained herein and in the Terms Agreement shall be true and correct on and as of the Closing Date as if made on and as of the Closing Date and the Company shall have complied with all 22 -22- agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date. (c) Subsequent to the Representation Date and prior to the Closing Date, there shall not have occurred any Material Adverse Change or any development involving a Prospective Material Adverse Change other than as set forth in the Registration Statement and the Prospectus, the effect of which in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Underwritten Securities on the terms and in the manner contemplated in the Registration Statement and the Prospectus. As used in this Section 6(c), "Prospectus" shall mean the Prospectus first used to confirm sales of the Offered Securities exclusive of any amendment or supplement thereto thereafter. (d) The Representatives shall have received on and as of the Closing Date a certificate of the Company signed by the Chief Executive Officer, the Chief Operating Officer or the Chief Financial Officer of the Company to the effect set forth in subsections (a) and (b) of this Section 6 and to the further effect that since the most recent date as of which information is given in the Prospectus there shall not have occurred any Material Adverse Change, or any development involving a Prospective Material Adverse Change. As used in this Section 6(d), "Prospectus" shall mean the Prospectus first used to confirm sales of the Offered Securities exclusive of any amendment or supplement thereto thereafter. (e) The Representatives shall have received on the Closing Date a signed opinion of Wachtell, Lipton, Rosen & Katz, special counsel for the Company, addressed to the Underwriters and dated the Closing Date and satisfactory to counsel for the Underwriters, to the effect that: (i) Each of this Agreement and the Terms Agreement has been duly authorized, executed and delivered by the Company. (ii) The number of authorized shares of capital stock of the Company is as set forth in the Prospectus under "Capitalization" and the authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus. 23 -23- (iii) The Offered Securities have been duly authorized for issuance and sale to the Underwriters in accordance with this Agreement and the Terms Agreement and, when issued and delivered by the Company to the Underwriters pursuant to this Agreement and the Terms Agreement against payment of the consideration set forth in the Terms Agreement, will be validly issued and fully paid and non-assessable. (iv) The issuance of the Offered Securities is not subject to preemptive rights arising by operation of law or under the charter or by-laws of the Company; and no holder of the Offered Securities will be subject to personal liability solely by reason of being such a holder. (v) If the Offered Securities are convertible into or exchangeable or exercisable for Common Stock, upon issuance and delivery of the Offered Securities, the Offered Securities shall be convertible, exchangeable or exercisable at the option of the holder thereof into or for Common Stock in accordance with the terms of the Offered Securities and the Resolution; the Common Stock issuable upon conversion, exchange or exercise of the Offered Securities has been duly authorized and validly reserved for issuance upon such conversion, exchange or exercise by all necessary corporate action, and such Common Stock, when issued upon such conversion, exchange or exercise, will be validly issued, fully paid and nonassessable; no holder of the Common Stock will be subject to personal liability solely by reason of being such a holder; and the issuance of such shares upon such conversion, exchange or exercise will not be subject to preemptive rights arising by operation of law or under the charter or by-laws of the Company. (vi) At the time the Registration Statement and each amendment thereto became effective and at the Representation Date, the Registration Statement and the Prospectus (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need express no opinion) appear on their face to be appropriately responsive to the applicable requirements of the Securities Act. (vii) The statements set forth or incorporated by reference in the Registration Statement and the 24 -24- Prospectus insofar as such statements purport to summarize certain provisions of the Offered Securities (and the Common Stock, if applicable) provide a fair summary of such provisions. (viii) Such counsel does not know of any legal or governmental actions, suits or proceedings, pending or threatened, required to be disclosed in the Registration Statement which are not disclosed therein as required (provided that for such purpose such counsel need not regard any action, suit or proceeding to be "threatened" unless the potential litigant has manifested to the management of the Company or to such counsel a present intention to initiate such suit or proceeding). (ix) Based upon such counsel's review of applicable law, no authorization, approval, consent or order of any court or governmental or regulatory authority, body or agency or third party is required in connection with (A) the offering, issuance or sale of the Offered Securities, if applicable, the filing of the Resolution with the Secretary of State of the State of Texas, or, if applicable, the valid authorization, issuance and delivery of the Common Stock issuable upon conversion, exchange or exercise of the Offered Securities, or (B) the execution, delivery or full and timely performance of this Agreement or the Terms Agreement by the Company, except such as may be required under the Securities Act or state securities laws or under the Company's listing agreement with the New York Stock Exchange, Inc. (x) To the best of such counsel's knowledge and information, the execution, delivery and the full and timely performance of this Agreement and the Terms Agreement, the filing of the Resolution with the Secretary of State of the State of Texas, the consummation of each of the transactions contemplated herein (including, without limitation, the issuance, sale and delivery of the Offered Securities and, if applicable, the issuance of the Common Stock upon conversion, exchange or exercise of the Offered Securities), therein and, if applicable, in the Resolution will not constitute a breach of, or default under (including, without limitation, any event which with notice or lapse of time, or both, would constitute a breach of or a default under), or result in the creation or imposition of any lien, charge or encumbrance 25 -25- upon any property or assets of the Company or any of the Subsidiaries pursuant to, any contract identified on a schedule to such opinion, nor will such action result in any violation of the provisions of the charter or by-laws of the Company, or any applicable law, rule, regulation or administrative, regulatory or court judgment, order or decree, except for any breach, default, lien, charge or encumbrance under any such contract as could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xi) Each document filed pursuant to the Exchange Act (other than the financial statements, schedules and other financial and statistical data included therein, as to which such counsel need express no opinion) and incorporated or deemed to be incorporated by reference in the Prospectus appears on its face to be appropriately responsive to the applicable requirements of the Exchange Act. (xii) The Company is not an investment company under the Investment Company Act of 1940, nor a holding company or a subsidiary of a holding company under the Public Utility Holding Company Act of 1935. Such counsel shall also state that they have been advised by the Commission that the Registration Statement became effective under the Securities Act; that any required filings of the Prospectus pursuant to Rule 424(b) have been made in the manner and within the time period required by Rule 424(b); and that, based solely on conversations with the Commission, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted, are pending or, to such counsel's knowledge, are contemplated under the Securities Act. In addition, such counsel shall also include a statement to the effect that nothing has come to the attention of such counsel which leads such counsel to believe that (1) the Registration Statement (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion), when it became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (2) the Prospectus (other than the financial statements and schedules and other 26 -26- financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion) as of its date or at the Representation Date contained and, as of the date such opinion is delivered, contains any untrue statement of a material fact or omitted or omits 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. Such counsel in rendering such opinion may rely as to certain matters of fact on certificates of officers of the Company and of public officials; provided, however, that (a) such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such certificates and (b) such certificates shall have been delivered to the Representatives prior to the Closing Date. In rendering such opinion, such counsel may rely as to matters involving the application of laws of (1) the State of Texas, upon the written opinion of James M. Shelger, General Counsel of the Company, delivered pursuant to clause (f) below of this Section 6 and (2) any jurisdiction other than the State of New York or the United States or the General Corporation Law of the State of Delaware, to the extent such counsel deems proper and specifies in such opinion, upon the opinion of other counsel who are reasonably satisfactory to counsel for the Underwriters; provided, however, that such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such opinion. (f) The Representatives shall have received on the Closing Date a signed opinion of James M. Shelger, General Counsel of the Company, addressed to the Underwriters and dated the Closing Date and satisfactory to counsel for the Underwriters, to the effect that: (i) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and to the best of such counsel's knowledge and information is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good 27 -27- standing could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (ii) Each Subsidiary has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (iii) Each of this Agreement and the Terms Agreement has been duly authorized, executed and delivered by the Company. (iv) The number of authorized shares of capital stock of the Company is as set forth in the Prospectus under "Capitalization" and the authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus. (v) The Offered Securities have been duly authorized for issuance and sale to the Underwriters in accordance with this Agreement and the Terms Agreement and, when issued and delivered by the Company to the Underwriters pursuant to this Agreement and the Terms Agreement against payment of the consideration set forth in the Terms Agreement, will be validly issued and fully paid and non-assessable. (vi) The issuance of the Offered Securities is not subject to preemptive or other similar rights arising by operation of law or under the charter or by-laws of the Company; and no holder of the Offered Securities will be subject to personal liability solely by reason of being such a holder. (vii) If the Offered Securities are convertible into or exchangeable or exercisable for Common Stock, upon issuance and delivery of the Offered Securities, the Offered Securities shall be convertible, exchangeable or exercisable at the option of the holder thereof into or for Common Stock in accordance with the terms of the 28 -28- Offered Securities and the Resolution; the Common Stock issuable upon conversion, exchange or exercise of the Offered Securities has been duly authorized and validly reserved for issuance upon such conversion, exchange or exercise by all necessary corporate action, and such Common Stock, when issued upon such conversion, exchange or exercise, will be validly issued, fully paid and nonassessable; no holder of the Common Stock will be subject to personal liability solely by reason of being such a holder; and the issuance of such shares upon such conversion, exchange or exercise will not be subject to preemptive rights arising by operation of law or under the charter or by-laws of the Company. (viii) All of the issued and outstanding capital stock of each Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, to the best of such counsel's knowledge and information, after due inquiry, except as set forth in the Registration Statement and the Prospectus, is owned by the Company, directly or indirectly, free and clear of any perfected security interest, and, to the best of such counsel's knowledge, after due inquiry, any other security interests or claims. (ix) The statements set forth or incorporated by reference in the Registration Statement and the Prospectus insofar as such statements purport to summarize certain provisions of the Offered Securities (and the Common Stock, if applicable) provide a fair summary of such provisions. (x) Such counsel does not know of any legal or governmental actions, suits or proceedings, pending or threatened, required to be disclosed in the Registration Statement which are not disclosed therein as required (provided that for such purpose such counsel need not regard any action, suit or proceeding to be "threatened" unless the potential litigant has manifested to the management of the Company or to such counsel a present intention to initiate such suit or proceeding). (xi) To the best of such counsel's knowledge and information, after due inquiry, there are no Contracts or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein 29 -29- or filed or incorporated by reference as exhibits thereto. (xii) Based upon such counsel's review of applicable law, no authorization, approval, consent or order of any court or governmental or regulatory authority, body or agency or third party is required in connection with (A) the offering, issuance or sale of the Offered Securities, if applicable, the filing of the Resolution with the Secretary of State of the State of Texas, or, if applicable, the valid authorization, issuance and delivery of the Common Stock issuable upon conversion, exchange or exercise of the Offered Securities, or (B) the execution, delivery or full and timely performance of this Agreement or the Terms Agreement by the Company, except such as may be required under the Securities Act or state securities laws or under the Company's listing agreement with the New York Stock Exchange, Inc. (xiii) To the best of such counsel's knowledge and information, the execution, delivery and the full and timely performance of this Agreement and the Terms Agreement, the filing of the Resolution with the Secretary of State of the State of Texas, the consummation of each of the transactions contemplated herein (including, without limitation, the issuance, sale and delivery of the Offered Securities and, if applicable, the issuance of the Common Stock upon conversion, exchange or exercise of the Offered Securities), therein and, if applicable, in the Resolution, and compliance by the Company with its obligations hereunder and thereunder will not conflict with or constitute a breach of, or default under (including, without limitation, any event which with notice or lapse of time, or both, would constitute a breach of or a default under), or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Subsidiaries pursuant to, any contract identified on a schedule to such opinion, nor will such action result in any violation of the provisions of the charter or by-laws of the Company, or any applicable law, rule, regulation or administrative, regulatory or court judgment, order or decree, except for any breach, default, lien, charge or encumbrance under any such contract as could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. 30 -30- In addition, such counsel shall also include a statement to the effect that nothing has come to the attention of such counsel which leads such counsel to believe that (1) the Registration Statement (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion), when it became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (2) the Prospectus (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion) as of its date or at the Representation Date contained and, as of the date such opinion is delivered, contains any untrue statement of a material fact or omitted or omits 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. Such counsel in rendering such opinion may rely as to certain matters of fact on certificates of officers of the Company and of public officials; provided, however, that (a) such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such certificates and (b) such certificates shall have been delivered to the Representatives prior to the Closing Date. In rendering such opinion, such counsel may rely as to matters involving the application of laws of (1) the State of New York or the General Corporation Law of the State of Delaware, upon the written opinion of Wachtell, Lipton, Rosen & Katz, delivered pursuant to clause (e) above of this Section 6 and (2) any jurisdiction other than the State of Texas or the United States, to the extent such counsel deems proper and specifies in such opinion, upon the opinion of other counsel who are reasonably satisfactory to counsel for the Underwriters; provided, however, that such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such opinion. (g) On the Representation Date and also on the Closing Date, Ernst & Young and Coopers & Lybrand shall have furnished to the Representatives signed letters, addressed to the Underwriters and dated the respective dates of delivery thereof, in form and substance satisfactory to the Representatives, containing statements and information of the 31 -31- type customarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information included or incorporated by reference in the Registration Statement and the Prospectus. (h) The Representatives shall have received on and as of the Closing Date a favorable opinion of Cahill Gordon & Reindel, counsel to the Underwriters, with respect to the Registration Statement, the Prospectus and other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters. (i) On the Representation Date, the Offered Securities and, if applicable, the Common Stock issuable upon conversion of the Offered Securities shall have been approved for listing on the New York Stock Exchange upon notice of issuance. (j) At the Closing Date, counsel for the Underwriters 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 Offered Securities as herein contemplated and related proceedings, 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 Offered Securities (and, if applicable, the Common Stock) as herein contemplated shall be satisfactory in form and substance to the Underwriters and counsel for the Underwriters. (k) On or prior to the Closing Date the Company shall have furnished to the Representatives such further certificates and documents as the Representatives shall reasonably request. (l) Subsequent to the execution and delivery of the Terms Agreement and prior to the Closing Date, there shall not have occurred any downgrading, nor shall any notice have been given of (i) any intended or potential downgrading or (ii) any review or possible change that does not indicate an improvement, in the rating accorded any securities of or guaranteed by the Company by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act. 32 -32- (m) The Company shall have delivered to the Representatives written agreements, in form and substance satisfactory to the Representative designated in the Terms Agreement, with each of its executive officers who own capital stock of the Company of a class which includes the Offered Securities that no offer, sale or other disposition, or request or demand for registration under the Securities Act or inclusion in any other registration statement filed by the Company under the Securities Act, of any capital stock of the Company of a class which includes the Offered Securities, or warrants, options, convertible, exercisable or exchangeable securities, or other rights to purchase or acquire, such capital stock (or any such right or exchangeable, exercisable or convertible security) owned by such person, or with respect to which such person has the power of disposition, will be made for a period of 90 days after the Representation Date, directly or indirectly, by such executive officer, otherwise than (i) with the prior written consent of the Representative designated in the Terms Agreement and (ii) pursuant to such exceptions, if any, as are agreed to by the Representatives and set forth in the Terms Agreement. (n) There shall not have been any amendment or supplement to the Registration Statement or the Prospectus to which the Underwriters shall have objected. The several obligations of the Underwriters designated in the Terms Agreement to purchase Option Securities hereunder on the Additional Closing Date are, unless otherwise agreed by the Underwriters designated in the Terms Agreement, subject to the conditions set forth in paragraph (a) to and including paragraph (n) above on and as of the Additional Closing Date (references therein to the Closing Date shall be deemed references to the Additional Closing Date for this purpose), except that the certificate called for by paragraph (d), the opinions called for by paragraphs (e), (f) and (h) and the letters called for by paragraph (g) shall be dated as of, and delivered on, the Additional Closing Date, and to the delivery to the Representatives on the Additional Closing Date of such other documents as they may reasonably request. 7. Indemnification and Contribution. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation the legal fees and other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained 33 -33- in the Registration Statement or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein; provided, however, that the foregoing indemnity with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter (or the benefit of any person controlling such Underwriter) from whom the person asserting any such losses, claims, damages or liabilities purchased Offered Securities if such untrue statement or omission or alleged untrue statement or omission made in such preliminary prospectus and is eliminated or remedied in the Prospectus and the Company has provided such Prospectus in accordance with paragraph 5(ii) hereof (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) and if it shall be established in the related action or proceeding that a copy of the Prospectus, if required by law (as so amended or supplemented, but exclusive of any documents incorporated therein by reference), shall not have been furnished to such person at or prior to the written confirmation of the sale of such Offered Securities to such person, except to the extent that such Prospectus contains any other untrue statement or omission or alleged untrue statement or omission of a material fact that was the subject matter of the related action or proceeding. For purposes of the proviso to the immediately preceding sentence, the term "Prospectus" shall not be deemed to include the documents incorporated therein by reference, and no Underwriter shall be obligated to send or give any supplement or amendment to any document incorporated by reference in any preliminary prospectus or the Prospectus to any person. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the directors of the Company, the officers of the Company who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or 34 -34- supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any preliminary prospectus. For purposes of this Section 7 and Section 4(ii), the only written information furnished by the Underwriters to the Company expressly for use in the Registration Statement and the Prospectus is the information in the last paragraph of the cover page of the Prospectus Supplement and ( ) and ( ) under the table under the caption "Underwriting" in the Prospectus Supplement. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnity may be sought pursuant to any of the two preceding paragraphs of this Section 7, such person (hereinafter called the "Indemnified Person") shall promptly notify the person against whom such indemnity may be sought (hereinafter called the "Indemnifying Person") in writing, and the Indemnifying Person, upon request of the Indemnified Person, shall promptly retain counsel satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary, (ii) there has been a failure by the Indemnifying Person to retain promptly counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign the Registration Statement and each person, if any, who 35 -35- controls the Company within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Underwriters and such control persons of Underwriters, such firm shall be designated in writing by the Representatives. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested an Indemnifying Person to reimburse the Indemnified Person for fees and expenses of counsel as contemplated by the third sentence of this paragraph, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement (1) includes an unconditional written release of such Indemnified Person, in form and substance satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (2) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of any Indemnified Person. If the indemnification provided for in the first or second paragraph of this Section 7 is unavailable to any extent to an Indemnified Person under such paragraph in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities as follows: as between the Company on the one hand and the Underwriters on the other (i) in such proportion as is appropriate to reflect the aggregate relative benefits received by the Company and by the Underwriters from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by 36 -36- 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 and of the Underwriters in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and by the Underwriters on the other shall be deemed to be in the same respective proportions as the net proceeds from the offering (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus bear to the aggregate public offering price of the Offered Securities. The relative fault of the Company on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total price at which the Offered Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 7 are several in proportion to the respective number of Offered Securities they have purchased hereunder, and not joint. 37 -37- The indemnity and contribution agreements contained in this Section 7 are in addition to any liability which the Indemnifying Persons may otherwise have to the Indemnified Persons referred to above. The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of and payment for any of the Offered Securities. 8. Termination of Agreement. Notwithstanding anything herein contained, this Agreement (or the obligations of the several Option Securities Underwriters with respect to the Option Securities) may be terminated in the absolute discretion of the Representatives, by notice given to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (or, in the case of the Option Securities, prior to the Additional Closing Date) (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the National Association of Securities Dealers, Inc., the American Stock Exchange or the ( ), (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York or ( ) shall have been declared by either U.S. Federal, New York State or ( ) authorities or exchange controls shall have been imposed by the United States, or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in the judgment of the Representatives, is material and adverse and which, in the judgment of the Representatives, makes it impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. 9. Effectiveness of Agreement; Additional Obligations of the Underwriters. This Agreement shall become effective upon the later of (x) the Representation Date and (y) release of notification by the Commission of the effectiveness of the most recent amendment to the Registration Statement filed prior to the Closing Date. If, on the Closing Date or the Additional Closing Date, as the case may be, any one or more of the Underwriters shall fail 38 -38- or refuse to purchase Offered Securities which it or they have agreed to purchase hereunder on such date, and the aggregate number of Offered Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of Offered Securities to be purchased on such date, the other Underwriters (with respect to the Option Securities, to the extent such Underwriters are Option Securities Underwriters) shall be obligated severally in the proportions that (1) with respect to Underwritten Securities the number of Underwritten Securities set forth opposite their respective names in the annex or annexes to Exhibit 1 hereto bears to the aggregate number of Underwritten Securities set forth opposite the names of all such non-defaulting Underwriters and (2) with respect to Option Securities, the number of Underwritten Securities set forth opposite their respective names in the annex or annexes to Exhibit 1 hereto bears to the aggregate number of Underwritten Securities set forth opposite the names of all such non-defaulting Underwriters who are Option Securities Underwriters, or in such other proportions as the Representatives may specify, to purchase the Offered Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided, however, that in no event shall the number of Offered Securities that any Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant to this Section 9 by an amount in excess of one-ninth of such number of Offered Securities without the written consent of such Underwriter. If, on the Closing Date or the Additional Closing Date, as the case may be, any Underwriter or Underwriters shall fail or refuse to purchase Offered Securities which it or they have agreed to purchase hereunder on such date, and the number of Offered Securities with respect to which such default occurs is more than one-tenth of the aggregate number of Offered Securities to be purchased on such date, and arrangements satisfactory to the Representatives and the Company for the purchase of such Offered Securities are not made within 36 hours after such default, this Agreement (or the obligations of the several Underwriters to purchase the Option Securities, as the case may be) shall terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case either the Representatives or the Company shall have the right to postpone the Closing Date (or, in the case of the Option Securities, the Additional Closing Date), but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 39 -39- 10. Reimbursement upon Occurrence of Certain Events. If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company agrees to reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and expenses of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder and pursuant to the Terms Agreement. In no event, however, shall the Company be responsible to the Underwriters for any loss of profits for failure to consummate the offering and sale of the Offered Securities. 11. Miscellaneous. This Agreement shall inure to the benefit of and be binding upon the Company, the Underwriters, any controlling persons referred to herein and their respective successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. No purchaser of Offered Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. 12. Notice. 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 Underwriters shall be given to the Representatives at the address as set forth in the Terms Agreement. Notices to the Company shall be given to it at Service Corporation International, 1929 Allen Parkway, Houston, Texas 77019 (facsimile: (713) ( )); Attention: ( ). 13. Counterparts; Applicable Law. This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly therein, without giving effect to the conflicts of laws provisions thereof. 40 If the foregoing is in accordance with your understanding, please sign and return six counterparts hereof. Very truly yours, SERVICE CORPORATION INTERNATIONAL By:_______________________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written (Insert Signature block(s) for the Representative or Representatives acting on behalf of the Underwriters, or for each Underwriter if no Syndicate) 41 EXHIBIT I SERVICE CORPORATION INTERNATIONAL ( ) Shares (TITLE OF EQUITY SECURITIES) TERMS AGREEMENT ( ), 199( ) Service Corporation International 1929 Allen Parkway Houston, Texas 77019 Attention: ( ) Ladies and Gentlemen: ( ) (the "Representative(s)") understand that Service Corporation International, a Texas corporation (the "Company"), proposes to issue and sell ( ) shares of its (describe Equity Securities) (the "Underwritten Securities"). Subject to the terms and conditions set forth herein or incorporated by reference herein, the (U.S.) Underwriters named in Annex A attached hereto (and the International Managers named in Annex B attached hereto) offer to purchase, severally and not jointly, the number of Underwritten Securities set forth opposite the name of each such Underwriter on Annex A (and Annex B) hereto at a price of $( ) per share (the "Purchase Price"). The Closing Date shall be ( ), 199( ), at ( ) A.M. at the offices of ( ). (It is understood that, subject to the conditions hereinafter stated, ( ) Underwritten Securities (the "U.S. Underwritten Securities") will be sold to the several U.S. Underwriters named in Annex A hereto (the "U.S. Underwriters") in connection with the offering and sale of such U.S. Underwritten Securities in the United States and Canada to United States and Canadian Persons (as such terms are defined in the Agreement between U.S. and International Underwriting Syndicates of even date herewith between the U.S. Underwriters and the International Managers), and ( ) Underwritten Securities (the "International Securities") will be sold to the several 42 -2- international managers named in Annex B hereto (the "International Managers") in connection with the offering and sale of such International Securities outside the United States and Canada to persons other than United States and Canadian Persons. ( ) shall act as representatives (the "U.S. Representatives") of the several U.S. Underwriters, and ( ) shall act as representatives (the "International Representatives") of the several International Managers. The U.S. Underwriters and the International Managers are hereinafter collectively referred to as the "Underwriters", and the U.S. Representatives and the International Representatives are hereinafter collectively referred to as the "Representatives.") (In addition, the Representatives understand that the Company proposes to issue and sell to the several (U.S.) Underwriters, for the sole purpose of covering over-allotments in connection with the sale of the Underwritten Securities, at the option of the (U.S.) Underwriters, up to an additional ( ) shares of the (describe Equity Securities) (the "Option Securities"). The Underwritten Securities and the Option Securities are herein referred to as the "Offered Securities.") (The offer herein contained is further conditioned upon the Company agreeing to sell to the (U.S.) Underwriters the Option Securities, and agreeing that the (U.S.) Underwriters shall have a one-time right to purchase, severally and not jointly, up to ( ) Option Securities at the Purchase Price. Option Securities may be purchased as provided below solely for the purpose of covering over-allotments made in connection with the offering of the Underwritten Securities. If any Option Securities are to be purchased, each (U.S.) Underwriter agrees, severally and not jointly, to purchase the number of Option Securities (subject to such adjustments to eliminate any fractional Offered Securities as the (U.S.) Representatives in their sole discretion may make) that bears the same proportion to the total number of Option Securities to be purchased as the number of (U.S.) Underwritten Securities set forth in Annex A hereto opposite the name of such (U.S.) Underwriter bears to the total number of (U.S.) Underwritten Securities.) (The Company's agreement to sell the Option Securities shall entitle the (U.S.) Underwriters to exercise the option to purchase the Option Securities at any time on or before the thirtieth day following the date of this Terms Agreement, by written notice from the (U.S.) Representatives to the Company. Such notice shall set forth the aggregate number of Option Securities as to which the option is being exercised and the date and time when the Option Securities are to be delivered and paid for which may be the same date and time as the Closing Date but 43 -3- shall not be earlier than the Closing Date nor later than the tenth full Business Day after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 9 of the Underwriting Agreement referred to below). Such notice shall be given at least two Business Days prior to the date and time of delivery specified therein.) The Underwritten Securities shall have the following terms: Title: ( ) Liquidation preference: ( ) Dividend rate: ( ) Dividend payment dates: ( ) Conversion, exchange or exercise provisions: ( ) Redemption provisions: ( ) Public offering price: $( ) per share Additional terms: ( ) All the provisions contained in the document entitled "Underwriting Agreement -- Service Corporation International -- Equity Securities" (the "Underwriting Agreement") and dated ( ), 199( ) (the "Basic Provisions"), a copy of which you have previously received, are herein incorporated by reference in their entirety and shall be deemed to be a part of this Terms Agreement to the same extent as if the Basic Provisions had been set forth in full herein. Terms defined in the Basic Provisions are used herein as therein defined. The Representative authorized to approve the form of agreement specified in Section 6(m) of the Underwriting Agreement and to give the consent specified in Section 5(h) and Section 6(m) of the Underwriting Agreement is ( ). (The additional exceptions to Section 5(h) are ( ).) Any action by the Representatives hereunder may be taken by the Representatives jointly or by ( ) alone on behalf of the Representatives, and any such action taken by ( ) alone shall be binding upon the Representatives. Notices to the Underwriters shall be given to the Representatives c/o ( ) (facsimile: (( )) ( )); Attention: ( ). This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly 44 in such state, without giving effect to the conflicts of laws provisions thereof. Please accept this offer no later than ( ) o'clock ( ).M. on ( ), 199( ), by signing a copy of this Terms Agreement in the space set forth below and returning the signed copy to us, or by sending us a written acceptance in the following form: "We hereby accept your offer, set forth in the Terms Agreement, dated ( ), 199( ), to purchase the Underwritten Securities on the terms set forth therein (and hereby grant to the (U.S.) Underwriters the option to purchase the Option Securities more fully set forth in the Terms Agreement) and agree to and accept all other terms and provisions of the Terms Agreement." Very truly yours, By:_____________________________________ Name: Title: Accepted as of the date first above written: SERVICE CORPORATION INTERNATIONAL By: _______________________________ Name: Title: 45 ANNEX A
Number of (U.S.) Underwritten Securities (U.S.) Underwriters To Be Purchased - ------------------- ------------------- -------------- Total: ==============
46 ANNEX B
Number of International Underwritten International Securities Managers To Be Purchased - ------------- --------------- -------------- Total: ==============
47 SCHEDULE I Significant Subsidiaries of the Company Within the Meaning of Rule 1-02 of Regulation S-X Under the Securities Exchange Act of 1934 EX-1.2 3 UNDERWRITING AGREEMENT - DEBT SECURITIES 1 EXHIBIT 1.2 UNDERWRITING AGREEMENT SERVICE CORPORATION INTERNATIONAL Debt Securities ( ), 199( ) To the Underwriter or Underwriters named in the within mentioned Terms Agreement Ladies and Gentlemen: Service Corporation International, a Texas corporation (the "Company"), may issue and sell from time to time its debt securities, consisting of (i) unsecured senior debt securities (the "Senior Debt Securities"), (ii) unsecured senior subordinated debt securities (the "Senior Subordinated Debt Securities") and (iii) subordinated debt securities (the "Subordinated Debt Securities" and, together with the Senior Debt Securities and the Senior Subordinated Debt Securities, the "Debt Securities"). The Debt Securities are registered under the registration statement referred to in Section 4(i) hereof. The Debt Securities may be issued in one or more series and may have varying designations, denominations, interest rates and payment dates, maturities, redemption provisions, conversion provisions, exchange provisions and selling prices. The Senior Debt Securities will be issued under an indenture (the "Senior Indenture") dated February 1, 1993 entered into between the Company and The Bank of New York, as trustee (the "Senior Trustee"). The Senior Subordinated Debt Securities will be issued under an indenture (the "Senior Subordinated Indenture") to be entered into between the Company and ( ), as trustee (the "Senior Subordinated Trustee"). The Subordinated Debt Securities will be issued under an indenture (the "Subordinated Indenture" and, together with the Senior Indenture and the Senior Subordinated Indenture, the "Indentures") dated September 1, 1991 between the Company and Texas Commerce Bank National Association, as trustee (the "Subordinated Trustee" and, together with the Senior Trustee and the Senior Subordinated Trustee, the "Trustees"). The Senior Subordinated Debt Securities and the Subordinated Debt Securities may be convertible into shares of common stock, par value $1.00 per share, of the Company (the "Common Stock"). The basic provisions set forth herein are intended to be incorporated by reference in a terms agreement of 2 -2- the type referred to below relating to, among other things, the designation and series of Debt Securities and the aggregate principal amount of Debt Securities (the "Underwritten Securities") to be issued and sold by the Company pursuant thereto and to be purchased, severally, by the underwriter or several underwriters named therein (the "Underwriters"). The Terms Agreement, which shall be in the form of Exhibit I hereto (the "Terms Agreement"), relating to the Underwritten Securities and such additional aggregate principal amount of Debt Securities that the Underwriters may be granted an option to purchase by the Company to cover over-allotments in connection with any offering of Underwritten Securities (the "Option Securities" and together with the Underwritten Securities, the "Offered Securities"), together with the provisions hereof incorporated therein by reference (which provisions shall not become effective until so incorporated by reference), is herein referred to as this "Agreement." The Terms Agreement may reflect that a portion of the Underwritten Securities are to be sold to the several U.S. underwriters named therein (the "U.S. Underwriters") in connection with the offering and sale of a portion of the Underwritten Securities in the United States and Canada (the "U.S. Underwritten Securities") to United States and Canadian persons (as defined in the instruments governing the coordination of the offering by the U.S. Underwriters and the International Managers (as defined below) named therein) and that the balance of the Underwritten Securities (the "International Underwritten Securities") are to be sold to the several international managers named therein (the "International Managers") in connection with the offering and sale of such International Underwritten Securities outside the United States and Canada to persons other than United States and Canadian persons. In such event, as used herein, the term "Underwriters" refers to the U.S. Underwriters and the International Managers, and the term "Representatives" refers to the U.S. Representatives named therein of the U.S. Underwriters and the International Representatives named therein of the International Managers. If the Underwriters consist only of the firm or firms referred to in the Terms Agreement as the Representative or Representatives, then the terms "Underwriters" and "Representatives," as used herein, shall be deemed to refer to such firm or firms. The obligations of the Underwriters to purchase, and the Company to sell, the Offered Securities are evidenced by the Terms Agreement delivered at the time the Company determines to sell the Offered Securities and, without the execution and delivery of the Terms Agreement, the Company shall not be obligated to sell, and the Underwriters shall not be obligated to purchase, any Debt Securities pursuant to this Agreement. The 3 -3- Terms Agreement specifies the firm or firms which will be Underwriters, the aggregate principal amount of the Offered Securities to be purchased by each Underwriter, the purchase price to be paid by the Underwriters for the Offered Securities, the public offering price, if any, of the Offered Securities and any terms of the Offered Securities not otherwise specified in the applicable Indenture (including, but not limited to, designations, denominations, conversion or exchange provisions, covenants, interest rates and payment dates, maturity, redemption provisions and sinking fund requirements). The Terms Agreement specifies any details of the terms of the offering that should be reflected in a post-effective amendment to the applicable Registration Statement or the Prospectus Supplement (each as hereinafter defined). The terms which follow, when used in this Agreement, shall have the meanings indicated. "Registration Statement" shall mean the registration statement or registration statements relating to the Offered Securities (and such other securities of the Company as may be included therein) which shall be the registration statement on Form S-3 filed under the Securities Act of 1933, as amended (collectively with the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder, the "Securities Act"), referred to in Section 4(i) below, including all documents incorporated therein by reference and all exhibits thereto, as from time to time amended or supplemented pursuant to the Securities Act, the Securities Exchange Act of 1934, as amended (collectively with the rules and regulations of the Commission thereunder, the "Exchange Act"), or otherwise, including as supplemented by the Prospectus Supplement, on or prior to the date of execution and delivery of the Terms Agreement (the "Representation Date") and, in the event any such amendment or supplement is filed prior to the Closing Date (as defined in Section 3 hereof), including by the filing of any Prospectus Supplement or document incorporated by reference, shall also mean such registration statement as so amended or supplemented. "Prospectus" shall mean the prospectus (including the related Prospectus Supplement with respect to the Offered Securities) relating to the Debt Securities (and such other securities of the Company as may be covered thereby), including all documents incorporated therein by reference, as from time to time amended or supplemented pursuant to the Securities Act, the Exchange Act or otherwise; provided, however, that a Prospectus Supplement shall be deemed to have supplemented the Prospectus only with respect to the Offered Securities to which it relates. 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 4 -4- 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, and on or prior to the completion of the applicable offering and which is deemed to be incorporated therein by reference. 1. Agreements to Sell and Purchase. The Company agrees to issue and sell to each Underwriter as hereinafter provided, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees to purchase at the purchase price set forth in the Terms Agreement, severally and not jointly, from the Company the respective aggregate principal amount of Underwritten Securities set forth opposite the name of such Underwriter on the annex or annexes to Exhibit 1 hereto (or such aggregate principal amount of Underwritten Securities, as the case may be, increased as set forth in Section 9 hereof, subject to such adjustments to eliminate any fractional Offered Securities as the Representatives in their sole discretion may make). If, pursuant to the Terms Agreement, the Company shall have granted the option to the Underwriters to purchase Option Securities, the Company agrees to sell to the Underwriters designated in the Terms Agreement to purchase Option Securities (each an "Option Securities Underwriter" and collectively, the "Option Securities Underwriters") the Option Securities, and the Option Securities Underwriters shall have a one-time right to purchase, severally and not jointly, the Option Securities on the terms set forth in the Terms Agreement. Option Securities may be purchased as provided below solely for the purpose of covering over-allotments made in connection with the offering of the Underwritten Securities. If any Option Securities are to be purchased, each Option Securities Underwriter agrees, severally and not jointly, to purchase the number of Option Securities (subject to such adjustments to eliminate any fractional Offered Securities as the Representatives designated in the Terms Agreement in their sole discretion may make) that bears the same proportion to the total number of Option Securities to be purchased as the number of Underwritten Securities set forth in the annex or annexes to Exhibit 1 hereto opposite the name of such Option Securities Underwriter bears to the total number of Underwritten Securities to be purchased by all Option Securities Underwriters. The Option Securities Underwriters may exercise the option to purchase the Option Securities at any time on or before 5 -5- the thirtieth day following the Representation Date, by written notice from the Representatives designated in the Terms Agreement to the Company. Such notice shall set forth the aggregate number of Option Securities as to which the option is being exercised and the date and time when the Option Securities are to be delivered and paid for, which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than the tenth full Business Day (as hereinafter defined) after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 9 hereof). Such notice shall be given at least two Business Days prior to the date and time of delivery specified therein. 2. Terms of Public Offering. The Company understands that the Underwriters intend (i) to make a public offering of the Offered Securities as soon after the Prospectus Supplement has been filed and the Terms Agreement has been executed and delivered as in the judgment of the Representatives is advisable and (ii) initially to offer the Offered Securities upon the terms set forth in the Prospectus Supplement and the Underwriters will advise the Company as to any alteration in the terms of such offering that would require, pursuant to the Securities Act, any amendment or supplement to the Prospectus Supplement. 3. Delivery of the Offered Securities and Payment Therefor. Payment for the Offered Securities shall be made to the Company or to the Company's order by certified or official bank check or checks payable in New York Clearing House or other next day funds in such location as the Representatives shall designate in the Terms Agreement at, in the case of the Underwritten Securities, such time and date as are specified in the Terms Agreement, or at such other time on the same or such other date, not later than the fifth Business Day (as hereinafter defined) thereafter, as the Representatives and the Company may agree upon in writing or, in the case of the Option Securities, on the date and at the time specified by the Representatives designated in the Terms Agreement to exercise such option in the written notice by such Representatives of the election to purchase such Option Securities by the Option Securities Underwriters. The time and date of such payment for the Underwritten Securities are referred to herein as the "Closing Date" and the time and date for such payment for the Option Securities, if other than the Closing Date, are herein referred to as the "Additional Closing Date". As used herein, the term "Business Day" means any day other than a day on which banks are permitted or required to be closed in New York City. 6 -6- Payment for the Offered Securities to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to the Representatives for the respective accounts of the several Underwriters of the Offered Securities to be purchased on such date registered in such names and in such denominations as the Representatives shall request in writing not later than two full Business Days prior to the Closing Date or the Additional Closing Date, as the case may be, with any transfer taxes payable in connection with the transfer to the Underwriters of the Offered Securities duly paid by the Company. The Company hereby agrees to pay any such transfer taxes. The certificates for the Offered Securities will be made available for inspection and packaging by the Representatives not later than 1:00 P.M., New York City time, on the Business Day prior to the Closing Date or the Additional Closing Date, as the case may be. 4. Representations and Warranties of the Company. The Company represents and warrants to each Underwriter as of the Representation Date and as of the Closing Date that: (i) A registration statement on Form S-3 (Registration No. 33-( )), including a prospectus, with respect to the Debt Securities (and such other securities of the Company as may be covered thereby), (i) has been prepared by the Company in conformity with the requirements of the Securities Act, (ii) has been filed with the Commission and (iii) has become effective. Such Registration Statement and the related prospectus may have been amended or supplemented from time to time prior to the Representation Date; any such amendment to the applicable Registration Statement was so prepared and filed and any such amendment has become effective. A prospectus supplement (the "Prospectus Supplement"), including a prospectus, relating to the Offered Securities has been prepared. The Prospectus Supplement and, if not previously filed, such prospectus will be filed pursuant to Rule 424 under the Securities Act. If the offering of the Offered Securities is to be made by U.S. Underwriters and International Managers, two such prospectus supplements, one relating to the Offered Securities to be sold by the U.S. Underwriters and one relating to the Underwritten Securities to be sold by the International Managers, and each identical to the other except for the cover page, have been so prepared and filed. In such event, the term "Prospectus Supplement" refers to such international and U.S. prospectus supplements. Copies of such Registration Statement and the Prospectus relating thereto, any such amendment or 7 -7- supplement, the Prospectus Supplement and all documents incorporated by reference therein which were filed with the Commission on or prior to the Representation Date (including one fully executed copy of the Registration Statement and of each amendment thereto for counsel for the Underwriters) have been delivered to each of the Representatives. The Company has included in the Registration Statement, as amended at the date the Registration Statement was declared effective (the "Effective Date"), all information (other than information relating specifically to the terms of any particular series of Debt Securities and the offering thereof) required by the Securities Act to be included in the Prospectus with respect to the Offered Securities (and the Common Stock, if applicable) and the offering and sale thereof. Except to the extent that the Underwriters shall agree in writing to a modification, the Registration Statement and the Prospectus shall be in all substantive respects in the form furnished to the Underwriters prior to the Representation Date or, to the extent not completed at the Representation Date, shall contain only such specific additional information and other changes as the Company has advised the Underwriters, a reasonable time prior to the Representation Date, is to be included or made therein and as to which the Underwriters have not reasonably objected. (ii) The Registration Statement, at the time it became effective, any post-effective amendment thereto, at the time it became effective, the Registration Statement and the Prospectus, as of the Representation Date and at the Closing Date, and any amendment or supplement thereto, conformed or will conform in all material respects to the requirements of the Securities Act and the Trust Indenture Act of 1939, as amended, and the Rules and Regulations of the Commission thereunder (the "Trust Indenture Act"); and no such document included or will include an untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading; provided, however, that the Company makes no representation or warranty as to (a) information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information relating to any Underwriter furnished to the Company by or on behalf of any Underwriter expressly for use therein and (b) that part of the Registration Statement that constitutes the Statement of Eligibility on Form T-1 of any 8 -8- of the Trustees under the Trust Indenture Act filed as an exhibit to the Registration Statement (the "Form T-1"). (iii) No order preventing or suspending the use of any preliminary prospectus has been issued by the Commission. (iv) (A) No stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for that purpose are pending before or threatened by the Commission and (B) each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and did not, or will not when so filed, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (v) Ernst & Young and Coopers & Lybrand, who are reporting upon the audited financial statements and the supporting schedules of the Company included or incorporated by reference in the Registration Statement and the Prospectus, in the case of Ernst & Young, were, at the time of their report, and, in the case of Coopers & Lybrand, are, independent public accountants within the meaning of the Securities Act. The financial statements, and the related notes thereto, included or incorporated by reference in the Registration Statement and the Prospectus, present fairly the consolidated financial position of the Company and its consolidated subsidiaries as of the dates indicated and the results of their operations and the changes in their consolidated cash flows for the periods specified; and said financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis, except as set forth therein, and the supporting schedules included or incorporated by reference in the Registration Statement present fairly the information required to be stated therein. If pro forma financial information is included in or incorporated by reference into the Registration Statement and the Prospectus, such pro forma financial information (including, without limitation, the notes thereto) as of the date presented (A) presented fairly in all material respects the information shown therein, (B) was prepared in accordance with applicable requirements of Regulation S-X promulgated under the Exchange Act, (C) was prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and (D) was properly computed on 9 -9- the bases described therein. In the opinion of the Company, the assumptions used in the preparation of any such pro forma financial information (including, without limitation, the notes thereto) were fair and reasonable and the adjustments used therein were appropriate to give effect to the transactions or circumstances referred to therein. No pro forma financial statements or other pro forma financial information is required to be included or incorporated by reference in the Registration Statement and the Prospectus other than those included or incorporated by reference therein. (vi) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Texas, has the corporate power and authority to own its property and to conduct its business as described in the Registration Statement and the Prospectus and to enter into this Agreement and the Terms Agreement, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries (as hereinafter defined), taken as a whole (each, a "Material Adverse Effect"). (vii) Each direct and indirect foreign and domestic subsidiary of the Company listed on Schedule I hereto, which constitute all of the significant subsidiaries of the Company within the meaning of Rule 1-02 of Regulation S-X under the Exchange Act (each, a "Subsidiary" and collectively, the "Subsidiaries") has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Registration Statement and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so incorporated, be in existence, have such power and authority, be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. All of the outstanding shares of 10 -10- capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable, and, except as set forth in the Registration Statement and the Prospectus, are owned by the Company, directly or indirectly, free and clear of all liens, encumbrances, security interests, claims and restrictions on transferability and voting (other than any restrictions on transferability as may arise under state and federal securities laws). Except as set forth in the Registration Statement and the Prospectus, there are no outstanding (i) securities or obligations convertible into or exchangeable or exercisable for any shares of capital stock of, or other interest in, the Company or any Subsidiary, (ii) rights, warrants or options to acquire or purchase any shares of capital stock of, or other interest in, the Company or any Subsidiary or any such convertible, exchangeable or exercisable securities or obligations, or (iii) obligations or understandings to issue or sell any shares of capital stock of, or other interest in, the Company or any Subsidiary, any such convertible, exchangeable or exercisable securities or obligations, or any such warrants, rights or options, except as have been disclosed to the Underwriters in writing prior to the date hereof and except for (A) issuances of shares of Common Stock and options to acquire Common Stock after the date of the most recent information set forth in the Registration Statement and the Prospectus pursuant to the Company's employee benefit plans as in effect on the date hereof and (B) issuances after the date of the most recent information set forth in the Registration Statement and the Prospectus of convertible debentures of the Company and Common Stock pursuant to the Company's Registration Statement on Form S-4 (Registration No. 33-54996) (the "S-4"). (viii) There are no partnerships in which the Company or any of the Subsidiaries has any direct or indirect controlling interest that would constitute a significant subsidiary within the meaning of Rule 1-02 of Regulation S-X under the Exchange Act. Except for the capital stock of the Subsidiaries and except as set forth in the Registration Statement and the Prospectus, the Company does not own, directly or indirectly, any shares of stock or any other equity or long-term debt securities or have any equity interest in any firm, partnership, joint venture or other entity. 11 -11- (ix) This Agreement and the Terms Agreement have been duly and validly authorized, executed and delivered by the Company. (x) Since the date of the latest consolidated financial statements of the Company and the Subsidiaries included in the Registration Statement and the Prospectus, except as set forth in or expressly contemplated by the Registration Statement and the Prospectus, there has not been (A) any change in the Company's issued capital stock or options, except (I) pursuant to the exercise of options or the conversion or exchange of outstanding convertible or exchangeable securities of the Company, (II) issuances of shares of Common Stock and options to acquire Common Stock issued after the date of such financial statements pursuant to the Company's employee benefit plans as in effect on the date hereof and (III) issuances after the date of such financial statements of convertible debentures of the Company and Common Stock pursuant to the S-4, or (B) any material adverse change in the management, condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole (each, a "Material Adverse Change," and any event or state of facts which could, singly or in the aggregate, reasonably be expected to result in a Material Adverse Change is herein referred to as a "Prospective Material Adverse Change"), whether or not arising from transactions or events occurring in the ordinary course of business. (xi) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as set forth therein, (A) there have been no transactions or contracts (written or oral) entered into or agreed to be entered into by the Company or any of the Subsidiaries (other than those in the ordinary course of business) which are material to the Company and the Subsidiaries, taken as a whole and (B) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock, other than regularly scheduled quarterly dividends in accordance with the past practice of the Company. (xii) As of the date of the Prospectus Supplement, the Company has the authorized, issued and outstanding capitalization set forth in the Prospectus under "Capitalization." The authorized capital stock of the Company (including, without limitation, the Common Stock 12 -12- issuable upon conversion or exchange of the Offered Securities, if applicable) conforms as to legal matters to the description thereof contained in the Registration Statement and the Prospectus, and all of the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable and are not subject to any preemptive or similar rights. The rights agreement dated as of July 18, 1988 between the Company and Texas Commerce Bank National Association as rights agent, as amended to date (the "Rights Agreement"), has been duly authorized, executed and delivered by the Company; the rights (the "Rights") to purchase the Company's Series C Junior Participating Preferred Stock (the "Series C Preferred Stock") outstanding thereunder and, if the Offered Securities are convertible into shares of Common Stock, to be issued upon issuance of the Common Stock upon conversion of such Offered Securities, have been duly authorized; the Series C Preferred Stock to be issued upon exercise of the Rights has been duly authorized; and the description of the Rights Agreement and the Rights set forth in the Registration Statement and the Prospectus is accurate in all material respects. (xiii) All corporate action required to be taken for the authorization, issuance and sale of the Offered Securities pursuant to this Agreement and the Terms Agreement has been validly and sufficiently taken. The Offered Securities, when executed by the Company and authenticated by the applicable Trustee in accordance with the terms of the applicable Indenture (assuming the due authorization, execution and delivery of such Indenture by the Trustee thereunder), and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement and the Terms Agreement and the applicable Indenture (assuming the due authorization, execution and delivery thereof by the Trustee thereunder), will constitute the valid and binding obligations of the Company entitled to the benefits of the applicable Indenture and enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). The Company has all the requisite corporate power and authority to execute and deliver the applicable Indenture and any supplemental indenture to such Indenture relating to the Offered Securities (the "Supplemental Indenture") and to incur and 13 -13- perform its obligations provided for therein. Each of the Indenture and the Supplemental Indenture relating to the Offered Securities, when executed by the Company and the Trustee thereunder (assuming the due authorization, execution and delivery of such Indenture and Supplemental Indenture by the Trustee thereunder), will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). If the Offered Securities are convertible into Common Stock, the Offered Securities are convertible into Common Stock in accordance with their terms and the terms of the applicable Supplemental Indenture relating to the Offered Securities. (xiv) If the Offered Securities are convertible into Common Stock, the Common Stock issuable upon conversion of the Offered Securities pursuant to the terms of the Supplemental Indenture has been duly authorized and validly reserved for issuance upon such conversion by all necessary corporate action and such Common Stock, when duly issued upon such conversion will be validly issued and fully paid and nonassessable; no holder thereof will be subject to personal liability solely by reason of being such a holder; and the issuance of such Common Stock upon such conversion will not be subject to preemptive rights. (xv) The Offered Securities and the Indenture and Supplemental Indenture relating thereto conform in all material respects to the descriptions thereof in the Prospectus. (xvi) The execution and delivery by the Company of, and the full and timely performance by the Company of its obligations under, this Agreement and the Terms Agreement, the Indenture relating to the Offered Securities, the Supplemental Indenture relating to the Offered Securities, the compliance by the Company with the terms thereof, and the consummation of each of the transactions contemplated herein and therein, (A) have been duly authorized by all necessary corporate action on the part of the Company, (B) do not and will not result in any violation of the articles of incorporation or by-laws of the Company and (C) do not and will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or 14 -14- constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or give rise to any right to accelerate the maturity or require the prepayment of any indebtedness under, or result in the creation or imposition of any lien, charge or encumbrance upon any material property or assets of the Company or of any Subsidiary under (I) any indenture, mortgage, loan agreement, note, lease, license, partnership agreement, franchise agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them may be bound or affected or to which any of their respective properties or assets may be subject (each, a "Contract" and collectively, the "Contracts"), other than any such conflict, breach, default, acceleration, prepayment, lien, charge or encumbrance that, could not individually or in the aggregate, reasonably be expected to result in any Material Adverse Effect, (II) any existing applicable law, rule or regulation (other than the securities or Blue Sky laws of the various states and other jurisdictions of the United States of America) or (III) any judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Company or any Subsidiary or any of their respective properties or assets. (xvii) No authorization, approval, consent or license of, or filing with, any government, governmental instrumentality or court, domestic or foreign (other than as have been made and obtained and are in full force and effect under the Securities Act and the Trust Indenture Act or as may be required under the securities or Blue Sky laws of the various states and other jurisdictions of the United States of America) is required for the valid authorization, issuance, sale and delivery of the Offered Securities by the Company, the execution and delivery by the Company of, or the full and timely performance by the Company of each of its obligations under, this Agreement, the Terms Agreement, the Indenture relating to the Offered Securities, the Supplemental Indenture relating to the Offered Securities, and the compliance by the Company with its obligations thereunder. (xviii) There are no contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed or incorporated by reference as exhibits to the Registration Statement that are not described, filed or incorporated as required. 15 -15- (xix) No holder of any securities of the Company has any rights, not effectively satisfied or waived, to require the Company to register the sale of any securities under the Securities Act in connection with the filing of the Registration Statement or the consummation of the transactions contemplated therein or pursuant to this Agreement or the Terms Agreement. (xx) The Company and the Subsidiaries are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health, or the environment or imposing liability or standards of conduct concerning Hazardous Material (collectively, "Environmental Laws"), except where such noncompliance with Environmental Laws could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. The term "Hazardous Material" means (i) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated biphenyl, and (v) any pollutant or contaminant or hazardous, dangerous, or toxic chemical, material, waste or substance regulated under or within the meaning of any other Environmental Law. (xxi) Each of the Company and each of the Subsidiaries owns, possesses or has obtained all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all federal, state, local and other governmental authorities (including foreign regulatory agencies), all self-regulatory organizations and all courts and other tribunals, domestic or foreign, necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as conducted as of the date hereof, except in each case where the failure to obtain licenses, permits, certificates, consents, orders, approvals and other authorizations, or to make all declarations and filings, could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect, and neither the Company nor any Subsidiary has received any notice of any proceeding relating to revocation or modification of any such license, permit, certificate, consent, order, approval or other authorization, except as described in the Registration Statement and the Prospectus and except, in each case, where such revocation or modification could not, 16 -16- reasonably be expected to singly or in the aggregate, have a Material Adverse Effect; and the Company and each Subsidiary are in compliance with all laws and regulations relating to the conduct of their respective businesses as conducted as set forth in the Registration Statement and the Prospectus, except where noncompliance with such laws or regulations could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xxii) To the best knowledge of the Company, each of the Company and the Subsidiaries owns or possesses the patents, patent licenses, trademarks, service marks, trade names, copyrights and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) (collectively, the "Intellectual Property") reasonably necessary to carry on the business conducted by each as conducted on the date hereof, except to the extent that the failure to own or possess such Intellectual Property could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect, and, except as set forth in the Registration Statement and the Prospectus, neither the Company nor any Subsidiary has received any notice of infringement of or conflict with asserted rights of others with respect to any Intellectual Property, except for notices the content of which if accurate could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xxiii) Except as set forth in the Registration Statement and the Prospectus, no authorization, approval or consent of any governmental authority or agency is required (other than those which have already been obtained) under the laws of any jurisdiction in which the Company or any of the Subsidiaries conduct their respective businesses in connection with the ownership by the Company of capital stock of any Subsidiary, any foreign exchange controls or the repatriation of any amount from or to the Company and the Subsidiaries, except to the extent such authorizations, approvals or consents have been obtained and are in full force and effect and except to the extent that the failure to obtain such authorization, approval or consent could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xxiv) The Company has not taken and will not take, directly or indirectly, any action designed to, or that might be reasonably expected to, cause or result in stabilization or manipulation of the price of the Offered 17 -17- Securities (or the Common Stock, if applicable), and the Company has not distributed and will not distribute any prospectus or other offering material in connection with the offering and sale of the Offered Securities other than any preliminary prospectus filed with the Commission or the Prospectus or other materials permitted under the Securities Act. (xxv) Except as set forth in the Registration Statement and the Prospectus, there is no action, suit or proceeding before or by any government, governmental or regulatory instrumentality, agency or body or court, domestic or foreign, or any arbitrator, now pending or, to the best knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any affiliate of the Company that, singly or in the aggregate with all such actions, suits and proceedings (i) could reasonably be expected to have a Material Adverse Effect or could reasonably be expected to have a material adverse effect on the consummation of the transactions contemplated in this Agreement or (ii) is required to be described in the Registration Statement or the Prospectus that is not so described. (xxvi) Neither the Company nor any Subsidiary (i) is in violation of its articles of incorporation, by-laws or other organizational documents or (ii) is or with the giving of notice or lapse of time or both would be in violation of, or in breach of or in default under or in the performance or observance of, any obligation, agreement, covenant or condition contained in this Agreement, the Terms Agreement or any Contract or of any permit, order, decree, judgment, statute, rule or regulation, foreign or domestic, applicable to the Company or any Subsidiary, except for such violations, breaches or defaults that, could not singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xxvii) The Company is not an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended or a holding company or a subsidiary of a holding company under the Public Utility Holding Company Act of 1935. (xxviii) The Company has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-1933 8, Laws of Florida). 18 -18- (xxix) The statistical and market-related data included or incorporated by reference in the Registration Statement and the Prospectus 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. (xxx) The Company knows of no outstanding claims for services, either in the nature of a finder's fee or origination fee, with respect to the transactions contemplated hereby and by the Terms Agreement, other than the underwriting fees and compensation to be paid to the Underwriters in accordance with this Agreement. (xxxi) No labor disputes exist with employees of the Company or of the Subsidiaries that could, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. Any certificate signed by any officer of the Company and delivered to the Underwriters or to counsel for the Underwriters shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby. 5. Agreements of the Company. The Company covenants and agrees with each Underwriter as follows: (a) To use its reasonable best efforts to cause any amendment to the Registration Statement to become effective at the earliest possible time. (b) To furnish to each of the Representatives, without charge, as many signed copies of the Registration Statement (as originally filed) and each amendment thereto and each document incorporated or deemed incorporated therein, in each case including exhibits filed therewith or incorporated therein, as the Representatives may reasonably request, and to each other Underwriter a conformed copy of the Registration Statement (as originally filed) and each amendment thereto, in each case without exhibits and, during the period mentioned in paragraph (e) below, to each of the Underwriters as many copies of the Prospectus (including all amendments and supplements thereto and documents incorporated by reference therein) as the Representatives may reasonably request. (c) To give the Underwriters prompt notice of the Company's intention to file or prepare any amendment to the 19 -19- Registration Statement or any amendment or supplement to the Prospectus, whether pursuant to the Securities Act, the Exchange Act or otherwise, to furnish the Underwriters and their counsel with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and not to file any such amendment or supplement or use any such prospectus to which the Underwriters or counsel for the Underwriters shall object. Subject to the foregoing sentence, the Company will cause each Prospectus Supplement relating to the Offered Securities to be filed with the Commission pursuant to the applicable paragraph of Rule 424 under the Securities Act within the time period prescribed and will provide evidence satisfactory to the Underwriters of such timely filing. (d) To advise the Representatives and their counsel promptly, and to confirm such advice in writing, (i) when any Prospectus Supplement relating to the Offered Securities shall have been filed with the Commission pursuant to Rule 424 under the Securities Act, (ii) when, prior to the termination of the offering of the Offered Securities, any amendment to the Registration Statement shall have been filed with the Commission or become effective, (iii) of the receipt of any comments from the Commission or of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Prospectus or Prospectus Supplement or the initiation or threatening of any proceeding for that purpose and (v) of the receipt by the Company of any notification with respect to any suspension of the qualification of the Offered Securities for offer and sale in any jurisdiction or the initiation of any proceeding for such purpose; and to use its reasonable best efforts to prevent the issuance of any such stop order or notification and, if issued, to obtain as soon as possible the withdrawal thereof. (e) If, during such period after the first date of the public offering of the Offered Securities as in the opinion of the Underwriters' counsel a prospectus relating to the Offered Securities is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur, information shall become known or condition exist as a result of which it is necessary or 20 -20- advisable to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary or advisable to amend or supplement the Prospectus to comply with law, forthwith, at the sole expense of the Company, to prepare, and, subject to Section 5(c) above, file with the Commission and furnish, without charge, to the Underwriters and to the dealers (whose names and addresses the Representatives will furnish to the Company) to which Offered Securities may have been sold by the Representatives on behalf of the Underwriters and to any other dealers, upon request, such amendments or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law. (f) To endeavor to qualify the Offered Securities (and, if applicable, the Common Stock) for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives shall request and to continue such qualification in effect so long as required for distribution of the Offered Securities and to pay all fees and expenses (including fees and disbursements of counsel to the Underwriters) incurred in connection with such qualification; provided, however, that the Company shall not be required to file a general consent to service of process in any jurisdiction or subject itself to general taxation in any jurisdiction. (g) To make generally available to its security holders and to the Representatives as soon as practicable, but not later than 15 months, after the date of each Terms Agreement an earnings statement, covering a period of at least 12 months beginning after the later of (i) the effective date of the Registration Statement, (ii) the effective date of the most recent post-effective amendment to the Registration Statement to become effective prior to the date of such Terms Agreement and (iii) the date of the Company's most recent Annual Report on Form 10-K filed with the Commission prior to the date of such Terms Agreement, which will satisfy the provisions of Rule 158 under the Securities Act and Section 11(a) of the Securities Act. (h) For a period of 120 days after the Representation Date, without the prior written consent of the 21 -21- Representative designated in the Terms Agreement, not to, and not cause or permit any Subsidiary to, directly or indirectly, effect any offer, sale or other disposition of, or registration of, any Debt Securities or any securities convertible into or exchangeable or exercisable for Debt Securities, other than the Offered Securities to be sold pursuant to the Terms Agreement and other than pursuant to such other exceptions, if any, as are agreed to by the Representatives and set forth in the Terms Agreement. If the Offered Securities are convertible into Common Stock, during a period of 120 days from the Representation Date, the Company will not, without the prior written consent of the Representative designated in the Terms Agreement, directly or indirectly, effect any offer, sale or other disposition of, or registration of, shares of Common Stock or any right to purchase or other security convertible into or exchangeable or exercisable for or any securities of the Company substantially similar to any such shares, other than (A) the Offered Securities to be sold pursuant to the Terms Agreement, (B) shares of Common Stock issued upon conversion, exercise or exchange of convertible, exchangeable or exercisable securities of the Company or of any Subsidiary outstanding on the Representation Date and (C) shares of Common Stock and options thereunder issued pursuant to employee benefit plans of the Company in place on the Representation Date as in effect on the Representation Date, and other than pursuant to such other exceptions, if any, as are agreed to by the Representatives and set forth in the Terms Agreement. (i) Whether or not the transactions contemplated hereby or by the Terms Agreement are consummated or this Agreement is terminated or shall not become effective, to pay all costs and expenses incident or relating to the performance of the Company's obligations hereunder, including, without limiting the generality of the foregoing, all costs and expenses (i) incurred in connection with the preparation, issuance, execution and delivery of the Offered Securities (including, if applicable, the Common Stock issuable upon conversion thereof), (ii) incurred in connection with the preparation, printing and filing under the Securities Act and the Exchange Act of the Registration Statement, the Prospectus, any preliminary prospectus and each Prospectus Supplement (including in each case all exhibits, amendments and supplements thereto and all documents incorporated therein by reference), (iii) incurred in connection with the registration or qualification of the Offered Securities (including, if applicable, the Common 22 -22- Stock issuable upon conversion or exchange thereof) under the laws of such jurisdictions as the Representatives may request (including filing fees and the fees of counsel for the Underwriters and their disbursements), (iv) in connection with the listing of the Offered Securities on the ( ) and, if the Offered Securities are convertible into Common Stock, the listing of such Common Stock on the New York Stock Exchange, (v) relating to any filing with the National Association of Securities Dealers Inc. (the "NASD") in connection with the offering of the Offered Securities, (vi) incurred in connection with the engagement of any qualified independent underwriter as may be required by NASD rules and regulations, (vii) incurred in connection with the rating of the Offered Securities, (viii) incurred in connection with advertising relating to the Offered Securities approved by the Company (which approval shall not be unreasonably withheld or delayed), (ix) relating to the fees and expenses of the applicable Trustee, including the fees and expenses of counsel to the applicable Trustee, and of the transfer agent and registrar for the Common Stock if the Offered Securities are convertible into the Common Stock and (x) relating to or in connection with the printing (including word processing and duplication costs) and delivery of this Agreement, the Terms Agreement, the Indenture relating to the Offered Securities, any Supplemental Indenture relating thereto, the agreement among underwriters, each other document or instrument relating to the underwriting arrangements and the coordination of the offering of the Offered Securities by the U.S. Underwriters and the International Managers, if applicable, any dealer agreements, the Preliminary and Supplemental Blue Sky Memoranda and the furnishing to the Underwriters and dealers of copies of the Registration Statement, the Prospectus and each Prospectus Supplement, including mailing and shipping, as herein provided. (j) To furnish to the Representatives for a period of five years after the Representation Date copies of all reports or other communications (financial or other) furnished to holders of the Company's capital stock, and copies of any reports and financial statements furnished to or filed with the Commission. (k) To use the net proceeds of the offering of the Offered Securities as set forth in the Prospectus under the caption "Use of Proceeds." 23 -23- (l) During the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act, to file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time period required by the Exchange Act and the Exchange Act Regulations. (m) (To use its best efforts to effect the listing of the Offered Securities on the ( ) on the Representation Date.) If the Offered Securities are convertible into Common Stock, the Company will use its best efforts to effect the listing of the shares of Common Stock issuable upon conversion of the Offered Securities on the New York Stock Exchange on the Representation Date. (n) To reserve and keep available at all times, free of preemptive rights, sufficient shares of Common Stock to satisfy any obligations to issue shares of Common Stock upon conversion of all of the Offered Securities that are convertible into the Common Stock. 6. Conditions of Underwriters' Obligations. The several obligations of the Underwriters hereunder to purchase the Underwritten Securities are subject to the following conditions: (a) If any amendment to the Registration Statement filed prior to the Closing Date has not been declared effective as of the Representation Date, such amendment shall have become effective not later than 5:30 P.M. on the Representation Date; and at the Closing Date no stop order suspending the effectiveness of the Registration Statement shall have been issued under the Securities Act or proceedings therefor initiated or threatened by the Commission. The price of the Offered Securities and any price-related information previously omitted from the effective Registration Statement and the Prospectus Supplement shall have been transmitted to the Commission for filing pursuant to Rule 424 under the Securities Act within the prescribed time period and prior to the Closing Date the Company shall have provided evidence satisfactory to the Underwriters of such timely filing. (b) The representations and warranties of the Company contained herein and in the Terms Agreement shall be true and correct on and as of the Closing Date as if made on and as of the Closing Date and the Company shall have complied with all agreements and satisfied all conditions on its part 24 -24- to be performed or satisfied hereunder at or prior to the Closing Date. (c) Subsequent to the Representation Date and prior to the Closing Date, there shall not have occurred any Material Adverse Change or any development involving a Prospective Material Adverse Change other than as set forth in the Registration Statement and the Prospectus, the effect of which in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Underwritten Securities on the terms and in the manner contemplated in the Registration Statement and the Prospectus. As used in this Section 6(c), "Prospectus" shall mean the Prospectus first used to confirm sales of the Offered Securities exclusive of any amendment or supplement thereto thereafter. (d) The Representatives shall have received on and as of the Closing Date a certificate of the Company signed by the Chief Executive Officer, the Chief Operating Officer or the Chief Financial Officer of the Company to the effect set forth in subsections (a) and (b) of this Section 6 and to the further effect that since the most recent date as of which information is given in the Prospectus there shall not have occurred any Material Adverse Change, or any development involving a Prospective Material Adverse Change. As used in this Section 6(d), "Prospectus" shall mean the Prospectus first used to confirm sales of the Offered Securities exclusive of any amendment or supplement thereto thereafter. (e) The Representatives shall have received on the Closing Date a signed opinion of Wachtell, Lipton, Rosen & Katz, special counsel for the Company, addressed to the Underwriters and dated the Closing Date and satisfactory to counsel for the Underwriters, to the effect that: (i) Each of this Agreement and the Terms Agreement has been duly authorized, executed and delivered by the Company. (ii) The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Indenture relating to the Offered Securities, and such Indenture has been duly authorized, executed and delivered by the Company and has been duly qualified under the Trust Indenture Act and (assuming the due authorization, execution and 25 -25- delivery by the Trustee thereunder) constitutes a valid and legally binding instrument of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject to the effect of general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and the discretion of the court before which any proceeding therefor may be brought. (iii) The Company has the requisite corporate power and authority to issue and deliver the Offered Securities, and the Offered Securities have been duly authorized by the Company for issuance. The Offered Securities, when executed by the Company and authenticated by the Trustee in accordance with the Indenture relating to the Offered Securities (assuming the due authorization, execution and delivery of the Indenture by the Trustee thereunder) and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement and the Terms Agreement will constitute valid and legally binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and the discretion of the court before which any proceeding therefor may be brought. (iv) The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Supplemental Indenture relating to the Offered Securities, and the Supplemental Indenture has been duly authorized, executed and delivered by the Company and (assuming the due authorization, execution and delivery by the Trustee under the Indenture relating to the Offered Securities) constitutes a valid and legally binding instrument of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and similar laws 26 -26- affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and the discretion of the court before which any proceeding therefor may be brought. (v) The statements set forth or incorporated by reference in the Registration Statement and the Prospectus insofar as such statements purport to summarize certain provisions of the Offered Securities (and the Common Stock, if applicable), the Indenture and the Supplemental Indenture provide a fair summary of such provisions. (vi) The number of authorized shares of capital stock of the Company is as set forth in the Prospectus under "Capitalization" and the authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus. (vii) If the Offered Securities are convertible into Common Stock, upon issuance and delivery of the Offered Securities, the Offered Securities shall be convertible at the option of the holder thereof into Common Stock in accordance with the terms of the Offered Securities and the Supplemental Indenture relating thereto; the Common Stock issuable upon conversion of the Offered Securities have been duly authorized and validly reserved for issuance upon such conversion by all necessary corporate action, and such Common Stock, when issued upon such conversion, will be validly issued, fully paid and nonassessable; no holder of the Common Stock will be subject to personal liability solely by reason of being such a holder; and the issuance of such shares upon such conversion will not be subject to preemptive rights arising by operation of law or under the charter or by-laws of the Company. (viii) At the time the Registration Statement and each amendment thereto became effective and at the Representation Date, the Registration Statement and the Prospectus (other than the Form T-1 and the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need express no opinion) appear on their face to be appropriately 27 -27- responsive to the applicable requirements of the Securities Act. The applicable Indenture, as amended by the Supplemental Indenture, complies with the requirements of the Trust Indenture Act. (ix) Such counsel does not know of any legal or governmental actions, suits or proceedings, pending or threatened, required to be disclosed in the Registration Statement which are not disclosed therein as required (provided that for such purpose such counsel need not regard any action, suit or proceeding to be "threatened" unless the potential litigant has manifested to the management of the Company or to such counsel a present intention to initiate such suit or proceeding). (x) Based upon such counsel's review of applicable law, no authorization, approval, consent or order of any court or governmental or regulatory authority, body or agency or third party is required in connection with (A) the offering, issuance or sale of the Offered Securities or, if applicable, the valid authorization, issuance and delivery of the Common Stock issuable upon conversion of the Offered Securities, or (B) the execution, delivery or full and timely performance of this Agreement, the Terms Agreement, the Indenture or the Supplemental Indenture by the Company, except such as may be required under the Securities Act, the Trust Indenture Act or state securities laws. (xi) To the best of such counsel's knowledge and information, the execution, delivery and the full and timely performance of this Agreement, the Terms Agreement, the Indenture and the Supplemental Indenture and the consummation of the transactions contemplated herein (including the issuance, sale and delivery of the Offered Securities and, if applicable, the issuance of the Common Stock upon conversion of the Offered Securities), will not constitute a breach of, or default under (including, without limitation, any event which with notice or lapse of time, or both, would constitute a breach of or a default under), or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Subsidiaries pursuant to, any contract identified on a schedule to such opinion, nor will such action result in any violation of the provisions of the 28 -28- charter or by-laws of the Company, or any applicable law, rule, regulation or administrative, regulatory or court judgment, order or decree, except for any breach, default, lien, charge or encumbrance under any such contract as could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (xii) Each document filed pursuant to the Exchange Act (other than the financial statements, schedules and other financial and statistical data included therein, as to which such counsel need express no opinion) and incorporated or deemed to be incorporated by reference in the Prospectus appears on its face to be appropriately responsive to the applicable requirements of the Exchange Act. (xiii) The Company is not an investment company under the Investment Company Act of 1940, nor a holding company or a subsidiary of a holding company under the Public Utility Holding Company Act of 1935. Such counsel shall also state that they have been advised by the Commission that the Indenture has been qualified under the Trust Indenture Act and that the Registration Statement became effective under the Securities Act; that any required filings of the Prospectus pursuant to Rule 424(b) have been made in the manner and within the time period required by Rule 424(b); and that, based solely on conversations with the Commission, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted, are pending or, to such counsel's knowledge, are contemplated under the Securities Act. In addition, such counsel shall also include a statement to the effect that nothing has come to the attention of such counsel which leads such counsel to believe that (1) the Registration Statement (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion), when it became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (2) the Prospectus (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion) as of its date or at the Repre- 29 -29- sentation Date contained and, as of the date such opinion is delivered, contains any untrue statement of a material fact or omitted or omits 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. Such counsel in rendering such opinion may rely as to certain matters of fact on certificates of officers of the Company and of public officials; provided, however, that (a) such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such certificates and (b) such certificates shall have been delivered to the Representatives prior to the Closing Date. In rendering such opinion, such counsel may rely as to matters involving the application of laws of (1) the State of Texas, upon the written opinion of James M. Shelger delivered pursuant to clause (f) below of this Section 6 and (2) any jurisdiction other than the State of New York or the United States or the General Corporation Law of the State of Delaware, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel who are reasonably satisfactory to counsel for the Underwriters; provided, however, that such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such opinion. (f) The Representatives shall have received on the Closing Date a signed opinion of James M. Shelger, General Counsel of the Company, addressed to the Underwriters and dated the Closing Date and satisfactory to counsel for the Underwriters, to the effect that: (i) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and to the best of such counsel's knowledge and information is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (ii) Each Subsidiary has been duly incorporated, is validly existing as a corporation in good standing 30 -30- under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. (iii) Each of this Agreement and the Terms Agreement has been duly authorized, executed and delivered by the Company. (iv) The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Indenture relating to the Offered Securities, and such Indenture has been duly authorized, executed and delivered by the Company and has been duly qualified under the Trust Indenture Act and (assuming the due authorization, execution and delivery by the Trustee thereunder) constitutes a valid and legally binding instrument of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject to the effect of general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and the discretion of the court before which any proceeding therefor may be brought. (v) The Company has the requisite corporate power and authority to issue and deliver the Offered Securities, and the Offered Securities have been duly authorized by the Company for issuance. The Offered Securities, when executed by the Company and authenticated by the Trustee in accordance with the Indenture relating to the Offered Securities (assuming the due authorization, execution and delivery of the Indenture by the Trustee thereunder) and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement and the Terms Agreement will constitute valid and legally binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with 31 -31- their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and the discretion of the court before which any proceeding therefor may be brought. (vi) The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Supplemental Indenture relating to the Offered Securities, and the Supplemental Indenture has been duly authorized, executed and delivered by the Company and (assuming the due authorization, execution and delivery by the Trustee under the Indenture relating to the Offered Securities) constitutes a valid and legally binding instrument of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and the discretion of the court before which any proceeding therefor may be brought. (vii) The statements set forth or incorporated by reference in the Registration Statement and the Prospectus insofar as such statements purport to summarize certain provisions of the Offered Securities (and the Common Stock, if applicable), the Indenture and the Supplemental Indenture provide a fair summary of such provisions. (viii) The number of authorized shares of capital stock of the Company is as set forth in the Prospectus under "Capitalization" and the authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus. (ix) If the Offered Securities are convertible into Common Stock, upon issuance and delivery of the Offered Securities, the Offered Securities shall be convertible at the option of the holder thereof into 32 -32- Common Stock in accordance with the terms of the Offered Securities and the Supplemental Indenture relating thereto; the Common Stock issuable upon conversion of the Offered Securities have been duly authorized and validly reserved for issuance upon such conversion by all necessary corporate action, and such Common Stock, when issued upon such conversion, will be validly issued, fully paid and nonassessable; no holder of the Common Stock will be subject to personal liability solely by reason of being such a holder; and the issuance of such shares upon such conversion will not be subject to preemptive rights arising by operation of law or under the charter or by-laws of the Company. (x) All of the issued and outstanding capital stock of each Subsidiary has been duly authorized and validly issued, is fully paid and nonassessable and, to the best of such counsel's knowledge and information, after due inquiry, except as set forth in the Registration Statement and the Prospectus, is owned by the Company, directly or indirectly, free and clear of any perfected security interest, and, to the best of such counsel's knowledge, after due inquiry, any other security interests or claims. (xi) Such counsel does not know of any legal or governmental actions, suits or proceedings, pending or threatened, required to be disclosed in the Registration Statement which are not disclosed therein as required (provided that for such purpose such counsel need not regard any action, suit or proceeding to be "threatened" unless the potential litigant has manifested to the management of the Company or to such counsel a present intention to initiate such suit or proceeding). (xii) To the best of such counsel's knowledge and information, after due inquiry, there are no Contracts or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed or incorporated by reference as exhibits thereto. (xiii) Based upon such counsel's review of applicable law, no authorization, approval, consent or order of any court or governmental or regulatory 33 -33- authority, body or agency or third party is required in connection with (A) the offering, issuance or sale of the Offered Securities or, if applicable, the valid authorization, issuance and delivery of the Common Stock issuable upon conversion of the Offered Securities, or (B) the execution, delivery or full and timely performance of this Agreement, the Terms Agreement, the Indenture or the Supplemental Indenture by the Company, except such as may be required under the Securities Act, the Trust Indenture Act or state securities laws. (xiv) To the best of such counsel's knowledge and information, the execution, delivery and the full and timely performance of this Agreement, the Terms Agreement, the Indenture and the Supplemental Indenture, the consummation of the transactions contemplated herein (including the issuance, sale and delivery of the Offered Securities and, if applicable, the issuance of the Common Stock upon conversion of the Offered Securities), and compliance by the Company with its obligations hereunder and thereunder will not conflict with or constitute a breach of, or default under (including, without limitation, any event which, with notice or lapse of time, or both, would constitute a breach of or a default under), or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Subsidiaries pursuant to, any contract identified on a schedule for such opinion, nor will such action result in any violation of the provisions of the charter or by-laws of the Company, or any applicable law, rule, regulation or administrative, regulatory or court judgment, order or decree, except for any breach, default, lien, charge or encumbrance under any such contract as could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. In addition, such counsel shall also include a statement to the effect that nothing has come to the attention of such counsel which leads such counsel to believe that (1) the Registration Statement (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion), when it became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary 34 -34- to make the statements therein not misleading and (2) the Prospectus (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion) as of its date or at the Representation Date contained and, as of the date such opinion is delivered, contains any untrue statement of a material fact or omitted or omits 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. Such counsel in rendering such opinion may rely as to certain matters of fact on certificates of officers of the Company and of public officials; provided, however, that (a) such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such certificates and (b) such certificates shall have been delivered to the Representatives prior to the Closing Date. In rendering such opinion, such counsel may rely as to matters involving the application of laws of (1) the State of New York or the General Corporation Law of the State of Delaware upon the written opinion of Wachtell, Lipton, Rosen & Katz delivered pursuant to clause (e) above of this Section 6 and (2) any jurisdiction other than the State of Texas or the United States, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel who are reasonably satisfactory to counsel for the Underwriters; provided, however, that such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such opinion. (g) On the Representation Date and also on the Closing Date, Ernst & Young and Coopers & Lybrand shall have furnished to the Representatives signed letters, addressed to the Underwriters and dated the respective dates of delivery thereof, in form and substance satisfactory to the Representatives, containing statements and information of the type customarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information included or incorporated by reference in the Registration Statement and the Prospectus. (h) The Representatives shall have received on and as of the Closing Date a favorable opinion of Cahill Gordon & Reindel, counsel to the Underwriters, with respect to the Registration Statement, the Prospectus and other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters. 35 -35- (i) (On the Representation Date, the Offered Securities shall have been approved for listing on the ( ) upon notice of issuance.) If the Offered Securities are convertible into Common Stock, on the Representation Date, the Common Stock issuable upon conversion of the Offered Securities shall have been approved for listing on the New York Stock Exchange upon notice of issuance. (j) At the Closing Date, counsel for the Underwriters 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 Offered Securities as herein contemplated and related proceedings, 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 Offered Securities (and, if applicable, the Common Stock) as herein contemplated shall be satisfactory in form and substance to the Underwriters and counsel for the Underwriters. (k) On or prior to the Closing Date the Company shall have furnished to the Representatives such further certificates and documents as the Representatives shall reasonably request. (l) Subsequent to the execution and delivery of the Terms Agreement and prior to the Closing Date, there shall not have occurred any downgrading, nor shall any notice have been given of (i) any intended or potential downgrading or (ii) any review or possible change that does not indicate an improvement, in the rating accorded any securities of or guaranteed by the Company by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act. (m) If the Offered Securities are convertible into Common Stock, the Company shall have delivered to the Representatives written agreements, in form and substance satisfactory to the Representative designated in the Terms Agreement, with each of its executive officers who owns Common Stock that no offer, sale or other disposition, or request or demand for registration under the Securities Act or inclusion in any other registration statement filed by the Company under the Securities Act, of any Common Stock or other capital stock of the Company, or warrants, options, convertible, exercisable or exchangeable securities, or other rights to purchase or acquire, Common Stock or other capital stock (or any such right or exchangeable, exercisable or convertible security) owned by such person, or 36 -36- with respect to which such person has the power of disposition, will be made for a period of 90 days after the date of this Agreement, directly or indirectly, by such executive officer, otherwise than (i) with the prior written consent of the Representative designated in the Terms Agreement and (ii) pursuant to such exceptions, if any, as are agreed to by the Representatives and set forth in the Terms Agreement. (n) There shall not have been any amendment or supplement to the Registration Statement or the Prospectus to which the Underwriters shall have objected. The several obligations of the Underwriters designated in the Terms Agreement to purchase Option Securities hereunder on the Additional Closing Date are, unless otherwise agreed by the Underwriters designated in the Terms Agreement, subject to the conditions set forth in paragraph (a) to and including paragraph (n) above on and as of the Additional Closing Date (references therein to the Closing Date shall be deemed references to the Additional Closing Date for this purpose), except that the certificate called for by paragraph (d), the opinions called for by paragraphs (e), (f) and (h) and the letters called for by paragraph (g) shall be dated as of, and delivered on, the Additional Closing Date, and to the delivery to the Representatives on the Additional Closing Date of such other documents as they may reasonably request. 7. Indemnification and Contribution. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation the legal fees and other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein; provided, however, that the foregoing indemnity with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter (or the benefit of any 37 -37- person controlling such Underwriter) from whom the person asserting any such losses, claims, damages or liabilities purchased Offered Securities if such untrue statement or omission or alleged untrue statement or omission made in such preliminary prospectus and is eliminated or remedied in the Prospectus and the Company has provided such Prospectus in accordance with paragraph 5(ii) hereof (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) and if it shall be established in the related action or proceeding that a copy of the Prospectus, if required by law (as so amended or supplemented, but exclusive of any documents incorporated therein by reference), shall not have been furnished to such person at or prior to the written confirmation of the sale of such Offered Securities to such person, except to the extent that such Prospectus contains any other untrue statement or omission or alleged untrue statement or omission of a material fact that was the subject matter of the related action or proceeding. For purposes of the proviso to the immediately preceding sentence, the term "Prospectus" shall not be deemed to include the documents incorporated therein by reference, and no Underwriter shall be obligated to send or give any supplement or amendment to any document incorporated by reference in any preliminary prospectus or the Prospectus to any person. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the directors of the Company, the officers of the Company who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any preliminary prospectus. For purposes of this Section 7 and Section 4(ii), the only written information furnished by the Underwriters to the Company expressly for use in the Registration Statement and the Prospectus is the information 38 -38- in the last paragraph of the cover page of the Prospectus Supplement and ( ) and ( ) under the table under the caption "Underwriting" in the Prospectus Supplement. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnity may be sought pursuant to any of the two preceding paragraphs of this Section 7, such person (hereinafter called the "Indemnified Person") shall promptly notify the person against whom such indemnity may be sought (hereinafter called the "Indemnifying Person") in writing, and the Indemnifying Person, upon request of the Indemnified Person, shall promptly retain counsel satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary, (ii) there has been a failure by the Indemnifying Person to retain promptly counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Underwriters and such control persons of Underwriters, such firm shall be designated in writing by the Representatives. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such 39 -39- consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested an Indemnifying Person to reimburse the Indemnified Person for fees and expenses of counsel as contemplated by the third sentence of this paragraph, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement (1) includes an unconditional written release of such Indemnified Person, in form and substance satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (2) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of any Indemnified Person. If the indemnification provided for in the first or second paragraph of this Section 7 is unavailable to any extent to an Indemnified Person under such paragraph in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities as follows: as between the Company on the one hand and the Underwriters on the other (i) in such proportion as is appropriate to reflect the aggregate relative benefits received by the Company and by the Underwriters from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and of the Underwriters in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and by the Underwriters on the other shall be deemed to be in the same respective proportions as the net proceeds from the offering 40 -40- (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus bear to the aggregate public offering price of the Offered Securities. The relative fault of the Company on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total price at which the Offered Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 7 are several in proportion to the respective number of Offered Securities they have purchased hereunder, and not joint. The indemnity and contribution agreements contained in this Section 7 are in addition to any liability which the Indemnifying Persons may otherwise have to the Indemnified Persons referred to above. The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Company contained in this Agreement shall remain operative and in 41 -41- full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of and payment for any of the Offered Securities. 8. Termination of Agreement. Notwithstanding anything herein contained, this Agreement (or the obligations of the several Option Securities Underwriters with respect to the Option Securities) may be terminated in the absolute discretion of the Representatives, by notice given to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (or, in the case of the Option Securities, prior to the Additional Closing Date) (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the National Association of Securities Dealers, Inc., the American Stock Exchange or the ( ), (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York or ( ) shall have been declared by either U.S. Federal, New York State or ( ) authorities or exchange controls shall have been imposed by the United States, or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in the judgment of the Representatives, is material and adverse and which, in the judgment of the Representatives, makes it impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. 9. Effectiveness of Agreement; Additional Obligations of the Underwriters. This Agreement shall become effective upon the later of (x) the Representation Date and (y) release of notification by the Commission of the effectiveness of the most recent amendment to the Registration Statement filed prior to the Closing Date. If, on the Closing Date or the Additional Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Offered Securities which it or they have agreed to purchase hereunder on such date, and the aggregate number of Offered Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of Offered Securities to be purchased on such date, the other Underwriters (with respect to the Option Securities, to the extent such Underwriters are Option Securities Underwriters) shall be obligated severally in 42 -42- the proportions that (1) with respect to Underwritten Securities, the number of Underwritten Securities set forth opposite their respective names in the annex or annexes to Exhibit 1 hereto bears to the aggregate number of Underwritten Securities set forth opposite the names of all such non-defaulting Underwriters and (2) with respect to Option Securities, the number of Underwritten Securities set forth opposite their respective names in the annex or annexes to Exhibit 1 hereto bears to the aggregate number of Underwritten Securities set forth opposite the names of all such non-defaulting Underwriters who are Option Securities Underwriters, or in such other proportions as the Representatives may specify, to purchase the Offered Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided, however, that in no event shall the number of Offered Securities that any Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant to this Section 9 by an amount in excess of one-ninth of such number of Offered Securities without the written consent of such Underwriter. If, on the Closing Date or the Additional Closing Date, as the case may be, any Underwriter or Underwriters shall fail or refuse to purchase Offered Securities which it or they have agreed to purchase hereunder on such date, and the number of Offered Securities with respect to which such default occurs is more than one-tenth of the aggregate number of Offered Securities to be purchased on such date, and arrangements satisfactory to the Representatives and the Company for the purchase of such Offered Securities are not made within 36 hours after such default, this Agreement (or the obligations of the several Underwriters to purchase the Option Securities, as the case may be) shall terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case either the Representatives or the Company shall have the right to postpone the Closing Date (or, in the case of the Option Securities, the Additional Closing Date), but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 10. Reimbursement upon Occurrence of Certain Events. If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company agrees to reimburse the Underwriters or such 43 -43- Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and expenses of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder and pursuant to the Terms Agreement. In no event, however, shall the Company be responsible to the Underwriters for any loss of profits for failure to consummate the offering and sale of the Offered Securities. 11. Miscellaneous. This Agreement shall inure to the benefit of and be binding upon the Company, the Underwriters, any controlling persons referred to herein and their respective successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. No purchaser of Offered Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. 12. Notice. 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 Underwriters shall be given to the Representatives at the address as set forth in the Terms Agreement. Notices to the Company shall be given to it at Service Corporation International, 1929 Allen Parkway, Houston, Texas 77019 (facsimile: (713) ( )); Attention: ( ). 13. Counterparts; Applicable Law. This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly therein, without giving effect to the conflicts of laws provisions thereof. 44 -44- If the foregoing is in accordance with your understanding, please sign and return six counterparts hereof. Very truly yours, SERVICE CORPORATION INTERNATIONAL By:_______________________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written (Insert Signature block(s) for the Representative or Representatives acting on behalf of the Underwriters, or for each Underwriter if no Syndicate) 45 EXHIBIT I SERVICE CORPORATION INTERNATIONAL $( ) (TITLE OF DEBT SECURITIES) TERMS AGREEMENT Service Corporation International ( ), 199( ) 1929 Allen Parkway Houston, Texas 77019 Attention: ( ) Ladies and Gentlemen: ( ) (the "Representative(s)") understand that Service Corporation International, a Texas corporation (the "Company"), proposes to issue and sell $( ) aggregate principal amount of its (describe Debt Securities) (the "Underwritten Securities"). Subject to the terms and conditions set forth herein or incorporated by reference herein, the (U.S.) Underwriters named in Annex A attached hereto (and the International Managers named in Annex B attached hereto) offer to purchase, severally and not jointly, the aggregate principal amount of Underwritten Securities set forth opposite the name of each such Underwriter on Annex A (and Annex B) hereto at a price of ( )% of the principal amount thereof (the "Purchase Price"). The Closing Date shall be ( ), 199( ), at ( ) A.M. at the offices of ( ). (It is understood that, subject to the conditions hereinafter stated, $( ) aggregate principal amount of Underwritten Securities (the "U.S. Underwritten Securities") will be sold to the several U.S. Underwriters named in Annex A hereto (the "U.S. Underwriters") in connection with the offering and sale of such U.S. Underwritten Securities in the United States and Canada to United States and Canadian Persons (as such terms are defined in the Agreement between U.S. and International Underwriting Syndicates of even date herewith between the U.S. Underwriters and the International Managers), and $( ) aggregate principal amount of Underwritten Securities (the "International Securities") will be sold to the several international managers named in Annex B hereto (the "International Managers") in connection with the offering and 46 -2- sale of such International Securities outside the United States and Canada to persons other than United States and Canadian Persons. ( ) shall act as representatives (the "U.S. Representatives") of the several U.S. Underwriters, and ( ) shall act as representatives (the "International Representatives") of the several International Managers. The U.S. Underwriters and the International Managers are hereinafter collectively referred to as the "Underwriters", and the U.S. Representatives and the International Representatives are hereinafter collectively referred to as the "Representatives.") (In addition, the Representatives understand that the Company proposes to issue and sell to the several (U.S.) Underwriters, for the sole purpose of covering over-allotments in connection with the sale of the Underwritten Securities, at the option of the (U.S.) Underwriters, up to an additional $( ) aggregate principal amount of the (describe Debt Securities) (the "Option Securities"). The Underwritten Securities and the Option Securities are herein referred to as the "Offered Securities.") (The offer herein contained is further conditioned upon the Company agreeing to sell to the (U.S.) Underwriters the Option Securities, and agreeing that the (U.S.) Underwriters shall have a one-time right to purchase, severally and not jointly, up to $( ) aggregate principal amount of Option Securities at the Purchase Price. Option Securities may be purchased as provided below solely for the purpose of covering over-allotments made in connection with the offering of the Underwritten Securities. If any Option Securities are to be purchased, each (U.S.) Underwriter agrees, severally and not jointly, to purchase the aggregate principal amount of Option Securities (subject to such adjustments to eliminate any fractional Offered Securities as the (U.S.) Representatives in their sole discretion may make) that bears the same proportion to the total aggregate principal amount of Option Securities to be purchased as the aggregate principal amount of (U.S.) Underwritten Securities set forth in Annex A hereto opposite the name of such (U.S.) Underwriter bears to the total aggregate principal amount of (U.S.) Underwritten Securities.) (The Company's agreement to sell the Option Securities shall entitle the (U.S.) Underwriters to exercise the option to purchase the Option Securities at any time on or before the thirtieth day following the date of this Terms Agreement, by written notice from the (U.S.) Representatives to the Company. Such notice shall set forth the aggregate principal amount of Option Securities as to which the option is being exercised and 47 -3- the date and time when the Option Securities are to be delivered and paid for which may be the same date and time as the Closing Date but shall not be earlier than the Closing Date nor later than the tenth full Business Day after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 9 of the Underwriting Agreement referred to below). Such notice shall be given at least two Business Days prior to the date and time of delivery specified therein.) The Underwritten Securities shall have the following terms: Title: ( ) Maturity: ( ) Interest rate: ( ) Interest payment dates: ( ) Conversion provisions: ( ) Redemption provisions: ( ) Sinking fund provisions: ( ) Public offering price: ( )% of the principal amount thereof Additional terms: ( ) All the provisions contained in the document entitled "Underwriting Agreement -- Service Corporation International -- Debt Securities" (the "Underwriting Agreement") and dated ( ), 199( ), a copy of which you have previously received, are herein incorporated by reference in their entirety and shall be deemed to be a part of this Terms Agreement to the same extent as if the Underwriting Agreement had been set forth in full herein. Terms defined in the Underwriting Agreement are used herein as therein defined. The Representative authorized to approve the form of agreement specified in Section 6(m) of the Underwriting Agreement and to give the consent specified in Section 5(h) and Section 6(m) of the Underwriting Agreement is ( ). (The additional exceptions to the first (and second sentences of Section 5(h) are ( )).) Any action by the Representatives hereunder may be taken by the Representatives jointly or by ( ) alone on behalf of the Representatives, and any such action taken by ( ) alone shall be binding upon the Representatives. Notices to the Underwriters shall be given to the Representatives c/o ( ) (facsimile: (( )) ( )); Attention: ( ). 48 This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly in such state, without giving effect to the conflicts of laws provisions thereof. Please accept this offer no later than ( ) o'clock ( ).M. on ( ), 199( ), by signing a copy of this Terms Agreement in the space set forth below and returning the signed copy to us, or by sending us a written acceptance in the following form: "We hereby accept your offer, set forth in the Terms Agreement, dated ( ), 199( ), to purchase the Underwritten Securities on the terms set forth therein (and hereby grant to the (U.S.) Underwriters the option to purchase the Option Securities more fully set forth in the Terms Agreement) and agree to and accept all other terms and provisions of the Terms Agreement." Very truly yours, By:_______________________________________ Name: Title: Accepted as of the date first above written: SERVICE CORPORATION INTERNATIONAL By: _____________________________ Name: Title: 49 ANNEX A
Aggregate Principal Amount of (U.S.) Underwritten Securities (U.S.) Underwriters To Be Purchased - ------------------- ------------------- ----------------- Total: =================
50 ANNEX B
Aggregate Principal Amount of International Underwritten Securities International Managers To Be Purchased - ---------------------- --------------- --------------- Total: ===============
51 SCHEDULE I Significant Subsidiaries of the Company within the meaning of Rule 1-02 of Regulation S-X under the Securities Exchange Act of 1934. --------------------------------------- EX-1.3 4 UNDERWRITING AGREEMENT - LLC PREFERRED SECURITIES 1 EXHIBIT 1.3 UNDERWRITING AGREEMENT SCI FINANCE LLC Preferred Securities guaranteed to the extent set forth in certain backup undertakings by SERVICE CORPORATION INTERNATIONAL ( ), 199( ) To the Underwriter or Underwriters named in the within mentioned Terms Agreement Ladies and Gentlemen: SCI Finance LLC, a limited liability company organized under the laws of the State of Texas (the "Company"), and Service Corporation International, a Texas corporation, as guarantor and provider of certain backup undertakings (the "Guarantor"), propose to issue and sell from time to time shares of the Preferred Securities, par value $1.00 per share, of the Company (the "Preferred Securities") guaranteed (the "Guarantee") by the Guarantor as to the payment of dividends, as, if and when legally declared, and as to payments on liquidation or redemption. The Preferred Securities are convertible into shares of Common Stock, $1.00 par value, of the Guarantor (the "Guarantor Common Stock"). The Preferred Securities, together with the related Guarantee, are collectively referred to herein as the "Securities." The Securities also are entitled to the benefits of certain backup undertakings (the "Undertakings") described in the Prospectus (as hereinafter defined) provided by the Guarantor, in addition to the Guarantee (the Undertakings, together with the Guarantee, being referred to herein collectively as the "Backup Undertakings"). The Securities and the Guarantor Common Stock are registered under the registration statement referred to in Section 4(i) hereof. The Securities may be issued in one or more series, may have varying dividend and liquidation preferences, voting rights and redemption provisions as described in a declaration and amendment (the "Declaration") to the Company's regulations (as amended to the Closing Date (as defined below), the "Regulations") adopted by the Guarantor as the manager of the Company. The basic provisions set 2 -2- forth herein are intended to be incorporated by reference in a terms agreement of the type referred to below relating to, among other things, the designation and series of Preferred Securities and the number of shares of Preferred Securities (together with the Guarantee, the "Underwritten Securities") to be issued and sold by the Company and the Guarantor pursuant thereto and to be purchased, severally, by the underwriter or several underwriters named therein (the "Underwriters"). The Terms Agreement, which shall be in the form of Exhibit I hereto (the "Terms Agreement"), relating to the Underwritten Securities and such additional shares of Securities that the Underwriters may be granted an option to purchase by the Company and the Guarantor to cover over-allotments in connection with any offering of Underwritten Securities (the "Option Securities" and together with the Underwritten Securities, the "Offered Securities"), together with the provisions hereof incorporated therein by reference (which provisions shall not become effective until so incorporated by reference), is herein referred to as this "Agreement." The Terms Agreement may reflect that a portion of the Underwritten Securities are to be sold to the several U.S. underwriters named therein (the "U.S. Underwriters") in connection with the offering and sale of a portion of the Underwritten Securities in the United States and Canada (the "U.S. Underwritten Securities") to United States and Canadian persons (as defined in the instruments governing the coordination of the offering by the U.S. Underwriters and the International Managers (as defined below) named therein) and that the balance of the Underwritten Securities (the "International Underwritten Securities") are to be sold to the several international managers named therein (the "International Managers") in connection with the offering and sale of such International Underwritten Securities outside the United States and Canada to persons other than United States and Canadian persons. In such event, as used herein, the term "Underwriters" refers to the U.S. Underwriters and the International Managers, and the term "Representatives" refers to the U.S. Representatives named therein of the U.S. Underwriters and the International Representatives named therein of the International Managers. If the Underwriters consist only of the firm or firms referred to in the Terms Agreement as the Representative or Representatives, then the terms "Underwriters" and "Representatives," as used herein, shall be deemed to refer to such firm or firms. The obligations of the Underwriters to purchase, and the Company and the Guarantor to sell, the Offered Securities are evidenced by the Terms Agreement delivered at the time the Company and the Guarantor determine to sell the Offered Securities and, without the execution and delivery of the Terms Agreement, the Company and the Guarantor shall not be obligated to sell, and the 3 -3- Underwriters shall not be obligated to purchase, any Securities pursuant to this Agreement. The Terms Agreement specifies the firm or firms which will be Underwriters, the amount of the Offered Securities to be purchased by each Underwriter, the purchase price to be paid by the Underwriters for the Offered Securities, the public offering price, if any, of the Offered Securities and any terms of the Offered Securities not otherwise specified in the applicable Declaration (including, but not limited to, designations, denominations, conversion or exchange provisions, covenants, dividend rates and payment dates, liquidation preferences and redemption provisions). The Terms Agreement specifies any details of the terms of the offering that should be reflected in a post-effective amendment to the applicable Registration Statement or the Prospectus Supplement (each as hereinafter defined). The terms which follow, when used in this Agreement, shall have the meanings indicated. "Registration Statement" shall mean the registration statement or registration statements relating to the Offered Securities (and such other securities of the Guarantor as may be included therein) which shall be the registration statement on Form S-3 filed under the Securities Act of 1933, as amended (collectively with the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder, the "Securities Act"), referred to in Section 4(i) below, including all documents incorporated therein by reference and all exhibits thereto, as from time to time amended or supplemented pursuant to the Securities Act, the Securities Exchange Act of 1934, as amended (collectively with the rules and regulations of the Commission thereunder, the "Exchange Act"), or otherwise, including as supplemented by the Prospectus Supplement, on or prior to the date of execution and delivery of the Terms Agreement (the "Representation Date") and, in the event any such amendment or supplement is filed prior to the Closing Date (as defined in Section 3 hereof), including by the filing of any Prospectus Supplement or document incorporated by reference, shall also mean such registration statement as so amended or supplemented. "Prospectus" shall mean the prospectus (including the related Prospectus Supplement with respect to the Offered Securities) relating to the Securities (and such other securities of the Guarantor as may be covered thereby), including all documents incorporated therein by reference, as from time to time amended or supplemented pursuant to the Securities Act, the Exchange Act or otherwise; provided, however, that a Prospectus Supplement shall be deemed to have supplemented the Prospectus only with respect to the Offered Securities to which it relates. Any reference herein to the terms "amend," "amendment" or "supplement" with respect to the Registration Statement, any preliminary 4 -4- 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, and on or prior to the completion of the applicable offering and which is deemed to be incorporated therein by reference. 1. Agreements to Sell and Purchase. Each of the Company and the Guarantor agrees to issue and sell to each Underwriter as hereinafter provided, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees to purchase at the price per share set forth in the Terms Agreement, severally and not jointly, from the Company and the Guarantor the respective number of Underwritten Securities set forth opposite the name of such Underwriter on the annex or annexes to Exhibit 1 hereto (or such number of Underwritten Securities, as the case may be, increased as set forth in Section 9 hereof, subject to such adjustments to eliminate any fractional Offered Securities as the Representatives in their sole discretion may make). The Guarantor agrees to issue the Backup Undertakings relating to the Underwritten Securities concurrently with the issue and sale of the Underwritten Securities as contemplated hereby. If, pursuant to the Terms Agreement, the Company and the Guarantor shall have granted the option to the Underwriters to purchase Option Securities, each of the Company and the Guarantor agrees to sell to the Underwriters designated in the Terms Agreement to purchase Option Securities (each, an "Option Securities Underwriter" and collectively, the "Option Securities Underwriters") the Option Securities, and the Option Securities Underwriters shall have a one-time right to purchase, severally and not jointly, the Option Securities on the terms set forth in the Terms Agreement. Option Securities may be purchased as provided below solely for the purpose of covering over-allotments made in connection with the offering of the Underwritten Securities. If any Option Securities are to be purchased, each Option Securities Underwriter agrees, severally and not jointly, to purchase the number of Option Securities (subject to such adjustments to eliminate any fractional Offered Securities as the Representatives designated in the Terms Agreement in their sole discretion may make) that bears the same proportion to the total number of Option Securities to be purchased as the number of Underwritten Securities set forth in the annex or annexes to Exhibit 1 hereto opposite the name of such Option Securities Underwriter bears to the total number of Underwritten Securities to be purchased by all Option Securities Underwriters. The Guarantor agrees to issue the Backup 5 -5- Undertakings relating to the Option Securities concurrently with the issue and sale of the Option Securities as contemplated hereby. The Option Securities Underwriters may exercise the option to purchase the Option Securities at any time on or before the thirtieth day following the Representation Date, by written notice from the Representatives designated in the Terms Agreement to the Company and the Guarantor. Such notice shall set forth the aggregate number of Option Securities as to which the option is being exercised and the date and time when the Option Securities are to be delivered and paid for, which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than the tenth full Business Day (as hereinafter defined) after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 9 hereof). Such notice shall be given at least two Business Days prior to the date and time of delivery specified therein. The Guarantor hereby irrevocably and unconditionally guarantees the timely performance by the Company of the Company's obligations under this Section 1. As compensation to the Underwriters for their commitments hereunder, and in view of the fact that proceeds of the sale of the Offered Securities will be lent by the Company to SCI International Limited, a Delaware corporation and a wholly-owned subsidiary of the Guarantor ("SCI Limited"), pursuant to the Loan Agreement (as defined below) the Guarantor hereby agrees to pay at each of the Closing Date and the Additional Closing Date to the Underwriters the amount per Offered Security purchased by the Underwriters set forth in the Terms Agreement. 2. Terms of Public Offering. The Company and the Guarantor understand that the Underwriters intend (i) to make a public offering of the Offered Securities as soon after the Prospectus Supplement has been filed and the Terms Agreement has been executed and delivered as in the judgment of the Representatives is advisable and (ii) initially to offer the Offered Securities upon the terms set forth in the Prospectus Supplement, and the Underwriters will advise the Company as to any alteration in the terms of such offering that would require, pursuant to the Securities Act, any amendment or supplement to the Prospectus Supplement. 3. Delivery of the Offered Securities and Payment Therefor. Payment for the Offered Securities shall be made to the Company or to the Company's order by certified or official bank check or checks payable in New York Clearing House or other next 6 -6- day funds in such location as the Representatives shall designate in the Terms Agreement at, in the case of the Underwritten Securities, such time and date as are specified in the Terms Agreement, or at such other time on the same or such other date, not later than the fifth Business Day (as hereinafter defined) thereafter, as the Representatives, the Company and the Guarantor may agree upon in writing or, in the case of the Option Securities, on the date and at the time specified by the Representatives designated in the Terms Agreement to exercise such option in the written notice by such Representatives of the election to purchase such Option Securities by the Option Securities Underwriters. The time and date of such payment for the Underwritten Securities are referred to herein as the "Closing Date" and the time and date for such payment for the Option Securities, if other than the Closing Date, are herein referred to as the "Additional Closing Date". As used herein, the term "Business Day" means any day other than a day on which banks are permitted or required to be closed in New York City. At the Closing Date or the Additional Closing Date, as the case may be, the Guarantor will pay the compensation payable to the Underwriters pursuant to Section 1 in respect of the Offered Securities being purchased by the Underwriters on such date, such payment to be made to the Representatives or their order for the account of the several Underwriters by (wire transfer of immediately available funds) (certified or official bank check or checks payable in New York Clearing House or other next day funds). Payment for the Offered Securities to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to the Representatives for the respective accounts of the several Underwriters of the Offered Securities to be purchased on such date registered in such names and in such denominations as the Representatives shall request in writing not later than two full Business Days prior to the Closing Date or the Additional Closing Date, as the case may be, with any transfer taxes payable in connection with the transfer to the Underwriters of the Offered Securities duly paid by the Guarantor. The Guarantor hereby agrees to pay any such transfer taxes. The certificates for the Offered Securities will be made available for inspection and packaging by the Representatives not later than 1:00 P.M., New York City time, on the Business Day prior to the Closing Date or the Additional Closing Date, as the case may be. 4. Representations and Warranties of the Company and the Guarantor. Each of the Company and the Guarantor jointly and severally represents and warrants to each Underwriter as of the Representation Date and as of the Closing Date that: 7 -7- (i) A registration statement on Form S-3 (Registration No. 33-( )), including a prospectus, with respect to the Securities (and such other securities of the Guarantor as may be covered thereby), (i) has been prepared by the Company and the Guarantor in conformity with the requirements of the Securities Act, (ii) has been filed with the Commission and (iii) has become effective. Such Registration Statement and the related prospectus may have been amended or supplemented from time to time prior to the Representation Date; any such amendment to the applicable Registration Statement was so prepared and filed and any such amendment has become effective. A prospectus supplement (the "Prospectus Supplement"), including a prospectus, relating to the Offered Securities has been prepared. The Prospectus Supplement and, if not previously filed, such prospectus will be filed pursuant to Rule 424 under the Securities Act. If the offering of the Offered Securities is to be made by U.S. Underwriters and International Managers, two such prospectus supplements, one relating to the Offered Securities to be sold by the U.S. Underwriters and one relating to the Underwritten Securities to be sold by the International Managers, and each identical to the other except for the cover page, have been so prepared and filed. In such event, the term "Prospectus Supplement" refers to such international and U.S. prospectus supplements. Copies of such Registration Statement and the Prospectus relating thereto, any such amendment or supplement, the Prospectus Supplement and all documents incorporated by reference therein which were filed with the Commission on or prior to the Representation Date (including one fully executed copy of the Registration Statement and of each amendment thereto for counsel for the Underwriters) have been delivered to each of the Representatives. The Company and the Guarantor have included in the Registration Statement, as amended at the date the Registration Statement was declared effective (the "Effective Date"), all information (other than information relating specifically to the terms of any particular series of Securities and the offering thereof) required by the Securities Act to be included in the Prospectus with respect to the Offered Securities (and the Guarantor Common Stock) and the offering and sale thereof. Except to the extent that the Underwriters shall agree in writing to a modification, the Registration Statement and the Prospectus shall be in all substantive respects in the form furnished to the Underwriters prior to the Representation Date or, to the extent not completed at the Representation Date, shall contain only such specific additional information and other changes as the Company and the Guarantor have advised the Underwriters, a 8 -8- reasonable time prior to the Representation Date, is to be included or made therein and as to which the Underwriters have not reasonably objected. (ii) The Registration Statement, at the time it became effective, any post-effective amendment thereto, at the time it became effective, the Registration Statement and the Prospectus, as of the Representation Date and at the Closing Date, and any amendment or supplement thereto, conformed or will conform in all material respects to the requirements of the Securities Act; and no such document included or will include an untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading; provided, however, that neither the Company nor the Guarantor makes any representation or warranty as to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information relating to any Underwriter furnished to the Guarantor by or on behalf of any Underwriter expressly for use therein. (iii) No order preventing or suspending the use of any preliminary prospectus has been issued by the Commission. (iv) (A) No stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for that purpose are pending before or threatened by the Commission and (B) each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and did not, or will not when so filed, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (v) Ernst & Young and Coopers & Lybrand, who are reporting upon the audited financial statements and the supporting schedules of the Guarantor included or incorporated by reference in the Registration Statement and the Prospectus, in the case of Ernst & Young, were, at the time of their report, and, in the case of Coopers & Lybrand, are, independent public accountants within the meaning of the Securities Act. The financial statements, and the related notes thereto, included or incorporated by reference in the Registration Statement and the Prospectus, present fairly the 9 -9- consolidated financial position of the Guarantor and its consolidated subsidiaries as of the dates indicated and the results of their operations and the changes in their consolidated cash flows for the periods specified; and said financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis, except as set forth therein, and the supporting schedules included or incorporated by reference in the Registration Statement present fairly the information required to be stated therein. If pro forma financial information is included in or incorporated by reference into the Registration Statement and the Prospectus, such pro forma financial information (including, without limitation, the notes thereto) as of the date presented (A) presented fairly in all material respects the information shown therein, (B) was prepared in accordance with applicable requirements of Regulation S-X promulgated under the Exchange Act, (C) was prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and (D) was properly computed on the bases described therein. In the opinion of the Company and the Guarantor, the assumptions used in the preparation of any such pro forma financial information (including, without limitation, the notes thereto) were fair and reasonable and the adjustments used therein were appropriate to give effect to the transactions or circumstances referred to therein. No pro forma financial statements or other pro forma financial information is required to be included or incorporated by reference in the Registration Statement and the Prospectus other than those included or incorporated by reference therein. (vi) The Company has been duly organized and is validly existing as a limited liability company under the laws of the State of Texas with power and authority (under the Texas Limited Liability Company Act and otherwise) to own its properties and conduct its business as described in the Registration Statement and the Prospectus, and has been duly qualified as a foreign limited liability company for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, other than where the failure to be so qualified and in good standing could not, singly or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company (each, a "Company Material Adverse Effect") or a Guarantor Material Adverse Effect (as defined below); and the Company does not own, 10 -10- directly or indirectly, any shares of stock or any other equity or short- or long-term debt securities (other than of SCI Limited) or have any other equity interest in any firm, partnership, joint venture or other entity. (vii) The Guarantor has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Texas, has the corporate power and authority to own its property and to conduct its business as described in the Registration Statement and the Prospectus and to enter into this Agreement and the Terms Agreement, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Guarantor and the Subsidiaries (as hereinafter defined), taken as a whole (each, a "Guarantor Material Adverse Effect"). (viii) All of the issued common membership interests, par value $( ) per share, of the Company (the "Common Shares") are owned by the Guarantor, free and clear of all liens, encumbrances, security interests, claims and restrictions on transferability and voting (other than any restrictions on transferability as may arise under the Company Agreements (as defined below) and state and federal securities laws). (ix) Each direct and indirect foreign and domestic subsidiary of the Guarantor listed on Schedule I hereto, which constitute all of the significant subsidiaries of the Guarantor within the meaning of Rule 1-02 of Regulation S-X under the Exchange Act (each, a "Subsidiary" and collectively, the "Subsidiaries"), has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Registration Statement and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so incorporated, be in existence, have such power and authority, be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a Guarantor Material Adverse Effect. All of the outstanding shares of 11 -11- capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and non-assessable, and, except as set forth in the Registration Statement and the Prospectus, are owned by the Guarantor, directly or indirectly, free and clear of all liens, encumbrances, security interests, claims and restrictions on transferability and voting (other than any restrictions on transferability as may arise under state and federal securities laws). Except as set forth in the Registration Statement and the Prospectus, there are no outstanding (i) securities or obligations convertible into or exchangeable or exercisable for any shares of capital stock of, or other interest in, the Company, the Guarantor or any Subsidiary, (ii) rights, warrants or options to acquire or purchase any shares of capital stock of, or other interest in, the Company, the Guarantor or any Subsidiary or any such convertible, exchangeable or exercisable securities or obligations, or (iii) obligations or understandings to issue or sell any shares of capital stock of, or other interest in, the Company, the Guarantor or any Subsidiary, any such convertible, exchangeable or exercisable securities or obligations, or any such warrants, rights or options, except as have been disclosed to the Underwriters in writing prior to the date hereof and except for (A) issuances of shares of Guarantor Common Stock and options to acquire Guarantor Common Stock after the date of the most recent information set forth in the Registration Statement and the Prospectus pursuant to the Guarantor's employee benefit plans as in effect on the date hereof and (B) issuances after the date of the most recent information set forth in the Registration Statement and the Prospectus of convertible debentures of the Guarantor and Guarantor Common Stock pursuant to the Guarantor's Registration Statement on Form S-4 (Registration No. 33-54996) (the "S-4"). (x) There are no partnerships in which the Guarantor or any of the Subsidiaries has any direct or indirect controlling interest that would constitute a significant subsidiary within the meaning of Rule 1-02 of Regulation S-X under the Exchange Act. Except for the capital stock of the Subsidiaries and except as set forth in the Registration Statement and the Prospectus, the Guarantor does not own, directly or indirectly, any shares of stock or any other equity or long-term debt securities or have any equity interest in any firm, partnership, joint venture or other entity. 12 -12- (xi) This Agreement and the Terms Agreement have been duly and validly authorized, executed and delivered by each of the Company and the Guarantor. (xii) Since the date of the latest consolidated financial statements of the Guarantor and the Subsidiaries included in the Registration Statement and the Prospectus, except as set forth in or expressly contemplated by the Registration Statement and the Prospectus, there has not been (A) any change in the Guarantor's or the Company's issued capital stock or options, except with respect to the Guarantor (I) pursuant to the exercise of options or the conversion or exchange of outstanding convertible or exchangeable securities of the Guarantor or the Company, (II) issuances of shares of Guarantor Common Stock and options to acquire Guarantor Common Stock issued after the date of such financial statements pursuant to the Guarantor's employee benefit plans as in effect or the date hereof and (III) issuances after the date of such financial statements of convertible debentures of the Guarantor and Guarantor Common Stock pursuant to the S-4, (B) any material adverse change in the management, condition (financial or otherwise), earnings, business affairs or business prospects of the Company (each, a "Company Material Adverse Change," and any event or state of facts which could, singly or in the aggregate, reasonably be expected to result in a Company Material Adverse Change is herein referred to as a "Prospective Company Material Adverse Change"), whether or not arising from transactions or events occurring in the ordinary course of business, or (C) any material adverse change in the management, condition (financial or otherwise), earnings, business affairs or business prospects of the Guarantor and the Subsidiaries, taken as a whole (each, a "Guarantor Material Adverse Change," and any event or state of facts which could, singly or in the aggregate, reasonably be expected to result in a Guarantor Material Adverse Change is herein referred to as a "Prospective Guarantor Material Adverse Change"), whether or not arising from transactions or events occurring in the ordinary course of business. (xiii) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as set forth therein, (A) there have been no transactions or contracts (written or oral) entered into or agreed to be entered into by the Company, the Guarantor or any of the Subsidiaries (other than those in the ordinary course of business) which are material to the Company, or the Guarantor and the Subsidiaries considered as a whole and (B) there has been no dividend or distribution of any kind 13 -13- declared, paid or made by the Company or the Guarantor on any class of its capital stock other than regularly scheduled quarterly dividends by the Guarantor in accordance with past practice of the Guarantor. (xiv) As of the date of the Prospectus Supplement, the Guarantor has the authorized, issued and outstanding capitalization set forth in the Prospectus under "Capitalization." The authorized capital stock of each of the Company and the Guarantor conforms as to legal matters to the description thereof contained in the Registration Statement and the Prospectus, and all of the outstanding shares of capital stock of each of the Company and the Guarantor have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to any preemptive or similar rights. The rights agreement dated as of July 18, 1988 between the Guarantor and Texas Commerce Bank National Association as rights agent, as amended to date (the "Rights Agreement") has been duly authorized, executed and delivered by the Guarantor; the rights (the "Rights") to purchase the Guarantor's Series C Junior Participating Preferred Stock (the "Series C Preferred Stock") outstanding thereunder and to be issued upon the conversion of the Offered Securities have been duly authorized; the Series C Preferred Stock to be issued upon exercise of the Rights has been duly authorized; and the description of the Rights Agreement and the Rights set forth in the Registration Statement and the Prospectus is accurate in all material respects. (xv) The Declaration establishing the Offered Securities set forth in the Terms Agreement has been duly adopted by the Guarantor as manager of the Company pursuant to the Company's Articles of Organization (the "Articles", and together with the Regulations and the Declaration, the "Company Agreements") and the Regulations and is in full force and effect. (xvi) All corporate action required to be taken for the authorization, issuance and sale of the Offered Securities pursuant to this Agreement and the Terms Agreement has been validly and sufficiently taken by the Company and the Guarantor, including, without limitation, by the Guarantor in its capacity as manager of the Company. The Offered Securities have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and the Terms Agreement and, when issued and delivered by the Company pursuant to this Agreement and the Terms Agreement against payment of the consideration set forth in the Terms Agreement, 14 -14- the Offered Securities will be validly issued and fully paid and nonassessable; no holder thereof will be subject to personal liability solely by reason of being such a holder; the Offered Securities will not be subject to the preemptive rights of any stockholder of the Company. The Offered Securities are convertible into Guarantor Common Stock in accordance with their terms and the terms of the Declaration and the Payment, Guarantee and Conversion Agreement by and between the Company and the Guarantor (the "Guarantor Agreement"). (xvii) The Guarantor Common Stock issuable upon conversion of the Offered Securities pursuant to the terms of the Declaration and the Guarantor Agreement has been duly authorized by the Guarantor and validly reserved for issuance by the Guarantor upon such conversion by all necessary corporate action and such Guarantor Common Stock, when duly issued upon such conversion, will be validly issued and fully paid and nonassessable; no holder thereof will be subject to personal liability solely by reason of being such a holder; and the issuance of such Guarantor Common Stock upon such conversion will not be subject to preemptive rights. (xviii) The Guarantee, the loan agreement (the "Loan Agreement") among the Company, SCI Limited and the Guarantor relating to the loan to SCI Limited by the Company of substantially all of the proceeds of the issuance of the Common Shares and the Offered Securities and the liability assumption agreement (the "Liability Agreement;" the Guarantor Agreement, the Loan Agreement and the Liability Agreement being collectively referred to as the "Guarantor Agreements") between the Company and the Guarantor have each been duly and validly authorized, executed and delivered by the Guarantor and, to the extent each is a party thereto, by the Company and SCI Limited, and constitute legal, valid and binding obligations of the Guarantor, the Company and SCI Limited to the extent the Guarantor, the Company or SCI, as the case may be, is a party thereto, enforceable against the Guarantor, the Company and SCI Limited, as the case may be, to the extent any of the Guarantor, the Company or SCI, as the case may be, is a party thereto in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); each of the Guarantor Agreements conform in all material respects to the descriptions thereof in the Registration Statement and the Prospectus. 15 -15- (xix) The execution and delivery by the Company, SCI Limited or the Guarantor, as the case may be, of, and the full and timely performance by the Company, SCI Limited or the Guarantor, as the case may be, of their respective obligations under, this Agreement, the Terms Agreement, the Company Agreements and the Guarantor Agreements, the consummation of each of the transactions contemplated herein and therein, the issuance of the Guarantor Common Stock upon conversion of the Offered Securities and the full and timely performance by the Guarantor of the Backup Undertakings, (A) have been duly authorized by all necessary corporate action on the part of each of the Company, the Guarantor and SCI Limited, (B) do not and will not result in any violation of the Articles or Regulations of the Company or the articles of incorporation or by-laws of the Guarantor or SCI Limited and (C) do not and will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or give rise to any right to accelerate the maturity or require the prepayment of any indebtedness under, or result in the creation or imposition of any lien, charge or encumbrance upon any material property or assets of, the Company, the Guarantor or any Subsidiary under (I) any indenture, mortgage, loan agreement, note, lease, license, partnership agreement, franchise agreement or other agreement or instrument to which the Company, the Guarantor or any Subsidiary is a party or by which any of them may be bound or affected or to which any of their respective properties or assets may be subject (each, a "Contract" and collectively, the "Contracts"), other than any such conflict, breach, default, acceleration, prepayment, lien, charge or encumbrance that could not, individually or in the aggregate, reasonably be expected to result in any Material Adverse Effect, (II) any existing applicable law, rule or regulation (other than the securities or Blue Sky laws of the various states and other jurisdictions of the United States of America) or (III) any judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Company, the Guarantor or any Subsidiary or any of their respective properties or assets. (xx) No authorization, approval, consent or license of, or filing with, any government, governmental instrumentality or court, domestic or foreign (other than as have been made and obtained and are in full force and effect under the Securities Act or as may be required under the securities or Blue Sky laws of the various states and other jurisdictions of the United States of America), is required for the valid 16 -16- authorization, issuance, sale and delivery of the Offered Securities by the Company or the Guarantee by the Guarantor, the issuance of the Guarantor Common Stock, the execution and delivery by the Company, the Guarantor and SCI Limited of, or the full and timely performance by the Company, the Guarantor and SCI Limited of each of their respective obligations under, this Agreement, the Terms Agreement, each of the Company Agreements and each of the Guarantor Agreements. (xxi) There are no contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed or incorporated by reference as exhibits to the Registration Statement that are not described, filed or incorporated as required. (xxii) No holder of any securities of the Company or of the Guarantor or any Subsidiary has any rights, not effectively satisfied or waived, to require the Company or the Guarantor to register the sale of any securities under the Securities Act in connection with the filing of the Registration Statement or the consummation of the transactions contemplated therein or pursuant to this Agreement or the Terms Agreement. (xxiii) Each of the Company, the Guarantor and the Subsidiaries is in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health or the environment or imposing liability or standards of conduct concerning any Hazardous Material (collectively, "Environmental Laws"), except where such noncompliance with Environmental Laws could not, singly or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or a Guarantor Material Adverse Effect. The term "Hazardous Material" means (i) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated biphenyl and (v) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance regulated under or within the meaning of any other Environmental Law. (xxiv) Each of the Company, the Guarantor and each of the Subsidiaries owns, possesses or has obtained all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings 17 -17- with, all federal, state, local and other governmental authorities (including foreign regulatory agencies), all self-regulatory organizations and all courts and other tribunals, domestic or foreign, necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as conducted as of the date hereof, except in each case where the failure to obtain licenses, permits, certificates, consents, orders, approvals and other authorizations, or to make all declarations and filings, could not, singly or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or a Guarantor Material Adverse Effect, and none of the Company, the Guarantor or any Subsidiary has received any notice of any proceeding relating to revocation or modification of any such license, permit, certificate, consent, order, approval or other authorization, except as described in the Registration Statement and the Prospectus and except, in each case, where such revocation or modification could not, singly or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or a Guarantor Material Adverse Effect; and the Company, the Guarantor and each Subsidiary are in compliance with all laws and regulations relating to the conduct of their respective businesses as conducted as set forth in the Registration Statement and the Prospectus, except where noncompliance with such laws or regulations could not, singly or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or a Guarantor Material Adverse Effect. (xxv) To the best knowledge of the Guarantor, each of the Guarantor and the Subsidiaries owns or possesses the patents, patent licenses, trademarks, service marks, trade names, copyrights and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) (collectively, the "Intellectual Property") reasonably necessary to carry on the business conducted by each as conducted on the date hereof, except to the extent that the failure to own or possess such Intellectual Property could not, singly or in the aggregate, reasonably be expected to have a Guarantor Material Adverse Effect, and, except as set forth in the Registration Statement and the Prospectus, neither the Guarantor nor any Subsidiary has received any notice of infringement of or conflict with asserted rights of others with respect to any Intellectual Property, except for notices the content of which if accurate could not, singly or in the aggregate, reasonably be expected to have a Guarantor Material Adverse Effect. 18 -18- (xxvi) Except as set forth in the Registration Statement and the Prospectus, no authorization, approval or consent of any governmental authority or agency is required (other than those which have already been obtained) under the laws of any jurisdiction in which the Guarantor or any of the Subsidiaries conduct their respective businesses in connection with the ownership by the Guarantor of capital stock of any Subsidiary, any foreign exchange controls or the repatriation of any amount from or to the Guarantor and the Subsidiaries, except to the extent such authorizations, approvals or consents have been obtained and are in full force and effect and except to the extent that the failure to obtain any such authorization, approval or consent could not, singly or in the aggregate, reasonably be expected to have a Guarantor Material Adverse Effect. (xxvii) Neither the Company nor the Guarantor has taken or will take, directly or indirectly, any action designed to, or that might be reasonably expected to, cause or result in stabilization or manipulation of the price of the Offered Securities or the Guarantor Common Stock, and neither the Company nor the Guarantor has distributed and neither the Company nor the Guarantor will distribute any prospectus or other offering material in connection with the offering and sale of the Offered Securities other than any preliminary prospectus filed with the Commission or the Prospectus or other materials permitted under the Securities Act. (xxviii) Except as set forth in the Registration Statement and the Prospectus, there is no action, suit or proceeding before or by any government, governmental or regulatory instrumentality, agency or body or court, domestic or foreign, or any arbitrator, now pending or, to the best knowledge of the Company or the Guarantor, threatened against or affecting the Company, the Guarantor or any Subsidiary or any affiliate of the Company or the Guarantor that, singly or in the aggregate with all such actions, suits and proceedings (i) could reasonably be expected to have a Company Material Adverse Effect or a Guarantor Material Adverse Effect or could reasonably be expected to have a material adverse effect on the consummation of the transactions contemplated in this Agreement, any Company Agreement or any Guarantor Agreement or (ii) is required to be described in the Registration Statement or the Prospectus that is not so described. (xxix) None of the Company, the Guarantor or any of the Subsidiaries (i) is in violation of, with respect to the Company, the Articles or Regulations, or, with respect to the 19 -19- Guarantor and the Subsidiaries, its articles of incorporation, by-laws or other organizational documents or (ii) is or with the giving of notice or lapse of time or both would be in violation of, or in breach of or in default under or in the performance or observance of, any obligation, agreement, covenant or condition contained in this Agreement, the Terms Agreement, any Company Agreement, any Guarantor Agreement or any Contract or of any permit, order, decree, judgment, statute, rule or regulation, foreign or domestic, applicable to the Company, the Guarantor or any Subsidiary, except for such violations, breaches or defaults that could not, singly or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or a Guarantor Material Adverse Effect. (xxx) Neither the Company nor the Guarantor is an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended or a holding company or a subsidiary of a holding company under the Public Utility Holding Company Act of 1935. (xxxi) Each of the Company and the Guarantor has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida). (xxxii) The statistical and market-related data included or incorporated by reference in the Registration Statement and the Prospectus are based on or derived from sources which the Company and the Guarantor believe to be reliable and accurate or represent the Company's and the Guarantor's good faith estimates that are made on the basis of data derived from such sources. (xxxiii) Neither the Company nor the Guarantor knows of any outstanding claims for services, either in the nature of a finder's fee or origination fee, with respect to the transactions contemplated hereby and by the Terms Agreement, other than the underwriting fees and compensation to be paid to the Underwriters in accordance with this Agreement. (xxxiv) No labor disputes exist with employees of the Guarantor or of the Subsidiaries that could, singly or in the aggregate, reasonably be expected to have a Guarantor Material Adverse Effect. Any certificate signed by any officer of the Company or of the Guarantor and delivered to the Underwriters or to counsel 20 -20- for the Underwriters shall be deemed a representation and warranty by the Company and the Guarantor to each Underwriter as to the matters covered thereby. 5. Agreements of the Company and the Guarantor. Each of the Company and the Guarantor jointly and severally covenants and agrees with each Underwriter as follows (with respect to clauses (l) and (n) below of this Section 5, solely the Guarantor so agrees): (a) To use their respective reasonable best efforts to cause any amendment to the Registration Statement to become effective at the earliest possible time. (b) To furnish to each of the Representatives, without charge, as many signed copies of the Registration Statement (as originally filed) and each amendment thereto and each document incorporated or deemed incorporated therein, in each case including exhibits filed therewith or incorporated therein, as the Representatives may reasonably request, and to each other Underwriter a conformed copy of the Registration Statement (as originally filed) and each amendment thereto, in each case without exhibits and, during the period mentioned in paragraph (e) below, to each of the Underwriters as many copies of the Prospectus (including all amendments and supplements thereto and documents incorporated by reference therein) as the Representatives may reasonably request. (c) To give the Underwriters prompt notice of their intention to file or prepare any amendment to the Registration Statement or any amendment or supplement to the Prospectus, whether pursuant to the Securities Act, the Exchange Act or otherwise, to furnish the Underwriters and their counsel with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and not to file any such amendment or supplement or use any such prospectus to which the Underwriters or counsel for the Underwriters shall object. Subject to the foregoing sentence, the Company and the Guarantor will cause each Prospectus Supplement relating to the Offered Securities to be filed with the Commission pursuant to the applicable paragraph of Rule 424 under the Securities Act within the time period prescribed and will provide evidence satisfactory to the Underwriters of such timely filing. (d) To advise the Representatives and their counsel promptly, and to confirm such advice in writing, (i) when any Prospectus Supplement relating to the Offered Securities shall 21 -21- have been filed with the Commission pursuant to Rule 424 under the Securities Act, (ii) when, prior to the termination of the offering of the Offered Securities, any amendment to the Registration Statement shall have been filed with the Commission or become effective, (iii) of the receipt of any comments from the Commission or of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Prospectus or Prospectus Supplement or the initiation or threatening of any proceeding for that purpose and (v) of the receipt by the Company or the Guarantor of any notification with respect to any suspension of the qualification of the Offered Securities for offer and sale in any jurisdiction or the initiation of any proceeding for such purpose; and to use their respective reasonable best efforts to prevent the issuance of any such stop order or notification and, if issued, to obtain as soon as possible the withdrawal thereof. (e) If, during such period after the first date of the public offering of the Offered Securities as in the opinion of the Underwriters' counsel a prospectus relating to the Offered Securities is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur, information shall become known or condition exist as a result of which it is necessary or advisable to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary or advisable to amend or supplement the Prospectus to comply with law, forthwith, at the sole expense of the Guarantor, to prepare, and, subject to Section 5(c) above, file with the Commission and furnish, without charge, to the Underwriters and to the dealers (whose names and addresses the Representatives will furnish to the Company or the Guarantor) to which Offered Securities may have been sold by the Representatives on behalf of the Underwriters and to any other dealers upon request, such amendments or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law. 22 -22- (f) To endeavor to qualify the Offered Securities (and, if applicable, the Guarantor Common Stock) for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives shall request and to continue such qualification in effect so long as required for distribution of the Offered Securities and to pay all fees and expenses (including fees and disbursements of counsel to the Underwriters) incurred in connection with such qualification; provided, however, that neither the Company nor the Guarantor shall be required to file a general consent to service of process in any jurisdiction or subject itself to general taxation in any jurisdiction. (g) To make generally available to its security holders and to the Representatives as soon as practicable, but not later than 15 months, after the date of each Terms Agreement an earnings statement, covering a period of at least 12 months beginning after the later of (i) the effective date of the Registration Statement, (ii) the effective date of the most recent post-effective amendment to the Registration Statement to become effective prior to the date of such Terms Agreement and (iii) the date of the Company's most recent Annual Report on Form 10-K filed with the Commission prior to the date of such Terms Agreement, which will satisfy the provisions of Rule 158 under the Securities Act and Section 11(a) of the Securities Act. (h) For a period of 120 days after the Representation Date, without the prior written consent of the Representative designated in the Terms Agreement, not to, and not cause or permit any Subsidiary to, directly or indirectly, effect any offer, sale or other disposition of, or registration of, any shares of securities of the Company or of the Guarantor of the same class as the Offered Securities (including, without limitation, any depositary shares representing the same) or the Guarantor Common Stock or any securities convertible into or exchangeable or exercisable for shares of securities of the Company or of the Guarantor of the same class as the Offered Securities or the Guarantor Common Stock, other than (A) the Offered Securities to be sold pursuant to the Terms Agreement, (B) shares of capital stock of the Guarantor issued upon conversion, exchange or exercise of convertible, exchangeable or exercisable securities (including, without limitation, the Offered Securities) of the Company, of the Guarantor or of any Subsidiary outstanding on the Representation Date and (C) shares of Guarantor Common Stock and options thereunder issued pursuant to employee benefit plans of the Guarantor in place on the Representation Date as in effect on the Representation 23 -23- Date, and other than pursuant to such other exceptions, if any, as are agreed to by the Representatives and set forth in the Terms Agreement. (i) Whether or not the transactions contemplated hereby or by the Terms Agreement are consummated or this Agreement is terminated or shall not become effective, to pay all costs and expenses incident or relating to the performance of the Company's and the Guarantor's obligations hereunder, including, without limiting the generality of the foregoing, all costs and expenses (i) incurred in connection with the preparation, issuance, execution and delivery of the Offered Securities (and the Guarantor Common Stock issuable upon conversion thereof), (ii) incurred in connection with the preparation, printing and filing under the Securities Act and the Exchange Act of the Registration Statement, the Prospectus, any preliminary prospectus and each Prospectus Supplement (including in each case all exhibits, amendments and supplements thereto and all documents incorporated therein by reference), (iii) incurred in connection with the registration or qualification of the Offered Securities (and the Guarantor Common Stock issuable upon conversion thereof) under the laws of such jurisdictions as the Representatives may request (including filing fees and the fees of counsel for the Underwriters and their disbursements), (iv) in connection with the listing of the Offered Securities (and the Guarantor Common Stock issuable upon conversion thereof) on the New York Stock Exchange, (v) relating to any filing with the National Association of Securities Dealers Inc. (the "NASD") in connection with the offering of the Offered Securities, (vi) incurred in connection with the engagement of any qualified independent underwriter as may be required by NASD rules and regulations, (vii) incurred in connection with the rating of the Offered Securities, (viii) incurred in connection with advertising relating to the Offered Securities approved by the Guarantor (which approval shall not be unreasonably withheld or delayed), (ix) relating to the fees and expenses of the transfer agent and registrar for the Offered Securities (and the Guarantor Common Stock issuable upon conversion thereof) and (x) relating to or in connection with the printing (including word processing and duplication costs) and delivery of this Agreement, the Terms Agreement, each Company Agreement, each Guarantor Agreement, the agreement among underwriters, each other document or instrument relating to the underwriting arrangements and the coordination of the offering of the Offered Securities by the U.S. Underwriters and the International Managers, if applicable, any dealer agreements, the Preliminary and Supplemental Blue Sky 24 -24- Memoranda and the furnishing to the Underwriters and dealers of copies of the Registration Statement, the Prospectus and each Prospectus Supplement, including mailing and shipping, as herein provided. (j) To furnish to the Representatives for a period of five years after the Representation Date copies of all reports or other communications (financial or other) furnished to holders of the Company's or the Guarantor's capital stock, and copies of any reports and financial statements furnished to or filed with the Commission. (k) To use, and to cause the Company to use, the proceeds of the sale of the Offered Securities to make the loans to SCI Limited contemplated by the Loan Agreement; and to use the net proceeds of the offering of the Offered Securities as set forth in the Prospectus under the caption "Use of Proceeds." (l) During the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act, to file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time period required by the Exchange Act and the Exchange Act Regulations. (m) To use their respective best efforts to effect the listing of the Offered Securities (including the shares of Guarantor Common Stock issuable upon the conversion of the Offered Securities) on the New York Stock Exchange on the Representation Date. (n) To reserve and keep available at all times, free of preemptive rights, sufficient shares of Guarantor Common Stock to satisfy any obligations to issue shares of Guarantor Common Stock upon conversion of all of the Offered Securities that are convertible into the Guarantor Common Stock. 6. Conditions of Underwriters' Obligations. The several obligations of the Underwriters hereunder to purchase the Underwritten Securities are subject to the following conditions: (a) If any amendment to the Registration Statement filed prior to the Closing Date has not been declared effective as of the Representation Date, such amendment shall have become effective not later than 5:30 P.M. on the Representation Date; and at the Closing Date no stop order suspending the effectiveness of the Registration Statement shall have been 25 -25- issued under the Securities Act or proceedings therefor initiated or threatened by the Commission. The price of the Offered Securities and any price-related information previously omitted from the effective Registration Statement and the Prospectus Supplement shall have been transmitted to the Commission for filing pursuant to Rule 424 under the Securities Act within the prescribed time period and prior to the Closing Date the Company shall have provided evidence satisfactory to the Underwriters of such timely filing. (b) The representations and warranties of each of the Company and the Guarantor contained herein and in the Terms Agreement shall be true and correct on and as of the Closing Date as if made on and as of the Closing Date and each of the Company and the Guarantor shall have complied with all agreements and satisfied all conditions on their respective part to be performed or satisfied hereunder at or prior to the Closing Date. (c) Subsequent to the Representation Date and prior to the Closing Date, there shall not have occurred any Company Material Adverse Change or any Guarantor Material Adverse Change or any development involving a Prospective Company Material Adverse Change or any Prospective Guarantor Material Adverse Change other than as set forth in the Registration Statement and the Prospectus, the effect of which in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Underwritten Securities on the terms and in the manner contemplated in the Registration Statement and the Prospectus. As used in this Section 6(c), "Prospectus" shall mean the Prospectus first used to confirm sales of the Offered Securities exclusive of any amendment or supplement thereto thereafter. (d) The Representatives shall have received on and as of the Closing Date a certificate of each of the Company and of the Guarantor signed by the Chief Executive Officer, the Chief Operating Officer or the Chief Financial Officer of each of the Company and of the Guarantor to the effect set forth in subsections (a) and (b) of this Section 6 and to the further effect that since the most recent date as of which information is given in the Prospectus there shall not have occurred any Company Material Adverse Change or any Guarantor Material Adverse Change, or any development involving a Prospective Company Material Adverse Change or any Prospective Guarantor Material Adverse Change. As used in this Section 6(d), "Prospectus" shall mean the Prospectus first used to confirm 26 -26- sales of the Offered Securities exclusive of any amendment or supplement thereto thereafter. (e) The Representatives shall have received on the Closing Date a signed opinion of Wachtell, Lipton, Rosen & Katz, special counsel for the Company and the Guarantor, addressed to the Underwriters and dated the Closing Date and satisfactory to counsel for the Underwriters, to the effect that: (i) Each of the Agreement and the Terms Agreement has been duly and validly authorized, executed and delivered by each of the Company and the Guarantor. (ii) The number of authorized shares of capital stock of the Company and the Guarantor is as set forth in the Prospectus under "Capitalization" and the authorized capital stock of each of the Company and the Guarantor conforms as to legal matters in all material respects to the description thereof contained in the Prospectus. (iii) The Offered Securities have been duly authorized for issuance and sale to the Underwriters in accordance with this Agreement and the Terms Agreement and, when issued and delivered by the Company to the Underwriters pursuant to this Agreement and the Terms Agreement against payment of the consideration set forth in the Terms Agreement, will be validly issued and fully paid and non-assessable. (iv) The issuance of the Offered Securities is not subject to preemptive rights arising by operation of law or under the Articles or Regulations; and no holder of the Offered Securities will be subject to personal liability solely by reason of being such a holder. (v) Upon issuance and delivery of the Offered Securities, the Offered Securities shall be convertible at the option of the holder thereof into Common Stock in accordance with the terms of the Offered Securities and the Guarantor Agreement; the Guarantor Common Stock issuable upon conversion of the Offered Securities has been duly authorized and validly reserved for issuance upon such conversion by all necessary corporate action on the part of the Guarantor, and such Guarantor Common Stock, when issued upon such conversion, will be validly issued, fully paid and nonassessable; no holder of the 27 -27- Guarantor Common Stock will be subject to personal liability solely by reason of being such a holder; and the issuance of such shares upon such conversion or exchange will not be subject to preemptive rights arising by operation of law or under the charter or by-laws of the Guarantor. (vi) Each of the Guarantor Agreements has been duly and validly authorized, executed and delivered by the Guarantor, the Company and SCI Limited to the extent each is a party thereto and constitutes a legal, valid and binding obligation of each of them to the extent a party thereto, enforceable against each of them to the extent a party thereto in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and similar laws affecting creditors' rights and remedies generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); and each of the Guarantor Agreements conforms in all material respects to the description thereof in the Registration Statement and the Prospectus. (vii) At the time the Registration Statement and each amendment thereto became effective and at the Representation Date, the Registration Statement and the Prospectus (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need express no opinion) appear on their face to be appropriately responsive to the applicable requirements of the Securities Act. (viii) The statements set forth or incorporated by reference in the Registration Statement and the Prospectus insofar as such statements purport to summarize certain provisions of the Offered Securities and the Guarantor Common Stock provide a fair summary of such provisions. (ix) Such counsel does not know of any legal or governmental actions, suits or proceedings, pending or threatened, required to be disclosed in the Registration Statement which are not disclosed therein as required (provided that for such purpose such counsel need not regard any action, suit or proceeding to be "threatened" unless the potential litigant has manifested to the 28 -28- management of the Company or to such counsel a present intention to initiate such suit or proceeding). (x) Based upon such counsel's review of applicable law, no authorization, approval, consent or order of any court or governmental or regulatory authority, body or agency or third party is required in connection with (A) the offering, issuance or sale of the Offered Securities or the valid authorization, issuance and delivery of the Guarantor Common Stock issuable upon conversion of the Offered Securities, or (B) the execution, delivery or full and timely performance of this Agreement, the Terms Agreement, each of the Company Agreements and each of the Guarantor Agreements by the Company, the Guarantor or SCI Limited, except such as may be required under the Securities Act or state securities laws or under the Company's and the Guarantor's listing agreement with the New York Stock Exchange. (xi) To the best of such counsel's knowledge and information, the execution, delivery and the full and timely performance of this Agreement, the Terms Agreement, each of the Company Agreements and each of the Guarantor Agreements, the consummation of each of the transactions contemplated herein and therein (including the issuance, sale and delivery of the Offered Securities and the issuance of the Guarantor Common Stock upon conversion of the Offered Securities), the performance by the Guarantor of the Backup Undertakings and compliance by each of the Company and the Guarantor with their respective obligations hereunder and thereunder will not conflict with or constitute a breach of, or default under (including, without limitation, any event which, with notice or lapse of time or both would constitute a breach of or a default under), or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company, the Guarantor or any of the Subsidiaries pursuant to, any contract identified on a schedule to such opinion, nor will such action result in any violation of the provisions of the Articles, Regulations, charter or by-laws of the Company or of the Guarantor or SCI Limited, as the case may be, or any applicable law, rule, regulation or administrative, regulatory or court judgment, order or decree, except for any breach, default, lien, charge or encumbrance under any such contract as could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. 29 -29- (xii) Each document filed pursuant to the Exchange Act (other than the financial statements, schedules and other financial and statistical data included therein, as to which such counsel need express no opinion) and incorporated or deemed to be incorporated by reference in the Prospectus appears on its face to be appropriately responsive to the applicable requirements of the Exchange Act. (xiii) Neither the Company nor the Guarantor is an investment company under the Investment Company Act of 1940, or a holding company or a subsidiary of a holding company under the Public Utility Holding Company Act of 1935. Such counsel shall also state that they have been advised by the Commission that the Registration Statement has become effective under the Securities Act; that any required filings of the Prospectus pursuant to Rule 424(b) have been made in the manner and within the time period required by Rule 424(b); and that, based solely on conversations with the Commission, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted, are pending or, to such counsel's knowledge, are contemplated under the Securities Act. In addition, such counsel shall also include a statement to the effect that nothing has come to the attention of such counsel which leads such counsel to believe that (1) the Registration Statement (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion), when it became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (2) the Prospectus (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion) as of its date or at the Representation Date contained and, as of the date such opinion is delivered, contains any untrue statement of a material fact or omitted or omits 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. 30 -30- Such counsel in rendering such opinion may rely as to certain matters of fact on certificates of officers of the Company and of the Guarantor and of public officials; provided, however, that (a) such counsel shall state that both such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such certificates and (b) such certificates shall have been delivered to the Representatives prior to the Closing Date. In rendering such opinion, such counsel may rely as to matters involving the application of laws of (1) the State of Texas, upon the written opinion of James M. Shelger, General Counsel of the Guarantor, delivered pursuant to clause (f) below of this Section 6 and (2) any jurisdiction other than the State of New York or the United States or the General Corporation Law of the State of Delaware, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel who are reasonably satisfactory to counsel for the Underwriters; provided, however, that such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such opinion. (f) The Representatives shall have received on the Closing Date a signed opinion of James M. Shelger, General Counsel of the Guarantor, addressed to the Underwriters and dated the Closing Date and satisfactory to counsel for the Underwriters, to the effect that: (i) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Texas, with power and authority (under the Texas Limited Liability Company Act and otherwise) to own its properties and conduct its business as described in the Registration Statement and the Prospectus and to the best of such counsel's knowledge and information is duly qualified as a foreign limited liability company for the transaction of business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or a Guarantor Material Adverse Effect. (ii) The Guarantor has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and 31 -31- to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a Guarantor Material Adverse Effect. (iii) Each Subsidiary has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing could not, singly or in the aggregate, reasonably be expected to have a Guarantor Material Adverse Effect. (iv) Each of this Agreement and the Terms Agreement has been duly authorized, executed and delivered by each of the Company and the Guarantor. (v) All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to any preemptive or similar rights; to the best of such counsel's knowledge and information, after due inquiry, all of the issued Common Shares are owned by the Guarantor, free and clear of all liens, encumbrances, security interests, claims and restrictions on transferability and voting (other than such restrictions on transferability as may arise under the Company Agreements and state and federal securities laws). (vi) The number of authorized shares of capital stock of the Company and the Guarantor is as set forth in the Prospectus under "Capitalization" and the authorized capital stock of each of the Company and the Guarantor conforms as to legal matters in all material respects to the description thereof contained in the Prospectus. (vii) The Declaration has been duly adopted by the Guarantor as manager of the Company pursuant to the 32 -32- Company's Articles and Regulations and is in full force and effect. (viii) The Offered Securities have been duly authorized for issuance and sale to the Underwriters in accordance with this Agreement and the Terms Agreement and, when issued and delivered by the Company to the Underwriters pursuant to this Agreement and the Terms Agreement against payment of the consideration set forth in the Terms Agreement, will be validly issued and fully paid and non-assessable. (ix) The issuance of the Offered Securities is not subject to preemptive rights arising by operation of law or under the Articles or Regulations; and no holder of the Offered Securities will be subject to personal liability solely by reason of being such a holder. (x) Upon issuance and delivery of the Offered Securities, the Offered Securities shall be convertible at the option of the holder thereof into Common Stock in accordance with the terms of the Offered Securities and the Guarantor Agreement; the Guarantor Common Stock issuable upon conversion of the Offered Securities has been duly authorized and validly reserved for issuance upon such conversion by all necessary corporate action on the part of the Guarantor, and such Guarantor Common Stock, when issued upon such conversion, will be validly issued, fully paid and nonassessable; no holder of the Guarantor Common Stock will be subject to personal liability solely by reason of being such a holder; and the issuance of such shares upon such conversion will not be subject to preemptive rights arising by operation of law or under the charter or by-laws of the Guarantor. (xi) All of the issued and outstanding capital stock of each Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, to the best of such counsel's knowledge and information, after due inquiry, except as set forth in the Registration Statement and the Prospectus, is owned by the Guarantor, directly or indirectly, free and clear of any perfected security interest, and, to the best of such counsel's knowledge, after due inquiry, any other security interests or claims. (xii) Each of the Guarantor Agreements has been duly and validly authorized, executed and delivered by the 33 -33- Guarantor, the Company and SCI Limited to the extent each is a party thereto and constitutes a legal, valid and binding obligation of each of them to the extent a party thereto, enforceable against each of them to the extent a party thereto in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and similar laws affecting creditors' rights and remedies generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); and each of the Guarantor Agreements conforms in all material respects to the descriptions thereof in the Registration Statement and the Prospectus. (xiii) The statements set forth or incorporated by reference in the Registration Statement and the Prospectus insofar as such statements purport to summarize certain provisions of the Offered Securities and the Guarantor Common Stock provide a fair summary of such provisions. (xiv) Such counsel does not know of any legal or governmental actions, suits or proceedings, pending or threatened, required to be disclosed in the Registration Statement which are not disclosed therein as required (provided that for such purpose such counsel need not regard any action, suit or proceeding to be "threatened" unless the potential litigant has manifested to the management of the Company or to such counsel a present intention to initiate such suit or proceeding). (xv) To the best of such counsel's knowledge and information, after due inquiry, there are no Contracts or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed or incorporated by reference as exhibits thereto. (xvi) Based on such counsel's review of applicable law, no authorization, approval, consent or order of any court or governmental or regulatory authority, body or agency or third party is required in connection with (A) the offering, issuance or sale of the Offered Securities or the valid authorization, issuance and delivery of the Guarantor Common Stock issuable upon conversion of the Offered Securities, or (B) the execution, delivery or 34 -34- full and timely performance of this Agreement, the Terms Agreement, each of the Company Agreements and each of the Guarantor Agreements by the Company, the Guarantor or SCI Limited, except such as may be required under the Securities Act or state securities laws or under the Company's and the Guarantor's listing agreement with the New York Stock Exchange, Inc. (xvii) To the best of such counsel's knowledge and information, the execution, delivery and the full and timely performance of this Agreement, the Terms Agreement, each of the Company Agreements and each of the Guarantor Agreements, the consummation of each of the transactions contemplated herein and therein (including the issuance, sale and delivery of the Offered Securities and the issuance of the Guarantor Common Stock upon conversion of the Offered Securities), the performance by the Guarantor of the Backup Undertakings and compliance by each of the Company and the Guarantor with their respective obligations hereunder and thereunder will not conflict with or constitute a breach of, or default under (including, without limitation, any event which, with notice or lapse of time, or both, would constitute a breach of or a default under), or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company, the Guarantor or any of the Subsidiaries pursuant to, any contract identified on a schedule to such opinion, nor will such action result in any violation of the provisions of the Articles, Regulations, charter or by-laws of the Company or of the Guarantor or SCI Limited, as the case may be, or any applicable law, rule, regulation or administrative, regulatory or court judgment, order or decree, except for any breach, default, lien, charge or encumbrance under any such contract as could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. In addition, such counsel shall also include a statement to the effect that nothing has come to the attention of such counsel which leads such counsel to believe that (1) the Registration Statement (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion), when it became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the 35 -35- statements therein not misleading and (2) the Prospectus (other than the financial statements and schedules and other financial or statistical data included or incorporated by reference therein, as to which such counsel need not make any statement or express any opinion) as of its date or at the Representation Date contained and, as of the date such opinion is delivered, contains any untrue statement of a material fact or omitted or omits 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. Such counsel in rendering such opinion may rely as to certain matters of fact on certificates of officers of the Company and of the Guarantor and of public officials; provided, however, that (a) such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such certificates and (b) such certificates shall have been delivered to the Representatives prior to the Closing Date. In rendering such opinion, such counsel may rely as to matters involving the application of laws of (1) the State of New York or the General Corporation Law of the State of Delaware upon the written opinion of Wachtell, Lipton, Rosen & Katz delivered pursuant to clause (e) above of this Section 6 and (2) any jurisdiction other than the State of Texas or the United States, to the extent he deems proper and specifies in such opinion, upon the opinion of other counsel who are reasonably satisfactory to counsel for the Underwriters; provided, however, that such counsel shall state that such counsel, the Underwriters and counsel for the Underwriters are justified in relying upon such opinion. (g) The Representatives shall have received on the Closing Date a signed opinion of Miller & Chevalier, special counsel to the Company and the Guarantor, addressed to the Underwriters and dated the Closing Date and satisfactory to counsel to the Underwriters, to the effect that the statements made in the Prospectus under the caption "Certain Federal Income Tax Considerations Regarding LLC Preferred Securities," to the extent that they constitute matters of law or legal conclusions, have been reviewed by such counsel and fairly and accurately present the information disclosed therein in all material respects. (h) On the Representation Date and also on the Closing Date, Ernst & Young and Coopers & Lybrand shall have furnished to the Representatives signed letters, addressed to the Underwriters and dated the respective dates of delivery 36 -36- thereof, in form and substance satisfactory to the Representatives, containing statements and information of the type customarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information included or incorporated by reference in the Registration Statement and the Prospectus. (i) The Representatives shall have received on and as of the Closing Date a favorable opinion of Cahill Gordon & Reindel, counsel to the Underwriters, with respect to the Registration Statement, the Prospectus and other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters. (j) On the Representation Date, the Offered Securities and the Guarantor Common Stock issuable upon conversion of the Offered Securities shall have been approved for listing on the New York Stock Exchange upon notice of issuance. (k) At the Closing Date, counsel for the Underwriters 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 Offered Securities as herein contemplated and related proceedings, 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 and the Guarantor in connection with the issuance and sale of the Offered Securities (and the Guarantor Common Stock) as herein contemplated shall be satisfactory in form and substance to the Underwriters and counsel for the Underwriters. (l) On or prior to the Closing Date the Company and the Guarantor shall have furnished to the Representatives such further certificates and documents as the Representatives shall reasonably request. (m) Subsequent to the execution and delivery of the Terms Agreement and prior to the Closing Date, there shall not have occurred any downgrading, nor shall any notice have been given of (i) any intended or potential downgrading or (ii) any review or possible change that does not indicate an improvement, in the rating accorded any securities of or guaranteed by the Company or the Guarantor by any "nationally recognized statistical rating organization," as such term is 37 -37- defined for purposes of Rule 436(g)(2) under the Securities Act. (n) The Guarantor shall have delivered to the Representatives written agreements, in form and substance satisfactory to the Representative designated in the Terms Agreement, with each of its executive officers who own capital stock of the Guarantor of a class which includes the Guarantor Common Stock that no offer, sale or other disposition, or request or demand for registration under the Securities Act or inclusion in any other registration statement filed by the Company or the Guarantor under the Securities Act, of any capital stock of the Guarantor of a class which includes the Guarantor Common Stock, or warrants, options, convertible, exercisable or exchangeable securities, or other rights to purchase or acquire, such capital stock (or any such right or exchangeable, exercisable or convertible security) owned by such person, or with respect to which such person has the power of disposition, will be made for a period of 90 days after the Representation Date, directly or indirectly, by such executive officer, otherwise than (i) with the prior written consent of the Representative designated in the Terms Agreement and (ii) pursuant to such exceptions, if any, as are agreed to by the Representatives and set forth in the Terms Agreement. (o) There shall not have been any amendment or supplement to the Registration Statement or the Prospectus to which the Underwriters shall have objected. The several obligations of the Underwriters designated in the Terms Agreement to purchase Option Securities hereunder on the Additional Closing Date are, unless otherwise agreed by the Underwriters designated in the Terms Agreement, subject to the conditions set forth in paragraph (a) to and including paragraph (o) above on and as of the Additional Closing Date (references therein to the Closing Date shall be deemed references to the Additional Closing Date for this purpose), except that the certificate called for by paragraph (d), the opinions called for by paragraphs (e), (f), (g) and (i) and the letters called for by paragraph (h) shall be dated as of, and delivered on, the Additional Closing Date, and to the delivery to the Representatives on the Additional Closing Date of such other documents as they may reasonably request. 7. Indemnification and Contribution. Each of the Company and the Guarantor, jointly and severally, agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, 38 -38- from and against any and all losses, claims, damages and liabilities (including, without limitation the legal fees and other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Company or the Guarantor shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Underwriter furnished to the Guarantor in writing by such Underwriter through the Representatives expressly for use therein; provided, however, that the foregoing indemnity with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter (or the benefit of any person controlling such Underwriter) from whom the person asserting any such losses, claims, damages or liabilities purchased Offered Securities if such untrue statement or omission or alleged untrue statement or omission made in such preliminary prospectus is eliminated or remedied in the Prospectus and the Company or the Guarantor has provided such Prospectus in accordance with paragraph 5(ii) hereof (as amended or supplemented if the Company or the Guarantor shall have furnished any amendments or supplements thereto) and if it shall be established in the related action or proceeding that a copy of the Prospectus, if required by law (as so amended or supplemented, but exclusive of any documents incorporated therein by reference), shall not have been furnished to such person at or prior to the written confirmation of the sale of such Offered Securities to such person, except to the extent that such Prospectus contains any other untrue statement or omission or alleged untrue statement or omission of a material fact that was the subject matter of the related action or proceeding. For purposes of the proviso to the immediately preceding sentence, the term "Prospectus" shall not be deemed to include the documents incorporated therein by reference, and no Underwriter shall be obligated to send or give any supplement or amendment to any document incorporated by reference in any preliminary prospectus or the Prospectus to any person. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantor, the directors of the Company, the directors of the Guarantor, the officers of the Company and of the Guarantor who sign the Registration Statement and each person, if any, who controls the 39 -39- Company or the Guarantor within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Company or the Guarantor shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with reference to information relating to such Underwriter furnished to the Guarantor in writing by such Underwriter through the Representatives expressly for use in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any preliminary prospectus. For purposes of this Section 7 and Section 4(ii), the only written information furnished by the Underwriters to the Guarantor expressly for use in the Registration Statement and the Prospectus is the information in the last paragraph of the cover page of the Prospectus Supplement and ( ) and ( ) under the table under the caption "Underwriting" in the Prospectus Supplement. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnity may be sought pursuant to any of the two preceding paragraphs of this Section 7, such person (hereinafter called the "Indemnified Person") shall promptly notify the person against whom such indemnity may be sought (hereinafter called the "Indemnifying Person") in writing, and the Indemnifying Person, upon request of the Indemnified Person, shall promptly retain counsel satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary, (ii) there has been a failure by the Indemnifying Person to retain promptly counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Person shall 40 -40- not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, the Guarantor, their respective directors, their respective officers who sign the Registration Statement and each person, if any, who controls the Company or the Guarantor within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Underwriters and such control persons of Underwriters, such firm shall be designated in writing by the Representatives. In the case of any such separate firm for the Company, the Guarantor, and such directors, officers and control persons of the Company or the Guarantor, such firm shall be designated in writing by the Guarantor. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested an Indemnifying Person to reimburse the Indemnified Person for fees and expenses of counsel as contemplated by the third sentence of this paragraph, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement (1) includes an unconditional written release of such Indemnified Person, in form and substance satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (2) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of any Indemnified Person. If the indemnification provided for in the first or second paragraph of this Section 7 is unavailable to any extent to an Indemnified Person under such paragraph in respect of any 41 -41- losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities as follows: as between the Company and the Guarantor on the one hand and the Underwriters on the other (i) in such proportion as is appropriate to reflect the aggregate relative benefits received by the Company and the Guarantor on the one hand and by the Underwriters on the other from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Guarantor on the one hand and of the Underwriters on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantor on the one hand and by the Underwriters on the other shall be deemed to be in the same respective proportions as the net proceeds from the offering (before deducting expenses) received by the Company and the total underwriting compensation received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus bear to the aggregate public offering price of the Offered Securities. The relative fault of the Company and the Guarantor on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Guarantor or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantor and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall an Underwriter be required to contribute any amount in 42 -42- excess of the amount by which the total price at which the Offered Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay or has paid 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 Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 7 are several in proportion to the respective number of Offered Securities they have purchased hereunder, and not joint. The indemnity and contribution agreements contained in this Section 7 are in addition to any liability which the Indemnifying Persons may otherwise have to the Indemnified Persons referred to above. The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Company and of the Guarantor contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or the Company, the Guarantor, their respective officers or directors or any other person controlling the Company or the Guarantor and (iii) acceptance of and payment for any of the Offered Securities. 8. Termination of Agreement. Notwithstanding anything herein contained, this Agreement (or the obligations of the several Option Securities Underwriters with respect to the Option Securities) may be terminated in the absolute discretion of the Representatives, by notice given to the Company or the Guarantor, if after the execution and delivery of this Agreement and prior to the Closing Date (or, in the case of the Option Securities, prior to the Additional Closing Date) (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the National Association of Securities Dealers, Inc., the American Stock Exchange or the ( ), (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York or ( ) shall have been declared by either U.S. Federal, New York State or ( ) authorities or exchange controls shall have been imposed by the United States, or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in the 43 -43- judgment of the Representatives, is material and adverse and which, in the judgment of the Representatives, makes it impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. 9. Effectiveness of Agreement; Additional Obligations of the Underwriters. This Agreement shall become effective upon the later of (x) the Representation Date and (y) release of notification by the Commission of the effectiveness of the most recent amendment to the Registration Statement filed prior to the Closing Date. If, on the Closing Date or the Additional Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Offered Securities which it or they have agreed to purchase hereunder on such date, and the aggregate number of Offered Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of Offered Securities to be purchased on such date, the other Underwriters (with respect to the Option Securities, to the extent such Underwriters are Option Securities Underwriters) shall be obligated severally in the proportions that (1) with respect to Underwritten Securities the number of Underwritten Securities set forth opposite their respective names in the annex or annexes to Exhibit 1 hereto bears to the aggregate number of Underwritten Securities set forth opposite the names of all such non-defaulting Underwriters and (2) with respect to Option Securities, the number of Underwritten Securities set forth opposite their respective names in the annex or annexes to Exhibit 1 hereto bears to the aggregate number of Underwritten Securities set forth opposite the names of all such non-defaulting Underwriters who are Option Securities Underwriters, or in such other proportions as the Representatives may specify, to purchase the Offered Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided, however, that in no event shall the number of Offered Securities that any Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant to this Section 9 by an amount in excess of one-ninth of such number of Offered Securities without the written consent of such Underwriter. If, on the Closing Date or the Additional Closing Date, as the case may be, any Underwriter or Underwriters shall fail or refuse to purchase Offered Securities which it or they have agreed to purchase hereunder on such date, and the number of Offered Securities with respect to which such default occurs is more than one-tenth of the aggregate number of Offered Securities to be purchased on such date, and arrangements satisfactory to the Representatives, the Company and the Guarantor for the purchase of such Offered 44 -44- Securities are not made within 36 hours after such default, this Agreement (or the obligations of the several Underwriters to purchase the Option Securities, as the case may be) shall terminate without liability on the part of any non-defaulting Underwriter, the Company or the Guarantor. In any such case either the Representatives or the Company and the Guarantor shall have the right to postpone the Closing Date (or, in the case of the Option Securities, the Additional Closing Date), but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 10. Reimbursement upon Occurrence of Certain Events. If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company or the Guarantor to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company or the Guarantor shall be unable to perform their respective obligations under this Agreement, each of the Company and the Guarantor jointly and severally agrees to reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and expenses of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder and pursuant to the Terms Agreement. In no event, however, shall the Company or the Guarantor be responsible to the Underwriters for any loss of profits for failure to consummate the offering and sale of the Offered Securities. 11. Miscellaneous. This Agreement shall inure to the benefit of and be binding upon the Company, the Guarantor, the Underwriters, any controlling persons referred to herein and their respective successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. No purchaser of Offered Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. 12. Notice. 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 Underwriters shall be given to 45 -45- the Representatives at the address as set forth in the Terms Agreement. Notices to the Company shall be given to it at SCI Finance LLC c/o Service Corporation International, 1929 Allen Parkway, Houston, Texas 77019 (facsimile: (713) ( )); Attention: ( ). Notices to the Guarantor shall be given to it at Service Corporation International, 1929 Allen Parkway, Houston, Texas 77019 (facsimile: (713) ( )); Attention: ( ). 13. Counterparts; Applicable Law. This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly therein, without giving effect to the conflicts of laws provisions thereof. 46 -46- If the foregoing is in accordance with your understanding, please sign and return six counterparts hereof. Very truly yours, SCI FINANCE LLC By:______________________________ Name: Title: SERVICE CORPORATION INTERNATIONAL, as Guarantor By:______________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written (Insert Signature block(s) for the Representative or Representatives acting on behalf of the Underwriters, or for each Underwriter if no Syndicate) 47 EXHIBIT I SCI FINANCE LLC ( ) Shares (TITLE OF SECURITIES) (liquidation preference $( ) per share) guaranteed to the extent set forth in certain backup undertakings by SERVICE CORPORATION INTERNATIONAL TERMS AGREEMENT ( ), 199( ) SCI Finance LLC Service Corporation International 1929 Allen Parkway Houston, Texas 77019 Attention: ( ) Ladies and Gentlemen: ( ) (the "Representative(s)") understand that SCI Finance LCC, a Texas limited liability corporation (the "Company"), and Service Corporation International, a Texas corporation, as guarantor and provider of certain backup undertakings (the "Guarantor"), propose to issue and sell ( ) shares of (describe Preferred Securities) (the "Underwritten Securities"). Subject to the terms and conditions set forth herein or incorporated by reference herein, the (U.S.) Underwriters named in Annex A attached hereto (and the International Managers named in Annex B attached hereto) offer to purchase, severally and not jointly, the number of Underwritten Securities set forth opposite the name of each such Underwriter on Annex A (and Annex B) hereto at a price of $( ) per share (the "Purchase Price"). The Closing Date shall be ( ), 199( ), at ( ) A.M. at the offices of ( ). As compensation to the Underwriters for their commitments hereunder, and in view of the fact that proceeds of the sale of the Offered Securities will be lent by the Company to SCI Limited 48 -2- pursuant to the Loan Agreement, the Guarantor hereby agrees to pay at (each of) the Closing Date (and the Additional Closing Date) to the Underwriters $( ) per Offered Security (as defined below) purchased by the Underwriters. (It is understood that, subject to the conditions hereinafter stated, ( ) Underwritten Securities (the "U.S. Underwritten Securities") will be sold to the several U.S. Underwriters named in Annex A hereto (the "U.S. Underwriters") in connection with the offering and sale of such U.S. Underwritten Securities in the United States and Canada to United States and Canadian Persons (as such terms are defined in the Agreement between U.S. and International Underwriting Syndicates of even date herewith between the U.S. Underwriters and the International Managers), and ( ) Underwritten Securities (the "International Securities") will be sold to the several international managers named in Annex B hereto (the "International Managers") in connection with the offering and sale of such International Securities outside the United States and Canada to persons other than United States and Canadian Persons. ( ) shall act as representatives (the "U.S. Representatives") of the several U.S. Underwriters, and ( ) shall act as representatives (the "International Representatives") of the several International Managers. The U.S. Underwriters and the International Managers are hereinafter collectively referred to as the "Underwriters", and the U.S. Representatives and the International Representatives are hereinafter collectively referred to as the "Representatives.") (In addition, the Representatives understand that the Company and the Guarantor propose to issue and sell to the several (U.S.) Underwriters, for the sole purpose of covering over-allotments in connection with the sale of the Underwritten Securities, at the option of the (U.S.) Underwriters, up to an additional ( ) shares of the (describe Preferred Securities) (the "Option Securities"). The Underwritten Securities and the Option Securities are herein referred to as the "Offered Securities.") (The offer herein contained is further conditioned upon the Company and the Guarantor agreeing to sell to the (U.S.) Underwriters the Option Securities, and agreeing that the (U.S.) Underwriters shall have a one-time right to purchase, severally and not jointly, up to ( ) Option Securities at the Purchase Price. Option Securities may be purchased as provided below solely for the purpose of covering over-allotments made in connection with the offering of the Underwritten Securities. If any Option Securities are to be purchased, each (U.S.) Underwriter agrees, severally and not jointly, to purchase the number of Option 49 -3- Securities (subject to such adjustments to eliminate any fractional Offered Securities as the (U.S.) Representatives in their sole discretion may make) that bears the same proportion to the total number of Option Securities to be purchased as the number of (U.S.) Underwritten Securities set forth in Annex A hereto opposite the name of such (U.S.) Underwriter bears to the total number of (U.S.) Underwritten Securities.) (The Company's and the Guarantor's agreement to sell the Option Securities shall entitle the (U.S.) Underwriters to exercise the option to purchase the Option Securities at any time on or before the thirtieth day following the date of this Terms Agreement, by written notice from the (U.S.) Representatives to the Company and the Guarantor. Such notice shall set forth the aggregate number of Option Securities as to which the option is being exercised and the date and time when the Option Securities are to be delivered and paid for which may be the same date and time as the Closing Date but shall not be earlier than the Closing Date nor later than the tenth full Business Day after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 9 of the Underwriting Agreement referred to below). Such notice shall be given at least two Business Days prior to the date and time of delivery specified therein.) The Underwritten Securities shall have the following terms: Title: ( ) Liquidation preference: ( ) Dividend rate: ( ) Dividend payment dates: ( ) Conversion or exchange provisions: ( ) Redemption provisions: ( ) Public offering price: $( ) per share Additional terms: ( ) All the provisions contained in the document entitled "Underwriting Agreement -- SCI Finance LLC -- Preferred Securities -- Service Corporation International" (the "Underwriting Agreement") and dated ( ), 199( ), a copy of which you have previously received, are herein incorporated by reference in their entirety and shall be deemed to be a part of this Terms Agreement to the same extent as if the Underwriting Agreement had been set forth in full herein. Terms defined in the Underwriting Agreement are used herein as therein defined. The Representative authorized to approve the form of agreement specified in Section 6(m) of the Underwriting Agreement 50 -4- and to give the consent specified in Section 5(h) and Section 6(m) of the Underwriting Agreement is ( ). (The additional exceptions to Section 5(h) are ( ).) Any action by the Representatives hereunder may be taken by the Representatives jointly or by ( ) alone on behalf of the Representatives, and any such action taken by ( ) alone shall be binding upon the Representatives. Notices to the Underwriters shall be given to the Representatives c/o ( ) (facsimile: (( )) ( )); Attention: ( ). This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly in such state, without giving effect to the conflicts of laws provisions thereof. Please accept this offer no later than ( ) o'clock ( ).M. on ( ), 199( ), by signing a copy of this Terms Agreement in the space set forth below and returning the signed copy to us, or by sending us a written acceptance in the following form: 51 -5- "We hereby accept your offer, set forth in the Terms Agreement, dated ( ), 199( ), to purchase the Underwritten Securities on the terms set forth therein and agree to and accept all other terms and provisions of the Terms Agreement (and hereby grant the (U.S.) Underwriters the option to purchase the Option Securities as more fully set forth in the Terms Agreement)." Very truly yours, By:______________________________ Name: Title: Accepted as of the date first above written: SCI FINANCE LLC By:______________________________ Name: Title: SERVICE CORPORATION INTERNATIONAL, as Guarantor By:______________________________ Name: Title: 52 ANNEX A
Number of (U.S.) Underwritten Securities (U.S.) Underwriters To Be Purchased - ------------------- ------------------- _________ Total: =========
53 ANNEX B
Number of International Underwritten International Securities Managers To be Purchased - ------------- --------------- _________ Total: =========
54 SCHEDULE I Significant Subsidiaries of the Guarantor Within the Meaning of Rule 1-02 of Regulation S-X under the Securities Exchange Act of 1934 --------------------------------------------- EX-3.8 5 SCI FINANCE ARTICLES OF ORGANIZATION 1 EXHIBIT 3.8 ARTICLES OF ORGANIZATION OF SCI FINANCE LLC The undersigned, being over the age of 18 years and acting as the sole organizer of a limited liability company under the Texas Limited Liability Company Act, as amended, does hereby adopt the following Articles of Organization for SCI Finance LLC (the "Company"): ARTICLE ONE The name of the Company is SCI Finance LLC. ARTICLE TWO The period of duration of the Company will commence upon the issuance of the Certificate of Organization for the Company by the Secretary of State of Texas and shall continue until the close of Company business on December 31, 2050, or until the earlier dissolution of the Company in accordance with the provisions of the Regulations of the Company (the "Regulations"), or as otherwise required by law. ARTICLE THREE 3.1 The total authorized membership interests of the Company shall be 7,001,000 interests. The Company is authorized to issue two classes of membership interests to be designated respectively as "Common Interests" and "Preferred Interests". 3.2 As to the Common Interests, the Company shall have authority to issue 1,000 Common Interests, $0.01 par. Subject to any prior rights of the holders of Preferred Interests, the holders of Common Interests shall be entitled to receive interim distributions payable in cash, interests or otherwise, when, as and if declared by the manager out of funds legally available therefor. Each holder of Common Interests shall be entitled to one vote per Common Interest held of record on the Company's books. Upon any liquidation, dissolution or winding up of the 2 Company, any of the Company's net assets available after distributions to any persons with priority relative to the holders of the Common Interests, including holders of the Preferred Interests, shall be distributed pro rata to the holders of Common Interests in accordance with their respective rights and interests. The Regulations shall set forth any other rights, powers and privileges relating to the Common Interests. 3.3 As to the Preferred Interests, the Company shall have authority to issue from time to time in one or more series up to 7,000,000 Preferred Interests, $0.01 par, each series of Preferred Interests ranking pari passu as to participation in profits and assets with each other series of Preferred Interests and with such other relative rights to interim distributions, voting rights, distributions upon liquidation, and other rights, preferences, privileges, limitations, restrictions and other terms and provisions as shall be set forth in the Regulations from time to time. ARTICLE FOUR The purposes for which the Company is organized are: 4.1 To issue its Common Interests to Service Corporation International ("Service Corporation") and redeem and repurchase such Common Interests. 4.2 To issue its Preferred Interests to purchasers, agents, underwriters or to members of the public, and (a) to use the proceeds thereof and of the Common Interests in connection with loans to SCI International Limited ("SCI Limited") and/or investments in Eligible Investments (as defined below); (b) to enforce, amend and administer the terms of such loan; and (c) to redeem and repurchase such Preferred Interests and otherwise to perform its obligations relating to such Preferred Interests and any agreement incidental thereto. 4.2.1 As used herein, the term "Eligible Institution" means a depository institution organized under the laws of -2- 3 the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), (a) (1) which has either (i) a long-term unsecured debt rating of AAA or better by S&P's and Aaa or better by Moody's or (ii) a short-term unsecured debt rating or a certificate of deposit rating of A-1+ or better by S&P's and P-1 or better by Moody's and (2) whose deposits are insured by the FDIC or (b)(1) the parent of which has a long-term or short-term unsecured debt rating which signifies investment grade and (2) whose deposits are insured by the FDIC. 4.2.2 As used herein, "Eligible Investments" means book-entry securities, negotiable instruments, cash or securities represented by instruments in bearer or registered form which evidence: (a) direct obligations of, and obligations fully guaranteed as to timely payment by, the Government of the United States of America; (b) demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by federal or state banking or depository institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) thereof shall have a credit rating from each of S&P's, Moody's and (if -3- 4 rated by Fitch) Fitch in the highest investment category granted thereby; (c) commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from each of S&P's, Moody's and (if rated by Fitch) Fitch in the highest investment rating category granted thereby; (d) investments in money market funds having a rating from each of S&P's and Moody's in the highest investment rating category granted thereby; (e) demand deposits, time deposits and certificates of deposit which are fully insured by the FDIC; (f) bankers' acceptances issued by any depository institution or trust company referred to in clause (b) above; or (g) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the Government of the United States of America or any agency or instrumentality thereof, the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with (1) a depository institution or trust company (acting as principal) described in clause (b) or (2) a depository institution or trust company which is an Eligible Institution and the deposits of which are insured by the FDIC. 4.2.3 As used herein, the term "FDIC" means the Federal Deposit Insurance Corporation or any successor thereto. -4- 5 4.2.4 As used herein, the term "Fitch" means Fitch Investors Service, Inc. or any successor thereto. 4.2.5 As used herein, the term "Moody's" means Moody's Investors Service, Inc. or any successor thereto. 4.2.6 As used herein, the term "Person" means any individual, corporation, association, partnership, trust or other entity. 4.2.7 As used herein, the term "S&P" means Standard & Poor's Ratings Group or any successor thereof. 4.3 To engage in any activity (including, without limitation, entering into and performing any agreement) which may be necessary, incidental, proper, advisable or convenient to accomplish the foregoing purposes. The Company shall have no power to incur obligations with respect to borrowed money from or become liable in respect of any borrowings of a third party. The foregoing shall not limit the Company's ability to incur other obligations. ARTICLE FIVE The organizer is Curtis G. Briggs and the address of the organizer is 1929 Allen Parkway, Houston, Texas 77219. ARTICLE SIX The name of the initial registered agent of the Company in the State of Texas is The Prentice-Hall Corporation System, Inc., and the address of such initial registered agent is 400 North St. Paul Street, Dallas, Texas 75201. ARTICLE SEVEN The Company is to be managed by the holder of the Common Interests. The number of initial managers shall be one. The name and address of the initial manager shall be as follows: -5- 6 Service Corporation International 1929 Allen Parkway Houston, Texas 77219 ARTICLE EIGHT No member shall have a preemptive right to acquire any membership interests or securities of any class that may at any time be issued, sold or offered for sale by the Company. Without limiting the foregoing, and without in any way limiting any Regulations, no vote, approval or consent of any member or class or group of members, in its capacity as such, shall be required with respect to the creation or issuance of any membership interest whether at or subsequent to the issuance of interests to the initial members of the Company, unless the Regulations otherwise specifically provide. ARTICLE NINE Except as expressly provided in the Regulations and in the Liability Assumption Agreement between Service Corporation and the Company (the "Assumption Agreement"), and to the extent permitted by law, no officer, director, employee or other agent of any manager of the Company (each, an "Agent") shall be liable to the Company or its members for monetary damages for an act or omission in such Agent's capacity as an Agent, provided that this Article Nine does not eliminate or limit the liability of any such Agent to the extent such Agent is found liable for (a) a breach of such Agent's duty of loyalty to the Company or its members; (b) an act or omission not in good faith that constitutes a breach of duty of such Agent to the Company or an act or omission that involves intentional misconduct or a knowing violation of the law; (c) a transaction from which such Agent received an improper benefit, whether or not the benefit resulted from an action taken within the scope of such Agent's office; or (d) an act or omission for which the liability of any such Agent is expressly provided by an applicable statute. Any repeal or amendment of this Article Nine by the members of the Company shall be prospective only and shall not adversely affect any limitation on the liability of any Agent existing at the time of such repeal or amendment. In addition to the circumstances in which any Agent is not liable as set forth in the preceding sentences and except as provided in the Regulations and in the Assumption Agreement, any Agent shall not be liable to the fullest extent permitted by any provision of the statutes of Texas hereafter enacted that further limits the liability of any Agent or of a director -6- 7 of a corporation. The foregoing shall not affect the liability of a holder of a Common Interest as provided in Article Ten. ARTICLE TEN Each holder of a Common Interest, in its capacity as a holder of a Common Interest, is fully liable for the Company's debts and liabilities and each such holder is directly liable to any creditor of the Company for such debts and liabilities. ARTICLE ELEVEN The Transfer of any Common Interests is prohibited absolutely. Any Transfer of any Common Interests shall be void and shall not be effective to transfer to any transferee thereof any rights conferred on a member including but not limited to rights to receive notice of or attend meetings of the Company, to vote on any matter, to receive interim distributions, or to receive a share of the net assets of the Company upon its dissolution and winding up. The preceding sentence shall not affect the transferability of any Preferred Interests. For purposes of this Article Eleven, "Transfer" means, with respect to any Common Interest, the transfer, sale, assignment, mortgage, creation or permission to subsist of pledge, lien, charge or encumbrance over, grant of any option, interest or other rights in, or other disposition of any such interests, any part thereof or any interest therein, whether by agreement, operation of law or otherwise. ARTICLE TWELVE The power to adopt, alter, amend or repeal the Regulations shall be vested in the manager of the Company, subject to any power expressly vested by the Regulations in the holders of one or more series of Preferred Interests to adopt, alter, amend or repeal the Regulations. IN WITNESS WHEREOF, these Articles of Organization have been executed on October 6, 1994 by the undersigned. SOLE ORGANIZER /s/ Curtis G. Briggs -7- EX-3.9 6 SCI FINANCE REGULATIONS 1 EXHIBIT 3.9 REGULATIONS OF SCI FINANCE LLC These REGULATIONS of SCI Finance LLC (as amended from time to time, these "Regulations") dated as of October 17, 1994 are (a) adopted by the Manager (as defined below) and (b) executed and agreed to by the Common Interestholders (as defined below). The Company has been organized as a Texas limited liability company by the filing of the Articles (as defined below) under and pursuant to the Act (as defined below) and the issuance of the Certificate of Organization of the Company by the Secretary of State of the State of Texas. (1) In these Regulations the following terms shall, where not inconsistent with the context, have the following meanings: "Act" means the Texas Limited Liability Company Act and any successor statute, as amended from time to time; "Articles" means the Articles of Organization of the Company, as amended from time to time; "Common Interests" means common membership interests in the Company as set forth in and authorized by the Articles and issued pursuant to these Regulations including Regulation 9; "Common Interestholder" means a holder of a Common Interest; "Company" means SCI Finance LLC, a Texas limited liability company; "Former Member" means a person who was a Common Interestholder but who has ceased to be a Member by virtue of Regulation 13; "Interest" means any Common Interest or any Preferred Interest; "Interestholder" means a holder of a Common Interest or a Preferred Interest; "Manager" means Service Corporation International, a company incorporated under the laws of the state of 2 Texas and having an office at 1929 Allen Parkway, Houston, Texas 77219 ("Service Corporation"); "Member" means the person, partnership or other entity registered in the Register of Members as the holder of an Interest; "Notice" means written notice unless otherwise specifically stated; "Preferred Interests" means preferred membership interest in the Company as set forth in and authorized by the Articles and issued pursuant to Regulation 9; "Preferred Interestholder" means the holder of a Preferred Interest; "Register of Members" means the Register of Members kept in accordance with Regulation 12; and "Transfer" means with respect to any Common Interests, the transfer, sale, assignment, mortgage, creation or permission to subsist of any pledge, lien, charge or encumbrance over, grant of any option, interest or other rights in, or other disposition of any such Interests, any part thereof or any interest therein, whether by agreement, operation of law or otherwise. (2) Wherever the context requires, references to the plural shall be deemed to include the singular and any pronoun used herein shall include the corresponding masculine, feminine or neuter forms. (3) Expressions referring to writing shall, unless the contrary intention appears, be construed as including printing, lithography, photography and other modes of words in a visible form. (4) Unless the context otherwise requires, words or expressions contained in these Regulations and not defined herein shall bear the same meaning as in the Act. INTERESTS. (5) Subject to the provisions of the Articles and these Regulations, the Manager shall have sole and absolute discretion with respect to the authorized but unissued Interests and may offer, allot, grant options with respect to, or otherwise dispose of such Interests to such persons at such times and for such consideration and -2- 3 upon such terms and conditions as the Manager may determine consistent with these Regulations and the Articles. (6) The initial Member of the Company is the person executing these Regulations, as of the date hereof, as Member, which is admitted to the Company as a Member contemporaneously with the execution by such person of these Regulations. Such Member is a Common Interestholder. The name and address of every person being the holder of registered Interests, their class or series and the date when they became or ceased to be a Member shall be entered in the Register of Members. (7) Subject to the terms of any series of Preferred Interests issued pursuant to Regulation 9, every person whose name is entered as a Member in the Register of Members being the holder of registered Interests, may request, and the Company shall issue thereto, a certificate specifying the Interest or Interests held and the par value thereof, provided that in respect of a registered Interest, or Interests, held jointly by several persons, the Company shall not be bound to issue more than one certificate, and delivery of a certificate for an Interest to one of several joint holders shall be sufficient delivery to all. Except as required by law, no person shall be recognized by the Company as holding any Interest in trust, and the Company shall not be bound by or be compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any Interest, or any interest in any fractional part of an Interest, or (except as otherwise provided by these Regulations, the Articles or as required by law or court order) any other rights in respect of any Interest except an absolute right to the entirety thereof in the registered holder. (8) If a certificate is worn out or lost, it may be renewed on production of the worn out certificate, or on satisfactory proof of its loss together with such in indemnity as the Manager may require. INTERESTS AND RIGHTS OF INTERESTHOLDERS. (9) Subject to the provisions of the Articles and these Regulations, the Manager may from time to time issue (i) additional Common Interests and (ii) Preferred Interests with such preferred, deferred or other special rights or -3- 4 such restrictions, whether in regard to interim distributions, voting, return of capital or otherwise as the Manager may from time to time determine and set forth in an amendment to these Regulations. Except as otherwise specifically set forth in these Regulations, interim distributions and all items of income, gain, loss, deduction or credit distributable or allocable to the Common Interestholders as a class shall be distributed or allocated to the Common Interestholders in proportion to the number of Common Interests held by each, and all adjustments to the capital accounts of the Common Interestholders as a group for reasons other than the allocation of income, gain, loss, deduction or credit by the Company or distributions by the Company or contributions to the Company shall be made to the capital account of each Common Interestholder based on such Common Interestholder's proportionate share of all Common Interests outstanding at the time of such adjustment. (10) Subject to and in accordance with the provisions of the Act, redeemable Interests may be issued on such terms as the Manager before the issue of the Interests may determine. The Manager may but is not obliged to require the passing of a resolution to make such alterations to these Regulations as may be necessary to specify the terms on which and the manner in which such Interests shall be redeemed and the rights and restrictions attaching thereto. (10a) Subject to and in accordance with the provisions of the Act and these Regulations, the Company may purchase Preferred Interests from time to time outstanding. (11) The rights conferred upon Preferred Interestholders of any series shall not, unless otherwise expressly provided by the terms of such series, be deemed to be varied by the creation or issue of any further series of Preferred Interests or any other Interests of the Company ranking pari passu with or junior to the Preferred Interests with regard to participation in the profits or assets of the Company. No Interestholder shall have any preemptive right to purchase or subscribe for any Interests. REGISTRATION OF MEMBERS. (12) The Company shall keep in one or more books a Register of its Members and shall enter therein the following: -4- 5 (a) the name and address of each Member, the number and types of Interests held by such Member and the amount paid or agreed to be considered to be paid on such Interests; (b) the date on which each person was entered in the Register of Members; and (c) the date on which any person ceased to be a Member. CESSATION OF MEMBERSHIP OF COMMON INTERESTHOLDERS. (13) A Common Interestholder ceases to be a Member of the Company upon the happening of any one or more of the following events: (a) the resignation, withdrawal, expulsion, termination, cessation or dissolution of such Common Interestholder; (b) if such Common Interestholder pursuant to or within the meaning of any Bankruptcy Law (as defined below): (i) commences a voluntary case; (ii) consents to the entry of an order for relief against it in an involuntary case; (iii) consents to the appointment of a Custodian (as defined below) of it or for all or substantially all of its property; or (iv) makes a general assignment for the benefit of its creditors; (c) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against such Common Interestholder in an involuntary case; (ii) appoints a Custodian of such Common Interestholder or for all or substantially all of its property; or (iii) orders the liquidation of such Common Interestholder, in each case if the order or decree remains unstayed and in effect for 60 days; or (d) if such Common Interestholder takes any action that, in the absence of Regulation 14, would result in a Transfer (as defined below) of such interest. The term "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. -5- 6 TRANSFER OF COMMON INTERESTS. (14) The Transfer of any Common Interests in the Company is prohibited absolutely. Any Transfer of any Common Interests in the Company shall be void and shall not be effective to transfer to any transferee thereof any rights conferred on a Member including but not limited to rights to receive Notice of or attend meetings of the Company, to vote on any matter, to receive interim distributions, or to receive a share of the net assets of the Company upon its dissolution and winding-up. (15) Regulation 14 shall not affect the transferability of any Preferred Interest issued pursuant to the provisions of Regulation 9. MEETINGS. (16) Subject to any class voting rights of outstanding Preferred Interests, neither the Common Interestholders nor the Preferred Interestholders shall have the right to call or convene a meeting, to remove a Manager or to vote on any new Manager. The Manager may convene a meeting of the Common Interestholders for the purpose of considering and, subject to any class voting rights of outstanding Preferred Interests, passing a resolution to: (a) alter the Articles; (b) require the Company to be dissolved and wound up; or (c) subject to the limitations in Regulation 46, cause any merger, consolidation, share or interest exchange, or other transaction authorized by or subject to the provisions of Part Ten of the Act. (16a) Subject to any class voting rights of outstanding Preferred Interests, neither Common Interestholders nor Preferred Interestholders shall have any rights to vote on, approve or consent to: (a) the issuance of any additional Interests subsequent to the issuance of Interests to the initial Members of the Company; or (b) any amendment or other modification of these Regulations. -6- 7 (17) Subject to the terms of any series of Preferred Interest, not less than 30 nor more than 60 days' Notice of a meeting shall be given to each of the Members entitled to vote at such meeting and mailed to each member entitled to vote at his or her address as registered in the Register of Members by first-class mail, postage prepaid, and such Notice shall be deemed delivered when deposited in the mail. Such Notice shall state the time and place and describe any resolution proposed for adoption and other business to be conducted at such meeting. Notice of any meeting may be waived if it is so agreed by all the Members entitled to attend and vote thereat. PROCEEDINGS AT MEETINGS. (18) (a) Except as provided pursuant to the terms of any series of Preferred Interests, the Manager shall preside at any meeting of Interestholders of the Company. (b) Except as provided pursuant to the terms of any series of Preferred Interests, at any meeting of Interestholders of the Company one or more Members entitled to vote, present in person or by proxy and representing in number in excess of 50% of the outstanding Interests entitled to vote thereat, shall form a quorum for the transaction of business; if within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned to the following day at the same time or at such other time as the Manager may determine. (c) The Manager may, with the consent of at least 50% in number of Interests of the Members entitled to vote at any meeting at which a quorum is present (and shall if directed by such members), adjourn the meeting from time to time and from place to place. At such adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted at the meeting as originally notified. It shall not be necessary to give any notice of the adjourned meeting or of the business to be transacted at the adjourned meeting; except for a meeting adjourned for which a future time or place was not set, when Notice of the adjourned meeting shall be given as in the case of an original meeting. -7- 8 (19) (a) Subject to any class voting rights of any series of Preferred Interests, at any meeting of the Company each Member entitled to vote shall be entitled to one vote for each Interest held by it and such vote may be given in person or by proxy. (b) Subject to these Regulations and any class voting rights of any series of Preferred Interests, at any meeting of the Company any question proposed for the consideration of the Members entitled to vote thereon shall be decided on a simple majority in number of Interests of the quorum of Members entitled to vote thereon and such majority shall be ascertained in accordance with the provisions of these Regulations. Notwithstanding Article 2.23.D of the Act, the actions permitted to be taken under Regulation 16 by vote of the Common Interestholders will require only the vote specified above and not a majority of all Members. (c) Except for any meeting of the Company at which Preferred Interestholders are entitled to vote, a declaration by the Manager that a question proposed for consideration at any meeting of the Company has, on a show of hands, been carried, or carried unanimously or by a particular majority or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favor of or against such question. (20) When a vote is taken by ballot, each member entitled to vote thereon shall be furnished with a ballot paper with which to vote in such manner as shall be determined at the meeting at which the vote is taken; and each ballot paper shall be signed or initialled or otherwise marked so as to identify the voter. At the conclusion of the ballot, the ballot paper shall be examined by the Manager, and the result of the ballot shall be declared by the Manager. MINUTES. (21) The Manager shall cause minutes to be duly entered in the Company's books of all resolutions and proceedings of each meeting of the Company and of each amendment to these Regulations, provided that any minutes of such meeting, if signed by the Manager, shall be sufficient -8- 9 evidence of the proceedings without any further proof of the facts there instated. WRITTEN CONSENT. (22) Any act required or permitted to be taken at any meeting of any Members may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, are signed by the Members (acting for themselves or through a proxy) entitled to vote if a meeting were held, having not fewer than the minimum number of votes that would be necessary to take the action at a meeting at which all such Members entitled to vote on the action were present and voted. MANAGER. (23) There shall be no directors of the Company. There shall be one Manager of the Company. The Manager shall be the holder of the Common Interests. The business of the Company shall be managed and conducted by the Manager, who shall have the following powers and duties, subject to the rights of any series of Preferred Interests: (a) to pay commissions on the sale and allotment of Interests; (b) to call meetings; (c) to amend these Regulations, including without limitation to establish the rights, preferences, privileges, limitations and restrictions of any Preferred Interests as contemplated by Regulation 9; (d) to issue and allot Interests subsequent to the initial Interests without any approval of any Members and no Member, in its capacity as such, shall have the right to cause the issuance of any Interests; (e) to pay all expenses incurred in forming and registering the Company; (f) to manage and supervise the affairs of the Company; (g) to allocate and distribute assets and make interim distributions with respect to the Interests; -9- 10 (h) to set aside any amount which shall in the discretion of the Manager be required as a reserve or reserves; (i) to redeem or repurchase on behalf of the Company Interests which may be redeemed or repurchased on behalf of the Company; (j) to appoint officers, attorneys and agents on behalf of the Company; (k) to act as liquidator or appoint a liquidator if the Company is dissolved pursuant to Regulation 42; (l) to execute all documents on behalf of and in the name of the Company; (m) to institute, bring, prosecute and defend proceedings in the name of the Company; and (n) to perform such other duties and to exercise such powers as are not by Regulation 16 required to be performed or exercised by the Common Interestholders; provided that any trustee appointed by any Preferred Interestholders pursuant to the rights conferred on them by the terms of any series of Preferred Interests may perform such acts and exercise such powers as such trustee is authorized to do under the terms of such series of the Preferred Interests. (24) A Manager of the Company may hold other office or place of profit with the Company and may be paid such extra remuneration therefor whether by way of salary, commission, participation of profits or otherwise. (25) The Company will indemnify any officer, director, employee or other agent of the Manager, in such agent's capacity as such, to the fullest extent permitted by the Act; provided that no amendment to or repeal of this Regulation shall adversely affect any right existing at the time of the amendment or repeal of this Regulation. The Company may purchase and maintain insurance, at its expense, to protect itself and any person who is or was serving as Manager, or an officer, director, employee or other agent of the Company, or who is or was serving at the request of the Company as a manager, director, officer, employee or other agent of any other entity, against any expense, liability or loss, whether or not -10- 11 the Company would have the power to indemnify such person against such expense, liability or loss under this Regulation 25. (26) A Manager may be party to or otherwise interested in any transaction or arrangement with the Company or in which the Company is otherwise interested and shall not by reason of occupying the office of Manager be accountable to the Company for any benefit which it derives from any such office or from any such transaction or arrangement, and no such transaction or arrangement shall be avoidable on the grounds of such interest or benefit, if such contract or arrangement is fair as to the Company as of the time it is authorized, approved or ratified by the Manager. (27) The Company will be treated as a partnership for federal income tax purposes, and the Manager will serve as the "Tax Matters Partner" as that term is defined in the Internal Revenue Code of 1986, as amended (the "Code"). The Company shall maintain a capital account for each Member in accordance with Section 704(b) of the Code and the Treasury regulations thereunder. A person that purchases a Member's Interests shall succeed to the capital account of such Member, or to such portion of the capital account of such Member that is attributable to the purchased Interests. (28) Service Corporation will at all times retain Common Interests representing, in its judgment and subject to the preferential right of Preferred Interestholders to dividends and liquidation distributions, more than 20% of the total value (measured by Interestholders' equity determined pursuant to generally accepted accounting principles) of the Company and more than 20% of all interests in the capital, income, gain, loss, deduction and credit of the Company. (29) The Manager shall not be entitled to any salary or other compensation for its services as Manager of the Company, but may be paid for all traveling, hotel and other expenses in connection with attendance at any meeting of the Company or otherwise in connection with the discharge of the Manager's duties. OFFICERS. (30) The Manager will be entitled to appoint any person as an officer or other agent of the Company, which person may also be an officer or agent of the Manager, to take such -11- 12 action or perform such rights or duties of the Manager as the Manager may specify. (31) The Manager will appoint such officers of the Company as required pursuant to the rights of Preferred Interestholders under the terms of any series of Preferred Interests issued by the Company. CUSTODIAN. (32) The Manager may appoint a custodian or trustee for the safekeeping of all moneys, assets and securities of the Company with such powers and duties in respect thereof as may be specified in such appointment. INTERIM DISTRIBUTIONS. (33) The Manager may declare interim distributions to be paid to the Members, in accordance with the terms of their Interests, out of the surplus or profits, including unrealized profits, of the Company. (34) The Manager may from time to time before declaring interim distributions set aside out of the surplus or profits of the Company such sums as it deems proper as a reserve fund to be used to meet contingencies or for any other special purpose. (35) To the extent that there is surplus or profits available for interim distributions in any accounting period, preferential interim distributions (including preferential interim distributions which may have fallen in arrears) shall be paid to the Preferred Interestholders in accordance with the terms of each series of Preferred Interests. (36) The surplus or profits of the Company which the Manager shall from time to time declare to be distributable in respect of any accounting period shall be applied first in payment to the Preferred Interestholders of preferential interim distributions payable on the Preferred Interests. (37) For the purpose of determining the amount of surplus or profit available for distribution, all expenses of the Company shall be allocated to, and reduce the amounts distributable to, Common Interestholders. To the extent that such surplus or profits are available for distribution to Members of the Company, the portion of such amounts distributable to Preferred Interestholders shall -12- 13 be determined without regard to any expenses of the Company. ACCOUNTS AND FINANCIAL STATEMENTS. (38) The Manager shall cause true accounts to be kept of all transactions of the Company in such manner as to show the assets and liabilities of the Company. (39) The financial year end of the Company shall be determined by the Manager and failing such determination, the financial year end shall be December 31 of each year. (40) Each Interestholder has such rights as are provided under Article 2.22.D of the Act. (41) The Manager may appoint an independent accountant to audit the books and records of the Company and the Manager may remove or replace such accountant in the Manager's sole and absolute discretion. The duties and remuneration of any such independent accountant shall be fixed by the Manager or in such manner as the Manager may determine. After the end of each fiscal year, the Manager shall, as promptly as possible and in any event within 90 days of the close of the fiscal year, cause to be prepared and transmitted to each Member federal income tax form K-1 or any other forms which the Manager believes are necessary or advisable. MERGER, DISSOLUTION AND WINDING-UP. (42) The Company shall be considered to have commenced voluntary winding-up and dissolution automatically and without the requirement of any other act: (a) when the period fixed for the duration of the Company expires; or (b) if the Common Interestholders of the Company unanimously pass a resolution requiring the Company to be wound up and dissolved; or (c) upon the happening of any one or more of the following events: (i) any event specified in Regulation 13(a), (b) or (c) with respect to Service Corporation; (ii) the Transfer by a Common Interestholder of any Common Interest; -13- 14 (iii) any event which would cause a Common Interestholder to cease to remain a Common Interestholder pursuant to Regulation 13; or (iv) the redemption, repurchase or cancellation of all Common Interests held by all Common Interestholders. (43) On dissolution and winding-up of the Company, the balance of the assets available for distribution and not subject to any special rights or restrictions attaching to any class of Interests, including any series of Preferred Interests, shall be applied in paying to the Former Members who were Members immediately preceding the commencement of dissolution and winding-up of the Company the amounts paid up on the Interests held by them and the surplus shall belong to such Former Members according to the respective number of Interests held by them. (44) As between the Common Interestholders and the Preferred Interestholders, the expenses incurred in the establishment and maintenance of the Company, in conducting the Company's business and in the dissolution or winding-up of the Company shall not be deducted in determining what assets are available for distribution to Preferred Interestholders. (45) No Member may withdraw from the Company. No Member may exercise any rights under Article 6.01.B of the Act except upon the unanimous consent of the Common Interestholders (or those persons who were Common Interestholders immediately prior to an event of dissolution). Notwithstanding the foregoing, this Regulation 45 shall not affect the transfer, assignment or conversion rights, if applicable, of any series of Preferred Interests. (46) The Company may not consolidate or merge with, or convey, transfer or lease its properties and assets substantially as an entirety to, any limited liability company, corporation or other body, except as required by law or as set forth in this Regulation 46. Solely for the purpose of changing its domicile, the Company may consolidate or merge with or into a limited liability company or a limited partnership formed under the laws of any state of the United States of America without the consent of the Preferred Interestholders; provided that (i) such successor limited liability company or limited partnership expressly assumes all of -14- 15 the obligations of the Company, (ii) the Company receives a legal opinion from a nationally recognized legal counsel that the Preferred Interestholders will not suffer any adverse tax consequences as a result of such merger or consolidation, (iii) the Manager reasonably believes (based upon advice from its financial advisors) that such merger or consolidation will not cause any Preferred Interests to be downgraded by any "nationally recognized statistical rating organization", as that term is defined by the Securities and Exchange Commission for purposes of Rule 436(G)(2) under the Securities Act of 1933, as amended, (iv) following such merger or consolidation, neither Service Corporation nor such successor limited liability company or limited partnership will be an "investment company" for purposes of the Investment Company Act of 1940, as amended, and (v) Service Corporation expressly acknowledges the successor in such merger or consolidation as the lender under any agreement relating to the loan of the proceeds from the issuance of any Preferred Interests to SCI International Limited ("SCI Limited") and reaffirms its obligations to the holders of Preferred Interests under any related guarantees and contractual backup undertakings executed by Service Corporation for the benefit of Preferred Interestholders. LIQUIDATOR. (47) Subject to any rights of Preferred Interestholders, when the Company is in dissolution by virtue of Regulation 42, the Manager shall serve as liquidator unless and until the majority of the former Common Interestholders who were Members immediately preceding the commencement of dissolution and winding-up by majority vote to appoint a liquidator to replace the Manager. LIQUIDATION. (48) Upon a Liquidation (as defined below) of the Company, the proceeds of such Liquidation shall be distributed in the ratios of the positive capital account balances of the Members, and upon Liquidation of any Member's Interest in the Company the proceeds of such Liquidation shall be distributed in accordance with the positive capital account balance of such Member, in each case as determined after taking into account all capital account adjustments for the Company's taxable year during which such Liquidation occurs (other than those adjustments made pursuant to this sentence), by the end of such taxable year (or, if later, within 90 days after the -15- 16 date of such Liquidation), except that in the case of a Liquidation of the Company the proceeds of such Liquidation shall not be required to be distributed by the end of such taxable year (or, if later, within 90 days after the date of such Liquidation) to the extent such proceeds constitute (i) reserves reasonably required to provide for liabilities (contingent or otherwise) of the Company or (ii) installment obligations owed to the Company, so long as such withheld amounts are distributed as soon as practicable and in the ratios of the Members' positive capital account balances. For purposes of this Regulation 48, "Liquidation" means (i) when used with reference to the Company, the earlier of (a) the date upon which the Company is terminated under Section 708(b)(1) of the Code or (b) the date upon which the Company ceases to be a going concern, and (ii) when used with reference to any Member, the earlier of (a) the date upon which there is a liquidation of the Company or (b) the date upon which such Member's entire interest in the Company is terminated other than by transfer, assignment or other disposition to a person other than the Company. (49) In connection with any termination of the Company under Section 708(b)(1) of the Code and after all related adjustments to the capital accounts of the Members, all property deemed distributed to the Members by the Company shall be distributed or deemed distributed to the Members by the Company in accordance with Regulation 48, and in addition to any adjustments to the capital accounts of the Members otherwise required, the following rules for adjustment shall apply: (a) The capital account of each Member who receives or is deemed to receive a distributive share of property (other than cash) from the Company shall be reduced by the fair market value of such property (net of such Member's share of liabilities securing such share of property that such Member is considered to assume, or take subject to, under Section 752 of the Code) at the time of the actual or deemed distribution by the Company (without taking into account Section 7701(g) of the Code); and (b) The capital account of each Member who is deemed to contribute such property back to the Company (as newly constituted for federal income tax purposes) shall be increased by the fair market value of such share of property (net of such Member's share of liabilities securing such share of property that the -16- 17 Company is considered to assume, or take subject to, under Section 752 of the Code (without taking into account Section 7701(g) of the Code)) at the time of the deemed contribution to the Company. NOTICES. (50) Unless otherwise herein or by law expressly provided, a Notice may be served by the Company on any Member either personally or by telex, cable or facsimile, or by sending it first-class mail, postage prepaid, in an envelope addressed to such Member, at such Member's address as registered in the Register of Members. (51) Any Notice shall be deemed to have been served at the time when the same would be delivered in the ordinary course of transmission, and in proving such service it shall be sufficient to prove that the Notice was properly addressed and prepaid, if posted, and the time when it was posted or transmitted by telex, cable or facsimile to or from the Company, as the case may be. SEAL OF THE COMPANY. (52) The Seal of the Company may be affixed to any instrument over the signature of the Manager or of an officer or other agent appointed by the Manager. ALTERATION OF REGULATIONS. (53) The Manager shall have the right to alter or amend these Regulations, subject to the terms of any series of outstanding Preferred Interests. LIABILITY OF COMMON INTERESTHOLDERS. (54) (a) No Preferred Interestholder shall be obligated personally for any debt, obligation or liability of the Company solely by reason of being a Member. (b) Notwithstanding anything to the contrary contained herein, in the Articles or in the Act, each Common Interestholder in its capacity as such, jointly and severally, shall be and hereby agrees (i) to be fully and directly liable for all of the debts, liabilities and other obligations of the Company, including those arising under the Liability Assumption Agreement between Service Corporation and the Company, the terms and conditions of which are specifically incorporated herein by reference, and (ii) -17- 18 that any creditor of the Company may proceed directly against any Common Interestholder without first reducing a claim against the Company to judgment. REGISTERED OFFICE AND AGENT; OFFICES. (55) The registered office of the Company required by the Act to be maintained in the State of Texas shall be the office of the initial registered agent named in the Articles or such other office (which need not be a place of business of the Company) as the Manager may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Texas shall be the initial registered agent named in the Articles or such other person or persons as the Manager may designate from time to time in the manner provided by law. The principal office of the Company in the United States shall be at such place as the Manager may designate from time to time, which need not be in the State of Texas, and the Company shall maintain records there as required by Article 2.22 of the Act and shall keep the street address of such principal office at the registered office of the Company in the State of Texas. The Company may have such other offices as the Manager may designate from time to time. FOREIGN QUALIFICATION. (56) Prior to the Company's conducting business in any jurisdiction other than Texas, the Manager shall cause the Company to comply, to the extent procedures are available and those matters are reasonably within the control of the Manager, with all requirements necessary to qualify the Company as a foreign limited liability company in that jurisdiction. At the request of the Manager, each Common Interestholder Member shall execute, acknowledge, swear to, and deliver all certificates and other instruments conforming with these Regulations that are necessary or appropriate to qualify, continue, and terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company may conduct business. NO STATE-LAW PARTNERSHIP. (57) The Members intend that the Company not be a partnership (including, without limitation, a limited partnership) or joint venture, and that no Member or Manager be a partner or joint venturer of any other Member or Manager, for any -18- 19 purposes other than federal income tax purposes and for state income tax purposes in the case of states whose characterization of the Company follows the characterization of the Company for federal income tax purposes, and these Regulations may not be construed to suggest otherwise. -19- 20 The person whose name is listed below, desires to form a Texas limited liability company pursuant to these Regulations and the Articles, and agrees to take the number of Common Interests in the Company set forth opposite its name: Common Interests ---------------- SERVICE CORPORATION INTERNATIONAL, a Texas corporation By: /s/ James M. Shelger 100 Name: James M. Shelger Title: Senior Vice President, General Counsel and Secretary IN WITNESS WHEREOF, the Manager adopts these Regulations as of the date first written above. SERVICE CORPORATION INTERNATIONAL, as Manager By: /s/ James M. Shelger Name: James M. Shelger Title: Senior Vice President, General Counsel and Secretary -20- EX-3.10 7 AMENDMENT TO THE REGULATIONS OF SCI FINANCE 1 Exhibit 3.10 ================================================================================ AMENDMENT TO THE REGULATIONS OF SCI FINANCE LLC SETTING FORTH THE TERMS OF UP TO ( ) PREFERRED SHARES DESIGNATED AS $( ) TERM CONVERTIBLE SHARES, SERIES A ( ), 1994 ================================================================================ 2 AMENDMENT TO THE REGULATIONS OF SCI FINANCE LLC INDEX OF DEFINED TERMS
DEFINED TERM SECTION - ------------ ----------------------- Applicable Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(i) Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certification Section 1 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(a) Capital Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 10(b)(i) Certificated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(b) Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(ii) Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 10(a)(ii) Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2 Common Stock Fundamental Change . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(iii) Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction Company Dividend Junior Shares . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(c)(ii) Company Dividend Parity Shares . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(c)(i) Company Liquidation Parity Shares . . . . . . . . . . . . . . . . . . . . . . . Section 6(a) Conditional Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(b) Conversion Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(b) Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(a) Current Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vii) Current Market Price Per Share . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vii) DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(b) Expiration Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vi) Fundamental Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(iv) Global Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(b) Liability Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . Section 7(a) Liquidation Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6(a) Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(a) Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(a) Nasdaq NM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(b) Non-Stock Fundamental Change . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(v) Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(a) Optional Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(b) Other Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vii) Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(iv) Paying and Conversion Agent . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(b) Per-Share Excess Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 10(b)(ii) Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certification Section 1 Purchased Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vi) Purchaser Stock Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(vi) Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(c) Reference Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(iv)
-i- 3
DEFINED TERM SECTION - ------------ ------------------------ Reference Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(vii) Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certification Section 2 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(a) SCI Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(e) SCI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(c) SCI Common Stock (for purposes of Section 8 only) . . . . . . . . . . . . . . . . . . . . . Section 8(g)(xi) SCI Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(a) SCI/Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction Series 305 Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 10(a)(iv) Series A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1 Tax Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(c) Tax Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(c) Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(viii)
-ii- 4 AMENDMENT TO THE REGULATIONS OF SCI FINANCE LLC SETTING FORTH THE TERMS OF UP TO ( ) PREFERRED SHARES DESIGNATED AS $( ) TERM CONVERTIBLE SHARES, SERIES A The undersigned officers of Service Corporation International, a Texas corporation, and the manager ("SCI" or the "Manager") of SCI Finance LLC, a Texas limited liability company (the "Company"), HEREBY CERTIFY: 1. That the Articles of Organization of the Company (the "Articles") authorize the issuance of up to 7,000,000 preferred interests (liquidation preference $50 per share) in the Company (the "Preferred Shares"); 2. That the Regulations of the Company (the "Regulations") authorize the Manager from time to time to issue Preferred Shares in one or more series or classes, with such dividend rights, liquidation preferences per share, redemption provisions, voting rights, conversion or exchange rights and other rights, preferences, privileges, limitations and restrictions as set forth in an amendment to the Regulations adopted by the Manager; and 3. That the Manager, pursuant to the aforesaid authority granted in the Regulations, hereby intends to create, and authorize the sale and issuance of, a series of Preferred Shares consisting of up to ( ) Preferred Shares having such dividend rights, liquidation preferences per share, redemption provisions, voting rights, conversion or exchange rights and other rights, preferences, privileges, limitations, restrictions and other terms and provisions as the Manager has authorized and approved as set forth below: THEREFORE, pursuant to the Regulations, the Manager hereby amends the Regulations to create, and authorizes the issuance and sale of, a series of Preferred Shares, liquidation preference $50 per Preferred Share, of the Company and hereby fixes the number, dividend rights, liquidation preferences per share, redemption provisions, voting rights, conversion or exchange rights and other rights, preferences, privileges, limitations, restrictions or other special rights and the qualifications, limitations or restrictions of, and other matters relating to, said series as follows: 1. Designation of $( ) Term Convertible Shares, Series A. Up to ( ) Preferred Shares of the Company, liquidation preference $50 per Preferred Share, are hereby 5 -2- constituted as a series of Preferred Shares and designated as "$( ) Term Convertible Shares, Series A" (hereinafter called the "Series A Shares"). 2. Ranking. The Series A Shares shall, with respect to dividend rights and rights on liquidation, dissolution or winding-up, rank (i) pari passu with any other series of Preferred Shares issued by the Company and (ii) prior to any other equity interests in the Company, including the common interests, $1.00 par value, in the Company (the "Common Shares"). So long as any Series A Shares are outstanding, the Company will not issue any interests in the Company ranking, as to participation in the profits or assets of the Company, senior to the Series A Shares. The issuance of any interests in the Company ranking senior to the Series A Shares shall constitute a variation or abrogation of the rights attached to the Series A Shares under the Regulations. 3. Dividends. (a) The holders of the Series A Shares shall be entitled to receive, when and as declared by the Company by action of the Manager out of funds held by the Company and legally available therefor, cumulative cash dividends at the annual rate of $( ) per Series A Share, and no more. The amount of dividends on the Series A Shares is calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, for any period shorter than a full monthly dividend period, dividends will be computed on the basis of the actual number of days elapsed in such period. Dividends on the Series A Shares are payable in United States dollars monthly in arrears on the last day of each calendar month of each year, commencing ( ), 1994. Such dividends will accrue and be cumulative whether or not they have been declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends. Dividends on the Series A Shares shall be cumulative from the date of the first issuance of any Series A Shares. In the event that any date on which dividends are payable on the Series A Shares is not a Business Day, then payment of the dividend payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. A "Business Day" shall mean any day other than a day on which banking institutions in The City of New York are authorized or required by law to close. Interest shall accrue on and be payable in respect of any dividend payment on the Series A Shares which is in arrears at 6 -3- the rate specified in the Loan Agreement dated ( ), 1994 (the "Loan Agreement") among the Company, SCI International Limited, a Delaware corporation ("SCI Limited") and SCI, a copy of which is attached hereto as Exhibit A, to the extent permitted by applicable law. (b) Dividends on the Series A Shares must be declared by the Company by action of the Manager in any calendar year or portion thereof to the extent that the Manager reasonably anticipates that at the time of payment the Company will have, and must be paid by the Company to the extent that at the time of proposed payment it has, (x) funds legally available for the payment of such dividends and (y) cash on hand sufficient to permit such payments. Dividends declared on the Series A Shares will be payable to the record holders thereof as they appear on the register for the Series A Shares on the relevant record dates, which will be one Business Day prior to the relevant payment dates. If dividends can be paid only in part on the Series A Shares in any calendar year or portion thereof as a result of the lack of sufficient funds legally available for the payment of dividends, then such partial dividends shall be paid on the respective dividend payment dates on a pro rata basis to holders of such Series A Shares. If at any time dividends on Preferred Shares are in arrears for any monthly dividend period, any dividend payments in respect thereof must be applied in respect of all dividend periods in arrears, pro rata in accordance with the respective amounts in arrears for each such period in equal amounts for each such period. (c) If dividends have not been paid in full on the Series A Shares, the Company shall not: (i) pay, or declare and set aside for payment, any dividends on any other Preferred Shares ranking pari passu with the Series A Shares as regards participation in profits of the Company ("Company Dividend Parity Shares"), unless the amount of any dividends declared on any Company Dividend Parity Shares is paid on the Company Dividend Parity Shares and the Series A Shares on a pro rata basis on the date such dividends are paid on such Company Dividend Parity Shares so that (x) (A) the aggregate amount of dividends paid on the Series A Shares bears the same ratio to (B) the aggregate amount of dividends paid on such Company Dividend Parity Shares as 7 -4- (y) (A) the aggregate amount of all accumulated and unpaid dividends in respect of the Series A Shares bears to (B) the aggregate of all accumulated and unpaid dividends in respect of such Company Dividend Parity Shares; (ii) pay, or declare and set aside for payment, any dividends on any interests of the Company ranking junior to the Series A Shares as to dividends ("Company Dividend Junior Shares"); or (iii) call for redemption or redeem, purchase or otherwise acquire any Company Dividend Parity Shares or Company Dividend Junior Shares or any Series A Shares other than (x) the redemption of all outstanding Series A Shares at the applicable Redemption Price (as defined below), (y) pursuant to a pro rata redemption of the Series A Shares at the applicable Redemption Price or (z) pursuant to a purchase or exchange offer made on the same terms to all holders of the Series A Shares; provided, however, that this clause (iii) shall not limit the rights of holders of Series A Shares to exercise their conversion rights provided in Section 8 hereof; until, in each case, such time as all accumulated and unpaid dividends (whether or not declared) on the Series A Shares shall have been paid in full for all dividend periods terminating on or prior to, in the case of clauses (i) and (ii), such payment, and in the case of clause (iii), the date of such call, redemption, purchase or acquisition. 4. Redemption. (a) Subject to the provisions of Section 4(b) and 4(c) hereof, upon any repayment or prepayment of principal on the loans to SCI Limited of the proceeds from the issuance and sale of the Series A Shares and the Common Shares (the "Loans"), the proceeds from such repayment or prepayment of principal on the Loans shall be applied to redeem the Series A Shares at (A) the applicable Conditional Redemption Price, if such redemption is effected on or after ( ), 1997 and prior to ( ), 1999, (B) the applicable Optional Redemption Price if such redemption is effected on or after ( ), 1999 and (C) the applicable Tax Redemption Price if such redemption is effected upon the occurrence of a Tax Event (as defined below) pursuant to Section 4(c) below, in each case upon not less than 30 nor more than 60 days' notice in writing by the Company to the holders of Series A Shares, except at final maturity of the Loans, in which case the Company shall redeem the Series A Shares as soon as practicable thereafter. 8 -5- (b) Subject to Section 4(c) below, the Series A Shares may not be redeemed by the Company prior to ( ), 1997. On and after ( ), 1997 and prior to ( ), 1999, the Series A Shares will be redeemable at the option of the Company, in whole or in part from time to time, at the redemption price per share equal to: $( ), if such redemption is effected on or after ( ), 1997 and prior to ( ), 1997; $( ) if such redemption is effected on or after ( ), 1997 and prior to ( ), 1998; and $( ) if such redemption is effected on or after ( ), 1998 and prior to ( ), 1999, in each case plus accrued and unpaid dividends (whether or not declared) to the date fixed for redemption (each such redemption price set forth in this sentence a "Conditional Redemption Price"). The Company may exercise the option set forth in the foregoing sentence only if (A) for 20 Trading Days (as defined in Section 8(l) below) within any period of 30 consecutive Trading Days (including the last Trading Day of such period) ending on the Trading Day immediately prior to the date of the giving of the Notice of Redemption (as defined in Section 5(a) below) in accordance with Section 5(a) hereof, the Closing Price (as defined in Section 8(l) below) of the SCI Common Stock exceeds ( )% of the Conversion Price (as defined in Section 8(a) below), (B) all dividends on the Series A Shares for all dividend periods ending on or prior to the date of the giving of the Notice of Redemption have been paid in full or declared and set aside for payment in full and (C) the Company shall have issued prior to 9:00 A.M. New York City time on the second Trading Day after such 30 Trading Day period a press release announcing the redemption and specifying the date on which such redemption will be effective. On and after ( ), 1999, the Series A Shares are redeemable, at the option of the Company, in whole or in part from time to time, out of proceeds received by the Company from the prepayment or repayment by SCI Limited of the Loans, upon not less than 30 nor more than 60 days' notice in writing by the Company to the holders of Series A Shares, at the respective prices per share set forth below, if redeemed during the 12-month period beginning ( ) of the years indicated below, in each case plus accrued and unpaid dividends (whether or not declared) to the date fixed for redemption (the "Optional Redemption Price"): 9 -6-
Redemption Redemption Year Price Year Price - ---- ---------- ---- ---------- 1999. . . . . . . . . . . . $ 2002. . . . . . . . . . . . $ 2000. . . . . . . . . . . . 2003. . . . . . . . . . . . 2001. . . . . . . . . . . . 2004 and thereafter. . . . . . . . . 50.00
; provided, however, that if the Series A Shares are listed on any national securities exchange or quoted on the Nasdaq National Market (the "Nasdaq NM"), then the Company shall redeem the Series A Shares in whole if a partial redemption thereof would result in a delisting of the Series A Shares from such national securities exchange or suspension from the Nasdaq NM. (c) If a Tax Event shall occur and be continuing, the Series A Shares will be subject to redemption, at the option of the Company, in whole but not in part, such notice to be given within 90 days following the occurrence of such Tax Event at a redemption price equal to: $( ) if such redemption is effected after the date of issuance of the Series A Shares and prior to ( ), 1995; $( ) if such redemption is effected on or after ( ), 1995 and prior to ( ), 1996; $( ) if such redemption is effected on or after ( ), 1996 and prior to ( ), 1997, plus in each case accrued and unpaid dividends (whether or not declared) to the date fixed for redemption; and if such redemption is effected at any time on or after ( ), 1997, the applicable Conditional Redemption Price (whether or not the Company could otherwise then redeem the Series A Shares pursuant to the first paragraph of Section 4(b) above) or the applicable Optional Redemption Price, as the case may be (any such redemption price paid in accordance with this paragraph, the "Tax Redemption Price," and together with the Conditional Redemption Price and the Optional Redemption Price, the "Redemption Price"). "Tax Event" means, with respect to the Series A Shares, that SCI shall have obtained an opinion of nationally recognized independent tax counsel experienced in such matters to the effect that, on or after ( ), 1994, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) any amendment to, or change in, an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the 10 -7- publication of any judicial decision or regulatory determination), (c) any official interpretation or pronouncement that provides for a position with respect to such laws or regulations that differs from the generally accepted position or (d) any action taken by any governmental agency or regulatory authority, which amendment or change is enacted, promulgated, issued or effective or which interpretation or pronouncement is issued or announced or which action is taken, in each case on or after ( ), 1994, there is more than an insubstantial risk that (i) the Company is subject to federal income tax with respect to interest accrued or received on the Loans or (ii) the Company is subject to liability for more than a de minimis amount of taxes, duties or other governmental charges. 5. Redemption Procedure. (a) Notice of any redemption (a "Notice of Redemption") of the Series A Shares will be given by the Company by mail to each record holder of Series A Shares to be redeemed not fewer than 30 nor more than 60 days prior to the date fixed for redemption thereof. For purposes of the calculation of the date of redemption and the dates on which notices are given pursuant to this Section 5(a), a Notice of Redemption shall be deemed to be given on the day such notice is first mailed by first class mail, postage prepaid, to holders of record of the Series A Shares. Each Notice of Redemption shall be addressed to the holder of record at the address of such holder appearing in the register of the Company for the Series A Shares on the relevant record date, which shall be selected by the Manager and shall not be fewer than 30 nor more than 60 days prior to the date fixed for redemption. No defect in the Notice of Redemption or in the mailing thereof or publication of its contents shall affect the validity of the redemption proceedings. (b) In the event that fewer than all the outstanding Series A Shares are to be redeemed, the Series A Shares to be redeemed will be selected as follows: the total number of Series A Shares to be redeemed first shall be allocated, on a pro rata basis, to the shares represented by one or more global certificates (a "Global Certificate") issued in accordance with Section 9 hereof and to the shares issued in certificated form ("Certificated Shares"). The shares so allocated to the shares represented by a Global Certificate for redemption shall be selected by The Depository Trust Company, or its successor ("DTC"), in accordance with its then-current practices and procedures. The shares so allocated to Certificated Shares for redemption shall be selected by lot or by such other method as the paying and conversion agent for the Series A Shares (the "Paying and Conversion Agent") may determine to be fair and appropriate. 11 -8- (c) In the event that any Series A Shares shall be converted into shares of common stock of SCI, $1.00 par value (the "SCI Common Stock"), or other property pursuant to Section 8 hereof, then (i) the Company shall not have the right to redeem such shares and (ii) any funds which shall have been deposited for the payment of the Redemption Price for such shares shall be returned to the Company immediately after such conversion (subject to declared dividends payable to holders of Series A Shares on the record date for such dividend payment, to the extent set forth in Section 8 hereof). (d) Subject to Section 3 hereof and to the following paragraph, SCI, the Company or any subsidiary of SCI shall have the right to purchase Series A Shares in the public or private market at such prices as may from time to time be available in the public or private market for such shares and shall have the right at any time to acquire any Series A Shares from the owner of such shares on such terms as may be agreeable to such owner. Series A Shares may be acquired by SCI, the Company or any subsidiary of SCI from any holder pursuant to this subparagraph (d) without offering any other holder an equal opportunity to sell its Series A Shares to SCI, the Company or any such subsidiary, and no purchase by SCI, the Company or any such subsidiary from any holder pursuant to this subparagraph (d) shall be deemed to create any right on the part of any other holder to sell any Series A Shares to SCI, the Company or any such subsidiary. (e) If the Company gives a Notice of Redemption in respect of Series A Shares represented by a Global Certificate, then, by 12:00 noon, New York time, on the redemption date, the Company will irrevocably deposit with DTC funds sufficient to pay the applicable Redemption Price and will give DTC irrevocable instructions and authority to pay the Redemption Price to the holders thereof. If Notice of Redemption shall have been given and funds deposited as required, then immediately prior to the close of business on the date of such deposit, all rights of holders of such Series A Shares so called for redemption will cease, except the right of the holders of such Series A Shares to receive the Redemption Price but without interest, and such shares shall thereupon cease to be outstanding. If the Company gives a Notice of Redemption in respect of Certificated Shares, then, by 12:00 noon, New York time, on the redemption date, the Company will irrevocably deposit with the Paying and Conversion Agent funds sufficient to pay the applicable Redemption Price and will give the Paying and Conversion Agent irrevocable instructions and authority to pay the Redemption Price to the holders thereof. If the Company 12 -9- gives a Notice of Redemption in respect of Certificated Shares, then on or after the redemption date, each holder of Series A Shares so called for redemption shall surrender the certificate or certificates evidencing such shares to the Company at the place designated in the Notice of Redemption and shall thereupon be entitled to receive payment of the Redemption Price. If less than all of the Series A Shares evidenced by any such surrendered certificate are redeemed, a new certificate shall be issued evidencing the unredeemed shares. If, on or before the redemption date, the Company will have irrevocably deposited with the Paying and Conversion Agent or other bank or trust company designated in the Notice of Redemption funds sufficient to pay the applicable Redemption Price, and will have given such Paying and Conversion Agent or bank or trust company irrevocable instructions and authority to pay the Redemption Price to the holders of Series A Shares to be redeemed, then, notwithstanding that the certificates evidencing any Series A Shares so called for redemption shall not have been surrendered, immediately prior to the close of business on the date of such deposit all rights of holders of such Series A Shares so called for redemption will cease, except the right of the holders of such shares to receive the Redemption Price, but without interest and the right of the holders of such shares to convert such shares into SCI Common Stock and other property in accordance with Section 8 hereof. If funds legally available for such purpose are not sufficient for redemption of the Certificated Shares which were to be redeemed, then such funds which are deposited shall be applied to redeem such Certificated Shares as the Company may designate by lot, and the certificates evidencing shares not redeemed shall be deemed not to be surrendered, such shares shall remain outstanding and the rights of each holder of such shares shall continue to be those of a holder of Series A Shares until such time as such holder receives the Redemption Price with respect to such shares. In the event that any date fixed for redemption of Series A Shares is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such redemption date. In the event that payment of the Redemption Price in respect of Series A Shares is improperly withheld or refused and not paid either by the Company or by SCI pursuant to the Payment, 13 -10- Guarantee and Conversion Agreement dated ( ), 1994 (the "SCI Agreement") entered into by SCI for the benefit of each holder of Series A Shares, a copy of which is attached hereto as Exhibit B, dividends on such shares will continue to accrue, at the then-applicable rate, from the original redemption date to the date such Redemption Price is actually paid, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. (f) No fractional Series A Shares shall be issued upon redemption of less than all Series A Shares. (g) All Series A Shares purchased or redeemed by the Company shall be retired and shall be restored to the status of authorized but unissued Preferred Shares, without designation as to series. 6. Liquidation Distribution. (a) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company, the holders of the Series A Shares at the time outstanding will be entitled to receive out of the assets of the Company available for distribution to its members, before any distribution of assets is made to holders of Common Shares or any other interests in the Company ranking junior to the Series A Shares as regards participation in assets of the Company, but together with the holders of every other series of Preferred Shares outstanding, if any, ranking pari passu with the Series A Shares as regards participation in the assets of the Company ("Company Liquidation Parity Shares"), an amount equal, in the case of the holders of the Series A Shares, to the aggregate of the liquidation preference of $50 per Series A Share and all accumulated and unpaid dividends (whether or not declared) to the date of payment (the "Liquidation Distribution"). If, upon any such liquidation, the Liquidation Distribution can be paid only in part because the Company has insufficient assets available to pay in full the aggregate Liquidation Distribution and the aggregate maximum liquidation distributions on the Company Liquidation Parity Shares, then the amounts payable by the Company on the Series A Shares and on such Company Liquidation Parity Shares shall be paid on a pro rata basis, so that (i) (x) the aggregate amount paid in respect of the Liquidation Distribution bears the same ratio to (y) the aggregate amount paid as liquidation distributions (including accrued and unpaid dividends) on the Company Liquidation Parity Shares as 14 -11- (ii) (x) the aggregate Liquidation Distribution bears to (y) the aggregate liquidation preference (including accrued and unpaid dividends) on the Company Liquidation Parity Shares. (b) As set forth in greater detail in the Regulations, the Company shall be considered to have commenced voluntary winding-up and dissolution automatically and without the requirement of any other act: (i) when the period fixed for the duration of the Company expires; (ii) if the holders of the Common Shares pass a resolution requiring the Company to be wound-up and dissolved; (iii) upon the bankruptcy, resignation, withdrawal, expulsion, termination, cessation or dissolution of the Manager under any applicable law; (iv) upon the happening of any event that would cause a Common Interestholder to cease to be a Common Interestholder pursuant to Regulation 13; or (v) if SCI transfers any Common Shares or if all of the Common Shares are redeemed, repurchased or cancelled by the Company. 7. Voting Rights. (a) The Series A Shares shall not have general voting rights but shall have the rights set forth in this Section 7. If (i) the Company fails to pay dividends in full on the Series A Shares for more than 60 consecutive monthly dividend periods (whether or not there are funds legally available therefor); (ii) an Event of Default (as defined in the Loan Agreement) occurs and is continuing on the Loans; or (iii) SCI is in default on any of its payment or other obligations under the SCI Agreement, then the holders of the outstanding Series A Shares, together with the holders of any other shares of a series of Preferred Shares having the right to vote for the appointment of a trustee in such event, acting as a single class, will be entitled, by resolution passed by the holders of a majority in liquidation preference (plus all accrued and unpaid dividends per share) of such shares present in person or represented by proxy at a meeting of such holders convened for such purpose (or by written consent), to appoint and authorize a trustee to enforce the Company's rights as a creditor under the Loans against SCI Limited and SCI (including the acceleration of 15 -12- principal and accrued interest on the Loans), to enforce the obligations undertaken by SCI under the SCI Agreement and the Liability Assumption Agreement dated ( ), 1994 (the "Liability Assumption Agreement") between SCI (including in its capacity as the Manager of the Company) and the Company, a copy of which is attached hereto as Exhibit C, pursuant to which SCI has agreed to guarantee payment of any liabilities incurred by the Company (other than obligations to holders of Series A Shares in their capacities as holders) and to declare and pay dividends on the Series A Shares. For purposes of determining whether the Company has failed to pay dividends in full for more than 60 consecutive monthly dividend periods, dividends shall be deemed to remain in arrears, notwithstanding any payments in respect thereof, until full cumulative dividends have been or contemporaneously are declared and paid with respect to all monthly dividend periods terminating on or prior to the date of payment of such full cumulative dividends. Not later than 45 days after such right to appoint a trustee arises, the Manager will convene a meeting for the above purposes. If the Manager fails to convene such meeting within such 45-day period, the holders of 10% in liquidation preference (plus all accrued and unpaid dividends per share) of the outstanding Series A Shares and such other Preferred Shares will be entitled to convene such meeting. The provisions of the Regulations relating to the convening and conduct of meetings of members will apply with respect to any such meeting. Any trustee so appointed shall vacate office immediately with respect to the Series A Shares if the Company (or SCI pursuant to the SCI Agreement) shall have paid in full all accrued and unpaid dividends on the Series A Shares (if the event that gave rise to such appointment was clause (i) above) or such default or breach by SCI, as the case may be, shall have been cured (if the event that gave rise to such appointment was clause (ii) or (iii) above). (b) If any resolution is presented to the members of the Company providing for, or the Manager otherwise proposes to effect (it being understood, that the events described in clauses (iii), (iv) and (v) of Section 6(b) hereof shall not be deemed to be a proposal by the Manager and are not subject to the approval procedures described in this Section 7(b)), (x) any amendment of the Articles, the Regulations, the Declaration or other action that adversely varies or abrogates the rights, preferences or privileges of the Series A Shares (including, without limitation, the authorization or issuance of any interests in the Company ranking, as to participation in the profits or assets of the Company, senior to the Series A Shares, or the issuance of any debt by the Company), (y) the liquidation, dissolution or winding-up of the Company or (z) the modification 16 -13- of the provisions of the Articles and the Regulations that absolutely prohibit transfers of the Common Shares, then the holders of outstanding Preferred Shares of all series (and, in the case of a resolution described in clause (x) above which would equally adversely affect the rights, preferences or privileges of any Company Dividend Parity Shares or any Company Liquidation Parity Shares, such Company Dividend Parity Shares or such Company Liquidation Parity Shares, as the case may be, or, in the case of any resolution described in clause (y) or (z) above, all Company Liquidation Parity Shares) will be entitled to vote together as a class on such resolution or action of the Manager (but not on any other resolution or action), and such resolution or other action shall not be effective except with the approval of the holders of 66-2/3% in liquidation preference (plus all accrued and unpaid dividends) of such outstanding shares; provided, however, that no such approval or ratification shall be required if the liquidation, dissolution and winding-up of the Company is proposed or initiated upon the initiation of proceedings, or after proceedings have been initiated, for the liquidation, dissolution, or winding-up of the Manager. (c) No vote or consent of the holders of the Series A Shares will be required for the Company to redeem and cancel Series A Shares in accordance with the Regulations and this Declaration. (d) The rights attached to the Series A Shares will be deemed not to be varied by the creation or issue of, and no vote will be required for the creation of, any further series of Preferred Shares or any other interests of the Company ranking pari passu with or junior to the Series A Shares with regard to participation in the profits or assets of the Company. The rights attached to the Series A Shares will be deemed to be varied by the issuance of any debt for borrowed money by the Company, and a vote pursuant to Section 7(b) hereof will be required for the issuance of any debt for borrowed money by the Company. Holders of Series A Shares have no preemptive rights. (e) Any act required or permitted to be taken at a meeting of shareholders of the Company may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the shareholders of the Company (acting for themselves or through a proxy) entitled to vote if a meeting were held having not fewer than the minimum number of votes that would be necessary to take the action at a meeting at which all such shareholders entitled to vote on the action were present and voted. 17 -14- The Company will cause a notice of any meeting at which holders of the Series A Shares are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of Series A Shares. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or written consents. (f) Notwithstanding that holders of Series A Shares are entitled to vote or consent under any of the circumstances described above, any of the Series A Shares and any Preferred Shares entitled to vote or consent with such Series A Shares as a single class outstanding at such time that are owned by SCI or any entity owned 50% or more by SCI, either directly or indirectly, shall not be entitled to vote or consent and shall, for the purposes of such vote or consent, be treated as if they were not outstanding. 8. Conversion Rights. (a) Subject to and upon compliance with the provisions of this Section 8, the holder of a Series A Share shall have the right, at such holder's option (but if such share is called for redemption, then in respect of such share only to and including but not after the close of business on the second Business Day preceding the date fixed for such redemption, provided that no default by the Company in the payment of the applicable Redemption Price (including any accrued and unpaid dividends) and no default by SCI in delivering SCI Common Stock in exchange for Series A Shares previously surrendered for conversion shall have occurred and be continuing on the date fixed for such redemption) to convert such share into that whole number of fully paid and nonassessable shares of SCI Common Stock equal to a fraction, the numerator of which is the liquidation preference of $50 of such Series A Share surrendered for conversion, and the denominator of which is the then current conversion price per share of SCI Common Stock (the "Conversion Price"). The Conversion Price shall initially be $( ) per share of SCI Common Stock and shall be subject to adjustment as set forth below. Each share of SCI Common Stock issuable upon conversion as contemplated by this Section 8 shall be issued with the rights to purchase Series C Junior Participating Preferred Stock of SCI (or such other securities in lieu thereof as specified in the Rights Agreement) pursuant to the Rights Agreement dated as of July 18, 1988 between SCI and Texas Commerce Bank National Association as rights agent, as amended to 18 -15- date, as are then issuable in respect of one share of SCI Common Stock, or any similar rights issued to holders of SCI Common Stock in addition thereto or in replacement therefor (such rights, together with any additional or replacement rights, being collectively referred to as the "Rights"), whether or not such Rights shall be exercisable at such time, but only if such Rights are issued and outstanding and held by other holders of SCI Common Stock (or are evidenced by outstanding share certificates representing SCI Common Stock) at such time and have not been retired or redeemed. (b) In order to exercise the conversion right provided in subparagraph (a) above, the holder of each Series A Share to be converted shall notify each of SCI and the Paying and Conversion Agent in writing (a "Conversion Notice") that the holder elects to convert its Series A Shares or a specified portion thereof, and, if the shares to be converted are Certificated Shares, such holder shall contemporaneously surrender the certificate or certificates evidencing such shares at the office of the Paying and Conversion Agent, duly endorsed to SCI or in blank. If the shares to be converted are represented by a Global Certificate, the holder thereof shall also deliver the Conversion Notice to DTC. Unless the shares of SCI Common Stock issuable upon conversion are to be issued in the same name or names as the name or names in which the Series A Shares to be converted are registered, a Conversion Notice shall be accompanied by instruments of transfer, in form satisfactory to the Conversion and Paying Agent, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax payable by such holder (or evidence reasonably satisfactory to the Conversion and Paying Agent demonstrating that such taxes have been paid). (c) As promptly as practicable after (i) in the case of shares to be converted which are represented by a Global Certificate, the Conversion Notice is received by the Manager, or (ii) in the case of Certificated Shares to be converted, the surrender of certificates evidencing such shares, and, in each case, the compliance by the converting holder with any other conditions set forth in subparagraph (b) above or this subparagraph (c), pursuant to the SCI Agreement, SCI shall issue and shall deliver or shall cause the Company to deliver to such holder, or otherwise in accordance with its written order, a certificate or certificates for the number of full shares of SCI Common Stock issuable upon the conversion of such shares in accordance with the provisions of this Section 8, and any fractional interest in respect of a share of SCI Common Stock 19 -16- arising upon such conversion shall be settled as provided in Section 11 hereof. (d) Each conversion of Series A Shares represented by a Global Certificate shall be deemed to have been effected immediately prior to the close of business on the date on which the Conversion Notice is received by the Manager. Each conversion of Certificated Shares shall be deemed to have been effected immediately prior to the close of business on the date on which such shares are surrendered for conversion. The person or persons in whose name or names any certificate or certificates for shares of SCI Common Stock issuable upon any conversion of Series A Shares shall be deemed to have become the holder or holders of record of the shares represented thereby at the time and on the date determined in accordance with the first two sentences of this subparagraph (d), and such conversion shall be at the Conversion Price in effect at such time on such date. (e) A holder of any Series A Share at the close of business on a record date with respect to the payment of a dividend on a Series A Share shall be entitled to receive such dividend payment on the corresponding dividend payment date notwithstanding the subsequent conversion thereof following such record date and on or prior to such dividend payment date or the Company's default in payment of such dividend on such dividend payment date. Except as provided in this subparagraph (e), no payment or adjustment shall be made upon any conversion on account of any dividends accrued on Series A Shares surrendered for conversion or on account of any dividends on the SCI Common Stock issued upon conversion. Except as provided in this subparagraph (e), SCI Common Stock issued upon conversion shall be deemed to be issued in exchange for the Series A Shares so converted and any right to accrued and unpaid dividends. (f) If more than one Series A Share shall be specified for conversion at one time by the same holder, the number of full shares of SCI Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of Series A Shares so specified. (g) The Conversion Price shall be adjusted from time to time as follows: (i) In case SCI shall pay or make a dividend or other distribution on SCI Common Stock in shares of SCI Common Stock, then the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of 20 -17- shareholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction the numerator of which shall be the number of shares of SCI Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this subparagraph (i), the number of shares of SCI Common Stock at any time outstanding shall not include shares held in the treasury of SCI (except to the extent such dividend or distribution is being made with respect to such shares) but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of SCI Common Stock. (ii) In case the outstanding shares of SCI Common Stock shall be subdivided into a greater number of shares of SCI Common Stock, then the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and, conversely, in case the outstanding shares of SCI Common Stock shall be combined into a smaller amount of shares of SCI Common Stock, then the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (iii) In case SCI shall issue rights or warrants to all holders of SCI Common Stock entitling them (for a period expiring within 45 days after the record date fixed for a distribution of such rights or warrants) to subscribe for or purchase shares of SCI Common Stock at a price per share less than the current market price per share (determined as provided in subparagraph (vii) below) of SCI Common Stock on the date fixed for the determination of shareholders entitled to receive such rights or 21 -18- warrants (other than pursuant to a dividend reinvestment plan), then the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be reduced by multiplying such Conversion Price by a fraction the numerator of which shall be the number of shares of SCI Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of SCI Common Stock which the aggregate of the offering price of the total number of shares of SCI Common Stock so offered for subscription or purchase would purchase at such current market price and the denominator shall be the number of shares of SCI Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of SCI Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this subparagraph (iii), the number of shares of SCI Common Stock at any time outstanding shall not include shares held in the treasury of SCI but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of SCI Common Stock. SCI agrees not to issue any rights or warrants in respect of shares of SCI Common Stock held in the treasury of SCI. To the extent that shares of SCI Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made in respect of the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of SCI Common Stock actually delivered. (iv) Subject to the second paragraph of subparagraph (iv), in case SCI shall, by dividend or otherwise, distribute to all holders of SCI Common Stock (A) shares of capital stock of SCI (other than SCI Common Stock), (B) evidences of indebtedness of SCI and/or (C) other assets (including securities, but excluding any rights or warrants referred to in subparagraph (iii) above, dividends or distributions in connection with the liquidation, dissolution or winding-up of SCI, dividends payable solely in cash 22 -19- that may from time to time be fixed by the Board of Directors of SCI and dividends or distributions referred to in subparagraph (i) above), then in each case (unless SCI makes the election referred to in the next sentence) the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on such record date by a fraction the numerator of which shall be the current market price per share (determined as provided in subparagraph (vii) below) of the SCI Common Stock on such record date (the "Reference Date") less the then fair market value on the Reference Date (as determined in good faith by the Board of Directors of SCI, whose determination shall be conclusive and shall be described in a statement filed with DTC and the Paying and Conversion Agent) of the portion of the shares of capital stock of SCI, evidences of indebtedness or other assets so distributed (and for which an adjustment to the Conversion Price has not been made previously pursuant to the terms of this Section 8) applicable to one share of SCI Common Stock and the denominator shall be such current market price per share of the SCI Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following the Reference Date. However, SCI may elect, in its sole discretion, in lieu of the foregoing adjustment, to make adequate provision so that each holder of Series A Shares shall have the right to receive upon conversion thereof the amount and kind of shares of capital stock, evidences of indebtedness or other assets such holder would have received had such holder converted such shares on such record date. If the Board of Directors of SCI determines the fair market value of any distribution for purposes of this subparagraph (iv) by reference to the actual or when issued trading market for any securities (including shares of capital stock or evidences of indebtedness of SCI) comprising a distribution of securities, it must in doing so consider the price in such market over the period used in computing the current market price of the SCI Common Stock. For purposes of this subparagraph (iv), any dividend or distribution that includes both (x) any of the items described in clauses (A), (B) or (C) of 23 -20- the first paragraph of this subparagraph (iv) and (y) SCI Common Stock or rights or warrants to subscribe for or purchase SCI Common Stock of the type referred to in subparagraph (iii) shall be deemed to be (1) a dividend or distribution of shares of capital stock of SCI (other than SCI Common Stock), evidences of indebtedness of SCI or other assets of the type referred to in clause (c) of the first paragraph of this subparagraph (iv) (making any Conversion Price reduction required by this subparagraph (iv)) immediately followed by (2) a dividend or distribution of such SCI Common Stock or rights or warrants to purchase SCI Common Stock of the type referred to in subparagraph (iii) (making any further Conversion Price reduction required by subparagraph (i) or (iii) of this Section 8(g)), except (A) the Reference Date of such dividend or distribution as defined in this subparagraph (iv) shall be substituted as "the date fixed for the determination of shareholders entitled to receive such dividend or other distribution," "the date fixed for the determination of shareholders entitled to receive such rights or warrants" and "the date fixed for such determination" within the meaning of subparagraphs (i) and (iii) of this Section 8(g) and (B) any shares of SCI Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of subparagraph (i) of this Section 8(g). The occurrence of a distribution or the occurrence of any other event as a result of which holders of Series A Shares converting such shares into SCI Common Stock hereunder will not be entitled to receive rights issued pursuant to any shareholder protective rights agreement now or hereafter in effect (the "Other Rights") in the same amount and manner as if such holders had converted such shares immediately prior to the occurrence of such distribution or other event shall be deemed a distribution of Other Rights for the purposes of conversion adjustments pursuant to this subparagraph (iv). In lieu of making any adjustment to the Conversion Price under this subparagraph (iv) as a result of such a distribution of Other Rights, SCI may elect, in its sole discretion, to provide that Other Rights shall be issuable in the same amount and 24 -21- manner upon conversion of the Series A Shares without regard to whether the shares of SCI Common Stock issuable upon conversion of the Series A Shares were issued before or after such distribution or other event. (v) In case SCI shall, by dividend or otherwise, at any time distribute cash to all holders of SCI Common Stock, excluding (A) any cash dividends on SCI Common Stock to the extent that the aggregate cash dividends per share of SCI Common Stock in any consecutive 12-month period do not exceed the greater of (x) the amount per share of SCI Common Stock of the cash dividends paid on the SCI Common Stock in the immediately preceding 12-month period, to the extent that such dividends for the immediately preceding 12-month period did not require an adjustment to the Conversion Price pursuant to this subparagraph (v) (as adjusted to reflect subdivisions or combinations of the SCI Common Stock) and (y) 15% of the average of the daily Closing Prices (as hereinafter defined) of the SCI Common Stock for the ten consecutive Trading Days (as hereinafter defined) immediately prior to the date of declaration of such dividend, (B) any dividend or distribution in connection with the liquidation, dissolution or winding-up of SCI, whether voluntary or involuntary, or any redemption of the Rights or any Other Rights; provided, however, that no adjustment shall be made pursuant to this subparagraph (v) if such distribution would otherwise constitute a Fundamental Change (as hereinafter defined) and be reflected in a resulting adjustment to the Conversion Price as provided in this Section 8) then, in each such case (unless SCI makes the election referred to in the proviso following this clause), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect at the close of business on such record date by a fraction the numerator of which shall be the last reported sale price of a share of SCI Common Stock on such record date less the amount of cash so distributed (to the extent not excluded as provided above) applicable to one share of SCI Common Stock, and the denominator shall be such last reported sale price of a share of SCI Common Stock, such reduction to become effective immediately prior to the opening of business on the day following such record date; 25 -22- provided, however, that SCI may elect, in its sole discretion, in lieu of the foregoing adjustment, to make adequate provision so that each holder of Series A Shares shall thereafter have the right to receive upon conversion the amount of cash such holder would have received had such holder converted each Series A Share on such record date. If any adjustment is required to be made as set forth in this subparagraph (v) as a result of a distribution which is a dividend described in clause (A) of this subparagraph (v), such adjustment will be based upon the amount by which such distribution exceeds the amount of the dividend permitted to be excluded pursuant to such clause (A) of this subparagraph (v). If an adjustment is required to be made pursuant to this subparagraph (v) as a result of a distribution which is not such a dividend, such adjustment would be based upon the full amount of such distribution. (vi) In case of the consummation of a tender or exchange offer (other than an odd-lot tender offer) made by SCI or any subsidiary of SCI for all or any portion of the outstanding shares of SCI Common Stock to the extent that the cash and fair market value (as determined in good faith by the Board of Directors of SCI, whose determination shall be conclusive and shall be described in a resolution of such Board) of any other consideration included in such payment per share of SCI Common Stock at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as amended) exceed by more than 10%, with any smaller excess being disregarded in computing the adjustment to the Conversion Price provided in this subparagraph (vi), the first reported sale price per share of SCI Common Stock on the Trading Day next succeeding the Expiration Time, then the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the Expiration Time by a fraction the numerator of which shall be the number of shares of SCI Common Stock outstanding (including any tendered or exchanged shares) on the Expiration Time multiplied by the first reported sale price of the SCI Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (x) the fair market value 26 -23- (determined as aforesaid) of the aggregate consideration payable to shareholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of SCI Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the first reported sale price of the SCI Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. (vii) For the purpose of any computation under this Section 8, the "current market price per share" of SCI Common Stock on any day shall be deemed to be the average of the daily Closing Prices (as hereinafter defined) per share of SCI Common Stock for the ten consecutive Trading Days prior to and including the date in question; provided, however, that (1) if the "ex" date (as hereinafter defined) for any event (other than the issuance, distribution or Fundamental Change requiring such computation) that requires an adjustment to the Conversion Price pursuant to this Section 8 (the "Other Event") occurs during such ten consecutive Trading Days and prior to the "ex" date for the issuance, distribution or Fundamental Change requiring such computation (the "Current Event"), the Closing Price for each Trading Day prior to the "ex" date for such Other Event shall be adjusted by multiplying such Closing Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such Other Event, (2) if the "ex" date for any Other Event occurs on or after the "ex" date for the Current Event and on or prior to the date in question, the Closing Price for each Trading Day on and after the "ex" date for such Other Event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such Other Event (provided that in the event that such fraction is required to be determined at a date subsequent to the date in question and with reference to events taking place subsequent to the date in question, the 27 -24- Board of Directors of SCI or, to the extent permitted by applicable law, a duly authorized committee thereof, whose determination shall be conclusive and described in a resolution of the Board of Directors of SCI or such duly authorized committee thereof, as the case may be, shall in good faith estimate such fraction based on assumptions it deems reasonable regarding such events taking place subsequent to the date in question, and such estimated fraction shall be used for purposes of such adjustment until such time as the actual fraction by which the Conversion Price is so required to be adjusted as a result of such Other Event is determined), and (3) if the "ex" date for the Current Event is on or prior to the date in question, after taking into account any adjustment required pursuant to clause (1) or (2) of this proviso, the Closing Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value (as determined in good faith by the Board of Directors of SCI or, to the extent permitted by applicable law, a duly authorized committee thereof in a manner consistent with any determination of such value for purposes of the subparagraphs of this Section 8, whose determination shall be conclusive and described in a resolution of the Board of Directors of SCI or such duly authorized committee thereof, as the case may be) of the shares of capital stock, evidences of indebtedness or other assets being distributed applicable to one share of SCI Common Stock as of the close of business on the day before such "ex" date. For purposes of this subparagraph (vii), the term "ex" date, (1) when used with respect to any issuance, distribution or Fundamental Change, means the first date on which the SCI Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Price was obtained without the right to receive such issuance, such distribution or the cash, securities, property or other assets distributable in such Fundamental Change to holders of the SCI Common Stock, (2) when used with respect to any subdivision or combination of shares of SCI Common Stock, means the first date on which the SCI Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective and (3) when used with respect to any tender or exchange offer means the first date on 28 -25- which the SCI Common Stock trades regular way on such exchange or in such market after the Expiration Time of such offer. (viii) No adjustment in the Conversion Price shall be required pursuant to this Section 8(g) unless the adjustment would require a change of at least 1% of such price; provided, however, that any adjustments which by reason of this subparagraph (viii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest cent (with .005 being rounded upward) or to the nearest 1/100th of a share (with .005 of a share being rounded upward), as the case may be. Notwithstanding anything to the contrary in this Section 8, the Company from time to time may, to the extent permitted by law and with the consent of the Manager, reduce the Conversion Price by any amount for any period of at least 20 Business Days, in which case the Company shall give at least 15 days' notice of such reduction to the holders of Series A Shares. In addition, the Company may, at its option and with the consent of the Manager, make such reductions in the Conversion Price in addition to those set forth in this Section 8, as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of SCI Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reasons. (ix) Whenever the Conversion Price is adjusted as herein provided, (A) the Company shall promptly file with DTC and the Paying and Conversion Agent a certificate of a duly authorized officer of the Manager or of a firm of independent public accountants setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment, and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment, and (B) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be given by the Company to DTC and the Paying and Conversion Agent and mailed by the Company to each 29 -26- holder of Series A Shares at such holder's last address as the same appears on the register of the Series A Shares. (x) In any case in which this Section 8 provides that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (A) issuing to the holder of any Series A Share converted after such record date and before the occurrence of such event the additional shares of SCI Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the SCI Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount in cash in lieu of any fractional shares pursuant to this Section 8. (xi) For purposes of this Section 8, "SCI Common Stock" includes any stock of any class of SCI which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of SCI and which is not subject to redemption by SCI. However, subject to the provisions of this Section 8, shares issuable on conversion of Series A Shares shall include only shares of the class designated as SCI Common Stock on the date of the initial issuance of Series A Shares by the Company or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of SCI and which are not subject to redemption by SCI; provided, however, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. (h) In case: (i) SCI shall declare a dividend (or any other distribution) on SCI Common Stock that would 30 -27- cause an adjustment to the Conversion Price of the Series A Shares pursuant to the terms of any of the subparagraphs above (including such an adjustment that would occur but for the terms of the first sentence of Section 8(g)(viii) above); or (ii) the outstanding shares of SCI Common Stock shall be subdivided into a greater number of shares of SCI Common Stock or combined into a smaller number of shares of SCI Common Stock; or (iii) SCI shall authorize the granting to the holders of SCI Common Stock generally of rights or warrants (for a period expiring within 45 days after the record date fixed for a distribution of such rights and warrants) to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (iv) of any reclassification of SCI Common Stock (other than a subdivision or combination of the outstanding shares of SCI Common Stock), or of any consolidation, merger or share exchange to which SCI is a party and for which approval of any shareholders of SCI is required, or of the sale or transfer of all or substantially all of the assets of SCI or a compulsory share exchange; or (v) of the voluntary or involuntary dissolution, liquidation or winding-up of the Manager; then the Company shall cause to be filed with the Conversion and Paying Agent, and shall cause to be mailed to all holders of Series A Shares at each such holder's last address as the same appears on the register for the Series A Shares, at least 20 days prior to the applicable record or effective date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of SCI Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (B) the date on which such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding-up is expected to become 31 -28- effective, and the date as of which it is expected that holders of SCI Common Stock of record shall be entitled to exchange their shares of SCI Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding- up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings described in clauses (i) through (v) above. (i) In the event that SCI shall be a party to any transaction or series of transactions constituting a Fundamental Change, including, without limitation, (i) any recapitalization or reclassification of shares of SCI Common Stock (other than a change in par value as a result of a subdivision or combination of the SCI Common Stock), (ii) any consolidation of SCI with, or merger of SCI into, any other corporation or any merger of another corporation into SCI as a result of which holders of SCI Common Stock shall be entitled to receive securities or other property or assets (including cash) with respect to or in exchange for SCI Common Stock (other than a merger which does not result in a reclassification, conversion, exchange or cancellation of outstanding shares of SCI Common Stock), (iii) any sale or transfer of all or substantially all of the assets of SCI, or (iv) any compulsory share exchange, pursuant to any of which the holders of SCI Common Stock shall be entitled to receive other securities, cash or other property, then appropriate provision shall be made as part of the terms of such transaction or series of transactions so that the holder of each Series A Share then outstanding shall have the right thereafter to convert such share only into (A) in the case of a Non-Stock Fundamental Change (as hereinafter defined), the kind and amount of the securities, cash and other property that would have been receivable upon such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of SCI Common Stock into which such Series A Share might have been converted immediately prior to such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange, after giving effect to any adjustment in the Conversion Price required by the provisions which follow in Section 8(k), and (B) in the case of a Common Stock Fundamental Change (as hereinafter defined), common stock of the kind received by holders of SCI Common Stock as a result of such Common Stock Fundamental Change in an amount determined pursuant to the provisions which follow in Section 8(k). The company formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the SCI 32 -29- Common Stock, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. Such certificate or articles of incorporation or other constituent document shall provide for adjustments which, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 8. The above provisions shall similarly apply to successive recapitalizations, reclassifications, consolidations, mergers, sales, transfer or share exchanges. (j) Notwithstanding any other provisions in this Section 8 to the contrary, if any Fundamental Change (as hereinafter defined) occurs, then the Conversion Price in effect will be adjusted immediately following such Fundamental Change as described below in Section 8(k). In addition, in the event of a Common Stock Fundamental Change, each Series A Share shall be convertible solely into common stock of the kind received by holders of SCI Common Stock as the result of such Common Stock Fundamental Change as more specifically provided below in Section 8(k). (k) For purposes of calculating any adjustment to be made pursuant to this Section 8 in the event of a Fundamental Change, immediately following such Fundamental Change (and for such purposes a Fundamental Change shall be deemed to occur on the earlier of (a) the occurrence of such Fundamental Change and (b) the date, if any, fixed for determination of shareholders entitled to receive the cash, securities, property or other assets distributable in such Fundamental Change to holders of the SCI Common Stock); (i) in the case of a Non-Stock Fundamental Change, the Conversion Price per share of SCI Common Stock shall be the lower of (A) the Conversion Price in effect immediately prior to such Non-Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to this Section 8, and (B) the product of (1) the greater of the Applicable Price (as hereinafter defined) and the applicable Reference Market Price (as hereinafter defined) and (2) a fraction the numerator of which shall be $50 and the denominator of which shall be the amount at which one Series A Share would be redeemed by the Company if the redemption date were the date of such Non-Stock Fundamental Change (such denominator being the sum of (1) (A) the Conditional Redemption Price set forth in 33 -30- Section 4(b) hereof (exclusive of any accrued and unpaid dividends) if such Non-Stock Fundamental Change occurs on or after ( ), 1997 and prior to ( ), 1999, (B) the Optional Redemption Price set forth in the table contained in Section 4(b) above (exclusive of any accrued and unpaid dividends) if the Non-Stock Fundamental Change occurs on or after ( ), 1999, or (C) if the Non-Stock Fundamental Change occurs during (i) the period commencing on the date of original issue of the Series A Shares and ending ( ), 1995, (ii) the 12-month period commencing ( ), 1995 and (iii) the period commencing ( ), 1996 and ending ( ), 1997, $( ), $( ) and $( ), respectively, and (2) any accrued and unpaid dividends on the Series A Shares, whether or not declared, to but excluding the date of such Non-Stock Fundamental Change); and (ii) in case of a Common Stock Fundamental Change, the Conversion Price per share of SCI Common Stock shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to this Section 8, multiplied by a fraction, the numerator of which is the Purchaser Stock Price (as hereinafter defined) and the denominator of which is the Applicable Price; provided, however, that in the event of a Common Stock Fundamental Change in which (A) 100% of the value of the consideration received by a holder of SCI Common Stock is common stock of the successor, acquiror or other third party (and cash, if any, paid with respect to any fractional interests in such common stock resulting from such Common Stock Fundamental Change) and (B) all of the SCI Common Stock shall have been exchanged for, converted into or acquired for common stock (and cash, if any, with respect to fractional interests) of the successor, acquiror or other third party, the Conversion Price per share of SCI Common Stock immediately following such Common Stock Fundamental Change shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change multiplied by a fraction, the numerator of which is one (1) and the denominator of which is the number of shares of common stock of the successor, acquiror, or other third party received by a 34 -31- holder of one share of SCI Common Stock as a result of such Common Stock Fundamental Change. (l) The following definitions shall apply to terms used in this Section 8: (i) "Applicable Price" shall mean (A) in the event of a Non-Stock Fundamental Change in which the holders of SCI Common Stock receive only cash, the amount of cash receivable by a holder of one share of SCI Common Stock and (B) in the event of any other Non-Stock Fundamental Change or any Common Stock Fundamental Change, the average of the Closing Prices for one share of SCI Common Stock during the ten Trading Days immediately prior to the record date for the determination of the holders of SCI Common Stock entitled to receive cash, securities, property or other assets in connection with such Non-Stock Fundamental Change or Common Stock Fundamental Change or, if there is no such record date, prior to the date upon which the holders of SCI Common Stock shall have the right to receive such cash, securities, property or other assets. (ii) "Closing Price" with respect to any securities on any day shall mean the closing sale price, regular way, on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in each case on the New York Stock Exchange or, if such security is not listed or admitted to trading on such Exchange, on the principal national securities exchange or quotation system on which such security is quoted or listed or admitted to trading or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of such security on the over-the-counter market on the date in question as reported by the National Quotation Bureau Incorporated, or a similarly generally accepted reporting service or, if not so available, in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors of SCI for that purpose or a price determined in good faith by the Board of Directors of SCI. The Closing Price on any Trading Day may be subject to adjustment as provided in this Section 8. (iii) "Common Stock Fundamental Change" shall mean any Fundamental Change in which more than 50% of the value (as determined in good faith by the Board of Directors of SCI) of the consideration received by the holders of SCI Common 35 -32- Stock pursuant to such transaction consists of common stock that, for the ten consecutive Trading Days immediately prior to such Fundamental Change, has been admitted for listing or admitted for listing subject to notice of issuance on a national securities exchange or quoted on the Nasdaq NM; provided, however, that a Fundamental Change shall not be a Common Stock Fundamental Change unless either (A) SCI continues to exist after the occurrence of such Fundamental Change and the outstanding Series A Shares continue to exist as outstanding Series A Shares, or (B) the outstanding Series A Shares continue to exist as Series A Shares and are convertible into common stock of the successor to SCI. (iv) "Fundamental Change" shall mean the occurrence of any transaction or event or series of transactions or events pursuant to which all or substantially all of the SCI Common Stock shall be exchanged for, converted into, acquired for or constitutes solely the right to receive cash, securities, property or other assets (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise); provided, however, in the case of a plan involving more than one such transaction or event, for purposes of adjustment of the Conversion Price, such Fundamental Change shall be deemed to have occurred when substantially all of the SCI Common Stock has been exchanged for, converted into, or acquired for or constitutes solely the right to receive cash, securities, property or other assets, but the adjustment shall be based upon the consideration which the holders of SCI Common Stock received in such transaction or event as a result of which more than 50% of the SCI Common Stock shall have been exchanged for, converted into, or acquired for or shall constitute solely the right to receive cash, securities, property or other assets; provided, further, that such term does not include (A) any transaction or event in which SCI and/or any of its subsidiaries are the issuers of all the cash, securities, property or other assets exchanged, acquired or otherwise issued in such transaction or event, or (B) any transaction or event in which the holders of SCI Common Stock receive securities of an issuer other than SCI if, immediately following such transaction or event, those holders hold a majority of the securities having the power to vote normally in the election of directors of such other issuer outstanding immediately following such transaction or other event. 36 -33- (v) "Non-Stock Fundamental Change" shall mean any Fundamental Change other than a Common Stock Fundamental Change. (vi) "Purchaser Stock Price" shall mean, with respect to any Common Stock Fundamental Change, the average of the Closing Prices for one share of the common stock received by holders of SCI Common Stock in such Common Stock Fundamental Change during the ten Trading Days immediately prior to the record date for the determination of the holders of SCI Common Stock entitled to receive such common stock or, if there is no such record date, prior to the date upon which the holders of SCI Common Stock shall have the right to receive such common stock. (vii) "Reference Market Price" shall initially mean $( ) (which is an amount equal to 66-2/3% of the last reported sale price for the SCI Common Stock on the New York Stock Exchange on ( ), 1994) and, in the event of any adjustment to the Conversion Price other than as a result of a Fundamental Change, the Reference Market Price shall also be adjusted so that the ratio of the Reference Market Price to the Conversion Price after giving effect to any such adjustment shall always be the same as the ratio of $( ) to the initial Conversion Price set forth in this Section 8. (viii) "Trading Day" shall mean (A) if the applicable security is listed or admitted for trading on the New York Stock Exchange or another national securities exchange, a day on which the New York Stock Exchange or such other national securities exchange is open for business or (B) if the applicable security is quoted on the Nasdaq NM, a day on which trades may be made on the Nasdaq NM or (C) if the applicable security is not otherwise listed, admitted for trading or quoted, any day other than a Saturday or Sunday or on a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. (m) The Manager will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of SCI Common Stock on conversions of Series A Shares pursuant hereto; provided, however, that the Manager shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of SCI Common Stock in a name other than that of the holder of the Series A Shares to be converted and no such issue 37 -34- or delivery shall be made unless and until the person requesting such issue or delivery has paid the Manager the amount of any such tax or has established, to the satisfaction of the Manager, that such tax has been paid. (n) SCI covenants that all shares of SCI Common Stock which may be delivered upon conversions of Series A Shares will upon delivery be duly and validly issued and fully paid and nonassessable, free of all liens and charges and not subject to any preemptive rights. (o) SCI covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of authorized but unissued shares and treasury shares of SCI Common Stock, a sufficient number of shares of SCI Common Stock for the purpose of effecting conversions of Series A Shares not theretofore converted. For purposes of this reservation of SCI Common Stock, the number of shares of SCI Common Stock which shall be deliverable upon the conversion of all outstanding Series A Shares shall be computed as if at the time of computation all outstanding Series A Shares were held by a single holder. SCI covenants that from time to time, in accordance with the laws of the State of Texas, to take such steps as are necessary to submit to shareholders of SCI a resolution to increase the authorized number of shares of SCI Common Stock if at any time the number of authorized and unissued shares and treasury shares of SCI Common Stock shall not be sufficient to permit the conversion of all then- outstanding Series A Shares. SCI has authorized in all respects the issuance of shares of SCI Common Stock upon conversion of Series A Shares. (p) If any shares of SCI Common Stock required to be reserved for purposes of conversion of the Series A Shares hereunder require registration with or approval of any governmental authority under any Federal or state law before such shares may be issued upon conversion, SCI agrees to use all reasonable efforts to expeditiously cause such shares to be duly registered or approved, as the case may be; provided, that, SCI shall not be required to subject itself to general service of process in any jurisdiction where it is not then so subject. If the SCI Common Stock is listed on the New York Stock Exchange, quoted on the Nasdaq NM or listed on any other national securities exchange, SCI agrees to use all reasonable efforts to list and keep listed on such exchange or system, upon official notice of issuance, all shares of SCI Common Stock issuable upon conversion of the Series A Shares. 38 -35- (q) Notwithstanding the provisions in this Section 8, the issuance of any shares of SCI Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of SCI and the investment of additional optional amounts in shares of SCI Common Stock under any such plan (whether any such plan is now or hereafter authorized), or the issuance of any shares of SCI Common Stock or options or rights to purchase such shares pursuant to any employee benefit plan or program of SCI or any subsidiary thereof (whether any such plan or program is now or hereafter authorized), or pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date hereof, shall not be deemed to constitute an issuance of SCI Common Stock or exercisable, exchangeable or convertible securities by SCI to which any of the adjustment provisions described in this Section 8 applies. There shall be no adjustment of the Conversion Price in case of the issuance of any stock (or securities convertible into or exchangeable for stock) of SCI except as described in this Section 8. Except as expressly set forth in this Section 8, if any action would require adjustment of the Conversion Price pursuant to more than one of the provisions described above, only one adjustment shall be made and such adjustment shall be the amount of adjustment which has the highest absolute value. 9. Book-Entry Issuance; The Depository Trust Company; Certificated Shares. (a) DTC will act as securities depository for the Series A Shares. The Series A Shares (other than such Certificated Shares) will be issued in the form of one or more fully-registered global certificates representing in the aggregate the total number of Series A Shares and registered in the name of Cede & Co. (DTC's nominee). (b) DTC may discontinue providing its services as securities depository with respect to the Series A Shares at any time by giving notice to the Company as provided in the agreement between the Company and DTC. Under such circumstances, in the event that a successor securities depository is not obtained, Certificated Shares shall be printed and delivered upon surrender of the Global Certificate or Certificates. (c) The Paying and Conversion Agent shall maintain a book-entry system, as defined in Treas. Reg. Section 5f.103-1(c)(2), with respect to all Certificated Shares. All rights to payments with respect to any Certificated Share shall be transferred only through such book-entry system and shall not be effective until 39 -36- the Paying and Conversion Agent has been notified of such transfer and provided with the identity of the transferee. 10. Tax Matters. (a) For each calendar month of the Company, gross income or gain, as determined for Federal income tax purposes, shall be allocated to each holder of Series A Shares as set forth in this Section 10(a). No items of deduction, loss or credit shall be allocated with respect to the Series A Shares. Income, gain, loss, deduction or credit not allocated to holders of Series A Shares shall be allocated to the holders of all other classes of Interests (including the Common Interestholders). (i) Subject to the provisions of subparagraph (iv) below, for any calendar month during which SCI Limited has not exercised its right to extend the interest payment period on the Loans pursuant to Section 2.02 of the Loan Agreement, an amount of gross income or gain of the Company shall be allocated to each holder of record of Series A Shares as of the record date for the dividend payable with respect to the Series A Shares for such month, in an amount equal to the per-share amount of such dividend, multiplied by the number of Series A Shares held of record by such holder as of such record date. (ii) Subject to the provisions of subparagraph (iv) below, for any calendar month during which SCI Limited has exercised its right to extend the interest payment period on the Loans pursuant to Section 2.02 of the Loan Agreement (including the month in which all accrued and unpaid interest on the Loans is paid pursuant to such Section 2.02), an amount of gross income or gain of the Company shall be allocated to each holder of record of Series A Shares as of the last day of such calendar month equal to the sum of the daily portions of the aggregate original issue discount accrued during each day of such month on the Loans (as determined pursuant to Sections 1272-1275 of the Internal Revenue Code of 1986, as amended (the "Code")) multiplied by a fraction, the numerator of which is the product of (x) $50 multiplied by (y) the number of Series A Shares held of record by such holder as of the last day of such month, and the denominator of which is the aggregate principal amount of the Loans outstanding as of the last day of such month (but not including any accrued interest, including all interest accrued as a result of the exercise by SCI Limited of its right to extend the interest payment period on the Loans). 40 -37- (iii) Subject to the provisions of subparagraph (iv) below, if a Series A Share is redeemed pursuant to Section 4 hereof or converted pursuant to Section 8 hereof during a calendar month, an amount of gross income of the Company shall be allocated to the holder of record of such Series A Share as of the date of such conversion or redemption equal to the amount of original issue discount that accrued during such calendar month (as determined pursuant to Sections 1272-1275 of the Code) with respect to that portion of the Loans that was prepaid pursuant to the Loan Agreement as a result of the redemption or conversion of such Series A Share. (iv) Notwithstanding the provisions of subparagraphs (i), (ii) and (iii) above, if, to the best knowledge of the Manager, the holder of record of a Series A Share is not the beneficial owner of such Series A Share as determined for Federal income tax purposes, amounts of income or gain allocable pursuant to such subparagraphs (i), (ii) or (iii) shall be allocated to the beneficial owner of such Series A Share, as determined by the Manager, rather than to the record holder of such Series A Share, and if the Manager is advised by counsel that the method of allocating gross income and gain among the holders of Series A Shares as set forth in this Section 10(a) is impermissible under the Code or if the Internal Revenue Service disallows such method, the Manager shall adopt a permissible method that as nearly as possible achieves the results of the method set forth in this Section 10(a). (v) Notwithstanding anything to the contrary in this Section 10(a), in the event of a Liquidation of the Company or of a Preferred Interestholder's Interest, income, gain, loss or deduction of the Company shall be allocated so that each Preferred Interestholder has a positive balance in its capital account equal to the sum of the amount of cash and the fair market value of property other than cash (if any) to be received by such Preferred Interestholder in such Liquidation. (vi) All amounts of income of the Company allocable to holders of the Series A Shares shall be interest income, to the extent thereof, and if the Company has insufficient interest income, other items of gross income or gain shall be allocated to holders of the Series A Shares. (vii) The Manager shall allocate income, gain, loss and deduction and items thereof among the Members in the 41 -38- manner required by Section 704(c) of the Code, as determined by it in its judgment. (b) (i) For the purpose of adjusting the capital accounts of the holders of Series A Shares, any dividend declared by the Company pursuant to Section 3(a) hereof shall be treated as distributed on the record date for such dividend. (ii) The Manager shall make such other adjustments to the capital accounts of the Members as are, in its judgment, required to comply with the requirements of Section 704 of the Code and the regulations promulgated thereunder and the purposes of the Regulations and this Amendment. 11. Fractional Shares. In the event the holder of Series A Shares shall be entitled to receive a fractional interest in a Series A Share or a fractional interest in a share of SCI Common Stock, except as otherwise provided herein, SCI shall either, in its sole discretion, (i) round such fractional interest up to the next whole Series A Share or share of SCI Common Stock, as the case may be, or (ii) deliver cash in the amount of the current market price per share (determined as provided in Section 8(g)(vii)) of such fractional interest. 12. Guarantee of Liabilities. It shall be a condition precedent to the issuance of the Series A Shares that SCI execute the Liability Assumption Agreement, pursuant to which SCI shall guarantee payment of all liabilities of the Company to the extent not paid by the Company (other than obligations to holders of Series A Shares, which will be separately guaranteed by SCI to the extent set forth in the SCI Agreement). The Liability Assumption Agreement shall be for the benefit of, and be enforceable by, third parties to whom the Company owes such obligations. 13. Severability of Provisions. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. 42 -39- 14. Defined Terms. All capitalized terms not defined in this Amendment shall have the meanings ascribed thereto in the Regulations. 43 -40- IN WITNESS WHEREOF, SCI FINANCE LLC has caused this Amendment to its Regulations to be signed by two of the officers of its Manager, and to be attested as set forth below, as of the ( ) day of ( ) 1994. SCI FINANCE LLC By: Service Corporation International, as Manager By: __________________________ Name: Title: Attest: ___________________ Name: By: __________________________ Name: Title Attest: ___________________ Name: 44 -41- SERVICE CORPORATION INTERNATIONAL hereby covenants to perform its obligations set forth in this Amendment to the Regulations of SCI Finance LLC, and, IN WITNESS WHEREOF, has caused this Amendment to be signed by two of its officers and to be attested as set forth below, as of the ( ) day of ( ) 1994. SERVICE CORPORATION INTERNATIONAL By: ______________________________ Name: Title: Attest: _______________________ Name: By: ______________________________ Name: Title: Attest: _______________________ Name: 45 Exhibit A (Loan Agreement) - See Exhibit 4.5(b) 46 Exhibit B (SCI Agreement) - See Exhibit 4.5(a) 47 Exhibit C (Liability Assumption Agreement) - See Exhibit 4.5(c) EX-4.2 8 SENIOR SUBORDINATED INDENTURE 1 EXHIBIT 4.2 ================================================================================ SERVICE CORPORATION INTERNATIONAL AND TEXAS COMMERCE BANK NATIONAL ASSOCIATION _____________________ Senior Subordinated Indenture Dated as of __________, 1994 ================================================================================ 2 CROSS REFERENCE SHEET* __________________ Provisions of Trust Indenture Act of 1939 and Senior Subordinated Indenture to be dated as of _________, 1994 between SERVICE CORPORATION INTERNATIONAL and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Trustee:
SECTION OF THE ACT SECTION OF INDENTURE - ------------------ -------------------- 310(a)(1), (2) and (5) . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 310(a)(3) and (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 and 6.10(a), (b) and (d) 310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13(a) and (c) 311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13(b) and (c) 311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 and 4.2(a) 312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(a) and (b)(i) and (ii) 312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(c) 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(a)(i), (ii), (iii), (iv), (v), (vi) and (vii) 313(a)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 313(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 313(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(b) 313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(c) 313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(d) 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 314(c)(1) and (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 314(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 315(a), (c) and (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9 316(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 316(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not required 316(a) (last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(a) 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7
___________________ * This Cross Reference Sheet is not part of the Indenture. 3
TABLE OF CONTENTS* _________________ PAGE ---- PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE ONE DEFINITIONS Section 1.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Associated Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Conversion Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . 3 Date of Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Holder of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Securityholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Issuer Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Last Sale Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 original issue date . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 original issue discount . . . . . . . . . . . . . . . . . . . . . . . . . 6 Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . 6 Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Periodic Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ___________ * This Table of Contents is not part of the Indenture. -i-
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PAGE ---- principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 principal amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 record date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . 9 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . 9 vice president . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Yield to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE TWO SECURITIES Section 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 2.2 Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 2.3 Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . 11 Section 2.4 Authentication and Delivery of Securities . . . . . . . . . . . . . . . . 14 Section 2.5 Execution of Securities . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 2.6 Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . 18 Section 2.7 Denomination and Date of Securities; Payments of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 2.8 Registration, Transfer and Exchange . . . . . . . . . . . . . . . . . . . 20 Section 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 2.10 Cancellation of Securities; Disposition Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 2.11 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 2.12 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 25 ARTICLE THREE COVENANTS OF THE ISSUER Section 3.1 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . 25 Section 3.2 Office for Notices and Payments, etc. . . . . . . . . . . . . . . . . . . 25 Section 3.3 No Interest Extension . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 3.4 Appointments to Fill Vacancies in Trustee's Office . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 3.5 Provision as to Paying Agent . . . . . . . . . . . . . . . . . . . . . . 26 Section 3.6 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ___________ * This Table of Contents is not part of the Indenture. -ii-
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PAGE ---- Section 3.7 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 3.8 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . 28 Section 3.9 Prohibition on Incurrence of Senior Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE Section 4.1 Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Section 4.2 Preservation and Disclosure of Securityholders Lists . . . . . . . . . . . . . . . . . . . . . . . . . 29 Section 4.3 Reports by the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 4.4 Reports by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 31 ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT Section 5.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 5.2 Payment of Securities on Default; Suit Therefor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Section 5.3 Application of Moneys Collected by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Section 5.4 Proceedings by Securityholders . . . . . . . . . . . . . . . . . . . . . 40 Section 5.5 Proceedings by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 41 Section 5.6 Remedies Cumulative and Continuing . . . . . . . . . . . . . . . . . . . 41 Section 5.7 Direction of Proceedings; Waiver of Defaults by Majority of Securityholders . . . . . . . . . . . . . . . . 41 Section 5.8 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Section 5.9 Undertaking to Pay Costs . . . . . . . . . . . . . . . . . . . . . . . . 43 Section 5.10 Trustee May Enforce Claim Without Possession of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Section 5.11 Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . 43 ARTICLE SIX CONCERNING THE TRUSTEE Section 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default . . . . . . . . . . . . . . . . . . . 44 Section 6.2 Certain Rights of the Trustee . . . . . . . . . . . . . . . . . . . . . . 45 ___________ * This Table of Contents is not part of the Indenture. -iii-
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PAGE ---- Section 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof . . . . . . . . . . . . . . . . . . . . 47 Section 6.4 Trustee and Agents May Hold Securities; Collections, etc. . . . . . . . . . . . . . . . . . . . . . 47 Section 6.5 Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 6.6 Compensation and Indemnification of Trustee and Its Prior Claim . . . . . . . . . . . . . . . . . . . . 47 Section 6.7 Right of Trustee to Rely on Officer's Certificate, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Section 6.8 Qualification of Trustee; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . 49 Section 6.9 Persons Eligible for Appointment as Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 6.10 Resignation and Removal; Appointment of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 57 Section 6.11 Acceptance of Appointment by Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Section 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee . . . . . . . . . . . . . . . . . 60 Section 6.13 Preferential Collection of Claims Against the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Section 6.14 Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . 65 ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS Section 7.1 Evidence of Action Taken by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 7.2 Proof of Execution of Instruments and of Holding of Securities . . . . . . . . . . . . . . . . . . . . . 67 Section 7.3 Holders to be Treated as Owners . . . . . . . . . . . . . . . . . . . . . 67 Section 7.4 Securities Owned by Issuer Deemed Not Outstanding . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 7.5 Right of Revocation of Action Taken . . . . . . . . . . . . . . . . . . . 68 Section 7.6 Record Date for Consents and Waivers . . . . . . . . . . . . . . . . . . 69 ARTICLE EIGHT SUPPLEMENTAL INDENTURES Section 8.1 Supplemental Indentures Without Consent of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 8.2 Supplemental Indentures With Consent of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 8.3 Effect of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . 73 ___________ * This Table of Contents is not part of the Indenture. -iv-
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PAGE ---- Section 8.4 Documents to be Given to Trustee . . . . . . . . . . . . . . . . . . . . 73 Section 8.5 Notation on Securities in Respect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . 73 Section 8.6 Subordination Unimpaired . . . . . . . . . . . . . . . . . . . . . . . . 74 ARTICLE NINE CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER DISPOSITION Section 9.1 Issuer May Consolidate, etc., on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Section 9.2 Successor Corporation to be Substituted . . . . . . . . . . . . . . . . . 75 Section 9.3 Opinion of Counsel to be Given Trustee . . . . . . . . . . . . . . . . . 75 ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS Section 10.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . 76 Section 10.2 Application by Trustee of Funds Deposited for Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . 79 Section 10.3 Repayment of Moneys Held by Paying Agent . . . . . . . . . . . . . . . . 79 Section 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years . . . . . . . . . . . . . . . . . 80 Section 10.5 Indemnity for U.S. Government Obligations . . . . . . . . . . . . . . . . 80 ARTICLE ELEVEN MISCELLANEOUS PROVISIONS Section 11.1 Partners, Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability . . . . . . . . . . . . . . . . . . . 80 Section 11.2 Provisions of Indenture for the Sole Benefit of Parties and Holders of Senior Indebtedness and of Securities . . . . . . . . . . . . . . . . . 81 Section 11.3 Successors and Assigns of Issuer Bound by Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Section 11.4 Notices and Demands on Issuer, Trustee and Holders of Securities . . . . . . . . . . . . . . . . . . . 81 Section 11.5 Officer's Certificates and Opinions of Counsel; Statements to be Contained Therein . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Section 11.6 Payments Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 83 ___________ * This Table of Contents is not part of the Indenture. -v-
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PAGE ---- Section 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . 83 Section 11.8 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Section 11.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Section 11.10 Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Section 11.11 Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS Section 12.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . 84 Section 12.2 Notice of Redemption; Partial Redemptions . . . . . . . . . . . . . . . . 84 Section 12.3 Payment of Securities Called for Redemption . . . . . . . . . . . . . . . 86 Section 12.4 Exclusion of Certain Securities from Eligibility for Selection for Redemption . . . . . . . . . . . . . . . . . . . . . . . . 87 Section 12.5 Mandatory and Optional Sinking Funds . . . . . . . . . . . . . . . . . . 88 ARTICLE THIRTEEN CONVERSION OF SECURITIES Section 13.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . 90 Section 13.2 Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . 91 Section 13.3 Fractional Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Section 13.4 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . 93 Section 13.5 Continuation of Conversion Privilege in Case of Merger, Consolidation or Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Section 13.6 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . 98 Section 13.7 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Section 13.8 Issuer to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . . 99 Section 13.9 Disclaimer of Responsibility for Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Section 13.10 Return of Funds Deposited for Redemption of Converted Securities . . . . . . . . . . . . . . . . . . 100 ARTICLE FOURTEEN SUBORDINATION Section 14.1 Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 ___________ * This Table of Contents is not part of the Indenture. -vi-
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PAGE ---- Section 14.2 Reliance on Certificate of Liquidating Agent; Further Evidence as to Ownership of Senior Indebtedness . . . . . . . . . . . . . . . . . . . 104 Section 14.3 Payment Permitted If No Default . . . . . . . . . . . . . . . . . . . . . 104 Section 14.4 Disputes with Holders of Certain Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Section 14.5 Trustee Not Charged with Knowledge of Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Section 14.6 Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . 106 Section 14.7 Rights of Trustee as Holder of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Section 14.8 Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . 106 Section 14.9 Subordination Rights Not Impaired by Acts or Omissions of the Issuer or Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . 106 Section 14.10 Trustee Not Fiduciary for Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 107 TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 ___________ * This Table of Contents is not part of the Indenture. -vii-
10 THIS SENIOR SUBORDINATED INDENTURE, dated as of __________, 1994 between SERVICE CORPORATION INTERNATIONAL, a Texas corporation (the "Issuer"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as trustee (the "Trustee"), W I T N E S S E T H: WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured senior subordinated debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture; WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture to provide, among other things, for the authentication, delivery and administration of the Securities; and WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been undertaken and completed; NOW, THEREFORE: In consideration of the premises and the purchases of the Securities by the Holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective Holders from time to time of the Securities as follows: ARTICLE ONE DEFINITIONS Section 1.1 For all purposes of this Indenture and of any indenture supplemental hereto, the following terms shall have the respective meanings specified in this Section 1.1 (except as otherwise expressly provided or unless the context otherwise clearly requires). All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939, including terms defined therein by reference to the Securities Act of 1933, shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture (except as herein otherwise expressly provided or unless the context otherwise clearly requires). -1- 11 All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means such accounting principles as are generally accepted at the date of execution and delivery of this Indenture. The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The expressions "date of this Indenture", "date hereof", "date as of which this Indenture is dated" and "date of execution and delivery of this Indenture" and other expressions of similar import refer to the effective date of the original execution and delivery of this Indenture, viz. ___________, 1994. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Associated Rights" means any rights to purchase shares of the Issuer's capital stock or other securities that are associated with any class of stock constituting Common Stock for purposes hereof if at the time of the issuance thereof such rights are not separable from any class of stock except upon the occurrence of a contingency, whether such rights exist at the date of the execution hereof or are thereafter issued by the Company as a dividend on any such class of stock or otherwise. "Authenticating Agent" shall have the meaning set forth in Section 6.14. "Bankruptcy Code" means the United States Bankruptcy Code, 11 United States Code Sec. 101 et seq., or any successor statute thereto. -2- 12 "Board of Directors" means either the Board of Directors of the Issuer or any committee of such Board duly authorized to act on its behalf. "Board Resolution" means one or more resolutions, certified by the secretary or an assistant secretary of the Issuer to have been duly adopted or consented to by the Board of Directors and to be in full force and effect. "Business Day" means, with respect to any Security, a day that (a) in the Place of Payment (or in any of the Places of Payment, if more than one) in which amounts are payable, as specified in the form of such Security, and (b) in the city in which the Corporate Trust Office is located, is not a day on which banking institutions are authorized or required by law or regulation to close. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act of 1939, then the body performing such duties on such date. "Common Stock" means the common stock, par value $1.00 per share, of the Issuer as the same exists at the date of execution and delivery of this Indenture or other capital stock of the Issuer into which such common stock is reclassified or changed from time to time. "Conversion Agent" shall have the meaning set forth in Section 3.2. "Conversion Price" shall have the meaning set forth in Section 13.4. "Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date as of which this Indenture is dated, located in Houston, Texas, except that with respect to the presentation of Securities for payment, for conversion or for registration of transfer and exchange, such term shall also mean the office of the Trustee's agent in the Borough of Manhattan, the City and State of New York, at which at any particular time its corporate agency business shall be conducted. "Date of Conversion" shall have the meaning set forth in Section 13.2. -3- 13 "Depositary" means, with respect to the Securities of any series issuable or issued in the form of one or more Global Securities, the Person designated as Depositary by the Issuer pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and, if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Global Securities of such series. "Event of Default" means any event or condition specified as such in Section 5.1. "Global Security" means a Security evidencing all or a part of a series of Securities issued to the Depositary for such series in accordance with Section 2.3 and bearing the legend prescribed in Section 2.4. "Holder", "Holder of Securities", "Securityholder" or other similar terms mean, in the case of any Security, the Person in whose name such Security is registered in the security register kept by the Issuer for that purpose in accordance with the terms hereof. "Indebtedness" means, with respect to any Person, (a) (i) the principal of and interest and premium, if any, on indebtedness for money borrowed of such Person evidenced by bonds, notes, debentures or similar obligations, including any guaranty by such Person of any indebtedness for money borrowed of any other Person, whether any such indebtedness or guaranty is outstanding on the date of this Indenture or is thereafter created, assumed or incurred, (ii) the principal of and interest and premium, if any, on indebtedness for money borrowed, incurred, assumed or guaranteed by such Person in connection with the acquisition by it or any of its subsidiaries of any other businesses, properties or other assets and (iii) lease obligations which such Person capitalizes in accordance with Statement of Financial Accounting Standards No. 13 promulgated by the Financial Accounting Standards Board or such other generally accepted accounting principles as may be from time to time in effect; (b) any other indebtedness of such Person, including any indebtedness representing the deferred -4- 14 and unpaid balance of the purchase price of any property or interest therein, including any such balance that constitutes a trade account payable, and any guaranty, endorsement or other contingent obligation of such Person in respect of any indebtedness of another, which is outstanding on the date of this Indenture or is thereafter created, assumed or incurred by such Person; and (c) any amendments, modifications, refundings, renewals or extensions of any indebtedness or obligation described as Indebtedness in clause (a) or (b) above. "Indenture" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both, including, for all purposes of this instrument and any such supplement, the provisions of the Trust Indenture Act of 1939 that are deemed to be a part of and govern this instrument and any such supplement, respectively, and shall include the forms and terms of particular series of Securities established as contemplated hereunder. The term "interest" means, when used with respect to non-interest bearing Securities (including, without limitation, any Original Issue Discount Security which by its terms bears interest only after maturity or upon default in any other payment due on such Security), interest payable after maturity (whether at stated maturity, upon acceleration or redemption or otherwise) or after the date, if any, on which the Issuer becomes obligated to acquire a Security, whether upon conversion, by purchase or otherwise. "Issuer" means (except as otherwise provided in Section 6.8) Service Corporation International, a Texas corporation, and, subject to Article Nine, its successors and assigns. "Issuer Order" means a written statement, request or order of the Issuer which is signed in its name by the chairman of the Board of Directors, the president, any vice president or the treasurer of the Issuer. "Last Sale Price" shall have the meaning set forth in Section 13.3. "Officer's Certificate", when used with respect to the Issuer, means a certificate signed by the chairman of the Board of Directors, the president, or any vice president and by the treasurer, any assistant treasurer, the controller, any -5- 15 assistant controller, the secretary or any assistant secretary of the Issuer. Each such certificate shall include the statements provided for in Section 11.5, if and to the extent required by the provisions of such Section 11.5. One of the officers signing any Officer's Certificate given pursuant to Section 4.3 shall be the principal executive, financial or accounting officer of the Issuer. "Opinion of Counsel" means an opinion in writing signed by the general counsel of the Issuer or by such other legal counsel who may be an employee of or counsel to the Issuer and who shall be satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 11.5, if and to the extent required by the provisions of such Section 11.5. The term "original issue date" of any Security (or portion thereof) means the earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution. The term "original issue discount" of any debt security, including any Original Issue Discount Security, means the difference between the principal amount of such debt security and the initial issue price of such debt security (as set forth in the case of an Original Issue Discount Security on the face of such Security). "Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Outstanding" (except as otherwise provided in Section 6.8), when used with reference to Securities, shall, subject to the provisions of Section 7.4, mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except: (a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Securities (other than Securities of any series as to which the provisions of Article Ten hereof shall not be applicable), or portions thereof, for the payment or redemption of which moneys or U.S. Government Obligations (as provided for in Section 10.1) in the necessary amount shall have been deposited in trust with the Trustee or with any Paying -6- 16 Agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the Holders of such Securities (if the Issuer shall act as its own Paying Agent), provided that, if such Securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice; (c) Securities which shall have been paid or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a Person in whose hands such Security is a legal, valid and binding obligation of the Issuer); and (d) Securities converted into Common Stock pursuant hereto and, for purposes of selection for redemption, Securities not deemed Outstanding pursuant to Section 12.2. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the portion of the principal amount thereof that would be due and payable as of the date of such determination (as certified by the Issuer to the Trustee) upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Paying Agent" shall have the meaning set forth in Section 3.2. "Periodic Offering" means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption and conversion provisions, if any, with respect thereto, are to be determined by the Issuer or its agents upon the issuance of such Securities. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, estate, unincorporated organization or government or any agency or political subdivision thereof. -7- 17 "Place of Payment", when used with respect to the Securities of any series, means the place or places where the principal of and interest, if any, on the Securities of such series are payable as determined in accordance with Section 2.3. The term "principal" of a debt security, including any Security, means the amount (including, without limitation, if and to the extent applicable, any premium and, in the case of an Original Issue Discount Security, any accrued original issue discount, but excluding interest) that is payable with respect to such debt security as of any date and for any purpose (including, without limitation, in connection with any sinking fund, upon any redemption at the option of the Issuer, upon any purchase or exchange at the option of the Issuer or the holder of such debt security and upon any acceleration of the maturity of such debt security). The term "principal amount" of a debt security, including any Security, means the principal amount as set forth on the face of such debt security. The term "record date" shall have the meaning set forth in Section 2.7. "Registrar" shall have the meaning set forth in Section 3.2. "Responsible Officer", when used with respect to the Trustee, means any officer assigned by the Trustee to administer its corporate trust matters. "Security" or "Securities" (except as otherwise provided in Section 6.8) has the meaning stated in the first recital of this Indenture or, as the case may be, securities that have been authenticated and delivered pursuant to this Indenture. "Senior Indebtedness" means Indebtedness of the Issuer outstanding at any time except (a) any Indebtedness of the Issuer that pursuant to its terms or the terms of any agreement relating thereto or by operation of law is subordinate or junior in right of payment to any other Indebtedness of the Issuer, provided that no Indebtedness of the Issuer shall be deemed to be subordinate to any other Indebtedness of the Issuer solely by virtue of any such other Indebtedness being secured or otherwise having the benefit of any lien or security interest, (b) any Indebtedness as to which, by the terms of the instrument creating or evidencing the same, it is provided that such Indebtedness is not senior in right of payment to the -8- 18 Securities, (c) the Securities, (d) the Issuer's subordinated indebtedness, (e) any Indebtedness of the Issuer to a wholly owned Subsidiary of the Issuer, (f) interest accruing after the filing of a petition initiating certain bankruptcy or insolvency proceedings unless such interest is an allowed claim enforceable against the Issuer in a proceeding under federal or state bankruptcy laws and (g) trade accounts payable. "Subsidiary" means any corporation of which the Issuer, or the Issuer and one or more Subsidiaries, or any one or more Subsidiaries, directly or indirectly own voting securities entitling any one or more of the Issuer and its Subsidiaries to elect a majority of the directors of such corporation, either at all times or so long as there is no default or contingency which permits the holders of any other class or classes of securities to vote for the election of one or more directors. "Trading Day" shall have the meaning set forth in Section 13.3. "Trust Indenture Act of 1939" (except as otherwise provided in Sections 8.1, 8.2 and 13.5) means the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, as in force at the date as of which this Indenture is originally executed. "Trustee" means the Person identified as "Trustee" in the first paragraph hereof and, subject to the provisions of Article Six, shall also include any successor trustee. "Trustee" shall also mean or include each Person who is then a trustee hereunder and, if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the trustee with respect to the Securities of such series. "U.S. Government Obligations" shall have the meaning set forth in Section 10.1(B). The term "vice president", when used with respect to the Issuer or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "Yield to Maturity" means the yield to maturity on a series of Securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with generally accepted financial practice or as otherwise provided in the terms of such series of Securities. -9- 19 ARTICLE TWO SECURITIES Section 2.1 Forms Generally. The Securities of each series shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to one or more Board Resolutions (as set forth in a Board Resolution or, to the extent established pursuant to rather than set forth in a Board Resolution, an Officer's Certificate detailing such establishment) or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities, as evidenced by their execution of such Securities. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. Section 2.2 Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication on all Securities shall be substantially as follows: This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Trustee By___________________________ Authorized Signatory If at any time there shall be an Authenticating Agent appointed with respect to any series of Securities, then the Securities of such series shall bear, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication which shall be substantially as follows: -10- 20 This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Trustee By_____________________________ as Authenticating Agent By_____________________________ Authorized Signatory Section 2.3 Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series and the Securities of each such series shall rank equally and pari passu with the Securities of each other series, but all Securities issued hereunder shall be subordinate and junior in right of payment, to the extent and in the manner set forth in Article Fourteen, to all Senior Indebtedness. There shall be established in or pursuant to one or more Board Resolutions (and, to the extent established pursuant to rather than set forth in a Board Resolution, in an Officer's Certificate detailing such establishment) or established in one or more indentures supplemental hereto, prior to the initial issuance of Securities of any series: (1) the designation of the Securities of the series, which shall distinguish the Securities of the series from the Securities of all other series; (2) whether the Securities will be convertible into Common Stock (or cash in lieu thereof) and, if so, the terms and conditions upon which such conversion will be effected including the initial Conversion Price and any adjustments thereto in addition to or different from those set forth in Section 13.4, the conversion period and other provisions in addition to or in lieu of those set forth herein; (3) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture -11- 21 (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5, 12.3 or 13.2); (4) the date or dates on which the principal of the Securities of the series is payable; (5) the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which any such interest shall accrue, on which any such interest shall be payable and on which a record shall be taken for the determination of Holders to whom any such interest is payable or the method by which such rate or rates or date or dates shall be determined or both; (6) the place or places where and the manner in which the principal of and any interest on Securities of the series shall be payable and the office or agency for the Securities of the series maintained by the Issuer pursuant to Section 3.2 (if other than as provided in Section 3.2); (7) any provisions relating to the issuance of Securities of such series at an original issue discount (including, without limitation, the issue price thereof, the rate or rates at which such original issue discount shall accrue, if any, and the date or dates from or to which or period or periods during which such original issue discount shall accrue at such rate or rates); (8) the right, if any, of the Issuer to redeem, purchase or repay Securities of the series, in whole or in part, at its option and the period or periods within which, the price or prices (or the method by which such price or prices shall be determined or both) at which, the form or method of payment therefor if other than in cash and any terms and conditions upon which and the manner in which (if different from the provisions of Article Twelve) Securities of the series may be so redeemed, purchased or repaid, in whole or in part, pursuant to any sinking fund or otherwise; (9) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series, in whole or in part, pursuant to any mandatory redemption, sinking fund or analogous provisions or at -12- 22 the option of a Holder thereof and the period or periods within which, the price or prices (or the method by which such price or prices shall be determined or both) at which, the form or method of payment therefor if other than in cash and any terms and conditions upon which and the manner in which (if different from the provisions of Article Twelve) Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; (10) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable; (11) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon acceleration of the maturity thereof; (12) whether the Securities of the series will be issuable as Global Securities; (13) if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions; (14) any trustees, depositaries, authenticating or paying agents, transfer agents or registrars, conversion agents or any other agents with respect to the Securities of such series; (15) any deleted, modified or additional events of default or remedies or any additional covenants with respect to the Securities of such series; (16) whether the provisions of Section 10.1(C) will be applicable to Securities of such series; (17) if the amounts of payments of principal of and interest on the Securities of such series are to be determined with reference to an index, the manner in which such amounts shall be determined; and -13- 23 (18) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series shall be substantially identical, except as to denomination and except as may otherwise be provided by or pursuant to the Board Resolution or Officer's Certificate referred to above or as set forth in any such indenture supplemental hereto. All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to such Board Resolution, such Officer's Certificate or in any such indenture supplemental hereto. Any such Board Resolution or Officer's Certificate referred to above with respect to Securities of any series filed with the Trustee on or before the initial issuance of the Securities of such series shall be incorporated herein by reference with respect to Securities of such series and shall thereafter be deemed to be a part of this Indenture for all purposes relating to Securities of such series as fully as if such Board Resolution or Officer's Certificate were set forth herein in full. Section 2.4 Authentication and Delivery of Securities. The Issuer may deliver Securities of any series executed by the Issuer to the Trustee for authentication together with the applicable documents referred to below in this Section 2.4, and the Trustee shall thereupon authenticate and deliver such Securities to, or upon the order of, the Issuer (contained in the Issuer Order referred to below in this Section 2.4) or pursuant to such procedures acceptable to the Trustee and to such recipients as may be specified from time to time by an Issuer Order. The maturity date, original issue date, interest rate, if any, and any other terms of the Securities of such series shall be determined by or pursuant to such Issuer Order and procedures. If provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral instructions from the Issuer or its duly authorized agent, which instructions shall be promptly confirmed in writing. In authenticating the Securities of such series and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive (in the case of subparagraphs (2), (3) and (4) below only at or before the time of the first request of the Issuer to the Trustee to authenticate Securities of such series) and (subject to Section 6.1) shall be fully protected in relying upon, unless and until such documents have been superseded or revoked: -14- 24 (1) an Issuer Order requesting such authentication and setting forth delivery instructions if the Securities of such series are not to be delivered to the Issuer, provided that, with respect to Securities of a series subject to a Periodic Offering, (a) such Issuer Order may be delivered by the Issuer to the Trustee prior to the delivery to the Trustee of such Securities for authentication and delivery, (b) the Trustee shall authenticate and deliver Securities of such series for original issue from time to time, in an aggregate principal amount not exceeding the aggregate principal amount established for such series, pursuant to an Issuer Order or pursuant to procedures acceptable to the Trustee as may be specified from time to time by an Issuer Order, (c) the maturity date or dates, original issue date or dates, interest rate or rates, if any, and any other terms of Securities of such series shall be determined by an Issuer Order or pursuant to such procedures, (d) if provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to telecommunication or electronic instructions from the Issuer or its duly authorized agent or agents, and (e) after the original issuance of the first Security of such series to be issued, any separate request by the Issuer that the Trustee authenticate Securities of such series for original issuance will be deemed to be a certification by the Issuer that it is in compliance with all conditions precedent provided for in this Indenture relating to the authentication and delivery of such Securities; (2) the Board Resolution, Officer's Certificate or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the form or forms and terms of the Securities of such series were established; (3) an Officer's Certificate setting forth the form or forms and terms of the Securities stating that the form or forms and terms of the Securities have been established pursuant to Sections 2.1 and 2.3 and comply with this Indenture and covering such other matters as the Trustee may reasonably request; and (4) at the option of the Issuer, either an Opinion of Counsel, or a letter from legal counsel addressed to the Trustee permitting it to rely on an Opinion of Counsel, substantially to the effect that: -15- 25 (A) in the case of an underwritten offering, the Securities of such series are in the form or forms contemplated by this Indenture and have been duly and validly authorized as contemplated by this Indenture; (B) in the case of an offering that is not underwritten, the Securities of such series are in the form or forms contemplated by this Indenture, certain terms of the Securities of such series have been established pursuant to a Board Resolution, an Officer's Certificate or a supplemental indenture in accordance with this Indenture, and when such other terms as are to be established pursuant to procedures set forth in an Issuer Order shall have been established, all such terms will have been duly authorized by the Issuer and will have been established in conformity with the provisions of this Indenture; (C) when the Securities of such series have been executed by the Issuer and authenticated by the Trustee in accordance with the provisions of this Indenture and delivered against payment therefor by the purchasers thereof, they will be valid and legally binding obligations of the Issuer, enforceable in accordance with their respective terms, and will be entitled to the benefits of this Indenture; and (D) to such counsel's knowledge after the inquiry indicated therein, the execution and delivery by the Issuer of, and the performance by the Issuer of its obligations under, the Securities of such series will not contravene any provision of applicable law or the articles of incorporation or by-laws of the Issuer or any agreement or other instrument binding upon the Issuer or any of its Subsidiaries that is material to the Issuer and its Subsidiaries, considered as one enterprise, or any judgment, order or decree of any governmental agency or any court having jurisdiction over the Issuer or any Subsidiary, and no consent, approval or authorization of any governmental body or agency is required for the performance by the Issuer of its obligations under the Securities, except such as are specified and have been obtained and such as may be required by the securities or -16- 26 blue sky laws of the various states in connection with the offer and sale of the Securities. In rendering such opinions, such counsel may qualify any opinions as to enforceability by stating that such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium and other similar laws affecting the rights and remedies of creditors and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Such counsel may rely, as to all matters governed by the laws of jurisdictions other than the State of Texas and the federal law of the United States, upon opinions of other counsel (copies of which shall be delivered to the Trustee), who shall be counsel reasonably satisfactory to the Trustee, in which case the opinion shall state that such counsel believes that both such counsel and the Trustee are entitled so to rely. Such counsel may also state that, insofar as such opinion involves factual matters, such counsel has relied, to the extent such counsel deems proper, upon certificates of officers of the Issuer and its Subsidiaries and certificates of public officials. The Trustee shall have the right to decline to authenticate and deliver any Securities of any series under this Section 2.4 if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors or board of trustees, executive committee or a trust committee of directors or trustees or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders or would adversely affect the Trustee's own rights, duties or immunities under the Securities, this Indenture or otherwise. If the Issuer shall establish pursuant to Section 2.3 that the Securities of a series are to be issued in the form of one or more Global Securities, then the Issuer shall execute and the Trustee shall, in accordance with this Section 2.4 and the Issuer Order with respect to such series, authenticate and deliver one or more Global Securities that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Securities of such series to be issued in the form of Global Securities and not yet cancelled, (ii) shall be registered in the name of the Depositary for such Global Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions, and (iv) shall bear a legend substantially to the following effect: -17- 27 "Unless and until it is exchanged in whole or in part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary." Each Depositary designated pursuant to Section 2.3 must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation. Section 2.5 Execution of Securities. The Securities shall be signed on behalf of the Issuer by the chairman of the Board of Directors, the president, any vice president or the treasurer of the Issuer, under its corporate seal which may, but need not, be attested by its secretary or one of its assistant secretaries. Such signatures may be the manual or facsimile signatures of the present or any future such officers. The seal of the Issuer may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee. In case any officer of the Issuer who shall have signed any of the Securities shall cease to be such officer before the Security so signed shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Security nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security had not ceased to be such officer of the Issuer; and any Security may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Security, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such an officer. Section 2.6 Certificate of Authentication. Only such Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized signatories, or its Authenticating Agent, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. The execution of such certificate by the Trustee, or its Authenticating Agent, upon any Security -18- 28 executed by the Issuer shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture. Each reference in this Indenture to authentication by the Trustee includes authentication by an agent appointed pursuant to Section 6.14. Section 2.7 Denomination and Date of Securities; Payments of Interest. The Securities of each series shall be issuable in registered form in denominations established as contemplated by Section 2.3 or, with respect to the Securities of any series, if not so established, in denominations of $1,000 and any integral multiple thereof. The Securities of each series shall be numbered, lettered or other distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine with the approval of the Trustee, as evidenced by the execution and authentication thereof. Each Security shall be dated the date of its authentication. The Securities of each series shall bear interest, if any, from the date, and such interest, if any, shall be payable on the dates, established as contemplated by Section 2.3. The Person in whose name any Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest shall be paid to the Persons in whose names Outstanding Securities for such series are registered (a) at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the Holders of Securities not less than 15 days preceding such subsequent record date or (b) as determined by such other procedure as is mutually acceptable to the Issuer and the Trustee. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) for the Securities of any series shall mean the date specified as such in the terms of the Securities of such series established as contemplated by Section 2.3, or, if no such date is so established, if such interest payment date is the first day of a calendar month, the fifteenth day of the -19- 29 next preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month, whether or not such record date is a Business Day. Section 2.8 Registration, Transfer and Exchange. The Issuer will keep at the office of each Registrar for each series of Securities a register or registers in which, subject to such reasonable regulations as it may prescribe, it will provide for the registration of Securities of each series and the registration of transfer of Securities of such series. Each such register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. At all reasonable times such register or registers shall be open for inspection and available for copying by the Trustee. Upon due presentation for registration of transfer of any Security of any series at the office of any Registrar, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Security or Securities of the same series, maturity date, interest rate, if any, and original issue date in authorized denominations for a like aggregate principal amount. All Securities presented for registration of transfer shall (if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the Holder or his attorney duly authorized in writing. At the option of the Holder thereof, Securities of any series (other than a Global Security, except as set forth below) may be exchanged for a Security or Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Securities to be exchanged at the office of the Registrar. The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer of Securities. No service charge shall be made for any such transaction or for any exchange of Securities of any series as contemplated by the immediately preceding paragraph. The Issuer shall not be required to exchange or register a transfer of (a) any Securities of any series for a period of 15 days next preceding the first mailing or publication of notice of redemption of Securities of such series to be -20- 30 redeemed, (b) any Securities selected, called or being called for redemption, in whole or in part, except, in the case of any Security to be redeemed in part, the portion thereof not so to be redeemed or (c) any Security if the Holder thereof has exercised his right, if any, to require the Issuer to repurchase such Security in whole or in part, except the portion of such Security not required to be repurchased. Notwithstanding any other provision of this Section 2.8, unless and until it is exchanged in whole or in part for Securities in definitive registered form, a Global Security representing all or a part of the Securities of a series may not be transferred except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. If at any time the Depositary for any Securities of a series represented by one or more Global Securities notifies the Issuer that it is unwilling or unable to continue as Depositary for such Securities or if at any time the Depositary for such Securities shall no longer be eligible under Section 2.4, the Issuer shall appoint a successor Depositary with respect to such Securities. If a successor Depositary for such Securities is not appointed by the Issuer within 90 days after the Issuer receives such notice or becomes aware of such ineligibility, the Issuer's election pursuant to Section 2.3 that such Securities be represented by one or more Global Securities shall no longer be effective and the Issuer shall execute, and the Trustee, upon receipt of an Issuer Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive registered form, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such Securities in exchange for such Global Security or Securities. The Issuer may at any time and in its sole discretion determine that the Securities of any series issued in the form of one or more Global Securities shall no longer be represented by a Global Security or Securities. In such event the Issuer shall execute, and the Trustee, upon receipt of an Officer's Certificate for the authentication and delivery of definitive Securities of such series, shall authenticate and deliver, Securities of such series in definitive registered form, in any authorized denominations, in an aggregate principal amount -21- 31 equal to the principal amount of the Global Security or Securities representing such Securities, in exchange for such Global Security or Securities. If specified by the Issuer pursuant to Section 2.3 with respect to Securities represented by a Global Security, the Depositary for such Global Security may surrender such Global Security in exchange in whole or in part for Securities of the same series in definitive registered form on such terms as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer shall execute, and the Trustee shall authenticate and deliver, without service charge, (i) to the Person specified by such Depositary, a new Security or Securities of the same series, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and (ii) to such Depositary a new Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities authenticated and delivered pursuant to clause (i) above. Upon the exchange of a Global Security for Securities in definitive registered form in authorized denominations, such Global Security shall be cancelled by the Trustee or an agent of the Issuer or the Trustee. Securities in definitive registered form issued in exchange for a Global Security pursuant to this Section 2.8 shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Issuer or the Trustee. The Trustee or such agent shall deliver at its office such Securities to or as directed by the Persons in whose names such Securities are so registered. All Securities issued upon any transfer or exchange of Securities shall be valid and legally binding obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Section 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities. In case any temporary or definitive Security shall become mutilated, defaced or be destroyed, lost or -22- 32 stolen, the Issuer in its discretion may execute, and upon the written request of any officer of the Issuer, the Trustee, in the absence of notice to the Trustee that such Security has been acquired by a bona fide purchaser, shall authenticate and deliver a new Security of the same series, maturity date, interest rate, if any, and original issue date, bearing a number or other distinguishing symbol not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen. In every case the applicant for a substitute Security shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by the Trustee to indemnity and defend and to save each of the Trustee and the Issuer harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof and in the case of mutilation or defacement, shall surrender the Security to the Trustee or such agent. Upon the issuance of any substitute Security, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee or its agent) connected therewith. In case any Security which has matured or is about to mature or has been called for redemption in full or is being surrendered for conversion in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may instead of issuing a substitute Security, pay or authorize the payment of the same or the conversion of such Security (without surrender thereof except in the case of a mutilated or defaced Security), if the applicant for such payment or conversion shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to hold each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to the Trustee's satisfaction of the destruction, loss or theft of such Security and of the ownership thereof. Every substitute Security of any series issued pursuant to the provisions of this Section 2.9 by virtue of the fact that any such Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately -23- 33 with any and all other Securities of such series duly authenticated and delivered hereunder. All Securities shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement, payment or conversion of mutilated, defaced, destroyed, lost or stolen Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement, payment or conversion of negotiable instruments or other securities without their surrender. Section 2.10 Cancellation of Securities; Disposition Thereof. All Securities surrendered for payment, purchase, redemption, registration of transfer, exchange or conversion, or for credit against any payment in respect of a sinking or analogous fund, if surrendered to the Issuer or any agent of the Issuer or the Trustee or any agent of the Trustee, shall be delivered to the Trustee or its agent for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee or its agent shall dispose of cancelled Securities held by it, or hold such Securities in accordance with its standard retention policy, and deliver a certificate of disposition or retention to the Issuer. If the Issuer or its agent shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee or its agent for cancellation. Section 2.11 Temporary Securities. Pending the preparation of definitive Securities for any series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable in any authorized denomination, and substantially in the form of the definitive Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Issuer with the concurrence of the Trustee as evidenced by the execution and authentication thereof. Temporary Securities may contain such references to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Issuer shall execute and -24- 34 shall furnish definitive Securities of such series and thereupon temporary Securities of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2 and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series an equal aggregate principal amount of definitive Securities of the same series having authorized denominations. Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series, unless otherwise established pursuant to Section 2.3. Section 2.12 Computation of Interest. Except as otherwise specified as contemplated by Section 2.1 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of 12 30-day months. ARTICLE THREE COVENANTS OF THE ISSUER Section 3.1 Payment of Principal and Interest. The Issuer covenants and agrees that it will duly and punctually pay or cause to be paid the principal of and interest, if any, on each of the Securities at the place, at the respective times and in the manner provided in the Securities. Section 3.2 Office for Notices and Payments, etc. So long as any of the Securities are Outstanding, the Issuer will maintain in each Place of Payment, an office or agency where the Securities may be presented for payment ("Paying Agent"), an office or agency where the Securities may be presented for registration of transfer and for exchange ("Registrar") and, if applicable, an office or agency where the Securities may be presented for conversion ("Conversion Agent") as in this Indenture provided, and an office or agency where notices and demands to or upon the Issuer in respect of the Securities or of this Indenture may be served. In case the Issuer shall at any time fail to maintain any such office or agency, or shall fail to give notice to the Trustee of any change in the location thereof, presentation may be made and notice and demand may be served in respect of the Securities or of this Indenture at the Corporate Trust Office. The Issuer hereby initially designates the Corporate Trust Office for each such purpose and appoints the Trustee as Registrar, Paying Agent, Conversion Agent and as the agent upon whom notices and demands may be served with respect to the Securities. -25- 35 Section 3.3 No Interest Extension. In order to prevent any accumulation of claims for interest after maturity thereof, the Issuer will not directly or indirectly extend or consent to the extension of the time for the payment of any claim for interest on any of the Securities and will not directly or indirectly be a party to or approve any such arrangement by the purchase or funding of said claims or in any other manner; provided, however, that this Section 3.3 shall not apply in any case where an extension shall be made pursuant to a plan proposed by the Issuer to the Holders of all Securities of any series then Outstanding. Section 3.4 Appointments to Fill Vacancies in Trustee's Office. The Issuer, whenever necessary to avoid or fill a vacancy in the office of the Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee hereunder. Section 3.5 Provision as to Paying Agent. (a) If the Issuer shall appoint a Paying Agent other than the Trustee, it will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 3.5, (1) that it will hold all sums held by it as such agent for the payment of the principal of or interest, if any, on the Securities (whether such sums have been paid to it by the Issuer or by any other obligor on the Securities) in trust for the benefit of the Holders of the Securities or the Trustee; and (2) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Securities) to make any payment of the principal of or interest, if any, on the Securities when the same shall be due and payable; and (3) that it will, at any time during the continuance of any such failure, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. (b) If the Issuer shall act as its own Paying Agent, it will, on or before each due date of the principal of or interest, if any, on the Securities, set aside, segregate and hold in trust for the benefit of the Holders of the Securities a sum sufficient to pay such principal or interest, if any, so becoming due and will notify the Trustee of any failure to take such action and of any failure by the Issuer (or by any other -26- 36 obligor under the Securities) to make any payment of the principal of or interest, if any, on the Securities when the same shall become due and payable. (c) Anything in this Section 3.5 to the contrary notwithstanding, the Issuer may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by it, or any Paying Agent hereunder, as required by this Section 3.5, such sums to be held by the Trustee upon the trusts herein contained. (d) Anything in this Section 3.5 to the contrary notwithstanding, any agreement of the Trustee or any Paying Agent to hold sums in trust as provided in this Section 3.5 is subject to Sections 10.3 and 10.4. (e) Whenever the Issuer shall have one or more Paying Agents, it will, on or before each due date of the principal of or interest, if any, on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal or interest, if any, so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal or interest, if any, and (unless such Paying Agent is the Trustee) the Issuer will promptly notify the Trustee of its action or failure so to act. Section 3.6 Corporate Existence. Subject to, and except as otherwise provided in, Article Nine, the Issuer will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, and franchise to be a corporation, and will remain qualified as a foreign corporation in good standing in each jurisdiction wherein the ownership of its assets or the conduct of its business requires it to he so qualified, except where the failure to so qualify would not have a material adverse effect on the Issuer and its Subsidiaries taken as a whole. Section 3.7 Maintenance of Properties. The Issuer will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Issuer may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Issuer from discontinuing the operation or maintenance of -27- 37 any of such properties if such discontinuance is, in the judgment of the Issuer, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders. Section 3.8 Payment of Taxes and Other Claims. The Issuer will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Issuer or any Subsidiary or upon the income, profits or property of the Issuer or any Subsidiary, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Issuer or any Subsidiary; provided, however, that the Issuer shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. Section 3.9 Prohibition on Incurrence of Senior Subordinated Debt. The Issuer will not incur or suffer to exist Indebtedness that is or purports to be, pursuant to its terms or the terms of any agreement relating thereto, senior in right of payment to the Securities and subordinate or junior in right of payment to any other Indebtedness of the Issuer; provided that no Indebtedness of the Issuer shall be deemed to be subordinate to any other Indebtedness of the Issuer solely by virtue of any such other Indebtedness being secured or otherwise having the benefit of any lien or security interest. ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE Section 4.1 Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders. The Issuer and any other obligor on the Securities covenant and agree that they will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Securities of each series as of a date not more than 15 days prior to the time such information is furnished: (a) semiannually and not more than 15 days after each March 1 and September 1; and -28- 38 (b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Issuer of any such request; provided that if and so long as the Trustee shall be the Registrar for such series, such List shall not be required to be furnished. Section 4.2 Preservation and Disclosure of Securityholders Lists. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders of each series of Securities (i) contained in the most recent list furnished to it as provided in Section 4.1, and (ii) received by it in the capacity of Registrar or Paying Agent for such series, if so acting. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished. (b) In case three or more Holders of Securities (hereinafter referred to as "applicants") apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Securities of a particular series (in which case the applicants must all hold Securities of such series) or with Holders of all Securities with respect to their rights under this Indenture or under such Securities, and such application is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either (i) afford to such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.2, or (ii) inform such applicants as to the approximate number of Holders of Securities of such series or of all Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee, in accordance with the provisions of subsection (a) of this Section 4.2, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application. -29- 39 If the Trustee shall elect not to afford to such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Securityholder of such series or all Holders of Securities, as the case may be, whose name and address appears in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.2, a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders of Securities of such series or of all Securities, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met, and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Each and every Holder of Securities, by receiving and holding the same, agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with the provisions of subsection (b) of this Section 4.2, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under such subsection (b). Section 4.3 Reports by the Issuer. The Issuer covenants: (a) to file with the Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of -30- 40 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 Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Issuer is not required to file information, documents or reports pursuant to either of such Sections, then to file with the Trustee and the Commission, in accordance with rules and 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 Securities Exchange Act of 1934 in respect of a debt security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (b) to file with the Trustee and the Commission, in accordance with rules and regulations presented from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations; (c) to transmit by mail to the Holders of Securities within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Section 4.4(c), such summaries of any information, documents and reports required to be filed by the Issuer pursuant to subsections (a) and (b) of this Section 4.3 as may be required to be transmitted to such Holders by rules and regulations prescribed from time to time by the Commission; and (d) furnish to the Trustee, not less than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his knowledge of the Issuer's compliance with all conditions and covenants under this Indenture. For purposes of this subsection (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. Section 4.4 Reports by the Trustee. (a) Within 60 days after September 15 of each year commencing with the year -31- 41 1995, the Trustee shall transmit by mail to the Holders of Securities, as provided in subsection (c) of this Section 4.4, a brief report dated as of such September 15 with respect to any of the following events which may have occurred within the last 12 months (but if no such event has occurred within such period, no report need be transmitted): (i) any change to its eligibility under Section 6.9 and its qualification under Section 6.8; (ii) the creation of, or any material change to, a relationship specified in paragraph (i) through (x) of Section 6.8(c); (iii) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities of any series, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of all Securities Outstanding on the date of such report; (iv) the amount, interest rate, if any, and maturity date of all other indebtedness owing by the Issuer (or by any other obligor on the Securities) to the Trustee in its individual capacity on the date of such report, with a brief description of any property held as collateral security therefor, except any indebtedness based upon a creditor relationship arising in any manner described in Section 6.13(b)(2), (3), (4) or (6); (v) any change to the property and funds, if any, physically in the possession of the Trustee (as such) on the date of such report; (vi) any additional issue of Securities which the Trustee has not previously reported; and (vii) any action taken by the Trustee in the performance of its duties under this Indenture which it has not previously reported and which in its opinion materially affects the Securities, except action in respect of a default, notice of which has -32- 42 been or is to be withheld by it in accordance with the provisions of Section 5.8. (b) The Trustee shall transmit to the Securityholders of each series, as provided in subsection (c) of this Section 4.4, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee, as such, since the date of the last report transmitted pursuant to the provisions of subsection (a) of this Section 4.4 (or if no such report has yet been so transmitted, since the date of this Indenture) for the reimbursement of which it claims or may claim a lien or charge prior to that of the Securities of such series on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this subsection (b), except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of all Securities Outstanding at such time, such report to be transmitted within 90 days after such time. (c) Reports pursuant to this Section shall be transmitted by mail: (i) to all Holders of Securities, as the names and addresses of such Holders appear upon the registry books of the Issuer; and (ii) to all other Persons to whom such reports are required to be transmitted pursuant to Section 313(c) of the Trust Indenture Act of 1939. (d) A copy of each such report shall, at the time of such transmission to Securityholders, be furnished to the Issuer and be filed by the Trustee with each stock exchange upon which the Securities of any applicable series are listed and also with the Commission. The Issuer agrees to notify the Trustee with respect to any series when and as the Securities of such series become admitted to trading on any national securities exchange. ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT Section 5.1 Events of Default. "Event of Default", wherever used herein with respect to Securities of any series, -33- 43 means any one or more of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article Fourteen or otherwise), unless it is either inapplicable to a particular series or is specifically deleted or modified in or pursuant to the Board Resolutions or supplemental indenture establishing such series of Securities or in the form of Security for such series: (a) default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or (b) default in the payment of the principal of any of the Securities of such series as and when the same shall become due and payable either at maturity, upon redemption, by declaration or otherwise; or (c) default in the payment or satisfaction of any sinking fund or other purchase obligation with respect to Securities of such series, as and when such obligation shall become due and payable; or (d) failure on the part of the Issuer duly to observe or perform any other of the covenants or agreements on the part of the Issuer in the Securities of such series or in this Indenture continued for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Issuer by the Trustee by registered mail, or to the Issuer and the Trustee by the Holders of at least 25 percent in aggregate principal amount of the Securities of such series then Outstanding; or (e) without the consent of the Issuer a court having jurisdiction shall enter an order for relief with respect to the Issuer under the Bankruptcy Code or without the consent of the Issuer a court having jurisdiction shall enter a judgment, order or decree adjudging the Issuer a bankrupt or insolvent, or enter an order for relief for reorganization, arrangement, adjustment or composition of or in respect of the Issuer under the Bankruptcy Code or applicable state insolvency law and the continuance of any such judgment, order or decree is unstayed and in effect for a period of 60 consecutive days; or -34- 44 (f) the Issuer shall institute proceedings for entry of an order for relief with respect to the Issuer under the Bankruptcy Code or for an adjudication of insolvency, or shall consent to the institution of bankruptcy or insolvency proceedings against it, or shall file a petition seeking, or seek or consent to reorganization, arrangement, composition or relief under the Bankruptcy Code or any applicable state law, or shall consent to filing of such petition or to the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator or similar official of the Issuer or of substantially all of its property, or the Issuer shall make a general assignment for the benefit of creditors as recognized under the Bankruptcy Code; or (g) default under any bond, debenture, note or other evidence of Indebtedness for money borrowed by the Issuer or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Issuer, whether such Indebtedness exists on the date hereof or shall hereafter be created, which default shall have resulted in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, or any default in payment of such Indebtedness (after the expiration of any applicable grace periods and the presentation of any debt instruments, if required), if the aggregate amount of all such Indebtedness which has been so accelerated and with respect to which there has been such a default in payment shall exceed $5,000,000, without each such default and acceleration having been rescinded or annulled within a period of 30 days after there shall have been given to the Issuer by the Trustee by registered mail, or to the Issuer and the Trustee by the Holders of at least 25 percent in aggregate principal amount of the Securities of such series then Outstanding, a written notice specifying each such default and requiring the Issuer to cause each such default and acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder; or (h) any other Event of Default provided with respect to the Securities of such series. If an Event of Default with respect to Securities of any series then Outstanding occurs and is continuing, then and -35- 45 in each and every such case, unless the principal of all of the Securities of such series shall have already become due and payable, either the Trustee or the Holders of not less than 25 percent in aggregate principal amount of the Securities of such series then Outstanding, by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the unpaid principal amount (or, if the Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all the Securities of such series and the interest, if any, accrued thereon to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Securities of such series contained to the contrary notwithstanding. This provision, however, is subject to the condition that, if at any time after the unpaid principal amount (or such specified amount) of the Securities of such series shall have been so declared due and payable and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest, if any, upon all of the Securities of such series and the principal of any and all Securities of such series which shall have become due otherwise than by acceleration (with interest on overdue installments of interest, if any, to the extent that payment of such interest is enforceable under applicable law and on such principal at the rate borne by the Securities of such series to the date of such payment or deposit) and the reasonable compensation, disbursements, expenses and advances of the Trustee, its agents, attorneys and counsel, and any and all defaults under this Indenture, other than the nonpayment of such portion of the principal amount of and accrued interest, if any, on Securities of such series which shall have become due by acceleration, shall have been cured or shall have been waived in accordance with Section 5.7 or provision deemed by the Trustee to be adequate shall have been made therefor -- then and in every such case the Holders of a majority in aggregate principal amount of the Securities of such series then Outstanding, by written notice to the Issuer and to the Trustee, may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. If any Event of Default with respect to the Issuer specified in Section 5.1(e) or 5.1(f) occurs, the unpaid principal amount (or, if the Securities of any series then Outstanding are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of each such series) and accrued interest on all Securities of each series then Outstanding shall ipso facto become and be immediately due and payable -36- 46 without any declaration or other act by the Trustee or any Securityholder. If the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Issuer, the Trustee and the Securityholders shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Securityholders shall continue as though no such proceeding had been taken. Except with respect to an Event of Default pursuant to Section 5.1(a), (b) or (c), the Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to a Responsible Officer by the Issuer, a Paying Agent or any Securityholder. Section 5.2 Payment of Securities on Default; Suit Therefor. The Issuer covenants that (a) if default shall be made in the payment of any installment of interest upon any of the Securities of any series then Outstanding as and when the same shall become due and payable, and such default shall have continued for a period of 30 days, or (b) if default shall be made in the payment of the principal of any of the Securities of such series as and when the same shall have become due and payable, whether at maturity of the Securities of such series or upon redemption or by declaration or otherwise -- then, upon demand of the Trustee, the Issuer will pay to the Trustee, for the benefit of the Holders of the Securities, the whole amount that then shall have become due and payable on all such Securities of such series for principal or interest, if any, or both, as the case may be, with interest upon the overdue principal and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest, if any, at the rate borne by the Securities of such series; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation, expenses, disbursements and advances of the Trustee, its agents, attorneys and counsel, and any expenses or liabilities incurred by the Trustee hereunder other than through its negligence or bad faith. If the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for -37- 47 the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Issuer or any other obligor on the Securities of such series and collect in the manner provided by law out of the property of the Issuer or any other obligor on the Securities of such series, wherever situated, the moneys adjudged or decreed to be payable. If there shall be pending proceedings for the bankruptcy or for the reorganization of the Issuer or any other obligor on the Securities of any series then Outstanding under any bankruptcy, insolvency or other similar law now or hereafter in effect, or if a receiver or trustee or similar official shall have been appointed for the property of the Issuer or such other obligor, or in the case of any other similar judicial proceedings relative to the Issuer or other obligor upon the Securities of such series, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of the Securities of such series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.2, shall be entitled and empowered by intervention in such proceedings or otherwise to file and prove a claim or claims for the whole amount of principal and interest, if any, owing and unpaid in respect of the Securities of such series, and, in case of any judicial proceedings, to 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 of the Securityholders allowed in such judicial proceedings relative to the Issuer or any other obligor on the Securities of such series, its or their creditors, or its or their property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses, and any receiver, assignee or trustee or similar official in bankruptcy or reorganization is hereby authorized by each of the Securityholders to make such payments to the Trustee, and, if the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee any amount due it for compensation and expenses, including counsel fees incurred by it up to the date of such distribution. To the extent that such payment of reasonable compensation, expenses and counsel fees out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, moneys, securities and other property which the Holders of the Securities of such series may be entitled to receive in such proceedings, whether in liquidation -38- 48 or under any plan of reorganization or arrangement or otherwise. All rights of action and of asserting claims under this Indenture, or under any of the Securities, may be enforced by the Trustee without the possession of any of the Securities, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be for the ratable benefit of the Holders of the Securities of the series in respect of which such judgment has been recovered. Section 5.3 Application of Moneys Collected by Trustee. Any moneys collected by the Trustee pursuant to Section 5.2 with respect to Securities of any series then Outstanding shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Securities of such series, and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid: FIRST: To the payment of costs and expenses of collection and reasonable compensation to the Trustee, its agents, attorneys and counsel, and of all other expenses and liabilities incurred, and all advances made, by the Trustee pursuant to Section 6.6 except as a result of its negligence or bad faith; SECOND: If the principal of the Outstanding Securities of such series shall not have become due and be unpaid, to the payment of interest, if any, on the Securities of such series, in the order of the maturity of the installments of such interest, if any, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest, if any, at the rate borne by the Securities of such series, such payment to be made ratably to the Persons entitled thereto; THIRD: If the principal of the Outstanding Securities of such series shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Securities of such series for principal and interest, if any, with interest on the overdue principal and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest, if any, at the rate borne by the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amounts so due and unpaid upon the Securities of such series, then to the payment of such principal and interest, if any, without -39- 49 preference or priority of principal over interest, or of interest over principal, or of any installment of interest, or of any other installment of interest, or of any Security over any other Security, ratably to the aggregate of such principal and accrued and unpaid interest; and FOURTH: To the payment of any surplus then remaining to the Issuer, its successors or assigns, or to whomsoever may be lawfully entitled to receive the same. No claim for interest which in any manner at or after maturity shall have been transferred or pledged separate or apart from the Securities to which it relates, or which in any manner shall have been kept alive after maturity by an extension (otherwise than pursuant to an extension made pursuant to a plan proposed by the Issuer to the Holders of all Securities of any series then Outstanding), purchase, funding or otherwise by or on behalf or with the consent or approval of the Issuer shall be entitled, in case of a default hereunder, to any benefit of this Indenture, except after prior payment in full of the principal of all Securities of any series then Outstanding and of all claims for interest not so transferred, pledged, kept alive, extended, purchased or funded. Section 5.4 Proceedings by Securityholders. No Holder of any Securities of any series then Outstanding shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or the Securities or for the appointment of a receiver or trustee or similar official, or for any other remedy hereunder or thereunder, unless such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless the Holders of not less than 25 percent in aggregate principal amount of the Securities of such series then Outstanding shall have made written request to the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding; it being understood and intended, and being expressly covenanted by the Holder of every Security of such series with every other taker and Holder and the Trustee, that no one or more Holders of Securities of such series shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture or of the Securities to affect, disturb or prejudice the rights of any other Holder of such -40- 50 Securities of such series, or to obtain or seek to obtain priority over or preference as to any other such Holder, or to enforce any right under this Indenture or the Securities, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of such series. Notwithstanding any other provisions in this Indenture, but subject to Article Fourteen, the right of any Holder of any Security to receive payment of the principal of and interest, if any, on such Security, on or after the respective due dates expressed in such Security, or, if applicable, to convert such Security as provided in Article Thirteen, or to institute suit for the enforcement of any such payment on or after such respective dates or for the enforcement of any such right to convert shall not be impaired or affected without the consent of such Holder. Section 5.5 Proceedings by Trustee. In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceedings in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. Section 5.6 Remedies Cumulative and Continuing. All powers and remedies given by this Article Five to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the Securityholders, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any Securityholder to exercise any right or power accruing upon any default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 5.4, every power and remedy given by this Article Five or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders. Section 5.7 Direction of Proceedings; Waiver of Defaults by Majority of Securityholders. The Holders of a majority in aggregate principal amount of the Securities of any -41- 51 series then Outstanding shall 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 with respect to Securities of such series; provided, however, that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee shall determine upon advice of counsel that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, its executive committee, or a trust committee of directors or Responsible Officers or both shall determine that the action or proceeding so directed would involve the Trustee in personal liability. The Holders of a majority in aggregate principal amount of the Securities of any series then Outstanding may on behalf of the Holders of all of the Securities of such series waive any past default or Event of Default hereunder and its consequences except a default in the payment of interest, if any, on, or the principal of, the Securities of such series. The provisions of Section 316(a)(1)(B) of the Trust Indenture Act of 1939 are expressly excluded herefrom. Upon any such waiver the Issuer, the Trustee and the Holders of the Securities of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Whenever any default or Event of Default hereunder shall have been waived as permitted by this Section 5.7, said default or Event of Default shall for all purposes of the Securities and this Indenture be deemed to have been cured and to be not continuing. Section 5.8 Notice of Defaults. The Trustee shall, within 90 days after the occurrence of a default, with respect to Securities of any series then Outstanding, mail to all Holders of Securities of such series, as the names and the addresses of such Holders appear upon the Security register, notice of all defaults known to the Trustee with respect to such series, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purpose of this Section 5.8 being hereby defined to be the events specified in clauses (a), (b), (c), (d), (e), (f), (g) and (h) of Section 5.1, not including periods of grace, if any, provided for therein and irrespective of the giving of the written notice specified in said clause (d) or (g) but in the case of any default of the character specified in said clause (d) or (g) no such notice to Securityholders shall be given until at least 60 days after the giving of written notice thereof to the Issuer pursuant to said clause (d) or (g), as the case may be); provided, however, that, except in the case of default in the payment of the principal of or interest, if any, on any of the -42- 52 Securities, or in the payment or satisfaction of any sinking fund or other purchase obligation, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or Responsible Officers or both of the Trustee in good faith determine that the withholding of such notice is in the best interests of the Securityholders. Section 5.9 Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, 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, the filing by any party litigant in such suit of an undertaking to pay the cost of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders, holding in the aggregate more than ten percent in principal amount of the Securities of any series then Outstanding, or to any suit instituted by any Securityholders for the enforcement of the payment of the principal of, or interest, if any, on any Security against the Issuer on or after the due date expressed in such Security or for the enforcement of the right to convert any Security in accordance with Article Thirteen. The provisions of Section 315(e) of the Trust Indenture Act of 1939 are expressly excluded herefrom. Section 5.10 Trustee May Enforce Claim Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceedings relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 5.11 Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, -43- 53 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 Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX CONCERNING THE TRUSTEE Section 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default. With respect to the Holders of any series of Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Securities of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Securities of a series has occurred (which has not been cured or waived) the Trustee shall exercise with respect to such series of Securities such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that (a) prior to the occurrence of an Event of Default with respect to the Securities of any series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred: (i) the duties and obligations of the Trustee with respect to the Securities of any series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance -44- 54 of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 5.7 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. Section 6.2 Certain Rights of the Trustee. Subject to Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate or any other certificate, statement, instrument, -45- 55 opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officer's Certificate or Issuer Order (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer; (c) the Trustee may consult with counsel and any written advice or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in reliance thereon in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture (including, without limitation, pursuant to Section 5.1), unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Securities of all series affected then Outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a -46- 56 condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor Trustee, shall be repaid by the Issuer upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. Section 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture, of the Securities or of any prospectus used to sell the Securities. The Trustee shall not be accountable for the use or application by the Issuer of any of the Securities or of the proceeds thereof. Section 6.4 Trustee and Agents May Hold Securities; Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not the Trustee or such agent and, subject to Sections 6.8 and 6.13, may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent. Section 6.5 Moneys Held by Trustee. Subject to the provisions of Section 10.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder. Section 6.6 Compensation and Indemnification of Trustee and Its Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and -47- 57 agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim or liability in the premises. The obligations of the Issuer under this Section 6.6 to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder, shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee and shall not be subordinate to the payment of the Senior Indebtedness pursuant to Article Fourteen. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities, and the Securities are hereby subordinated to such senior claim. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1 or in connection with Article Five hereof, the expenses (including the reasonable fees and expenses of its counsel) and the compensation for the services in connection therewith are intended to constitute expenses of administration under any bankruptcy law. Section 6.7 Right of Trustee to Rely on Officer's Certificate, etc. Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officer's Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. -48- 58 Section 6.8 Qualification of Trustee; Conflicting Interests. (a) If the Trustee has or shall acquire any conflicting interest (as defined in subsection (c)), then within 90 days after ascertaining that it has such conflicting interest, and if the default (as defined in subsection (c)) to which such conflicting interest relates has not been cured or duly waived or otherwise eliminated before the end of such 90-day period, the Trustee shall either eliminate such conflicting interest or, except as otherwise provided below, resign, and the Issuer shall take prompt steps to have a successor appointed in the manner provided in Section 6.10. (b) If the Trustee shall fail to comply with the provisions of subsection (a), the Trustee shall, within 10 days after the expiration of such 90-day period, transmit notice of such failure to the Securityholders in the manner and to the extent provided in Section 4.4 and, subject to the provisions of Section 5.9, unless the Trustee's duty to resign is stayed as provided below, any Securityholder who has been a bona fide holder of Securities for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee, and the appointment of a successor, if the Trustee fails, after written request thereof by such Securityholder, to comply with the provisions of subsection (a). Except in the case of a default in the payment of the principal of or interest on any Security, or in the payment of any sinking or purchase fund installment, the Trustee shall not be required to resign as provided by this Section 6.8 if the Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that (i) the default under this Indenture may be cured or waived during a reasonable period and under the procedures described in such application, and (ii) a stay of the Trustee's duty to resign will not be inconsistent with the interests of Holders of the Securities. The filing of such an application shall automatically stay the performance of the duty to resign until the Commission orders otherwise. Any resignation of the Trustee shall become effective only upon the appointment of a successor trustee in accordance with the provisions of Section 6.10 and such successor's acceptance of such an appointment. -49- 59 (c) For the purposes of this Section 6.8, the Trustee shall be deemed to have a conflicting interest with respect to Securities of any series if the Securities of such series are in default (as determined in accordance with the provisions of Section 5.1, but exclusive of any period of grace or requirement of notice) and (i) the Trustee is trustee under this Indenture with respect to the Outstanding Securities of any other series or is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Issuer are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Securities issued under this Indenture; provided that there shall be excluded from the operation of this paragraph, this Indenture with respect to the Securities of any other series and there shall also be so excluded any other indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Issuer are outstanding if (x) this Indenture is and, if applicable, this Indenture and any series issued pursuant to this Indenture and such other indenture or indentures are wholly unsecured and rank equally, and such other indenture or indentures are hereafter qualified under the Trust Indenture Act of 1939, unless the Commission shall have found and declared by order pursuant to Section 305(b) or Section 307(c) of the Trust Indenture Act of 1939, that differences exist between the provisions of this Indenture with respect to Securities of such series and one or more other series, or the provisions of this Indenture and the provisions of such other indenture or indentures which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to Securities of such series and such other series, or under this Indenture or such other indenture or indentures, or (y) the Issuer shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that trusteeship under this Indenture with respect to Securities of such series and such other series, or under this Indenture and such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to -50- 60 disqualify the Trustee from acting as such under this Indenture with respect to Securities of such series and such other series, or under this Indenture and such other indentures; (ii) the Trustee or any of its directors or executive officers is an underwriter for the Issuer; (iii) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with an underwriter for the Issuer; (iv) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee, or representative of the Issuer, or of an underwriter (other than the Trustee itself) for the Issuer who is currently engaged in the business of underwriting, except that (x) one individual may be a director or an executive officer, or both, of the Trustee and a director or an executive officer, or both, of the Issuer, but may not be at the same time an executive officer of both the Trustee and the Issuer; (y) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director or an executive officer, or both, of the Trustee and a director of the Issuer, and (z) the Trustee may be designated by the Issuer or by any underwriter for the Issuer to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of subsection (c)(i) of this Section, to act as trustee, whether under an indenture or otherwise; (v) 10% or more of the voting securities of the Trustee is beneficially owned either by the Issuer or by any director, partner or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Issuer or by any director, partner, or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (vi) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which -51- 61 is in default, (x) 5% or more of the voting securities or 10% or more of any other class of security of the Issuer, not including the Securities issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (y) 10% or more of any class of security of an underwriter for the Issuer; (vii) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default, 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Issuer; (viii) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default, 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Issuer; (ix) the Trustee owns on the date of default (as determined in accordance with the provisions of Section 5.1, but exclusive of any period of grace or requirement of notice) or on any anniversary of such default while such default remains outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under paragraphs (vi), (vii) or (viii) of this subsection. As to any such securities of which the Trustee acquired ownership through becoming executor, administrator, or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after the dates of any such default and annually in each succeeding year that the Securities remain in default, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such dates. If the Issuer fails to make payment in full of principal -52- 62 of or interest on any of the Securities when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such Securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such Securities so held by the Trustee, with sole or joint control over such Securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of paragraphs (vi), (vii) and (viii) of this subsection; or (x) except under the circumstances described in paragraphs (1), (3), (4), (5) or (6) of Section 6.13(b), the Trustee shall be or shall become a creditor of the Issuer. For purposes of subsection (c)(i), the term "series of securities" or "series" means a series, class or group of securities issuable under an indenture pursuant to whose terms holders of one such series may vote to direct the Trustee, or otherwise take action pursuant to a vote of such holders, separately from holders of another such series: provided, that "series of securities" or "series" shall not include any series of securities issuable under an indenture if all such series rank equally and are wholly unsecured. The specification of percentages in subsections (c)(v) to (ix), inclusive, of this Section 6.8 shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of subsections (c)(iii) or (vii) of this Section 6.8. For the purposes of subsections (c)(vi), (vii), (viii) and (ix) of this Section 6.8, only, (i) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies, or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; -53- 63 (ii) an obligation shall be deemed to be in default when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (iii) the Trustee shall not be deemed to be the owner or holder of (x) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in clause (ii) above, or (y) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (z) any security which it holds as agent for collection, or as custodian, escrow agent, or depositary, or in any similar representative capacity. Except as provided above, the word "security" or "securities" as used in this Section 6.8 shall mean any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas or other mineral rights, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. (d) For purposes of this Section 6.8: (i) the term "underwriter" when used with reference to the Issuer shall mean every person who, within a one year period prior to the time as of which the determination is made, was an underwriter of any security of the Issuer outstanding at the time of the determination; (ii) the term "director" shall mean any director of a corporation or any individual performing similar functions with respect to any organization whether incorporated or unincorporated; (iii) the term "person" shall mean an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof; as used in this paragraph, the term "trust" -54- 64 shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security; (iv) the term "voting security" shall mean any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person; (v) the term "Issuer" shall mean any obligor upon the Securities; and (vi) the term "executive officer" shall mean the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated, but shall not include the chairman of the board of directors. (e) The percentage of voting securities and other securities specified in this Section 6.8 shall be calculated in accordance with the following provisions: (i) a specified percentage of the voting securities of the Trustee, the Issuer or any other person referred to in this Section 6.8 (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person; (ii) a specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding; (iii) the term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if -55- 65 relating to capital shares, and the number of units if relating to any other kind of security; (iv) the term "outstanding" means issued and not held by or for the account for the Issuer; the following securities shall not be deemed outstanding within the meaning of this definition: (A) securities of an issuer held in a sinking fund relating to securities of the Issuer of the same class; (B) securities of an issuer held in a sinking fund relating to another class of securities of the Issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (C) securities pledged by the Issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (D) securities held in escrow if placed in escrow by the issuer thereof; provided, that any voting securities of an issuer shall be deemed outstanding if any person other than the Issuer is entitled to exercise the voting rights thereof; and (v) a security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. Section 6.9 Persons Eligible for Appointment as Trustee. The Trustee for each series of Securities hereunder -56- 66 shall at all times be a corporation organized and doing business under the laws of the United States of America or of any state or the District of Columbia having a combined capital and surplus of at least $50,000,000 and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal, state or District of Columbia authority, or a corporation or other Person permitted to act as trustee by the Commission. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 6.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. No obligor upon the Securities or any Affiliate of such obligor shall serve as Trustee upon the Securities. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.9, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.10. Section 6.10 Resignation and Removal; Appointment of Successor Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving written notice of resignation to the Issuer and by mailing notice of such resignation to the Holders of then Outstanding Securities of each series affected at their addresses as they shall appear on the registry books. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide Holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 5.9, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur: -57- 67 (i) the Trustee shall fail to comply with the provisions of Section 6.8 with respect to any series of Securities after written request therefor by the Issuer or by any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.9 and shall fail to resign after written request therefor by the Issuer or by any such Securityholder; or (iii) the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, the Issuer may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 5.9, any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Securities of each series then Outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to the Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders. (d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.10 shall become effective upon -58- 68 acceptance of appointment by the successor trustee as provided in Section 6.11. Section 6.11 Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 6.10 shall execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.6. If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Issuer, the predecessor trustee and each successor trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor trustee with respect to the Securities of any series as to which the predecessor trustee is not retiring shall continue to be vested in the predecessor trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures. No successor trustee with respect to any series of Securities shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor -59- 69 trustee shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9. Upon acceptance of appointment by any successor trustee as provided in this Section 6.11, the Issuer shall give notice thereof to the Holders of Securities of each series affected, by mailing such notice to such Holders at their addresses as they shall appear on the registry books. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Issuer fails to give such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be given at the expense of the Issuer. Section 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities of any series 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 of any series 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 Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; provided that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities of any series in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. Section 6.13 Preferential Collection of Claims Against the Issuer. (a) Subject to the provisions of this Section, if the Trustee shall be or shall become a creditor, -60- 70 directly or indirectly, secured or unsecured, of the Issuer within three months prior to a default, as defined in subsection (c) of this Section 6.13, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Securities and the holders of other indenture securities (as defined in this Section 6.13): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three month period and valid as against the Issuer and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in subsection (a)(2) of this Section, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Issuer upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three month period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Issuer and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any Person (other than the Issuer) who is liable thereon, (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third Person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Code or applicable state law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three month period; -61- 71 (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three month period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in subsection (c) of this Section would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in such paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three month period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Securityholders and the holders of other indenture securities in such manner that the Trustee, such Securityholders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Code or applicable state law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Issuer of the funds and property in such special account and before crediting to the respective claims of the Trustee, such Securityholders and the holders of other indenture securities dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Code or applicable state law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from -62- 72 such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Code or applicable state law, whether such distribution is made in cash, securities or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceeding for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee, such Securityholders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee, such Securityholders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee who has resigned or been removed after the beginning of such three month period shall be subject to the provisions of this subsection (a) as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three month period, it shall be subject to the provisions of this subsection (a) if and only if the following conditions exist: (i) the receipt of property or reduction of claim which would have given rise to the obligation to account, if such Trustee had continued as trustee, occurred after the beginning of such three month period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. (b) There shall be excluded from the operation of this Section 6.13 a creditor relationship arising from: -63- 73 (1) the ownership or acquisition of securities issued under any indenture or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advance and of the circumstances surrounding the making thereof is given to the Securityholders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in subsection (c)(2) of this Section 6.13; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Issuer; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in subsection (c)(3) of this Section 6.13. (c) As used in this Section 6.13: (1) the term "default" shall mean any failure to make payment in full of the principal of or interest on any of the Securities when and as such principal or interest becomes due and payable; (2) the term "cash transaction" shall mean any transaction in which full payment for goods or securities sold is made within seven days after delivery -64- 74 of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (3) the term "self-liquidating paper" shall mean any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Issuer for the purpose of financing the purchase, processing, manufacture, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Issuer arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation; and (4) the term "Issuer" shall mean any obligor upon the Securities. Section 6.14 Appointment of Authenticating Agent. As long as any Securities of a series remain Outstanding, the Trustee may, by an instrument in writing, appoint with the approval of the Issuer an authenticating agent (the "Authenticating Agent") which shall be authorized to act on behalf of the Trustee to authenticate Securities, including Securities issued upon exchange, registration of transfer, partial redemption or pursuant to Section 2.9. Securities of each such series authenticated by such Authenticating Agent shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee. Whenever reference is made in this Indenture to the authentication and delivery of Securities of any series by the Trustee or to the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent for such series and a certificate of authentication executed on behalf of the Trustee by such Authenticating Agent. Such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States of America or of any state or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 (determined as provided in Section 6.9 with respect to the Trustee) and subject to supervision or examination by federal or state authority. -65- 75 Any corporation into which any Authenticating Agent may be merged or converted, or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent with respect to all series of Securities for which it served as Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. Any Authenticating Agent may at any time, and if it shall cease to be eligible shall, resign by giving written notice of resignation to the Trustee and to the Issuer. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Issuer. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.14 with respect to one or more series of Securities, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Issuer and the Issuer shall provide notice of such appointment to all Holders of Securities of such series in the manner and to the extent provided in Section 11.4. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent. The Issuer agrees to pay to the Authenticating Agent for such series from time to time reasonable compensation. The Authenticating Agent for the Securities of any series shall have no responsibility or liability for any action taken by it as such at the direction of the Trustee. Sections 6.2, 6.3, 6.4 and 7.3 shall be applicable to any Authenticating Agent. ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS Section 7.1 Evidence of Action Taken by Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of -66- 76 Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article Seven. Section 7.2 Proof of Execution of Instruments and of Holding of Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument by a Securityholder or his agent or proxy may be proved in the following manner: (a) The fact and date of the execution by any Holder of any instrument may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the person executing such instruments acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or other such officer. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute sufficient proof of the authority of the person executing the same. (b) The ownership of Securities shall be proved by the Security register or by a certificate of the Security registrar. Section 7.3 Holders to be Treated as Owners. The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the Person in whose name any Security shall be registered upon the Security register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest, if any, on such Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. Section 7.4 Securities Owned by Issuer Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have concurred in any direction, consent or waiver under this Indenture, Securities which are owned by the Issuer or any other obligor on the Securities with respect to -67- 77 which such determination is being made or by any Affiliate of the Issuer or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any Affiliate of the Issuer or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officer's Certificate listing and identifying all Securities, if any, known by the Issuer to be owned or held by or for the account of any of the above-described Persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officer's Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. Section 7.5 Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article Seven, revoke such action so far as concerns such Security, provided that such revocation shall not become effective until three business days after such filing. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in -68- 78 this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action. Section 7.6 Record Date for Consents and Waivers. The Issuer may, but shall not be obligated to, direct the Trustee to establish a record date for the purpose of determining the Persons entitled to (i) waive any past default with respect to the Securities of such series in accordance with Section 5.7 of this Indenture, (ii) consent to any supplemental indenture in accordance with Section 8.2 of this Indenture, or (iii) waive compliance with any term, condition or provision of any covenant hereunder. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and any such Persons, shall be entitled to waive any such past default, consent to any such supplemental indenture or waive compliance with any such term, condition or provision, whether or not such Holder remains a Holder after such record date; provided, however, that unless such waiver or consent is obtained from the Holders, or duly designated proxies, of the requisite principal amount of Outstanding Securities of such series prior to the date which is the 180th day after such record date, any such waiver or consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect. ARTICLE EIGHT SUPPLEMENTAL INDENTURES Section 8.1 Supplemental Indentures Without Consent of Securityholders. The Issuer, when authorized by a resolution of the Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as in force at the date of the execution thereof) for one or more of the following purposes: (a) to evidence the succession of another corporation to the Issuer, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer pursuant to Article Nine; -69- 79 (b) to add to the covenants of the Issuer such further covenants, restrictions, conditions or provisions as the Issuer and the Trustee shall consider to be for the protection of the Holders of all or any series of Securities (and if such covenants, restrictions, conditions or provisions are to be for the protection of less than all series of Securities, stating that the same are expressly being included solely for the protection of such series), and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided, in this Indenture as herein set forth; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default; (c) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make any other provisions as the Issuer may deem necessary or desirable, provided that no such action shall adversely affect the interests of the Holders of the Securities; (d) to establish the form or terms of Securities of any series as permitted by Sections 2.1 and 2.3 and to provide for adjustment of conversion rights pursuant to Section 13.5; and (e) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.11. -70- 80 The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 8.1 may be executed without the consent of the Holders of any of the Securities then Outstanding, notwithstanding any of the provisions of Section 8.2. Section 8.2 Supplemental Indentures With Consent of Securityholders. With the consent (evidenced as provided in Article Seven) of the Holders of not less than a majority in aggregate principal amount of the Securities then Outstanding of any series affected by such supplemental indenture, the Issuer, when authorized by a resolution of the Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act of 1939 as in force at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of such series; provided, that no such supplemental indenture shall (a) extend the final maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest, if any, thereon (or, in the case of an Original Issue Discount Security, reduce the rate of accrual of original issue discount thereon), or reduce or alter the method of computation of any amount payable on redemption, repayment or purchase by the Company thereof (or the time at which any such redemption, repayment or purchase may be made), or make the principal thereof (including any amount in respect of original issue discount), or interest, if any, thereon payable in any coin or currency other than that provided in the Securities or in accordance with the terms of the Securities, or reduce the portion of the principal amount of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy pursuant to Section 5.2, or impair or affect the right of any Securityholder to -71- 81 institute suit for the payment or conversion thereof or materially and adversely affect the right to convert the Securities in accordance herewith or, if the Securities provide therefor, any right of repayment or purchase at the option of the Securityholder, in each case without the consent of the Holder of each Security so affected, or change, amend or modify the subordination provisions of Article Fourteen of this Indenture or Section 3.9 of this Indenture or any of the definitions used in such Article Fourteen or Section 3.9 or consent to the departure from any of the terms of such Article Fourteen or Section 3.9, in each case in any manner that would adversely affect the Holders of any Securities of any series issued under this Indenture or (b) reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected. No consent of any Holder of any Security shall be necessary under this Section 8.2 to permit the Trustee and the Issuer to execute supplemental indentures pursuant to Sections 8.1, 9.2 and 13.5. A supplemental indenture which changes or eliminates any covenant, Event of Default or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of Holders of Securities of such series, with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order) certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Holders of the Securities as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section 8.2 to approve the particular form of any proposed supplemental indenture, but it shall -72- 82 be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section 8.2, the Trustee shall give notice thereof to the Holders of then Outstanding Securities of each series affected thereby, by mailing a notice thereof by first-class mail to such Holders at their addresses as they shall appear on the Security register. Any failure of the Issuer to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 8.3 Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes and every Holder of Securities of each series affected thereby theretofor or thereafter authenticated and delivered hereunder shall be bound thereby. Section 8.4 Documents to be Given to Trustee. The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall be entitled to receive an Officer's Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article Eight complies with the applicable provisions of this Indenture. Section 8.5 Notation on Securities in Respect of Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article Eight may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken by Securityholders. If the Issuer or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Issuer, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, authenticated by the Trustee and delivered in exchange for the Securities of such series then Outstanding. -73- 83 Section 8.6 Subordination Unimpaired. This Indenture may not be amended to alter the subordination of any Outstanding Securities without the written consent of each holder of Senior Indebtedness then outstanding that would be adversely affected thereby. ARTICLE NINE CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER DISPOSITION Section 9.1 Issuer May Consolidate, etc., on Certain Terms. Subject to the provisions of Section 9.2, nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Issuer with or into any other corporation or corporations (whether or not affiliated with the Issuer), or successive consolidations or mergers in which the Issuer or its successor or successors shall be a party or parties, or shall prevent any sale, lease, exchange or other disposition of all or substantially all the property and assets of the Issuer to any other corporation (whether or not affiliated with the Issuer) authorized to acquire and operate the same; provided, however, and the Issuer hereby covenants and agrees, that any such consolidation, merger, sale, lease, exchange or other disposition shall be upon the conditions that (a) immediately after such consolidation, merger, sale, lease, exchange or other disposition the corporation (whether the Issuer or such other corporation) formed by or surviving any such consolidation or merger, or to which such sale, lease, exchange or other disposition shall have been made, shall not be in default in the performance or observance of any of the terms, covenants and conditions of this Indenture to be kept or performed by the Issuer; (b) the corporation (if other than the Issuer) formed by or surviving any such consolidation or merger, or to which such sale, lease, exchange or other disposition shall have been made, shall be a corporation organized under the laws of the United States of America, any state thereof or the District of Columbia; and (c) the due and punctual payment of the principal of and interest, if any, on all the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed by the Issuer, shall be expressly assumed and the conversion rights, if any, shall be provided for in accordance with this Indenture, by supplemental indenture satisfactory in form to the Trustee executed and delivered to the Trustee, by the corporation (if other than the Issuer) formed by such consolidation, or into which the Issuer shall have been merged, or by the corporation which shall have acquired or leased such property. -74- 84 Section 9.2 Successor Corporation to be Substituted. In case of any such consolidation, merger, sale, lease, exchange or other disposition and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and interest, if any, on all of the Securities and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Issuer, such successor corporation shall succeed to and be substituted for the Issuer, with the same effect as if it had been named herein as the party of the first part, and the Issuer (including any intervening successor to the Issuer which shall have become the obligor hereunder) shall be relieved of any further obligation under this Indenture and the Securities; provided, however, that in the case of a lease of the property and assets of the Issuer (including any such intervening successor), the Issuer (including any such intervening successor) shall continue to be liable on its obligations under this Indenture and the Securities to the extent, but only to the extent, of liability to pay the principal of and interest, if any, on the Securities at the time, places and rate prescribed in this Indenture and the Securities. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of the Issuer, any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Issuer and delivered to the Trustee; and, upon the order of such successor corporation instead of the Issuer and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Issuer to the Trustee for authentication, and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale, lease, exchange or other disposition such changes in phraseology and form (but not in substance) may be made in the Securities, thereafter to be issued, as may be appropriate. Section 9.3 Opinion of Counsel to be Given Trustee. The Trustee, subject to Sections 6.1 and 6.2, may receive an Officer's Certificate and Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, lease, exchange or other disposition and any such assumption and any -75- 85 such provision for conversion rights comply with the provisions of this Article Nine. ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS Section 10.1 Satisfaction and Discharge of Indenture. (A) If at any time (a) the Issuer shall have paid or caused to be paid the principal of and interest, if any, on all the Securities Outstanding (other than Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9) as and when the same shall have become due and payable, or (b) the Issuer shall have delivered to the Trustee for cancellation all Securities theretofore authenticated (other than Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9); and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer, then this Indenture shall cease to be of further effect, and the Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the satisfaction and discharge contemplated by this provision have been complied with, and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction and discharging this Indenture. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred, and to compensate the Trustee for any services thereafter reasonably and properly rendered, by the Trustee in connection with this Indenture or the Securities. (B) If at any time (a) the Issuer shall have paid or caused to be paid the principal of and interest, if any, on all the Securities of any series Outstanding (other than Securities of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9) as and when the same shall have become due and payable, or (b) the Issuer shall have delivered to the Trustee for cancellation all Securities of any series theretofore authenticated (other than any Securities of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9), or (c) in the case of any series of Securities with respect to which the exact amount described in clause (ii) below can be determined at the time of making the deposit referred to in such clause (ii), (i) all the Securities of such -76- 86 series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee as funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Securities of such series, cash in an amount (other than moneys repaid by the Trustee or any Paying Agent to the Issuer in accordance with Section 10.4) or direct obligations of the United States of America, backed by its full faith and credit ("U.S. Government Obligations"), maturing as to principal and interest, if any, at such times and in such amounts as will insure the availability of cash, or a combination thereof, sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal of and interest, if any, on all Securities of such series on each date that such principal or interest, if any, is due and payable, and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of this Indenture and the Securities of such series; then the Issuer shall be deemed to have paid and discharged the entire indebtedness on all the Securities of such series on the date of the deposit referred to in clause (ii) above and the provisions of this Indenture with respect to the Securities of such series shall no longer be in effect (except, in the case of clause (c) of this Section 10.1(B), as to (i) rights of registration of transfer and exchange of Securities of such series, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities of such series, (iii) rights of Holders of Securities of such series to receive payments of principal thereof and interest, if any, thereon upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders of Securities of such series to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the Holders of Securities of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, (vi) the obligations of the Issuer under Section 3.2 with respect to Securities of such series and (vii) the obligations of the Issuer under Article Thirteen) and the Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent contemplated by this provision have been complied with, and at the cost and expense of the Issuer, shall execute proper instruments acknowledging the same. -77- 87 (C) The following provisions shall apply to the Securities of each series (other than Securities that are convertible into Common Stock) unless specifically otherwise provided in a Board Resolution, Officer's Certificate or indenture supplemental hereto provided pursuant to Section 2.3. In addition to discharge of this Indenture pursuant to the next preceding paragraph, in the case of any series of Securities with respect to which the exact amount described in subparagraph (a) below can be determined at the time of making the deposit referred to in such subparagraph (a), the Issuer shall be deemed to have paid and discharged the entire indebtedness on all the Securities of such a series on the 91st day after the date of the deposit referred to in subparagraph (a) below, and the provisions of this Indenture with respect to the Securities of such series shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities of such series, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities of such series, (iii) rights of Holders of Securities of such series to receive payments of principal thereof and interest, if any, thereon upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders of Securities of such series to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the Holders of Securities of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, (vi) the obligations of the Issuer under Section 3.2 with respect to Securities of such series and (vii) the obligations of the Issuer under Article Thirteen) and the Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent contemplated by this provision have been complied with, and at the cost and expense of the Issuer, shall execute proper instruments acknowledging the same, if (a) with reference to this provision the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Trustee as funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Securities of such series (i) cash in an amount, or (ii) U.S. Government Obligations, maturing as to principal and interest, if any, at such times and in such amounts as will insure the availability of cash, or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal of and interest, if any, on all Securities of such series on each date that such principal or interest, if any, is -78- 88 due and payable, and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of this Indenture and the Securities of such series; (b) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Issuer is a party or by which it is bound; and (c) the Issuer has delivered to the Trustee an Opinion of Counsel based on the fact that (x) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (y), since the date hereof, there has been a change in the applicable United States federal income tax law, in either case to the effect that, and such opinion shall confirm that, the Holders of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred. Section 10.2 Application by Trustee of Funds Deposited for Payment of Securities. Subject to Section 10.4, all moneys and U.S. Government Obligations deposited with the Trustee pursuant to Section 10.1 shall be held in trust, and such moneys and all moneys from such U.S. Government Obligations shall be applied by it to the payment, either directly or through any Paying Agent (including the Issuer acting as its own paying agent), to the Holders of the particular Securities of such series for the payment or redemption of which such moneys and U.S. Government Obligations have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest, if any, but such moneys need not be segregated from other funds except to the extent required by law. The Trustee and any Paying Agent shall promptly pay to the Issuer, upon the written request of the Issuer, any excess moneys or U.S. Government Obligations held by them at any time, including all moneys deposited with the Trustee pursuant to Section 10.1(B) and held by it or any Paying Agent for the payment of Securities subsequently converted. Section 10.3 Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any Paying Agent under the provisions of this Indenture with respect to such series of Securities shall, -79- 89 upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. Section 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years. Any moneys deposited with or paid to the Trustee or any Paying Agent for the payment of the principal of or interest, if any, on any Security of any series and not applied but remaining unclaimed for two years after the date upon which such principal or interest, if any, shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series or such Paying Agent, and the Holder of the Securities of such series shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any Paying Agent with respect to such moneys shall thereupon cease. Section 10.5 Indemnity for U.S. Government Obligations. The Issuer shall pay and indemnity the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 10.1 or the principal or interest received in respect of such obligations. ARTICLE ELEVEN MISCELLANEOUS PROVISIONS Section 11.1 Partners, Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer or director, as such, of the Issuer, or any partner of the Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities by the Holders thereof and as part of the consideration for the issue of the Securities. -80- 90 Section 11.2 Provisions of Indenture for the Sole Benefit of Parties and Holders of Senior Indebtedness and of Securities. Nothing in this Indenture or in the Securities, expressed or implied, shall give or be construed to give to any Person, other than the parties hereto and their successors and the holders of Senior Indebtedness and the Holders of the Securities, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors, the holders of the Senior Indebtedness and the Holders of the Securities. Section 11.3 Successors and Assigns of Issuer Bound by Indenture. All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Issuer shall bind its successors and assigns, whether so expressed or not. Section 11.4 Notices and Demands on Issuer, Trustee and Holders of Securities. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities to or on the Issuer, or as required pursuant to the Trust Indenture Act of 1939, may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to Service Corporation International, 1929 Allen Parkway, P.O. Box 130548, Houston, Texas 77019, Attention: Secretary. Any notice, direction, request or demand by the Issuer or any Holder of Securities to or upon the Trustee shall be deemed to have been sufficiently given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Trustee is filed by the Trustee with the Issuer) to Texas Commerce Bank National Association, 600 Travis Street, 8th Floor, Houston, Texas 77002, Attention: Vice President, Corporate Trust Department. Where this Indenture provides for notice to Holders of Securities, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security register. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such -81- 91 waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail any notice when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be reasonably satisfactory to the Trustee shall be deemed to be sufficient notice. Section 11.5 Officer's Certificates and Opinions of Counsel; Statements to be Contained Therein. Upon any application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, or as required pursuant to the Trust Indenture Act of 1939, the Issuer shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion provided for in this Indenture (other than a certificate provided pursuant to Section 4.3(d)) and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) 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 opinion as to whether or not such covenant or condition has been complied with, and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as -82- 92 aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer or officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with and directed to the Trustee shall contain a statement that such firm is independent. Section 11.6 Payments Due on Saturdays, Sundays and Holidays. If the date of maturity of principal of or interest, if any, on the Securities of any series or the date fixed for redemption, purchase or repayment of any such Security or the last date for conversion of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, if any, or principal need not be made on such date and such conversion need not be made by such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, purchase or repayment or the last date of such conversion, and, in the case of payment, no interest shall accrue for the period after such date. Section 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act of 1939. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture which is required to be included herein by any of Sections 310 to 317, inclusive, or is deemed applicable to this Indenture by virtue -83- 93 of the provisions, of the Trust Indenture Act of 1939, such required provision shall control. Section 11.8 GOVERNING LAW. THIS INDENTURE AND EACH SECURITY SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF TEXAS, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE OR APPLICABLE FEDERAL LAW. Section 11.9 Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 11.10 Effect of Headings. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof. Section 11.11 Separability Clause. In case any provision of this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS Section 12.1 Applicability of Article. The provisions of this Article shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified, as contemplated by Section 2.3 for Securities of such series. Section 12.2 Notice of Redemption; Partial Redemptions. Notice of redemption to the Holders of Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of such redemption by first-class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such series at their last addresses as they shall appear upon the registry books. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part -84- 94 shall not affect the validity of the proceedings for the redemption of any other Security of such series. The notice of redemption to each such Holder shall specify the principal amount of each Security of such series held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Securities, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest, if any, (or, in the case of Original Issue Discount Securities, original issue discount) accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest, if any, thereon or on the portions thereof to be redeemed (or, in the case of Original Issue Discount Securities, original issue discount) will cease to accrue and, if applicable, shall also specify the Conversion Price then in effect and the date on which the right to convert such Securities or the portions thereof to be redeemed will expire. In case any Security of a series is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. On or before the redemption date specified in the notice of redemption given as provided in this Section 12.2, the Issuer will deposit with the Trustee or with one or more Paying Agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.5) an amount of money sufficient to redeem on the redemption date all the Securities of such series so called for redemption (other than those theretofore surrendered for conversion into Common Stock) at the appropriate redemption price, together with accrued interest, if any, to the date fixed for redemption. If any Security called for redemption is converted pursuant hereto, any moneys deposited with the Trustee or any Paying Agent or so segregated and held in trust for the redemption of such Security shall be paid to the Issuer upon the Issuer's request, or, if then held by the Issuer, shall be discharged from such trust. The Issuer will deliver to the Trustee at least 30 days prior to the date fixed for redemption (unless a shorter notice shall be satisfactory to the Trustee) -85- 95 an Officer's Certificate stating the aggregate principal amount of Securities to be redeemed. In case of a redemption at the election of the Issuer prior to the expiration of any restriction on such redemption, the Issuer shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders pursuant to this Section 12.2, an Officer's Certificate stating that such restriction has been complied with. If less than all the Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Securities of such series to be redeemed. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities of any series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. If any Security selected for partial redemption is surrendered for conversion after such selection, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption. Upon any redemption of less than all the Securities of a series, for purposes of selection for redemption the Issuer and the Trustee may treat as Outstanding Securities surrendered for conversion during the period of 15 days next preceding the mailing of a notice of redemption, and need not treat as Outstanding any Security authenticated and delivered during such period in exchange for the unconverted portion of any Security converted in part during such period. Section 12.3 Payment of Securities Called for Redemption. If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place or places stated in such notice at the applicable redemption price, together with interest, if any, accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Securities at the redemption price, together with interest, if any, accrued to said date) interest (or, in the case of Original Issue Discount Securities, original issue discount) on the Securities or portions of Securities so called for redemption shall cease to accrue, and such Securities shall cease from and after the date fixed for redemption (unless an earlier date shall be -86- 96 specified in a Board Resolution, Officer's Certificate or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the form and terms of the Securities of such series were established) to be convertible into Common Stock and, except as provided in Sections 6.5 and 10.4, to be entitled to any other benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, said Securities or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest, if any, accrued thereon to the date fixed for redemption; provided that payment of interest, if any, becoming due on or prior to the date fixed for redemption shall be payable to the Holders of Securities registered as such on the relevant record date subject to the terms and provisions of Sections 2.3 and 2.7 hereof. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the redemption price shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by such Security, and such Security shall remain convertible into Common Stock until the redemption price of such Security (together with such interest thereon) shall have been paid or duly provided for. Upon presentation of any Security redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Security or Securities of such series and of like tenor, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented. Section 12.4 Exclusion of Certain Securities from Eligibility for Selection for Redemption. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 45 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by, either (a) the Issuer or (b) a Person specifically identified in such written statement as an Affiliate of the Issuer. -87- 97 Section 12.5 Mandatory and Optional Sinking Funds. The minimum amount of any sinking fund payment provided for by the terms of the Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of the Securities of any series is herein referred to as an "optional sinking fund payment". The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date". In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Issuer may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Issuer or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for Securities (not previously so credited) converted into Common Stock and so delivered to the Trustee for cancellation, (c) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section 12.5, or (d) receive credit for Securities of such series (not previously so credited) redeemed by the Issuer through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities. On or before the 60th day next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee an Officer's Certificate (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series and the basis for such credit, (b) stating that none of the Securities of such series to be so credited has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured or otherwise ceased to exist) and are continuing, and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Issuer intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation -88- 98 pursuant to Section 2.10 to the Trustee with such Officer's Certificate (or reasonably promptly thereafter if acceptable to the Trustee). Such Officer's Certificate shall be irrevocable and upon its receipt by the Trustee the Issuer shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such 60th day, to deliver such Officer's Certificate and Securities (subject to the parenthetical clause in the second preceding sentence) specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof, and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section 12.5. If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 or a lesser sum if the Issuer shall so request with respect to the Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price together with accrued interest, if any, to the date fixed for redemption. If such amount shall be $50,000 or less and the Issuer makes no such request, then it shall be carried over until a sum in excess of $50,000 is available. The Trustee shall select, in the manner provided in Section 12.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of such series (or portions thereof) so selected. The Trustee, in the name and at the expense of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 12.2 (and with the effect provided in Section 12.3) for the redemption of Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section 12.5. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if -89- 99 such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of and interest, if any, on, the Securities of such series at maturity. On or before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest, if any, accrued to the date fixed for redemption of Securities to be redeemed on such sinking fund payment date. The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or give any notice of redemption of Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default with respect to such series except that, where the giving of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.7 or the default cured on or before the 60th day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section 12.5 to the redemption of such Securities. ARTICLE THIRTEEN CONVERSION OF SECURITIES Section 13.1 Applicability of Article. The provisions of this Article shall be applicable to the Securities of any series which are convertible into Common Stock or, if so provided in a Board Resolution, Officer's Certificate or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the form and terms of the Securities of such series were established, cash in lieu thereof, as and to the extent provided by the terms of the Securities of such series. -90- 100 Section 13.2 Exercise of Conversion Privilege. In order to exercise the conversion privilege, the Holder of any Security to be converted shall surrender such Security to the Conversion Agent at any time during usual business hours at its office or agency maintained for the purpose as provided in this Indenture, accompanied by a fully executed written notice, in substantially the form set forth on the reverse of the Security, that the Holder elects to convert such Security or a stated portion thereof constituting a multiple of $1,000 in principal amount, and, if such Security is surrendered for conversion during the period between the close of business on any record date for such Security and the opening of business on the related interest payment date and has not been called for redemption on a redemption date within such period (or on such interest payment date), accompanied also by payment of an amount equal to the interest payable on such interest payment date on the portion of the principal amount of the Security being surrendered for conversion. Such notice shall also state the name or names (and address) in which the certificate or certificates for shares of Common Stock shall be issued (or to whom payment in cash in lieu of Common Stock shall be made). Securities surrendered for conversion shall (if so required by the Issuer or the Conversion Agent) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Conversion Agent duly executed by, the Holder or his attorney duly authorized in writing. As promptly as practicable after the receipt of such notice and the surrender of such Security as aforesaid, the Issuer shall, subject to the provisions of Section 13.7, issue and deliver at such office or agency to such Holder, or on his written order, a certificate or certificates for the number of full shares of Common Stock issuable on conversion of such Security in accordance with the provisions of such Security and cash, as provided in Section 13.3, in respect of any fraction of a share of Common Stock otherwise issuable upon such conversion or, if so provided in a Board Resolution, Officer's Certificate or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the form and terms of the Securities of such series were established, cash in lieu of shares of Common Stock. Such conversion shall be at the Conversion Price in effect, and shall be deemed to have been effected, immediately prior to the close of business on the date (herein called the "Date of Conversion") on which such notice in proper form shall have been received by the Conversion Agent and such Security shall have been surrendered as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable, if any, upon such conversion shall be deemed to have become on the Date of Conversion the holder or holders of record of the shares represented thereby; provided, however, -91- 101 that any such surrender on any date when the stock transfer books of the Issuer shall be closed shall constitute the Person or Persons in whose name or names the certificate or certificates for such shares are to be issued, if any, as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open but such conversion shall nevertheless be at the Conversion Price in effect at the close of business on the date when such Security shall have been so surrendered with the conversion notice in proper form. In the case of conversion of a portion, but less than all, of a Security, the Issuer shall execute, and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Issuer, a Security or Securities in the aggregate principal amount of the unconverted portion of the Security surrendered. Except as otherwise expressly provided in this Indenture, no payment or adjustment shall be made for interest accrued on any Security (or portion thereof) converted or for dividends or distributions on any Common Stock issued upon conversion of any Security. The right, if any, of a Holder of any Security to cause the Issuer to redeem, purchase or repay such Security shall terminate upon receipt by the Issuer of any notice of conversion of such Security. Section 13.3 Fractional Interests. No fractions of shares or scrip representing fractions of shares shall be issued upon conversion of Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities so surrendered. If any fraction of a share of Common Stock would, except for the provisions of this Section 13.3, be issuable on the conversion of any Security or Securities, the Issuer shall make payment in lieu thereof in cash equal to the value of such fraction computed on the basis of the Last Sale Price of one share of Common Stock on the most recent Trading Day prior to the Date of Conversion. "Last Sale Price" on any Trading Day shall mean (i) the closing price regular way (or, if no closing price is reported the average of the bid and asked prices) as reported on the New York Stock Exchange Composite Tape, or (ii) if on such Trading Day the Common Stock is not listed or admitted to trading on such exchange, the closing price regular way (or, if no closing price is reported the average of the bid and asked prices) on the principal national securities exchange on which the Common Stock is listed or admitted to trading, or (iii) if not listed or admitted to trading on any national securities exchange on such Trading Day, then the average of the closing bid and asked prices as reported through the National Association of Securities Dealers, Inc. on its NASDAQ National Market -92- 102 System or NASDAQ System or a similar organization if NASDAQ is no longer reporting information, or (iv) if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on such National Market System or NASDAQ System on such Trading Day, then the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Issuer for that purpose or (v) if not quoted by any such organization on such Trading Day, the fair value of such Common Stock on such Trading Day, as determined by the Board of Directors. The term "Trading Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which securities are not traded on any of the above-mentioned exchanges or in such markets. Section 13.4 Adjustment of Conversion Price. The conversion price or rate (herein called the "Conversion Price") for a series of Securities shall be as set forth in a Board Resolution, Officer's Certificate or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the form and terms of the Securities of such series were established, and, except as otherwise provided therein, shall be subject to adjustment from time to time as follows: (a) In case the Issuer shall (1) pay a dividend or make a distribution in shares of Common Stock on the Common Stock, (2) subdivide its outstanding shares of Common Stock into a greater number of shares, (3) combine its outstanding shares of Common Stock into a smaller number of shares, (4) issue by reclassification of its Common Stock any shares of capital stock of the Issuer or (5) redeem any Associated Rights, the Conversion Price in effect immediately prior to such action shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other capital stock of the Issuer which he would have owned immediately following such action had such Security been converted immediately prior thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately, except as provided in subsection (e) below, after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. If as a result of an adjustment made pursuant to this subsection (a), the Holder of any Security thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of -93- 103 capital stock (including shares of Common Stock and other capital stock) of the Issuer, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed with the Trustee) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. (b) In case the Issuer shall issue rights or warrants to all holders of Common Stock entitling them (for a period not exceeding 45 days from the date of such issuance) to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share (as determined pursuant to subsection (d) below) of the Common Stock on the record date mentioned below, the Conversion Price shall be adjusted to a price, computed to the nearest cent, so that the same shall equal the price determined by multiplying: (1) the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by a fraction, of which (2) the numerator shall be (A) the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus (B) the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such current market price (determined by multiplying such total number of shares by the exercise price of such rights or warrants and dividing the product so obtained by such current market price), and of which (3) the denominator shall be (A) the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus (B) the number of additional shares of Common Stock which are so offered for subscription or purchase. Such adjustment shall become effective immediately, except as provided in subsection (e) below, after the record date for the determination of holders entitled to receive such rights or warrants -94- 104 (c) In case the Issuer shall distribute to substantially all holders of Common Stock, evidences of indebtedness, equity securities (including equity interests in the Issuer's Subsidiaries) other than Common Stock, or other assets (other than cash dividends paid out of surplus of the Issuer), or shall distribute to substantially all holders of Common Stock rights or warrants to subscribe for securities (other than those referred to in subsection (b) above) then in each such case the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the current market price per share (determined as provided in subsection (d) below) of the Common Stock on the record date mentioned below less the then fair market value (as determined by the Board of Directors, whose determination shall, if made in good faith, be conclusive evidence of such fair market value) of the portion of the assets so distributed or of such subscription rights or warrants applicable to one share of Common Stock, and of which the denominator shall be such current market price per share of the Common Stock. Such adjustment shall become effective immediately, except as provided in subsection (e) below, after the record date for the determination of stockholders entitled to receive such distribution. (d) For the purpose of any computation under subsections (b) and (c) above, the current market price per share of Common Stock on any date shall be deemed to be the average of the Last Sale Prices for the 30 consecutive Trading Days commencing 45 Trading Days before the date in question. (e) In any case in which this Section 13.4 shall require that an adjustment be made immediately following a record date, the Issuer may elect to defer the effectiveness of such adjustment (but in no event until a date later than the effective time of the event giving rise to such adjustment), in which case the Issuer shall, with respect to any Security converted after such record date and before such adjustment shall have become effective, (i) defer paying any cash payment pursuant to Section 13.3 or issuing to the Holder of such Security the number of shares of Common Stock and other capital stock of the Issuer issuable upon such conversion in excess of the -95- 105 number of shares of Common Stock and other capital stock of the Issuer issuable thereupon only on the basis of the Conversion Price prior to adjustment, and (ii) not later than five Business Days after such adjustment shall have become effective, pay to such Holder the appropriate cash payment pursuant to Section 13.3 and issue to such Holder the additional shares of Common Stock and other capital stock of the Issuer issuable on such conversion. (f) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% of the Conversion Price; provided, that any adjustments which by reason of this subsection (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment and, provided further, that adjustment shall be required and made in accordance with the provisions of this Article Thirteen (other than this subsection (f)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the Holders of Securities or Common Stock. All calculations under this Article Thirteen shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. (g) Whenever the Conversion Price is adjusted as herein provided, the Issuer shall promptly (i) file with the Trustee and each Conversion Agent an Officer's Certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) mail or cause to be mailed a notice of such adjustment to each Holder of Securities in the manner provided in Section 11.4. Anything in this Section 13.4 to the contrary notwithstanding, the Issuer shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 13.4, as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights or warrants to purchase stock or securities, or distribution of other assets (other than cash dividends) hereafter made by the Issuer to its stockholders shall not be taxable. Section 13.5 Continuation of Conversion Privilege in Case of Merger, Consolidation or Sale of Assets. If any of the -96- 106 following shall occur, namely: (a) any consolidation or merger of the Issuer as a result of which the holders of Common Stock shall be entitled to receive stock, other securities or other assets (including cash) with respect to or in exchange for Common Stock; or (b) sale, lease, exchange or other disposition of all or substantially all of the property and assets of the Issuer as an entirety, then the Issuer, or such successor or purchasing corporation, as the case may be, shall, as a condition precedent to such consolidation, merger, sale, lease, exchange or other disposition, execute and deliver to the Trustee a supplemental indenture (which shall conform to the Trust Indenture Act of 1939 as in force at the date of the execution thereof) providing that the Holder of each convertible Security then Outstanding shall have the right to convert such Security into the kind and amount of shares of stock and other securities and property (including cash) receivable upon or in connection with such consolidation, merger, sale, lease, exchange or other disposition by a holder of the number of shares of Common Stock issuable upon conversion of such Security immediately prior to such consolidation, merger, sale, lease, exchange or other disposition. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article Thirteen. If, in the case of any such consolidation, merger, sale, lease, exchange or other disposition, the stock or other securities and property (including cash) receivable thereupon or in connection therewith by a holder of shares of Common Stock includes shares of stock or other securities and property (including cash) of a corporation other than the successor or purchasing corporation, as the case may be, in such consolidation, merger, sale, lease, exchange or other disposition, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The provisions of this Section 13.5 shall similarly apply to successive consolidations, mergers, sales, leases, exchanges or other dispositions. Notice of the execution of each such supplemental indenture shall be mailed to each Holder of Securities in the manner provided in Section 11.4. Neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any such supplemental indenture relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders of Securities upon the conversion of their Securities after any such -97- 107 consolidation, merger, sale, lease, exchange or other disposition or to any adjustment to be made with respect thereto, but, subject to the provisions of Sections 6.1 and 6.2, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officer's Certificate (which the Issuer shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. Section 13.6 Notice of Certain Events. If: (a) the Issuer shall declare a dividend (or any other distribution) payable to the holders of Common Stock otherwise than in cash; or (b) the Issuer shall authorize the granting to all holders of Common Stock of rights to subscribe for or purchase any shares of stock of any class or of any other rights; or (c) the Issuer shall authorize any reclassification or change of the Common Stock (other than a subdivision or combination of its outstanding shares of Common Stock), or any consolidation or merger to which the Issuer is a party and for which approval of any stockholders of the Issuer is required, or the sale, lease, exchange or other disposition of all or substantially all the property and assets of the Issuer; or (d) there shall be authorized or ordered any voluntary or involuntary dissolution, liquidation or winding-up of the Issuer; then, the Issuer shall cause to be filed at the office or agency maintained for the purpose of conversion of the Securities as provided in Section 3.2, and shall cause to be mailed to each Holder of Securities, in the manner provided in Section 11.4, at least 20 days before the date hereinafter specified (or the earlier of the dates hereinafter specified, in the event that more than one date is specified), a notice stating the date on which (1) a record is expected to be taken for the purpose of such dividend, distribution or rights, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (2) such reclassification, change, consolidation, merger, sale, lease, exchange or other disposition, dissolution, liquidation or winding-up is expected to become effective and the date, if any is to be fixed, as of which it is expected that holders of -98- 108 Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, change, consolidation, merger, sale, lease, exchange or other disposition, dissolution, liquidation or winding-up. Section 13.7 Taxes on Conversion. The Issuer will pay any and all documentary, stamp or similar taxes payable to the United States of America or any political subdivision or taxing authority thereof or therein in respect of the issue or delivery of shares of Common Stock on conversion of Securities pursuant thereto; provided, however, that the Issuer shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the Holder of the Securities to be converted (or payment of cash in lieu thereof to a Person other than such Holder) and no such issue or delivery (or payment) shall be made unless and until the Person requesting such issue or delivery (or payment) has paid to the Issuer the amount of any such tax or has established, to the satisfaction of the Issuer, that such tax has been paid. The Issuer extends no protection with respect to any other taxes imposed in connection with conversion of Securities. Section 13.8 Issuer to Provide Stock. The Issuer shall reserve, free from preemptive rights, out of its authorized but unissued shares, sufficient shares to provide for the conversion of convertible Securities from time to time as such Securities are presented for conversion; provided, however, that nothing contained herein shall be construed to preclude the Issuer from satisfying its obligations in respect of the conversion of Securities by delivery of repurchased shares of Common Stock which are held in the treasury of the Issuer. If any shares of Common Stock to be reserved for the purpose of conversion of Securities hereunder require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued or delivered upon conversion, then the Issuer covenants that it will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be; provided, however, that nothing in this Section 13.8 shall be deemed to affect in any way the obligations of the Issuer to convert Securities into Common Stock as provided in this Article Thirteen. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value, if any, of the Common Stock, the Issuer will take all corporate action which may, in the opinion of counsel, be -99- 109 necessary in order that the Issuer may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Conversion Price. The Issuer covenants that all shares of Common Stock which may be issued upon conversion of Securities will upon issue be fully paid and non-assessable by the Issuer and free of preemptive rights. Section 13.9 Disclaimer of Responsibility for Certain Matters. Neither the Trustee, any Conversion Agent nor any agent of either shall at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the Officer's Certificate referred to in Section 13.4(g), or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee, any Conversion Agent nor any agent of either shall be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property (including cash), which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee, any Conversion Agent nor any agent of either makes any representation with respect thereto. Neither the Trustee, any Conversion Agent nor any agent of either shall be responsible for any failure of the Issuer to issue, register the transfer of or deliver any shares of Common Stock or stock certificates or other securities or property (including cash) upon the surrender of any Security for the purpose of conversion or, subject to Sections 6.1 and 6.2, to comply with any of the covenants of the Issuer contained in this Article Thirteen. Section 13.10 Return of Funds Deposited for Redemption of Converted Securities. Any funds which at any time shall have been deposited by the Issuer or on its behalf with the Trustee or any Paying Agent for the purpose of paying the principal of and interest, if any, on any of the Securities and which shall not be required for such purposes because of the conversion of such Securities, as provided in this Indenture, shall forthwith after such conversion be repaid to the Issuer by the Trustee or such Paying Agent. -100- 110 ARTICLE FOURTEEN SUBORDINATION Section 14.1 Securities Subordinated to Senior Indebtedness. The Issuer covenants and agrees that anything in this Indenture or the Securities of any series to the contrary notwithstanding, the indebtedness evidenced by the Securities of each series is subordinate and junior in right of payment to all Senior Indebtedness to the extent provided herein, and each Holder of Securities of each series, by his acceptance thereof, likewise covenants and agrees to the subordination herein provided and shall be bound by the provisions hereof. Subject to Section 14.4, if the Issuer shall default in the payment of any principal of or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Issuer by the holders of such Senior Indebtedness or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or interest on any of the Securities, or in respect of any redemption, retirement, purchase or other acquisition of any of the Securities other than those made in capital stock of the Issuer (or cash in lieu of fractional shares thereof, pursuant to Article Thirteen or otherwise made in capital stock of the Issuer (or cash in lieu of fractional shares thereof). If (a) without the consent of the Issuer a court having jurisdiction shall enter an order for relief with respect to the Issuer under the Bankruptcy Code or without the consent of the Issuer a court having jurisdiction shall enter a judgement, order or decree adjudging the Issuer as bankrupt or insolvent, or enter an order for relief for reorganization, arrangement, adjustment or composition of or in respect of the Issuer under the Bankruptcy Code or applicable state insolvency law, or (b) the Issuer shall institute proceedings for entry of an order for relief with respect to the Issuer under the Bankruptcy Code or for an adjudication of insolvency, or shall consent to the institution of bankruptcy or insolvency proceedings against it, or shall file a petition seeking, or seek or consent to reorganization, arrangement, composition or relief under the Bankruptcy Code or any applicable state law, or shall consent to the filing of such petition or to the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator or similar official of the Issuer or of -101- 111 substantially all of its property, or the Issuer shall make a general assignment for the benefit of creditors as recognized under the Bankruptcy Code, then all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness then outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities of any series shall be paid or delivered directly to the holders of Senior Indebtedness in accordance with the priorities then existing among such holders until all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) shall have been paid in full. In the event of any such proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the Holders of the Securities, together with the holders of any obligations of the Issuer ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Issuer the amounts at the time due and owing on account of unpaid principal of and interest, if any, on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Issuer ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character, whether in cash, securities or other property (other than securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in the subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness then outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), shall be received by the Trustee or any Holder in contravention of any of the terms hereof, such payment or distribution shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Indebtedness then outstanding in accordance with the priorities then existing -102- 112 among such holders for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all such Senior Indebtedness in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Indebtedness is hereby irrevocably authorized to endorse or assign the same. No present or future holder of any Senior Indebtedness shall be prejudiced in the right to enforce subordination of the indebtedness evidenced by the Securities by any act or failure to act on the part of the Issuer. Nothing contained herein shall impair, as between the Issuer and the Holders of Securities of each series, the obligation of the Issuer to pay to such Holders the principal of and interest, if any, on such Securities or prevent the Trustee or the Holder from exercising all rights, powers and remedies otherwise permitted by applicable law or hereunder upon a default or Event of Default hereunder, all subject to the rights of the holders of the Senior Indebtedness to receive cash, securities or other property otherwise payable or deliverable to the Holders. Senior Indebtedness shall not be deemed to have been paid in full unless the holders thereof shall have received cash, securities or other property equal to the amount of such Senior Indebtedness then outstanding. Upon the payment in full of all Senior Indebtedness, the Holders of Securities of each series shall be subrogated to all rights of any holders of Senior Indebtedness to receive any further payments or distributions applicable to the Senior Indebtedness until the indebtedness evidenced by the Securities of such series shall have been paid in full, and such payments or distributions received by such Holders, by reason of such subrogation, of cash, securities or other property which otherwise would be paid or distributed to the holders of Senior Indebtedness, shall, as between the Issuer and its creditors other than the holders of Senior Indebtedness, on the one hand, and such Holders, on the other hand, be deemed to be a payment by the Issuer on account of Senior Indebtedness, and not on account of the Securities of such series. The provisions of this Section 14.1 shall not impair any rights, interests, remedies or powers of any secured creditor of the Issuer in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture. The securing of any obligations of the Issuer, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such -103- 113 obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities. Section 14.2 Reliance on Certificate of Liquidating Agent; Further Evidence as to Ownership of Senior Indebtedness. Upon any payment or distribution of assets of the Issuer, the Trustee and the Holders shall be entitled to rely upon an order or decree issued by any court of competent jurisdiction in which such dissolution or winding up or liquidation or reorganization or arrangement proceedings are pending or upon a certificate of the trustee in bankruptcy, receiver, assignee for the benefit of creditors or other Person making such payment or distribution, delivered to the Trustee or to the Holders, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Issuer, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Fourteen. In the absence of any such bankruptcy trustee, receiver, assignee or other Person, the Trustee shall be entitled to rely upon a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee or representative on behalf of such holder) as evidence that such Person is a holder of Senior Indebtedness (or is such a trustee or representative). If the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distributions pursuant to this Article Fourteen, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, as to the extent to which such Person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Article Fourteen, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 14.3 Payment Permitted If No Default. Nothing contained in this Article Fourteen or elsewhere in this Indenture, or in any of the Securities, shall prevent (a) the Issuer at any time, except during the pendency of any default in the payment of any principal of or interest on any Senior Indebtedness as described in Section 14.1 or of any of the events described in clauses (a) and (b) of Section 14.1, from making payments of the principal of or interest, if any, on the Securities, or (b) the application by the Trustee or any Paying Agent of any moneys deposited with it hereunder to payments of the principal of or interest, if any, on the Securities, unless -104- 114 and until the Trustee or such Paying Agent, as the case may be, shall have timely received the Officer's Certificate or written notice provided for in Section 14.5. Section 14.4 Disputes with Holders of Certain Senior Indebtedness. Any failure by the Issuer to make any payment on or under any Senior Indebtedness, other than any Senior Indebtedness as to which the provisions of this Section 14.4 shall have been waived by the Issuer in the instrument or instruments by which the Issuer incurred, assumed, guaranteed or otherwise created such Senior Indebtedness, shall not be deemed a default under Section 14.1 if (i) the Issuer shall be disputing its obligation to make such payment or perform such obligation, and (ii) either (A) no final judgment relating to such dispute shall have been issued against the Issuer which is in full force and effect and is not subject to further review, including a judgment that has become final by reason of the expiration of the time within which a party may seek further appeal or review, or (B) in the event of a judgment that is subject to further review or appeal has been issued, the Issuer shall in good faith be prosecuting an appeal or other proceeding for review, and a stay of execution shall have been obtained pending such appeal or review. Section 14.5 Trustee Not Charged with Knowledge of Prohibition. Anything in this Article Fourteen or elsewhere in this Indenture contained to the contrary notwithstanding, the Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee and shall be entitled to assume conclusively that no such facts exist and that no event specified in clauses (a) and (b) of Section 14.1 has happened, unless and until the Trustee shall have received an Officer's Certificate to that effect or notice in writing to that effect signed by or on behalf of the holder or holders, or their representatives, of Senior Indebtedness who shall have been certified by the Issuer or otherwise established to the reasonable satisfaction of the Trustee to be such holder or holders or representatives or from any trustee under any indenture pursuant to which such Senior Indebtedness shall be outstanding; provided, however, that, if the Trustee shall not have received the Officer's Certificate or notice provided for in this Section 14.5 at least three Business Days preceding the date upon which by the terms hereof any such moneys may become payable for any purpose (including, without limitation, the payment of either the principal of or interest, if any, on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such moneys and apply the same to the purpose for which they were received and shall not be affected by any notice to the -105- 115 contrary which may be received by it within three Business Days preceding such date. The Issuer shall give prompt written notice to the Trustee and to each Paying Agent of any facts which would prohibit any payment of moneys to or by the Trustee or any Paying Agent, and the Trustee shall not be charged with knowledge of the curing of any default or the elimination of any other fact or condition preventing such payment or distribution unless and until the Trustee shall have received an Officer's Certificate to such effect. Section 14.6 Trustee to Effectuate Subordination. Each Holder of Securities by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as between such Holder and holders of Senior Indebtedness as provided in this Article Fourteen and appoints the Trustee its attorney- in-fact for any and all such purposes. Section 14.7 Rights of Trustee as Holder of Senior Indebtedness. The Trustee shall be entitled to all the rights set forth in this Article Fourteen with respect to any Senior Indebtedness which may at the time be held by it, to the same extent as any other holder of Senior Indebtedness and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article Fourteen shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6. Section 14.8 Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Issuer and be then acting hereunder, the term "Trustee" as used in this Article Fourteen shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if the Paying Agent were named in this Article Fourteen in addition to or in place of the Trustee; provided, however, that Sections 14.5 and 14.7 shall not apply to the Issuer if it acts as Paying Agent. Section 14.9 Subordination Rights Not Impaired by Acts or Omissions of the Issuer or Holders of Senior Indebtedness. No right of any present or future holders of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Issuer or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Issuer with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged -106- 116 with. The holders of Senior Indebtedness may, at any time or from time to time and in their absolute discretion, change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any such Senior Indebtedness, or amend or supplement any instrument pursuant to which any such Senior Indebtedness is issued or by which it may be secured, or release any security therefor, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness, including, without limitation, the waiver of default thereunder, all without notice to or assent from the Holders of the Securities or the Trustee and without affecting the obligations of the Issuer, the Trustee or the Holders of Securities under this Article Fourteen. Section 14.10 Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of the Senior Indebtedness, and shall not be liable to any such holders if it shall mistakenly pay over or distribute money or assets to Securityholders or the Issuer. -107- 117 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, effective as of __________, 1994. SERVICE CORPORATION INTERNATIONAL By _________________________________________ Name: Title: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Trustee By _________________________________________ Name: Title: -108- EX-4.4 9 FORM OF COMMON STOCK WARRANT AGREEMENT 1 EXHIBIT 4.4 ________________________________________________________________________________ SERVICE CORPORATION INTERNATIONAL AND ___________________________ ___________________________ Warrant Agent _____________ COMMON STOCK WARRANT AGREEMENT Dated as of ________, 19__ _____________ ________________________________________________________________________________ 2 TABLE OF CONTENTS*
Page ---- PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Appointment of Warrant Agent . . . . . . . . . . . . . . . . . . . . 1 Section 2. Form of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 3. Countersignature and Registration . . . . . . . . . . . . . . . . . . 2 Section 4. Transfers and Exchanges . . . . . . . . . . . . . . . . . . . . . . . 2 Section 5. Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 6. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 7. Mutilated or Missing Warrants . . . . . . . . . . . . . . . . . . . . 4 Section 8. Reservation of Shares, etc. . . . . . . . . . . . . . . . . . . . . . 4 Section 9. Warrant Price; Adjustments . . . . . . . . . . . . . . . . . . . . . . 5 Section 10. Notice to Warrantholders . . . . . . . . . . . . . . . . . . . . . . . 12 Section 11. Certain Covenants of the Company . . . . . . . . . . . . . . . . . . . 12 Section 12. Disposition of Proceeds, etc. . . . . . . . . . . . . . . . . . . . . 13 Section 13. Merger or Consolidation or Change of Name of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 14. Duties of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . 14 Section 15. Change of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . 16 Section 16. Identity of Transfer Agent . . . . . . . . . . . . . . . . . . . . . . 17 Section 17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 18. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . 18
____________________ * This Table of Contents does not constitute a part of this Agreement or have any bearing upon the interpretation of any of its terms and provisions. -i- 3 Section 19. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 20. {Texas} Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 21. Benefits of This Agreement . . . . . . . . . . . . . . . . . . . . . . 18 Section 22. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-ii- 4 COMMON STOCK WARRANT AGREEMENT dated as of _________ __, 19__, between Service Corporation International, a Texas corporation (hereinafter called the "Company"), and ___________ having a corporate trust office in ____________________, as warrant agent (hereinafter called the "Warrant Agent"). WHEREAS, the Company proposes to issue {Class _} Purchase Warrants entitling the holders thereof to purchase an aggregate of ____________ shares of Common Stock of the Company (par value $1.00 per share) ("Shares") at an initial cash purchase price of $_________ per Share at any time {after ________ and} prior to 1:00 P.M. Houston, Texas time on ________________, 19__ (herein called the "expiration date") (unless extended as provided in Section 9A hereof); and WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, registration, transfer, exchange and exercise of Warrants to be issued from time to time by the Company, NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows: Section 1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the instructions hereinafter in this Agreement set forth, and the Warrant Agent hereby accepts such appointment. Section 2. Form of Warrant. The text of the Warrants and the form of election to purchase Shares to be set forth on the reverse thereof shall be substantially as set forth in Exhibit A attached hereto. Each Warrant shall, subject to the terms of this Warrant Agreement, entitle the registered holder thereof to initially purchase the number of Shares specified therein at an initial exercise price of $______ per Share; provided, however, that the warrant exercise price and the number of Shares issuable upon exercise of Warrants are subject to adjustment upon the occurrence of certain events, all as hereinafter provided. The Warrants shall be executed on behalf of the Company by the manual or facsimile signature of the present or any future Chairman of the Board, Chairman of the Executive Committee of the Board, Vice Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, Vice Chairman, or Vice President of the Company, under its seal, affixed or in facsimile, and by the manual or facsimile signature of the present or any future Secretary of Assistant Secretary of the Company. 5 The Company shall promptly notify the Warrant Agent from time to time in writing of the number of Warrants to be issued and furnish written instructions in connection therewith signed by an executive officer of the Company; such notification and instructions may, but need not be, in the form of a general or continuing authorization to the Warrant Agent. The Warrants shall be dated by the Warrant Agent as of the date of each initial issuance, and as of the date of issuance thereof upon any transfer or exchange thereof. Section 3. Countersignature and Registration. The Warrant Agent shall maintain books for the transfer and registration of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the names of the respective registered holders thereof. The Warrants shall be countersigned by the Warrant Agent (or by any successor to the Warrant Agent then acting as warrant agent under this Agreement) and shall not be valid for any purpose unless so countersigned. Such Warrants may be so countersigned, however, by the Warrant Agent (or by its successor as warrant agent) and be delivered by the Warrant Agent, notwithstanding that the persons whose manual or facsimile signatures appear thereon as proper officers of the Company shall have caused to be such officers at the time of such countersignature or delivery. Upon issuance of any Warrant, the Company will present the same, or cause the same to be presented, to the Warrant Agent for countersignature of such Warrant. Section 4. Transfers and Exchanges. The Warrant Agent shall transfer from time to time, any outstanding Warrants upon the books to be maintained by the Warrant Agent for that purpose, upon the surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant of like tenor shall be issued to the transferee and the surrendered Warrant shall be cancelled by the Warrant Agent. All such Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time. The Warrants may be exchanged at the option of the holder thereof, when surrendered at the office in ________________, of the Warrant Agent, for another Warrant, or other Warrants of different denominations, of like tenor and representing in the aggregate the right to purchase a like number of Shares. The Warrant Agent is hereby irrevocably authorized to countersign and deliver, in accordance with the provisions of this Section and Section 3 of this Agreement, such new Warrants required pursuant to the provisions of this Section, and the Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose. -2- 6 Section 5. Exercise of Warrants. The registered holder of each Warrant shall have the right, which may be exercised as in such Warrant expressed, to purchase from the Company (and the Company shall issue and sell to such registered holder) the number of Shares specified in such Warrants, upon surrender to the Company at the office in _________________, of the Warrant Agent of such Warrant, with the form of election to purchase on the reverse thereof duly filled in and signed, and upon payment to the Warrant Agent for the account of the Company of the warrant exercise price, determined in accordance with the provisions of Section 9 of this Agreement, for the number of Shares in respect of which such Warrant is then exercised. Payment of such warrant exercise price may be made in case, or by certified check or bank draft or postal or express money order, payable in United States dollars, to the order of the Warrant Agent. No adjustment shall be made for any dividends on any Shares issuable upon exercise of any Warrant. Subject to Section 6, upon such surrender of Warrants, and payment of the warrant exercise price as aforesaid, the Company shall issue and cause to be delivered with all reasonable dispatch to or upon the written order of the registered holder of such Warrants and in such name or names as such registered holder may designate, a certificate or certificates for the number of full Shares so purchased upon the exercise of such Warrants, together with cash, as provided in Section 9 of this Agreement, in respect of any fraction of a Share otherwise issuable upon such surrender. Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such Shares as of the date of the surrender of such Warrants and payment of the warrant exercise price as aforesaid; provided, however, that if, at the date of surrender of such Warrants and payment of such warrant exercise price, the transfer books for the Shares purchasable upon the exercise of such Warrants shall be closed, no such surrender of such Warrants and no such payment of such warrant exercise price shall be effective to constitute the person so designated to be named therein as the holder of record of such Shares on such date, but shall be effective to constitute such person as the holder of record of such Shares for all purposes at the opening of business on the next succeeding day on which the transfer books for the Shares purchasable upon the exercise of such Warrants shall be opened, and the certificates for the Shares in respect of which such Warrants are then exercised shall be issuable as of the date on which such books shall next be opened, and until such date the Company shall be under no duty to deliver any certificate for such Shares. The rights of purchase represented by the Warrants shall be exercisable, at the election of the registered holders thereof, either as an entirety or from time to time for part only of the Shares specified therein and, in the event -3- 7 that any Warrant is exercised in respect of less than all of the Shares specified therein at any time prior to the date of expiration of the Warrants, a new Warrant or Warrants of like tenor will be issued for the remaining number of Shares specified in the Warrant so surrendered, and the Warrant Agent is hereby irrevocably authorized to countersign and to deliver the required new Warrants pursuant to the provisions of this Section and of Section 3 of this Agreement, and the Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose. Section 6. Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Shares issuable upon the exercise of Warrants; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue or delivery of any certificates for Shares in a name other than that of the registered holder of Warrants in respect of which such Shares are issued and the Company shall not be required to issue and deliver the certificates for such Shares unless and until the holder has paid to the Company the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Company that such tax has been paid. Section 7. Mutilated or Missing Warrants. In case any of the Warrants shall be mutilated, lost, stolen or destroyed, the Company will issue and the Warrant Agent will countersign and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of a substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company and the Warrant Agent of such loss, theft or destruction of such Warrants and indemnity, if requested, also satisfactory to them. Applicants for such substitute Warrants shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company or the Warrant Agent may prescribe. Any such new Warrant shall constitute an original contractual obligation of the Company whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone. Section 8. Reservation of Shares, etc. Prior to the issuance of any Warrants there shall have been reserved, and the Company shall at all times through the expiration date keep reserved, out of its authorized and unissued Common Stock, a number of Shares sufficient to provide for the exercise of the -4- 8 rights of purchase represented by the Warrants, and the Transfer Agent for the Shares and every subsequent Transfer Agent for the Shares issuable upon the exercise of any of the rights of purchase aforesaid are hereby irrevocably authorized and directed at all times to reserve such number of authorized and unissued Shares as shall be requisite for such purpose. The Company will keep a copy of this Agreement on file with the Transfer Agent for the Shares issuable upon the exercise of the rights of purchase represented by the Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from time to time from such Transfer Agent certificates required to honor outstanding Warrants that have been exercised. The Company will supply such Transfer Agent with duly executed certificates for such purpose and with duly executed certificates for such purpose and will itself provide or otherwise make available any cash which may be issuable as provided in Section 9 of this Agreement. All Warrants surrendered in the exercise of the rights thereby evidenced or surrendered for transfer, exchange or partial exercise shall be cancelled by the Warrant Agent and shall thereafter be delivered to the Company. Section 9. Warrant Price; Adjustments. A. The warrant price per share at which Shares shall be purchasable upon exercise of Warrants (herein called the "warrant exercise price") to and including the expiration date (unless the expiration date is extended as provided below in this Section 9A) shall be $_______ per share, or, if adjusted as provided in this Section, shall be such price as so adjusted. The Warrants will not be exercisable prior to {the close of business on the date of any initial issuance thereof} {________________} and will expire at 1:00 P.M. Houston, Texas time on the expiration date; provided that the Company reserves the right to, and may, in its sole discretion, at any time and from time to time, at such time or times at the Company so determines, extend the expiration date of the Warrants for such periods of time as it chooses; further provided that in no case may the expiration date of the Warrants (as extended) be extended beyond five years from the expiration date set forth above. Whenever the expiration date of the Warrants is so extended, the Company shall at least 20 days prior to the then expiration date cause to be mailed to the Warrant Agent and the registered holders of the Warrants in accordance with the provisions of Section 17 hereof a notice stating that the expiration date has been extended and setting forth the new expiration date. B. The above provision is, however, subject to the following: (1) The warrant exercise price, the number of Shares purchasable upon exercise of each Warrant and the number -5- 9 of Warrants outstanding shall be subject to adjustment as follows: (a) In case the Company shall at any time after the date of this Agreement (i) pay a dividend, or make a distribution on, the Common Stock which is payable in shares of its Common Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into a greater number of securities (including shares of Common Stock), or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares (including shares of Common Stock), the number of Shares purchasable upon exercise of each Warrant immediately prior to the occurrence of such event shall be adjusted so that the holder of each Warrant shall be entitled to receive upon payment of the warrant exercise price the aggregate number of shares of the Company which, if such Warrant had been exercised immediately prior to the occurrence of such event, such holder would have owned or have been entitled to receive immediately after the occurrence of such event. An adjustment made pursuant to this subparagraph (a) shall become effective immediately after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of a subdivision or combination. If, as a result of an adjustment made pursuant to this subparagraph (a), the holder of any Warrant thereafter exercised shall become entitled to receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company (whose determination shall be conclusive) shall determine the allocation between or among shares of such classes of capital stock. In the event that at any time, as a result of an adjustment made pursuant to this subparagraph (a), the holder of any Warrant thereafter exercised shall become entitled to receive any shares or other securities of the Company other than shares of Common Stock, thereafter the number of such other shares so received upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Common Stock contained in this paragraph, and other provisions of this paragraph 9B(1) with respect to the shares of Common Stock shall apply on like terms to any such other shares or other securities. (b) In case the Company shall fix a record date for the issuance of rights or warrants to all holders of its Common Stock entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Common Stock at a price per share less than the current market price per share of Common Stock (as defined in subparagraph (e) -6- 10 below) at such record date, the warrant exercise price shall be determined by multiplying the warrant exercise price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Shares of Common Stock outstanding on such record date plus the number of Shares of Common Stock which the aggregate offering price of the total number of Shares so offered would purchase at such current market price, and the denominator of which shall be the number of Shares of Common Stock outstanding on such record date plus the number of additional Shares of Common Stock offered for subscription or purchase. Such adjustment shall be made successively whenever such a record date is fixed, and shall become effective immediately after such record date. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of common stock at less than such current market price, and in determining the aggregate offering price of such shares, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors of the Company. Common stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment required under this subparagraph (b). To the extent that Shares of Common Stock are not delivered after the expiration of such rights or warrants, the warrant exercise price shall be readjusted to the warrant exercise price which would then be in effect had the adjustments made in respect of the issuance of such rights or warrants been made on the basis of delivery of only the number of Shares of Common Stock actually delivered. (c) In case the Company shall fix a record date for making a distribution to all holders of its Common Stock of evidences of its indebtedness or assets (excluding regular quarterly or other periodic or recurring cash dividends or distributions and cash dividends or distributions paid from retained earnings or referred to in subparagraph (a) above) or rights or warrants to subscribe or warrants to purchase such evidences of indebtedness or assets (excluding those referred to in subparagraph (b) above), then in each such case the warrant exercise price shall be determined by multiplying the warrant exercise price in effect immediately prior to such record date by a fraction (x) the numerator of which shall be such current market price (as defined in subparagraph (e) below) per Share of Common Stock on such record date, less the then fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive) of the portion of the assets or evidences of indebtedness so -7- 11 distributed or of such subscription rights or warrants applicable to one share of the Common Stock and (y) the denominator of which shall be the current market price per share of the Common Stock on such record date. Such adjustment shall be made successively whenever such a record date is fixed and shall become effective immediately after such record date. Notwithstanding the foregoing, in the event that the Company shall distribute any rights or warrants to acquire capital stock ("Rights") pursuant to this subparagraph (c), the distribution of separate certificates representing such rights subsequent to their initial distribution (whether or not such distribution shall have occurred prior to the date of the issuance of such Warrants) shall be deemed to be the distribution of such Rights for purposes of this subparagraph (c), provided that the Company may, in lieu of making any adjustment pursuant to this subparagraph (c) upon a distribution of separate certificates representing such Rights, make proper provision so that each holder of such Warrants who exercises such Warrants (or any portion thereof) (A) before the record date for such distribution of separate certificates shall be entitled to receive upon such conversion shares of Common Stock issued with Rights and (B) after such record date and prior to the expiration, redemption or termination of such Rights shall be entitled to receive upon such exercise, in addition to the shares of Common Stock issuable upon such exercise, the same number of such Rights as would a holder of the number of shares of Common Stock that such Warrants so exercised would have entitled the holder thereof to purchase in accordance with the terms and provisions of and applicable to the Rights if such Warrants were exercised immediately prior to the record date for such distribution. Common Stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment required under this subparagraph (c). (d) After each adjustment of the number of shares purchasable upon exercise of each Warrant pursuant to subparagraph 9B(1)(a), the warrant exercise price shall be adjusted by multiplying such warrant exercise price immediately prior to such adjustment by a fraction of which the numerator shall be the number of Shares purchasable upon exercise of each Warrant immediately prior to such adjustment, and the denominator of which shall be the number of Shares so purchasable immediately thereafter. After each adjustment of the warrant exercise price pursuant to subparagraph 9B(1)(b) or (c), the total number of Shares or fractional part thereof purchasable upon the exercise of each Warrant shall be proportionately adjusted to such number of shares or fractional parts thereof as the aggregate warrant exercise price of the number of shares or -8- 12 fractional part thereof purchasable immediately prior to such adjustment will buy at the adjusted warrant exercise price. (e) For the purpose of any computation under subparagraphs 9B(1)(b) and (c) above, the current market price per Share of Common Stock at any date shall be deemed to be the average of the daily closing prices for the 30 consecutive business days commencing 45 business days before the day in question. The closing price for each day shall be (i) if the Common Stock is listed or admitted for trading on any national securities exchange, the last sale price (regular way), or the average of the closing bid and ask prices, if no sale occurred, of Common Stock on the principal securities exchange on which the Common Stock is listed, (ii) if not listed as described in (i), the mean between the closing high bid and low asked quotations of Common Stock in the National Association of Securities Dealers, Inc., Automated Quotation System, or any similar system or automated dissemination of quotations or securities prices then in common use, if so quoted, or (iii) if not quoted as described in clause (ii), the mean between the high bid and low asked quotations for Common Stock as reported the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for Common Stock on at least 5 of the 10 preceding days. If none of the conditions set forth above is met, the Closing Price of Common Stock on any day or the average of such Closing Prices for any period shall be the fair market value of Common Stock as determined by a member firm of the New York Stock Exchange, Inc. selected by the Company. (f) (A) Nothing contained herein shall be construed to require an adjustment as a result of the issuance of Common Stock pursuant to, or the granting or exercise of any rights under, the Company's Shareholder Investment Plan or any successor plans providing for the purchase of shares of Common Stock by the Company's shareholders or employees at a price not less than 90% of the "average market price" during the "pricing period" as such terms, or equivalent terms, are defined in, and as calculated pursuant to, such plans from time to time. (B) In addition, no adjustment in the warrant exercise price shall be required unless and until the earlier of the following shall have occurred: (x) such adjustment would require an increase or decrease of at least 1% in the warrant exercise price or (y) a period of 3 years shall have elapsed from the date of the occurrence of any event requiring any such adjustment pursuant to subparagraphs 9B(1)(a), (b) or (c) above. All adjustments shall be made to the nearest one hundredth of a Share and the nearest cent, and any adjustments which by reason of this subparagraph (f) are not -9- 13 required to be made shall be carried forward cumulatively and taken into account in any subsequent adjustment which (including such carry-forward) is required to be made under this subparagraph (f). (g) In any case in which this subparagraph 9B(1) shall require than an adjustment be made retroactively immediately following a record date, the Company may elect to defer (but only until five business days following the mailing of the notice described in subparagraph 9B(5) below) issuing to the holder of any Warrant exercised after such record date the Shares of the Company issuable upon such exercise over and above the Shares issuable upon such exercise only on the basis of the warrant exercise price prior to adjustment. (h) The Company may, at its option, at any time until the expiration date, reduce the then current warrant exercise price to any amount deemed appropriate by the Board of Directors of the Company for any period not exceeding twenty (20) consecutive days (as evidenced in a resolution adopted by such Board of Directors), but only upon giving the notices required by subparagraph 9(B)(5) twenty (20) days prior to taking such action. (i) Except as herein otherwise expressly provided, no adjustment in the warrant exercise price shall be made by reason of the issuance of Shares, or securities convertible into or exchangeable for Shares, or securities carrying the right to purchase any of the foregoing or for any other reason whatsoever. (j) Irrespective of any of the adjustments in the warrant exercise price or the number of Shares, Warrant Certificates theretofore issued may continue to express the same prices and number of shares as are stated in a similar Warrant Certificate issuable initially, or at some subsequent time, pursuant to this Agreement and such number of Shares specified therein shall be deemed to have been so adjusted. (2) No fractional Shares of Common Stock shall be issued upon the exercise of Warrants. If more than one Warrant shall be exercised at one time by the same holder, the number of full Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of Shares purchased pursuant to the Warrants so exercised. Instead of any fractional Share of Common Stock which would otherwise be issuable upon exercise of any Warrant, the Company shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the last sales price (or bid price if there were no sales) per Share of Common Stock in -10- 14 either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange on the business day which next precedes the day of exercise or, if the Common Stock is not then listed or admitted to trading on the New York Stock Exchange, an amount equal to the same fraction of the market price per share of Common Stock (as determined in a manner described by the board of Directors of the Corporation) at the close of business on the business day which next precedes the day of exercise. (3) In case any of the following shall occur while any Warrants are outstanding: (a) any reclassification or change of the outstanding Shares of Common Stock (other than a change in par value), or from par value to no par value, or from no par value to par value; or (b) any consolidation or merger to which the Company is a party (other than a consolidation or a merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change in, the outstanding shares of Common Stock issuable upon exercise of the Warrants); or (c) any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety; then the Company, or such successor or purchasing corporation, as the case may be, shall make appropriate provision by amendment of this Agreement or otherwise so that the holders of the Warrants then outstanding shall have the right at any time thereafter, upon exercise of such Warrants, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as would be received by a holder of the number of shares of Common Stock issuable upon exercise of such Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Such provision shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 9. The above provisions of this paragraph 9B(3) shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales or conveyances. (4) Before taking any action which would cause an adjustment decreasing the warrant exercise price so that the warrant exercise price is below the then par value of the shares of Common Stock, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Shares of Common Stock at the warrant exercise price as so adjusted. -11- 15 (5) Whenever the warrant exercise price then in effect is adjusted as herein provided, the Company shall mail to each holder of the Warrants at such holder's address as it shall appear on the books of the Company a statement setting forth the adjusted warrant exercise price, then and thereafter effective under the provisions hereof together with the facts, in reasonable detail, upon which such adjustment is based. (6) In case (i) the Company shall declare a dividend (or any distribution) on its Common Stock payable otherwise than in cash out of its current or retained earnings, or (ii) the Company shall authorize the granting to the holders of its Common Stock of rights to subscribe for or purchase any shares of capital stock of any class or of any other rights, or (iii) there is to be any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock), or any consolidation of merger to which the Company is a party and for which approval of any stockholders of the Company is required, or (iv) any distribution is to be made on or in respect of the Common Stock in connection with the dissolution, liquidation or winding up of the Company, then the Company shall mail to each holder of Warrants at such holder's address as it shall appear on the books of the Company, at least twenty days (or ten days in the case specified in clause (i) or (ii) above) prior to the applicable record date hereinafter specified, a notice stating (x) the record date for such dividend, distribution or rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such divided, distribution or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, dissolution, liquidation or winding up. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect any such transaction or any adjustment in the warrant exercise price required by this Section 9. Section 10. Notice to Warrantholders. Nothing contained in this Agreement or in any of the Warrants shall be construed as conferring upon the holders thereof the right to vote or to consent or to receive notice as shareholders in respect of the meetings of shareholders or the election of directors of the Company or any other matter, or any rights whatsoever as shareholders of the Company. -12- 16 Section 11. Certain Covenants of the Company. A. So long as any unexpired Warrants remain outstanding and if required in order to comply with the Securities Act of 1933, as amended (the "Act"), the Company covenants and agrees that it will file such post-effective amendments to the registration statement filed pursuant to the Act with respect to the Warrants (File No. 33-________) (or such other registration statements or post-effective amendments or supplements) as may be necessary to permit the Company to deliver to each person exercising a Warrant a prospectus meeting the requirements of Section 10(a)(3) of the Act and otherwise complying therewith, and will deliver such a prospectus to each such person. The Company further covenants and agrees that it will obtain and keep effective all permits, consents and approvals of governmental agencies and authorities, and will use its best efforts to take all action which may be necessary to qualify the Shares for sale under the securities laws of such of the United States, as may be necessary to permit the free exercise of the Warrants, and the issuance, sale, transfer and delivery of the Shares issued upon exercise of the Warrants, and to maintain such qualifications during the entire period in which the Warrants are exercisable. B. The Company covenants and agrees that it shall take all such action as may be necessary to ensure that all Shares will at the time of delivery of certificates for such Shares (subject to payment of the warrant exercise price) be duly and validly authorized and issued and fully paid and nonassessable Shares, free from any preemptive rights and taxes, liens, charges and securities interests created by or imposed upon the Company. C. The Company covenants and agrees that it will take all action which may be necessary to cause the Shares to be duly listed on the New York Stock Exchange or the National Association of Securities Dealers Automated Quotations System ("NASDAQ") or any securities exchange on which the other shares of Common Stock of the Company are listed at the dates of exercise of the Warrants. Section 12. Disposition of Proceeds, etc. A. The Warrant Agent shall account promptly to the Company with respect to Warrants exercised and concurrently pay to the Company all moneys received by the Warrant Agent for the purchase of Shares through the exercise of such Warrants. B. The Warrant Agent shall keep copies of this Agreement available for inspection by holders of Warrants during normal business hours at its principal office in the City of _________, _________. -13- 17 Section 13. Merger or Consolidation or Change of Name of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidate, or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any corporation succeeding to the corporate trust business of the Warrant Agent, shall be the successor to the Warrant Agent hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Warrant Agent under the provisions of Section 16 of this Agreement. In case at the time such successor to the Warrant Agent shall succeed to the agency created by this Agreement, any of the Warrants shall have been countersigned but not delivered, any such successor to the Warrant Agent may adopt the countersignature of the original Warrant Agent and deliver such Warrants so countersigned; and in case at that time any of the Warrants shall not have been countersigned, any successor to the Warrant Agent may countersign such Warrants either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases such Warrant shall have the full force provided in the Warrants and in this Agreement. In case at any time the name of the Warrant Agent shall be changed and at such time any of the Warrants shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignature under its prior name and deliver Warrants so countersigned; and in case at that time any of the Warrants shall not have been countersigned, the Warrant Agent may countersign such Warrants either in its prior name or in its changed name; and in all such cases such Warrants shall have the full force provided in the Warrants and in this Agreement. Section 14. Duties of Warrant Agent. The Warrant Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Warrants, by their acceptance thereof, shall be bound: A. The statements contained herein and in the Warrants shall be taken as statements of the Company, and the Warrant Agent assumes no responsibility for the correctness of any of the same except such as describe the Warrant Agent or action taken or to be taken by it. The Warrant Agent assumes no responsibility with respect to the distribution of the Warrants except as herein otherwise provided. -14- 18 B. The Warrant Agent shall not be responsible for any failure of the Company to comply with any of the covenants contained in this Agreement or in the Warrants to be complied with by the Company. C. The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys, agents or employees or for any loss to the Company resulting from such neglect or misconduct, provided reasonable care shall have been exercised in the selection and continued employment thereof. D. The Warrant Agent may consult at any time with counsel satisfactory to it (who may be counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any holder of any Warrant in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the opinion or the advice of such counsel. E. The Warrant Agent shall incur no liability or responsibility to the Company or to any holder of any Warrant for any action taken in reliance on any notice, resolution, waiver, consent, order, certificate, or other paper, document or instrument believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. F. The Company agrees to pay to the Warrant Agent reasonable compensation for all services rendered by the Warrant Agent in the execution of this Agreement, to reimburse the Warrant Agent for all expenses, taxes and governmental charges and other charges of any kind and nature incurred by the Warrant Agent in the execution of this Agreement and to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments costs and counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement except as a result of the Warrant Agent's gross negligence or bad faith. G. The Warrant Agent shall be under no obligation to institute any action, suit or legal proceeding or to take any other action likely to involve expense unless the Company or one or more registered holders of Warrants shall furnish the Warrant Agent with reasonable security and indemnity for any costs and expenses which may be incurred, but this provision shall not affect the power of the Warrant Agent to take such action as the Warrant Agent may consider proper, -15- 19 whether with or without any such security or indemnity. All rights of action under this Agreement or under any of the Warrants may be enforced by the Warrant Agent without the possession of any of the Warrants or the production thereof at any trial or other proceedings relative thereto, and any such action, suit or proceeding instituted by the Warrant Agent shall be brought in its name as Warrant Agent, and any recovery of judgment shall be for the ratable benefit of the registered holders of the Warrants, as their respective rights or interests may appear. H. The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. I. The Warrant Agent shall act hereunder solely as agent and not in a ministerial capacity, and its duties shall be determined solely by the provisions hereof. The Warrant Agent shall not be liable for anything which it may do or refrain from doing in connection with this Agreement except for its own gross negligence or bad faith. Section 15. Change of Warrant Agent. The Warrant Agent may resign and be discharged from its duties under this Agreement by giving to the Company notice in writing, and to the holders of the Warrants notice by publication, of such resignation, specifying a date when such resignation shall take effect, which notice shall be published at the expense of the Company at least once a week for two consecutive weeks in a newspaper of general circulation in the City of Houston, Texas, and the City of New York, New York, prior to the date so specified. The Warrant Agent may be removed by the Company by like notice from the Company to the Warrant Agent and the holders of Warrants at the expense of the Company. If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Warrant Agent. If the Company shall fail to make such appointment within a period of 30 days after such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent or by the registered holder of a Warrant (who shall, with such notice, submit his Warrant for inspection by the Company), then at the expense of the Company, the Warrant Agent or the registered holder of any Warrant may apply to any court of competent -16- 20 jurisdiction for the appointment of a successor to the Warrant Agent. Any successor Warrant Agent, whether appointed by the Company or by such a court, shall be a bank or trust company, in good standing, incorporated under the laws of any State or of the United States of America, having at the time of its appointment as Warrant Agent a combined capital and surplus of at least $100,000,000. After appointment the successor Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent without further act or deed; but the former Warrant Agent shall deliver and transfer to the successor Warrant Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Failure to file or publish any notice provided for in this Section, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of the successor Warrant Agent, as the case may be. Section 16. Identity of Transfer Agent. Forthwith upon the appointment of any Transfer Agent for the Shares or of any subsequent Transfer Agent for Shares issuable upon the exercise of the rights of purchase represented by the Warrants, the Company will file with the Warrant Agent a statement setting forth the name and address of such Transfer Agent. Section 17. Notices. Any notice pursuant to this Agreement to be given or made by the Warrant Agent or by the registered holder of any Warrant to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent) as follows: Service Corporation International 1929 Allen Parkway Houston, Texas 77219 Attn:___________________________ Any notice pursuant to this Agreement to be given or made by the Company or by the registered holder of any Warrant to or on the Warrant Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company) as follows: ________________________________ ________________________________ ________________________________ Attn:___________________________ -17- 21 Any notice pursuant to this Agreement to be given or made by the Company or the Warrant Agent to the registered holder of any Warrant shall be sufficiently given or made (unless otherwise specifically provided for herein) if sent by first-class mail, postage prepaid, addressed to said registered holder at his address appearing on the Warrant register. Section 18. Supplements and Amendments. The Company and the Warrant Agent may from time to time supplement or amend this Agreement without the approval of any holders of Warrants in order to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provision herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company and the Warrant Agent may deem necessary or desirable and which will not materially adversely affect the interest of the registered holders of the Warrants. Section 19. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. Section 20. {Texas} Contract. This Agreement and each Warrant issued hereunder shall be deemed to be a contract made under the laws of the State of {Texas} and for all purposes shall be construed in accordance with the laws of said State. Section 21. Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any person or entity other than the Company and the Warrant Agent and the holders of Warrants any legal or equitable right, remedy or claim under this Agreement, but this Agreement shall be for the sole and exclusive benefit of the Company and the Warrant Agent and the holders of Warrants. Section 22. Counterparts. This Agreement may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. -18- 22 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the day and year first above written. SERVICE CORPORATION INTERNATIONAL By:_____________________________ Attest: ___________________________ ________________________________ Warrant Agent By:_____________________________ Attest: ___________________________ -19- 23 EXHIBIT A (Form of Warrant) Unless extended, Void After 1:00 P.M., Houston, Texas time, ____(A) ____, 19__ No. WA Warrant to Purchase _______ Shares of Common Stock CLASS __ WARRANT SERVICE CORPORATION INTERNATIONAL FOR VALUE RECEIVED, Service Corporation International (the "Company"), upon the surrender {after __________} and prior to 1:00 P.M., Houston, Texas time, ____(A) ____, 19__ (unless extended) of this Warrant for exercise, with the exercise form on the reverse side hereof duly executed, at the office of ___________________________________, will sell and deliver or cause to be sold and delivered to _______________ or assigns (the "Warrant Holder") a certificate or certificates for the number of whole shares purchasable, as indicated above, of fully paid and non-assessable shares of Common Stock ($1.00 par value) of the Company (the "Shares"), for which the Warrant is exercised, at a price of $_______ per Share (the "Warrant Price"), subject to all the terms, provisions and conditions of a Common Stock Warrant Agreement dated as of _____________, 19__ (the "Warrant Agreement"), executed by the Company and _________________________________ (the "Warrant Agent"), which Warrant Agreement is hereby incorporated herein by reference and made a part hereof. 1. The Warrant Price shall be payable in cash, certified check, bank draft or postal or express money order, payable in United States dollars, to the order of the Warrant Agent. In certain events, the Warrant Price and the number of Shares deliverable on exercise of this Warrant are subject to adjustments, as provided in the Warrant Agreement. No certificates for a fractional Share will be issued. As to any fraction of a Share which would otherwise be purchasable on the exercise of a Warrant, the Company shall pay the cash value thereof determined as provided in the Warrant Agreement. 2. This Warrant is issued in accordance with the Warrant Agreement in which the rights of the Warrant Holders and the terms, provisions and conditions upon which this Warrant has been executed and delivered and may be exercised are more fully set forth. Every Warrant Holder, by acceptance hereof, assents to all the terms, provisions and conditions of the Warrant Agreement. A counterpart of the Warrant Agreement ____________________ (A) The expiration date; see page 1 of Warrant Agreement A-1 24 is on file at the office of the Company in Houston, Texas, and at the office of the Warrant Agent in __________, ________. 3. In the event this Warrant shall not be exercised on or before _____ (B) ____, 19__ , unless said date is extended as provided for in Section 9A of the Warrant Agreement, this Warrant shall become void and all rights hereunder shall cease. Reference is made to the further provisions of this Warrant set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Warrant shall not be valid for any purpose until it shall have been countersigned by the Warrant Agent. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in its name and on its behalf by the facsimile signatures of its duly authorized officers and a facsimile of its seal. Dated: _____________, 19__ SERVICE CORPORATION INTERNATIONAL By ________________________ Attest: /s/ _______________________ Countersigned: ____________________________ ____________________________ Warrant Agent By: _______________________ Authorized Signature (REVERSE OF WARRANT) 4. Subject to the provisions of paragraph 3 contained on the face of this Warrant, (a) this Warrant, with or without other Warrants, upon surrender at the office of the Warrant Agent, may be exchanged for another Warrant or Warrants of like tenor in denominations entitling the Warrant Holder to purchase a like aggregate number of Shares, but only to the ____________________ (B) The expiration date; see page 1 of Warrant Agreement A-2 25 extent provided in the Warrant Agreement, or (b) this Warrant may be transferred at the office of the Warrant Agent by the Warrant Holder or his assigns, in person or by attorney duly authorized in writing, but only in the manner provided in the Warrant Agreement and upon surrender of this Warrant. If this Warrant shall be exercised in part, the Warrant Holder shall be entitled to receive, upon surrender hereof, another Warrant or Warrants of like tenor for the number of whole Shares not purchased upon such exercise. 5. No Warrant Holder shall be entitled to vote or receive dividends or be deemed the holder of Shares of the Company for any purpose, nor shall anything contained in the Warrant Agreement or herein be construed to confer upon the Warrant Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors of the Company, or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any action (whether upon any recapitalization, issue of securities, reclassification of securities, consolidation, merger, conveyance or otherwise) or to receive notice of meetings or other action affecting shareholders (except for notices as provided for in the Warrant Agreement), or to receive dividends or subscription rights or otherwise, until this Warrant shall have been exercised and the Shares purchasable on the exercise thereof shall have become deliverable as provided in the Warrant Agreement. 6. Every holder of a Warrant, by accepting this Warrant, consents and agrees with the Company, the Warrant Agent and with every subsequent holder of this Warrant that until this Warrant is transferred on the books of the Warrant Agent, the Company and the Warrant Agent may treat the registered holder hereof as the absolute owner hereof for all purposes notwithstanding any notice to the contrary. 7. The Company represents and warrants that the Shares to be issued by it as provided in the Warrant Agreement have been duly authorized and, when so issued in accordance with the Warrant Agreement, will be validly issued, fully-paid and non-assessable. The Company represents and warrants that it has authority to execute and deliver the Warrant Agreement and the Warrants thereunder, but the Warrant Agent makes no representation with respect thereto, or with respect to the validity or sufficiency of the Warrants, the Warrant Agreement or the Shares. A-3 26 FORM OF EXERCISE (Form of exercise to be executed by the Warrant Holder at the time of exercise) To _________________________ _____________________ Warrant Agent: The undersigned, holder of the within Warrant, (1) exercises his right to purchase _____ of the Shares of Common Stock ($1.00 par value) of Service Corporation International, which the undersigned is entitled to purchase under the terms of the within Warrant, and (2) makes payment in full for the number of Shares of Common Stock so purchased by payment of $________ in cash. Please issue the certificate for Shares of Common Stock (and any new Warrants in the case of a partial exercise) as follows: ________________________________________________________________________________ Print or Type Name ________________________________________________________________________________ Social Security or other Identifying Number ________________________________________________________________________________ Street Address ________________________________________________________________________________ City State Zip Code A-4 27 and deliver it (together with any new Warrants in the case of a partial exercise) to the above address unless a different address is indicated below. Dated: __________________ ___________________________ Signature (Signature must conform in all respects to name of holder as specified on the face of the Warrant) To be used only for special instructions for delivery. Deliver to: ________________________________________________________________________________ Print or Type Name ________________________________________________________________________________ Street Address ________________________________________________________________________________ City State Zip Code A-5 28 ASSIGNMENT (Form of assignment to be executed if Warrant Holder desires to transfer Warrant) FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers unto ____________________ ________________________________________________________________________________ Print or Type Name ________________________________________________________________________________ Street Address ________________________________________________________________________________ City State Zip Code ________________________________________________________________________________ Social Security or other Identifying Number the right represented by the within Warrant to purchase ____ Shares of Common Stock ($1.00 par value) of Service Corporation International to which the within Warrant relates and appoints ____________ attorney to transfer such right on the books of the Warrant Agent with full power of substitution in the premises. Dated: ____________________ ___________________________ Signature (Signature must conform in all respects to name of holder as specified on the face of the Warrant) Signature Guaranteed ___________________________ A-6 EX-4.5(A) 10 FORM OF SCI PAYMENT, GUARANTEE AND CONVERSION AGMT 1 EXHIBIT 4.5(a) PAYMENT, GUARANTEE AND CONVERSION AGREEMENT THIS PAYMENT, GUARANTEE AND CONVERSION AGREEMENT (the ``Agreement''), dated as of ( ), 1994 is executed and delivered by Service Corporation International, a Texas corporation (``SCI''), for the benefit of each of the Holders (as defined below) from time to time of the Preferred Shares (as defined below) of SCI Finance LLC, a limited liability company organized under the laws of the State of Texas (the ``Company''). WHEREAS, the Company may issue from time to time, in one or more series, up to 7,000,000 of its preferred interests (the ``Preferred Shares''); WHEREAS, the Company intends to issue up to ( ) Preferred Shares designated as $( ) Term Convertible Shares, Series A (the ``Series A Shares''), and SCI desires to enter into this Agreement for the benefit of each of the Holders, as provided herein; WHEREAS, the Company pursuant to the Loan Agreement (as defined below) will loan to SCI International Limited, a Delaware corporation and a wholly-owned subsidiary of SCI (``SCI Limited''), substantially all of the proceeds from the issuance and sale of the Series A Shares and from the issuance and sale of its common interests (the ``Common Shares''); and WHEREAS, SCI desires to agree to the extent set forth herein to pay to each of the Holders the Guarantee Payments (as defined below); and WHEREAS, SCI desires to agree to provide for the conversion of the Preferred Shares into SCI Common Stock (as herein defined) pursuant to the terms hereof and to make the delivery of such SCI Common Stock and any other property then deliverable in respect of the Preferred Shares upon conversion thereof in accordance with the terms hereof. NOW, THEREFORE, in consideration of the purchase by each Holder of the Series A Shares, which purchase SCI hereby agrees shall benefit SCI, SCI executes and delivers this Agreement for the benefit of each of the Holders. 2 -2- ARTICLE I DEFINITIONS As used in this Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. ``Guarantee Payments'' shall mean the following payments, without duplication, to the extent not paid by the Company: (i) any accumulated and unpaid dividends which have been theretofore declared on the Preferred Shares of any series out of moneys legally available therefor, (ii) the redemption price (including all accumulated and unpaid dividends) to the date of payment payable with respect to any Preferred Shares of any series called for redemption by the Company out of funds legally available therefor, and (iii) upon a liquidation of the Company, the lesser of (a) the aggregate liquidation preference per Preferred Share and all accumulated and unpaid dividends (whether or not declared) to the date of payment and (b) the amount of remaining assets of the Company after satisfaction of other parties having claims which, as a matter of law, are prior to those of the Holders. ``Holder'' shall mean any holder from time to time of any Preferred Shares of any series; provided, however, that in determining whether the Holders of the requisite percentage of Preferred Shares have given any request, notice, consent or waiver hereunder, ``Holder'' shall not include SCI or any entity owned 50% or more by SCI, either directly or indirectly. ``Liability Assumption Agreement'' shall mean the Liability Assumption Agreement entered into between the Company and SCI (including in its capacity as Manager of the Company) pursuant to which SCI has agreed to guarantee the payment of any indebtedness or liabilities incurred by the Company (other than obligations to Holders of Preferred Shares in such Holders' capacities as Holders of such Preferred Shares). ``Loan Agreement'' shall mean the agreement, dated the date hereof, by and among the Company, SCI Limited and SCI, pursuant to which the Company will loan to SCI Limited substantially all of the proceeds received by the Company from the issuance and sale of the Series A Shares and the Common Shares. ``Loans'' shall mean the loans from the Company to SCI Limited pursuant to the Loan Agreement. ``Payment Agent'' shall mean Society National Bank, as registrar, transfer agent and paying and conversion agent, or its duly appointed successor. 3 -3- ARTICLE II PAYMENT AND CONVERSION OBLIGATIONS SECTION 2.01. Guarantee Payments; Conversion. (a) SCI irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments, as and when due (except to the extent paid by the Company), regardless of any defense, right of set-off or counterclaim which the Company may have or assert. SCI's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amount by SCI to the Holders or by causing the Company to pay such amounts to the Holders. (b) (i) SCI also irrevocably and unconditionally agrees to deliver to each Holder, upon conversion in accordance with the Articles of Organization or Regulations of the Company (as such may have been at any time heretofore, and may at any time hereafter be, amended including, without limitation, any amendment setting forth the terms of a series of Preferred Shares including the Series A Shares, being referred to herein as the ``Articles'') of any Preferred Shares held by such Holder, all shares of common stock, $1.00 par value, of SCI (the ``SCI Common Stock'') or other property into which such Preferred Shares are convertible pursuant to the Articles, as and when so required upon compliance by the Holder with the procedures set forth in such Articles, regardless of any defense, right of set-off or counterclaim which the Company may have or assert. SCI covenants and agrees that it shall duly and punctually perform each and every term and provision of the Articles in respect of the right of the Holders to convert the Preferred Shares into SCI Common Stock or such other property as set forth therein, and all such terms and provisions in respect of such conversion are incorporated herein by reference mutatis mutandis as if set forth herein, and SCI ratifies, confirms and adopts, without reservation, each covenant and obligation therein so contained in respect of any such conversion. SCI's obligation to make any such delivery may be satisfied by direct delivery of such SCI Common Stock or other property to such Holder or by causing the Company to make such delivery to such Holder. (ii) SCI covenants that all shares of SCI Common Stock which may be delivered upon conversion of Preferred Shares will upon delivery be duly and validly issued and fully paid and nonassessable, free of all liens and charges and not subject to any preemptive rights. (iii) SCI covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of authorized but unissued shares and treasury shares of SCI Common Stock, a sufficient number of shares of SCI Common Stock for the purpose of effecting conversions of Preferred Shares not theretofore converted. For purposes of this reservation of SCI Common Stock, the 4 -4- number of shares of SCI Common Stock which shall be deliverable upon the conversion of all outstanding Preferred Shares shall be computed as if at the time of computation all outstanding Preferred Shares were held by a single holder. SCI covenants that from time to time, in accordance with the laws of the State of Texas, it will take such steps as are necessary to submit to shareholders of SCI a resolution to increase the authorized number of shares of SCI Common Stock if at any time the number of authorized and unissued shares and treasury shares of SCI Common Stock shall not be sufficient to permit the conversion of all then-outstanding Preferred Shares. Prior to the issuance of any Preferred Shares of a series, SCI will authorize in all respects the issuance of shares of SCI Common Stock upon conversion of Preferred Shares of such series. (iv) If any shares of SCI Common Stock required to be reserved for purposes of conversion of the Preferred Shares hereunder require registration with or approval of any governmental authority under any Federal or state law before such shares may be issued upon conversion, SCI agrees to use all reasonable efforts to expeditiously cause such shares to be duly registered or approved, as the case may be; provided, that, SCI shall not be required to subject itself to general service of process in any jurisdiction where it is not then so subject. If the SCI Common Stock is listed on the New York Stock Exchange, quoted on the Nasdaq National Market or listed on any other national securities exchange, SCI agrees to use all reasonable efforts to list and keep listed on such exchange or system, upon official notice of issuance, all shares of SCI Common Stock issuable upon conversion of the Preferred Shares. SECTION 2.02. Waiver of Notice. SCI hereby waives notice of acceptance of this Agreement and of any liability to which it applies or may apply, presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 2.03. Obligations Unconditional. The obligations, covenants, agreements and duties of SCI under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Company of any express or implied agreement, covenant, term or condition relating to the Preferred Shares to be performed or observed by the Company; (b) the extension of time for the payment or delivery by the Company of all or any portion of the dividends (other than in connection with a valid extension of the interest payment periods by SCI Limited under the Loan Agreement), redemption price, liquidation distributions, SCI Common Stock or other property upon 5 -5- conversion or any other sums or other property payable or deliverable under the terms of the Preferred Shares or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Shares; (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Shares, or any action on the part of the Company granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Company or any of the assets of the Company; (e) any invalidity of, or defect or deficiency in, any of the Preferred Shares; or (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred. There shall be no obligation of the Holders to give notice to, or obtain the consent of, SCI with respect to the happening of any of the foregoing. SECTION 2.04. Enforcement. This is a guarantee of payment and performance and not of collection. A Holder may enforce this Agreement directly against SCI, and SCI will waive any right or remedy to require that any action be brought against the Company or any person or entity before proceeding against SCI. Subject to Section 2.05, all waivers herein contained shall be without prejudice to the Holders' rights at the Holders' option to proceed against the Company, whether by separate action or by joinder. SCI agrees that, with respect to the Guarantee Payments, this Agreement shall not be discharged except by payment of the Guarantee Payments in full (to the extent not paid by the Company), and by complete performance of all other obligations of SCI contained in this Agreement and that all obligations of SCI under Section 2.01(b) hereof shall not be satisfied otherwise than upon delivery of the SCI Common Stock and other property then deliverable upon conversion of the Preferred Shares in accordance with the Articles. SECTION 2.05. Subrogation. SCI shall be subrogated to all rights (if any) of the Holders against the Company in respect of any amounts or property paid or delivered to the Holders by SCI under this Agreement and shall have the right to waive payment or delivery of any amount or property in respect of which payment or delivery has been made to the Holders by SCI pursuant to Section 2.01; provided, however, that SCI shall not (except 6 -6- to the extent required by mandatory provisions of law) exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of a payment or delivery under this Agreement, if at the time of any such payment or delivery, any amounts or deliveries are due and unpaid or unmade under this Agreement. If any amount or property shall be paid or delivered to SCI in violation of the preceding sentence, SCI agrees to pay over or deliver such amount or property to the Holders. SECTION 2.06. Independent Obligations. SCI acknowledges that its obligations hereunder are independent of the obligations of the Company with respect to the Preferred Shares and that SCI shall be liable as principal and sole debtor hereunder to make Guarantee Payments and make deliveries pursuant to Section 2.01(b) pursuant to the terms of this Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (f), inclusive, of Section 2.03. ARTICLE III COVENANTS AND RANKING SECTION 3.01. Limitations on Payments on, or in respect of, SCI Capital Stock. So long as any Preferred Shares of any series remain outstanding, SCI shall not declare or pay any dividend on, and SCI shall not, and shall not permit any of its majority-owned subsidiaries to, redeem, purchase, acquire or make a liquidation payment with respect to, any of SCI's capital stock (other than (1) any redemption of rights to purchase Series C Junior Participating Preferred Stock of SCI (or such other securities in lieu thereof as specified in the Rights Agreement) pursuant to the Rights Agreement dated as of July 18, 1988 between SCI and Texas Commerce Bank National Association as rights agent, as amended or supplemented from time to time and (2) any reacquisition by SCI of any of its stock issued in connection with any acquisition by SCI or any of its subsidiaries of a business (including any assets, leases or liabilities (contingent or otherwise) related thereto (as a result of a purchase price adjustment or settlement of breach of warranties in connection with such acquisition) or make any guarantee payments with respect to the foregoing (other than payments under this Agreement) and will otherwise comply with Section 3(c) of the Amendment to the Company's Regulations establishing the Series A Shares as if such provisions were applicable to them, if at such time (i) SCI shall be in default with respect to its payment or other obligations hereunder or under the Liability Assumption Agreement, (ii) there shall have occurred any event that constitutes an Event of Default (as defined in the Loan Agreement) under the Loan Agreement or (iii) there shall exist any nonpayment of interest under the Loans (including, without limitation, during any valid extension of the interest payment periods in accordance with the terms of the Loan Agreement). SCI shall take all actions necessary to ensure the compliance of its subsidiaries with this Section 3.01. 7 -7- SECTION 3.02. Additional Covenants. SCI covenants, so long as any Preferred Shares of any series remain outstanding: (i) to maintain direct 100% ownership of the Common Shares and any other interests in the Company (other than the Preferred Shares); (ii) to cause more than 20% of the total value (initially measured by shareholders' equity determined in accordance with generally accepted accounting principles) of the Company and, subject to the preferential rights of the Holders of Preferred Shares as to dividends and liquidation distributions, more than 20% of all interests in the capital, income, gain, loss, deduction and credit of the Company to be represented by Common Shares; (iii) not to voluntarily dissolve, wind-up or liquidate the Company; (iv) to remain the Manager of the Company and to timely perform all of its duties as Manager of the Company (including the duty to declare and pay dividends on the Preferred Shares to the extent set forth in the Articles); and (v) to use reasonable efforts to cause the Company to remain a limited liability company under the laws of the State of Texas (provided however that the Company may reorganize under the laws of another jurisdiction provided that the Company has received an opinion of counsel from nationally recognized legal counsel that such reorganization will not have an adverse effect, including, without limitation, an adverse tax effect, on the Holders of the Series A Shares) and use reasonable efforts to cause the Company to continue to be treated as a partnership for United States federal income tax purposes. SECTION 3.03. Ranking. The obligations of SCI under this Agreement in respect of the Guarantee Payments will constitute an unsecured obligation of SCI and will rank (i) junior in right of payment to all other liabilities of SCI and will be subordinated in right of payment to all such liabilities in the same manner and to the same extent as SCI's guarantee of obligations under the Loan Agreement is subordinated to Senior Indebtedness (as defined in the Loan Agreement), (ii) senior to the preferred stock of any series now or hereafter issued by SCI and (iii) pari passu with any guarantee now or hereafter entered into by SCI in respect of any preferred or preference stock of any affiliate of SCI. ARTICLE IV TERMINATION This Agreement shall terminate and be of no further force and effect as to a series of Preferred Shares upon full payment of the redemption price (including all accumulated and unpaid dividends) or the retirement or cancellation of all of such series of Preferred Shares, or delivery of all shares of SCI Common Stock or other property required to be delivered upon conversion, with respect to all outstanding Preferred Shares of that series or shall terminate completely upon full payment and delivery of the amounts payable or deliverable to the Holders upon liquidation of the Company including the delivery of all shares of SCI Common Stock or other property required to be delivered upon conversion of 8 -8- the Preferred Shares of all such series; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, with respect to any such series if at any time any Holder of Preferred Shares of such series must restore payment of any sums or property paid or delivered under the Preferred Shares of such series or under this Agreement for any reason whatsoever. ARTICLE V MISCELLANEOUS SECTION 5.01. Binding Effect. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of SCI and shall inure to the benefit of the Holders. SCI shall not assign its obligations hereunder without the prior approval of the Holders of not less than 66-2/3% in liquidation preference (plus all accrued and unpaid dividends per share) of each series of Preferred Shares then outstanding. No approval of the Holders shall be required in connection with a merger of SCI with or into any entity if: (i) at such time no Event of Default under the Loan Agreement has occurred and is continuing, or would occur as a result of such merger, and (ii) either (I) SCI is the survivor of such merger or (II) the survivor is a corporation organized under the laws of the United States or any state thereof and expressly assumes all of the obligations of SCI under this Agreement and the Loan Agreement, and SCI receives an opinion of counsel from nationally recognized counsel that the merger will not result in the recognition of taxable gain or loss by the Holders of the Preferred Shares. SECTION 5.02. Amendment. Except with respect to any changes which do not adversely affect the rights of Holders (in which case no vote will be required), this Agreement may only be amended by an instrument in writing signed by SCI with the prior approval of the Holders of not less than 66-2/3% in liquidation preference (plus all accrued and unpaid dividends per share) of each series of Preferred Shares then outstanding and affected thereby. 9 -9- SECTION 5.03. Notices. Any notice, request or other communication required or permitted to be given hereunder to SCI shall be given in writing by delivering the same against receipt therefor by facsimile transmission (confirmed by mail) or telex, addressed to SCI, as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer-back, if sent by telex), to it: Service Corporation International 1929 Allen Parkway Houston, Texas 77019 Fax No: (713) 525-5475 Attention: ( ) Any notice, request or other communication required or permitted to be given hereunder to the Holders shall be given by SCI in the same manner as notices sent by the Company to the Holders. SECTION 5.04. Beneficiaries of this Agreement. This Agreement is solely for the benefit of the Holders and is not separately transferable from the Preferred Shares. SECTION 5.05. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN AND WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. THIS PAYMENT, GUARANTEE AND CONVERSION AGREEMENT is executed as of the day and year first above written. SERVICE CORPORATION INTERNATIONAL By:______________________________ Name: Title: EX-4.5(B) 11 FORM OF LOAN AGEEMENT 1 EXHIBIT 4.5(b) LOAN AGREEMENT LOAN AGREEMENT, dated as of ( ), 1994, among SCI International Limited, a Delaware corporation (``SCI Limited''), Service Corporation International, a Texas corporation (``SCI''), and SCI Finance LLC, a limited liability company organized under the laws of the State of Texas (the ``Company''). WHEREAS, the Company intends to issue its common interests (the ``Common Shares'') to SCI, and receive related capital contributions, in an aggregate amount of at least $( ) (the ``Common Share Payments'') and to issue and sell its preferred interests (the ``Preferred Shares''), and to issue and sell at least ( ) Preferred Shares designated as $( ) Term Convertible Shares, Series A (the ``Series A Shares''), with a liquidation preference equal to $50 per Series A Share (the ``Liquidation Preference''); and WHEREAS, SCI (i) is guaranteeing (A) the payment on liquidation or redemption of the Series A Shares and (B) the payment of dividends on the Series A Shares if and when declared to the extent that there are sufficient funds legally available therefor, and (ii) is irrevocably and unconditionally covenanting and agreeing to deliver shares of its Common Stock, $1.00 par value (``SCI Common Stock''), upon conversion of the Series A Shares, all to the extent set forth in the Payment, Guarantee and Conversion Agreement, dated as of ( ), 1994 by SCI for the benefit of each holder of Preferred Shares (the ``SCI Agreement''); and WHEREAS, the primary purpose for which the Company was formed is to refinance indebtedness incurred in connection with acquisitions of stock of non-United States entities by one or more indirect subsidiaries of SCI, and consistent therewith, SCI has asked the Company to make a loan to SCI Limited in an aggregate principal amount approximately equal to the sum of the aggregate Common Share Payments and the aggregate Liquidation Preference of the Series A Shares issued and sold by the Company less 1% of such sum; and WHEREAS, the Company intends to make the aforementioned loans to SCI Limited on the terms and conditions hereinafter stated; and WHEREAS, SCI desires to guarantee the payment obligations of SCI Limited hereunder as and when due to the extent herein set forth; and WHEREAS, it is a condition precedent to the making of the Loans (as defined below) that SCI Limited secure its obligations in respect of the Loans with the pledge of 50% of the outstanding capital stock of Service Corporation International plc pursuant to the terms 2 -2- of the Stock Pledge Agreement in the form attached hereto as Exhibit A (the ``Pledge Agreement''). NOW THEREFORE, SCI Limited, SCI and the Company hereby agree as follows: ARTICLE I THE LOANS Section 1.01. The Loans. Subject to the terms and conditions herein, the Company agrees to make loans to SCI Limited on the date hereof in an aggregate principal amount of $( ) in next day funds, such loans to approximately equal the sum of the aggregate stated Liquidation Preference of the Series A Shares issued and sold on the date hereof plus the related Common Share Payments less 1% of such sum. All such loans shall be referred to herein as the ``Loans.'' Section 1.02. Term of the Loans; Mandatory Prepayment. (a) If the Company redeems Series A Shares in accordance with the terms thereof, the Loans shall become due and payable in a principal amount equal to the aggregate stated Liquidation Preference of the Series A Shares so redeemed, together with any and all accrued but unpaid interest thereon and any premium in excess of such principal amount in accordance with Section 1.03 hereof. Any payment pursuant to this Section 1.02(a) shall be made in immediately available funds prior to 12:00 noon, New York City time, on the date fixed for such redemption or at such other time on such earlier date as the Company, SCI Limited and SCI shall agree. (b) The entire principal amount of the Loans shall become due and payable, together with any accrued and unpaid interest thereon, on the earliest of ( ), 2024 or the date upon which SCI Limited, SCI or the Company is dissolved, wound- up or liquidated; provided, that, if SCI Limited is dissolved, wound-up or liquidated and (i) SCI remains obligated under the SCI Agreement and (ii) SCI Limited's obligations hereunder are assumed by either SCI or another entity, the principal amount of the Loans will not become due and payable. Section 1.03. Optional Prepayment. SCI Limited shall have the right to prepay the Loans, in whole or in part (together with any accrued but unpaid interest on the portion being prepaid), at any time (A) that the Company shall have given a notice of redemption of the Series A Shares in connection with a Tax Event as contemplated by Section 3(c) of the Amendment to the Regulations of the Company setting forth the terms of the 3 -3- Series A Shares (the ``Amendment'') and, if the redemption date is prior to ( ), 1995, at ( )% of the principal amount thereof; if the redemption date is on or after ( ), 1995 and prior to ( ), 1996, at ( )% of the principal amount thereof; if the redemption date is on or after ( ), 1996 and prior to ( ), 1997, at ( )% of the principal amount thereof; and thereafter at the applicable percentage of the principal amount thereof set forth in clauses (B) and (C) of this sentence, (B) on or after ( ), 1997 and prior to ( ), 1998, at ( )% of the principal amount thereof; and on or after ( ), 1998 and prior to ( ), 1999, at ( )% of the principal amount thereof and (C) on or after ( ), 1999, during the twelve-month periods beginning on ( ) in each of the following years at the following prepayment prices (expressed as a percentage of the principal amount of the Loans being prepaid):
Prepayment Price as a % of Principal Year Amount - ------------------- ------------ %
; provided, however, that SCI Limited may not prepay all or any portion of the Loans under Section 1.03 hereof prior to ( ), 1999 unless the Company has the right concurrently therewith to redeem, under Section 4(b) or 4(c) of the Amendment, the number of Series A Shares with an aggregate redemtion price equal to such prepayment. For purposes hereof, (A) SCI Limited shall not be deemed to have the right to redeem the Series A Shares under the Amendment unless and until SCI Limited shall have satisfied all conditions precedent to effecting such redemption set forth in the Amendment and the satisfaction of each thereof is continuing and in full force and effect and (B) if at any time the Company is only permitted to redeem all but not less than all of the Series A Shares pursuant to the Amendment, then SCI Limited shall not be permitted to prepay less than all of the Loans in connection with any such redemption of the Series A Shares. SCI Limited shall have the right to prepay the Loans at any time by transfer to the Company of Series A Shares and the aggregate amount of the Loans then outstanding shall be reduced in an amount equal to the Liquidation Preference per Series A Share (valued at 100% of the amount thereof) transferred to the Company. Upon any such prepayment, SCI Limited shall be deemed to represent and warrant to the Company that (i) the transfer of such shares has been duly authorized by all necessary corporate action on the part of SCI Limited, (ii) SCI Limited has good and marketable title to such shares, (iii) such shares are not subject to any lien, charge or other encumbrance or defect in title and (iv) such transfer will not conflict with or result in a breach or default under any contract or other instrument binding upon SCI Limited or violate any law, rule or regulation, or order or decree of any court of competent jurisdiction, binding upon SCI Limited. 4 -4- ARTICLE II INTEREST Section 2.01. Interest on the Loans. The Loans shall bear interest at an annual rate equal to ( )% from the date they are made until maturity. Such interest shall be payable on the last day of each calendar month of each year, commencing ( ), 1994. In the event that any date on which interest is payable on the Loans is not a Business Day (as defined below), then payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date, subject to certain rights of extension described under Section 2.02 below. Interest shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, for any period shorter than a full monthly interest period, interest shall be computed on the basis of the actual number of days elapsed in such period. A ``Business Day'' shall mean any day other than a day on which banking institutions in The City of New York are authorized or required by law to close. Section 2.02. Extension of Interest Payment Period. Notwithstanding the provisions of Section 2.01 hereof, SCI Limited shall have the right at any time or from time to time during the term of the Loans, so long as SCI Limited is not in default in the payment of interest on the Loans, to extend interest payments under the Loans for up to an aggregate of 60 monthly interest payment periods during the term of the Loans whether or not such deferrals occur in consecutive months, and at the end of any such extended payment period SCI Limited shall pay all interest then accrued and unpaid (together with interest on such accrued and unpaid interest at the rate specified for the Loans to the extent permitted by applicable law); provided, however, that, during any such extended interest payment period, or at any time during which there is an Event of Default under the Loans, SCI shall not declare or pay any dividend on, and SCI shall not, and shall not permit any of its majority-owned subsidiaries to, redeem, purchase, acquire or make a liquidation payment with respect to, any of SCI's capital stock (other than (1) any redemption of rights (the "Rights") to purchase Series C Junior Participating Preferred Stock of SCI (or such other securities in lieu thereof as specified in the Rights Agreement) pursuant to the Rights Agreement (the "Rights Agreement") dated as of July 18, 1988 between SCI and Texas Commerce Bank National Association as rights agent, as amended or supplemented from time to time and (2) any reacquisition by SCI of any of its stock issued in connection with any acquisition by SCI or any of its subsidiaries of a business (including any assets, leases or liabilities (contingent or otherwise) related thereto) as a result of a purchase price adjustment or settlement of breach of warranties in connection with such acquisition), or make any guarantee payments with respect to the foregoing (other than payments under the SCI Agreement). Prior to the 5 -5- termination of any such extended interest payment period, SCI Limited may further extend the interest payment period; provided, that such extended interest payment period together with all such further extensions thereof may not exceed 60 monthly interest payments in the aggregate over the term of the Loans. SCI Limited shall give the Company notice of its selection of an extended interest payment period at least one Business Day prior to the earlier of (i) the date the Company declares, or would be scheduled to declare, the related dividend or (ii) the date the Company is required to give notice of the record or payment date of such related dividend to the New York Stock Exchange or other applicable stock exchange or self-regulatory organization or to holders of the Series A Shares, but in any event not less than two Business Days prior to such record date. SCI shall cause the Company to give such notice of SCI Limited's selection of such extended interest payment period to the holders of the Series A Shares concurrently therewith. Section 2.03. Additional Interest. If at any time the Company is or will be required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, SCI Limited also will pay as additional interest on the Loans such amounts as shall be required so that the net amounts received and retained by the Company after paying any such taxes, duties, assessments or governmental charges will not be less than the amounts the Company would have received had no such taxes, duties, assessments or governmental charges been imposed. ARTICLE III PAYMENTS Section 3.01. Method and Date of Payment. Each payment by SCI Limited of principal of, premium, if any, and interest on the Loans shall be made to the Company in lawful money of the United States, in immediately available funds, at such place and to such account as may be designated by the Company. ARTICLE IV GUARANTEE OF SCI; SUBORDINATION OF GUARANTEE Section 4.01. Guarantee of SCI. Subject to the provisions of this Article IV, SCI hereby irrevocably and unconditionally guarantees to the Company, irrespective of the validity and enforceability of this Loan Agreement, the Loans or the obligations of SCI 6 -6- Limited to the Company, that: (a) the principal of, premium, if any, and interest on the Loans will be duly and punctually paid in full when due, whether at maturity, by acceleration, on prepayment or otherwise, and all other obligations of SCI Limited to the Company hereunder will be promptly paid in full or performed, all in accordance with the terms hereof; and (b) in the case of any extension of time of payment or renewal of any Loans, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration, on prepayment or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of SCI Limited to the Company, for whatever reason, SCI irrevocably and unconditionally agrees to pay in full to the Company the payment of principal of, premium, if any, and interest on the Loans, as and when due (except to the extent paid by SCI Limited), regardless of any defense, right of set-off or counterclaim which SCI Limited may have or assert. Section 4.02. Waiver of Notice. SCI hereby waives notice of acceptance of its guarantee obligations under this Loan Agreement and of any liability to which it applies or may apply, presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands, Section 4.03. Guarantee Obligations Unconditional. The obligations, covenants, agreements and duties of SCI pursuant to its guarantee obligations under this Loan Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by SCI Limited of any express or implied agreement, covenant, term or condition relating to this Loan Agreement or the Loans to be performed or observed by SCI Limited; (b) the extension of time for the payment or delivery by SCI Limited of all or any portion of the interest on the Loans (other than in connection with a valid extension of the interest payment periods by SCI Limited under this Loan Agreement), principal of and premium, if any, on the Loans or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Loan Agreement and the Loans; (c) any failure, omission, delay or lack of diligence on the part of the Company to enforce, assert or exercise any right, privilege, power or remedy conferred on the Company pursuant to the terms of this Loan Agreement, or any action on the part of the Company granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any 7 -7- collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, SCI Limited or any of the assets of SCI Limited; (e) any invalidity of, or defect or deficiency in, any of this Loan Agreement or the Loans; or (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred. There shall be no obligation of the Company to give notice to, or obtain the consent of, SCI with respect to the happening of any of the foregoing. Section 4.04. Enforcement by Holders. This is a guarantee of payment and performance and not of collection. The Company or its duly authorized representative (including, in certain circumstances, a trustee on behalf of holders of Series A Shares) may enforce the guarantee obligations of SCI under this Loan Agreement directly against SCI, and SCI will waive any right or remedy to require that any action be brought against SCI Limited or any person or entity before proceeding against SCI. Subject to Section 4.05, all waivers herein contained shall be without prejudice to the rights of the Company or the holders of Series A Shares (acting through a trustee as provided in Section 7.01 hereof) at their respective option to proceed against SCI Limited, whether by separate action or by joinder. SCI agrees that the guarantee obligations of SCI under this Loan Agreement shall not be discharged except by payment in full of all principal, premium, if any, and interest then owing on the Loans (to the extent not paid by SCI Limited), and by complete performance of all other guarantee obligations of SCI under this Loan Agreement. Section 4.05. Subrogation. SCI shall be subrogated to all rights (if any) of the Company against SCI Limited in respect of any amounts or property paid or delivered to the Company by SCI pursuant to SCI's guarantee obligations under this Loan Agreement and shall have the right to waive payment or delivery of any amount or property in respect of which payment or delivery has been made to the Company by SCI pursuant to Section 4.01; provided, however, that SCI shall not (except to the extent required by mandatory provisions of law) exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of a payment or delivery pursuant to SCI's guarantee obligations under this Loan Agreement, if at the time of any such payment or delivery, any amounts or deliveries are due and unpaid or unmade pursuant to SCI's guarantee obligations under this Loan Agreement. If any amount or property shall be paid or delivered to SCI in violation of the preceding sentence, SCI agrees to pay over or deliver such amount or property to the Company. Section 4.06. Obligations of SCI Independent. SCI acknowledges that its 8 -8- obligations hereunder are independent of the obligations of SCI Limited with respect to this Loan Agreement and the Loans and that SCI shall be liable as principal and sole debtor hereunder to make payment of the obligations to pay principal of, premium, if any, and interest on the Loans pursuant to the terms of this Loan Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (f), inclusive, of Section 4.03. Section 4.07. Subordination. (a) SCI and the Company covenant and agree, and the holders of the Series A Shares (and any trustee appointed by such holders) by their acceptance of such Series A Shares likewise agree, that the obligations of SCI in respect of its guarantee obligations under this Loan Agreement and the Loans are subordinate and junior in right of payment to all Senior Indebtedness as provided herein. The term ``Senior Indebtedness'' means the principal of, premium, if any, and interest on (i) all indebtedness of SCI, other than ordinary trade credit and other accounts payable arising in the ordinary course of business, whether outstanding on the date hereof or hereafter created, incurred or assumed, which is for money borrowed, or evidenced by a note or similar instrument given in connection with the acquisition of any business, properties or assets, including securities, (ii) any indebtedness of others of the kinds described in the preceding clause (i) for which SCI is responsible or liable as guarantor and (iii) amendments, renewals, extensions and refundings of any such indebtedness, unless in any instrument or instruments evidencing or securing such indebtedness or pursuant to which the same is outstanding, or in any such amendment, renewal, extension or refunding, it is expressly provided that such indebtedness is not superior in right of payment to SCI's guarantee of the Loans. Except as aforesaid, Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of these subordination provisions irrespective of any amendment, modification or waiver of any term of the Senior Indebtedness or extension or renewal of the Senior Indebtedness. (b) In the event that (i) SCI shall default in the payment of any principal of, premium, if any, or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or declaration or otherwise or (ii) an event of default occurs with respect to any Senior Indebtedness permitting the holders thereof to accelerate the maturity thereof and written notice of such event of default is given to SCI by the holders of such Senior Indebtedness, then unless and until such default in payment or event of default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of SCI's guarantee obligations under this Loan Agreement or the Loans or in respect of any repayment, redemption, retirement, purchase or other acquisition of the Loans. (c) In the event of (i) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceeding relating to SCI or its property or for the benefit of its creditors, (ii) any proceeding for the liquidation, dissolution or other winding up of SCI, voluntary or involuntary, whether or not involving insolvency 9 -9- or bankruptcy proceedings, (iii) any assignment by SCI for the benefit of creditors, or (iv) any other marshalling of the assets of SCI, all Senior Indebtedness (including, without limitation, interest accruing thereon after the commencement of any such proceeding, assignment or marshalling of assets) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, may be made on account of SCI's guarantee obligations under this Loan Agreement or the Loans. In any such event, any payment or distribution, whether in cash, securities or other property (other than securities of SCI or any other corporation provided for by a plan of reorganization or a readjustment, the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by SCI's guarantee obligations under this Loan Agreement and the Loans, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of SCI's guarantee obligations under this Loan Agreement and the Loans (including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of SCI being subordinated to the payment of SCI's guarantee obligations under this Loan Agreement and the Loans) shall be paid or delivered directly to the holders of Senior Indebtedness or to their representative, or to the trustee under the indenture or agreement (if any) pursuant to which such Senior Indebtedness may have been issued, in accordance with the priorities then existing among such holders until all Senior Indebtedness shall have been paid in full. No present or future holder of any Senior Indebtedness shall be prejudiced in the right to enforce subordination of SCI's guarantee obligations under this Loan Agreement and the Loans by any act or failure to act on the part of SCI. (d) Senior Indebtedness shall not be deemed to have been paid in full unless the holders thereof shall have received cash, securities or property in full payment of such Senior Indebtedness then outstanding. Upon the payment in full of all Senior Indebtedness, the Company shall be subrogated to all the rights of any holders of Senior Indebtedness to receive any further payments or distributions applicable to the Senior Indebtedness until the Loans shall have been paid in full, and such payments or distributions of cash, securities or other property received by the Company, by reason of such subrogation, which otherwise would be paid or distributed to the holders of Senior Indebtedness, shall, as between SCI and its creditors other than the holders of Senior Indebtedness on the one hand, and the Company, on the other, be deemed to be a payment by SCI on account of Senior Indebtedness, and not on account of SCI's guarantee obligations under this Loan Agreement and the Loans. 10 -10- ARTICLE V REPRESENTATIONS AND WARRANTIES Section 5.01. Representations and Warranties. Each of SCI Limited and SCI jointly and severally represents and warrants to the Company that: (a) Good Standing. Each of SCI Limited and SCI is a corporation duly incorporated and validly existing under the laws of the State of Delaware, in the case of SCI Limited, and Texas, in the case of SCI, with power and authority (corporate and other) to own its properties and conduct its business as now being conducted. (b) Power and Authority. Each of SCI Limited and SCI has full power and authority to enter into this Agreement and the Pledge Agreement (to the extent a party thereto) and to incur and perform the obligations provided for herein and therein (to the extent a party thereto), all of which have been duly authorized by all proper and necessary action. (c) No Conflict. The execution and delivery of this Agreement and the Pledge Agreement and the performance by each of SCI Limited and SCI of all their respective obligations hereunder and thereunder will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which either SCI Limited or SCI is a party or by which either SCI Limited or SCI is bound or subject, nor will this Agreement or the Pledge Agreement result in a violation of the provisions of SCI Limited's or SCI's certificate of incorporation or by-laws. (d) Binding Agreement. This Agreement and the Pledge Agreement constitutes the valid and legally binding obligation of each of SCI Limited and SCI (to the extent a party thereto), enforceable against them (to the extent a party thereto) in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. ARTICLE VI COVENANTS Section 6.01. Covenants. (a) SCI covenants and agrees (i) that it will not 11 -11- declare or pay any dividend on, and SCI will not, and will not permit any of its majority-owned subsidiaries to, redeem, purchase, acquire or make a liquidation payment with respect to, any of SCI's capital stock (other than (1) any redemption of the Rights (or such other securities in lieu thereof as specified in the Rights Agreement) pursuant to the Rights Agreement and (2) any reacquisition by SCI of any of its stock issued in connection with any acquisition by SCI or any of its subsidiaries of a business (including any assets, leases or liabilities (contingent or otherwise) related thereto) as a result of a purchase price adjustment or settlement of breach of warranties in connection with such acquisition), or make any guarantee payments with respect to the foregoing (other than payments under the SCI Agreement) and will otherwise comply with Section 3(c) of the Amendment to the Company's Regulations establishing the Series A Shares as if such provisions were applicable to them, if at such time (x) there shall have occurred any event that constitutes an Event of Default hereunder or (y) SCI shall be in default with respect to its payment or other obligations under the SCI Agreement or in default in its payment or other obligations under the Liability Assumption Agreement, dated as of ( ), 1994, between SCI (including in its capacity as the Manager of the Company) and the Company (the ``Liability Assumption Agreement''), or (z) there shall exist any nonpayment of interest under the Loans, including during any valid extension of the interest payment periods. In addition, SCI agrees (i) to maintain direct 100% ownership of the Common Shares and any other interests in the Company (other than the Preferred Shares), (ii) to cause more than 20% of the total value (initially measured by shareholders' equity determined in accordance with generally accepted accounting principles) of the Company and, subject to the preferential rights of the holders of Preferred Shares as to dividends and liquidation distributions, more than 20% of all interests in the capital, income, gain, loss, deduction and credit of the Company to be represented by Common Shares, (iii) not to dissolve, wind-up or liquidate the Company voluntarily, (iv) to remain the Manager of the Company and to timely perform all of its duties as Manager of the Company (including the duty to declare and pay dividends on the Preferred Shares), and (v) to use reasonable efforts to cause the Company to remain a limited liability company under the laws of the State of Texas (provided however that the Company may reorganize under the laws of another jurisdiction provided that the Company has received an opinion of counsel from nationally recognized legal counsel that such reorganization will not have an adverse effect, including, without limitation, an adverse tax effect, on the holders of the Series A Shares) and use reasonable efforts to cause the Company to continue to be treated as a partnership for United States federal income tax purposes. SCI covenants and agrees to comply with Section 2.01(b) of the SCI Agreement. (b) Each of SCI Limited and SCI agrees that its obligations under this Agreement will also be for the benefit of the holders from time to time of Series A Shares, and each of SCI Limited and SCI acknowledges and agrees that such holders, acting through a trustee as provided in Section 7.01 hereof, will be entitled to enforce this Agreement directly against each of SCI Limited and SCI. 12 -12- (c) Each of SCI and SCI Limited agrees not to permit another entity to merge with or into it unless: (i) at such time no Event of Default hereunder has occurred and is continuing, or would occur as a result of such merger, and (ii) either (I) SCI or SCI Limited, as the case may be, is the survivor of such merger or (II) the survivor is a corporation organized under the laws of the United States or any state thereof and expressly assumes all of the obligations of SCI or SCI Limited, as the case may be, under this Agreement and the Loans, and SCI Limited receives an opinion of counsel from nationally recognized legal counsel that the merger will not result in the recognition of taxable gain or loss by the holders of the Series A Shares. ARTICLE VII EVENTS OF DEFAULT Section 7.01. Events of Default. If one or more of the following events (each an ``Event of Default'') shall occur and be continuing: (a) default in the payment of any interest on the Loans when due for 10 Business Days; provided, however, that a valid extension of the interest payment period by SCI Limited pursuant to Section 2.02 hereof shall not constitute a default in the payment of interest for this purpose; or (b) default in the payment of principal of or premium, if any, on the Loans when due; or (c) failure of SCI to comply with the conversion provisions of the Series A Shares or of the SCI Agreement; or (d) the dissolution, winding up or liquidation of the Company; or (e) the bankruptcy, insolvency or liquidation of SCI Limited or SCI; or (f) breach by SCI Limited or SCI of any covenants contained herein continued for 30 days after notice to SCI Limited and SCI from the holders of not less than 25% in liquidation preference of the Series A Shares then outstanding; then, in every such Event of Default, and at any time thereafter during the continuance of such Event of Default, the Company will have the right to declare the principal of and the 13 -13- interest on the Loans (including any interest subject to an extension of the interest payment period) and all other amounts payable under this Agreement to be forthwith due and payable whereupon the same shall become and be forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement to the contrary notwithstanding. Each of SCI Limited and SCI expressly acknowledges that under the terms of the Series A Shares, the holders of the outstanding Series A Shares shall have the right to appoint a trustee, which trustee shall be authorized to exercise the Company's right to accelerate the principal amount of the Loans and to enforce the Company's creditor rights under the Loans and this Agreement, including rights of collection, and each of SCI Limited and SCI agrees to cooperate with such trustee. ARTICLE VIII SECURITY Section 8.01. Security. In order to secure the due and punctual payment of principal of, premium, if any, and interest on the Loans when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, optional repayment or otherwise, and performance of all other obligations of SCI Limited to the Company under this Loan Agreement, SCI Limited has simultaneously with the execution of this Loan Agreement entered into the Pledge Agreement, pursuant to which SCI Limited has granted to the Company a first priority lien (to the extent and subject to certain exceptions expressly permitted by the Pledge Agreement) on and security interest in the collateral described therein. The execution and delivery of the Pledge Agreement is a condition precedent to the making of the Loans hereunder by the Company. ARTICLE IX MISCELLANEOUS Section 9.01. Maintenance of Book-Entry System. SCI Limited shall maintain a book-entry system, as defined in Treas. Reg. Section 5f.103-1(c)(2), with respect to the Loans. All rights to payments under the Loans shall be transferred only through the book-entry system and shall not be effective until SCI Limited has been notified of such transfer and provided with the identity of the transferee. Section 9.02. Notices. All notices hereunder shall be deemed given by a party 14 -14- hereto if in writing and delivered personally or by telegram or facsimile transmission or by registered or certified mail (return receipt requested) to the other party at the following address for such party (or at such other address as shall be specified by like notice): If to the Company, to: SCI Finance LLC c/o Service Corporation International, as Manager 1929 Allen Parkway Houston, Texas 77019 Fax No.: (713) 525-5475 Attention: ( ) If to SCI Limited, to: SCI International Limited c/o Service Corporation International 1929 Allen Parkway Houston, Texas 77019 Fax No.: (713) 525-5475 Attention: ( ) If to SCI, to: Service Corporation International 1929 Allen Parkway Houston, Texas 77019 Fax No.: (713) 525-5475 Attention: ( ) Any notice given by mail or telegram or facsimile transmission shall be effective when received. Section 9.03. Binding Effect. SCI Limited shall have the right at all times to assign any of its rights or obligations under this Loan Agreement to a direct or indirect wholly-owned subsidiary of SCI; provided, however, that, in the event of any such assignment, SCI Limited shall remain jointly and severally liable with such assignee for all such obligations; and provided, further, that SCI Limited shall receive an opinion of legal counsel to the effect that any such assignment does not cause the Company to be considered an ``investment company'' as defined under the United States Investment Company Act of 1940, as amended. The Company may not assign any of its rights hereunder without the 15 -15- prior written consent of SCI Limited and SCI. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of SCI Limited, SCI and the Company and their respective successors and assigns. This Agreement may not otherwise be assigned by SCI Limited, SCI or the Company. Section 9.04. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN AND WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. Section 9.05. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Section 9.06. Amendments. This Agreement may be amended by mutual consent of the parties in the manner the parties shall agree; provided, however, that, so long as any of the Series A Shares remain outstanding, no such amendment shall be made that adversely affects the holders of the Series A Shares, no termination of this Agreement shall occur, and no Event of Default or compliance with any covenant under this Agreement may be waived by the Company, without the prior approval of the holders of at least 66-2/3% in liquidation preference of the outstanding Series A Shares (other than Series A Shares that are owned by SCI Limited, SCI or any entity owned 50% or more by SCI, either directly or indirectly), in writing or at a duly constituted meeting of such holders. 16 IN WITNESS WHEREOF, the parties hereto have caused THIS LOAN AGREEMENT to be executed by their respective officers thereunto duly authorized as of the day and year first above written. SCI INTERNATIONAL LIMITED By:__________________________________ Name: Title: SERVICE CORPORATION INTERNATIONAL By:__________________________________ Name: Title: SCI FINANCE LLC By: Service Corporation International, as Manager By:_____________________________ Name: Title: 17 EXHIBIT A STOCK PLEDGE AGREEMENT STOCK PLEDGE AGREEMENT (the "Agreement"), dated as of ( ), 1994, made by SCI International Limited, a Delaware corporation ("Pledgor"), in favor of SCI Finance LLC, a Texas corporation, as pledgee ("Pledgee") pursuant to the Loan Agreement (as hereinafter defined). R E C I T A L S : 1. Pledgor is the legal and beneficial owner of the shares of common stock of Service Corporation International plc, a United Kingdom corporation and a wholly-owned subsidiary of the Pledgor, set forth on Schedule A attached hereto (the "Pledged Shares"). 2. Pledgor is the obligor under a loan agreement (as at any time amended, modified or supplemented after the date hereof, the "Loan Agreement") dated as of the date hereof, by and among Pledgee, as lender, Service Corporation International, a Texas corporation ("SCI"), as guarantor, and Pledgor, as borrower. 3. This Agreement is made and delivered by Pledgor to secure the Secured Obligations (as hereinafter defined). A G R E E M E N T : Pledgor warrants, represents and covenants as follows: Section 1. Definitions. Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement. The following terms shall have the following meanings. Such definitions shall be equally applicable to the singular and plural forms of the terms defined. "Additional Shares" shall mean fifty percent (50%) of any additional shares of stock of the issuer set forth on Schedule A attached hereto from time to time acquired by Pledgor in any manner. "Certificates" shall mean any and all certificates representing shares of stock held by Pledgor as set forth on Schedule A attached hereto and any interest of Pledgor in the entries on the books of any financial intermediary pertaining to such shares of stock, and shall include any certificates representing Additional Shares. "Dividends" shall mean, subject to Section 8 hereof, all dividends, cash or 18 -2- proceeds, options, warrants, rights, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Collateral (as defined below). "Lien" shall mean any mortgage, charge, pledge, lien, privilege, security interest or other encumbrance upon or with respect to any property of any kind of any person or any of its subsidiaries, real or personal, moveable or immovable, now owned or hereafter acquired. "Secured Obligations" shall have the meaning set forth in Section 4 hereof. Section 2. Pledge. Pledgor hereby pledges to Pledgee and grants a security interest in and pledge of all of Pledgor's right, title and interest in, to and under the following property, whether now existing or hereafter acquired (collectively, "Pledged Collateral"), to secure the Secured Obligations: (i) all Pledged Shares; (ii) all Additional Shares; (iii) all Certificates relating to all and any of the foregoing; and (iv) all Dividends relating to all and any of the foregoing. Section 3. Delivery of Pledged Collateral. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of Pledgee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Pledgee. Pledgee shall have the right, if an Event of Default shall have occurred and be continuing and without notice to Pledgor, to transfer to or to register in the name of Pledgee or any of its nominees any or all of the Pledged Collateral. In addition, Pledgee shall have the right at any time to exchange certificates representing or evidencing Pledged Collateral for certificates of smaller or larger denominations. Section 4. Secured Obligations. This Agreement secures, and the Pledged Collateral is collateral security for, the payment and performance in full when due, whether at stated maturity, by acceleration or otherwise (including, without limitation, the payment of interest and other amounts which would accrue and become due but for the filing of a petition in bankruptcy or the operation of the automatic stay under Section 362(a) of Title 11, United States Code), of (i) all obligations of Pledgor now existing or hereafter arising under or in respect of the Loan Agreement; and (ii) without duplication of the amounts described 19 -3- in clause (i) all obligations of Pledgor now existing or hereafter arising under or in respect of this Agreement (the obligations described in clauses (i) and (ii), collectively, the "Secured Obligations"). Section 5. No Release. Nothing set forth in this Agreement shall relieve Pledgor from the performance of any term, covenant, condition or agreement on Pledgor's part to be performed or observed under or in respect of any Pledged Collateral or from any liability to any person under or in respect of any Pledged Collateral or impose any obligation on Pledgee to perform or observe any such term, covenant, condition or agreement on Pledgor's part to be so performed or observed or impose any liability on Pledgee for any act or omission on the part of Pledgor relating thereto or for any breach of any representation or warranty on the part of Pledgor contained in this Agreement, or in respect of the Pledged Collateral or made in connection herewith or therewith. The obligations of Pledgor contained in this paragraph shall survive the termination of this Agreement and the discharge of Pledgor's other obligations hereunder. Section 6. Representations, Warranties and Covenants. Pledgor represents, warrants and covenants as follows: (i) Ownership. Pledgor is, and at the time of delivery of the Pledged Collateral to Pledgee pursuant to Section 3 of this Agreement will be, the legal and beneficial owner of the Pledged Collateral free and clear from any Lien or other right, title or interest of any person other than the Liens and security interests granted by Pledgor to Pledgee pursuant to this Agreement. The pledge and security interest created by this Agreement shall not at any time be subject to any Lien (other than any Lien incurred or created by or on behalf of Pledgee). Except as otherwise permitted by the Loan Agreement, Pledgor at all times will be the sole beneficial owner of the Pledged Collateral. Pledgor has not performed any acts which might prevent Pledgee from enforcing any of the terms of this Agreement or that would limit Pledgee in any such enforcement and Pledgor shall defend the Pledged Collateral against all claims and demands of all persons at any time claiming any interest therein adverse to Pledgee. (ii) Shares Validly Issued. All of the Pledged Shares have been duly authorized and validly issued and are fully paid and non-assessable. (iii) Delivery of Shares. Upon the delivery of the Pledged Shares to Pledgee in accordance with Section 3 hereof, Pledgee will have a valid and perfected first priority security interest in the Pledged Shares securing the payment of the Secured Obligations subject to no prior Liens. (iv) Government Regulations. The pledge of the Pledged Collateral 20 -4- pursuant to this Agreement does not violate Regulation G, T, U or X of the Federal Reserve Board. (v) Authorization; Enforceability. Pledgor has full power, authority and legal right to pledge and grant a security interest in and to all the Pledged Collateral pursuant to this Agreement. This Agreement constitutes the legal, valid and binding obligation of Pledgor, enforceable against Pledgor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and similar laws affecting creditors' rights generally and to general equitable principles. (vi) No Consents. Except as otherwise obtained and in full force and effect, no consent of any other party (including, without limitation, stockholders or creditors of Pledgor) and no consent, authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (x) for the execution, delivery or performance of this Agreement by Pledgor or (y) for the exercise at any time by Pledgee of each and every of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement, except as may be required in connection with any disposition of the Pledged Collateral by laws affecting the offering and sale of securities generally. (vii) No Conflicts. The execution, delivery and performance by Pledgor of this Agreement do not (or with notice or lapse of time or both, will not) violate, conflict with or constitute a breach of or a default under, or result in the termination of, or accelerate the performance required by, or result in there being declared void, voidable or without further binding effect any provision of, any other agreement, instrument or document to which Pledgor is a party or by which it or its property or assets are bound or affected or any statute, law or rule or any judgment or decree of any court of competent jurisdiction. Section 7. Supplements, Further Assurances. Pledgor agrees that at any time and from time to time, at the sole expense of Pledgor, Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that Pledgee may reasonably request in order to perfect and protect the Lien granted or purported to be granted hereby or to enable Pledgee to exercise fully and enforce its rights and remedies hereunder with respect to any Pledged Collateral. Section 8. Special Provisions Concerning Pledged Collateral. (i) Voting Rights, Dividends, Etc. Prior to Event of Default. As long as no Event of Default shall have occurred and be continuing: 21 -5- (a) Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms or intent of this Agreement or of the Loan Agreement; provided, however, that Pledgor shall give Pledgee at least five days' prior written notice of the manner in which it intends to exercise any such right. It is understood, however, that neither (I) the voting by Pledgor of any Pledged Shares for or Pledgor's consent to the election of directors at a regularly scheduled annual or other meeting of stockholders or with respect to incidental matters at any such meeting nor (II) Pledgor's consent to or approval of any action otherwise permitted under this Agreement and the Loan Agreement shall be deemed inconsistent with the terms or intent of this Agreement or of the Loan Agreement within the meaning of this Section 8(i)(a), and no notice of any such voting or consent need be given to Pledgee. (b) Pledgor shall be entitled to receive and retain, and to utilize free and clear of the Lien of this Agreement, any and all dividends and distributions in respect of the Pledged Collateral; provided, however, that any and all (A) stock dividends and other distributions in equity securities in respect of the Pledged Collateral, (B) dividends paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral and (C) dividends or other distributions paid or payable in cash or otherwise in respect of any Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus shall be, and shall be delivered forthwith to Pledgee to hold as, Pledged Collateral and shall, if received by Pledgor, be received in trust for the benefit of Pledgee, be segregated from the other property or funds of Pledgor, and be delivered forthwith to Pledgee as Pledged Collateral in the same form as so received (with any necessary endorsement). (c) In order to permit Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant to Section 8(i)(a) above and to receive the dividends and distributions which it is authorized to receive and retain pursuant to Section 8(i)(b) above, Pledgee shall, if necessary, upon written request of Pledgor and at the sole expense of Pledgor, from time to time execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, dividend payment orders and other instruments as Pledgor may reasonably request. (ii) Voting Rights and Dividends After Event of Default. Upon the occurrence and during the continuance of an Event of Default: (a) Upon written notice from Pledgee to Pledgor, all rights of Pledgor to 22 -6- exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 8(i)(a) above shall cease, and all such rights shall thereupon become vested in Pledgee, which shall thereupon have the sole right to exercise such voting and other consensual rights during the continuance of such Event of Default. (b) Upon written notice from Pledgee to Pledgor, all rights of Pledgor to receive the dividends and distributions which it would otherwise be authorized to receive and retain pursuant to Section 8(i)(b) above shall cease and all such rights shall thereupon become vested in Pledgee, which shall thereupon have the sole right to receive and hold as Pledged Collateral such dividends and distributions during the continuance of such Event of Default. (iii) Further Assurances for Voting Rights and Dividends. In order to permit Pledgee to receive all dividends and other distributions to which it may be entitled under Section 8(i)(b) above, to exercise the voting and other consensual rights which it may be entitled to exercise pursuant to Section 8(ii)(a) above, and to receive all dividends and distributions which it may be entitled to receive under Section 8(ii)(b) above, Pledgor shall, if necessary, upon written notice from Pledgee and at the sole expense of Pledgor, from time to time execute and deliver to Pledgee appropriate proxies, dividend payment orders and other instruments as Pledgee may reasonably request. (iv) Dividends Received in Trust. All dividends and distributions which are received by Pledgor contrary to the provisions of Section 8(ii)(b) above shall be received in trust for the benefit of Pledgee, shall be segregated from other funds of Pledgor and shall be forthwith paid over to Pledgee as Pledged Collateral in the same form as so received (with any necessary endorsement). Section 9. Transfers and Other Liens; Additional Shares. (i) Transfers and Other Liens. Pledgor shall not (a) pledge, encumber, hypothecate, sell, convey, assign or otherwise dispose of, or grant any option or warrant with respect to, any of the Pledged Collateral or suffer any of the foregoing to occur by operation of law or otherwise except for the Liens and security interests granted by Pledgor to the Pledgee pursuant to this Agreement or (b) cause or permit any issuer of Pledged Collateral consisting of capital stock to merge or consolidate unless fifty percent (50%) of the outstanding capital stock of the surviving or resulting corporation is, upon such merger or consolidation, pledged hereunder and no cash, securities or other property is distributed in respect of the outstanding shares of any other constituent corporation. (ii) Additional Shares. Pledgor agrees that it will cause each issuer of Pledged Collateral consisting of capital stock not to issue any stock or other securities in addition to 23 -7- or in substitution for such Pledged Collateral issued by such issuer, except to Pledgor. Section 10. Reasonable Care. Pledgee shall be deemed to have exercised reasonable care in the custody and preservation of such Pledged Collateral in its possession if such Pledged Collateral is accorded treatment substantially equivalent to that which Pledgee, in its individual capacity, accords its own property consisting of negotiable securities, it being understood that Pledgee shall not have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not Pledgee has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps (other than steps taken in accordance with the standard of care set forth above to maintain possession of the Pledged Shares) to preserve rights against any person with respect to any Pledged Collateral. Section 11. Events of Default; Remedies. (i) Event of Default. It shall be an Event of Default hereunder if there shall occur an Event of Default under the Loan Agreement. (ii) Dispositions of Pledged Collateral. If any Event of Default shall have occurred and be continuing, Pledgee may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code in effect in the State of New York at that time. The Pledgee may also in its sole discretion, without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale or at any exchange or broker's board for cash, on credit or for future delivery, and at such price or prices and upon such other terms as Pledgee may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Pledged Collateral. Pledgee may be the purchaser of any or all of the Pledged Collateral at any such sale but shall not be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Pledged Collateral sold at such sale, to use and apply any of the Secured Obligations owed to Pledgee as a credit on account of the purchase price of any Pledged Collateral payable by Pledgee at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Pledgor, and Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Pledgee shall give Pledgor not less than ten days' prior written notice of the time and place of any sale or other intended disposition of any of the Pledged Collateral, except any Pledged Collateral which is of a type customarily sold on a recognized market. The notice of such sale shall (1) in the case of a public sale, state the time and place fixed for such sale, and 24 -8- (2) in the case of a private sale, state the day after which such sale may be consummated. Pledgor agrees that such notice constitutes reasonable notice. Pledgee shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. Pledgee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Pledgor hereby waives any claims against Pledgee arising by reason of the fact that the price at which any Pledged Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if Pledgee accepts the first offer received and does not offer such Pledged Collateral to more than one offeree. (iii) Securities Laws Limitations. Pledgor recognizes that, by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities laws, Pledgee may be compelled, with respect to any sale of all or any part of the Pledged Collateral, to limit purchasers to those who will agree, among other things, to acquire the Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges that any such private sales may be at prices and on terms less favorable to Pledgee than those obtainable through a public sale without such restrictions (including, without limitation, a public offering made pursuant to a registration statement under the Securities Act), and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that Pledgee shall have no obligation to engage in public sales and no obligation to delay the sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if Pledgor would agree to do so. (iv) Additional Information. If Pledgee determines to exercise its right to sell any or all of the Pledged Collateral, upon written request, Pledgor shall, and shall cause each issuer of any Pledged Collateral to be sold hereunder from time to time to, furnish to Pledgee all such information as Pledgee may request in order to determine the number of shares and other instruments included in the Pledged Collateral which may be sold by Pledgee as exempt transactions under the Securities Act and the rules of the Securities and Exchange Commission thereunder, as the same are from time to time in effect. (v) Waivers. Pledgor hereby waives, to the extent permitted by applicable law, notice or judicial hearing in connection with Pledgee's taking possession or Pledgee's disposition of any Pledged Collateral, including, without limitation, any and all prior notice and hearing for any prejudgment remedy or remedies and any such 25 -9- right which Pledgor would otherwise have under law, and Pledgor hereby further waives: (a) all damages occasioned by such taking of possession; (b) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of Pledgee's rights hereunder; and (c) all rights of redemption, appraisal, valuation, stay, extension or moratorium now or hereafter in force under any applicable law. Any sale of, or the grant of options to purchase, or any other realization upon, any Pledged Collateral pursuant to the terms of this Agreement shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of Pledgor therein and thereto, and shall be a perpetual bar both at law and in equity against Pledgor and against any and all persons claiming or attempting to claim the Pledged Collateral so sold, optioned or realized upon, or any part thereof, from, through and under Pledgor. (vi) Deficiency. Notwithstanding any other provision of this Agreement to the contrary, if, after giving effect to any sale, transfer or other disposition of any or all of the Pledged Collateral pursuant hereto and after the application of the proceeds hereunder to the Secured Obligations, any Secured Obligations remain unpaid or unsatisfied, Pledgor shall remain liable for the unpaid and unsatisfied amount of such Secured Obligations. Section 12. Expenses. Pledgor will upon demand pay to Pledgee the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and the allocated reasonable fees and expenses of staff counsel and the reasonable fees and expenses of any experts and agents which Pledgee may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Pledged Collateral, (iii) the exercise or enforcement of any of the rights or remedies of Pledgee hereunder or under applicable law or (iv) the failure by Pledgor to fully and timely perform or observe any of the provisions hereof. All amounts payable by Pledgor under this Section 12 shall be due upon demand and shall be part of the Secured Obligations. Pledgor's obligations under this Section 12 shall survive the termination of this Agreement and the discharge of Pledgor's other obligations hereunder. 26 -10- Section 13. No Waiver; Discontinuance of Proceeding. (i) No Waiver. No failure on the part of Pledgee to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by Pledgee of any right, power or remedy hereunder or under applicable law preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein provided are to the fullest extent permitted by the law cumulative and are not exclusive of any remedies provided by law. (ii) Discontinuance of Proceeding. In the event Pledgee shall have instituted any proceeding to enforce any right, power or remedy under this instrument by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to Pledgee, then and in every such case Pledgor and Pledgee shall be restored to their respective former positions and rights hereunder with respect to the Pledged Collateral, and all rights, remedies and powers of Pledgee shall continue as if no such proceeding had been instituted. Section 14. Indemnification. Pledgor hereby agrees to indemnify Pledgee for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against Pledgee in any way relating to or arising out of this Agreement or the Loan Agreement or the pledge and security interest contemplated hereby or the enforcement of any of the terms hereof or otherwise arising or relating in any manner to the pledges contemplated hereunder. Section 15. Amendments, Etc. This Agreement may be amended by mutual consent of the parties in the manner the parties shall agree; provided, however, that so long as any of the $( ) Term Convertible Shares, Series A of Pledgee (the "Series A Shares"), remain outstanding, no such amendment shall be made that adversely affects the holders of the Series A Shares, no termination of this Agreement shall occur, and no Event of Default or compliance with any covenant under this Agreement may be waived by the Pledgee, without the prior approval of the holders of at least 66-2/3% in liquidation preference (plus all accrued and unpaid dividends) of the outstanding Series A Shares (other than Series A Shares that are owned by Pledgor, SCI or any entity owned 50% or more by SCI, either directly or indirectly), in writing or at a duly constituted meeting of such holders. Section 16. Termination and Release. When all of the Secured Obligations have been indefeasibly paid or otherwise satisfied in full, this Agreement shall terminate. Upon termination of this Agreement or any release of Pledged Collateral in accordance with the provisions of the Loan Agreement, Pledgee shall, upon the request and at the sole expense 27 -11- of Pledgor, forthwith assign, transfer and deliver, against receipt and without recourse to Pledgee, such of the Pledged Collateral to be released (in the case of a release) as may be in the possession of Pledgee and Pledgee shall execute such document and take such other action, all at the sole expense of Pledgor, as may be reasonably requested by Pledgor to reflect the termination of this Agreement and the release of the Pledged Collateral. Section 17. Addresses for Notices. All notices and other communications required or permitted to be given or made under this Agreement shall be in writing and shall be deemed to have been duly given and received, regardless of when and whether received, either (a) on the day of hand delivery; (b) five business days after being deposited in the mail, when sent by United States certified mail, postage and certification fee prepaid, return receipt requested; (c) one business day after being timely delivered to a next-day air courier; or (d) when receipt is acknowledged by the addressee, if telecopied, addressed as follows: To Pledgor: SCI International Limited c/o Service Corporation International 1929 Allen Parkway Houston, Texas 77019 Attention: ( ) Telecopy No. (713) 525-5475 To the Pledgee: SCI Finance LLC c/o Service Corporation International, as Manager 1929 Allen Parkway Houston, Texas 77019 Attention: ( ) Telecopy No. (713) 525-5475 Section 18. Successors and Assigns. This Agreement shall be binding upon Pledgor, its successors and assigns and shall inure, together with the rights and remedies of Pledgee hereunder, to the benefit of Pledgee and its successors, transferees and assigns. Section 19. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF. 28 -12- Section 20. Severability of Provisions. Any provision of this Agreement which is prohibited or enforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 21. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same Agreement. Section 22. Headings. The Section headings used in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement. Section 23. Obligations Absolute. All obligations of Pledgor hereunder shall be absolute and unconditional irrespective of: (i) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar event of Pledgor (except that the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar event of Pledgor); (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from any other agreement or instrument relating hereto or thereto; (iii) any exchange, release or non-perfection of any other collateral or the pledge of any additional collateral or the failure to recover in respect thereof pursuant to any remedy or right of Pledgee contained in this Agreement, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Secured Obligations; (iv) any exercise or non-exercise, or any waiver of any right, remedy, power or privilege under or in respect of this Agreement except as specifically set forth in a waiver granted pursuant to the provisions of Section 15 hereof; or (v) any other circumstances which might otherwise constitute a defense available to, or a discharge of, Pledgor. Section 24. Rights of Holders of Series A Shares. Each of Pledgor and Pledgee agrees that its obligations under this Agreement will also be for the benefit of the 29 -13- holders from time to time of Series A Shares, and each of Pledgor and Pledgee acknowledges and agrees that such holders, acting through a trustee (and only through such a trustee as provided therein) as provided in Section 7.01 of the Loan Agreement, will be entitled to enforce this Agreement directly against each of Pledgor and Pledgee. 30 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their officer thereunto duly authorized as of the date first above written. SCI INTERNATIONAL LIMITED, Pledgor By:___________________________________ Name: Title: SCI FINANCE LLC, Pledgee By:___________________________________ Name: Title: 31 SCHEDULE A PLEDGED SHARES
Percentage of All Capital or Other Equity Class of Par Certificate Number Interests of Issuer Stock Value Numbers of Shares Issuer - ------ -------- ----- ----------- --------- ------------- Service Corporation 50% Inter- national plc
EX-4.5(C) 12 FORM OF LIABILITY ASSUMPTION AGREEMENT 1 EXHIBIT 4.5(c) LIABILITY ASSUMPTION AGREEMENT THIS LIABILITY ASSUMPTION AGREEMENT (the "Agreement") dated as of ( ), 1994, between Service Corporation International, a Texas corporation ("SCI") and SCI Finance LLC, a limited liability company organized under the laws of the State of Texas (the "Company"). WHEREAS, the Company may issue from time to time, in one or more series, up to 7,000,000 of its preferred interests (the "Preferred Shares") and intends to issue and sell up to ( ) Preferred Shares designated as $( ) Term Convertible Shares, Series A, with a liquidation preference of $50 per share (the "Liquidation Preference"); WHEREAS, the Company will loan substantially all of the proceeds from the issuance and sale of the Preferred Shares and the proceeds from the issuance and sale of its common interests (the "Common Shares") to SCI International Limited, a Delaware corporation and a wholly-owned subsidiary of SCI; and WHEREAS, SCI is the manager of the Company (the "Manager"). NOW THEREFORE, SCI and the Company hereby agree as follows: ARTICLE I Section 1.01. Guarantee by SCI. Subject to the terms and conditions hereof, SCI (including in its capacity as the Manager) hereby irrevocably and unconditionally guarantees to each person or entity to which the Company is now or hereafter becomes indebted or liable (the "Beneficiaries") (other than obligations to holders of the Preferred Shares in such holders' capacities as holders of such shares, such obligations being separately guaranteed to the extent set forth in the Payment, Guarantee and Conversion Agreement dated the date hereof by SCI for the benefit of each such holder), the full payment, when and as due, regardless of any defense, right of set-off or counterclaim which the Company may have or assert, of any and all such indebtedness and liabilities of the Company to such Beneficiaries (collectively, the "Obligations"). This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. Section 1.02. Term of Agreement. This Agreement will remain in effect until the later of such time as (a) all of the Preferred Shares shall have been redeemed or 2 -2- converted into shares of Common Stock, $1.00 par value, of SCI, or other property, in accordance with their terms or shall have been purchased and canceled by the Company or SCI or (b) there are no Beneficiaries remaining. Except as provided in the preceding sentence, this Agreement is continuing, irrevocable, unconditional and absolute. Section 1.03. Waiver of Notice. SCI hereby waives notice of acceptance of this Agreement and of any Obligation to which it applies or may apply, and SCI hereby waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption or conversion and all other notices and demands. Section 1.04. Obligations Unconditional. The obligations, covenants, agreements and duties of SCI under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Company of any express or implied agreement, covenant, term or condition relating to the Obligations to be performed or observed by the Company; (b) the extension of the time for the payment by the Company of all or any portion of the Obligations or for the performance of any other obligation under, arising out of, or in connection with, the Obligations; (c) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the Obligations or any action on the part of the Company granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale or any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Company or any of the assets of the Company; or (e) the settlement or compromise of any Obligation guaranteed hereby or any obligation hereby incurred. There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, SCI with respect to the happening of any of the foregoing. 3 -3- Section 1.05. Enforcement. A Beneficiary may enforce this Agreement directly against SCI and SCI waives any right or remedy to require that any action be brought against the Company or any other person or entity before proceeding against SCI. ARTICLE II Section 2.01. Binding Effect. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of SCI (including any successors, assigns, receivers, trustees and representatives of SCI in its capacity as the Manager) and shall inure to the benefit of the Beneficiaries. Section 2.02. Amendment. So long as there remains any Beneficiary, or any Preferred Shares are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiaries or the holders of Preferred Shares. Section 2.03. Notices. Any notice, request or other communication required or permitted to be given hereunder to SCI or the Company shall be given in writing by delivering the same against receipt therefor by facsimile transmission (confirmed by mail) or telex, addressed to SCI or the Company, as the case may be, as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer-back, if sent by telex), to it: If to the Company, to: SCI Finance LLC c/o Service Corporation International, as Manager 1929 Allen Parkway Houston, Texas 77019 Facsimile: (713) 525-5475 Attention: ( ) If to SCI, to: Service Corporation International 1929 Allen Parkway Houston, Texas 77019 Facsimile: (713) 525-5475 Attention: ( ) 4 -4- Section 2.04. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN AND WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. 5 -5- THIS LIABILITY ASSUMPTION AGREEMENT is executed as of the day and year first above written. SERVICE CORPORATION INTERNATIONAL By:____________________________________ Name: Title: SCI FINANCE LLC By: Service Corporation International, as Manager By:____________________________________ Name: Title: EX-4.9 13 UNDERTAKING TO FURNISH INST. RELATING TO LT DEBT 1 EXHIBIT 4.9 AGREEMENT TO FURNISH INSTRUMENTS WITH RESPECT TO LONG-TERM DEBT Pursuant to Item 601(b)(4) of Regulation S-K, there is not filed with this Registration Statement certain instruments with respect to long-term debt under which the total amount of securities authorized thereunder does not exceed 10 per cent of the total assets of Registrant and its subsidiaries on a consolidated basis. Registrant agrees to furnish a copy of any such instrument to the Commission upon request. SERVICE CORPORATION INTERNATIONAL By: /s/ James M. Shelger Name: James M. Shelger Title: Senior Vice President, General Counsel and Secretary Date: October 17, 1994 EX-12.2 14 RATIO OF EARNINGS TO COMBINED FC AND PSD 1 EXHIBIT 12.2 SERVICE CORPORATION INTERNATIONAL RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (Thousands, except ratio amounts)
Six Months Ended June 30, Years Ended December 31, ------------------------- --------------------------------------------------------- 1994 1993 1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- ---- ---- Pretax income . . . . . . . . . . . . $113,642 $ 88,281 $173,492 $139,336 $108,872 $ 99,432 $ 84,618 Undistributed income of less than 50% owned equity investees . . . . . (456) (259) (325) (718) (252) (146) -- Minority interest in income of majority owned subsidiaries with fixed charges . . . . . . . . . 1,041 1,002 1,938 1,798 1,752 1,334 886 Add fixed charges as adjusted (from below) . . . . . . . . . . . . 42,577 37,662 78,841 68,584 59,508 52,845 42,437 -------- -------- -------- -------- -------- -------- -------- $156,804 $126,686 $253,946 $209,000 $169,880 $153,465 $127,941 -------- -------- -------- -------- -------- -------- -------- Fixed charges: Interest expense: Corporate . . . . . . . . . . . . . $ 32,456 $ 28,888 $ 59,631 $ 53,902 $ 42,429 $ 36,095 $ 32,514 Financial services . . . . . . . . . 4,577 3,598 7,725 5,826 9,453 10,171 3,982 Capitalized. . . . . . . . . . . . . 355 73 705 481 701 467 445 Amortization of debt costs . . . . . 140 141 288 328 116 126 138 1/3 of rental expense. . . . . . . . 5,404 5,035 11,197 8,528 7,510 6,453 5,803 Preferred dividends (pretax) . . . . -- -- -- -- -- 5,186 10,879 -------- -------- -------- -------- -------- -------- -------- Fixed charges. . . . . . . . . . . . . 42,932 37,735 79,546 69,065 60,209 58,498 53,761 Fixed charges as adjusted: Less: Capitalized interest . . . . . (355) (73) (705) (481) (701) (467) (445) Preferred dividend (pretax). . -- -- -- -- -- (5,186) (10,879) -------- -------- -------- -------- -------- -------- -------- Fixed charges as adjusted. . . . . . $ 42,577 $ 37,662 $ 78,841 $ 68,584 $ 59,508 $ 52,845 $ 42,437 -------- -------- -------- -------- -------- -------- -------- Ratio (earnings divided by fixed charges) . . . . . . . . . . . . . . 3.65 3.36 3.19 3.03 2.82 2.62 2.38 ======== ======== ======== ======== ======== ======== ========
EX-23.4 15 CONSENT OF COOPERS & LYBRAND LLP 1 EXHIBIT 23.4 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this registration statement on Form S-3 of our report, which includes an explanatory paragraph pertaining to accounting changes, dated February 8, 1994, on our audit of the consolidated financial statements and financial statement schedules of Service Corporation International as of December 31, 1993, and for the year then ended, which report is included in the Annual Report on Form 10-K for the year ended December 31, 1993. We also consent to the reference to our firm under the caption "Experts." /s/ COOPERS & LYBRAND L.L.P. Houston, Texas October 18, 1994 EX-23.5 16 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.5 CONSENT OF INDEPENDENT AUDITOR We consent to the reference of our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of Service Corporation International and SCI Finance LLC for the registration of up to $1,000,000,000 of Service Corporation International debt securities, common stock, preferred stock, and common stock warrants or SCI Finance LLC LLC preferred securities, and to the incorporation by reference therein of our report dated February 8, 1993, with respect to the consolidated financial statements and schedules of Service Corporation International for the years ended December 31, 1992 and 1991 included in the Annual Report (Form 10-K) of Service Corporation International for the year ended December 31, 1993. /s/ ERNST & YOUNG LLP Houston, Texas October 18, 1994 EX-24 17 POWERS OF ATTORNEY 1 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 2 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ R. L. Waltrip 3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 4 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ Samuel W. Rizzo 5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or employee, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or employee, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or employee, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 6 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 7th day of October, 1994. /s/ Wesley T. McRae 7 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 8 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ Anthony L. Coelho 9 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 10 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 6th day of October, 1994. /s/ Douglas M. Conway 11 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 12 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ Jack Finkelstein 13 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 14 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ A. J. Foyt, Jr. 15 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 16 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 13th day of October, 1994. /s/ James J. Gavin, Jr. 17 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 18 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ James H. Greer 19 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 20 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ L. William Heiligbrodt 21 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 22 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ B. D. Hunter 23 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 24 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ John W. Mecom, Jr. 25 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 26 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ Clifton H. Morris, Jr. 27 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 28 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ E. H. Thornton, Jr. 29 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 30 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ W. Blair Waltrip 31 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer or director, or both, of Service Corporation International, a Texas corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo and James M. Shelger their true and lawful attorneys and agents (each with authority to act alone), to do any and all acts and things and to execute any and all instruments which said attorneys and agents deem necessary or advisable: (i) to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission in respect thereof, in connection with the registration under the said Securities Act of the offering, sale and delivery of certain securities of said corporation as set forth below (the "Securities"), including specifically, but without limiting the generality of the foregoing, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to Registration Statements or to any amendments (including post-effective amendments) thereto filed with the Securities and Exchange Commission in respect of said Securities, and to any instrument or document filed as part of, as an exhibit to or in connection with said Registration Statements or amendments; and (ii) to register or qualify said Securities for sale and to register or license the Company as a broker or dealer in said Securities under the securities or Blue Sky laws of all such States as may be necessary or appropriate to permit therein the offering and sale of said Securities as contemplated by said Registration Statements, including specifically, without limitation, the power and authority to sign for and on behalf of the undersigned the name of the undersigned as officer or director, or both, of the Company to any application, statement, petition, prospectus, notice or other instrument or document, or to any amendment thereto, or to any exhibit filed as a part thereof or in connection therewith, which is required to be signed by the undersigned and to be filed with the public authority or authorities administering said Securities or Blue Sky laws for the purpose of so registering or qualifying said Securities or registering or licensing the Company, and the undersigned does hereby ratify and confirm as his own act and deed all that said attorney and agent shall do or cause to be done by virtue hereof. The Securities of the Company covered by this power of attorney are: (i) Debt securities of the Company consisting of debentures (whether senior, senior subordinated or subordinated), notes and/or other unsecured evidences of indebtedness; (ii) Common Stock, par value $1.00 per share ("Common Stock"), of the Company and the related Series C Junior Participating Preferred Stock Rights ("Rights"), including without limitation Common Stock of the Company which may be issued upon conversion of any securities of the Company or any of its subsidiaries; (iii) Preferred stock, par value $1.00 per share, of the Company; 32 (iv) Warrants to acquire Common Stock (including any associated Rights) of the Company; (v) Debt or equity securities of any subsidiary of the Company, including securities convertible into Common Stock (including any associated Rights) of the Company; and (vi) Guarantees by the Company of any debt or equity securities of any subsidiary of the Company. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th day of September, 1994. /s/ Edward E. Williams EX-25.1 18 T-1 - SENIOR DEBT SECURITIES 1 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM T-1 STATEMENT OF ELIGIBILITY 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) __________ -------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (Jurisdiction of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, New York 10286 (Address of principal executive offices) (Zip Code) SERVICE CORPORATION INTERNATIONAL (Exact name of obligor as specified in its charter) Texas 74-1488375 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1929 Allen Parkway Houston, TX 77019 (Address of principal executive offices) (Zip Code) -------------------- Senior Debt Securities* (Title of the indenture securities) *Specific title(s) to be determined in connection with sale(s) of Senior Debt Securities 2 GENERAL ITEM 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. Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. 10006, New York and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20549 New York Clearing House Association New York, N.Y. (b) Whether it is authorized to exercise corporate trust powers: Yes. ITEM 2. Affiliations with Obligor If the obligor is an affiliate of the trustee, describe each such affiliation. None. (See Note on page 2.) -------------------- ITEM 16. List of Exhibits: Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the Commission's Rules of Practice. 1. - A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (See Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. - A copy of the existing By-laws of the Trustee. (See Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. - The consent of the Trustee required by Section 321(b) of the Act. (See Exhibit 6 to Form T-1, Registration Statement No. 33-44051.) 7. - A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. (See Exhibit 7 to Form T-1, Registration Statement No. 33-55379.) 1 3 NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -------------------- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank 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 13th day of October, 1994. The Bank of New York By: /s/ Robert F. McIntyre Robert F. McIntyre Assistant Vice President 2 EX-25.2 19 T-1 - SENIOR SUBORDINATED DEBT SECURITIES 1 EXHIBIT 25.2 ******************************************************************************** FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 STATEMENT OF ELIGIBILITY 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) ________ (Not applicable.) TEXAS COMMERCE BANK NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) Not applicable (Jurisdiction of incorporation or organization if not a U.S. national bank) 74-0800980 (I.R.S. Employer Identification No.) 712 Main Street, Houston, Texas 77002 (Address of principal executive offices) (Zip code) Carol Kirkland, 712 Main Street, 26th Floor, Houston, Texas 77002, (713) 546-2449 (Name, address and telephone number of agent for service) Service Corporation International (Exact name of obligor as specified in its charter) Texas 74-1488375 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1929 Allen Parkway, Houston, Texas 77219 (Address of principal executive offices) (Zip Code) Senior Subordinated Debt Securities (Title of the indenture securities) ******************************************************************************* 2 ITEM 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. Comptroller of the Currency, Washington, D. C. Federal Deposit Insurance Corporation, Washington, D. C. The Board of Governors of the Federal Reserve System, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each such affiliation. As of October 11, 1994 No such affiliation exists. ITEM 3. VOTING SECURITIES OF THE TRUSTEE. Furnish the following information as to each class of voting securities of the trustee. Not applicable. ITEM 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 other indenture. Not applicable. 2 3 (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 other indenture, including a statement as to how the indenture securities will rank as compared with the securities issued under such other indenture. Not applicable. ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH OBLIGOR OR UNDERWRITERS. If the trustee or any of the directors or executive officers of the trustee is a director, officer, partner, employee, appointee, or representative of the obligor or of any underwriter for the obligor, identify each such person having any such connection and state the nature of each such connection. Not applicable. ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS. Furnish the following information as to the voting securities of the trustee owned beneficially by the obligor and each director, partner and executive officer of the obligor. Not applicable. ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS. Furnish the following information as to the voting securities of the trustee owned beneficially by each underwriter for the obligor and each director, partner, and executive officer of each such underwriter. Not applicable. ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE. Furnish the following information as to securities of the obligor owned beneficially or held as collateral security for obligations in default by the trustee. Not applicable. 3 4 ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE. If the trustee owns beneficially or holds as collateral security for obligations in default any securities of an underwriter for the obligor, furnish the following information as to each class of securities of such underwriter any of which are so owned or held by the trustee. Not applicable. ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR. If the trustee owns beneficially or holds as collateral security for obligations in default voting securities of a person who, to the knowledge of the trustee (1) owns 10% or more of the voting securities of the obligor or (2) is an affiliate, other than a subsidiary, of the obligor, furnish the following information as to the voting securities of such person. Not applicable. ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR. If the trustee owns beneficially or holds as collateral security for obligations in default any securities of a person who, to the knowledge of the trustee, owns 50% or more of the voting securities of the obligor, furnish the following information as to each class of securities of such person any of which are so owned or held by the trustee. Not applicable. ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE. Except as noted in the instructions to the Form T-1, if the obligor is indebted to the trustee, furnish the following information: nature of indebtedness, amount outstanding and date due. Not applicable. 4 5 ITEM 13. DEFAULTS BY THE OBLIGOR. (a) State whether there is or has been a default with respect to the securities under this indenture. Explain the nature of any such default. As of October 11, 1994 No such default exists or has existed. (b) 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, or is trustee for more than one outstanding series of securities under the indenture, state whether there has been a default under any such indenture or series, identify the indenture or series affected, and explain the nature of any such default. As of October 11, 1994 No such default exists or has existed. ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS. If any underwriter is an affiliate of the trustee, describe each such affiliation. Not applicable. ITEM 15. FOREIGN TRUSTEE. Identify the order or rule pursuant to which the foreign trustee is authorized to act as sole trustee under indentures qualified or to be qualified under the Act. Not applicable. ITEM 16. LIST OF EXHIBITS. List below all exhibits filed as part of this statement of eligibility. /*/ 1. A copy of the articles of association of the trustee as now in effect. /**/ 2. A copy of the certificate of authority of the trustee to commence business. 5 6 /**/ 3. A copy of the certificate of authorization of the trustee to exercise corporate trust powers issued by the Board of Governors of the Federal Reserve System under date of January 21, 1948. /***/ 4. A copy of the existing bylaws of the trustee. 5. A copy of each indenture referred to in Item 4, if the obligor is in default. Not Applicable. 6. The consent of the United States institutional trustees required by Section 321(b) of the Act. 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. 8. A copy of any order pursuant to which the foreign trustee is authorized to act as sole trustee under indentures qualified or to be qualified under the Act. Not applicable. 9. Foreign trustees are required to file a consent to service of process on Form F-X. Not applicable. - ----------------------------- / */ Incorporated by reference to Exhibit bearing the same Exhibit number submitted with the Form T-1 of Texas Commerce Bank National Association with respect to File No. 33-51417. / **/ Incorporated by reference to Exhibit bearing the same Exhibit number submitted with the Form T-1 of Texas National Bank of Commerce of Houston with respect to File No. 2-24599. /***/ Incorporated by reference to Exhibit bearing the same Exhibit number submitted with the Form T-1 of Texas Commerce Bank National Association with respect to File No. 33-53077. (Remainder of Page Intentionally Left Blank) 6 7 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the trustee, Texas Commerce Bank National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Houston, and State of Texas, on the 11th day of October, 1994. TEXAS COMMERCE BANK NATIONAL ASSOCIATION (Trustee) By: /s/ WAYNE MENTZ Wayne Mentz Assistant Vice President and Trust Officer 7 8 Exhibit 6 Securities & Exchange Commission Washington, D.C. 20549 Gentlemen: The undersigned is trustee under an Indenture dated as of September 1, 1991, as supplemented from time to time by supplemental indentures thereto, between Service Corporation International and Texas Commerce Bank National Association, as Trustee, entered into in connection with the issuance of its Senior Subordinated Debt Securities. In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned hereby consents that reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities & Exchange Commission upon its request therefor. Very truly yours, TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: /s/ WAYNE MENTZ Wayne Mentz Assistant Vice President and Trust Officer 9 Board of Governors of the Federal Reserve System OMB Number: 7100-0036 Federal Deposit Insurance Corporation OMB Number: 3064-0082 Office of the Comptroller of the Currency OMB Number: 1357-0081 Federal Financial Institutions Examination Council Expires July 31, 1994 - ------------------------------------------------------------------------------------------------------------------------------------ (1) Please refer to page i, Table of Contents, for (Logo) the required disclosure of estimated burden. - ------------------------------------------------------------------------------------------------------------------------------------ Consolidated Reports of Condition and Income for A Bank With Domestic and Foreign Offices--FFIEC 031 (940630) Report at the close of business June 30, 1994 ---------- (RCR 0000) This report is required by law: 12 U.S.C. Section 324 (State This report form is to be filed by banks with branches and con- member banks); 12 U.S.C. Section 1817 (State nonmember banks); solidated subsidiaries in U.S. territories and possessions, Edge and 12 U.S.C. Section 161 (National banks). or Agreement subsidiaries, foreign branches, consolidated foreign subsidiaries, or International Banking Facilities. - ------------------------------------------------------------------------------------------------------------------------------------ NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in by an authorized officer and the Report of Condition must be accordance with Federal regulatory authority instructions. attested to by not less than two directors (trustees) for State NOTE: These instructions may in some cases differ from nonmember banks and three directors for State member and generally accepted accounting principles. National banks. I, Kenneth L. Tilton, EVP & Controller --------------------------------------------------------- We, the undersigned directors (trustees), attest to the correct- Name and Title of Officer Authorized to Sign Report ness of this Report of Condition (including the supporting schedules) and declare that it has been examined by us and to of the named bank do hereby declare that these Reports of the best of our knowledge and belief has been prepared in Condition and Income (including the supporting schedules) conformance with the instructions issued by the appropriate have been prepared in conformance with the instructions Federal regulatory authority and is true and correct. issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and belief. Marc J. Shapiro /s/ Marc J. Shapiro ---------------------------------------------------------------- Director (Trustee) /s/ Kenneth L. Tilton Alan R. Buckwalter, III /s/ Alan R. Buckwalter, III - -------------------------------------------------------------- ---------------------------------------------------------------- Signature of Officer Authorized to Sign Report Director (Trustee) July 28, 1994 Robert C. Hunter /s/ Robert C. Hunter - -------------------------------------------------------------- ---------------------------------------------------------------- Date of Signature Director (Trustee) - ------------------------------------------------------------------------------------------------------------------------------------ For Banks Submitting Hard Copy Report Forms: State Member Banks: Return the original and one copy to the National Banks: Return the original only in the special return appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of the special return address envelope, return the original only to State Nonmember Banks: Return the original only in the the FDIC, c/o Quality Data Systems, 2139 Espey Court, special return address envelope provided. If express mail is Crofton, MD 21114. used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data Systems, 2139 Espey Court, Crofton, MD 21114. - ------------------------------------------------------------------------------------------------------------------------------------ FDIC Certificate Number 0 3 2 6 3 ---------- (RCR 0000) CALL NO. 188 31 06-30-94 CERT: 03263 00373 STBK 48-3926 TEXAS COMMERCE BANK NATIONAL ASSOCIA 712 MAIN STREET HOUSTON, TX 77001 Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency
10 (2) Consolidated Reports of Condition and Income for A Bank With Domestic and Foreign Offices - ------------------------------------------------------------------------------------------------------------------------------------ Table of Contents Signature Page Cover Report of Condition Schedule RC--Balance Sheet........................... RC-1, 2 Report of Income Schedule RC-A--Cash and Balance Due Schedule RI--Income Statement................ RI-1, 2, 3 From Depository Institutions.......................... RC-3 Schedule RI-A--Changes in Equity Capital........... RI-3 Schedule RC-B--Securities............................ RC-4, 5 Schedule RI-B--Charge-offs and Recoveries and Schedule RC-C--Loans and lease Financing Changes in Allowance for Loan and Lease Receivables: Losses........................................ RI-4, 5 Part I. Loans and Leases......................... RC-6, 7 Schedule RI-C--Applicable Income Taxes by Part II. Loans to Small Businesses and Taxing Authority................................. RI-5 Small Farms (included in the forms for Schedule RI-D--Income from June 30 only)................................ RC-7a, 7b International Operations......................... RI-6 Schedule RC-D--Trading Assets and Liabilities Schedule RI-E--Explanations..................... RI-7, 8 (to be completed only by selected banks).............. RC-8 Schedule RC-E--Deposit Liabilities.................. RC-9, 10 Schedule RC-F--Other Assets............................ RC-11 Schedule RC-G--Other Liabilities....................... RC-11 Schedule RC-H--Selected Balance Sheet Items for Domestic Offices..................................... RC-12 Schedule RC-I--Selected Assets and Liabilities of IBFs.............................................. RC-13 Disclosure of Estimated Burden Schedule RC-K--Quarterly Averages...................... RC-13 Schedule RC-L--Off-Balance Sheet Items............. RC-14, 15 The estimated average burden associated with this information Schedule RC-M--Memoranda........................... RC-16, 17 collection is 30.7 hours per respondent and is estimated to Schedule RC-N--Past Due and Nonaccrual Loans, vary from 15 to 200 hours per response, depending on individual Leases, and Other Assets......................... RC-18, 19 circumstances. Burden estimates include the time for reviewing Schedule RC-O--Other Data for Deposit instructions, gathering and maintaining data in the required Insurance Assessments............................ RC-20, 21 form, and completing the information collection, but exclude Schedule RC-R--Risk-Based Capital.................. RC-22, 23 the time for compiling and maintaining business records in the Optional Narrative Statement Concerning the normal course of a respondent's activities. Comments concerning Amounts Reported in the Reports of the accuracy of this burden estimate and suggestions for Condition and Income................................. RC-24 reducing this burden should be directed to the Office of Special Report (to be completed by all banks) Information and Regulatory Affairs, Office of Management and Schedule RC-J--Repricing Opportunities (sent only to Budget, Washington, D.C. 20503, and to one of the following: and to be completed only by savings banks) Secretary Board of Governors of the Federal Reserve System Washington, D.C. 20551 Legislative and Regulatory Analysis Division Office of the Comptroller of the Currency Washington, D.C. 20219 Assistant Executive Secretary Federal Deposit Insurance Corporation Washington, D.C. 20429 For information or assistance, national and state nonmember banks should contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington, D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through Friday between 8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their Federal Reserve District Bank.
11
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RI-1 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Consolidated Report of Income for the period January 1, 1994-June 30, 1994 All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars. Schedule RI--Income Statement __________ | I480 | (- ____________ ________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | _______________________________________________________________________________________________ ____________________ 1. Interest income: | ////////////////// | a. Interest and fee income on loans: | ////////////////// | (1) In domestic offices: | ////////////////// | (a) Loans secured by real estate ................................................... | 4011 88,779 | 1.a.(1)(a) (b) Loans to depository institutions ............................................... | 4019 962 | 1.a.(1)(b) (c) Loans to finance agricultural production and other loans to farmers ............ | 4024 2,591 | 1.a.(1)(c) (d) Commercial and industrial loans ................................................ | 4012 118,060 | 1.a.(1)(d) (e) Acceptances of other banks ..................................................... | 4026 0 | 1.a.(1)(e) (f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// | (1) Credit cards and related plans ............................................. | 4054 6,291 | 1.a.(1)(f)(1) (2) Other ...................................................................... | 4055 46,035 | 1.a.(1)(f)(2) (g) Loans to foreign governments and official institutions ......................... | 4056 7,561 | 1.a.(1)(g) (h) Obligations (other than securities and leases) of states and political | ////////////////// | subdivisions in the U.S.: | ////////////////// | (1) Taxable obligations ........................................................ | 4503 109 | 1.a.(1)(h)(1) (2) Tax-exempt obligations ..................................................... | 4504 1,557 | 1.a.(1)(h)(2) (i) All other loans in domestic offices ............................................ | 4058 40,417 | 1.a.(1)(i) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4059 5,622 | 1.a.(2) b. Income from lease financing receivables: | ////////////////// | (1) Taxable leases ..................................................................... | 4505 7,961 | 1.b.(1) (2) Tax-exempt leases .................................................................. | 4307 0 | 1.b.(2) c. Interest income on balances due from depository institutions:(1) | ////////////////// | (1) In domestic offices ................................................................ | 4105 93 | 1.c.(1) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4106 0 | 1.c.(2) d. Interest and dividend income on securities: | ////////////////// | (1) U.S. Treasury securities and U.S. Government agency and corporation obligations .... | 4027 93,097 | 1.d.(1) (2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// | (a) Taxable securities ............................................................. | 4506 35 | 1.d.(2)(a) (b) Tax-exempt securities .......................................................... | 4507 99 | 1.d.(2)(b) (3) Other domestic debt securities ..................................................... | 3657 8,368 | 1.d.(3) (4) Foreign debt securities ............................................................ | 3658 41 | 1.d.(4) (5) Equity securities (including investments in mutual funds) .......................... | 3659 1,394 | 1.d.(5) e. Interest income from assets held in trading accounts ................................... | 4069 619 | 1.e. ______________________ ____________ (1) Includes interest income on time certificates of deposit not held in trading accounts.
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RI-2 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RI--Continued ________________ Dollar Amounts in Thousands | Year-to-date | ___________________________________________________________________________________ ______________ 1. Interest income (continued) | RIAD Bil Mil Thou | f. Interest income on federal funds sold and securities purchased | ////////////////// | under agreements to resell in domestic offices of the bank and of | ////////////////// | its Edge and Agreement subsidiaries, and in IBFs .................... | 4020 79,166 | 1.f. g. Total interest income (sum of items 1.a through 1.f) ................ | 4107 508,857 | 1.g. 2. Interest expense: | ////////////////// | a. Interest on deposits: | ////////////////// | (1) Interest on deposits in domestic offices: | ////////////////// | (a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// | telephone and preauthorized transfer accounts) .............. | 4508 13,934 | 2.a.(1)(a) (b) Nontransaction accounts: | ////////////////// | (1) Money market deposit accounts (MMDAs) ................... | 4509 13,159 | 2.a.(1)(b)(1) (2) Other savings deposits .................................. | 4511 35,932 | 2.a.(1)(b)(2) (3) Time certificates of deposit of $100,000 or more ........ | 4174 11,361 | 2.a.(1)(b)(3) (4) All other time deposits ................................. | 4512 45,223 | 2.a.(1)(b)(4) (2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// | subsidiaries, and IBFs .......................................... | 4172 6,490 | 2.a.(2) b. Expense of federal funds purchased and securities sold under | ////////////////// | agreements to repurchase in domestic offices of the bank and of | ////////////////// | its Edge and Agreement subsidiaries, and in IBFs .................... | 4180 13,565 | 2.b. c. Interest on demand notes issued to the U.S. Treasury and on | ////////////////// | other borrowed money ................................................ | 4185 13,410 | 2.c. d. Interest on mortgage indebtedness and obligations under | ////////////////// | capitalized leases .................................................. | 4072 1,014 | 2.d. e. Interest on subordinated notes and debentures ....................... | 4200 13,122 | 2.e. f. Total interest expense (sum of items 2.a through 2.e) ............... | 4073 167,210 | 2.f. ___________________________ 3. Net interest income (item 1.g minus 2.f) ............................... | ////////////////// | RIAD 4074 | 341,647 | 3. ___________________________ 4. Provisions: | ////////////////// | ___________________________ a. Provision for loan and lease losses ................................. | ////////////////// | RIAD 4230 | (16,960)| 4.a. b. Provision for allocated transfer risk ............................... | ////////////////// | RIAD 4243 | (2,290)| 4.b. ___________________________ 5. Noninterest income: | ////////////////// | a. Income from fiduciary activities .................................... | 4070 64,207 | 5.a. b. Service charges on deposit accounts in domestic offices ............. | 4080 74,167 | 5.b. c. Trading gains (losses) and fees from foreign exchange transactions .. | 4075 6,372 | 5.c. d. Other foreign transaction gains (losses) ............................ | 4076 137 | 5.d. e. Gains (losses) and fees from assets held in trading accounts ........ | 4077 5,825 | 5.e. f. Other noninterest income: | ////////////////// | (1) Other fee income ................................................ | 5407 45,405 | 5.f.(1) (2) All other noninterest income* ................................... | 5408 17,507 | 5.f.(2) ___________________________ g. Total noninterest income (sum of items 5.a through 5.f) ............. | ////////////////// | RIAD 4079 | 213,620 | 5.g. 6. a. Realized gains (losses) on held-to-maturity securities .............. | ////////////////// | RIAD 3521 | 43 | 6.a. b. Realized gains (losses) on available-for-sale securities ............ | ////////////////// | RIAD 3196 | 0 | 6.b. ___________________________ 7. Noninterest expense: | ////////////////// | a. Salaries and employee benefits ...................................... | 4135 197,684 | 7.a. b. Expenses of premises and fixed assets (net of rental income) | ////////////////// | (excluding salaries and employee benefits and mortgage interest) .... | 4217 57,793 | 7.b. c. Other noninterest expense* .......................................... | 4092 149,246 | 7.c. ___________________________ d. Total noninterest expense (sum of items 7.a through 7.c) ............ | ////////////////// | RIAD 4093 | 404,723 | 7.d. ___________________________ 8. Income (loss) before income taxes and extraordinary items and other | ////////////////// | ___________________________ adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)| ////////////////// | RIAD 4301 | 169,837 | 8. 9. Applicable income taxes (on item 8) .................................... | ////////////////// | RIAD 4302 | 65,051 | 9. ___________________________ 10. Income (loss) before extraordinary items and other adjustments | ////////////////// | ___________________________ (item 8 minus 9) ....................................................... | ////////////////// | RIAD 4300 | 104,786 | 10. _________________________________________________ ____________ *Describe on Schedule RI-E--Explanations.
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RI-3 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RI--Continued ________________ | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ___________________________________________________________________________ ____________________ 11. Extraordinary items and other adjustments: | ////////////////// | a. Extraordinary items and other adjustments, gross of income taxes* . | 4310 0 | 11.a. b. Applicable income taxes (on item 11.a)* ........................... | 4315 0 | 11.b. c. Extraordinary items and other adjustments, net of income taxes | ////////////////// | ___________________________ (item 11.a minus 11.b) ............................................ | ////////////////// | RIAD 4320 | 0 | 11.c. 12. Net income (loss) (sum of items 10 and 11.c) ......................... | ////////////////// | RIAD 4340 | 104,786 | 12. _________________________________________________ ________________ Memoranda | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ______________________________________________________________________________________________________ ____________________ 1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// | August 7, 1986, that is not deductible for federal income tax purposes .......................... | 4513 300 | M.1. 2. Fee income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// | (included in Schedule RI, item 5.g) ............................................................. | 8431 6,797 | M.2. 3. Estimated foreign tax credit included in applicable income taxes, items 9 and 11.b above ........ | 4309 0 | M.3. 4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// | Taxable equivalent adjustment to "Income (loss) before income taxes and extraordinary | ////////////////// | items and other adjustments" (item 8 above) ..................................................... | 1244 0 | M.4. 5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number | nearest whole number) ........................................................................... | 4150 9,424 | M.5. ______________________ Schedule RI-A--Changes in Equity Capital Indicate decreases and losses in parentheses. __________ | I483 | (- ____________ ________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ______________________________________________________________________________________________________ ____________________ 1. Total equity capital originally reported in the December 31, 1993, Reports of Condition | ////////////////// | and Income ...................................................................................... | 3215 1,694,783 | 1. 2. Equity capital adjustments from amended Reports of Income, net* ................................. | 3216 0 | 2. 3. Amended balance end of previous calendar year (sum of items 1 and 2) ............................ | 3217 1,694,783 | 3. 4. Net income (loss) (must equal Schedule RI, item 12) ............................................. | 4340 104,786 | 4. 5. Sale, conversion, acquisition, or retirement of capital stock, net .............................. | 4346 0 | 5. 6. Changes incident to business combinations, net .................................................. | 4356 181,120 | 6. 7. LESS: Cash dividends declared on preferred stock ................................................ | 4470 0 | 7. 8. LESS: Cash dividends declared on common stock ................................................... | 4460 130,000 | 8. 9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// | for this schedule) .............................................................................. | 4411 0 | 9. 10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10. 11. Change in net unrealized holding gains (losses) on available-for-sale securities ................ | 8433 (34,404)| 11. 12. Foreign currency translation adjustments ........................................................ | 4414 0 | 12. 13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ........ | 4415 20,978 | 13. 14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// | item 28) ........................................................................................ | 3210 1,837,263 | 14. ______________________ ____________ *Describe on Schedule RI-E--Explanations.
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RI-4 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RI-B--Charge-offs and Recoveries and Changes in Allowance for Loan and Lease Losses Part I. Charge-offs and Recoveries on Loans and Leases Part I excludes charge-offs and recoveries through the allocated transfer risk reserve. __________ | I486 | (- _________________________________ ________ | (Column A) | (Column B) | | Charge-offs | Recoveries | ____________________ ____________________ | calendar year-to-date | _________________________________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 1. Loans secured by real estate: | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ......................................... | 4651 1,879 | 4661 5,825 | 1.a. b. To non-U.S. addressees (domicile) ..................................... | 4652 0 | 4662 0 | 1.b. 2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// | a. To U.S. banks and other U.S. depository institutions .................. | 4653 0 | 4663 0 | 2.a. b. To foreign banks ...................................................... | 4654 0 | 4664 0 | 2.b. 3. Loans to finance agricultural production and other loans to farmers ...... | 4655 0 | 4665 0 | 3. 4. Commercial and industrial loans: | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ......................................... | 4645 3,771 | 4617 5,843 | 4.a. b. To non-U.S. addressees (domicile) ..................................... | 4646 0 | 4618 0 | 4.b. 5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// | expenditures: | ////////////////// | ////////////////// | a. Credit cards and related plans ........................................ | 4656 1,101 | 4666 168 | 5.a. b. Other (includes single payment, installment, and all student loans) ... | 4657 4,948 | 4667 2,447 | 5.b. 6. Loans to foreign governments and official institutions ................... | 4643 0 | 4627 545 | 6. 7. All other loans .......................................................... | 4644 467 | 4628 27 | 7. 8. Lease financing receivables: | ////////////////// | ////////////////// | a. Of U.S. addressees (domicile) ......................................... | 4658 0 | 4668 0 | 8.a. b. Of non-U.S. addressees (domicile) ..................................... | 4659 0 | 4669 2,001 | 8.b. 9. Total (sum of items 1 through 8) ......................................... | 4635 12,166 | 4605 16,856 | 9. ___________________________________________ ___________________________________________ | Cumulative | Cumulative | | Charge-offs | Recoveries | | Jan. 1, 1986 | Jan. 1, 1986 | Memoranda | through | through | Dollar Amounts in Thousands | Dec. 31, 1989 | Report Date | ______________________________________________________________________________ ____________________ ____________________ To be completed by national banks only. | RIAD Bil Mil Thou | RIAD Bil Mil Thou | ____________________ ____________________ 1. Charge-offs and recoveries of Special-Category Loans, as defined for this | ////////////////// | ////////////////// | Call Report by the Comptroller of the Currency ........................... | ////////////////// | 4784 13,632 | M.1. ___________________________________________ ___________________________________________ | (Column A) | (Column B) | Memorandum items 2 and 3 are to be completed by all banks. | Charge-offs | Recoveries | ____________________ ____________________ 2. Loans to finance commercial real estate, construction, and land | calendar year-to-date | _________________________________________ development activities (not secured by real estate) included in | RIAD Bil Mil Thou | RIAD Bil Mil Thou | ____________________ ____________________ Schedule RI-B, part I, items 4 and 7, above .............................. | 5409 6 | 5410 275 | M.2. 3. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// | Schedule RI-B, part I, item 1, above): | ////////////////// | ////////////////// | a. Construction and land development ..................................... | 3582 0 | 3583 0 | M.3.a. b. Secured by farmland ................................................... | 3584 0 | 3585 0 | M.3.b. c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | (1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// | properties and extended under lines of credit ..................... | 5411 0 | 5412 0 | M.3.c.(1) (2) All other loans secured by 1-4 family residential properties ...... | 5413 912 | 5414 339 | M.3.c.(2) d. Secured by multifamily (5 or more) residential properties ............. | 3588 0 | 3589 0 | M.3.d. e. Secured by nonfarm nonresidential properties .......................... | 3590 967 | 3591 4,731 | M.3.e. ___________________________________________
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RI-5 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RI-B--Continued Part II. Changes in Allowance for Loan and Lease Losses and in Allocated Transfer Risk Reserve ___________________________________________ | (Column A) | (Column B) | | Allowance for | Allocated | | Loan and Lease | Transfer Risk | | Losses | Reserve | ____________________ ____________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 1. Balance originally reported in the December 31, 1993, Reports of | ////////////////// | ////////////////// | Condition and Income ..................................................... | 3124 324,608 | 3131 2,290 | 1. 2. Recoveries (column A must equal part I, item 9, column B above) .......... | 4605 16,856 | 3132 0 | 2. 3. LESS: Charge-offs (column A must equal part I, item 9, column A above) ... | 4635 12,166 | 3133 0 | 3. 4. Provision (column A must equal Schedule RI, item 4.a; column B must | ////////////////// | ////////////////// | equal Schedule RI, item 4.b) ............................................. | 4230 (16,960)| 4243 (2,290)| 4. 5. Adjustments* (see instructions for this schedule) ........................ | 4815 2,684 | 3134 0 | 5. 6. Balance end of current period (sum of items 1 through 5) (column A must | ////////////////// | ////////////////// | equal Schedule RC, item 4.b; column B must equal Schedule RC, | ////////////////// | ////////////////// | item 4.c) ................................................................ | 3123 315,022 | 3128 0 | 6. ___________________________________________ ____________ *Describe on Schedule RI-E--Explanations. Schedule RI-C--Applicable Income Taxes by Taxing Authority Schedule RI-C is to be reported with the December Report of Income. __________ | I489 | (- ____________ ________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ 1. Federal ....................................................................................... | 4780 N/A | 1. 2. State and local................................................................................ | 4790 N/A | 2. 3. Foreign ....................................................................................... | 4795 N/A | 3. 4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............ | 4770 N/A | 4. ____________________________ 5. Deferred portion of item 4 ........................................ | RIAD 4772 | N/A | ////////////////// | 5. __________________________________________________
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RI-6 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RI-D--Income from International Operations For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations account for more than 10 percent of total revenues, total assets, or net income. Part I. Estimated Income from International Operations __________ | I492 | (- ______ ________ | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | _________________________________________________________________________________________________ ____________________ 1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// | and IBFs: | ////////////////// | a. Interest income booked ................................................................... | 4837 N/A | 1.a. b. Interest expense booked .................................................................. | 4838 N/A | 1.b. c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// | (item 1.a minus 1.b) ..................................................................... | 4839 N/A | 1.c. 2. Adjustments for booking location of international operations: | ////////////////// | a. Net interest income attributable to international operations booked at domestic offices .. | 4840 N/A | 2.a. b. Net interest income attributable to domestic business booked at foreign offices .......... | 4841 N/A | 2.b. c. Net booking location adjustment (item 2.a minus 2.b) ..................................... | 4842 N/A | 2.c. 3. Noninterest income and expense attributable to international operations: | ////////////////// | a. Noninterest income attributable to international operations .............................. | 4097 N/A | 3.a. b. Provision for loan and lease losses attributable to international operations ............. | 4235 N/A | 3.b. c. Other noninterest expense attributable to international operations ....................... | 4239 N/A | 3.c. d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// | minus 3.b and 3.c) ....................................................................... | 4843 N/A | 3.d. 4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// | adjustment (sum of items 1.c, 2.c, and 3.d) ................................................. | 4844 N/A | 4. 5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// | the effects of equity capital on overall bank funding costs ................................. | 4845 N/A | 5. 6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// | adjustment (sum of items 4 and 5) ........................................................... | 4846 N/A | 6. 7. Income taxes attributable to income from international operations as estimated in item 6 .... | 4797 N/A | 7. 8. Estimated net income attributable to international operations (item 6 minus 7) .............. | 4341 N/A | 8. ______________________ Memoranda ______________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | _________________________________________________________________________________________________ ____________________ 1. Intracompany interest income included in item 1.a above ..................................... | 4847 N/A | M.1. 2. Intracompany interest expense included in item 1.b above .................................... | 4848 N/A | M.2. ______________________ Part II. Supplementary Details on Income from International Operations Required by the Departments of Commerce and Treasury for Purposes of the U.S. International Accounts and the U.S. National Income and Product Accounts ________________ | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | _________________________________________________________________________________________________ ____________________ 1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1. 2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2. 3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// | (excluding IBFs): | ////////////////// | a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a. b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b. 4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// | domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4. 5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// | (excluding IBFs) ............................................................................ | 4853 N/A | 5. --------------------
8 17
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RI-7 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RI-E--Explanations Schedule RI-E is to be completed each quarter on a calendar year-to-date basis. Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.) __________ | I495 | (- ______ ________ | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | __________________________________________________________________________________________________ ____________________ 1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// | Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// | a. Net gains on other real estate owned ..................................................... | 5415 9,157 | 1.a. b. Net gains on sales of loans .............................................................. | 5416 0 | 1.b. c. Net gains on sales of premises and fixed assets .......................................... | 5417 0 | 1.c. Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// | Schedule RI, item 5.f.(2): | ////////////////// | _____________ d. | TEXT 4461 |______________________________________________________________________________| 4461 | 1.d. ___________ e. | TEXT 4462 |______________________________________________________________________________| 4462 | 1.e. ___________ f. | TEXT 4463 |______________________________________________________________________________| 4463 | 1.f. _____________ 2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// | a. Amortization expense of intangible assets ................................................ | 4531 33,268 | 2.a. Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// | b. Net losses on other real estate owned .................................................... | 5418 0 | 2.b. c. Net losses on sales of loans ............................................................. | 5419 0 | 2.c. d. Net losses on sales of premises and fixed assets ......................................... | 5420 0 | 2.d. Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// | Schedule RI, item 7.c: | ////////////////// | | ////////////////// | _____________ FDIC Assessment | ////////////////// | e. | TEXT 4464 |______________________________________________________________________________| 4464 17,938 | 2.e. ___________ f. | TEXT 4467 |______________________________________________________________________________| 4467 | 2.f. ___________ g. | TEXT 4468 |______________________________________________________________________________| 4468 | 2.g. _____________ 3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// | applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// | all extraordinary items and other adjustments): | ////////////////// | _____________ a. (1) | TEXT 4469 |__________________________________________________________________________| 4469 | 3.a.(1) _____________ (2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2) _____________ ____________________________ b. (1) | TEXT 4487 |__________________________________________________________________________| 4487 | 3.b.(1) _____________ (2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2) _____________ ____________________________ c. (1) | TEXT 4489 |__________________________________________________________________________| 4489 | 3.c.(1) _____________ (2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2) ____________________________ 4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// | item 2) (itemize and describe all adjustments): | ////////////////// | _____________ a. | TEXT 4492 |______________________________________________________________________________| 4492 | 4.a. ___________ b. | TEXT 4493 |______________________________________________________________________________| 4493 | 4.b. _____________ 5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// | Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// | _____________ a. | TEXT 4494 |______________________________________________________________________________| 4494 | 5.a. ___________ b. | TEXT 4495 |______________________________________________________________________________| 4495 | 5.b. _____________ 6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// | item 10) (itemize and describe all corrections): | ////////////////// | _____________ a. | TEXT 4496 |______________________________________________________________________________| 4496 | 6.a. ___________ b. | TEXT 4497 |______________________________________________________________________________| 4497 | 6.b. _____________
9 18
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RI-8 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RI-E--Continued ________________ | Year-to-date | ---------------------- Dollar Amounts in Thousands | RIAD Bil Mil Thou | __________________________________________________________________________________________________ ____________________ 7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// | (itemize and describe all such transactions): | ////////////////// | | ////////////////// | _____________ | ////////////////// | a. | TEXT 4498 |_Capital Injection from Parent Company________________________________________| 4498 20,978 | 7.a. ___________ b. | TEXT 4499 |______________________________________________________________________________| 4499 | 7.b. _____________ 8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// | item 5) (itemize and describe all adjustments): | ////////////////// | | ////////////////// | _____________ | ////////////////// | a. | TEXT 4521 |_Bank Acquisition_____________________________________________________________| 4521 2,684 | 8.a. ___________ b. | TEXT 4522 |______________________________________________________________________________| 4522 | 8.b. _____________ --------------------- 9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | (- ______________________ at its option, any other significant items affecting the Report of Income): ___ No comment | | (RIAD 4769) ___ Other explanations (please type or print clearly): (TEXT 4769)
10 19
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-1 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1994 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC--Balance Sheet __________ | C400 | (- ____________ ________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | _________________________________________________________________________________________________ ____________________ ASSETS | ////////////////// | 1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// | a. Noninterest-bearing balances and currency and coin(1) ................................... | 0081 1,952,721 | 1.a. b. Interest-bearing balances(2) ............................................................ | 0071 5,011 | 1.b. 2. Securities: | ////////////////// | a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. | 1754 1,363,948 | 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) ............................ | 1773 1,611,902 | 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// | of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// | a. Federal funds sold ...................................................................... | 0276 4,622,525 | 3.a. b. Securities purchased under agreements to resell ......................................... | 0277 47,547 | 3.b. 4. Loans and lease financing receivables: ____________________________| ////////////////// | a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 9,706,261 | ////////////////// | 4.a. b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 315,022 | ////////////////// | 4.b. c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c. ____________________________ d. Loans and leases, net of unearned income, | ////////////////// | allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... | 2125 9,391,239 | 4.d. 5. Assets held in trading accounts ............................................................ | 3545 34,188 | 5. 6. Premises and fixed assets (including capitalized leases) ................................... | 2145 534,581 | 6. 7. Other real estate owned (from Schedule RC-M) ............................................... | 2150 106,753 | 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... | 2130 0 | 8. 9. Customers' liability to this bank on acceptances outstanding ............................... | 2155 8,678 | 9. 10. Intangible assets (from Schedule RC-M) ..................................................... | 2143 589,826 | 10. 11. Other assets (from Schedule RC-F) .......................................................... | 2160 459,182 | 11. 12. Total assets (sum of items 1 through 11) ................................................... | 2170 20,728,101 | 12. ______________________ ____________ (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held in trading accounts.
11 20
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-2 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC--Continued ___________________________ Dollar Amounts in Thousands | ///////// Bil Mil Thou | _______________________________________________________________________________________________ _________________________ LIABILITIES | /////////////////////// | 13. Deposits: | /////////////////////// | a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) ..... | RCON 2200 15,468,673 | 13.a. ____________________________ (1) Noninterest-bearing(1) ................................ | RCON 6631 5,776,281 | /////////////////////// | 13.a.(1) (2) Interest-bearing ...................................... | RCON 6636 9,692,392 | /////////////////////// | 13.a.(2) ____________________________ b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// | part II) .............................................................................. | RCFN 2200 515,926 | 13.b. ____________________________ (1) Noninterest-bearing ................................... | RCFN 6631 0 | /////////////////////// | 13.b.(1) (2) Interest-bearing ...................................... | RCFN 6636 515,926 | /////////////////////// | 13.b.(2) ____________________________ 14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// | offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// | a. Federal funds purchased ............................................................... | RCFD 0278 436,360 | 14.a. b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 245,637 | 14.b. 15. a. Demand notes issued to the U.S. Treasury .............................................. | RCON 2840 1,504,602 | 15.a. b. Trading liabilities ................................................................... | RCFD 3548 18,589 | 15.b. 16. Other borrowed money: | /////////////////////// | a. With original maturity of one year or less ............................................ | RCFD 2332 85,293 | 16.a. b. With original maturity of more than one year .......................................... | RCFD 2333 20,349 | 16.b. 17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 30,128 | 17. 18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 8,678 | 18. 19. Subordinated notes and debentures ........................................................ | RCFD 3200 345,000 | 19. 20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 211,603 | 20. 21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 18,890,838 | 21. | /////////////////////// | 22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22. EQUITY CAPITAL | /////////////////////// | 23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 0 | 23. 24. Common stock ............................................................................. | RCFD 3230 612,893 | 24. 25. Surplus (exclude all surplus related to preferred stock).................................. | RCFD 3839 1,014,464 | 25. 26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 197,320 | 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities ................ | RCFD 8434 12,586 | 26.b. 27. Cumulative foreign currency translation adjustments ...................................... | RCFD 3284 0 | 27. 28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 1,837,263 | 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// | and 28) .................................................................................. | RCFD 3300 20,728,101 | 29. ___________________________ Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the Number most comprehensive level of auditing work performed for the bank by independent external __________________ auditors as of any date during 1993 .............................................................. | RCFD 6724 N/A | M.1. __________________ 1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external submits a report on the consolidated holding company auditors (but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in 8 = No external audit work accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) ____________ (1) Includes total demand deposits and noninterest-bearing time and savings deposits.
12 21
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-3 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-A--Cash and Balances Due From Depository Institutions Exclude assets held in trading accounts. ----------- | C405 | (- _________________________________ ________ | (Column A) | (Column B) | | Consolidated | Domestic | | Bank | Offices | ------------------------------------------- Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou | _____________________________________________________________________________ ____________________ ____________________ 1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// | coin .................................................................... | 0022 1,509,753 | ////////////////// | 1. a. Cash items in process of collection and unposted debits .............. | ////////////////// | 0020 1,204,067 | 1.a. b. Currency and coin .................................................... | ////////////////// | 0080 305,686 | 1.b. 2. Balances due from depository institutions in the U.S. ................... | ////////////////// | 0082 83,133 | 2. a. U.S. branches and agencies of foreign banks (including their IBFs) ... | 0083 5,060 | ////////////////// | 2.a. b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// | in the U.S. (including their IBFs) ................................... | 0085 78,073 | ////////////////// | 2.b. 3. Balances due from banks in foreign countries and foreign central banks .. | ////////////////// | 0070 5,866 | 3. a. Foreign branches of other U.S. banks ................................. | 0073 565 | ////////////////// | 3.a. b. Other banks in foreign countries and foreign central banks ........... | 0074 5,330 | ////////////////// | 3.b. 4. Balances due from Federal Reserve Banks ................................. | 0090 358,951 | 0090 358,951 | 4. 5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// | Schedule RC, sum of items 1.a and 1.b) .................................. | 0010 1,957,732 | 0010 1,957,703 | 5. ___________________________________________ ______________________ Memorandum Dollar Amounts in Thousands RCOW Bil Mil Thou __________________________________________________________________________________________________ ____________________ 1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// | column B above) .............................................................................. | 0050 78,122 | M.1. ______________________
13 22
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-4 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-B--Securities Exclude assets held in trading accounts. __________ | C410 | (- ___________________________________________________________________________ ________ | Held-to-maturity | Available-for-sale | _________________________________________ _________________________________________ | (Column A) | (Column B) | (Column C) | (Column D) | | Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) | ____________________ ____________________ ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________ ____________________ ____________________ ____________________ ____________________ 1. U.S. Treasury securities ......... | 0211 0 | 0213 0 | 1286 651,724 | 1287 643,271 | 1. 2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// | (exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// | ment agencies(2) .............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a. b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// | Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// | agencies(3) ................... | 1294 0 | 1295 0 | 1297 0 | 1298 0 | 2.b. 3. Securities issued by states | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and political subdivisions | ////////////////// | ////////////////// | ////////////////// | ////////////////// | in the U.S.: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. General obligations ........... | 1676 440 | 1677 437 | 1678 0 | 1679 0 | 3.a. b. Revenue obligations ........... | 1681 150 | 1686 236 | 1690 0 | 1691 0 | 3.b. c. Industrial development | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and similar obligations ....... | 1694 0 | 1695 0 | 1696 0 | 1697 0 | 3.c. 4. Mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities (MBS): | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. Pass-through securities: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | (1) Guaranteed by | ////////////////// | ////////////////// | ////////////////// | ////////////////// | GNMA ...................... | 1698 0 | 1699 0 | 1701 632,586 | 1702 666,581 | 4.a.(1) (2) Issued by FNMA | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and FHLMC ................. | 1703 593,847 | 1705 579,295 | 1706 255,804 | 1707 248,531 | 4.a.(2) (3) Privately-issued .......... | 1709 0 | 1710 0 | 1711 0 | 1713 0 | 4.a.(3) b. CMOs and REMICs: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | (1) Issued by FNMA | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and FHLMC ................. | 1714 474,517 | 1715 443,500 | 1716 0 | 1717 0 | 4.b.(1) (2) Privately-issued | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and collateralized | ////////////////// | ////////////////// | ////////////////// | ////////////////// | by MBS issued or | ////////////////// | ////////////////// | ////////////////// | ////////////////// | guaranteed by | ////////////////// | ////////////////// | ////////////////// | ////////////////// | FNMA, FHLMC, or | ////////////////// | ////////////////// | ////////////////// | ////////////////// | GNMA ...................... | 1718 4,980 | 1719 4,995 | 1731 10,295 | 1732 10,132 | 4.b.(2) (3) All other privately- | ////////////////// | ////////////////// | ////////////////// | ////////////////// | issued .................... | 1733 0 | 1734 0 | 1735 0 | 1736 0 | 4.b.(3) 5. Other debt securities: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. Other domestic debt | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities .................... | 1737 288,779 | 1738 286,358 | 1739 0 | 1741 0 | 5.a. b. Foreign debt | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities .................... | 1742 1,235 | 1743 1,086 | 1744 0 | 1746 0 | 5.b. _____________________________________________________________________________________ _____________ (1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D. (2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime Administration obligations, and Export-Import Bank participation certificates. (3) Includes obligations (other than pass-through securities, CMOs, and REMICs) issued by the Farm Credit System, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority.
14 23
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-5 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-B--Continued _____________________________________________________________________________________ | Held-to-maturity | Available-for-sale | _________________________________________ _________________________________________ | (Column A) | (Column B) | (Column C) | (Column D) | | Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) | ____________________ ____________________ ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ____________________________________ ____________________ ____________________ ____________________ ____________________ 6. Equity securities: | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. Investments in mutual | ////////////////// | ////////////////// | ////////////////// | ////////////////// | funds ....................... | ////////////////// | ////////////////// | 1747 0 | 1748 0 | 6.a. b. Other equity securities | ////////////////// | ////////////////// | ////////////////// | ////////////////// | with readily determin- | ////////////////// | ////////////////// | ////////////////// | ////////////////// | able fair values ............ | ////////////////// | ////////////////// | 1749 0 | 1751 0 | 6.b. c. All other equity | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities(1) ............... | ////////////////// | ////////////////// | 1752 43,387 | 1753 43,387 | 6.c. 7. Total (sum of items 1 | ////////////////// | ////////////////// | ////////////////// | ////////////////// | through 6) (total of | ////////////////// | ////////////////// | ////////////////// | ////////////////// | column A must equal | ////////////////// | ////////////////// | ////////////////// | ////////////////// | Schedule RC, item 2.a) | ////////////////// | ////////////////// | ////////////////// | ////////////////// | (total of column D must | ////////////////// | ////////////////// | ////////////////// | ////////////////// | equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// | ////////////////// | item 2.b) ...................... | 1754 1,363,948 | 1771 1,315,907 | 1772 1,593,796 | 1773 1,611,902 | 7. _____________________________________________________________________________________ ___________ Memoranda | C412 | (- ___________ _________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ 1. Pledged securities(2) ......................................................................... | 0416 2,520,189 | M.1. 2. Maturity and repricing data for debt securities(2)(3)(4) (excluding those in nonaccrual status):| ////////////////// | a. Fixed rate debt securities with a remaining maturity of: | ////////////////// | (1) Three months or less ................................................................... | 0343 429 | M.2.a.(1) (2) Over three months through 12 months .................................................... | 0344 129,783 | M.2.a.(2) (3) Over one year through five years ....................................................... | 0345 1,165,573 | M.2.a.(3) (4) Over five years ........................................................................ | 0346 1,621,403 | M.2.a.(4) (5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 2,917,188 | M.2.a.(5) b. Floating rate debt securities with a repricing frequency of: | ////////////////// | (1) Quarterly or more frequently ........................................................... | 4544 14,040 | M.2.b.(1) (2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 1,235 | M.2.b.(2) (3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3) (4) Less frequently than every five years .................................................. | 4552 0 | M.2.b.(4) (5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 15,275 | M.2.b.(5) c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// | securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// | debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 2,932,463 | M.2.c. 3. Not applicable | ////////////////// | 4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// | in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4. 5. Not applicable | ////////////////// | 6. Floating rate debt securities with a remaining maturity of one year or less(2) (included in | ////////////////// | Memorandum item 2.b.(5) above) ................................................................ | 5519 0 | M.6. 7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// | trading securities during the calendar year-to-date ........................................... | 1778 0 | M.7. ______________________ _____________ (1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D. (2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value. (3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock. (4) Memorandum item 2 is not applicable to savings banks that must complete supplemental Schedule RC-J.
15 24
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-6 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-C--Loans and Lease Financing Receivables Part I. Loans and Leases Do not deduct the allowance for loan and lease losses from amounts __________ reported in this schedule. Report total loans and leases, net of unearned | C415 | (- _________________________________ ________ income. Exclude assets held in trading accounts. | (Column A) | (Column B) | | Consolidated | Domestic | | Bank | Offices | ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou | _____________________________________________________________________________ ____________________ ____________________ 1. Loans secured by real estate ........................................... | 1410 2,109,126 | ////////////////// | 1. a. Construction and land development ................................... | ////////////////// | 1415 323,162 | 1.a. b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// | improvements) ....................................................... | ////////////////// | 1420 18,761 | 1.b. c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | (1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// | properties and extended under lines of credit ................... | ////////////////// | 1797 0 | 1.c.(1) (2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// | (a) Secured by first liens ...................................... | ////////////////// | 5367 511,475 | 1.c.(2)(a) (b) Secured by junior liens ..................................... | ////////////////// | 5368 180,688 | 1.c.(2)(b) d. Secured by multifamily (5 or more) residential properties ........... | ////////////////// | 1460 124,510 | 1.d. e. Secured by nonfarm nonresidential properties ........................ | ////////////////// | 1480 950,530 | 1.e. 2. Loans to depository institutions: | ////////////////// | ////////////////// | a. To commercial banks in the U.S. ..................................... | ////////////////// | 1505 10,899 | 2.a. (1) To U.S. branches and agencies of foreign banks .................. | 1506 7,152 | ////////////////// | 2.a.(1) (2) To other commercial banks in the U.S. ........................... | 1507 8,747 | ////////////////// | 2.a.(2) b. To other depository institutions in the U.S. ........................ | 1517 727 | 1517 727 | 2.b. c. To banks in foreign countries ....................................... | ////////////////// | 1510 62,648 | 2.c. (1) To foreign branches of other U.S. banks ......................... | 1513 0 | ////////////////// | 2.c.(1) (2) To other banks in foreign countries ............................. | 1516 68,896 | ////////////////// | 2.c.(2) 3. Loans to finance agricultural production and other loans to farmers .... | 1590 91,793 | 1590 91,793 | 3. 4. Commercial and industrial loans: | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ....................................... | 1763 4,163,635 | 1763 4,116,601 | 4.a. b. To non-U.S. addressees (domicile) ................................... | 1764 134,573 | 1764 33,085 | 4.b. 5. Acceptances of other banks: | ////////////////// | ////////////////// | a. Of U.S. banks ....................................................... | 1756 0 | 1756 0 | 5.a. b. Of foreign banks .................................................... | 1757 0 | 1757 0 | 5.b. 6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// | expenditures (i.e., consumer loans) (includes purchased paper) ......... | ////////////////// | 1975 1,394,929 | 6. a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// | revolving credit plans) ............................................. | 2008 108,360 | ////////////////// | 6.a. b. Other (includes single payment, installment, and all student loans) . | 2011 1,286,569 | ////////////////// | 6.b. 7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// | foreign central banks) ................................................. | 2081 228,729 | 2081 222,342 | 7. 8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// | subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// | obligations) ........................................................... | 2107 55,025 | 2107 55,025 | 8. 9. Other loans ............................................................ | 1563 1,233,907 | ////////////////// | 9. a. Loans for purchasing or carrying securities (secured and unsecured) . | ////////////////// | 1545 151,026 | 9.a. b. All other loans (exclude consumer loans) ............................ | ////////////////// | 1564 1,082,881 | 9.b. 10. Lease financing receivables (net of unearned income) ................... | ////////////////// | 2165 209,022 | 10. a. Of U.S. addressees (domicile) ....................................... | 2182 164,729 | ////////////////// | 10.a. b. Of non-U.S. addressees (domicile) ................................... | 2183 44,293 | ////////////////// | 10.b. 11. LESS: Any unearned income on loans reflected in items 1-9 above ........ | 2123 0 | 2123 0 | 11. 12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// | 10 minus item 11) (total of column A must equal Schedule RC, item 4.a) . | 2122 9,706,261 | 2122 9,540,104 | 12. ___________________________________________
16 25
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-7 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-C--Continued Part I. Continued ___________________________________________ | (Column A) | (Column B) | | Consolidated | Domestic | Memoranda | Bank | Offices | ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou | _____________________________________________________________________________ ____________________ ____________________ 1. Commercial paper included in Schedule RC-C, part I, above .............. | 1496 0 | 1496 0 | M.1. 2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// | (included in Schedule RC-C, part I, above): | ////////////////// | ////////////////// | a. Loans secured by real estate: | ////////////////// | ////////////////// | _____________________ (1) To U.S. addressees (domicile) ................................... | 1687 0 | M.2.a.(1) (2) To non-U.S. addressees (domicile) ............................... | 1689 0 | M.2.a.(2) b. Loans to finance agricultural production and other loans to farmers . | 1613 0 | M.2.b. c. Commercial and industrial loans: | ////////////////// | (1) To U.S. addressees (domicile) ................................... | 1758 0 | M.2.c.(1) (2) To non-U.S. addressees (domicile)................................ | 1759 0 | M.2.c.(2) d. All other loans (exclude loans to individuals for household, | ////////////////// | family, and other personal expenditures) ............................ | 1615 219,755 | M.2.d. e. Lease financing receivables: | ////////////////// | (1) Of U.S. addressees (domicile) ................................... | 1789 0 | M.2.e.(1) (2) Of non-U.S. addressees (domicile) ............................... | 1790 0 | M.2.e.(2) f. Total (sum of Memorandum items 2.a through 2.e) ..................... | 1616 219,755 | M.2.f. 3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// | in nonaccrual status): | ////////////////// | a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// | (1) Three months or less ............................................ | 0348 301,672 | M.3.a.(1) (2) Over three months through 12 months ............................. | 0349 298,972 | M.3.a.(2) (3) Over one year through five years ................................ | 0356 1,464,897 | M.3.a.(3) (4) Over five years ................................................. | 0357 1,026,545 | M.3.a.(4) (5) Total fixed rate loans and leases (sum of | ////////////////// | Memorandum items 3.a.(1) through 3.a.(4)) ....................... | 0358 3,092,086 | M.3.a.(5) b. Floating rate loans with a repricing frequency of: | ////////////////// | (1) Quarterly or more frequently .................................... | 4554 4,317,823 | M.3.b.(1) (2) Annually or more frequently, but less frequently than quarterly . | 4555 1,704,771 | M.3.b.(2) (3) Every five years or more frequently, but less frequently than | ////////////////// | annually ........................................................ | 4561 370,925 | M.3.b.(3) (4) Less frequently than every five years ........................... | 4564 71,508 | M.3.b.(4) (5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// | through 3.b.(4)) ................................................ | 4567 6,465,027 | M.3.b.(5) c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// | (must equal the sum of total loans and leases, net, from | ////////////////// | Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// | Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// | leases from Schedule RC-N, sum of items 1 through 8, column C) ...... | 1479 9,557,113 | M.3.c. 4. Loans to finance commercial real estate, construction, and land | ////////////////// | development activities (not secured by real estate) included in | ////////////////// | Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ........... | 2746 277,878 | M.4. 5. Loans and leases held for sale (included in Schedule RC-C, part I, above)| 5369 198,043 | M.5. 6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// |_____________________ residential properties (included in Schedule RC-C, part I, item | ////////////////// | RCON Bil Mil Thou | ____________________ 1.c.(2)(a), column B, page RC-6) ....................................... | ////////////////// | 5370 51,087 | M.6. ___________________________________________ _____________ (1) Memorandum item 3 is not applicable to savings banks that must complete supplemental Schedule RC-J. (2) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A.
17 26
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-7a City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-C--Continued Part II. Loans to Small Businesses and Small Farms Schedule RC-C, Part II is to be reported only with the June Report of Condition. Report the number and amount currently outstanding as of June 30 of business loans with "original amounts" of $1,000,000 or less and farm loans with "original amounts" of $500,000 or less. The following guidelines should be used to determine the "original amount" of a loan: (1) for loans drawn down under lines of credit or loan commitments, the "original amount" of the loan is the size of the line of credit or loan commitment when the line of credit or loan commitment was most recently approved, extended, or renewed prior to the report date. However, if the amount currently outstanding as of the report date exceeds this size, the "original amount" is the amount currently outstanding on the report date. (2) For loan participations and syndications, the "original amount" of the loan participation or syndication is the entire amount of the credit originated by the lead lender. (3) For all other loans, the "original amount" is the total amount of the loan at origination or the amount currently outstanding as of the report date, whichever is larger. Loans to Small Businesses ____________ 1. Indicate in the appropriate box at the right whether all or substantially all of the bank's | C418 | (- "Loans secured by nonfarm nonresidential properties" in domestic offices reported in Schedule _____ __________ RC-C, part I, item 1.e, column B, and all or substantially all of the bank's "Commercial | YES NO | and industrial loans to U.S. addressees" in domestic offices reported in Schedule RC-C, _______ _______________ part I, item 4.a, column B, have original amounts of $100,000 or less (see instructions)..... | 6999 | |////| X | 1. ________________________ If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5. If NO, skip items 2.a and 2.b, complete items 3 and 4 below, and go to item 5. _____________________ 2. Report the total number of loans currently outstanding for each of the | Number of Loans | following Schedule RC-C, part I, loan categories: |__________________ | a. "Loans secured by nonfarm nonresidential properties" in domestic |RCON |//////////// | offices reported in Schedule RC-C, part I, item 1.e, ______ | column B............................................................ |5562 N/A | 2.a. b. "Commercial and industrial loans to U.S. addressees" in domestic |////////////////// | offices reported in Schedule RC-C, part I, item 4.a, column b....... |5563 N/A | 2.b. ____________________ ___________________________________________ | (Column A) | (Column B) | | | Amount | | | Currently | | Number of Loans | Instruments | ____________________ ____________________ Dollar Amounts in Thousands | RCON | /////////// | RCON Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 3. Number and amount currently outstanding of "Loans secured by nonfarm | ////////////////// | ////////////////// | nonresidential properties" in domestic offices reported in Schedule RC-C, | ////////////////// | ////////////////// | part I, item 1.e, column B (sum of items 3.a through 3.c must be less | ////////////////// | ////////////////// | than or equal to Schedule RC-C, part I, item 1.e, column B): | ////////////////// | ////////////////// | a. With original amounts of $100,000 or less ............................. | 5564 968 | 5565 37,560 | 3.a. b. With original amounts of more than $100,000 through $250,000 .......... | 5566 803 | 5567 87,396 | 3.b. c. With original amounts of more than $250,000 through $1,000,000 ........ | 5568 849 | 5569 281,525 | 3.c. 4. Number and amount currently outstanding of "Commercial and industrial | ////////////////// | ////////////////// | loans to U.S. addressees" in domestic offices reported in Schedule RC-C, | ////////////////// | ////////////////// | part I, item 4.a, column B (sum of items 4.a through 4.c must be less than | ////////////////// | ////////////////// | or equal to Schedule RC-C, part I, item 4.a, column B): | ////////////////// | ////////////////// | a. With original amounts of $100,000 or less ............................. | 5570 10,516 | 5571 191,365 | 4.a. b. With original amounts of more than $100,000 through $250,000 .......... | 5572 1,422 | 5573 133,351 | 4.b. c. With original amounts of more than $250,000 through $1,000,000 ........ | 5574 1,409 | 5575 400,042 | 4.c. ___________________________________________
17a 27
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-7b City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-C--Continued Part II. Continued Agricultural Loans to Small Farms 5. Indicate in the appropriate box at the right whether all or substantially all of the bank's "Loans secured by farmland (including farm residential and other improvements)" in domestic offices reported in Schedule RC-C, part I, item 1.b, column B, and all or substantially all of the bank's "Loans to finance agricultural production and other loans to farmers" YES NO in domestic offices reported in Schedule RC-C, part I, item 3, column B, have original _______ _______________ amounts of $100,000 or less (see instructions)............................................... | 6860 | |////| X | 5. _______ _______________ If YES, complete items 6.a and 6.b below and do not complete items 7 and 8. If NO, skip items 6.a and 6.b and complete items 7 and 8 below. _____________________ 6. Report the total number of loans currently outstanding for each of the | Number of Loans | following Schedule RC-C, part I, loan categories: |__________________ | a. "Loans secured by farmland (including farm residential and other |RCON |//////////// | improvements)" in domestic offices reported in Schedule RC-C, part ______ | I, item 1.b, column B .............................................. |5576 N/A | 6.a. b. "Loans to finance agricultural production and other loans to farmers" | ///////////////// | in domestic offices reported in Schedule RC-C, part I, item 3, | ///////////////// | column 8 ........................................................... |5577 N/A | 6.b. ____________________ ___________________________________________ | (Column A) | (Column B) | | | Amount | | | Currently | | Number of Loans | Outstanding | ____________________ ____________________ Dollar Amounts in Thousands | RCON | /////////// | RCON Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 7. Number and amount currently outstanding of "Loans secured by farmland | ////////////////// | ////////////////// | (including farm residential and other improvements)" in domestic offices | ////////////////// | ////////////////// | reported in Schedule RC-C, part I, item 1.b, column B (sum of items 7.a | ////////////////// | ////////////////// | through 7.c must be less than or equal to Schedule RC-C, part I, item 1.b, | ////////////////// | ////////////////// | column B) | ////////////////// | ////////////////// | a. With original amounts of $100,000 or less ............................. | 5578 35 | 5579 1,081 | 7.a. b. With original amounts of more than $100,000 through $250,000 .......... | 5580 14 | 5581 1,459 | 7.b. c. With original amounts of more than $250,000 through $500,000 .......... | 5582 10 | 5583 1,926 | 7.c. 8. Number and amount currently outstanding of "Loans to finance agricultural | ////////////////// | ////////////////// | production and other loans to farmers" in domestic offices reported in | ////////////////// | ////////////////// | Schedule RC-C, part I, item 3, column B (sum of items 8.a through 8.c | ////////////////// | ////////////////// | must be less than or equal to Schedule RC-C, part I, item 3, column B): | ////////////////// | ////////////////// | a. With original amounts of $100,000 or less ............................. | 5584 209 | 5585 4,463 | 8.a. b. With original amounts of more than $100,000 through $250,000 .......... | 5586 45 | 5587 4,368 | 8.b. c. With original amounts of more than $250,000 through $500,000 .......... | 5588 25 | 5589 5,085 | 8.c. ___________________________________________
17b 28
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-8 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-D--Trading Assets and Liabilities Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional amount of interest rate, foreign exchange rate, and other commodity and equity contracts (as reported in Schedule RC-L, items 11, 12, and 13). ------------------------------------------------ | C420 | (- _________________ ________ Dollar Amounts in Thousands | ///////// Bil Mil Thou | __________________________________________________________________________________________________ _________________________ ASSETS | /////////////////////// | 1. U.S. Treasury securities in domestic offices ................................................ | RCON 3531 1,366 | 1. 2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// | backed securities) .......................................................................... | RCON 3532 973 | 2. 3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... | RCON 3533 9,047 | 3. 4. Mortgage-backed securities in domestic offices: | /////////////////////// | a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA ..................... | RCON 3534 0 | 4.a. b. CMOs and REMICs issued by FNMA or FHLMC .................................................. | RCON 3535 0 | 4.b. c. All other ................................................................................ | RCON 3536 0 | 4.c. 5. Other debt securities in domestic offices ................................................... | RCON 3537 0 | 5. 6. Certificates of deposit in domestic offices ................................................. | RCON 3538 107 | 6. 7. Commercial paper in domestic offices ........................................................ | RCON 3539 0 | 7. 8. Bankers acceptances in domestic offices ..................................................... | RCON 3540 0 | 8. 9. Other trading assets in domestic offices .................................................... | RCON 3541 0 | 9. 10. Trading assets in foreign offices ........................................................... | RCFN 3542 0 | 10. 11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// | contracts: | /////////////////////// | a. In domestic offices ...................................................................... | RCON 3543 22,459 | 11.a. b. In foreign offices ....................................................................... | RCFN 3544 236 | 11.b. 12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ........... | RCFD 3545 34,188 | 12. ___________________________ ___________________________ | ///////// Bil Mil Thou | LIABILITIES _________________________ 13. Liability for short positions ............................................................... | RCFD 3546 0 | 13. 14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// | contracts ................................................................................... | RCFD 3547 18,589 | 14. 15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ...... | RCFD 3548 18,589 | 15. ___________________________
18 29
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-9 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-E--Deposit Liabilities Part I. Deposits in Domestic Offices __________ | C425 | (- ______________________________________________________ ________ | | Nontransaction | | Transaction Accounts | Accounts | _________________________________________ ____________________ | (Column A) | (Column B) | (Column C) | | Total transaction | Memo: Total | Total | | accounts (including| demand deposits | nontransaction | | total demand | (included in | accounts | | deposits) | column A) | (including MMDAs) | ____________________ ____________________ ____________________ Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou | __________________________________________________________ ____________________ ____________________ ____________________ Deposits of: | ////////////////// | ////////////////// | ////////////////// | 1. Individuals, partnerships, and corporations .......... | 2201 6,935,403 | 2240 5,088,642 | 2346 7,814,725 | 1. 2. U.S. Government ...................................... | 2202 36,983 | 2280 36,876 | 2520 306 | 2. 3. States and political subdivisions in the U.S. ........ | 2203 170,925 | 2290 41,851 | 2530 66,482 | 3. 4. Commercial banks in the U.S. ......................... | 2206 260,794 | 2310 260,794 | ////////////////// | 4. a. U.S. branches and agencies of foreign banks ....... | ////////////////// | ////////////////// | 2347 0 | 4.a. b. Other commercial banks in the U.S. ................ | ////////////////// | ////////////////// | 2348 239 | 4.b. 5. Other depository institutions in the U.S. ............ | 2207 17,649 | 2312 17,649 | 2349 0 | 5. 6. Banks in foreign countries ........................... | 2213 31,336 | 2320 31,336 | ////////////////// | 6. a. Foreign branches of other U.S. banks .............. | ////////////////// | ////////////////// | 2367 0 | 6.a. b. Other banks in foreign countries .................. | ////////////////// | ////////////////// | 2373 0 | 6.b. 7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// | (including foreign central banks) .................... | 2216 2,491 | 2300 2,491 | 2377 0 | 7. 8. Certified and official checks ........................ | 2330 131,340 | 2330 131,340 | ////////////////// | 8. 9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// | columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// | item 13.a) ........................................... | 2215 7,586,921 | 2210 5,610,979 | 2385 7,881,752 | 9. ________________________________________________________________ ______________________ Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou | ____________________________________________________________________________________________________ ____________________ 1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// | a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ......................... | 6835 869,189 | M.1.a. b. Total brokered deposits ..................................................................... | 2365 0 | M.1.b. c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// | (1) Issued in denominations of less than $100,000 ........................................... | 2343 0 | M.1.c.(1) (2) Issued either in denominations of $100,000 or in denominations greater than $100,000 | ////////////////// | and participated out by the broker in shares of $100,000 or less ........................ | 2344 0 | M.1.c.(2) d. Total deposits denominated in foreign currencies ............................................ | 3776 3,148 | M.1.d. e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// | reported in item 3 above which are secured or collateralized as required under state law) ... | 5590 210,049 | M.1.e. 2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// | equal item 9, column C above): | ////////////////// | a. Savings deposits: | ////////////////// | (1) Money market deposit accounts (MMDAs) ................................................... | 6810 1,321,748 | M.2.a.(1) (2) Other savings deposits (excludes MMDAs) ................................................. | 0352 3,015,257 | M.2.a.(2) b. Total time deposits of less than $100,000 ................................................... | 6648 2,635,577 | M.2.b. c. Time certificates of deposit of $100,000 or more ............................................ | 6645 876,781 | M.2.c. d. Open-account time deposits of $100,000 or more .............................................. | 6646 32,389 | M.2.d. 3. All NOW accounts (included in column A above) .................................................. | 2398 1,975,942 | M.3. ______________________
19 30
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-10 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-E--Continued Part I. Continued Memoranda (continued) _________________________________________________________________________________________________________________________________ | Deposit Totals for FDIC Insurance Assessments(1) ______________________ | | Dollar Amounts in Thousands | RCON Bil Mil Thou | | __________________________________________________________________________________________________ ____________________ | 4. Total deposits in domestic offices (sum of item 9, column A and item 9, column C) |/////////////////// | | | (must equal Schedule RC, item 13.a) ......................................................... | 2200 15,468,673 | M.4. | | | ////////////////// | | | a. Total demand deposits (must equal item 9, column B) ...................................... | 2210 5,610,979 | M.4.a.| | b. Total time and savings deposits(2) (must equal item 9, column A plus item 9, column C | ////////////////// | | | minus item 9, column B) .................................................................. | 2350 9,857,694 | M.4.b.| ______________________ | ____________ | | (1) An amended Certified Statement should be submitted to the FDIC if the deposit totals reported in this item are amended | | after the semiannual Certified Statement originally covering this report date has been filed with the FDIC. | | (2) For FDIC insurance assessment purposes, "total time and savings deposits" consists of nontransaction accounts and all | | transaction accounts other than demand deposits. | | | _________________________________________________________________________________________________________________________________ ______________________ Dollar Amounts in Thousands | RCON Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ 5. Time deposits of less than $100,000 and open-account time deposits of $100,000 or more | ////////////////// | (included in Memorandum items 2.b and 2.d above) with a remaining maturity or repricing | ////////////////// | frequency of:(1) | ////////////////// | a. Three months or less ....................................................................... | 0359 201,040 | M.5.a. b. Over three months through 12 months (but not over 12 months) ............................... | 3644 1,436,073 | M.5.b. 6. Maturity and repricing data for time certificates of deposit of $100,000 or more:(1) | ////////////////// | a. Fixed rate time certificates of deposit of $100,000 or more with a remaining maturity of: | ////////////////// | (1) Three months or less ................................................................... | 2761 544,364 | M.6.a.(1) (2) Over three months through 12 months .................................................... | 2762 245,662 | M.6.a.(2) (3) Over one year through five years ....................................................... | 2763 73,549 | M.6.a.(3) (4) Over five years ........................................................................ | 2765 0 | M.6.a.(4) (5) Total fixed rate time certificates of deposit of $100,000 or more (sum of | ////////////////// | Memorandum items 6.a.(1) through 6.a.(4)) .............................................. | 2767 863,575 | M.6.a.(5) b. Floating rate time certificates of deposit of $100,000 or more with a repricing frequency of:| ////////////////// | (1) Quarterly or more frequently ........................................................... | 4568 13,206 | M.6.b.(1) (2) Annually or more frequently, but less frequently than quarterly ........................ | 4569 0 | M.6.b.(2) (3) Every five years or more frequently, but less frequently than annually ................. | 4571 0 | M.6.b.(3) (4) Less frequently than every five years .................................................. | 4572 0 | M.6.b.(4) (5) Total floating rate time certificates of deposit of $100,000 or more (sum of | ////////////////// | Memorandum items 6.b.(1) through 6.b.(4)) .............................................. | 4573 13,206 | M.6.b.(5) c. Total time certificates of deposit of $100,000 or more (sum of Memorandum items 6.a.(5) | ////////////////// | and 6.b.(5)) (must equal Memorandum item 2.c. above) ....................................... | 6645 876,781 | M.6.c. ______________________ _____________ (1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J.
20 31
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-11 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-E--Continued Part II. Deposits in Foreign Offices (including Edge and Agreement subsidiaries and IBFs) ____________________ Dollar Amounts in Thousands | RCFN Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ Deposits of: | ////////////////// | 1. Individuals, partnerships, and corporations ................................................... | 2621 515,926 | 1. 2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 0 | 2. 3. Foreign banks (including U.S. branches and | ////////////////// | agencies of foreign banks, including their IBFs) .............................................. | 2625 0 | 3. 4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4. 5. Certified and official checks ................................................................. | 2330 0 | 5. 6. All other deposits ............................................................................ | 2668 0 | 6. 7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 515,926 | 7. ______________________ Schedule RC-F--Other Assets __________ | C430 | (- _________________ ________ Dollar Amounts in Thousands | ////////// Bil Mil Thou | __________________________________________________________________________________________________ _________________________ 1. Income earned, not collected on loans ........................................................ | RCFD 2164 60,113 | 1. 2. Net deferred tax assets(1) ................................................................... | RCFD 2148 32,700 | 2. 3. Excess residential mortgage servicing fees receivable ........................................ | RCFD 5371 0 | 3. 4. Other (itemize amounts that exceed 25% of this item) ......................................... | RCFD 2168 366,369 | 4. _____________ ___________________________ a. | TEXT 3549 |_Swap Interest Receivable___________________________| RCFD 3549 | 109,027 | /////////////////////// | 4.a. ___________ b. | TEXT 3550 |____________________________________________________| RCFD 3550 | | /////////////////////// | 4.b. ___________ c. | TEXT 3551 |____________________________________________________| RCFD 3551 | | /////////////////////// | 4.c. _____________ ___________________________ 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) ........................... | RCFD 2160 459,182 | 5. ___________________________ Memorandum ___________________________ Dollar Amounts in Thousands | ////////// Bil Mil Thou | __________________________________________________________________________________________________ _________________________ 1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 0 | M.1. ___________________________ Schedule RC-G--Other Liabilities __________ | C435 | (- _________________ ________ Dollar Amounts in Thousands | ////////// Bil Mil Thou | __________________________________________________________________________________________________ _________________________ 1. a. Interest accrued and unpaid on deposits in domestic offices(2) ............................ | RCON 3645 22,071 | 1.a. b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................. | RCFD 3646 174,094 | 1.b. 2. Net deferred tax liabilities(1) .............................................................. | RCFD 3049 298 | 2. 3. Minority interest in consolidated subsidiaries ............................................... | RCFD 3000 0 | 3. 4. Other (itemize amounts that exceed 25% of this item) ......................................... | RCFD 2938 15,140 | 4. _____________ ___________________________ a. | TEXT 3552 |_Trading Security Purchase Fails____________________| RCFD 3552 | 4,578 | /////////////////////// | 4.a. ___________ b. | TEXT 3553 |____________________________________________________| RCFD 3553 | | /////////////////////// | 4.b. ___________ c. | TEXT 3554 |____________________________________________________| RCFD 3554 | | /////////////////////// | 4.c. _____________ ___________________________ 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) ........................... | RCFD 2930 211,603 | 5. ___________________________ ____________ (1) See discussion of deferred income taxes in Glossary entry on "income taxes." (2) For savings banks, include "dividends" accrued and unpaid on deposits.
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-12 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-H--Selected Balance Sheet Items for Domestic Offices ________ | C440 | (- ____________ ________ | Domestic Offices | ____________________ Dollar Amounts in Thousands | RCON Bil Mil Thou | _____________________________________________________________________________________________________ ____________________ 1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 8,678 | 1. 2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 8,678 | 2. 3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 4,670,072 | 3. 4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 681,997 | 4. 5. Other borrowed money ............................................................................ | 2850 105,642 | 5. EITHER | ////////////////// | 6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6. OR | ////////////////// | 7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 350,155 | 7. 8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 20,559,970 | 8. 9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)| 3129 18,372,552 | 9. ______________________ Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. ______________________ | RCON Bil Mil Thou | ____________________ 10. U.S. Treasury securities ....................................................................... | 1779 643,271 | 10. 11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// | securities) .................................................................................... | 1785 0 | 11. 12. Securities issued by states and political subdivisions in the U.S. ............................. | 1786 590 | 12. 13. Mortgage-backed securities: | ////////////////// | a. Pass-through securities: | ////////////////// | (1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1787 1,508,959 | 13.a.(1) (2) Privately-issued ........................................................................ | 1869 0 | 13.a.(2) b. CMOs and REMICs: | ////////////////// | (1) Issued by FNMA and FHLMC ................................................................ | 1877 474,517 | 13.b.(1) (2) Privately-issued ........................................................................ | 2253 15,112 | 13.b.(2) 14. Other domestic debt securities ................................................................. | 3159 288,779 | 14. 15. Foreign debt securities ........................................................................ | 3160 1,235 | 15. 16. Equity securities: | ////////////////// | a. Investments in mutual funds ................................................................. | 3161 0 | 16.a. b. Other equity securities with readily determinable fair values ............................... | 3162 0 | 16.b. c. All other equity securities ................................................................. | 3169 43,387 | 16.c. 17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) .......... | 3170 2,975,850 | 17. ______________________ Memorandum (to be completed only by banks with IBFs and other "foreign" offices) ______________________ Dollar Amounts in Thousands | RCON Bil Mil Thou | _____________________________________________________________________________________________________ ____________________ EITHER | ////////////////// | 1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 N/A | M.1. OR | ////////////////// | 2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2. ______________________
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-13 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-I--Selected Assets and Liabilities of IBFs To be completed only by banks with IBFs and other "foreign" offices. __________ | C445 | (- ____________ ________ Dollar Amounts in Thousands | RCFN Bil Mil Thou | _____________________________________________________________________________________________________ ____________________ 1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) .................. | 2133 N/A | 1. 2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// | column A) ...................................................................................... | 2076 N/A | 2. 3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) ..... | 2077 N/A | 3. 4. Total IBF liabilities (component of Schedule RC, item 21) ...................................... | 2898 N/A | 4. 5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// | part II, items 2 and 3) ........................................................................ | 2379 N/A | 5. 6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ...... | 2381 N/A | 6. Schedule RC-K--Quarterly Averages (1) __________ | C455 | (- _________________ ________ Dollar Amounts in Thousands | ///////// Bil Mil Thou | _______________________________________________________________________________________________ _________________________ ASSETS | /////////////////////// | 1. Interest-bearing balances due from depository institutions ............................... | RCFD 3381 5,011 | 1. 2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ....... | RCFD 3382 2,547,917 | 2. 3. Securities issued by states and political subdivisions in the U.S.(2) .................... | RCFD 3383 618 | 3. 4. a. Other debt securities(2) .............................................................. | RCFD 3647 291,657 | 4.a. b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock) . | RCFD 3648 43,187 | 4.b. 5. Federal funds sold and securities purchased under agreements to resell in domestic offices | /////////////////////// | of the bank and of its Edge and Agreement subsidiaries, and in IBFs ...................... | RCFD 3365 4,112,124 | 5. 6. Loans: | /////////////////////// | a. Loans in domestic offices: | /////////////////////// | (1) Total loans ....................................................................... | RCON 3360 9,142,738 | 6.a.(1) (2) Loans secured by real estate ...................................................... | RCON 3385 2,114,330 | 6.a.(2) (3) Loans to finance agricultural production and other loans to farmers ............... | RCON 3386 89,121 | 6.a.(3) (4) Commercial and industrial loans ................................................... | RCON 3387 3,920,930 | 6.a.(4) (5) Loans to individuals for household, family, and other personal expenditures ....... | RCON 3388 1,401,685 | 6.a.(5) (6) Obligations (other than securities and leases) of states and political subdivisions | /////////////////////// | in the U.S. ....................................................................... | RCON 3389 73,657 | 6.a.(6) b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............. | RCFN 3360 173,596 | 6.b. 7. Assets held in trading accounts .......................................................... | RCFD 3401 70,539 | 7. 8. Lease financing receivables (net of unearned income) ..................................... | RCFD 3484 211,267 | 8. 9. Total assets ............................................................................. | RCFD 3368 19,856,739 | 9. LIABILITIES | /////////////////////// | 10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// | and telephone and preauthorized transfer accounts) (exclude demand deposits) ............. | RCON 3485 2,043,067 | 10. 11. Nontransaction accounts in domestic offices: | /////////////////////// | a. Money market deposit accounts (MMDAs) ................................................. | RCON 3486 1,482,065 | 11.a. b. Other savings deposits ................................................................ | RCON 3487 3,017,373 | 11.b. c. Time certificates of deposit of $100,000 or more ...................................... | RCON 3345 873,340 | 11.c. d. All other time deposits ............................................................... | RCON 3469 2,682,293 | 11.d. 12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs .. | RCFN 3404 398,354 | 12. 13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// | offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs .............. | RCFD 3353 715,846 | 13. 14. Other borrowed money ..................................................................... | RCFD 3355 76,692 | 14. ___________________________ _____________ (1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or (2) an average of weekly figures (i.e., the Wednesday of each week of the quarter). (2) Quarterly averages for all debt securities should be based on amortized cost. (3) Quarterly averages for all equity securities should be based on historical cost.
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-14 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-L--Off-Balance Sheet Items Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk. __________ | C460 | (- ____________ ________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | ____________________________________________________________________________________________________ ____________________ 1. Unused commitments: | ////////////////// | a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// | equity lines ............................................................................... | 3814 0 | 1.a. b. Credit card lines .......................................................................... | 3815 0 | 1.b. c. Commercial real estate, construction, and land development: | ////////////////// | (1) Commitments to fund loans secured by real estate ....................................... | 3816 175,141 | 1.c.(1) (2) Commitments to fund loans not secured by real estate ................................... | 6550 86,736 | 1.c.(2) d. Securities underwriting .................................................................... | 3817 0 | 1.d. e. Other unused commitments ................................................................... | 3818 6,243,833 | 1.e. 2. Financial standby letters of credit and foreign office guarantees ............................. | 3819 1,104,325 | 2. ___________________________ a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 71,651 | ////////////////// | 2.a. ___________________________ 3. Performance standby letters of credit and foreign office guarantees ........................... | 3821 91,318 | 3. a. Amount of performance standby letters of credit conveyed to | ////////////////// | ___________________________ others .......................................................... | RCFD 3822 | 5,389 | ////////////////// | 3.a. ___________________________ 4. Commercial and similar letters of credit ...................................................... | 3411 228,326 | 4. 5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// | the reporting bank ............................................................................ | 3428 0 | 5. 6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// | (nonaccepting) bank ........................................................................... | 3429 0 | 6. 7. Securities borrowed ........................................................................... | 3432 0 | 7. 8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// | against loss by the reporting bank) ........................................................... | 3433 6,473 | 8. 9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated as sold | ////////////////// | for Call Report purposes: | ////////////////// | a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// | (1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3650 0 | 9.a.(1) (2) Amount of recourse exposure on these mortgages as of the report date ................... | 3651 0 | 9.a.(2) b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// | (1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3652 0 | 9.b.(1) (2) Amount of recourse exposure on these mortgages as of the report date ................... | 3653 0 | 9.b.(2) c. Farmer Mac agricultural mortgage loan pools: | ////////////////// | (1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3654 0 | 9.c.(1) (2) Amount of recourse exposure on these mortgages as of the report date ................... | 3655 0 | 9.c.(2) 10. When-issued securities: | ////////////////// | a. Gross commitments to purchase .............................................................. | 3434 17,339 | 10.a. b. Gross commitments to sell .................................................................. | 3435 20,995 | 10.b. 11. Interest rate contracts (exclude when-issued securities): | ////////////////// | a. Notional value of interest rate swaps ...................................................... | 3450 5,228,389 | 11.a. b. Futures and forward contracts .............................................................. | 3823 1,036,450 | 11.b. c. Option contracts (e.g., options on Treasuries): | ////////////////// | (1) Written option contracts ............................................................... | 3824 330,476 | 11.c.(1) (2) Purchased option contracts ............................................................. | 3825 1,330,476 | 11.c.(2) 12. Foreign exchange rate contracts: | ////////////////// | a. Notional value of exchange swaps (e.g., cross-currency swaps) .............................. | 3826 0 | 12.a. b. Commitments to purchase foreign currencies and U.S. dollar exchange (spot, forward, | ////////////////// | and futures) ............................................................................... | 3415 1,037,599 | 12.b. c. Option contracts (e.g., options on foreign currency): | ////////////////// | (1) Written option contracts ............................................................... | 3827 21,110 | 12.c.(1) (2) Purchased option contracts ............................................................. | 3828 21,110 | 12.c.(2) ______________________
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-15 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-L--Continued __________ | C461 | (- ____________ ________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | ____________________________________________________________________________________________________ ____________________ 13. Contracts on other commodities and equities: | ////////////////// | a. Notional value of other swaps (e.g., oil swaps) ............................................ | 3829 34,242 | 13.a. b. Futures and forward contracts (e.g., stock index and commodity--precious metals, | ////////////////// | wheat, cotton, livestock--contracts) ....................................................... | 3830 0 | 13.b. c. Option contracts (e.g., options on commodities, individual stocks and stock indexes): | ////////////////// | (1) Written option contracts ............................................................... | 3831 0 | 13.c.(1) (2) Purchased option contracts ............................................................. | 3832 0 | 13.c.(2) 14. All other off-balance sheet liabilities (itemize and describe each component of this item | ////////////////// | over 25% of Schedule RC, item 28, "Total equity capital") ..................................... | 3430 0 | 14. | ////////////////// | _____________ __________________________ a. | TEXT 3555 |______________________________________________________| RCFD 3555 | | ////////////////// | 14.a. ___________ b. | TEXT 3556 |______________________________________________________| RCFD 3556 | | ////////////////// | 14.b. ___________ c. | TEXT 3557 |______________________________________________________| RCFD 3557 | | ////////////////// | 14.c. _____________ d. | TEXT 3558 |______________________________________________________| RCFD 3558 | | ////////////////// | 14.d. _____________ __________________________ 15. All other off-balance sheet assets (itemize and describe each component of this item | ////////////////// | over 25% of Schedule RC, item 28, "Total equity capital") ..................................... | 5591 0 | 15. | ////////////////// | _____________ __________________________ a. | TEXT 5592 |______________________________________________________| RCFD 5592 | | ////////////////// | 15.a. ___________ b. | TEXT 5593 |______________________________________________________| RCFD 5593 | | ////////////////// | 15.b. ___________ c. | TEXT 5594 |______________________________________________________| RCFD 5594 | | ////////////////// | 15.c. _____________ d. | TEXT 5595 |______________________________________________________| RCFD 5595 | | ////////////////// | 15.d. _____________ ________________________________________________ Memoranda ______________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | ____________________________________________________________________________________________________ ____________________ 1. Not applicable | ////////////////// | 2. Not applicable | ////////////////// | 3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// | Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// | that are fee paid or otherwise legally binding) ............................................... | 3833 3,790,294 | M.3. a. Participations in commitments with an original maturity | ////////////////// | ___________________________ exceeding one year conveyed to others ........................... | RCFD 3834 | 117,051 | ////////////////// | M.3.a. ___________________________ 4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// | Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// | to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above ............. | 3377 37,344 | M.4. 5. To be completed for the September report only: | ////////////////// | Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// | have been securitized and sold without recourse (with servicing retained), amounts | ////////////////// | outstanding by type of loan: | ////////////////// | a. Loans to purchase private passenger automobiles ............................................ | 2741 N/A | M.5.a. b. Credit cards and related plans ............................................................. | 2742 N/A | M.5.b. c. All other consumer installment credit (including mobile home loans) ........................ | 2743 N/A | M.5.c. ______________________
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-16 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-M--Memoranda __________ | C465 | (- ____________ ________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | ______________________________________________________________________________________________________ ____________________ 1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ////////////////// | shareholders, and their related interests as of the report date: | ////////////////// | a. Aggregate amount of all extensions of credit to all executive officers, directors, principal | ////////////////// | shareholders, and their related interests ..................................................... | 6164 61,242 | 1.a. b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ////////////////// | extensions of credit by the reporting bank (including extensions of credit to | ////////////////// | related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ////////////////// | ____________________________ of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 7 | ////////////////// | 1.b. ____________________________ 2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ////////////////// | and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) .................... | 3405 0 | 2. 3. Not applicable. | ////////////////// | 4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ////////////////// | (include both retained servicing and purchased servicing): | ////////////////// | a. Mortgages serviced under a GNMA contract ...................................................... | 5500 0 | 4.a. b. Mortgages serviced under a FHLMC contract: | ////////////////// | (1) Serviced with recourse to servicer ........................................................ | 5501 0 | 4.b.(1) (2) Serviced without recourse to servicer ..................................................... | 5502 0 | 4.b.(2) c. Mortgages serviced under a FNMA contract: | ////////////////// | (1) Serviced under a regular option contract .................................................. | 5503 0 | 4.c.(1) (2) Serviced under a special option contract .................................................. | 5504 0 | 4.c.(2) d. Mortgages serviced under other servicing contracts ............................................ | 5505 0 | 4.d. 5. To be completed only by banks with $1 billion or more in total assets: | ////////////////// | Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ////////////////// | equal Schedule RC, item 9): | ////////////////// | a. U.S. addressees (domicile) .................................................................... | 2103 6,186 | 5.a. b. Non-U.S. addressees (domicile) ................................................................ | 2104 2,492 | 5.b. 6. Intangible assets: | ////////////////// | a. Mortgage servicing rights ..................................................................... | 3164 4,049 | 6.a. b. Other identifiable intangible assets: | ////////////////// | (1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1) (2) All other identifiable intangible assets .................................................. | 5507 167,998 | 6.b.(2) c. Goodwill ...................................................................................... | 3163 417,779 | 6.c. d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ........................ | 2143 589,826 | 6.d. e. Intangible assets that have been grandfathered for regulatory capital purposes ................ | 6442 0 | 6.e. ______________________ YES NO ______________________ 7. Does your bank have any mandatory convertible debt that is part of your Tier 2 capital? .......... | 6167 |///| X | 7. ____________________ If yes, complete items 7.a through 7.e: | RCFD Bil Mil Thou | ____________________ a. Total equity contract notes, gross ............................................................ | 3290 N/A | 7.a. b. Common or perpetual preferred stock dedicated to redeem the above notes ....................... | 3291 N/A | 7.b. c. Total equity commitment notes, gross .......................................................... | 3293 N/A | 7.c. d. Common or perpetual preferred stock dedicated to redeem the above notes ....................... | 3294 N/A | 7.d. e. Total (item 7.a minus 7.b plus 7.c minus 7.d) ................................................. | 3295 N/A | 7.e. ______________________ _____________ (1) Do not report federal funds sold and securities purchased under agreements to resell with other commercial banks in the U.S. in this item.
26 37
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-17 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-M--Continued ___________________________ Dollar Amounts in Thousands | ///////// Bil Mil Thou | _____________________________________________________________________________________________ _________________________ 8. a. Other real estate owned: | /////////////////////// | (1) Direct and indirect investments in real estate ventures ......................... | RCFD 5372 0 | 8.a.(1) (2) All other real estate owned: | /////////////////////// | (a) Construction and land development in domestic offices ....................... | RCON 5508 43,398 | 8.a.(2)(a) (b) Farmland in domestic offices ................................................ | RCON 5509 2,961 | 8.a.(2)(b) (c) 1-4 family residential properties in domestic offices ....................... | RCON 5510 557 | 8.a.(2)(c) (d) Multifamily (5 or more) residential properties in domestic offices .......... | RCON 5511 504 | 8.a.(2)(d) (e) Nonfarm nonresidential properties in domestic offices ....................... | RCON 5512 59,333 | 8.a.(2)(e) (f) In foreign offices .......................................................... | RCFN 5513 0 | 8.a.(2)(f) (3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ....... | RCFD 2150 106,753 | 8.a.(3) b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// | (1) Direct and indirect investments in real estate ventures ......................... | RCFD 5374 0 | 8.b.(1) (2) All other investments in unconsolidated subsidiaries and associated companies ... | RCFD 5375 0 | 8.b.(2) (3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ....... | RCFD 2130 0 | 8.b.(3) c. Total assets of unconsolidated subsidiaries and associated companies ................ | RCFD 5376 0 | 8.c. 9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// | item 23, "Perpetual preferred stock and related surplus" ............................... | RCFD 3778 0 | 9. 10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// | proprietary, private label, and third party mutual funds): | /////////////////////// | a. Money market funds .................................................................. | RCON 6441 5,766,274 | 10.a. b. Equity securities funds ............................................................. | RCON 8427 0 | 10.b. c. Debt securities funds ............................................................... | RCON 8428 0 | 10.c. d. Other mutual funds .................................................................. | RCON 8429 0 | 10.d. e. Annuities ........................................................................... | RCON 8430 0 | 10.e. ___________________________ _________________________________________________________________________________________________________________________________ | | ______________________ |Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | | _________________________________________________________________________________________________ ____________________ |1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | | | a. Reciprocal holdings of banking organizations' capital instruments ........................ | 3836 N/A | M.1.a. | | b. Nonreciprocal holdings of banking organizations' capital instruments ..................... | 3837 N/A | M.1.b. | ______________________ | | _________________________________________________________________________________________________________________________________
27 38
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-18 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-N--Past Due and Nonaccrual Loans, Leases, and Other Assets The FFIEC regards the information reported in all of Memorandum item 1, in items 1 through 10, column A, and in Memorandum items 2 through 4, __________ column A, as confidential. | C470 | (- __________________________________________________________________ | (Column A) | (Column B) | (Column C) | | Past due | Past due 90 | Nonaccrual | | 30 through 89 | days or more | | | days and still | and still | | | accruing | accruing | | __________________________________________________________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | _______________________________________________________________________________________________________________________ 1. Loans secured by real estate: | //////////////////// | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ................ | | 1246 41,543 | 1247 91,683 | 1.a. b. To non-U.S. addressees (domicile) ............ | | 1249 0 | 1250 0 | 1.b. 2. Loans to depository institutions and | //////////////////// | ////////////////// | ////////////////// | acceptances of other banks: | //////////////////// | ////////////////// | ////////////////// | a. To U.S. banks and other U.S. depository | //////////////////// | ////////////////// | ////////////////// | institutions ................................. | | 5378 0 | 5379 0 | 2.a. b. To foreign banks ............................. | | 5381 0 | 5382 0 | 2.b. 3. Loans to finance agricultural production and | //////////////////// | ////////////////// | ////////////////// | other loans to farmers .......................... | | 1597 1,544 | 1583 7,059 | 3. 4. Commercial and industrial loans: | //////////////////// | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ................ | | 1252 6,782 | 1253 42,620 | 4.a. b. To non-U.S. addressees (domicile) ............ | | 1255 203 | 1256 1,494 | 4.b. 5. Loans to individuals for household, family, and | //////////////////// | ////////////////// | ////////////////// | other personal expenditures: | //////////////////// | ////////////////// | ///////////////// | a. Credit cards and related plans ............... | | 5384 250 | 5385 0 | 5.a. b. Other (includes single payment, installment, | //////////////////// | ////////////////// | ////////////////// | and all student loans) ....................... | | 5387 17,464 | 5388 967 | 5.b. 6. Loans to foreign governments and official | //////////////////// | ////////////////// | ////////////////// | institutions .................................... | | 5390 0 | 5391 0 | 6. 7. All other loans ................................. | | 5460 2,234 | 5461 4,825 | 7. 8. Lease financing receivables: | //////////////////// | ////////////////// | ////////////////// | a. Of U.S. addressees (domicile) ................ | | 1258 0 | 1259 500 | 8.a. b. Of non-U.S. addressees (domicile) ............ | | 1272 0 | 1791 0 | 8.b. 9. Debt securities and other assets (exclude other | //////////////////// | ////////////////// | ////////////////// | real estate owned and other repossessed assets) . | | 3506 0 | 3507 29 | 9. __________________________________________________________________ ==================================================================================================================================== Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in items 1 through 8. _________________________________________________________________ | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | 10. Loans and leases reported in items 1 |____________________ _____________________ ____________________| through 8 above which are wholly or partially | /////////////////// | ////////////////// | ////////////////// | guaranteed by the U.S. Government ............... | | 5613 52,698 | 5614 87,483 | 10. a. Guaranteed portion of loans and leases | /////////////////// | ////////////////// | ////////////////// | included in item 10 above .................... | | 5616 50,447 | 5617 80,986 | 10.a. _________________________________________________________________
28 39
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-19 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-N--Continued _________ | C473 | (- ______________________________________________________ _________ | (Column A) | (Column B) | (Column C) | | Past due | Past due 90 | Nonaccrual | | 30 through 89 | days or more | | | days and still | and still | | Memoranda | accruing | accruing | | ____________________ _____________________ _____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________________________ ____________________ ____________________ _____________________ 1. Restructured loans and leases included in | ////////////////// | ////////////////// | ////////////////// | Schedule RC-N, items 1 through 8, above ......... | | | | M.1. 2. Loans to finance commercial real estate, | ////////////////// | ////////////////// | ////////////////// | construction, and land development activities | ////////////////// | ////////////////// | ////////////////// | (not secured by real estate) included in | ////////////////// | ////////////////// | ////////////////// | Schedule RC-N, items 4 and 7, above ............. | | 6559 0 | 6560 523 | M.2. ____________________ ____________________ ____________________ 3. Loans secured by real estate in domestic offices | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou | ____________________ ____________________ ____________________ (included in Schedule RC-N, item 1, above): | ////////////////// | ////////////////// | ////////////////// | a. Construction and land development ............ | | 2769 3,663 | 3492 22,831 | M.3.a. b. Secured by farmland .......................... | | 3494 0 | 3495 624 | M.3.b. c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | ////////////////// | (1) Revolving, open-end loans secured by | ////////////////// | ////////////////// | ////////////////// | 1-4 family residential properties and | ////////////////// | ////////////////// | ////////////////// | extended under lines of credit ........... | | 5399 0 | 5400 0 | M.3.c.(1) (2) All other loans secured by 1-4 family | ////////////////// | ////////////////// | ////////////////// | residential properties ................... | | 5402 4,401 | 5403 8,879 | M.3.c.(2) d. Secured by multifamily (5 or more) | ////////////////// | ////////////////// | ////////////////// | residential properties ....................... | | 3500 406 | 3501 6,041 | M.3.d. e. Secured by nonfarm nonresidential properties . | | 3503 33,073 | 3504 53,308 | M.3.e. ________________________________________________________________ ___________________________________________ | (Column A) | (Column B) | | Past due 30 | Past due 90 | | through 89 days | days or more | ____________________ ____________________ | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ____________________ ____________________ 4. Interest rate, foreign exchange rate, and other | ////////////////// | ////////////////// | commodity and equity contracts: | ////////////////// | ////////////////// | a. Book value of amounts carried as assets ...... | | 3528 0 | M.4.a. b. Replacement cost of contracts with a | ////////////////// | ////////////////// | positive replacement cost .................... | | 3530 0 | M.4.b. ___________________________________________
29 40
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-20 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-O--Other Data for Deposit Insurance Assessments An amended Certified Statement should be submitted to the FDIC if the amounts reported in items 1 through 10 of this schedule are amended after the semiannual Certified Statement originally covering __________ this report date has been filed with the FDIC. | C475 | (- ____________ ________ Dollar Amounts in Thousands | RCON Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ 1. Unposted debits (see instructions): | ////////////////// | a. Actual amount of all unposted debits ...................................................... | 0030 N/A | 1.a. OR | ////////////////// | b. Separate amount of unposted debits: | ////////////////// | (1) Actual amount of unposted debits to demand deposits ................................... | 0031 0 | 1.b.(1) (2) Actual amount of unposted debits to time and savings deposits(1) ...................... | 0032 0 | 1.b.(2) 2. Unposted credits (see instructions): | ////////////////// | a. Actual amount of all unposted credits ..................................................... | 3510 N/A | 2.a. OR | ////////////////// | b. Separate amount of unposted credits: | ////////////////// | (1) Actual amount of unposted credits to demand deposits .................................. | 3512 0 | 2.b.(1) (2) Actual amount of unposted credits to time and savings deposits(1) ..................... | 3514 0 | 2.b.(2) 3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// | deposits in domestic offices) ................................................................ | 3520 0 | 3. 4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// | Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// | a. Demand deposits of consolidated subsidiaries .............................................. | 2211 3,039 | 4.a. b. Time and savings deposits(1) of consolidated subsidiaries ................................. | 2351 16 | 4.b. c. Interest accrued and unpaid on deposits of consolidated subsidiaries ...................... | 5514 0 | 4.c. 5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// | a. Demand deposits in insured branches (included in Schedule RC-E, Part II) .................. | 2229 0 | 5.a. b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) ..... | 2383 0 | 5.b. c. Interest accrued and unpaid on deposits in insured branches | ////////////////// | (included in Schedule RC-G, item 1.b) ..................................................... | 5515 0 | 5.c. ______________________ ______________________ Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// | Federal Reserve to act as pass-through correspondents. | ////////////////// | 6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// | behalf of its respondent depository institutions that are also reflected as deposit liabilities| ////////////////// | of the reporting bank: | ////////////////// | a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, | ////////////////// | Memorandum item 4.a) ...................................................................... | 2314 1,974 | 6.a. b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | ////////////////// | Memorandum item 4.b) ...................................................................... | 2315 0 | 6.b. 7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// | a. Unamortized premiums ...................................................................... | 5516 12,476 | 7.a. b. Unamortized discounts ..................................................................... | 5517 0 | 7.b. ______________________ _______________________________________________________________________________________________________________________________ | | |8. To be completed by banks with "Oakar deposits." | ______________________ | Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of | ////////////////// | | | the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)) .... | 5518 N/A | 8. | ______________________ | | _______________________________________________________________________________________________________________________________ ______________________ 9. Deposits in lifeline accounts ................................................................ | 5596 ///////////// | 9. 10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// | deposits in domestic offices) ................................................................ | 8432 0 | 10. ______________________ ______________ (1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction accounts and all transaction accounts other than demand deposits.
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-21 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-O--Continued Memoranda (to be completed each quarter except as noted) ______________________ Dollar Amounts in Thousands | RCON Bil Mil Thou | __________________________________________________________________________________________________ ____________________ 1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and 1.b.(1) | ////////////////// | must equal Schedule RC, item 13.a): | ////////////////// | a. Deposit accounts of $100,000 or less: | ////////////////// | (1) Amount of deposit accounts of $100,000 or less ........................................ | 2702 8,952,562 | M.1.a.(1) (2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// | ___________________________ completed for the June report only) ........................ | RCON 3779 | 1,253,217 | ////////////////// | M.1.a.(2) ___________________________ b. Deposit accounts of more than $100,000: | ////////////////// | (1) Amount of deposit accounts of more than $100,000 ........... Number | 2710 6,516,111 | M.1.b.(1) ___________________________ (2) Number of deposit accounts of more than $100,000 ........... | RCON 2722 | 16,476 | ////////////////// | M.1.b.(2) _________________________________________________ 2. Estimated amount of uninsured deposits in domestic offices of the bank: a. An estimate of your bank's uninsured deposits can be determined by multiplying the number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2) above by $100,000 and subtracting the result from the amount of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(1) above. Indicate in the appropriate box at the right whether your bank has a method or procedure for YES NO ______________________ determining a better estimate of uninsured deposits than the estimate described above ..... | 6861| |///| X | M.2.a. ____________________ X b. If the box marked YES has been checked, report the estimate of uninsured deposits | RCON Bil Mil Thou | ____________________ determined by using your bank's method or procedure ....................................... | 5597 N/A | M.2.b. ______________________ _____________________________________________________________________________________________________________________________ | C477 | (- Person to whom questions about the Reports of Condition and Income should be directed: __________ Karen Gatenby, Vice President (713) 216-5263 ___________________________________________________________________________________ ______________________________________ Name and Title (TEXT 8901) Area code and phone number (TEXT 8902)
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-22 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-R--Risk-Based Capital This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1993, must complete items 2 through 9 and Memorandum item 1. Banks with assets of less than $1 billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below. ____________ | C480 | (- 1. Test for determining the extent to which Schedule RC-R must be completed. To be completed _____ __________ only by banks with total assets of less than $1 billion. Indicate in the appropriate | YES NO | box at the right whether the bank has total capital greater than or equal to eight percent __________ _______________ of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1. _____________________________ For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions). If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked NO has been checked, the bank must complete the remainder of this schedule. A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight percent or that the bank is not in compliance with the risk-based capital guidelines. ___________________________________________ | (Column A) | (Column B) | |Subordinated Debt(1)| Other | | and Intermediate | Limited- | Items 2 and 3 are to be completed by all banks. | Term Preferred | Life Capital | | Stock | Instruments | ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 2. Subordinated debt(1) and other limited-life capital instruments (original | ////////////////// | ////////////////// | weighted average maturity of at least five years) with a remaining | ////////////////// | ////////////////// | maturity of: | ////////////////// | ////////////////// | a. One year or less ...................................................... | 3780 0 | 3786 0 | 2.a. b. Over one year through two years ....................................... | 3781 0 | 3787 0 | 2.b. c. Over two years through three years .................................... | 3782 0 | 3788 0 | 2.c. d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d. e. Over four years through five years .................................... | 3784 7,000 | 3790 0 | 2.e. f. Over five years ....................................................... | 3785 338,000 | 3791 0 | 2.f. ___________________________________________ ______________________ 3. Total qualifying capital (i.e., Tier 1 and Tier 2 capital) allowable under the risk-based | RCFD Bil Mil Thou | ____________________ capital guidelines ............................................................................ | 3792 1,759,720 | 3. ______________________ ___________________________________________ | (Column A) | (Column B) | Items 4-9 and Memorandum item 1 are to be completed | Assets | Credit Equiv- | by banks that answered NO to item 1 above and | Recorded | alent Amount | by banks with total assets of $1 billion or more. | on the | of Off-Balance | | Balance Sheet | Sheet Items(2) | ____________________ ____________________ 4. Assets and credit equivalent amounts of off-balance sheet items assigned | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ____________________ ____________________ to the Zero percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// | (1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// | guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// | OECD central governments .......................................... | 3794 1,296,824 | ////////////////// | 4.a.(1) (2) All other ......................................................... | 3795 708,024 | ////////////////// | 4.a.(2) b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 0 | 4.b. ___________________________________________ ______________ (1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.e, "Total." (2) Do not report in column B the risk-weighted amount of assets reported in column A.
32 43
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-23 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Schedule RC-R--Continued ___________________________________________ | (Column A) | (Column B) | | Assets | Credit Equiv- | | Recorded | alent Amount | | on the | of Off-Balance | | Balance Sheet | Sheet Items(1) | ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// | assigned to the 20 percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// | (1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// | agencies and other OECD central governments ........................| 3798 828,077 | ////////////////// | 5.a.(1) (2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// | ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// | securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// | by cash on deposit .................................................| 3799 158,164 | ////////////////// | 5.a.(2) (3) All other ..........................................................| 3800 7,501,299 | ////////////////// | 5.a.(3) b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3801 434,717 | 5.b. 6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// | assigned to the 50 percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet .................................. | 3802 511,492 | ////////////////// | 6.a. b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3803 32,045 | 6.b. 7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// | assigned to the 100 percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet .................................. | 3804 9,930,242 | ////////////////// | 7.a. b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3805 2,809,610 | 7.b. 8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// | risk-based capital ratio(2) .............................................. | 3806 109,001 | ////////////////// | 8. 9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// | items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// | item 12 plus items 4.b and 4.c) .......................................... | 3807 21,043,123 | ////////////////// | 9. ___________________________________________ ___________________________________________ | (Column A) | (Column B) | | Notional | Replacement | | Principal | Cost | Memorandum | Value | (Market Value) | ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 1. Notional principal value and replacement cost of interest rate and | ////////////////// | ////////////////// | foreign exchange rate contracts (in column B, report only those | ////////////////// | ////////////////// | contracts with a positive replacement cost): | ////////////////// | ////////////////// | a. Interest rate contracts (exclude futures contracts) ................... | ////////////////// | 3808 130,423 | M.1.a. (1) With a remaining maturity of one year or less ..................... | 3809 1,901,817 | ////////////////// | M.1.a.(1) (2) With a remaining maturity of over one year ........................ | 3810 5,710,837 | ////////////////// | M.1.a.(2) b. Foreign exchange rate contracts (exclude contracts with an original | ////////////////// | ////////////////// | maturity of 14 days or less and futures contracts) .................... | ////////////////// | 3811 14,817 | M.1.b. (1) With a remaining maturity of one year or less ..................... | 3812 324,170 | ////////////////// | M.1.b.(1) (2) With a remaining maturity of over one year ........................ | 3813 41,311 | ////////////////// | M.1.b.(2) ___________________________________________ ______________ (1) Do not report in column B the risk-weighted amount of assets reported in column A. (2) Until a final rule on the regulatory capital treatment of net unrealized holding gains (losses) on available-for-sale securities that is applicable to the reporting bank has taken effect, a bank that has adopted FASB Statement No. 115 should include the difference between the fair value and the amortized cost of its available-for-sale securities in item 8 and report the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g., futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables as well as any portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital.
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Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031 Address: P.O. Box 2558 Page RC-24 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ Optional Narrative Statement Concerning the Amounts Reported in the Reports of Condition and Income at close of business on June 30, 1994 Texas Commerce Bank National Association Houston Texas _______________________________________________________________ __________________________________, ___________________________ Legal Title of Bank City State The management of the reporting bank may, if it wishes, sub- the truncated statement will appear as the bank's statement mit a brief narrative statement on the amounts reported in both on agency computerized records and in computer-file the Reports of Condition and Income. This optional statement releases to the public. will be made available to the public, along with the publicly available data in the Reports of Condition and Income, in re- All information furnished by the bank in the narrative state- sponse to any request for individual bank report data. How- ment must be accurate and not misleading. Appropriate ef- ever, the information reported in column A and in all of forts shall be taken by the submitting bank to ensure the Memorandum item 1 of Schedule RC-N is regarded as confidential statement's accuracy. The statement must be signed, in the and will not be released to the public. BANKS CHOOSING TO space provided below, by a senior officer of the bank who SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE thereby attests to its accuracy. STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS, REFERENCES If, subsequent to the original submission, material changes TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN are submitted for the data reported in the Reports of Condi- SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE tion and Income, the existing narrative statement will be NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD deleted from the files, and from disclosure; the bank, at its COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing option, may replace it with a statement, under signature, ap- not to make a statement may check the "No comment" box below propriate to the amended data. and should make no entries of any kind in the space provided for the narrative statement; i.e., DO NOT enter in this space The optional narrative statement will appear in agency such phrases as "No statement," "Not applicable," "N/A," records and in release to the public exactly as submitted (or "No comment," and "None." amended as described in the preceding paragraph) by the management of the bank (except for the truncation of state- ments exceeding the 750-character limit described above). THE STATEMENT WILL NOT BE EDITED OR SCREENED IN ANY The optional statement must be entered on this sheet. The WAY BY THE SUPERVISORY AGENCIES FOR ACCURACY OR statement should not exceed 100 words. Further, regardless RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT of the number of words, the statement must not exceed 750 SIGNIFY THAT ANY FEDERAL SUPERVISORY AGENCY HAS characters, including punctuation, indentation, and standard VERIFIED OR CONFIRMED THE ACCURACY OF THE INFORMATION spacing between words and sentences. If any submission CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL should exceed 750 characters, as defined, it will be truncated APPEAR ON ANY PUBLIC RELEASE OF THE OPTIONAL STATEMENT at 750 characters with no notice to the submitting bank and SUBMITTED BY THE MANAGEMENT OF THE REPORTING BANK. _________________________________________________________________________________________________________________________________ No comment | | (RCON 6979) | C471 | C472 |(- ___ ___________________ BANK MANAGEMENT STATEMENT (please type or print clearly): (TEXT 6980) Signature of Kenneth L. Tilton appears here July 28, 1994 _____________________________________________ ________________________________ Signature of Executive Officer of Bank Date of Signature
34 45
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 Address: P.O. Box 2558 City, State Zip: Houston, TX 77252-2558 FDIC Certificate No.: |0|3|2|6|3| ___________ THIS PAGE IS TO BE COMPLETED BY ALL BANKS - ---------------------------------------------------------------------------------------------------------------------------------- NAME AND ADDRESS OF BANK | OMB No. For OCC: 1557-0081 | OMB No. For FDIC: 3064-0052 | OMB No. For Federal Reserve: 7100-0036 | Expiration Date: 2/28/95 | PLACE LABEL HERE | SPECIAL REPORT | (Dollar Amounts in Thousands) | __________________________________________________________________ | CLOSE OF BUSINESS | FDIC Certificate Number | | | DATE | | C-700 | (- | 6/30/94 | |0|3|2|6|3| | | __________________________________________________________________________________________________________________________________ LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date) - ---------------------------------------------------------------------------------------------------------------------------------- The following information is required by Public Laws 90-44 and 102-242, but does not constitute a part of the Report of Condition. With each Report of Condition, these Laws require all banks to furnish a report of all loans or other extensions of credit to their executive officers made since the date of the previous Report of Condition. Data regarding individual loans or other extensions of credit are not required. If no such loans or other extensions of credit were made during the period, insert "none" against subitem (a). (Exclude the first $15,000 of indebtedness of each executive officer under bank credit card plan.) See Sections 215.2 and 215.3 of Title 12 of the Code of Federal Regulations (Federal Reserve Board Regulation O) for the definitions of "executive officer" and "extension of credit," respectively. Exclude loans and other extensions of credit to directors and principal shareholders who are not executive officers. - ---------------------------------------------------------------------------------------------------------------------------------- _____________________________ a. Number of loans made to executive officers since the previous Call Report date .............. | RCFD 3561 | 0 a. ____________________________ b. Total dollar amount of above loans (in thousands of dollars) ................................ | RCFD 3562 | 0 b. _____________________________ c. Range of interest charged on above loans _______________________________________________________ (example: 9 3/4% = 9.75) .......................................... | RCFD 7701 | 0.00 | % to | RCFD 7702 | 0.00 | % c. _______________________________________________________ __________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________ SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT | DATE (Month, Day, Year) | | | Signature of Kenneth L. Tilton appears here | __________________________________________________________________________________________________________________________________ NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED (TEXT 8903) | AREA CODE/PHONE NUMBER (TEXT 8904) | Karen Gatenby, Vice President | (713) 216-5263 | __________________________________________________________________________________________________________________________________ FDIC 8040/53 (12-92)
35 EX-25.3 20 T-1 - SUBORDINATED DEBT SECURITIES 1 -20- the first paragraph of this subparagraph (iv) and (y) SCI Common Stock or rights or warrants to subscribe for or purchase SCI Common Stock of the type referred to in subparagraph (iii) shall be deemed to be (1) a dividend or distribution of shares of capital stock of SCI (other than SCI Common Stock), evidences of indebtedness of SCI or other assets of the type referred to in clause (c) of the first paragraph of this subparagraph (iv) (making any Conversion Price reduction required by this subparagraph (iv)) immediately followed by (2) a dividend or distribution of such SCI Common Stock or rights or warrants to purchase SCI Common Stock of the type referred to in subparagraph (iii) (making any further Conversion Price reduction required by subparagraph (i) or (iii) of this Section 8(g)), except (A) the Reference Date of such dividend or distribution as defined in this subparagraph (iv) shall be substituted as "the date fixed for the determination of shareholders entitled to receive such dividend or other distribution," "the date fixed for the determination of shareholders entitled to receive such rights or warrants" and "the date fixed for such determination" within the meaning of subparagraphs (i) and (iii) of this Section 8(g) and (B) any shares of SCI Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of subparagraph (i) of this Section 8(g). The occurrence of a distribution or the occurrence of any other event as a result of which holders of Series A Shares converting such shares into SCI Common Stock hereunder will not be entitled to receive rights issued pursuant to any shareholder protective rights agreement now or hereafter in effect (the "Other Rights") in the same amount and manner as if such holders had converted such shares immediately prior to the occurrence of such distribution or other event shall be deemed a distribution of Other Rights for the purposes of conversion adjustments pursuant to this subparagraph (iv). In lieu of making any adjustment to the Conversion Price under this subparagraph (iv) as a result of such a distribution of Other Rights, SCI may elect, in its sole discretion, to provide that Other Rights shall be issuable in the same amount and 2 -21- manner upon conversion of the Series A Shares without regard to whether the shares of SCI Common Stock issuable upon conversion of the Series A Shares were issued before or after such distribution or other event. (v) In case SCI shall, by dividend or otherwise, at any time distribute cash to all holders of SCI Common Stock, excluding (A) any cash dividends on SCI Common Stock to the extent that the aggregate cash dividends per share of SCI Common Stock in any consecutive 12-month period do not exceed the greater of (x) the amount per share of SCI Common Stock of the cash dividends paid on the SCI Common Stock in the immediately preceding 12-month period, to the extent that such dividends for the immediately preceding 12-month period did not require an adjustment to the Conversion Price pursuant to this subparagraph (v) (as adjusted to reflect subdivisions or combinations of the SCI Common Stock) and (y) 15% of the average of the daily Closing Prices (as hereinafter defined) of the SCI Common Stock for the ten consecutive Trading Days (as hereinafter defined) immediately prior to the date of declaration of such dividend, (B) any dividend or distribution in connection with the liquidation, dissolution or winding-up of SCI, whether voluntary or involuntary, or any redemption of the Rights or any Other Rights; provided, however, that no adjustment shall be made pursuant to this subparagraph (v) if such distribution would otherwise constitute a Fundamental Change (as hereinafter defined) and be reflected in a resulting adjustment to the Conversion Price as provided in this Section 8) then, in each such case (unless SCI makes the election referred to in the proviso following this clause), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect at the close of business on such record date by a fraction the numerator of which shall be the last reported sale price of a share of SCI Common Stock on such record date less the amount of cash so distributed (to the extent not excluded as provided above) applicable to one share of SCI Common Stock, and the denominator shall be such last reported sale price of a share of SCI Common Stock, such reduction to become effective immediately prior to the opening of business on the day following such record date; 3 -22- provided, however, that SCI may elect, in its sole discretion, in lieu of the foregoing adjustment, to make adequate provision so that each holder of Series A Shares shall thereafter have the right to receive upon conversion the amount of cash such holder would have received had such holder converted each Series A Share on such record date. If any adjustment is required to be made as set forth in this subparagraph (v) as a result of a distribution which is a dividend described in clause (A) of this subparagraph (v), such adjustment will be based upon the amount by which such distribution exceeds the amount of the dividend permitted to be excluded pursuant to such clause (A) of this subparagraph (v). If an adjustment is required to be made pursuant to this subparagraph (v) as a result of a distribution which is not such a dividend, such adjustment would be based upon the full amount of such distribution. (vi) In case of the consummation of a tender or exchange offer (other than an odd-lot tender offer) made by SCI or any subsidiary of SCI for all or any portion of the outstanding shares of SCI Common Stock to the extent that the cash and fair market value (as determined in good faith by the Board of Directors of SCI, whose determination shall be conclusive and shall be described in a resolution of such Board) of any other consideration included in such payment per share of SCI Common Stock at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as amended) exceed by more than 10%, with any smaller excess being disregarded in computing the adjustment to the Conversion Price provided in this subparagraph (vi), the first reported sale price per share of SCI Common Stock on the Trading Day next succeeding the Expiration Time, then the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the Expiration Time by a fraction the numerator of which shall be the number of shares of SCI Common Stock outstanding (including any tendered or exchanged shares) on the Expiration Time multiplied by the first reported sale price of the SCI Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (x) the fair market value 4 -23- (determined as aforesaid) of the aggregate consideration payable to shareholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of SCI Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the first reported sale price of the SCI Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. (vii) For the purpose of any computation under this Section 8, the "current market price per share" of SCI Common Stock on any day shall be deemed to be the average of the daily Closing Prices (as hereinafter defined) per share of SCI Common Stock for the ten consecutive Trading Days prior to and including the date in question; provided, however, that (1) if the "ex" date (as hereinafter defined) for any event (other than the issuance, distribution or Fundamental Change requiring such computation) that requires an adjustment to the Conversion Price pursuant to this Section 8 (the "Other Event") occurs during such ten consecutive Trading Days and prior to the "ex" date for the issuance, distribution or Fundamental Change requiring such computation (the "Current Event"), the Closing Price for each Trading Day prior to the "ex" date for such Other Event shall be adjusted by multiplying such Closing Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such Other Event, (2) if the "ex" date for any Other Event occurs on or after the "ex" date for the Current Event and on or prior to the date in question, the Closing Price for each Trading Day on and after the "ex" date for such Other Event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such Other Event (provided that in the event that such fraction is required to be determined at a date subsequent to the date in question and with reference to events taking place subsequent to the date in question, the 5 -24- Board of Directors of SCI or, to the extent permitted by applicable law, a duly authorized committee thereof, whose determination shall be conclusive and described in a resolution of the Board of Directors of SCI or such duly authorized committee thereof, as the case may be, shall in good faith estimate such fraction based on assumptions it deems reasonable regarding such events taking place subsequent to the date in question, and such estimated fraction shall be used for purposes of such adjustment until such time as the actual fraction by which the Conversion Price is so required to be adjusted as a result of such Other Event is determined), and (3) if the "ex" date for the Current Event is on or prior to the date in question, after taking into account any adjustment required pursuant to clause (1) or (2) of this proviso, the Closing Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value (as determined in good faith by the Board of Directors of SCI or, to the extent permitted by applicable law, a duly authorized committee thereof in a manner consistent with any determination of such value for purposes of the subparagraphs of this Section 8, whose determination shall be conclusive and described in a resolution of the Board of Directors of SCI or such duly authorized committee thereof, as the case may be) of the shares of capital stock, evidences of indebtedness or other assets being distributed applicable to one share of SCI Common Stock as of the close of business on the day before such "ex" date. For purposes of this subparagraph (vii), the term "ex" date, (1) when used with respect to any issuance, distribution or Fundamental Change, means the first date on which the SCI Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Price was obtained without the right to receive such issuance, such distribution or the cash, securities, property or other assets distributable in such Fundamental Change to holders of the SCI Common Stock, (2) when used with respect to any subdivision or combination of shares of SCI Common Stock, means the first date on which the SCI Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective and (3) when used with respect to any tender or exchange offer means the first date on 6 -25- which the SCI Common Stock trades regular way on such exchange or in such market after the Expiration Time of such offer. (viii) No adjustment in the Conversion Price shall be required pursuant to this Section 8(g) unless the adjustment would require a change of at least 1% of such price; provided, however, that any adjustments which by reason of this subparagraph (viii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest cent (with .005 being rounded upward) or to the nearest 1/100th of a share (with .005 of a share being rounded upward), as the case may be. Notwithstanding anything to the contrary in this Section 8, the Company from time to time may, to the extent permitted by law and with the consent of the Manager, reduce the Conversion Price by any amount for any period of at least 20 Business Days, in which case the Company shall give at least 15 days' notice of such reduction to the holders of Series A Shares. In addition, the Company may, at its option and with the consent of the Manager, make such reductions in the Conversion Price in addition to those set forth in this Section 8, as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of SCI Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reasons. (ix) Whenever the Conversion Price is adjusted as herein provided, (A) the Company shall promptly file with DTC and the Paying and Conversion Agent a certificate of a duly authorized officer of the Manager or of a firm of independent public accountants setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment, and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment, and (B) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be given by the Company to DTC and the Paying and Conversion Agent and mailed by the Company to each 7 -26- holder of Series A Shares at such holder's last address as the same appears on the register of the Series A Shares. (x) In any case in which this Section 8 provides that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (A) issuing to the holder of any Series A Share converted after such record date and before the occurrence of such event the additional shares of SCI Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the SCI Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount in cash in lieu of any fractional shares pursuant to this Section 8. (xi) For purposes of this Section 8, "SCI Common Stock" includes any stock of any class of SCI which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of SCI and which is not subject to redemption by SCI. However, subject to the provisions of this Section 8, shares issuable on conversion of Series A Shares shall include only shares of the class designated as SCI Common Stock on the date of the initial issuance of Series A Shares by the Company or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of SCI and which are not subject to redemption by SCI; provided, however, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. (h) In case: (i) SCI shall declare a dividend (or any other distribution) on SCI Common Stock that would 8 -27- cause an adjustment to the Conversion Price of the Series A Shares pursuant to the terms of any of the subparagraphs above (including such an adjustment that would occur but for the terms of the first sentence of Section 8(g)(viii) above); or (ii) the outstanding shares of SCI Common Stock shall be subdivided into a greater number of shares of SCI Common Stock or combined into a smaller number of shares of SCI Common Stock; or (iii) SCI shall authorize the granting to the holders of SCI Common Stock generally of rights or warrants (for a period expiring within 45 days after the record date fixed for a distribution of such rights and warrants) to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (iv) of any reclassification of SCI Common Stock (other than a subdivision or combination of the outstanding shares of SCI Common Stock), or of any consolidation, merger or share exchange to which SCI is a party and for which approval of any shareholders of SCI is required, or of the sale or transfer of all or substantially all of the assets of SCI or a compulsory share exchange; or (v) of the voluntary or involuntary dissolution, liquidation or winding-up of the Manager; then the Company shall cause to be filed with the Conversion and Paying Agent, and shall cause to be mailed to all holders of Series A Shares at each such holder's last address as the same appears on the register for the Series A Shares, at least 20 days prior to the applicable record or effective date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of SCI Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (B) the date on which such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding-up is expected to become 9 -28- effective, and the date as of which it is expected that holders of SCI Common Stock of record shall be entitled to exchange their shares of SCI Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding- up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings described in clauses (i) through (v) above. (i) In the event that SCI shall be a party to any transaction or series of transactions constituting a Fundamental Change, including, without limitation, (i) any recapitalization or reclassification of shares of SCI Common Stock (other than a change in par value as a result of a subdivision or combination of the SCI Common Stock), (ii) any consolidation of SCI with, or merger of SCI into, any other corporation or any merger of another corporation into SCI as a result of which holders of SCI Common Stock shall be entitled to receive securities or other property or assets (including cash) with respect to or in exchange for SCI Common Stock (other than a merger which does not result in a reclassification, conversion, exchange or cancellation of outstanding shares of SCI Common Stock), (iii) any sale or transfer of all or substantially all of the assets of SCI, or (iv) any compulsory share exchange, pursuant to any of which the holders of SCI Common Stock shall be entitled to receive other securities, cash or other property, then appropriate provision shall be made as part of the terms of such transaction or series of transactions so that the holder of each Series A Share then outstanding shall have the right thereafter to convert such share only into (A) in the case of a Non-Stock Fundamental Change (as hereinafter defined), the kind and amount of the securities, cash and other property that would have been receivable upon such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of SCI Common Stock into which such Series A Share might have been converted immediately prior to such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange, after giving effect to any adjustment in the Conversion Price required by the provisions which follow in Section 8(k), and (B) in the case of a Common Stock Fundamental Change (as hereinafter defined), common stock of the kind received by holders of SCI Common Stock as a result of such Common Stock Fundamental Change in an amount determined pursuant to the provisions which follow in Section 8(k). The company formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the SCI 10 -29- Common Stock, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. Such certificate or articles of incorporation or other constituent document shall provide for adjustments which, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 8. The above provisions shall similarly apply to successive recapitalizations, reclassifications, consolidations, mergers, sales, transfer or share exchanges. (j) Notwithstanding any other provisions in this Section 8 to the contrary, if any Fundamental Change (as hereinafter defined) occurs, then the Conversion Price in effect will be adjusted immediately following such Fundamental Change as described below in Section 8(k). In addition, in the event of a Common Stock Fundamental Change, each Series A Share shall be convertible solely into common stock of the kind received by holders of SCI Common Stock as the result of such Common Stock Fundamental Change as more specifically provided below in Section 8(k). (k) For purposes of calculating any adjustment to be made pursuant to this Section 8 in the event of a Fundamental Change, immediately following such Fundamental Change (and for such purposes a Fundamental Change shall be deemed to occur on the earlier of (a) the occurrence of such Fundamental Change and (b) the date, if any, fixed for determination of shareholders entitled to receive the cash, securities, property or other assets distributable in such Fundamental Change to holders of the SCI Common Stock); (i) in the case of a Non-Stock Fundamental Change, the Conversion Price per share of SCI Common Stock shall be the lower of (A) the Conversion Price in effect immediately prior to such Non-Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to this Section 8, and (B) the product of (1) the greater of the Applicable Price (as hereinafter defined) and the applicable Reference Market Price (as hereinafter defined) and (2) a fraction the numerator of which shall be $50 and the denominator of which shall be the amount at which one Series A Share would be redeemed by the Company if the redemption date were the date of such Non-Stock Fundamental Change (such denominator being the sum of (1) (A) the Conditional Redemption Price set forth in 11 -30- Section 4(b) hereof (exclusive of any accrued and unpaid dividends) if such Non-Stock Fundamental Change occurs on or after ( ), 1997 and prior to ( ), 1999, (B) the Optional Redemption Price set forth in the table contained in Section 4(b) above (exclusive of any accrued and unpaid dividends) if the Non-Stock Fundamental Change occurs on or after ( ), 1999, or (C) if the Non-Stock Fundamental Change occurs during (i) the period commencing on the date of original issue of the Series A Shares and ending ( ), 1995, (ii) the 12-month period commencing ( ), 1995 and (iii) the period commencing ( ), 1996 and ending ( ), 1997, $( ), $( ) and $( ), respectively, and (2) any accrued and unpaid dividends on the Series A Shares, whether or not declared, to but excluding the date of such Non-Stock Fundamental Change); and (ii) in case of a Common Stock Fundamental Change, the Conversion Price per share of SCI Common Stock shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change, but after giving effect to any other adjustments effected pursuant to this Section 8, multiplied by a fraction, the numerator of which is the Purchaser Stock Price (as hereinafter defined) and the denominator of which is the Applicable Price; provided, however, that in the event of a Common Stock Fundamental Change in which (A) 100% of the value of the consideration received by a holder of SCI Common Stock is common stock of the successor, acquiror or other third party (and cash, if any, paid with respect to any fractional interests in such common stock resulting from such Common Stock Fundamental Change) and (B) all of the SCI Common Stock shall have been exchanged for, converted into or acquired for common stock (and cash, if any, with respect to fractional interests) of the successor, acquiror or other third party, the Conversion Price per share of SCI Common Stock immediately following such Common Stock Fundamental Change shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change multiplied by a fraction, the numerator of which is one (1) and the denominator of which is the number of shares of common stock of the successor, acquiror, or other third party received by a 12 -31- holder of one share of SCI Common Stock as a result of such Common Stock Fundamental Change. (l) The following definitions shall apply to terms used in this Section 8: (i) "Applicable Price" shall mean (A) in the event of a Non-Stock Fundamental Change in which the holders of SCI Common Stock receive only cash, the amount of cash receivable by a holder of one share of SCI Common Stock and (B) in the event of any other Non-Stock Fundamental Change or any Common Stock Fundamental Change, the average of the Closing Prices for one share of SCI Common Stock during the ten Trading Days immediately prior to the record date for the determination of the holders of SCI Common Stock entitled to receive cash, securities, property or other assets in connection with such Non-Stock Fundamental Change or Common Stock Fundamental Change or, if there is no such record date, prior to the date upon which the holders of SCI Common Stock shall have the right to receive such cash, securities, property or other assets. (ii) "Closing Price" with respect to any securities on any day shall mean the closing sale price, regular way, on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in each case on the New York Stock Exchange or, if such security is not listed or admitted to trading on such Exchange, on the principal national securities exchange or quotation system on which such security is quoted or listed or admitted to trading or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of such security on the over-the-counter market on the date in question as reported by the National Quotation Bureau Incorporated, or a similarly generally accepted reporting service or, if not so available, in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors of SCI for that purpose or a price determined in good faith by the Board of Directors of SCI. The Closing Price on any Trading Day may be subject to adjustment as provided in this Section 8. (iii) "Common Stock Fundamental Change" shall mean any Fundamental Change in which more than 50% of the value (as determined in good faith by the Board of Directors of SCI) of the consideration received by the holders of SCI Common 13 -32- Stock pursuant to such transaction consists of common stock that, for the ten consecutive Trading Days immediately prior to such Fundamental Change, has been admitted for listing or admitted for listing subject to notice of issuance on a national securities exchange or quoted on the Nasdaq NM; provided, however, that a Fundamental Change shall not be a Common Stock Fundamental Change unless either (A) SCI continues to exist after the occurrence of such Fundamental Change and the outstanding Series A Shares continue to exist as outstanding Series A Shares, or (B) the outstanding Series A Shares continue to exist as Series A Shares and are convertible into common stock of the successor to SCI. (iv) "Fundamental Change" shall mean the occurrence of any transaction or event or series of transactions or events pursuant to which all or substantially all of the SCI Common Stock shall be exchanged for, converted into, acquired for or constitutes solely the right to receive cash, securities, property or other assets (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise); provided, however, in the case of a plan involving more than one such transaction or event, for purposes of adjustment of the Conversion Price, such Fundamental Change shall be deemed to have occurred when substantially all of the SCI Common Stock has been exchanged for, converted into, or acquired for or constitutes solely the right to receive cash, securities, property or other assets, but the adjustment shall be based upon the consideration which the holders of SCI Common Stock received in such transaction or event as a result of which more than 50% of the SCI Common Stock shall have been exchanged for, converted into, or acquired for or shall constitute solely the right to receive cash, securities, property or other assets; provided, further, that such term does not include (A) any transaction or event in which SCI and/or any of its subsidiaries are the issuers of all the cash, securities, property or other assets exchanged, acquired or otherwise issued in such transaction or event, or (B) any transaction or event in which the holders of SCI Common Stock receive securities of an issuer other than SCI if, immediately following such transaction or event, those holders hold a majority of the securities having the power to vote normally in the election of directors of such other issuer outstanding immediately following such transaction or other event. 14 -33- (v) "Non-Stock Fundamental Change" shall mean any Fundamental Change other than a Common Stock Fundamental Change. (vi) "Purchaser Stock Price" shall mean, with respect to any Common Stock Fundamental Change, the average of the Closing Prices for one share of the common stock received by holders of SCI Common Stock in such Common Stock Fundamental Change during the ten Trading Days immediately prior to the record date for the determination of the holders of SCI Common Stock entitled to receive such common stock or, if there is no such record date, prior to the date upon which the holders of SCI Common Stock shall have the right to receive such common stock. (vii) "Reference Market Price" shall initially mean $( ) (which is an amount equal to 66-2/3% of the last reported sale price for the SCI Common Stock on the New York Stock Exchange on ( ), 1994) and, in the event of any adjustment to the Conversion Price other than as a result of a Fundamental Change, the Reference Market Price shall also be adjusted so that the ratio of the Reference Market Price to the Conversion Price after giving effect to any such adjustment shall always be the same as the ratio of $( ) to the initial Conversion Price set forth in this Section 8. (viii) "Trading Day" shall mean (A) if the applicable security is listed or admitted for trading on the New York Stock Exchange or another national securities exchange, a day on which the New York Stock Exchange or such other national securities exchange is open for business or (B) if the applicable security is quoted on the Nasdaq NM, a day on which trades may be made on the Nasdaq NM or (C) if the applicable security is not otherwise listed, admitted for trading or quoted, any day other than a Saturday or Sunday or on a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. (m) The Manager will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of SCI Common Stock on conversions of Series A Shares pursuant hereto; provided, however, that the Manager shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of SCI Common Stock in a name other than that of the holder of the Series A Shares to be converted and no such issue 15 -34- or delivery shall be made unless and until the person requesting such issue or delivery has paid the Manager the amount of any such tax or has established, to the satisfaction of the Manager, that such tax has been paid. (n) SCI covenants that all shares of SCI Common Stock which may be delivered upon conversions of Series A Shares will upon delivery be duly and validly issued and fully paid and nonassessable, free of all liens and charges and not subject to any preemptive rights. (o) SCI covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of authorized but unissued shares and treasury shares of SCI Common Stock, a sufficient number of shares of SCI Common Stock for the purpose of effecting conversions of Series A Shares not theretofore converted. For purposes of this reservation of SCI Common Stock, the number of shares of SCI Common Stock which shall be deliverable upon the conversion of all outstanding Series A Shares shall be computed as if at the time of computation all outstanding Series A Shares were held by a single holder. SCI covenants that from time to time, in accordance with the laws of the State of Texas, to take such steps as are necessary to submit to shareholders of SCI a resolution to increase the authorized number of shares of SCI Common Stock if at any time the number of authorized and unissued shares and treasury shares of SCI Common Stock shall not be sufficient to permit the conversion of all then- outstanding Series A Shares. SCI has authorized in all respects the issuance of shares of SCI Common Stock upon conversion of Series A Shares. (p) If any shares of SCI Common Stock required to be reserved for purposes of conversion of the Series A Shares hereunder require registration with or approval of any governmental authority under any Federal or state law before such shares may be issued upon conversion, SCI agrees to use all reasonable efforts to expeditiously cause such shares to be duly registered or approved, as the case may be; provided, that, SCI shall not be required to subject itself to general service of process in any jurisdiction where it is not then so subject. If the SCI Common Stock is listed on the New York Stock Exchange, quoted on the Nasdaq NM or listed on any other national securities exchange, SCI agrees to use all reasonable efforts to list and keep listed on such exchange or system, upon official notice of issuance, all shares of SCI Common Stock issuable upon conversion of the Series A Shares. 16 -35- (q) Notwithstanding the provisions in this Section 8, the issuance of any shares of SCI Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of SCI and the investment of additional optional amounts in shares of SCI Common Stock under any such plan (whether any such plan is now or hereafter authorized), or the issuance of any shares of SCI Common Stock or options or rights to purchase such shares pursuant to any employee benefit plan or program of SCI or any subsidiary thereof (whether any such plan or program is now or hereafter authorized), or pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date hereof, shall not be deemed to constitute an issuance of SCI Common Stock or exercisable, exchangeable or convertible securities by SCI to which any of the adjustment provisions described in this Section 8 applies. There shall be no adjustment of the Conversion Price in case of the issuance of any stock (or securities convertible into or exchangeable for stock) of SCI except as described in this Section 8. Except as expressly set forth in this Section 8, if any action would require adjustment of the Conversion Price pursuant to more than one of the provisions described above, only one adjustment shall be made and such adjustment shall be the amount of adjustment which has the highest absolute value. 9. Book-Entry Issuance; The Depository Trust Company; Certificated Shares. (a) DTC will act as securities depository for the Series A Shares. The Series A Shares (other than such Certificated Shares) will be issued in the form of one or more fully-registered global certificates representing in the aggregate the total number of Series A Shares and registered in the name of Cede & Co. (DTC's nominee). (b) DTC may discontinue providing its services as securities depository with respect to the Series A Shares at any time by giving notice to the Company as provided in the agreement between the Company and DTC. Under such circumstances, in the event that a successor securities depository is not obtained, Certificated Shares shall be printed and delivered upon surrender of the Global Certificate or Certificates. (c) The Paying and Conversion Agent shall maintain a book-entry system, as defined in Treas. Reg. Section 5f.103-1(c)(2), with respect to all Certificated Shares. All rights to payments with respect to any Certificated Share shall be transferred only through such book-entry system and shall not be effective until 17 -36- the Paying and Conversion Agent has been notified of such transfer and provided with the identity of the transferee. 10. Tax Matters. (a) For each calendar month of the Company, gross income or gain, as determined for Federal income tax purposes, shall be allocated to each holder of Series A Shares as set forth in this Section 10(a). No items of deduction, loss or credit shall be allocated with respect to the Series A Shares. Income, gain, loss, deduction or credit not allocated to holders of Series A Shares shall be allocated to the holders of all other classes of Interests (including the Common Interestholders). (i) Subject to the provisions of subparagraph (iv) below, for any calendar month during which SCI Limited has not exercised its right to extend the interest payment period on the Loans pursuant to Section 2.02 of the Loan Agreement, an amount of gross income or gain of the Company shall be allocated to each holder of record of Series A Shares as of the record date for the dividend payable with respect to the Series A Shares for such month, in an amount equal to the per-share amount of such dividend, multiplied by the number of Series A Shares held of record by such holder as of such record date. (ii) Subject to the provisions of subparagraph (iv) below, for any calendar month during which SCI Limited has exercised its right to extend the interest payment period on the Loans pursuant to Section 2.02 of the Loan Agreement (including the month in which all accrued and unpaid interest on the Loans is paid pursuant to such Section 2.02), an amount of gross income or gain of the Company shall be allocated to each holder of record of Series A Shares as of the last day of such calendar month equal to the sum of the daily portions of the aggregate original issue discount accrued during each day of such month on the Loans (as determined pursuant to Sections 1272-1275 of the Internal Revenue Code of 1986, as amended (the "Code")) multiplied by a fraction, the numerator of which is the product of (x) $50 multiplied by (y) the number of Series A Shares held of record by such holder as of the last day of such month, and the denominator of which is the aggregate principal amount of the Loans outstanding as of the last day of such month (but not including any accrued interest, including all interest accrued as a result of the exercise by SCI Limited of its right to extend the interest payment period on the Loans). 18 -37- (iii) Subject to the provisions of subparagraph (iv) below, if a Series A Share is redeemed pursuant to Section 4 hereof or converted pursuant to Section 8 hereof during a calendar month, an amount of gross income of the Company shall be allocated to the holder of record of such Series A Share as of the date of such conversion or redemption equal to the amount of original issue discount that accrued during such calendar month (as determined pursuant to Sections 1272-1275 of the Code) with respect to that portion of the Loans that was prepaid pursuant to the Loan Agreement as a result of the redemption or conversion of such Series A Share. (iv) Notwithstanding the provisions of subparagraphs (i), (ii) and (iii) above, if, to the best knowledge of the Manager, the holder of record of a Series A Share is not the beneficial owner of such Series A Share as determined for Federal income tax purposes, amounts of income or gain allocable pursuant to such subparagraphs (i), (ii) or (iii) shall be allocated to the beneficial owner of such Series A Share, as determined by the Manager, rather than to the record holder of such Series A Share, and if the Manager is advised by counsel that the method of allocating gross income and gain among the holders of Series A Shares as set forth in this Section 10(a) is impermissible under the Code or if the Internal Revenue Service disallows such method, the Manager shall adopt a permissible method that as nearly as possible achieves the results of the method set forth in this Section 10(a). (v) Notwithstanding anything to the contrary in this Section 10(a), in the event of a Liquidation of the Company or of a Preferred Interestholder's Interest, income, gain, loss or deduction of the Company shall be allocated so that each Preferred Interestholder has a positive balance in its capital account equal to the sum of the amount of cash and the fair market value of property other than cash (if any) to be received by such Preferred Interestholder in such Liquidation. (vi) All amounts of income of the Company allocable to holders of the Series A Shares shall be interest income, to the extent thereof, and if the Company has insufficient interest income, other items of gross income or gain shall be allocated to holders of the Series A Shares. (vii) The Manager shall allocate income, gain, loss and deduction and items thereof among the Members in the 19 -38- manner required by Section 704(c) of the Code, as determined by it in its judgment. (b) (i) For the purpose of adjusting the capital accounts of the holders of Series A Shares, any dividend declared by the Company pursuant to Section 3(a) hereof shall be treated as distributed on the record date for such dividend. (ii) The Manager shall make such other adjustments to the capital accounts of the Members as are, in its judgment, required to comply with the requirements of Section 704 of the Code and the regulations promulgated thereunder and the purposes of the Regulations and this Amendment. 11. Fractional Shares. In the event the holder of Series A Shares shall be entitled to receive a fractional interest in a Series A Share or a fractional interest in a share of SCI Common Stock, except as otherwise provided herein, SCI shall either, in its sole discretion, (i) round such fractional interest up to the next whole Series A Share or share of SCI Common Stock, as the case may be, or (ii) deliver cash in the amount of the current market price per share (determined as provided in Section 8(g)(vii)) of such fractional interest. 12. Guarantee of Liabilities. It shall be a condition precedent to the issuance of the Series A Shares that SCI execute the Liability Assumption Agreement, pursuant to which SCI shall guarantee payment of all liabilities of the Company to the extent not paid by the Company (other than obligations to holders of Series A Shares, which will be separately guaranteed by SCI to the extent set forth in the SCI Agreement). The Liability Assumption Agreement shall be for the benefit of, and be enforceable by, third parties to whom the Company owes such obligations. 13. Severability of Provisions. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. 20 -39- 14. Defined Terms. All capitalized terms not defined in this Amendment shall have the meanings ascribed thereto in the Regulations. 21 -40- IN WITNESS WHEREOF, SCI FINANCE LLC has caused this Amendment to its Regulations to be signed by two of the officers of its Manager, and to be attested as set forth below, as of the ( ) day of ( ) 1994. SCI FINANCE LLC By: Service Corporation International, as Manager By: __________________________ Name: Title: Attest: ___________________ Name: By: __________________________ Name: Title Attest: ___________________ Name: 22 -41- SERVICE CORPORATION INTERNATIONAL hereby covenants to perform its obligations set forth in this Amendment to the Regulations of SCI Finance LLC, and, IN WITNESS WHEREOF, has caused this Amendment to be signed by two of its officers and to be attested as set forth below, as of the ( ) day of ( ) 1994. SERVICE CORPORATION INTERNATIONAL By: ______________________________ Name: Title: Attest: _______________________ Name: By: ______________________________ Name: Title: Attest: _______________________ Name: 23 Exhibit A (Loan Agreement) - See Exhibit 4.5(b) 24 Exhibit B (SCI Agreement) - See Exhibit 4.5(a) 25 Exhibit C (Liability Assumption Agreement) - See Exhibit 4.5(c) 26 EXHIBIT 4.4 ________________________________________________________________________________ SERVICE CORPORATION INTERNATIONAL AND ___________________________ ___________________________ Warrant Agent _____________ COMMON STOCK WARRANT AGREEMENT Dated as of ________, 19__ _____________ ________________________________________________________________________________ 27 TABLE OF CONTENTS*
Page ---- PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Appointment of Warrant Agent . . . . . . . . . . . . . . . . . . . . 1 Section 2. Form of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 3. Countersignature and Registration . . . . . . . . . . . . . . . . . . 2 Section 4. Transfers and Exchanges . . . . . . . . . . . . . . . . . . . . . . . 2 Section 5. Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 6. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 7. Mutilated or Missing Warrants . . . . . . . . . . . . . . . . . . . . 4 Section 8. Reservation of Shares, etc. . . . . . . . . . . . . . . . . . . . . . 4 Section 9. Warrant Price; Adjustments . . . . . . . . . . . . . . . . . . . . . . 5 Section 10. Notice to Warrantholders . . . . . . . . . . . . . . . . . . . . . . . 12 Section 11. Certain Covenants of the Company . . . . . . . . . . . . . . . . . . . 12 Section 12. Disposition of Proceeds, etc. . . . . . . . . . . . . . . . . . . . . 13 Section 13. Merger or Consolidation or Change of Name of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 14. Duties of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . 14 Section 15. Change of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . 16 Section 16. Identity of Transfer Agent . . . . . . . . . . . . . . . . . . . . . . 17 Section 17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 18. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . 18
____________________ * This Table of Contents does not constitute a part of this Agreement or have any bearing upon the interpretation of any of its terms and provisions. -i- 28 Section 19. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 20. {Texas} Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 21. Benefits of This Agreement . . . . . . . . . . . . . . . . . . . . . . 18 Section 22. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-ii- 29 COMMON STOCK WARRANT AGREEMENT dated as of _________ __, 19__, between Service Corporation International, a Texas corporation (hereinafter called the "Company"), and ___________ having a corporate trust office in ____________________, as warrant agent (hereinafter called the "Warrant Agent"). WHEREAS, the Company proposes to issue {Class _} Purchase Warrants entitling the holders thereof to purchase an aggregate of ____________ shares of Common Stock of the Company (par value $1.00 per share) ("Shares") at an initial cash purchase price of $_________ per Share at any time {after ________ and} prior to 1:00 P.M. Houston, Texas time on ________________, 19__ (herein called the "expiration date") (unless extended as provided in Section 9A hereof); and WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, registration, transfer, exchange and exercise of Warrants to be issued from time to time by the Company, NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows: Section 1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the instructions hereinafter in this Agreement set forth, and the Warrant Agent hereby accepts such appointment. Section 2. Form of Warrant. The text of the Warrants and the form of election to purchase Shares to be set forth on the reverse thereof shall be substantially as set forth in Exhibit A attached hereto. Each Warrant shall, subject to the terms of this Warrant Agreement, entitle the registered holder thereof to initially purchase the number of Shares specified therein at an initial exercise price of $______ per Share; provided, however, that the warrant exercise price and the number of Shares issuable upon exercise of Warrants are subject to adjustment upon the occurrence of certain events, all as hereinafter provided. The Warrants shall be executed on behalf of the Company by the manual or facsimile signature of the present or any future Chairman of the Board, Chairman of the Executive Committee of the Board, Vice Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, Vice Chairman, or Vice President of the Company, under its seal, affixed or in facsimile, and by the manual or facsimile signature of the present or any future Secretary of Assistant Secretary of the Company. 30 The Company shall promptly notify the Warrant Agent from time to time in writing of the number of Warrants to be issued and furnish written instructions in connection therewith signed by an executive officer of the Company; such notification and instructions may, but need not be, in the form of a general or continuing authorization to the Warrant Agent. The Warrants shall be dated by the Warrant Agent as of the date of each initial issuance, and as of the date of issuance thereof upon any transfer or exchange thereof. Section 3. Countersignature and Registration. The Warrant Agent shall maintain books for the transfer and registration of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the names of the respective registered holders thereof. The Warrants shall be countersigned by the Warrant Agent (or by any successor to the Warrant Agent then acting as warrant agent under this Agreement) and shall not be valid for any purpose unless so countersigned. Such Warrants may be so countersigned, however, by the Warrant Agent (or by its successor as warrant agent) and be delivered by the Warrant Agent, notwithstanding that the persons whose manual or facsimile signatures appear thereon as proper officers of the Company shall have caused to be such officers at the time of such countersignature or delivery. Upon issuance of any Warrant, the Company will present the same, or cause the same to be presented, to the Warrant Agent for countersignature of such Warrant. Section 4. Transfers and Exchanges. The Warrant Agent shall transfer from time to time, any outstanding Warrants upon the books to be maintained by the Warrant Agent for that purpose, upon the surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant of like tenor shall be issued to the transferee and the surrendered Warrant shall be cancelled by the Warrant Agent. All such Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time. The Warrants may be exchanged at the option of the holder thereof, when surrendered at the office in ________________, of the Warrant Agent, for another Warrant, or other Warrants of different denominations, of like tenor and representing in the aggregate the right to purchase a like number of Shares. The Warrant Agent is hereby irrevocably authorized to countersign and deliver, in accordance with the provisions of this Section and Section 3 of this Agreement, such new Warrants required pursuant to the provisions of this Section, and the Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose. -2- 31 Section 5. Exercise of Warrants. The registered holder of each Warrant shall have the right, which may be exercised as in such Warrant expressed, to purchase from the Company (and the Company shall issue and sell to such registered holder) the number of Shares specified in such Warrants, upon surrender to the Company at the office in _________________, of the Warrant Agent of such Warrant, with the form of election to purchase on the reverse thereof duly filled in and signed, and upon payment to the Warrant Agent for the account of the Company of the warrant exercise price, determined in accordance with the provisions of Section 9 of this Agreement, for the number of Shares in respect of which such Warrant is then exercised. Payment of such warrant exercise price may be made in case, or by certified check or bank draft or postal or express money order, payable in United States dollars, to the order of the Warrant Agent. No adjustment shall be made for any dividends on any Shares issuable upon exercise of any Warrant. Subject to Section 6, upon such surrender of Warrants, and payment of the warrant exercise price as aforesaid, the Company shall issue and cause to be delivered with all reasonable dispatch to or upon the written order of the registered holder of such Warrants and in such name or names as such registered holder may designate, a certificate or certificates for the number of full Shares so purchased upon the exercise of such Warrants, together with cash, as provided in Section 9 of this Agreement, in respect of any fraction of a Share otherwise issuable upon such surrender. Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such Shares as of the date of the surrender of such Warrants and payment of the warrant exercise price as aforesaid; provided, however, that if, at the date of surrender of such Warrants and payment of such warrant exercise price, the transfer books for the Shares purchasable upon the exercise of such Warrants shall be closed, no such surrender of such Warrants and no such payment of such warrant exercise price shall be effective to constitute the person so designated to be named therein as the holder of record of such Shares on such date, but shall be effective to constitute such person as the holder of record of such Shares for all purposes at the opening of business on the next succeeding day on which the transfer books for the Shares purchasable upon the exercise of such Warrants shall be opened, and the certificates for the Shares in respect of which such Warrants are then exercised shall be issuable as of the date on which such books shall next be opened, and until such date the Company shall be under no duty to deliver any certificate for such Shares. The rights of purchase represented by the Warrants shall be exercisable, at the election of the registered holders thereof, either as an entirety or from time to time for part only of the Shares specified therein and, in the event -3- 32 that any Warrant is exercised in respect of less than all of the Shares specified therein at any time prior to the date of expiration of the Warrants, a new Warrant or Warrants of like tenor will be issued for the remaining number of Shares specified in the Warrant so surrendered, and the Warrant Agent is hereby irrevocably authorized to countersign and to deliver the required new Warrants pursuant to the provisions of this Section and of Section 3 of this Agreement, and the Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose. Section 6. Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Shares issuable upon the exercise of Warrants; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue or delivery of any certificates for Shares in a name other than that of the registered holder of Warrants in respect of which such Shares are issued and the Company shall not be required to issue and deliver the certificates for such Shares unless and until the holder has paid to the Company the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Company that such tax has been paid. Section 7. Mutilated or Missing Warrants. In case any of the Warrants shall be mutilated, lost, stolen or destroyed, the Company will issue and the Warrant Agent will countersign and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of a substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company and the Warrant Agent of such loss, theft or destruction of such Warrants and indemnity, if requested, also satisfactory to them. Applicants for such substitute Warrants shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company or the Warrant Agent may prescribe. Any such new Warrant shall constitute an original contractual obligation of the Company whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone. Section 8. Reservation of Shares, etc. Prior to the issuance of any Warrants there shall have been reserved, and the Company shall at all times through the expiration date keep reserved, out of its authorized and unissued Common Stock, a number of Shares sufficient to provide for the exercise of the -4- 33 rights of purchase represented by the Warrants, and the Transfer Agent for the Shares and every subsequent Transfer Agent for the Shares issuable upon the exercise of any of the rights of purchase aforesaid are hereby irrevocably authorized and directed at all times to reserve such number of authorized and unissued Shares as shall be requisite for such purpose. The Company will keep a copy of this Agreement on file with the Transfer Agent for the Shares issuable upon the exercise of the rights of purchase represented by the Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from time to time from such Transfer Agent certificates required to honor outstanding Warrants that have been exercised. The Company will supply such Transfer Agent with duly executed certificates for such purpose and with duly executed certificates for such purpose and will itself provide or otherwise make available any cash which may be issuable as provided in Section 9 of this Agreement. All Warrants surrendered in the exercise of the rights thereby evidenced or surrendered for transfer, exchange or partial exercise shall be cancelled by the Warrant Agent and shall thereafter be delivered to the Company. Section 9. Warrant Price; Adjustments. A. The warrant price per share at which Shares shall be purchasable upon exercise of Warrants (herein called the "warrant exercise price") to and including the expiration date (unless the expiration date is extended as provided below in this Section 9A) shall be $_______ per share, or, if adjusted as provided in this Section, shall be such price as so adjusted. The Warrants will not be exercisable prior to {the close of business on the date of any initial issuance thereof} {________________} and will expire at 1:00 P.M. Houston, Texas time on the expiration date; provided that the Company reserves the right to, and may, in its sole discretion, at any time and from time to time, at such time or times at the Company so determines, extend the expiration date of the Warrants for such periods of time as it chooses; further provided that in no case may the expiration date of the Warrants (as extended) be extended beyond five years from the expiration date set forth above. Whenever the expiration date of the Warrants is so extended, the Company shall at least 20 days prior to the then expiration date cause to be mailed to the Warrant Agent and the registered holders of the Warrants in accordance with the provisions of Section 17 hereof a notice stating that the expiration date has been extended and setting forth the new expiration date. B. The above provision is, however, subject to the following: (1) The warrant exercise price, the number of Shares purchasable upon exercise of each Warrant and the number -5- 34 of Warrants outstanding shall be subject to adjustment as follows: (a) In case the Company shall at any time after the date of this Agreement (i) pay a dividend, or make a distribution on, the Common Stock which is payable in shares of its Common Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into a greater number of securities (including shares of Common Stock), or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares (including shares of Common Stock), the number of Shares purchasable upon exercise of each Warrant immediately prior to the occurrence of such event shall be adjusted so that the holder of each Warrant shall be entitled to receive upon payment of the warrant exercise price the aggregate number of shares of the Company which, if such Warrant had been exercised immediately prior to the occurrence of such event, such holder would have owned or have been entitled to receive immediately after the occurrence of such event. An adjustment made pursuant to this subparagraph (a) shall become effective immediately after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of a subdivision or combination. If, as a result of an adjustment made pursuant to this subparagraph (a), the holder of any Warrant thereafter exercised shall become entitled to receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company (whose determination shall be conclusive) shall determine the allocation between or among shares of such classes of capital stock. In the event that at any time, as a result of an adjustment made pursuant to this subparagraph (a), the holder of any Warrant thereafter exercised shall become entitled to receive any shares or other securities of the Company other than shares of Common Stock, thereafter the number of such other shares so received upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Common Stock contained in this paragraph, and other provisions of this paragraph 9B(1) with respect to the shares of Common Stock shall apply on like terms to any such other shares or other securities. (b) In case the Company shall fix a record date for the issuance of rights or warrants to all holders of its Common Stock entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Common Stock at a price per share less than the current market price per share of Common Stock (as defined in subparagraph (e) -6- 35 below) at such record date, the warrant exercise price shall be determined by multiplying the warrant exercise price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Shares of Common Stock outstanding on such record date plus the number of Shares of Common Stock which the aggregate offering price of the total number of Shares so offered would purchase at such current market price, and the denominator of which shall be the number of Shares of Common Stock outstanding on such record date plus the number of additional Shares of Common Stock offered for subscription or purchase. Such adjustment shall be made successively whenever such a record date is fixed, and shall become effective immediately after such record date. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of common stock at less than such current market price, and in determining the aggregate offering price of such shares, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors of the Company. Common stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment required under this subparagraph (b). To the extent that Shares of Common Stock are not delivered after the expiration of such rights or warrants, the warrant exercise price shall be readjusted to the warrant exercise price which would then be in effect had the adjustments made in respect of the issuance of such rights or warrants been made on the basis of delivery of only the number of Shares of Common Stock actually delivered. (c) In case the Company shall fix a record date for making a distribution to all holders of its Common Stock of evidences of its indebtedness or assets (excluding regular quarterly or other periodic or recurring cash dividends or distributions and cash dividends or distributions paid from retained earnings or referred to in subparagraph (a) above) or rights or warrants to subscribe or warrants to purchase such evidences of indebtedness or assets (excluding those referred to in subparagraph (b) above), then in each such case the warrant exercise price shall be determined by multiplying the warrant exercise price in effect immediately prior to such record date by a fraction (x) the numerator of which shall be such current market price (as defined in subparagraph (e) below) per Share of Common Stock on such record date, less the then fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive) of the portion of the assets or evidences of indebtedness so -7- 36 distributed or of such subscription rights or warrants applicable to one share of the Common Stock and (y) the denominator of which shall be the current market price per share of the Common Stock on such record date. Such adjustment shall be made successively whenever such a record date is fixed and shall become effective immediately after such record date. Notwithstanding the foregoing, in the event that the Company shall distribute any rights or warrants to acquire capital stock ("Rights") pursuant to this subparagraph (c), the distribution of separate certificates representing such rights subsequent to their initial distribution (whether or not such distribution shall have occurred prior to the date of the issuance of such Warrants) shall be deemed to be the distribution of such Rights for purposes of this subparagraph (c), provided that the Company may, in lieu of making any adjustment pursuant to this subparagraph (c) upon a distribution of separate certificates representing such Rights, make proper provision so that each holder of such Warrants who exercises such Warrants (or any portion thereof) (A) before the record date for such distribution of separate certificates shall be entitled to receive upon such conversion shares of Common Stock issued with Rights and (B) after such record date and prior to the expiration, redemption or termination of such Rights shall be entitled to receive upon such exercise, in addition to the shares of Common Stock issuable upon such exercise, the same number of such Rights as would a holder of the number of shares of Common Stock that such Warrants so exercised would have entitled the holder thereof to purchase in accordance with the terms and provisions of and applicable to the Rights if such Warrants were exercised immediately prior to the record date for such distribution. Common Stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment required under this subparagraph (c). (d) After each adjustment of the number of shares purchasable upon exercise of each Warrant pursuant to subparagraph 9B(1)(a), the warrant exercise price shall be adjusted by multiplying such warrant exercise price immediately prior to such adjustment by a fraction of which the numerator shall be the number of Shares purchasable upon exercise of each Warrant immediately prior to such adjustment, and the denominator of which shall be the number of Shares so purchasable immediately thereafter. After each adjustment of the warrant exercise price pursuant to subparagraph 9B(1)(b) or (c), the total number of Shares or fractional part thereof purchasable upon the exercise of each Warrant shall be proportionately adjusted to such number of shares or fractional parts thereof as the aggregate warrant exercise price of the number of shares or -8- 37 fractional part thereof purchasable immediately prior to such adjustment will buy at the adjusted warrant exercise price. (e) For the purpose of any computation under subparagraphs 9B(1)(b) and (c) above, the current market price per Share of Common Stock at any date shall be deemed to be the average of the daily closing prices for the 30 consecutive business days commencing 45 business days before the day in question. The closing price for each day shall be (i) if the Common Stock is listed or admitted for trading on any national securities exchange, the last sale price (regular way), or the average of the closing bid and ask prices, if no sale occurred, of Common Stock on the principal securities exchange on which the Common Stock is listed, (ii) if not listed as described in (i), the mean between the closing high bid and low asked quotations of Common Stock in the National Association of Securities Dealers, Inc., Automated Quotation System, or any similar system or automated dissemination of quotations or securities prices then in common use, if so quoted, or (iii) if not quoted as described in clause (ii), the mean between the high bid and low asked quotations for Common Stock as reported the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for Common Stock on at least 5 of the 10 preceding days. If none of the conditions set forth above is met, the Closing Price of Common Stock on any day or the average of such Closing Prices for any period shall be the fair market value of Common Stock as determined by a member firm of the New York Stock Exchange, Inc. selected by the Company. (f) (A) Nothing contained herein shall be construed to require an adjustment as a result of the issuance of Common Stock pursuant to, or the granting or exercise of any rights under, the Company's Shareholder Investment Plan or any successor plans providing for the purchase of shares of Common Stock by the Company's shareholders or employees at a price not less than 90% of the "average market price" during the "pricing period" as such terms, or equivalent terms, are defined in, and as calculated pursuant to, such plans from time to time. (B) In addition, no adjustment in the warrant exercise price shall be required unless and until the earlier of the following shall have occurred: (x) such adjustment would require an increase or decrease of at least 1% in the warrant exercise price or (y) a period of 3 years shall have elapsed from the date of the occurrence of any event requiring any such adjustment pursuant to subparagraphs 9B(1)(a), (b) or (c) above. All adjustments shall be made to the nearest one hundredth of a Share and the nearest cent, and any adjustments which by reason of this subparagraph (f) are not -9- 38 required to be made shall be carried forward cumulatively and taken into account in any subsequent adjustment which (including such carry-forward) is required to be made under this subparagraph (f). (g) In any case in which this subparagraph 9B(1) shall require than an adjustment be made retroactively immediately following a record date, the Company may elect to defer (but only until five business days following the mailing of the notice described in subparagraph 9B(5) below) issuing to the holder of any Warrant exercised after such record date the Shares of the Company issuable upon such exercise over and above the Shares issuable upon such exercise only on the basis of the warrant exercise price prior to adjustment. (h) The Company may, at its option, at any time until the expiration date, reduce the then current warrant exercise price to any amount deemed appropriate by the Board of Directors of the Company for any period not exceeding twenty (20) consecutive days (as evidenced in a resolution adopted by such Board of Directors), but only upon giving the notices required by subparagraph 9(B)(5) twenty (20) days prior to taking such action. (i) Except as herein otherwise expressly provided, no adjustment in the warrant exercise price shall be made by reason of the issuance of Shares, or securities convertible into or exchangeable for Shares, or securities carrying the right to purchase any of the foregoing or for any other reason whatsoever. (j) Irrespective of any of the adjustments in the warrant exercise price or the number of Shares, Warrant Certificates theretofore issued may continue to express the same prices and number of shares as are stated in a similar Warrant Certificate issuable initially, or at some subsequent time, pursuant to this Agreement and such number of Shares specified therein shall be deemed to have been so adjusted. (2) No fractional Shares of Common Stock shall be issued upon the exercise of Warrants. If more than one Warrant shall be exercised at one time by the same holder, the number of full Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of Shares purchased pursuant to the Warrants so exercised. Instead of any fractional Share of Common Stock which would otherwise be issuable upon exercise of any Warrant, the Company shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the last sales price (or bid price if there were no sales) per Share of Common Stock in -10- 39 either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange on the business day which next precedes the day of exercise or, if the Common Stock is not then listed or admitted to trading on the New York Stock Exchange, an amount equal to the same fraction of the market price per share of Common Stock (as determined in a manner described by the board of Directors of the Corporation) at the close of business on the business day which next precedes the day of exercise. (3) In case any of the following shall occur while any Warrants are outstanding: (a) any reclassification or change of the outstanding Shares of Common Stock (other than a change in par value), or from par value to no par value, or from no par value to par value; or (b) any consolidation or merger to which the Company is a party (other than a consolidation or a merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change in, the outstanding shares of Common Stock issuable upon exercise of the Warrants); or (c) any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety; then the Company, or such successor or purchasing corporation, as the case may be, shall make appropriate provision by amendment of this Agreement or otherwise so that the holders of the Warrants then outstanding shall have the right at any time thereafter, upon exercise of such Warrants, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as would be received by a holder of the number of shares of Common Stock issuable upon exercise of such Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Such provision shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 9. The above provisions of this paragraph 9B(3) shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales or conveyances. (4) Before taking any action which would cause an adjustment decreasing the warrant exercise price so that the warrant exercise price is below the then par value of the shares of Common Stock, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Shares of Common Stock at the warrant exercise price as so adjusted. -11- 40 (5) Whenever the warrant exercise price then in effect is adjusted as herein provided, the Company shall mail to each holder of the Warrants at such holder's address as it shall appear on the books of the Company a statement setting forth the adjusted warrant exercise price, then and thereafter effective under the provisions hereof together with the facts, in reasonable detail, upon which such adjustment is based. (6) In case (i) the Company shall declare a dividend (or any distribution) on its Common Stock payable otherwise than in cash out of its current or retained earnings, or (ii) the Company shall authorize the granting to the holders of its Common Stock of rights to subscribe for or purchase any shares of capital stock of any class or of any other rights, or (iii) there is to be any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock), or any consolidation of merger to which the Company is a party and for which approval of any stockholders of the Company is required, or (iv) any distribution is to be made on or in respect of the Common Stock in connection with the dissolution, liquidation or winding up of the Company, then the Company shall mail to each holder of Warrants at such holder's address as it shall appear on the books of the Company, at least twenty days (or ten days in the case specified in clause (i) or (ii) above) prior to the applicable record date hereinafter specified, a notice stating (x) the record date for such dividend, distribution or rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such divided, distribution or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, dissolution, liquidation or winding up. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect any such transaction or any adjustment in the warrant exercise price required by this Section 9. Section 10. Notice to Warrantholders. Nothing contained in this Agreement or in any of the Warrants shall be construed as conferring upon the holders thereof the right to vote or to consent or to receive notice as shareholders in respect of the meetings of shareholders or the election of directors of the Company or any other matter, or any rights whatsoever as shareholders of the Company. -12- 41 Section 11. Certain Covenants of the Company. A. So long as any unexpired Warrants remain outstanding and if required in order to comply with the Securities Act of 1933, as amended (the "Act"), the Company covenants and agrees that it will file such post-effective amendments to the registration statement filed pursuant to the Act with respect to the Warrants (File No. 33-________) (or such other registration statements or post-effective amendments or supplements) as may be necessary to permit the Company to deliver to each person exercising a Warrant a prospectus meeting the requirements of Section 10(a)(3) of the Act and otherwise complying therewith, and will deliver such a prospectus to each such person. The Company further covenants and agrees that it will obtain and keep effective all permits, consents and approvals of governmental agencies and authorities, and will use its best efforts to take all action which may be necessary to qualify the Shares for sale under the securities laws of such of the United States, as may be necessary to permit the free exercise of the Warrants, and the issuance, sale, transfer and delivery of the Shares issued upon exercise of the Warrants, and to maintain such qualifications during the entire period in which the Warrants are exercisable. B. The Company covenants and agrees that it shall take all such action as may be necessary to ensure that all Shares will at the time of delivery of certificates for such Shares (subject to payment of the warrant exercise price) be duly and validly authorized and issued and fully paid and nonassessable Shares, free from any preemptive rights and taxes, liens, charges and securities interests created by or imposed upon the Company. C. The Company covenants and agrees that it will take all action which may be necessary to cause the Shares to be duly listed on the New York Stock Exchange or the National Association of Securities Dealers Automated Quotations System ("NASDAQ") or any securities exchange on which the other shares of Common Stock of the Company are listed at the dates of exercise of the Warrants. Section 12. Disposition of Proceeds, etc. A. The Warrant Agent shall account promptly to the Company with respect to Warrants exercised and concurrently pay to the Company all moneys received by the Warrant Agent for the purchase of Shares through the exercise of such Warrants. B. The Warrant Agent shall keep copies of this Agreement available for inspection by holders of Warrants during normal business hours at its principal office in the City of _________, _________. -13- 42 Section 13. Merger or Consolidation or Change of Name of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidate, or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any corporation succeeding to the corporate trust business of the Warrant Agent, shall be the successor to the Warrant Agent hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Warrant Agent under the provisions of Section 16 of this Agreement. In case at the time such successor to the Warrant Agent shall succeed to the agency created by this Agreement, any of the Warrants shall have been countersigned but not delivered, any such successor to the Warrant Agent may adopt the countersignature of the original Warrant Agent and deliver such Warrants so countersigned; and in case at that time any of the Warrants shall not have been countersigned, any successor to the Warrant Agent may countersign such Warrants either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases such Warrant shall have the full force provided in the Warrants and in this Agreement. In case at any time the name of the Warrant Agent shall be changed and at such time any of the Warrants shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignature under its prior name and deliver Warrants so countersigned; and in case at that time any of the Warrants shall not have been countersigned, the Warrant Agent may countersign such Warrants either in its prior name or in its changed name; and in all such cases such Warrants shall have the full force provided in the Warrants and in this Agreement. Section 14. Duties of Warrant Agent. The Warrant Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Warrants, by their acceptance thereof, shall be bound: A. The statements contained herein and in the Warrants shall be taken as statements of the Company, and the Warrant Agent assumes no responsibility for the correctness of any of the same except such as describe the Warrant Agent or action taken or to be taken by it. The Warrant Agent assumes no responsibility with respect to the distribution of the Warrants except as herein otherwise provided. -14- 43 B. The Warrant Agent shall not be responsible for any failure of the Company to comply with any of the covenants contained in this Agreement or in the Warrants to be complied with by the Company. C. The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys, agents or employees or for any loss to the Company resulting from such neglect or misconduct, provided reasonable care shall have been exercised in the selection and continued employment thereof. D. The Warrant Agent may consult at any time with counsel satisfactory to it (who may be counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any holder of any Warrant in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the opinion or the advice of such counsel. E. The Warrant Agent shall incur no liability or responsibility to the Company or to any holder of any Warrant for any action taken in reliance on any notice, resolution, waiver, consent, order, certificate, or other paper, document or instrument believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. F. The Company agrees to pay to the Warrant Agent reasonable compensation for all services rendered by the Warrant Agent in the execution of this Agreement, to reimburse the Warrant Agent for all expenses, taxes and governmental charges and other charges of any kind and nature incurred by the Warrant Agent in the execution of this Agreement and to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments costs and counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement except as a result of the Warrant Agent's gross negligence or bad faith. G. The Warrant Agent shall be under no obligation to institute any action, suit or legal proceeding or to take any other action likely to involve expense unless the Company or one or more registered holders of Warrants shall furnish the Warrant Agent with reasonable security and indemnity for any costs and expenses which may be incurred, but this provision shall not affect the power of the Warrant Agent to take such action as the Warrant Agent may consider proper, -15- -----END PRIVACY-ENHANCED MESSAGE-----