-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M+mStqSyY+mVLuRgvxeIlHcPdTR0vhKvx3Gvj94hMp/s3LOaf1lw6RA3OJprZlQd 6mLktVUwyMegOkq8v0+C1w== 0000950129-98-001188.txt : 19980325 0000950129-98-001188.hdr.sgml : 19980325 ACCESSION NUMBER: 0000950129-98-001188 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980324 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980324 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICE CORPORATION INTERNATIONAL CENTRAL INDEX KEY: 0000089089 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200] IRS NUMBER: 741488375 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06402 FILM NUMBER: 98572161 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 8-K 1 SERVICE CORPORATION INTERNATIONAL - 03/24/98 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): March 11, 1998 SERVICE CORPORATION INTERNATIONAL (Exact name of registrant as specified in its charter) TEXAS (State or other jurisdiction of incorporation) 1-6402-1 74-1488375 (Commission File Number) (IRS Employer Identification No.) 1929 Allen Parkway, Houston, Texas 77019 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 522-5141 2 ITEM 5. OTHER EVENTS On August 27, 1996, Service Corporation International (the "Company") filed with the Securities and Exchange Commission a registration statement on Form S-3 (File No. 333-10867) under the Securities Act of 1933, as amended, relating to the public offering from time to time of up to $1,000,000,000 in aggregate initial offering price of debt securities, common stock and common stock warrants of the Company. On March 11, 1998, the Company entered into (i) an Underwriting Agreement with J.P. Morgan Securities Inc., Chase Securities Inc., Citicorp Securities, Inc., BancAmerica Robertson Stephens and Societe Generale Securities Corporation with respect to $200,000,000 aggregate principal amount of its 6.50% Notes due March 15, 2008, and (ii) an Underwriting Agreement with J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and UBS Securities LLC with respect to $300,000,000 aggregate principal amount of its 6.30% Dealer remarketable securities sm ("Drs.sm") due March 15, 2020. On March 16, 1998, the Company entered into a Remarketing Agreement with J.P. Morgan Securities Inc. with respect to the remarketing of the Drs. Both Underwriting Agreements, the Global Securities issued pursuant thereto and the Remarketing Agreement are attached as exhibits. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) The following exhibits to Registration Statement on Form S-3 (Registration No. 333-10867) are filed as part of this report on Form 8-K. Exhibit 1.1 Underwriting Agreement dated as of March 11, 1998 between the Company and J.P. Morgan Securities Inc., Chase Securities Inc., Citicorp Securities, Inc., BancAmerica Robertson Stephens and Societe Generale Securities Corporation with respect to $200,000,000 aggregate principal amount of the Company's 6.50% Notes due March 15, 2008. Exhibit 1.2 Underwriting Agreement dated as of March 11, 1998 between the Company and J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and UBS Securities LLC with respect to $300,000,000 aggregate principal amount of the Company's 6.30% Dealer remarketable securities sm due March 15, 2020. Exhibit 1.3 Remarketing Agreement dated as of March 16, 1998 between the Company and J.P. Morgan Securities Inc. 3 Exhibit 1.4 Form of Global Security dated March 16, 1998 with respect to $200,000,000 aggregate principal amount of the Company's 6.50% Notes due March 15, 2008. Exhibit 1.5 Form of Global Security dated March 16, 1998 with respect to $200,000,000 aggregate principal amount of the Company's 6.30% Dealer remarketable securitiessm due March 15, 2020. Exhibit 1.6 Form of Global Security dated March 16, 1998 with respect to $100,000,000 aggregate principal amount of the Company's 6.30% Dealer remarketable securitiessm due March 15, 2020. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SERVICE CORPORATION INTERNATIONAL Date: March 24, 1998 By: /s/ James M. Shelger ------------------------------ James M. Shelger Senior Vice President General Counsel and Secretary 5 INDEX TO EXHIBITS
Exhibit No. Description of Exhibit - ----------- ---------------------- 1.1 Underwriting Agreement dated as of March 11, 1998 between the Company and J.P. Morgan Securities Inc., Chase Securities Inc., Citicorp Securities, Inc., BancAmerica Robertson Stephens and Societe Generale Securities Corporation with respect to $200,000,000 aggregate principal amount of the Company's 6.50% Notes due March 15, 2008. 1.2 Underwriting Agreement dated as of March 11, 1998 between the Company and J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and UBS Securities LLC with respect to $300,000,000 aggregate principal amount of the Company's 6.30% Dealer remarketable securities sm due March 15, 2020. 1.3 Remarketing Agreement dated as of March 16, 1998 between the Company and J.P. Morgan Securities Inc. 1.4 Form of Global Security dated March 16, 1998 with respect to $200,000,000 aggregate principal amount of the Company's 6.50% Notes due March 15, 2008. 1.5 Form of Global Security dated March 16, 1998 with respect to $200,000,000 aggregate principal amount of the Company's 6.30% Dealer remarketable securitiessm due March 15, 2020. 1.6 Form of Global Security dated March 16, 1998 with respect to $100,000,000 aggregate principal amount of the Company's 6.30% Dealer remarketable securitiessm due March 15, 2020.
EX-1.1 2 UNDERWRITING AGREEMENT 3/11/98 6.50% NOTES 1 EXHIBIT 1.1 UNDERWRITING AGREEMENT SERVICE CORPORATION INTERNATIONAL Debt Securities March 11, 1998 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 Texas Commerce Bank National Association, as trustee (the "Senior Subordinated Trustee"). The Subordinated Debt Securities will be issued under an indenture (as amended by the First Amendment thereto dated as of August 23, 1996, the "Subordinated Indenture" and, together with the Senior Indenture and the Senior Subordinated Indenture, the "Indentures") dated September 1, 1991 between the Company and Chase Bank of Texas, National Association, formerly known as Texas Commerce Bank National Association, as trustee (the "Subordinated Trustee" and, together with the Senior Trustee and the Senior Subordinated Trustee, 2 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 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 3 -3- 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 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 4 -4- 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 (which shall be deemed to be not earlier than such time as no Underwriter or dealer is required by law to deliver a prospectus in connection with sales of the Offered Securities) 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 I 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, subject to the conditions hereinafter stated, 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 5 -5- 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 I 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 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 wire transfer of immediately available 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 6 -6- 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. 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. 333-10867), 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 7 -7- 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 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 8 -8- 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 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) Coopers & Lybrand L.L.P., 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, 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 9 -9- 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 its subsidiaries, 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 or organized, is validly existing as a corporation or entity in good standing under the laws of the jurisdiction of its incorporation or organization, has the corporate or other power and authority to own its property and to conduct 10 -10- 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 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) and the Company's Registration Statement on Form S-4 (Registration No. 333-01857) (together, 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 11 -11- 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 its 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 or any of its subsidiaries, (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 its 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 its subsidiaries, taken as a whole and (B) there has been no dividend or distribution of any kind declared, paid or 12 -12- 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) If the Prospectus contains a section entitled "Capitalization," 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 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 Chase Bank of Texas, National Association, formerly known as 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 13 -13- 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 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. 14 -14- (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 and 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 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 15 -15- 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. (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 its 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 its subsidiaries owns, possesses or has obtained all licenses, ermits, 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 16 -16- 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 such 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, reasonably be expected to singly or in the aggregate, have a Material Adverse Effect; and the Company and each of its subsidiaries 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 each of its 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 17 -17- 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 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 of the Company 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 by this Agreement and the Terms 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 of the Company (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 18 -18- 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). (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 19 -19- 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 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 20 -20- 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, 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. 21 -21- (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 90 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 of the Company to, directly or indirectly, effect any offer, sale or other disposition of, or registration of, any Debt Securities or any other long term debt, notes or debentures of or guaranteed by the Company or any of its subsidiaries or any securities convertible into or exchangeable or exercisable for Debt Securities or any such long-term debt, notes or debentures, 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 90 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 of the Company 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 22 -22- 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 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) relating to any filing with the National Association of Securities Dealers, Inc. (the "NASD") in connection with the offering of the Offered Securities, (v) incurred in connection with the engagement of any qualified independent underwriter as may be required by NASD rules and regulations, (vi) incurred in connection with the rating of the Offered Securities, (vii) incurred in connection with advertising relating to the Offered Securities approved by the Company (which approval shall not be unreasonably withheld or delayed), (viii) 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 (ix) 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 23 -23- 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 Supplement 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 in connection with sales (including resales) of the Offered Securities, 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) 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. (o) To deliver copies of the Prospectus to such place or places as shall be designated by the Representatives not later than 1:00 p.m., New York City time, on the day after the date of the Terms Agreement. 6. Conditions of Underwriters' Obligations. The several obligations of the Underwriters hereunder to purchase the Underwritten Securities are subject to the following conditions: 24 -24- (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., New York City time, 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 to the Representatives evidence satisfactory to the Representatives 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 to be performed or satisfied hereunder at or prior to the Closing Date. (c) Subsequent to the Representation Date and prior to payment for the Underwritten Securities on the Closing Date, there shall not have occurred or become known 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 or Treasurer 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 25 -25- Prospectus to the Closing Date 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 Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P ("LSZHL"), 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) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own its property and to conduct its business as described in the Prospectus. (ii) Each of this Agreement and the Terms Agreement has been duly authorized, executed and delivered by the Company. (iii) 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. (iv) 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 26 -26- 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. (v) The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Supplemental Indenture (if applicable) relating to the Offered Securities, and the Supplemental Indenture (if applicable) 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. (vi) 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. 27 -27- (vii) The statements set forth in the Registration Statement and the Prospectus under the caption "Certain United States Federal Income Tax Considerations," insofar as such statements constitute summaries of legal matters, are fair and accurate in all material respects. (viii) If the Prospectus contains a section entitled "Capitalization", the number of authorized shares of capital stock of the Company is as set forth in the Prospectus under "Capitalization". The authorized capital stock of the Company conforms as to legal matters in all material respects 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 Common Stock in accordance with the terms of the Offered Securities and the Supplemental Indenture (if applicable) 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) 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 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. 28 -28- (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) 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, the Supplemental Indenture (if applicable) or the Offered Securities by the Company, except such as may be required under the Securities Act, the Trust Indenture Act or state securities laws. (xiii) To the best of such counsel's knowledge and information, after due inquiry, the execution, delivery and the full and timely performance of this Agreement, the Terms Agreement, the Indenture and the Supplemental Indenture (if applicable) and the Offered Securities 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 (the scope of which list of contracts being reasonably acceptable to the Representatives), nor will such action result in any violation of the provisions of the charter or by-laws of 29 -29- 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. (xiv) 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. (xv) 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 and 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 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 30 -30- 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 any jurisdiction other than the State of Texas 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 LSZHL shall state that LSZHL, the Underwriters and counsel for the Underwriters are justified in relying upon such opinion. In addition, such counsel may assume for purposes of such opinion that the laws of the State of New York are identical to the laws of the State of Texas. (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, after due inquiry, 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 31 -31- 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 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 32 -32- 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. (vi) The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Supplemental Indenture (if applicable) relating to the Offered Securities, and the Supplemental Indenture (if applicable) 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) If the Prospectus contains a section entitled "Capitalization", the number of authorized shares of capital stock of the Company is as set 33 -33- forth in the Prospectus under "Capitalization". The authorized capital stock of the Company conforms as to legal matters in all material respects 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 Common Stock in accordance with the terms of the Offered Securities and the Supplemental Indenture (if applicable) 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 and information, 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). 34 -34- (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 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, the Supplemental Indenture (if applicable) or the Offered Securities 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, after due inquiry, the execution, delivery and the full and timely performance of this Agreement, the Terms Agreement, the Indenture, the Supplemental Indenture (if applicable) and the Offered Securities, 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 to such opinion (the scope of which list of contracts being reasonably acceptable to the Representatives), 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, 35 -35- 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 and at the Representation Date contained and, as of the date such opinion is delivered, contains any untrue statement of a material fact or omitted on omits 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 General Corporation Law of the State of Delaware upon the written opinion of LSZHL 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 James M. Shelger shall state that James M. Shelger, the Underwriters and counsel for the 36 -36- Underwriters are justified in relying upon such opinion. In addition, such counsel may assume for purposes of such opinion that the laws of the State of New York are identical to the laws of the State of Texas. (g) On the Representation Date and also on the Closing Date, Coopers & Lybrand L.L.P. 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. (i) 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. 37 -37- (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 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 Representative designated in the Terms Agreement 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. (o) The Company shall have complied with its obligations under Section 5(o). 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, 38 -38- 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 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 was made in such preliminary prospectus and is eliminated or remedied in the Prospectus and the Company has provided such Prospectus in accordance with Section 5(b) 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 39 -39- 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 in the last paragraph of the cover page of the Prospectus Supplement and the second paragraph 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, 40 -40- Person, upon request of the Indemnified Person, shall promptly retain counsel satisfactory to the Indemnified Person to represent the Indemnified Person in such proceeding and shall pay the reasonable 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 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 41 -41- Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement; provided, however, that the Indemnifying Person shall not be liable for any settlement effected without its consent pursuant to this sentence if the Indemnifying Person is contesting in good faith the request for reimbursement and all other fees and expenses of counsel not so contested shall have been reimbursed. 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 (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 42 -42- 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 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. 43 -43- 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. or the American Stock Exchange, (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 shall have been declared by either U.S. Federal or New York State 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 the aggregate principal amount of Offered Securities which it or they have agreed to purchase hereunder on such date, and the aggregate principal amount 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 principal amount 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 aggregate principal amount of Underwritten Securities set forth opposite their respective names in 44 -44- the annex or annexes to Exhibit I hereto bears to the aggregate principal amount of Underwritten Securities set forth opposite the names of all such non-defaulting Underwriters and (2) with respect to Option Securities, the aggregate principal amount of Underwritten Securities set forth opposite their respective names in the annex or annexes to Exhibit I hereto bears to the aggregate principal amount 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 aggregate principal amount of 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 aggregate principal amount 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 aggregate principal amount 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 the aggregate principal amount of Offered Securities which it or they have agreed to purchase hereunder on such date, and the aggregate principal amount of Offered Securities with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Offered Securities to be purchased on such date, and arrangements satisfactory to the Representatives and the Company for the purchase of such aggregate principal amount of 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 45 -45- 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) 525- 9067); Attention: James M. Shelger. 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, SERVICE CORPORATION INTERNATIONAL By: /s/ GREGORY L. CAUTHEN ------------------------------------- Name: Gregory L. Cauthen Title: Vice President and Treasurer CONFIRMED AND ACCEPTED, as of the date first above written J.P. MORGAN SECURITIES INC. CHASE SECURITIES INC. CITICORP SECURITIES, INC. BANCAMERICA ROBERTSON STEPHENS SOCIETE GENERALE SECURITIES CORPORATION By: J.P. MORGAN SECURITIES INC. By: /s/ RAYMOND SCHMITT ------------------------------------- Name: Raymond Schmitt Title: 47 EXHIBIT I SERVICE CORPORATION INTERNATIONAL $200,000,000 6.50% Notes due March 15, 2008 TERMS AGREEMENT March 11, 1998 Service Corporation International 1929 Allen Parkway Houston, Texas 77019 Attention: James M. Shelger Ladies and Gentlemen: J.P. Morgan Securities Inc., Chase Securities Inc., Citicorp Securities, Inc., BancAmerica Robertson Stephens and Societe Generale Securities Corporation (the "Representatives") understand that Service Corporation International, a Texas corporation (the "Company"), proposes to issue and sell $200,000,000 aggregate principal amount of its 6.50% Notes due March 15, 2008 (the "Notes") (the "Underwritten Securities"). The Notes are Senior Debt Securities and are to be issued under the Senior Indenture. Subject to the terms and conditions set forth herein or incorporated by reference herein, the Underwriters named in Annex A 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 hereto at a price of 98.959% of the principal amount thereof (the "Purchase Price"). The Closing Date shall be March 16, 1998, at 9:00 A.M., New York City time, at the offices of Cahill Gordon & Reindel. The Underwritten Securities shall have the following terms: Title: 6.50% Notes due March 15, 2008 Maturity: March 15, 2008 48 -2- Interest rate: 6.50% per annum Interest payment dates: March 15 and September 15, commencing September 15, 1998 Record Dates: March 1 and September 1 Redemption at option of Company: None Sinking fund provisions: None Public offering price: 99.609% of the principal amount thereof All the provisions contained in the document entitled "Underwriting Agreement -- Service Corporation International -- Debt Securities" (the "Underwriting Agreement") and dated March 11, 1998, 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 J.P. Morgan Securities Inc. The text of the first sentence of Section 5(h) of the Underwriting Agreement is hereby deleted for purposes of the purchase and sale of the Notes and the following shall be deemed inserted therein in lieu thereof: "For a period beginning on the Representation Date to and including the Business Day following the Closing Date, not to, and not to cause or permit any subsidiary of the Company to, directly or indirectly, effect any offer, sale or other disposition of, or registration of, any debt securities or any other long-term debt, notes or debentures of or guaranteed by the Company or any of its Subsidiaries which are substantially similar to the Notes (which expressly shall be deemed not to include any debt securities or guarantees of debt securities issued under the S-4) without the prior written consent of J.P. Morgan Securities Inc." The additional exceptions to Section 5(h) of the Underwriting Agreement are: The Company may issue $300,000,000 aggregate principal amount of its 6.30% Dealer remarketable securitiessm due March 15, 2020, pursuant to an underwriting agreement, together with the terms agreement forming a part thereof of even date therewith, dated March 11, 1998 among the Company and J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and UBS Securities LLC. 49 -3- Any action by the Representatives hereunder may be taken by the Representatives jointly or by J.P. Morgan Securities Inc. alone on behalf of the Representatives, and any such action taken by J.P. Morgan Securities Inc. alone shall be binding upon the Representatives. Notices to the Underwriters shall be given to the Representatives c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New York 10260 (facsimile: (212) 648-5790); Attention: Syndicate Department. 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. Times referred to herein are to New York City time. 50 -4- Please accept this offer no later than 6:00 P.M. on March 11, 1998 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 March 11, 1998, 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." Very truly yours, J.P. MORGAN SECURITIES INC. CHASE SECURITIES INC CITICORP SECURITIES, INC. BANCAMERICA ROBERTSON STEPHENS SOCIETE GENERALE SECURITIES CORPORATION By: J.P. MORGAN SECURITIES INC. By: /s/ RAYMOND SCHMITT ------------------------------------- Name: Raymond Schmitt Title: Accepted as of the date first above written: SERVICE CORPORATION INTERNATIONAL By: /s/ GREGORY L. CAUTHEN ----------------------------------- Name: Gregory L. Cauthen Title: Vice President and Treasurer 51 ANNEX A
Aggregate Principal Amount of Underwritten Securities Underwriters To Be Purchased - ------------ --------------- J.P. Morgan Securities Inc. . . . . . . . . . . .. . . . . . $ 60,000,000 Chase Securities Inc. . . . . . . . . . . . . . .. . . . . . 50,000,000 Citicorp Securities, Inc. . . . . . . . . . . .. . . . . . 30,000,000 BancAmerica Robertson Stephens . . . . . . . . .. . . . . . 30,000,000 Societe Generale Securities Corporation . . . . .. . . . . . $ 30,000,000 ------------ Total: $200,000,000 ============
52 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. Investment Capital Corporation, a Texas corporation SCI Funeral Services of New York, Inc., a New York corporation SCI Funeral Services, Inc., an Iowa corporation SCI International Limited, a Delaware corporation SCI Texas Funeral Services, Inc., a Texas corporation SCIT Holdings, Inc., a Delaware corporation OGF-PFG, a French corporation Service Corporation International France, a French corporation EX-1.2 3 UNDERWRITING AGREEMENT - 3/11/98 6.30% SECURITIES 1 EXHIBIT 1.2 UNDERWRITING AGREEMENT SERVICE CORPORATION INTERNATIONAL Debt Securities March 11, 1998 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 Texas Commerce Bank National Association, as trustee (the "Senior Subordinated Trustee"). The Subordinated Debt Securities will be issued under an indenture (as amended by the First Amendment thereto dated as of August 23, 1996, the "Subordinated Indenture" and, together with the Senior Indenture and the Senior Subordinated Indenture, the "Indentures") dated September 1, 1991 between the Company and Chase Bank of Texas, National Association, formerly known as Texas Commerce Bank National Association, as trustee (the "Subordinated Trustee" and, together with the Senior Trustee and the Senior Subordinated Trustee, 2 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 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. 3 -3- In connection with the offer and sale by the Company of the Underwritten Securities pursuant to this Agreement and the Terms Agreement, the Company and J.P. Morgan Securities Inc., as the Remarketing Dealer (the "Remarketing Dealer"), will enter into the Remarketing Agreement to be dated the Closing Date (as defined herein) (the "Remarketing Agreement"). 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 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 4 -4- 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 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 (which shall be deemed to be not earlier than such time as no Underwriter or dealer is required by law to deliver a prospectus in connection with sales of the Offered Securities) 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 I 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 5 -5- the offering of the Underwritten Securities. If any Option Securities are to be purchased, subject to the conditions hereinafter stated, 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 I 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 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 wire transfer of immediately available 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 6 -6- 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. 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. 333-10867), 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 7 -7- 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 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 8 -8- 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 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) Coopers & Lybrand L.L.P., 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, 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 9 -9- 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 its subsidiaries, 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 10 -10- 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 or organized, is validly existing as a corporation or entity in good standing under the laws of the jurisdiction of its incorporation or organization, has the corporate or other 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 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 11 -11- Statement on Form S-4 (Registration No. 33-54996) and the Registration Statement on Form S-4 (Registration No. 333-01857) (together, 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, the Terms Agreement, and the Remarketing Agreement have been duly and validly authorized, and this Agreement and the Terms Agreement have been duly and validly executed and delivered by the Company. (x) Since the date of the latest consolidated financial statements of the Company and its 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 or any of its subsidiaries, (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 its 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. 12 -12- (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 its 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) If the Prospectus contains a section entitled "Capitalization", 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 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 Chase Bank of Texas, National Association, formerly known as 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, the Terms Agreement and the Remarketing Agreement has been validly and sufficiently taken. The Offered Securities, when executed by 13 -13- 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 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 14 -14- holder; and the issuance of such Common Stock upon such conversion will not be subject to preemptive rights. (xv) The Offered Securities, the Indenture and Supplemental Indenture relating thereto and the Remarketing Agreement 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 Remarketing Agreement and 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 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. 15 -15- (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 Remarketing Agreement, 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. (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, the Terms Agreement or the Remarketing Agreement. (xx) The Company and its 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. 16 -16- (xxi) Each of the Company and each of its 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 such 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, reasonably be expected to singly or in the aggregate, have a Material Adverse Effect; and the Company and each of its subsidiaries 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 each of its 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 17 -17- 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 conducts 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 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 of the Company 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 by this Agreement, the Terms Agreement and the Remarketing Agreement or (ii) is required to be described in the Registration Statement or the Prospectus that is not so described. 18 -18- (xxvi) Neither the Company nor any subsidiary of the Company (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, the Remarketing 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). (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 and other than as set forth in the Remarketing 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. 19 -19- 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 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. 20 -20- (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 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. 21 -21- (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 90 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 of the Company to, directly or indirectly, effect any offer, sale or other disposition of, or registration of, any Debt Securities or any other long term debt, notes or debentures of or guaranteed by the Company or any of its subsidiaries or any securities convertible into or exchangeable or exercisable for Debt Securities or any such long-term debt, notes or debentures, 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 90 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 22 -22- 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 of the Company 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 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) relating to any filing with the National Association of Securities Dealers Inc. (the "NASD") in connection with the offering of the Offered Securities, (v) incurred in connection with the engagement of any qualified independent underwriter as may be required by NASD rules and regulations, (vi) incurred in connection with the rating of the Offered Securities, (vii) incurred in connection with advertising relating to the Offered Securities approved by the Company (which approval shall not be unreasonably withheld or delayed), (viii) relating to the fees and expenses of the applicable Trustee, including the fees and 23 -23- 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 (ix) 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, the Remarketing Agreement 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. The Company shall not be required to pay any costs, fees or expenses with respect to the remarketing of the Offered Securities except as expressly set forth in the Remarketing Agreement. (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 Supplement 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 in connection with sales (including resales) of the Offered Securities, 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) 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. 24 -24- (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. (o) To deliver copies of the Prospectus to such place or places as shall be designated by the Representatives not later than 1:00 p.m., New York City time, on the day after the date of the Terms Agreement. 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., New York City time, 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 to the Representatives evidence satisfactory to the Representatives 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 to be performed or satisfied hereunder at or prior to the Closing Date. (c) Subsequent to the Representation Date and prior to payment for the Underwritten Securities on the Closing Date, there shall not have occurred or become known 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, 25 -25- 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 or Treasurer 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 to the Closing Date 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 Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. ("LSZHL") 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) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own its property and to conduct its business as described in the Prospectus. (ii) Each of this Agreement and the Terms Agreement has been duly authorized, executed and delivered by the Company. (iii) 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 26 -26- 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. (iv) 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. (v) The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Supplemental Indenture (if applicable) relating to the Offered Securities, and the Supplemental Indenture (if applicable) 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, 27 -27- 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 Remarketing Agreement, and the Remarketing Agreement has been duly authorized, executed and delivered by the Company and (assuming the due authorization, execution and delivery by the Remarketing Dealer under the Remarketing Agreement) 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, and except as any rights to indemnification or contribution thereunder may be limited by federal and state securities laws and public policy considerations. (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, the Supplemental Indenture and the Remarketing Agreement provide a fair summary of such provisions. (viii) The statements set forth in the Registration Statement and the Prospectus under the caption "Certain United States Federal Income Tax Considerations," insofar as such statements constitute summaries of legal matters, are fair and accurate in all material respects. (ix) If the Prospectus contains a section entitled "Capitalization", the number of authorized shares of capital stock of the Company is as set 28 -28- forth in the Prospectus under "Capitalization". The authorized capital stock of the Company conforms as to legal matters in all material respects to the description thereof contained in the Prospectus. (x) 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 (if applicable) 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. (xi) 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 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. (xii) 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). 29 -29- (xiii) 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, the Supplemental Indenture (if applicable), the Remarketing Agreement or the Offered Securities 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, after due inquiry, the execution, delivery and the full and timely performance of this Agreement, the Terms Agreement, the Indenture, the Supplemental Indenture (if applicable), the Remarketing Agreement and the Offered Securities 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 (the scope of which list of contracts being reasonably acceptable to the Representatives), 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. (xv) Each document filed pursuant to the Exchange Act (other than the financial statements, schedules and other financial and statistical data 30 -30- 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. (xvi) 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 and 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 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. 31 -31- 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 any jurisdiction other than the State of Texas 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 LSZHL shall state that LSZHL, the Underwriters and counsel for the Underwriters are justified in relying upon such opinion. In addition, such counsel may assume for purposes of such opinion that the laws of the State of New York are identical to the laws of the State of Texas. (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, after due inquiry, 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 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 32 -32- 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 their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and similar laws 33 -33- 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 (if applicable) relating to the Offered Securities, and the Supplemental Indenture (if applicable) 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 Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Remarketing Agreement, and the Remarketing Agreement has been duly authorized, executed and delivered by the Company and (assuming the due authorization, execution and delivery by the Remarketing Dealer under the Remarketing Agreement) 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, and except as any rights to indemnification or contribution thereunder may be limited by federal and state securities laws and public policy considerations. 34 -34- (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 Common Stock, if applicable), the Indenture, the Supplemental Indenture and the Remarketing Agreement provide a fair summary of such provisions. (ix) If the Prospectus contains a section entitled "Capitalization," the number of authorized shares of capital stock of the Company is as set forth in the Prospectus under "Capitalization". The authorized capital stock of the Company conforms as to legal matters in all material respects to the description thereof contained in the Prospectus. (x) 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 (if applicable) 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. (xi) 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 and information, after due inquiry, any other security interests or claims. 35 -35- (xii) 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). (xiii) 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. (xiv) 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, the Supplemental Indenture (if applicable), the Remarketing Agreement or the Offered Securities by the Company, except such as may be required under the Securities Act, the Trust Indenture Act or state securities laws. (xv) To the best of such counsel's knowledge and information, after due inquiry, the execution, delivery and the full and timely performance of this Agreement, the Terms Agreement, the Indenture, the Supplemental Indenture (if applicable), the Remarketing Agreement and the Offered Securities, 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 36 -36- (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 (the scope of which list of contracts being reasonably acceptable to the Representatives), 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 and at the Representation Date contained and, as of the date such opinion is delivered, contains any untrue statement of a material fact or omitted on omits 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 37 -37- the Closing Date. In rendering such opinion, such counsel may rely as to matters involving the application of laws of (1) the General Corporation Law of the State of Delaware upon the written opinion of LSZHL 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 James M. Shelger shall state that James M. Shelger, the Underwriters and counsel for the Underwriters are justified in relying upon such opinion. In addition, such counsel may assume for purposes of such opinion that the laws of the State of New York are identical to the laws of the State of Texas. (g) On the Representation Date and also on the Closing Date, Coopers & Lybrand L.L.P. 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. (i) The Representatives shall have received on and as of the Closing Date a favorable opinion of Davis Polk & Wardwell, counsel to the Underwriters, with respect to the validity of the Offered Securities, the conformity of the Drs. to the description thereof in 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. 38 -38- (j) 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. (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 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. (l) On or prior to the Closing Date, the Company shall have executed and delivered the Remarketing Agreement, and the Remarketing Agreement shall be satisfactory in form and substance to the Underwriters and counsel for the Underwriters. (m) 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. (n) 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. (o) 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 39 -39- 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 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 Representative designated in the Terms Agreement and set forth in the Terms Agreement. (p) There shall not have been any amendment or supplement to the Registration Statement or the Prospectus to which the Underwriters shall have objected. (q) The Company shall have complied with its obligations under Section 5(o). 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 (q) 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), (h) and (i) 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 40 -40- 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 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 was made in such preliminary prospectus and is eliminated or remedied in the Prospectus and the Company has provided such Prospectus in accordance with Section 5(b) 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 41 -41- 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 in the last paragraph of the cover page of the Prospectus Supplement and the second paragraph 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 in such proceeding and shall pay the reasonable 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 42 -42- 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 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; provided, however, that the Indemnifying Person shall not be liable for any settlement effected without its consent pursuant to this sentence if the Indemnifying Person is contesting in good faith the request for reimbursement and all other fees and expenses of counsel not so contested shall have been reimbursed. 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. 43 -43- 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 (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 44 -44- 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 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. or the American Stock Exchange, (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 shall have been declared by either U.S. Federal or New York State authorities or exchange controls shall have been imposed by the United States, or (iv) there 45 -45- 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 the aggregate principal amount of Offered Securities which it or they have agreed to purchase hereunder on such date, and the aggregate principal amount 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 principal amount 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 aggregate principal amount of Underwritten Securities set forth opposite their respective names in the annex or annexes to Exhibit I hereto bears to the aggregate principal amount of Underwritten Securities set forth opposite the names of all such non-defaulting Underwriters and (2) with respect to Option Securities, the aggregate principal amount of Underwritten Securities set forth opposite their respective names in the annex or annexes to Exhibit I hereto bears to the aggregate principal amount 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 aggregate principal amount of 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 aggregate principal amount 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 aggregate principal amount 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 46 -46- fail or refuse to purchase the aggregate principal amount of Offered Securities which it or they have agreed to purchase hereunder on such date, and the aggregate principal amount of Offered Securities with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Offered Securities to be purchased on such date, and arrangements satisfactory to the Representatives and the Company for the purchase of such aggregate principal amount of 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 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. 47 -47- 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) 525- 9067); Attention: James M. Shelger. 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. 48 -48- If the foregoing is in accordance with your understanding, please sign and return six counterparts hereof. Very truly yours, SERVICE CORPORATION INTERNATIONAL By: /s/ GREGORY L. CAUTHEN ------------------------------------- Name: Gregory L. Cauthen Title: Vice President and Treasurer CONFIRMED AND ACCEPTED, as of the date first above written J.P. MORGAN SECURITIES INC. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED MORGAN STANLEY & CO. INCORPORATED UBS SECURITIES LLC By: J.P. MORGAN SECURITIES INC. By: /s/ RAYMOND SCHMITT -------------------------------------- Name: Raymond Schmitt Title: 49 EXHIBIT I SERVICE CORPORATION INTERNATIONAL $300,000,000 6.30% Dealer remarketable securitiesSM ("Drs.SM") due March 15, 2020 TERMS AGREEMENT March 11, 1998 Service Corporation International 1929 Allen Parkway Houston, Texas 77019 Attention: James M. Shelger Ladies and Gentlemen: J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and UBS Securities LLC (the "Representatives") understand that Service Corporation International, a Texas corporation (the "Company"), proposes to issue and sell $300,000,000 aggregate principal amount of its 6.30% Dealer remarketable securitiesSM ("Drs.SM") due March 15, 2020 (the "Underwritten Securities"). The Drs. are Senior Debt Securities and are to be issued under the Senior Indenture. Subject to the terms and conditions set forth herein or incorporated by reference herein, the Underwriters named in Annex A 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 hereto at a price of 99.290% of the principal amount thereof (the "Purchase Price"). The Closing Date shall be March 16, 1998, at 9:00 A.M., New York City time, at the offices of Cahill Gordon & Reindel. The Underwritten Securities shall have the following terms: 50 -2- Title: 6.30% Dealer remarketable securitiesSM due March 15, 2020 Maturity: March 15, 2020 Initial Interest rate: 6.30% per annum until the First Remarketing Date Interest payment dates: March 15 and September 15, commencing September 15, 1998 Record Dates: March 1 and September 1 Remarketing Agreement: In consideration of the Company entering into the Remarketing Agreement with the Remarketing Dealer, the Remarketing Dealer shall pay to the Company on the Closing Date in immediately available funds an amount equal to 4.50% of the principal amount of the Drs. Redemption: The Drs. are subject to mandatory tender on March 15, 2003 and on March 15, 2010 (the "First Remarketing Date" and the "Second Remarketing Date," respectively, and, together, the "Remarketing Dates"). As further set forth in the Remarketing Agreement, if the Remarketing Dealer has elected to remarket the Drs. on a Remarketing Date (as described in the Prospectus Supplement), the Drs. will be subject to mandatory tender to the Remarketing Dealer at 100% of the principal amount thereof for remarketing on such Remarketing Date. If the Remarketing Dealer elects not to remarket the Drs. on any Remarketing Date, or for any reason does not purchase all of the Drs. on such Remarketing Date, the Company will be required to purchase on such Remarketing Date any Drs. that have not been purchased by the Remarketing Dealer at 100% of the principal amount thereof plus accrued interest, if any. As further set forth in the Remarketing Agreement, the Drs. will not be redeemable by the Company, except as indicated above and except that on either Remarketing Date the Company shall have the right to redeem the Drs., in whole but not in part, from the Remarketing Dealer at a redemption price equal to the sum of (i) 100% of the aggregate principal amount of the Drs. and (ii) the Call Price defined in the Remarketing Agreement).
51 -3- Sinking fund provisions: None Public offering price: 99.890% of the principal amount of the Drs. The foregoing is a summary of the terms of the Drs. Reference is hereby made to the Remarketing Agreement for a full description of the terms of the Drs. To the extent the foregoing description is inconsistent with the description of the Drs. set forth in the Remarketing Agreement, the Remarketing Agreement shall control. All the provisions contained in the document entitled "Underwriting Agreement -- Service Corporation International -- Debt Securities" (the "Underwriting Agreement") and dated March 11, 1998, 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(o) of the Underwriting Agreement and to give the consent specified in Section 5(h) and Section 6(o) of the Underwriting Agreement is J.P. Morgan Securities Inc. The text of the first sentence of Section 5(h) of the Underwriting Agreement is hereby deleted for purposes of the purchase and sale of the Drs. and the following shall be deemed inserted therein in lieu thereof: "For a period beginning on the Representation Date to and including the Business Day following the Closing Date, not to, and not to cause or permit any subsidiary of the Company to, directly or indirectly, effect any offer, sale or other disposition of, or registration of, any debt securities or any other long-term debt, notes or debentures of or guaranteed by the Company or any of its Subsidiaries which are substantially similar to the Drs. (which expressly shall be deemed not to include any debt securities or guarantees of debt securities issued under the S-4) without the prior written consent of J.P. Morgan Securities Inc." The additional exceptions 52 -4- to Section 5(h) of the Underwriting Agreement are: the Company may issue $200,000,000 aggregate principal amount of its 6.50% Notes due March 15, 2008, pursuant to an underwriting agreement, together with the terms agreement forming a part thereof of even date therewith, dated March 11, 1998 among the Company and J.P. Morgan Securities Inc., Chase Securities Inc., Citicorp Securities, Inc., BancAmerica Robertson Stephens and Societe Generale Securities Corporation. Any action by the Representatives hereunder may be taken by the Representatives jointly or by J.P. Morgan Securities Inc. alone on behalf of the Representatives, and any such action taken by J.P. Morgan Securities Inc. alone shall be binding upon the Representatives. Notices to the Underwriters shall be given to the Representatives c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New York 10260 (facsimile: (212) 648-5790); Attention: Syndicate Department. 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. Times referred to herein are to New York City time. 53 -5- Please accept this offer no later than 6:00 P.M. on March 11, 1998 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 March 11, 1998, 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." Very truly yours, J.P. MORGAN SECURITIES INC. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED MORGAN STANLEY & CO. INCORPORATED UBS SECURITIES LLC By: J.P. MORGAN SECURITIES INC. By: /s/ RAYMOND SCHMITT --------------------------------- Name: Raymond Schmitt Title: Accepted as of the date first above written: SERVICE CORPORATION INTERNATIONAL By: /s/ GREGORY L. CAUTHEN ----------------------------------- Name: Gregory L. Cauthen Title: Vice President and Treasurer 54
ANNEX A ------- Aggregate Principal Amount of Underwritten Securities Underwriters To Be Purchased - ------------ ---------------- J.P. Morgan Securities Inc. . . . . . . . . . . . . . . . . . . $120,000,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . . . . . . . . . . . . . . . 60,000,000 Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . 60,000,000 UBS Securities LLC . . . . . . . . . . . . . . . . . . . . . . . 60,000,000 ------------ Total: . . . . . . . . . . . . . . . . $300,000,000 ============
55 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. Investment Capital Corporation, a Texas corporation SCI Funeral Services of New York, Inc., a New York corporation SCI Funeral Services, Inc., an Iowa corporation SCI International Limited, a Delaware corporation SCI Texas Funeral Services, Inc., a Texas corporation SCIT Holdings, Inc., a Delaware corporation OGF-PFG, a French corporation Service Corporation International France, a French corporation EX-1.3 4 REMARKETING AGREEMENT 3/16/98 1 EXHIBIT 1.3 REMARKETING AGREEMENT REMARKETING AGREEMENT dated as of March 16, 1998 (the "REMARKETING AGREEMENT") between Service Corporation International, a Texas corporation (the "COMPANY"), and J.P. Morgan Securities Inc. ("JPMSI" and, in its capacity as the remarketing dealer hereunder, the "REMARKETING DEALER"). WHEREAS, the Company has issued $300,000,000 aggregate principal amount of its 6.30% Dealer remarketable securities(sm)* ("DRS."(sm)) due March 15, 2020 (the "STATED MATURITY DATE") pursuant to an Indenture dated as of February 1, 1993, as supplemented (the "INDENTURE"), between the Company and The Bank of New York, a New York banking corporation, as trustee (the "TRUSTEE"); and WHEREAS, the Drs. are being sold initially pursuant to an Underwriting Agreement dated as of March 11, 1998 (the "UNDERWRITING AGREEMENT") between the Company and JPMSI, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and UBS Securities LLC, as Underwriters; and WHEREAS, the Company has filed with the Securities and Exchange Commission (the "COMMISSION") a registration statement (No. 333-10867) under the Securities Act of 1933, as amended (the "SECURITIES ACT"), in connection with the offering of debt securities, including the Drs., which registration statement was declared effective by order of the Commission, and has filed such amendments thereto and such amended or supplemented prospectuses as may have been required to the date hereof, and will file such additional amendments and supplements thereto and such additional amended or supplemented prospectuses as may hereafter be required (such registration statement, including any amendments and supplements thereto, and all documents incorporated therein by reference, as from time to time amended or supplemented pursuant to the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the Securities Act, or otherwise, are referred to herein as the "REGISTRATION STATEMENT"); all preliminary and final prospectuses relating to such Registration Statement used in connection with the offering of Drs., including the documents incorporated by reference therein, are referred to herein collectively as the "PROSPECTUS"; provided that, if any new or revised prospectus shall be p rovided to the Remarketing Dealer by the Company for use in connection with any remarketing of the Drs. which differs from the Prospectus filed with the - ----------------- *"Dealer remarketable securities(sm)" and "Drs.(sm)" are service marks of J.P. Morgan Securities Inc. 2 Commission at the time of the initial issuance of the Drs. (whether or not such new or revised prospectus is required to be filed by the Company pursuant to Rule 424(b) under the Securities Act), the term "PROSPECTUS" shall refer to such new or revised prospectus from and after the time it is first provided to the Remarketing Dealer for such use, and the term "REGISTRATION STATEMENt" shall refer to the Registration Statement as deemed amended by the prospectus so provided or any new registration statement of which such prospectus is a part; and WHEREAS, JPMSI is prepared to act as the Remarketing Dealer with respect to the first remarketing of the Drs. (the "FIRST REMARKETING") on March 15, 2003 (the " FIRST REMARKETING DATE") and with respect to the second remarketing of the Drs. (the "SECOND REMARKETING," and, together with the First Remarketing, the "REMARKETING") on March 15, 2010 (the "SECOND REMARKETING DATE," and, together with the First Remarketing Date, the "REMARKETING DATES"), in each case pursuant to the terms of, but subject to the conditions set forth in, this Agreement; NOW, THEREFORE, for and in consideration of the covenants herein made, and subject to the conditions herein set forth, the parties hereto agree as follows: SECTION 1. Definitions. "BUSINESS DAY" means any day other than a Saturday or Sunday or other day on which banking institutions in the City of New York are authorized or obligated by law, executive order or governmental decree to be closed. SECTION 2. Representations and Warranties. (a) The Company represents and warrants to the Remarketing Dealer as of the date hereof, each Notification Date (as defined below), each Determination Date (as defined below) and each Remarketing Date (each of the foregoing dates being hereinafter referred to as a "REPRESENTATION DATE"), as follows: (i) It has filed all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (collectively, the "EXCHANGE ACT DOCUMENTS"). (ii) The applicable Remarketing Materials (as defined below) will not, as of their date or any Remarketing Date, include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2 3 (iii) The representations and warranties contained in the Underwriting Agreement are true and correct in all material respects with the same force and effect as though expressly made at and as of each Representation Date; provided that, for purposes of this Agreement, representations and warranties in the Underwriting Agreement shall be deemed modified by the Exchange Act Documents, as well as any new or revised registration statement and new or revised prospectus required by subsection 3(f) hereof (provided further, however, that no such modification shall reflect, either singly or in the aggregate, a material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, business, prospects, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a whole), and the date as of which such representations and warranties are made shall include each Representation Date. (iv) Since the respective dates as of which information is given in the Remarketing Materials or the Exchange Act Documents, there has not been any material change in the capital stock or long-term debt of the Company or any of its subsidiaries, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, business, prospects, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Remarketing Materials or the Exchange Act Documents. Except as set forth or contemplated in the Remarketing Materials or the Exchange Act Documents, neither the Company nor any of its subsidiaries has entered into any transaction or agreement (whether or not in the ordinary course of business) material to the Company and its subsidiaries, taken as a whole. (v) This Agreement has been duly authorized, executed and delivered by the Company. (vi) The issue and sale of the Drs. and the performance by the Company of all of its obligations under the Drs., the Indenture and this Agreement and the consummation of the transactions herein and therein contemplated will not (i) conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) 3 4 result in any violation of the provisions of the Certificate of Incorporation or the By-Laws of the Company or (iii) result in a violation of any applicable law or statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company, its subsidiaries or any of their respective properties, except in the case of clause (i) or (iii) above where such breach or violation (other than a violation of federal or state securities laws) will not result in a material adverse change in the general affairs, business, prospects, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a whole. No consent, approval, authorization, order, license, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Drs. or the consummation by the Company of the transactions contemplated by this Agreement or the Indenture, except such as have already been obtained and except as may be required under the blue sky laws of any jurisdiction. (vii) The Drs. conform in all material respects to the description thereof contained in the Prospectus. (b) Additional Certifications. Any certificate signed by any director or officer of the Company and delivered to the Remarketing Dealer or to counsel for the Remarketing Dealer in connection with the remarketing of the Drs. shall be deemed a representation and warranty by the Company to the Remarketing Dealer as to the matters covered thereby. SECTION 3. Covenants of the Company. The Company covenants with the Remarketing Dealer as follows: (a) The Company will provide prompt notice by telephone, confirmed in writing (which may include facsimile or other electronic transmission), to the Remarketing Dealer of the occurrence: (i) at any time of any event set forth in clause (i), (ii) or (iii) of subsection 8(c), or of any amendment to the Indenture (including the Drs.); and (ii) in connection with each Remarketing, on or after the relevant Notification Date, of any event set forth in clauses (i) or (ii) of subsection 8(d). (b) The Company will furnish to the Remarketing Dealer upon request: 4 5 (i) each Registration Statement and the Prospectus relating to the Drs. (including in each case any amendment or supplement thereto and each document incorporated therein by reference); (ii) each Exchange Act Document filed after the date hereof; and (iii) such other information relating to the Company and the Drs. as the Remarketing Dealer may reasonably request from time to time for use in connection with the remarketing of the Drs. The Company agrees to provide the Remarketing Dealer with as many copies of the foregoing written materials and information as the Remarketing Dealer may reasonably request for use in connection with the remarketing of Drs. and consents to the use thereof for such purpose. (c) If, at any time within three months of the Remarketing Date, any event or condition known to the Company relating to or affecting the Company, any subsidiary thereof or the Drs. shall occur which could reasonably be expected to cause any of the materials or information referred to in subsection (b) above or any document incorporated therein by reference (collectively, the "REMARKETING MATERIALS") to contain an untrue statement of a material fact or omit to state a material fact, the Company shall promptly notify the Remarketing Dealer in writing of the circumstances and details of such event or condition. (d) So long as the Drs. are outstanding, the Company will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and the rules and regulations thereunder. (e) The Company will comply with the Securities Act, the Exchange Act, the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT") and the rules and regulations of the Commission thereunder so as to permit the completion of the remarketing of the Drs. as contemplated in (i) this Agreement, (ii) the Prospectus first used to confirm sales of the Drs. when the Drs. were originally issued, and (iii) the prospectuses, if any, used in connection with the Remarketings. (f) If a new or amended Registration Statement in respect of the Drs. is in the opinion of counsel for the Remarketing Dealer or for the Company necessary to sell Drs. on an unrestricted basis on the relevant Remarketing Date, then the Company, at its expense, will, on or before such Remarketing Date: 5 6 (i) prepare and file with the Commission such amended or new Registration Statement (including a Prospectus) covering such sale of Drs. by the Remarketing Dealer, and cause such Registration Statement to become effective on or prior to such Remarketing Date; (ii) furnish to the Remarketing Dealer such number of copies of such Prospectus as the Remarketing Dealer may reasonably request; (iii) furnish to the Remarketing Dealer an officers' certificate, an opinion, including a statement as to the absence of material misstatements in or omissions from the Registration Statement and the Prospectus, of Liddell, Sapp, Zivley, Hill & LaBoon, LLP or such other counsel to the Company reasonably satisfactory to the Remarketing Dealer and a "comfort letter" from the Company's independent accountants, in each case dated as of such Remarketing Date and in form and substance satisfactory to the Remarketing Dealer, of the same tenor as the officers' certificate, opinion and comfort letter, respectively, delivered to satisfy the closing conditions of the Underwriting Agreement, but modified to relate to such new or amended Registration Statement and the Prospectus; and (iv) provide to the Remarketing Dealer and any other securities dealer participating in the remarketing of the Drs. the opportunity to conduct an underwriters' due diligence investigation of the Company in a scope customarily provided in connection with a public offering of the Company's debt securities. Furthermore, if at any time when, in the opinion of counsel for the Remarketing Dealer, a prospectus is required by the Securities Act to be delivered in connection with sales of the Drs., any event shall occur or condition shall exist as a result of which it is necessary to amend the Registration Statement or amend or supplement the Prospectus in order that such Prospectus will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it is necessary to amend or supplement the Prospectus to comply with law, the Company, at its expense, will promptly furnish to the Remarketing Dealer such amendments or supplements to the Prospectus as may be needed 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. The Company agrees to reimburse the Remarketing Dealer for all of its reasonable out-of-pocket expenses (including reasonable fees and disbursements 6 7 of counsel) incurred in connection with any remarketing under circumstances described in this subsection 3(f). (g) The Company agrees that neither it nor any of its subsidiaries or affiliates shall purchase or otherwise acquire, or enter into any agreement to purchase or otherwise acquire, any of the Drs. on or prior to the Second Remarketing, other than a repurchase of the Drs. in accordance with subsection 4(g) or a redemption of the Drs. in accordance with subsection 4(h). (h) The Company will comply with each of the covenants set forth in the Underwriting Agreement. (i) In connection with each Remarketing, the Company will arrange for the qualification of the Drs. for sale under the laws of such jurisdictions as the Remarketing Dealer may designate, and will maintain such qualifications in effect so long as required for the relevant Remarketing; the Company will pay all expenses in connection with such qualification, including the fees and disbursements of counsel for any dealers participating in the remarketing in connection with such qualification and in connection with blue sky and legal investment surveys. (j) During each five Business Day period ending on the First Remarketing Date or the Second Remarketing Date, as the case may be, the Company will not, without the consent of the Remarketing Dealer, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce the offering of, any debt securities, except debt securities issued to owners of facilities in connection with the acquisition by the Company or any of its subsidiaries of such facilities. SECTION 4. Appointment and Obligations of the Remarketing Dealer. (a) Unless this Agreement is otherwise terminated in accordance with Section 10 hereof, in accordance with the terms, but subject to the conditions, of this Agreement, the Company hereby appoints JPMSI, and JPMSI hereby accepts such appointment, as the exclusive Remarketing Dealer with respect to the Drs., subject further to (i) the obligation of the Company to repurchase the Drs. in accordance with subsection 4(g) or (ii) the option of the Company to redeem the Drs. in accordance with subsection 4(h) hereof. (b) In connection with each Remarketing, the obligations of the Remarketing Dealer hereunder to purchase the tendered Drs. on the relevant Remarketing Date, to determine the relevant Reset Interest Rate pursuant to subsection 4(d) below and to remarket the Drs. are conditioned on: 7 8 (i) the issuance and delivery of such Drs. pursuant to the terms and conditions of the Underwriting Agreement; (ii) the Remarketing Dealer's election on the relevant Notification Date to purchase the Drs. for remarketing on the relevant Remarketing Date; and (iii) satisfaction on the relevant Remarketing Date of all the conditions set forth in Section 8 hereof, as determined in the Remarketing Dealer's sole discretion. (c) On a Business Day not later than fifteen Business Days prior to each Remarketing Date (each a "NOTIFICATION DATE"), the Remarketing Dealer will notify the Company and the Trustee as to whether it elects to purchase the Drs. on such Remarketing Date. If, and only if, the Remarketing Dealer so elects with respect to such Remarketing Date, the Drs. shall be subject to mandatory tender to the Remarketing Dealer for purchase and remarketing on such Remarketing Date, upon the terms and subject to the conditions described herein. The purchase price of the Drs. shall be equal in each case to 100% of the principal amount thereof. (d) The Remarketing Dealer shall determine a new stated interest rate on the Drs. as of the First Remarketing Date (the "INTEREST RATE TO THE SECOND REMARKETING DATE") and as of the Second Remarketing Date (the "INTEREST RATE TO MATURITY", and, together with the Interest Rate to the Second Remarketing Date, the "RESET INTEREST RATES") as follows: on the third Business Day immediately preceding the relevant Remarketing Date (each a "DETERMINATION DATE") by 3:30 p.m., New York City time, the Remarketing Dealer shall solicit the Reference Corporate Dealers (defined below) for firm, committed bids to purchase all outstanding Drs. at the Dollar Price (defined below), and by selecting the lowest such firm, committed bid (regardless of whether each of the Reference Corporate Dealers actually submits a bid). Each bid shall be expressed in terms of the relevant Reset Interest Rate that the Drs. would bear (quoted as a spread over 5.63% per annum (the "BASE RATE")), based on the following assumptions: (i) the Drs. would be sold to such Reference Corporate Dealer on the relevant Remarketing Date for settlement on the same day; (ii) the Drs. would mature on the Second Remarketing Date or the Stated Maturity Date, as the case may be; and (iii) the Drs. would bear interest at a stated rate equal to the rate bid by such Reference Corporate Dealer, payable semi-annually on the interest payment dates for the Drs., from and including the First 8 9 Remarketing Date to but excluding the Second Remarketing Date, or from and including the Second Remarketing Date to but excluding the Stated Maturity Date, as the case may be. The relevant Reset Interest Rate announced by the Remarketing Dealer as a result of such process will be quoted to the nearest one hundred-thousandth (0.00001) of one percent per annum and, absent manifest error, will be binding and conclusive upon holders of the Drs., the Company and the Trustee. Subject only to subsection 4(e) below, the Remarketing Dealer shall have the discretion to select the time at which each Reset Interest Rate is determined on the relevant Determination Date. The Remarketing Dealer shall have the right in its sole discretion to either (i) remarket the Drs. for its own account or (ii) sell the Drs. to the Reference Corporate Dealer submitting the lowest firm, committed bid pursuant to this subsection 4(d). In the event that two or more Reference Corporate Dealers submit equivalent bids which constitute the lowest firm, committed bid, the Remarketing Dealer may in its sole discretion elect to sell the Drs. to any such Reference Corporate Dealer. "DOLLAR PRICE" means, with respect to each Remarketing Date, the greater of (1) 100% of the principal amount of the Drs. and (2) the discounted present value to such Remarketing Date of the cash flows on a bond (x) with a principal amount equal to the aggregate principal amount of the Drs., (y) maturing on (i) the Second Remarketing Date (in the case of a determination made in connection with the First Remarketing), or (ii) the Stated Maturity Date (in the case of a determination made in connection with the Second Remarketing) and (z) bearing interest at a rate equal to the Base Rate, using a discount rate equal to the Treasury Rate (defined below), payable semi-annually (assuming a 360-day year consisting of twelve 30-day months) on the interest payment dates of the Drs. (i) in the case of a determination made in connection with the First Remarketing, from the First Remarketing Date to the Second Remarketing Date, or 9 10 (ii) in the case of a determination made in connection with the Second Remarketing, from the Second Remarketing Date to the Stated Maturity Date. "REFERENCE CORPORATE DEALER" means J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, UBS Securities LLC, Merrill, Lynch, Pierce, Fenner & Smith Incorporated and Chase Securities Inc. If any of such persons shall cease to be a leading dealer of publicly-traded debt securities of the Company, then the Remarketing Dealer may, with the approval of the Company (not to be unreasonably withheld), replace such person with any other leading dealer of publicly-traded debt securities of the Company. "TREASURY RATE" means, with respect to each Determination Date, the annual rate equal to the semi-annual equivalent yield to maturity or interpolated (on a 30/360 day count basis) yield to maturity on such Determination Date of the Comparable Treasury Issue (defined below) for value on the relevant Remarketing Date, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price (as defined below). "COMPARABLE TREASURY ISSUE" means, with respect to each Determination Date, the United States Treasury security selected by the Remarketing Dealer as having an actual maturity on such Determination Date (or the United States Treasury securities selected by the Remarketing Dealer to derive an interpolated maturity on such Determination Date) comparable to (i) the time remaining to the Second Remarketing Date (in the case of a determination made in connection with the First Remarketing), or (ii) the remaining term of the Drs. (in the case of a determination made in connection with the Second Remarketing). "COMPARABLE TREASURY PRICE" means, with respect to each Determination Date, (a) the offer price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) on such Determination Date, as set forth on Telerate Page 500 (as defined below), adjusted to reflect settlement on the relevant Remarketing Date, if prices quoted on Telerate Page 500 are for settlement on any date other than such Remarketing Date, or (b) if such page (or any successor page) is not displayed or does not contain such offer prices on such Business Day, (i) the average of five Reference Treasury Dealer Quotations (as defined below) for such Remarketing Date, excluding the highest and lowest of such Reference Treasury Dealer Quotations (unless there is more than one highest or lowest quotation, in which case only one such highest and/or lowest quotation shall be excluded), or (ii) if the Remarketing Dealer obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations. 10 11 "TELERATE PAGE 500" means the display designated as "Telerate Page 500" on Dow Jones Markets Limited (or such other page as may replace Telerate Page 500 on such service) or such other service displaying the offer prices specified in (a) above as may replace Dow Jones Markets Limited. "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each Determination Date and each Reference Treasury Dealer, the offer price(s) for the Comparable Treasury Issue (expressed as a percentage of its principal amount) for settlement on the relevant Remarketing Date, quoted in writing to the Remarketing Dealer by such Reference Treasury Dealer by 3:30 p.m., New York City time, on such Determination Date. The Remarketing Dealer shall have the discretion to select the time at which the Comparable Treasury Price is determined on such Determination Date. "REFERENCE TREASURY DEALER" means a primary U.S. Government securities dealer in The City of New York (which may include the Remarketing Dealer) selected by the Remarketing Dealer. (e) In connection with each Remarketing, if the Remarketing Dealer has elected to remarket the Drs. as provided in subsections 4(c) and 4(d), then it shall notify the Company, the Trustee and The Depository Trust Company ("DTC") by telephone, confirmed in writing (which may include facsimile or other electronic transmission), by 5:00 p.m., New York City time, on the Determination Date for such Remarketing of the relevant Reset Interest Rate applicable to the Drs. effective (i) from and including the First Remarketing Date to but excluding the Second Remarketing Date, or (ii) from and including the Second Remarketing Date to but excluding the Stated Maturity Date, as the case may be. (f) If any Remarketing is done as provided herein then, subject to Section 8 hereof, the Remarketing Dealer will make, or cause the Trustee to make, payment to DTC by the close of business on the relevant Remarketing Date against delivery through DTC of the Drs. tendered in such Remarketing, of the purchase price for all of the Drs. so tendered. The purchase price of the Drs. tendered in such Remarketing will be equal to 100% of the principal amount thereof and shall be paid in immediately available funds. (g) If the Remarketing Dealer (i) does not elect to purchase the Drs. for the relevant Remarketing pursuant to subsection 4(c); (ii) shall not have received by the required time on the relevant Determination Date any firm, committed bids to purchase all of the Drs. pursuant to subsection 4(d); or (iii) for any reason does not purchase all of the Drs. on the relevant Remarketing Date, then the Company shall repurchase on such Remarketing Date any Drs. that have not been purchased by the Remarketing Dealer at a price equal to 100% of the principal amount of 11 12 such Drs. plus all accrued interest, if any, on such Drs. to (but excluding) such Remarketing Date. The Remarketing Dealer shall notify the Company promptly about the occurrence of circumstances set forth in clause (ii) or (iii) above. (h) If the Remarketing Dealer has elected to remarket the Drs. on the relevant Remarketing Date in accordance with subsection 4(c) hereof, the Company may irrevocably elect to exercise its right to redeem the Drs., in whole but not in part, from the Remarketing Dealer on such Remarketing Date, by giving written notice of such election to the Remarketing Dealer no later than the later of (i) the Business Day immediately prior to the relevant Determination Date or (ii) if fewer than three Reference Corporate Dealers submit firm, committed bids in accordance with subsection 4(d) hereof, immediately after the deadline set by the Remarketing Dealer for receiving such bids has passed; and by paying the amount equal to the sum of (x) 100% of the aggregate principal amount of the Drs. and (y) the Call Price (as defined in Section 10). In either such case, the Company shall pay such redemption price for the Drs. in same-day funds by wire transfer on such Remarketing Date to an account designated by the Remarketing Dealer. For purposes of calculating the Call Price, the Remarketing Dealer shall be deemed to have made the request for the Call Price on the date the Company makes its election to redeem the Drs. If the Company exercises its right to redeem the Drs. pursuant to clause (ii) above, it shall promptly reimburse the Remarketing Dealer for any and all expenses (including any and all hedge losses resulting from intra-day hedging associated with the determination of the Dollar Price on the Determination Date by the Remarketing Dealer) incurred by the Remarketing Dealer in connection with its having to break such associated intra-day hedging transactions to enable the Company to exercise such redemption right. If any such broken hedges result in a profit to the Remarketing Dealer, the Remarketing Dealer shall promptly pay such profit over to the Company. The amount of any hedge losses or profits shall be calculated by the Remarketing Dealer. (i) In accordance with the terms and provisions of the Drs., the tender and settlement procedures set forth in this Section 4, shall be subject to modification without the consent of the holders of the Drs., to the extent required by DTC or, if the book-entry system is no longer available for the Drs. at the time of either Remarketing, to the extent required to facilitate the tendering and 12 13 remarketing of Drs. in certificated form. In addition, the Remarketing Dealer may, without the consent of the holders of the Drs., modify the settlement procedures set forth in the Indenture and/or the Drs. in order to facilitate the settlement process. (j) In accordance with the terms and provisions of the Drs., the Company hereby (i) agrees that at all times, it will use its best efforts to maintain the Drs. in book-entry form with DTC or any successor thereto and to appoint a successor depositary to the extent necessary to maintain the Drs. in book-entry form and (ii) waives any discretionary right it otherwise may have under the Indenture to cause the Drs. to be issued in certificated form. SECTION 5. Fees and Expenses. Subject to subsection 3(f), the last paragraph of subsection 4(h) and Section 10 hereof, the Remarketing Dealer will not receive any fees or reimbursement of expenses from the Company for its remarketing services set forth herein. SECTION 6. Resignation of the Remarketing Dealer. The Remarketing Dealer may resign and be discharged from its duties and obligations hereunder at any time, such resignation to be effective ten Business Days after delivery of a written notice to the Company and the Trustee of such resignation. The Remarketing Dealer also may resign and be discharged from its duties and obligations hereunder at any time, such resignation to be effective immediately, upon termination of this Agreement in accordance with subsection 10(b) hereof. The Company shall have the right, but not the obligation, to appoint a successor Remarketing Dealer. SECTION 7. Dealing in the Drs.; Purchase of Drs. by the Company; Incorporation by Reference of Master Agreement. (a) JPMSI, when acting as the Remarketing Dealer or in its individual or any other capacity, may, to the extent permitted by law, buy, sell, hold and deal in any of the Drs. JPMSI, as holder or beneficial owner of the Drs., may exercise any vote or join as a holder or beneficial owner, as the case may be, in any action which any holder or beneficial owner of Drs. may be entitled to exercise or take pursuant to the Indenture with like effect as if it did not act in any capacity hereunder. The Remarketing Dealer, in its capacity either as principal or agent, may also engage in or have an interest in any financial or other transaction with the Company as freely as if it did not act in any capacity hereunder. (b) The Company may purchase Drs. in the Second Remarketing, provided that the relevant Reset Interest Rate established with respect to Drs. in such Remarketing is not different from the Reset Interest Rate that would have 13 14 been established if the Company had not purchased such Drs. in such Remarketing. (c) Reference is made to the ISDA Master Agreement dated as of July 1, 1996 (the "MASTER AGREEMENT") between Morgan Guaranty Trust Company of New York ("MGT") and the Company, including, without limitation the Schedule thereto and the Credit Support Annex dated as of July 1, 1996; provided that if the Master Agreement is terminated, then, for the purposes hereof, the Master Agreement shall mean the Master Agreement as of the date of termination. The Company and JPMSI hereby agree to be bound by the Credit Enhancement provisions set forth in Part 5 Sections 11 through 13 of the Schedule to the Master Agreement and the Credit Support Annex, as if JPMSI were MGT and as if the Company's obligations hereunder to pay the Call Price were the only Transaction (within the meaning of the Master Agreement). In the event the Company is required to post collateral pursuant to the provisions of the Master Agreement incorporated herein, then, at the request of JPMSI, the Company will enter into an agreement with JPMSI in the form substantially similar to the Master Agreement (including, without limitation, Part 5 Sections 11 through 13 of the Schedule and the Credit Support Annex) with respect to such collateral, and such agreement will supersede and replace this paragraph. In the event of any inconsistency between the provisions of this Agreement and the provisions of the Master Agreement incorporated herein, this Agreement shall prevail. SECTION 8. Conditions to Remarketing Dealer's Obligations. In connection with each Remarketing, the obligations of the Remarketing Dealer to purchase the Drs. on the relevant Remarketing Date in accordance with the provisions of this Agreement, to determine the relevant Reset Interest Rate pursuant to subsection 4(d), and to remarket the Drs. in such Remarketing have been undertaken in reliance on, and are subject to, the following conditions: (a) the due performance in all material respects by the Company of its obligations and agreements as set forth in this Agreement and the accuracy in all material respects of the representations and warranties in this Agreement and any certificate delivered pursuant hereto; (b) the due performance in all material respects by the Company of its obligations and agreements set forth in, and the accuracy in all material respects as of the dates specified therein of the representations and warranties contained in, the Underwriting Agreement; (c) none of the following events shall have occurred at any time on or prior to the relevant Remarketing Date: 14 15 (i) an Event of Default (as defined in the Indenture), or any event which, with the giving of notice or passage of time, or both, would constitute an Event of Default thereunder, with respect to the Drs. shall have occurred and be continuing; (ii) an Event of Default (as defined in the Master Agreement) shall have occurred and be continuing under the Master Agreement (whether or not the Master Agreement shall have terminated); (iii) the Company shall have failed to comply with the provisions of the Master Agreement (as incorporated herein pursuant to Section 7(c) above) or any agreement entered into pursuant to Section 7(c) above or an event shall have occurred thereunder, if such failure or such an occurrence is continuing and constitutes an Event of Default (as defined in the Master Agreement or such other agreement entered into pursuant to Section 7(c), as the case may be); or (iv) without the prior written consent of the Remarketing Dealer, the Indenture (including the Drs.) shall have been amended in any manner, or otherwise contain any provision not contained therein as of the date hereof, that in either case in the judgment of the Remarketing Dealer materially changes the nature of the Drs. or the remarketing procedures; (d) in connection with such Remarketing, none of the following events shall have occurred after the Remarketing Dealer elects on the relevant Notification Date to purchase the Drs.: (i) there shall have occurred any downgrading, or any notice shall have been given of (A) any downgrading, (B) any intended or potential downgrading or (C) any review or possible change that does not indicate an improvement, in the rating accorded any debt 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; (ii) trading of any securities of, or guaranteed by, the Company shall have been suspended on any exchange or in any over-the-counter market; (iii) a material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, business, prospects, management, financial position, stockholders' equity 15 16 or results of operations of the Company and its subsidiaries, taken as a whole, the effect of which is such as to make it, in the judgment of the Remarketing Dealer, impracticable or inadvisable to remarket the Drs. or to enforce contracts for the sale of the Drs.; (iv) if a prospectus is required under the Securities Act to be delivered in connection with such Remarketing, the Company shall fail to furnish to the Remarketing Dealer on the relevant Remarketing Date the officers' certificate, opinion and comfort letter referred to in subsection 3(f) of this Agreement and such other documents and opinions as counsel for the Remarketing Dealer may reasonably require for the purpose of enabling such counsel to pass upon the sale of Drs. in such Remarketing as herein contemplated and related proceedings, or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; (v) 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 American Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade; or a general moratorium on commercial banking activities in New York shall have been declared by either Federal or New York State authorities; (vi) 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 Remarketing Dealer, is material and adverse and which, in the judgment of the Remarketing Dealer, makes it impracticable to remarket the Drs. or to enforce contracts for the sale of the Drs.; (vii) the Treasury Rate used to determine the Dollar Price on the relevant Determination Date exceeds the Base Rate; or (viii) the Remarketing Dealer shall not have received by the required time on the relevant Determination Date any firm, committed bids to purchase all of the Drs. in accordance with subsection 4(d) hereof; (e) the Remarketing Dealer shall have received (as soon as practicable following notification by the Remarketing Dealer to the Company on the relevant Notification Date of its election to purchase the Drs. and in any event prior to the relevant Determination Date) a certificate of any of the Chief Financial Officer, the Treasurer, or the Controller of the Company, satisfactory to the Remarketing Dealer, dated as of the relevant Notification Date, to the following effect: 16 17 (i) the Company has, prior to the Remarketing Dealer's election on such Notification Date to remarket the Drs., provided the Remarketing Dealer with notice of all events as required under subsection 3(a) of this Agreement; (ii) the representations and warranties in this Agreement are true and correct in all material respects at and as of such Notification Date; and (iii) the Company has complied in all material respects with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to such Notification Date; and (f) the Remarketing Dealer shall have received on the relevant Remarketing Date a certificate of any of the Chief Financial Officer, the Treasurer or the Controller of the Company, satisfactory to the Remarketing Dealer, dated as of such Remarketing Date, to the following effect: (i) the representations and warranties in this Agreement are true and correct in all material respects with the same force and effect as though expressly made at and as of such Remarketing Date; (ii) the Company has complied in all material respects with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to such Remarketing Date; (iii) no material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, business prospects, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a whole, shall have occurred since the date of the most recent financial statements of the Company filed with the Commission; and (iv) the conditions specified in clauses (i), (ii) and (iii) of subsection 8(c) and clauses (i) and (ii) of subsection 8(d) of this Agreement have been satisfied. SECTION 9. Indemnification. (a) The Company agrees to indemnify and hold harmless the Remarketing Dealer and each person, if any, who controls the Remarketing Dealer 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 reasonable legal fees 17 18 and other expenses incurred in connection with any suit, action or proceeding or any claim asserted): (i) arising out of the failure to have an effective registration statement under the Securities Act relating to the Drs., if required, or the failure to satisfy the prospectus delivery requirements of the Securities Act because the Company failed to notify the Remarketing Dealer of such delivery requirement or failed to provide the Remarketing Dealer with a prospectus for delivery, (ii) caused by any untrue statement or alleged untrue statement of a material fact contained in any of the Remarketing Materials 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 the Remarketing Dealer furnished to the Company in writing by the Remarketing Dealer expressly for use therein, or (iii) any violation by the Company of, or any failure by the Company to perform any of its obligations under, this Agreement, or (iv) the acts or omissions of the Remarketing Dealer in connection with its duties and obligations hereunder, except to the extent finally judicially determined to be due primarily to its gross negligence or willful misconduct. (b) The Remarketing Dealer agrees to indemnify and hold harmless the Company, its directors and its officers and each person who controls the Company within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Remarketing Dealer in subsection 9(a)(ii) of this Agreement, but only with reference to information relating to such Remarketing Dealer furnished to the Company in writing by such Remarketing Dealer expressly for use in any of the Remarketing Materials. (c) 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 either of the two preceding paragraphs, such person (the "INDEMNIFIED PERSON") shall promptly notify the person against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing, and the Indemnifying Person, upon request 18 19 of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person in such proceeding and shall pay the reasonable 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) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in 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 the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for the Remarketing Dealer and its directors and officers shall be designated in writing by it and any such separate firm for the Company, its directors and its officers who sign the Registration Statement and such control persons of the Company or authorized representatives 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. (d) Notwithstanding the foregoing subsection (c), 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 such subsection (c), 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; provided, however, that the Indemnifying Person shall not be liable for any settlement effected without its consent pursuant to this sentence 19 20 if the Indemnifying Person is contesting in good faith the request for reimbursement and all other fees and expenses of counsel not so contested shall have been reimbursed. 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 includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding. (e) If the indemnification provided for in subsections 9(a) and 9(b) is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to, then each Indemnifying Person, 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 (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Remarketing Dealer, on the other hand, from the remarketing of the Drs. or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such propor tion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Remarketing Dealer, 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. With respect to either Remarketing, the relative benefits received by the Company, on the one hand, and the Remarketing Dealer, on the other, shall be deemed to be in the same respective proportions as the aggregate principal amount of the Drs. bears to the amount, if any, by which the price at which the Drs. are sold by the Remarketing Dealer in such Remarketing exceeds the price paid by the Remarketing Dealer for the Drs. tendered on the relevant Remarketing Date plus, in the case of the First Remarketing, the value (if any) of the remaining embedded interest rate option, as reasonably determined by the Remarketing Dealer. The relative fault of the Company, on the one hand, and the Remarketing Dealer, 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 Remarketing Dealer and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (f) The Company and the Remarketing Dealer agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding 20 21 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 incurred by such Indemnified Person in connection with investigating or defending any such action or claim. (g) Notwithstanding the provisions of this Section 9, in no event shall the Remarketing Dealer be required to contribute any amount in excess of the amount by which the total price at which the Drs. remarketed by it and distributed to the public were offered to the public exceeds the amount of any damages that such Remarketing Dealer 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 remedies provided for in this Section 9 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law of in equity. (h) The indemnity and contribution agreements of the Company and the Remarketing Dealer contained in this Section 9 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement and (ii) any investigation made by or on behalf of the Remarketing Dealer or any person controlling the Remarketing Dealer or by or on behalf of the Company, its officers or directors or any other person controlling the Company. SECTION 10. Termination of Remarketing Agreement. (a) This Agreement shall terminate as to the Remarketing Dealer on the earliest of (i) the effective date of the resignation of the Remarketing Dealer pursuant to Section 6; (ii) the date of the occurrence of any of the events described in clauses (i) through (iii) of subsection 4(g); or (iii) the date the Company gives notice of its intention to redeem all of the outstanding Drs. in accordance with subsection 4(h). (b) In addition, the Remarketing Dealer may terminate all of its obligations under this Agreement immediately by notifying the Company and the Trustee of its election to do so, at any time on or before either Remarketing Date, if: 21 22 (i) any of the conditions referred to or set forth in subsection 8(a) or (b) hereof have not been met or satisfied in full or any of the events set forth in subsection 8(c) or 8(d) shall have occurred; or (ii) the Remarketing Dealer determines, in its sole discretion, after consultation with the Company, that there is material, non-public information about the Company that is not available to the Remarketing Dealer which is necessary for it to fulfill its obligations under this Agreement. (c) If this Agreement is terminated pursuant to this Section 10, such termination shall be without liability of any party to any other party, except that, in the case of a termination resulting from a failure to observe the conditions set forth in subsections 8(a) or 8(b), or the occurrence of any of the events set forth in subsection 8(c) or any of clauses (i) through (iv) of subsection 8(d), the Company shall reimburse the Remarketing Dealer for all of its reasonable out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Remarketing Dealer. Section 9 and subsections 4(h), 10(c) and 10(d) shall survive such termination and remain in full force and effect. (d) Upon: (i) the termination of this Agreement pursuant to subsection 10(b) (except as a result of any event described in subsection 8(d)(vii) and subject to the Remarketing Dealer's obligation to comply with Section 4(d) hereof), or (ii) a repurchase by the Company of any Drs. due to a failure by the holder thereof to deliver the Drs. to the Remarketing Dealer against payment therefor in connection with a mandatory tender, then, upon the request of the Remarketing Dealer, the Company shall pay the Call Price (as defined below) to the Remarketing Dealer. The Remarketing Dealer shall promptly notify the Company of the Call Price by telephone, confirmed in writing (which may include facsimile or other electronic transmission). The Call Price shall be paid in same-day funds by wire transfer to an account designated by the Remarketing Dealer and shall be paid as soon as practicable, and in any event not later than the earlier of (x) three Business Days after written notification to the Company and (y) the first Remarketing Date after notification to the Company. 22 23 "CALL PRICE" means the fair market value of the embedded interest rate option implicit in the Remarketing Dealer's right to purchase at par and remarket on each Remarketing Date, pursuant to this Agreement, of any Drs. not purchased (due to the prior termination of this Agreement or otherwise) by the Remarketing Dealer on the relevant Remarketing Date (such principal amount of Drs., the "UNPURCHASED DRS."). This amount shall equal: (i) if the Remarketing Dealer's request for the Call Price payment is made before the first Determination Date, the Commercially Reasonable Option Value (as defined below) on the date of such request; (ii) if the Remarketing Dealer's request for the Call Price payment is made on or after the first Determination Date and on or prior to the First Remarketing Date, the amount, if positive, equal to: (1) the Commercially Reasonable Option Value, determined as if the date of determination thereof was the first day after the First Remarketing Date; plus (2)(a) the Drs. Premium for the first Determination Date; multiplied by (b)(x) the Unpurchased Drs. on the First Remarketing Date; divided by (y) the Original Amount of Drs. "ORIGINAL AMOUNT OF DRS." means the principal amount of the Drs. issued by the Company on the date hereof; and "DRS. PREMIUM" equals the Dollar Price relating to the relevant Determination Date less the Original Amount of Drs.; (iii) if the Remarketing Dealer's request for a Call Price payment is made after the First Remarketing Date but before the second Determination Date, the amount equal to the Commercially Reasonable Option Value on the date of such request; 23 24 (iv) if the Remarketing Dealer's request for the Call Price payment is made on or after the second Determination Date, an amount (if positive) equal to: (1) the Drs. Premium for the second Determination Date; multiplied by (2)(a) the Unpurchased Drs. on the Second Remarketing Date; divided by (b) the Original Amount of Drs. "COMMERCIALLY REASONABLE OPTION VALUE" means, on any specified date, the amount determined by the Remarketing Dealer on such date under Section 6(e) of the Master Agreement on a "Market Quotation" basis in respect of the embedded interest rate option(s) implicit in the Remarketing Dealer's option to purchase at par the Unpurchased Drs. on each remaining Remarketing Date, as if a "Termination Event" had occurred on such specified date under such interest rate option with respect to the Company under the Master Agreement and the Company was the "Affected Party". The determination of the Commercially Reasonable Option Value shall be made using the provisions of the Master Agreement regardless of any termination of the Master Agreement. The Remarketing Dealer's determination of the Call Price, absent manifest error, shall be binding and conclusive upon the parties hereto. (e) This Agreement shall not be subject to termination by the Company. SECTION 11. Remarketing Dealer's Performance; Duty of Care. The duties and obligations of the Remarketing Dealer shall be determined solely by the express provisions of this Agreement and the Indenture. No implied covenants or obligations of or against the Remarketing Dealer shall be read into this Agreement or the Indenture. In the absence of bad faith on the part of the Remarketing Dealer, the Remarketing Dealer may conclusively rely upon any document furnished to it, which purports to conform to the requirements of this Agreement and the Indenture, as to the truth of the statements expressed in any of such documents. The Remarketing Dealer shall be protected in acting upon any document or communication reasonably believed by it to have been signed, presented or made by the proper party or parties. The Remarketing Dealer shall incur no liability to the Company or to any beneficial owner or holder of Drs. in its individual capacity or as Remarketing Dealer for any action or failure to act in connection with the remarketing or otherwise, except to the extent finally judicially determined to be due primarily to its gross negligence or willful misconduct. 24 25 SECTION 12. Governing Law. This agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws provisions thereof. SECTION 13. Term of Agreement. Unless otherwise terminated in accordance with the provisions hereof, this Agreement shall remain in full force and effect from the date hereof until the earlier of the first day thereafter on which no Drs. are outstanding or the completion of the Second Remarketing. Regardless of any termination of this Agreement pursuant to any of the provisions hereof, the obligations of the Company and the Remarketing Dealer pursuant to Section 9 and of the Company under subsections 4(h), 10(c) and 10(d) hereof shall remain operative and in full force and effect until fully satisfied. SECTION 14. Successors and Assigns. The rights and obligations of the Company hereunder may not be assigned or delegated to any other person (other than as specified in Article Nine of the Indenture) without the prior written consent of the Remarketing Dealer. The rights and obligations of the Remarketing Dealer hereunder may not be assigned or delegated to any other person (other than an affiliate of the Remarketing Dealer, with the consent of the Company, not to be unreasonably withheld) without the prior written consent of the Company. This Agreement shall inure to the benefit of and be binding upon the Company and the Remarketing Dealer and their respective successors and assigns, and will not confer any benefit upon any other person, partnership, association or corporation other than persons, if any, controlling the Remarketing Dealer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or any other indemnified party to the extent provided in Section 9 hereof. The terms "successors" and "assigns" shall not include any purchaser of any Drs. merely because of such purchase. SECTION 15. Headings. Section headings have been inserted in this Agreement as a matter of convenience of reference only, and it is agreed that such section headings are not a part of this Agreement and will not be used in the interpretation of any provisions of this Agreement. SECTION 16. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any or all jurisdictions because it conflicts with any provision of any constitution, statute, rule or public policy or for any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case, circumstance or jurisdiction, or of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever. 25 26 SECTION 17. Counterparts. This Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. SECTION 18. Amendments; Waivers. This Agreement may be amended or portions thereof may be waived by any instrument in writing signed by each of the parties hereto so long as this Agreement as amended or the provisions as so waived are not inconsistent with the Indenture in effect as of the date of any such amendment or waiver. SECTION 19. Notices. Unless otherwise specified, any notices, requests, consents or other communications given or made hereunder or pursuant hereto shall be made in writing (which may include facsimile or other electronic transmission) and shall be deemed to have been validly given or made when delivered or, if earlier, three days after it was mailed, registered or certified mail, return receipt requested and postage prepaid, addressed as follows: (a) to the Company: Service Corporation International 1929 Allen Parkway P.O. Box 130548 Houston, Texas 77019 Attention: James M. Shelger Facsimile No.: (713) 525-9067 (b) to JPMSI: J.P. Morgan Securities Inc. 60 Wall Street New York, New York 10260 Attention: Syndicate Department Facsimile No.: (212) 648-5909 or to such other address as the Company or the Remarketing Dealer shall specify in writing. 26 27 IN WITNESS WHEREOF, each of the Company and the Remarketing Dealer has caused this Remarketing Agreement to be executed in its name and on its behalf by one of its duly authorized officers as of the date first above written. SERVICE CORPORATION INTERNATIONAL By /s/ GREGORY L. CAUTHEN ---------------------------------- Name: Gregory L. Cauthen Title: Vice President and Treasurer J.P. MORGAN SECURITIES INC. By /s/ RAYMOND SCHMITT ---------------------------------- Name: Raymond Schmitt Title: EX-1.4 5 FORM OF GLOBAL SECURITY - 6.50% NOTES 1 EXHIBIT 1.4 UNLESS AND UNTIL THIS GLOBAL NOTE IS EXCHANGED IN WHOLE OR IN PART FOR THE NOTES IN DEFINITIVE REGISTERED FORM, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE (AS DEFINED BELOW)) 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. UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION FOR TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. GLOBAL NOTE No. 1 U.S. $200,000,000 CUSIP 817565AR5 SERVICE CORPORATION INTERNATIONAL 6.50% NOTES DUE MARCH 15, 2008 SERVICE CORPORATION INTERNATIONAL, a Texas corporation (the "Issuer"), for value received, hereby promises to pay to Cede & Co. or registered assigns, at the office or agency of the Issuer, the principal sum of $200,000,000 U.S. dollars on March 15, 2008 in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest at an annual rate of 6.50% payable on March 15 and September 15 in each year, to the person in whose name the Note is registered at the close of business on the record date for such interest which shall be the preceding March 1 or September 1 (whether or not such record date is a Business Day (as defined in the Indenture)), respectively, commencing September 15, 1998, with interest on September 15, 1998 consisting of interest accrued from March 16, 1998. Reference is made to the further provisions of this Note 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. The statements set forth in the legend set forth above are an integral part of the terms of this Note and by acceptance hereof the holder of this Note agrees to be subject to, and bound by, the terms and provisions set forth in each such legend, if any. This Global Note is issued in respect of an issue of an aggregate of U.S. $200,000,000 principal amount of 6.50% Notes due March 15, 2008 of the Issuer and is governed by the Senior Indenture dated as of February 1, 1993, duly executed and delivered by the Issuer to The Bank of New York, as Trustee (the "Trustee"), as supplemented by Board Resolutions (as defined in the Indenture) (such Indenture and Board Resolutions, collectively, the "Indenture"). The terms of the Indenture are incorporated herein by reference. This Global Note shall in all respects be entitled to the same benefits as definitive Notes under the Indenture. If and to the extent that any provision of the Indenture limits, qualifies, or conflicts with any other provision of the Indenture which is required to be included in the Indenture by any of Sections 310 to 317, inclusive, or is deemed applicable to the Indenture by virtue of the provisions, of the Trust Indenture Act of 1939, as amended, such required provision shall control. The Issuer hereby irrevocably undertakes to the holder hereof to exchange this Global Note in accordance with the terms of the Indenture without charge. This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been mutually signed by the Trustee under the Indenture. IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. SERVICE CORPORATION INTERNATIONAL By: ------------------------------- Gregory L. Cauthen Vice President and Treasurer [Corporate Seal] Attest: - --------------------------------------------------- Curtis G. Briggs Assistant Secretary CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. Dated: March 16, 1998 THE BANK OF NEW YORK, as Trustee By: ----------------------------- Authorized Signatory -1- 2 REVERSE OF GLOBAL NOTE SERVICE CORPORATION INTERNATIONAL 6.50% NOTES DUE MARCH 15, 2008 This Global Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Issuer (the "Securities") of the series hereinafter specified, all issued or to be issued under and pursuant to the Indenture, to which Indenture reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the holders of the Securities. The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as provided in the Indenture. This Global Note is one of a series designated as the 6.50% Notes due March 15, 2008 of the Issuer, limited in aggregate principal amount to $200,000,000. If an Event of Default (as defined in the Indenture) with respect to Securities of any series then Outstanding (as defined in the Indenture) occurs and is continuing, then and 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 (as defined in the Indenture) 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 Holders), may declare the unpaid principal amount 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. Notwithstanding the preceding sentence, however, if at any time after the unpaid principal 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 and the reasonable compensation, disbursements, expenses and advances of the Trustee, and any and all defaults under the 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 become due by acceleration, shall have been cured or shall have been waived or provision deemed by the Trustee to be adequate shall have been made therefor -- then 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. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of any series affected, evidenced as provided in the Indenture, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Securities of each such series; provided, however, that no such supplemental indenture shall (i) extend the final maturity of any Security, or reduce the principal amount thereof or reduce the rate or extend the time of payment of any interest thereon, change the coin or currency in which principal and interest are payable, or impair or affect the rights of any Holder to institute suit for the payment thereof, without the consent of the Holder of each Security so affected, or (ii) reduce the aforesaid percentage of Securities, the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holder of each Security affected. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, the Holders of 66-2/3% in aggregate principal amount then Outstanding of the Securities of such series (or, in the case of certain defaults or Events of Default, all or certain series of the Securities, as the case may be) may on behalf of the Holders of all the Securities of such series (or all or certain series of the Securities, as the case may be) waive any such past default or Event of Default and its consequences. The preceding sentence shall not, however, apply to a default in the payment of the principal of or interest on any of the Securities of such series. Any such consent or waiver by the Holder of this Note (unless revoked or provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Note and any Notes which may be issued in exchange or substitution herefor, irrespective of whether or not any notation thereof is made upon this Note or such other Notes. No reference herein to the Indenture and no provision of this Note or the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note in the manner, at the respective times, at the rate and in the coin or currency herein prescribed. The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment of, or on account of, the principal hereof and subject to the provisions on the face hereof, interest hereon, 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. No recourse under or upon any obligation, covenant or agreement contained in the Indenture or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, past, present or future stockholder, officer or director, as such 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 Security by the Holder and as part of the consideration for the issue of the Security. Interest shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each. This Note shall be construed in accordance with and governed by the laws of the State of Texas. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Indenture. -2- EX-1.5 6 FORM OF GLOBAL SECURITY - 6.30% SECURITIES 1 EXHIBIT 1.5 UNLESS AND UNTIL THIS GLOBAL SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR THE SECURITIES IN DEFINITIVE REGISTERED FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE (AS DEFINED BELOW)) 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. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. SERVICE CORPORATION INTERNATIONAL 6.30% DEALER REMARKETABLE SECURITY(SM) ("DRS.(SM)") DUE MARCH 15, 2020 No. 1 $200,000,000 CUSIP: 817565AS3 Service Corporation International, a Texas corporation (hereinafter called the "COMPANY"), for value received, hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of TWO HUNDRED MILLION U.S. DOLLARS on March 15, 2020, at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, semi-annually on March 15 and September 15 of each year (each, an "INTEREST PAYMENT DATE"), on said principal sum at the rate per annum specified below, at such office or agency, in like coin or currency, from the March 15 or September 15, as the case may be, to which interest on the Securities has been paid preceding the date hereof (unless the date hereof is a March 15 or a September 15 to which interest has been paid, in which case from the date hereof, or unless the date hereof is prior to any interest having been paid, in which case from March 16, 1998) until payment of said principal sum has been made or duly provided for. - ------------------------------------ (sm) "Dealer remarketable security" and "Drs." are service marks of J.P. Morgan Securities Inc. 2 If the Company shall default in the payment of interest when due on such March 15 or September 15, then this Security shall bear interest at the rate in effect immediately prior to the date of default from the next preceding date to which interest has been paid, or, if no interest has been paid, from March 16, 1998. The interest so payable on any March 15 or September 15 shall be paid to the such person in whose name this Security shall be registered at the close of business on the fifteenth calendar day (whether or not a Business Day) immediately preceding the related Interest Payment Date (each, a "REGULAR RECORD DATE"). For purposes of this Security, "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which banking institutions in The City of New York are authorized or obligated by law, executive order or government decree to be closed. If and to the extent the Company shall default in the payment of the interest due on any Interest Payment Date, such defaulted interest shall be paid to the person in whose name this Security is registered at the close of business on a record date established for such payment by notice by or on behalf of the Company to the holders of the Securities mailed by first-class mail not less than fifteen days prior to such record date to their last address as they shall appear upon the Security register, such record date to be not less than five days preceding the date of payment of such defaulted interest. The Company may pay interest by check mailed to the holder's address as it appears on the Security register. The rate of interest on this Security shall be 6.30% per annum to but excluding March 15, 2003 (the "FIRST REMARKETING DATE"). If, acting pursuant to the Remarketing Agreement dated as of March 16, 1998 (the "REMARKETING AGREEMENT") between J.P. Morgan Securities Inc., as Remarketing Dealer (the "REMARKETING DEALER") and the Company, the Remarketing Dealer remarkets the Securities on the First Remarketing Date, then, from and including the First Remarketing Date the interest rate on the Securities shall be reset to but excluding March 15, 2010 (the "SECOND REMARKETING DATE" and, together with the First Remarketing Date, the "REMARKETING DATES"), and if the Remarketing Dealer remarkets the Securities on the Second Remarketing Date then, from and including the Second Remarketing Date the interest rate on this Security shall be reset to but excluding March 15, 2020 (the "STATED MATURITY DATE"), and, in each case, the relevant rate of interest shall be determined by the Remarketing Dealer in accordance with the procedures set forth in Section 4 on the reverse hereof. If the Remarketing Dealer elects to remarket the Securities on either Remarketing Date, then this Security shall be subject to mandatory tender to the Remarketing Dealer for remarketing on such Remarketing Date, on the terms and subject to the conditions set forth on the reverse hereof. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been executed by the Trustee under the Indenture referred to on the reverse hereof. 2 3 IN WITNESS WHEREOF, Service Corporation International has caused this Security to be signed by its duly authorized officers and has caused its corporate seal to be affixed hereunto. SERVICE CORPORATION INTERNATIONAL By: ------------------------------ Title: Attest: - ------------------------- Secretary Certificate of Authentication This is one of the Securities of the series designated therein and described in the within mentioned Indenture. THE BANK OF NEW YORK, as Trustee By: ------------------------------ Authorized Signatory 4 Service Corporation International 6.30% Dealer remarketable security(sm) ("Drs.(sm)") due March 15, 2020 1. Indenture. (a) This Security is one of the duly authorized issue of debt securities of the Company (herein referred to as the "DEBT SECURITIES") of the series hereinafter specified, all issued or to be issued under and pursuant to a senior indenture dated as of February 1, 1993, as amended and supplemented (the "INDENTURE") between the Company and The Bank of New York, a New York banking corporation, as Trustee (herein referred to as the "TRUSTEE"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders (the words "HOLDERS", "HOLDER", "SECURITYHOLDERS" or "SECURITYHOLDER" mean the registered holder(s)) of the Debt Securities. (b) The Debt Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be denominated in different currencies, may be subject to different redemption provisions, if any, may be subject to different sinking funds, if any, may be subject to additional covenants and Events of Default and may otherwise vary as provided in the Indenture. This Security is one of the series designated as the 6.30% Dealer remarketable securities(sm) ("DRS.(SM)") due March 15, 2020 of the Company and such series is limited in aggregate principal amount to $300,000,000. References herein to "SECURITIES" or "DRS." shall mean the Debt Securities of said series. (c) All capitalized terms used in this Security which are defined in the Indenture and not otherwise defined herein shall have the meanings assigned to them in the Indenture. 2. Mandatory Tender on each Remarketing Date; Purchase and Settlement. On a Business Day not later than fifteen Business Days prior to either Remarketing Date (each a "NOTIFICATION DATE"), the Remarketing Dealer will notify the Company and the Trustee as to whether it elects to purchase all of the outstanding Drs. for remarketing on such Remarketing Date. If, and only if, the Remarketing Dealer so elects on either Remarketing Date, the Drs. shall be subject to mandatory tender to the Remarketing Dealer for purchase and remarketing on such Remarketing Date, upon the terms and subject to the conditions described herein and in the Remarketing Agreement. The purchase price of the Drs. shall be equal to 100% of the principal amount thereof. No holder or beneficial owner of any Securities shall have any rights or claims under the Remarketing Agreement or against the Company or the Remarketing Dealer as a result of the Remarketing Dealer not purchasing such Securities on either Remarketing Date. 3. Maintenance of Book-Entry System. (a) The tender and settlement procedures with respect to the Securities set forth in the Remarketing Agreement shall be subject to modification, without the consent of the holders of the Securities, to the extent required by DTC or, if the book-entry system is no longer available for the Securities at the time of the remarketing, to the extent required to facilitate the tendering and remarketing of Securities in certificated form. In addition, the R-1 5 Remarketing Dealer may modify the settlement procedures without the consent of the holders of the Securities in order to facilitate the settlement process. (b) The Company hereby agrees with the Trustee and the holders of Securities that (i) at all times, it will use its best efforts to maintain the Securities in book-entry form with DTC or any successor thereto and to appoint a successor depositary to the extent necessary to maintain the Securities in book-entry form and (ii) it waives any discretionary right that it otherwise may have under the Indenture to cause the Securities to be issued in certificated form. 4. Determination of Reset Interest Rates; Notification Thereof. The Remarketing Dealer shall determine the interest rate the Drs. will bear from and including the First Remarketing Date to but excluding the Second Remarketing Date (the "FIRST RESET INTEREST RATE") and from and including the Second Remarketing Date to but excluding the Stated Maturity Date (the "SECOND RESET INTEREST RATE" and together with the First Reset Interest Rate, the "RESET INTEREST RATES") on the third Business Day immediately preceding the relevant Remarketing Date (each a "DETERMINATION DATE") by soliciting by 3:30 p.m., New York City time, the Reference Corporate Dealers (defined below) for firm, committed bids to purchase all outstanding Drs. at the Dollar Price (defined below), and by selecting the lowest such firm, committed bid (regardless of whether each of the Reference Corporate Dealers actually submits a bid). Each bid shall be expressed in terms of the Reset Interest Rate that the Drs. would bear (quoted as a spread over 5.63% per annum (the "BASE RATE")) based on the following assumptions: (i) the Drs. would be sold to the Reference Corporate Dealer on the relevant Remarketing Date for settlement on the same day; (ii) the Drs. would mature on the Second Remarketing Date or the Stated Maturity Date, as the case may be; and (iii) the Drs. would bear interest at the rate bid by such Reference Corporate Dealer, payable semi-annually on the Interest Payment Dates from and including the First Remarketing Date to but excluding the Second Remarketing Date or from and including the Second Remarketing Date to but excluding the Stated Maturity Date, as the case may be. The relevant Reset Interest Rate announced by the Remarketing Dealer as a result of such process will be quoted to the nearest one hundred-thousandth (0.00001) of one percent per annum and, absent manifest error, will be binding and conclusive upon holders of the Drs., the Company and the Trustee. The Remarketing Dealer shall have the discretion to select the time at which each Reset Interest Rate is determined on the relevant Determination Date. The Remarketing Dealer shall have the right in its sole discretion to either (i) remarket the Drs. for its own account or (ii) sell the Drs. to the Reference Corporate Dealer submitting the lowest firm, committed bid pursuant to Section 4 of this Security. If two or more Reference Corporate Dealers submit equivalent bids which constitute the lowest firm, committed bid, the Remarketing Dealer may in its sole discretion elect to sell the Drs. to any such Reference Corporate Dealer. R-2 6 If the Remarketing Dealer has elected to remarket the Drs. on either Remarketing Date as provided herein, then it shall notify the Company, the Trustee and DTC by telephone, confirmed in writing (which may include facsimile or other electronic transmission), by 5:00 p.m., New York City time, on the relevant Determination Date of the relevant Reset Interest Rate applicable to the Drs. effective from and including the First Remarketing Date or from and including the Second Remarketing Date, as the case may be. "DOLLAR PRICE" means, with respect to each Remarketing Date, the greater of (1) 100% of the principal amount of the Drs. and (2) the discounted present value to such Remarketing Date of the cash flows on a bond: (x) with a principal amount equal to the aggregate principal amount of the Drs., (y) maturing on (a) the Second Remarketing Date (in the case of a determination made in connection with the First Remarketing Date), or (b) the Stated Maturity Date (in the case of a determination made in connection with the Second Remarketing Date) and (z) bearing interest at a rate equal to the Base Rate, using a discount rate equal to the Treasury Rate (defined below), payable semi-annually (assuming a 360-day year consisting of twelve 30-day months) on the Interest Payment Dates, (i) in the case of a determination made in connection with the First Remarketing Date, from and including the First Remarketing Date to but excluding the Second Remarketing Date, or (ii) in the case of a determination made in connection with the Second Remarketing Date, from and including the Second Remarketing Date to but excluding the Stated Maturity Date. "REFERENCE CORPORATE DEALER" means J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Chase Securities Inc. If any of such persons shall cease to be a leading dealer of publicly-traded debt securities of the Company, then the Remarketing Dealer may replace, with the approval of the Company (not to be unreasonably withheld), such person with any other leading dealer of publicly-traded debt securities of the Company. "TREASURY RATE" means, with respect to any Determination Date, the annual rate equal to the semi-annual equivalent yield to maturity or interpolated (on a 30/360 day count basis) yield to maturity on such Determination Date of the Comparable Treasury Issue (defined below) for value on the relevant Remarketing Date, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price (as defined below). "COMPARABLE TREASURY ISSUE" means, with respect to any Determination Date, the United States Treasury security selected by the Remarketing Dealer as having an actual maturity on such Determination Date (or the United States Treasury security selected by the Remarketing Dealer to derive an interpolated maturity on such Determination Date) comparable to (i) the time remaining R-3 7 to the Second Remarketing Date (in the case of a determination made in connection with the First Remarketing Date), or (ii) the remaining term of the Drs. (in the case of a determination made in connection with the Second Remarketing Date). "COMPARABLE TREASURY PRICE" means, with respect to any Determination Date, (a) the offer prices for the Comparable Treasury Issue (expressed as a percentage of its principal amount) on such Determination Date, as set forth on Telerate Page 500 (as defined below), adjusted to reflect settlement on the relevant Remarketing Date if prices quoted on Telerate Page 500 are for settlement on any date other than such Remarketing Date, or (b) if such page (or any successor page) is not displayed or does not contain such offer prices on such Business Day, (i) the average of five Reference Treasury Dealer Quotations for such Remarketing Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations (unless there is more than one highest or lowest quotation, in which case only one such highest and/or lowest quotation shall be excluded), or (ii) if the Remarketing Dealer obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations. "TELERATE PAGE 500" means the display designated as "Telerate Page 500" on Dow Jones Markets Limited (or such other page as may replace Telerate Page 500 on such service) or such other service displaying the offer prices specified in clause (a) of the definition of Comparable Treasury Price as may replace Dow Jones Markets Limited. "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each Determination Date and each Reference Treasury Dealer, the offer price for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) for settlement on the relevant Remarketing Date, quoted in writing to the Remarketing Dealer by such Reference Treasury Dealer by 3:30 p.m., New York City time, on such Determination Date. "REFERENCE TREASURY DEALER" means a primary U.S. Government securities dealer in The City of New York (which may include the Remarketing Dealer) selected by the Remarketing Dealer. 5. Repurchase. If the Remarketing Dealer for any reason does not purchase all of the Drs. on either Remarketing Date, then the Company shall repurchase on such Remarketing Date, at a price equal to 100% of the principal amount of the Drs. plus all accrued interest, if any, on the Drs. to (but excluding) the relevant Remarketing Date, any Drs. that have not been purchased by the Remarketing Dealer on such Remarketing Date. 6. Redemption. If the Remarketing Dealer has elected to remarket the Drs. on either Remarketing Date, the Company shall have the right to redeem the Drs., in whole but not in part, from the Remarketing Dealer on such Remarketing Date at a redemption price equal to the sum of (i) 100% of the aggregate principal amount of the Drs. and (ii) the Call Price (as defined below), by giving written notice of such redemption to the Remarketing Dealer no later than the later of (x) one Business Day prior to the relevant Determination Date or R-4 8 (y) if fewer than three Reference Corporate Dealers timely submit firm, committed bids for all outstanding Drs. to the Remarketing Dealer on the relevant Determination Date in accordance with Section 4 of this Security, immediately after the deadline set by the Remarketing Dealer for receiving such bids has passed. In either such case, the Company shall pay such redemption price for the Drs. in same-day funds by wire transfer on the relevant Remarketing Date to an account designated by the Remarketing Dealer. For purposes of calculating the Call Price, the Remarketing Dealer shall be deemed to have made the request for the Call Price on the date the Company makes its election to redeem the Drs. The Drs. are not otherwise subject to redemption. "CALL PRICE" means the fair market value of the embedded interest rate option implicit in the Remarketing Dealer's right to purchase at par and remarket on each Remarketing Date of any Drs. not purchased by the Remarketing Dealer on the relevant Remarketing Date (such principal amount of Drs., the "UNPURCHASED DRS."). This amount shall equal: (i) if the Remarketing Dealer's request for the Call Price payment is made before the first Determination Date, the Commercially Reasonable Option Value (as defined below) on the date of such request; (ii) if the Remarketing Dealer's request for the Call Price payment is made on or after the first Determination Date and on or prior to the First Remarketing Date, the amount, if positive, equal to: (1) the Commercially Reasonable Option Value, determined as if the date of determination thereof was the first day after the First Remarketing Date; plus (2)(a) the Drs. Premium for the first Determination Date; multiplied by (b)(x) the Unpurchased Drs. on the First Remarketing Date; divided by (y) the Original Amount of Drs. "ORIGINAL AMOUNT OF DRS." means $300,000,000; and "DRS. PREMIUM" equals the Dollar Price relating to the relevant Determination Date less the Original Amount of Drs.; R-5 9 (iii) if the Remarketing Dealer's request for a Call Price payment is made after the First Remarketing Date but before the second Determination Date, the amount equal to the Commercially Reasonable Option Value on the date of such request; (iv) if the Remarketing Dealer's request for the Call Price payment is made on or after the second Determination Date, an amount (if positive) equal to: (1) the Drs. Premium for the second Determination Date; multiplied by (2)(a) the Unpurchased Drs. on the Second Remarketing Date; divided by (b) the Original Amount of Drs. "COMMERCIALLY REASONABLE OPTION VALUE" means, on any specified date, the amount determined by the Remarketing Dealer on such date under Section 6(e) of the ISDA Master Agreement dated as of July 1, 1996 (the "MASTER AGREEMENT") between Morgan Guaranty Trust Company of New York and the Company, on a "Market Quotation" basis in respect of the embedded interest rate option(s) implicit in the Remarketing Dealer's option to purchase at par the Unpurchased Drs. on each remaining Remarketing Date, as if a "Termination Event" had occurred on such specified date under such interest rate option with respect to the Company under the Master Agreement and the Company was the "Affected Party". The determination of the Commercially Reasonable Option Value shall be made using the provisions of the Master Agreement regardless of any termination of the Master Agreement. 7. Certain Covenants. The Indenture restricts the Company's ability to merge, consolidate or sell, lease, exchange or otherwise dispose of all or substantially all of its assets. In addition, the Company is obliged to abide by certain covenants, including a covenant limiting the ability of the Company or any of its Subsidiaries to mortgage, pledge, encumber or subject to any lien or security interest any of their assets and a covenant limiting entering into any sale and leaseback transaction by the Company or any of its Subsidiaries, all as more fully described in the Indenture. All of such covenants are subject to the covenant defeasance procedures outlined in the Indenture. 8. Effect of Event of Default. If an Event of Default (as defined in the Indenture) with respect to Debt Securities of any series then Outstanding (as defined in the Indenture) occurs and is continuing, then and in each and every such case, unless the principal of all of the Debt Securities of such series shall have already become due and payable, either the Trustee or the Holders (as defined in the Indenture) of not less than 25 percent in aggregate principal amount of the Debt Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if given by Holders), may declare the unpaid principal amount of all the Debt Securities of such series and the interest, if any, accrued thereon to be due and payable immediately, and upon any such R-6 10 declaration the same shall become and shall be immediately due and payable. Notwithstanding the preceding sentence, however, if at any time after the unpaid principal amount of the Debt 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 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 Debt Securities of such series and the principal of any and all Debt Securities of such series which shall have become due otherwise than by acceleration and the reasonable compensation, disbursements, expenses and advances of the Trustee, and any and all defaults under the Indenture, other than the nonpayment of such portion of the principal amount of and accrued interest, if any, on Debt Securities of such series which shall become due by acceleration, shall have been cured or shall have been waived or provision deemed by the Trustee to be adequate shall have been made therefor -- then in every such case the Holders of a majority in aggregate principal amount of the 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. 9. Tax Treatment; Agreement to Tender. The Company and the holders of this Security (and each holder of a beneficial interest herein) by accepting this Security, agree to treat the Drs. as fixed rate debt instruments that mature on the First Remarketing Date for United States Federal income tax purposes. Furthermore, each holder of this Security irrevocably agrees that this Security shall automatically be tendered to the Remarketing Dealer if the Remarketing Dealer elects to remarket the Securities on the terms and conditions set forth herein. 10. Amendments and Waivers. Modifications and amendments of the Indenture will be permitted to be made only with the consent of the holders of not less than a majority in principal amount of all Outstanding Debt Securities issued under the Indenture that are affected by such modification or amendment; provided, however, that no such modification or amendment may, without the consent of the holder of each such Debt Security affected thereby, (a) extend the stated maturity of the principal of such 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, change the coin or currency in which the 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 (b) reduce the percentage in aggregate principal amount of Debt Securities of any series issued under the Indenture, the consent of the holders of which is required for any such modification or amendment. The holders of a majority in aggregate principal amount of the Outstanding Debt Securities of each series may, on behalf of all holders of Debt Securities of that series, waive, insofar as that series is concerned, compliance by the Company with certain restrictive covenants of the Indenture. Modifications and amendments of the Indenture will be permitted to be made by the Company and the Trustee without the consent of any holder of the Debt Securities: (a) to evidence the assumption by a successor corporation of the obligations of the Company under the Indenture; (b) to add covenants or new events of default for the protection of the holders of such Debt Securities; (c) to establish the form and terms of any series of Debt Securities; (d) to evidence the acceptance of R-7 11 appointment by a successor Trustee; (e) to secure such Debt Securities with any property or assets; and (f) to cure any ambiguity or correct any inconsistency in the Indenture or to amend the Indenture in any other manner which the Company may deem necessary or desirable and which, in each case, will not adversely affect the interests of the holders of the Debt Securities of any series issued under the Indenture. 11. Denominations, Transfer and Exchange. (a) The Securities are issuable in registered form without coupons in denominations of $1,000 and any integral multiple thereof. (b) Where certificated Securities are presented to at the corporate trust offices of the Trustee or other transfer agent designated by the Company for such purpose with a request to register their transfer or to exchange them for an equal principal amount of Securities of other authorized denominations, the Trustee or other transfer agent shall register the transfer or make the exchange if its requirements for such transactions are met. The Company will not make any charge for any registration of transfer or exchange but may require the payment by the party requesting such registration of transfer or exchange of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (c) Neither the Company nor any Trustee shall be required to (a) issue, register the transfer of or exchange any Securities during a period beginning at the opening of business 15 days before the selection of any Securities for redemption and ending at the close of business on the day of mailing of the notice of redemption; (b) register the transfer of or exchange any Security, or portion thereof, so selected for redemption, in whole or in part, except the unredeemed portion of any Security being redeemed in part; or (c) issue, register the transfer of or exchange any Security that has been surrendered for repayment at the option of the holder, except the portion, if any, of such Security not to be so repaid. 12. No Liability of Certain Persons. No past, present or future stockholder, employee, officer or director of the Company or any successor thereof shall have any liability for any obligation, covenant or agreement of the Company contained in this Security or the Indenture. Each holder by accepting this Security waives and releases all such liability. This waiver and release are part of the consideration for the issue of this Security. 13. Governing Law. The laws of the State of New York govern the Indenture and this Security. R-8 12 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto: PLEASE INSERT TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE - ------------------------------------------ - ------------------------------------------ - -------------------------------------------------------------------------------- PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the within Security of Service Corporation International and all rights thereunder and hereby irrevocably constitutes and appoints ______________________ attorney to transfer said Security on the books of the Company, with full power of substitution in the premises Dated: --------------------------------- Signature NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURES MUST BE GUARANTEED BY AN "ELIGIBLE GUARANTOR INSTITUTION" MEETING THE REQUIREMENTS OF THE TRUSTEE, WHICH REQUIREMENTS INCLUDE MEMBERSHIP OR PARTICIPATION IN THE SECURITY TRANSFER AGENT MEDALLION PROGRAM ("STAMP") OR SUCH OTHER "SIGNATURE GUARANTEE PROGRAM" AS MAY BE DETERMINED BY THE TRUSTEE IN ADDITION TO, OR IN SUBSTITUTION FOR, STAMP, ALL IN ACCORDANCE WITH THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. R-9 EX-1.6 7 FORM OF GLOBAL SECURITY - 6.30% SECURITIES 1 EXHIBIT 1.6 UNLESS AND UNTIL THIS GLOBAL SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR THE SECURITIES IN DEFINITIVE REGISTERED FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE (AS DEFINED BELOW)) 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. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. SERVICE CORPORATION INTERNATIONAL 6.30% DEALER REMARKETABLE SECURITY(SM) ("DRS.(SM)") DUE MARCH 15, 2020 No. 2 $100,000,000 CUSIP: 817565AS3 Service Corporation International, a Texas corporation (hereinafter called the "COMPANY"), for value received, hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of ONE HUNDRED MILLION U.S. DOLLARS on March 15, 2020, at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, semi-annually on March 15 and September 15 of each year (each, an "INTEREST PAYMENT DATE"), on said principal sum at the rate per annum specified below, at such office or agency, in like coin or currency, from the March 15 or September 15, as the case may be, to which interest on the Securities has been paid preceding the date hereof (unless the date hereof is a March 15 or a September 15 to which interest has been paid, in which case from the date hereof, or unless the date hereof is prior to any interest having been paid, in which case from March 16, 1998) until payment of said principal sum has been made or duly provided for. - ------------------------------------ (sm) "Dealer remarketable security" and "Drs." are service marks of J.P. Morgan Securities Inc. 2 If the Company shall default in the payment of interest when due on such March 15 or September 15, then this Security shall bear interest at the rate in effect immediately prior to the date of default from the next preceding date to which interest has been paid, or, if no interest has been paid, from March 16, 1998. The interest so payable on any March 15 or September 15 shall be paid to the such person in whose name this Security shall be registered at the close of business on the fifteenth calendar day (whether or not a Business Day) immediately preceding the related Interest Payment Date (each, a "REGULAR RECORD DATE"). For purposes of this Security, "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which banking institutions in The City of New York are authorized or obligated by law, executive order or government decree to be closed. If and to the extent the Company shall default in the payment of the interest due on any Interest Payment Date, such defaulted interest shall be paid to the person in whose name this Security is registered at the close of business on a record date established for such payment by notice by or on behalf of the Company to the holders of the Securities mailed by first-class mail not less than fifteen days prior to such record date to their last address as they shall appear upon the Security register, such record date to be not less than five days preceding the date of payment of such defaulted interest. The Company may pay interest by check mailed to the holder's address as it appears on the Security register. The rate of interest on this Security shall be 6.30% per annum to but excluding March 15, 2003 (the "FIRST REMARKETING DATE"). If, acting pursuant to the Remarketing Agreement dated as of March 16, 1998 (the "REMARKETING AGREEMENT") between J.P. Morgan Securities Inc., as Remarketing Dealer (the "REMARKETING DEALER") and the Company, the Remarketing Dealer remarkets the Securities on the First Remarketing Date, then, from and including the First Remarketing Date the interest rate on the Securities shall be reset to but excluding March 15, 2010 (the "SECOND REMARKETING DATE" and, together with the First Remarketing Date, the "REMARKETING DATES"), and if the Remarketing Dealer remarkets the Securities on the Second Remarketing Date then, from and including the Second Remarketing Date the interest rate on this Security shall be reset to but excluding March 15, 2020 (the "STATED MATURITY DATE"), and, in each case, the relevant rate of interest shall be determined by the Remarketing Dealer in accordance with the procedures set forth in Section 4 on the reverse hereof. If the Remarketing Dealer elects to remarket the Securities on either Remarketing Date, then this Security shall be subject to mandatory tender to the Remarketing Dealer for remarketing on such Remarketing Date, on the terms and subject to the conditions set forth on the reverse hereof. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been executed by the Trustee under the Indenture referred to on the reverse hereof. 2 3 IN WITNESS WHEREOF, Service Corporation International has caused this Security to be signed by its duly authorized officers and has caused its corporate seal to be affixed hereunto. SERVICE CORPORATION INTERNATIONAL By: ------------------------------ Title: Attest: - ------------------------- Secretary Certificate of Authentication This is one of the Securities of the series designated therein and described in the within mentioned Indenture. THE BANK OF NEW YORK, as Trustee By: ------------------------------ Authorized Signatory 4 Service Corporation International 6.30% Dealer remarketable security(sm) ("Drs.(sm)") due March 15, 2020 1. Indenture. (a) This Security is one of the duly authorized issue of debt securities of the Company (herein referred to as the "DEBT SECURITIES") of the series hereinafter specified, all issued or to be issued under and pursuant to a senior indenture dated as of February 1, 1993, as amended and supplemented (the "INDENTURE") between the Company and The Bank of New York, a New York banking corporation, as Trustee (herein referred to as the "TRUSTEE"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders (the words "HOLDERS", "HOLDER", "SECURITYHOLDERS" or "SECURITYHOLDER" mean the registered holder(s)) of the Debt Securities. (b) The Debt Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be denominated in different currencies, may be subject to different redemption provisions, if any, may be subject to different sinking funds, if any, may be subject to additional covenants and Events of Default and may otherwise vary as provided in the Indenture. This Security is one of the series designated as the 6.30% Dealer remarketable securities(sm) ("DRS.(SM)") due March 15, 2020 of the Company and such series is limited in aggregate principal amount to $300,000,000. References herein to "SECURITIES" or "DRS." shall mean the Debt Securities of said series. (c) All capitalized terms used in this Security which are defined in the Indenture and not otherwise defined herein shall have the meanings assigned to them in the Indenture. 2. Mandatory Tender on each Remarketing Date; Purchase and Settlement. On a Business Day not later than fifteen Business Days prior to either Remarketing Date (each a "NOTIFICATION DATE"), the Remarketing Dealer will notify the Company and the Trustee as to whether it elects to purchase all of the outstanding Drs. for remarketing on such Remarketing Date. If, and only if, the Remarketing Dealer so elects on either Remarketing Date, the Drs. shall be subject to mandatory tender to the Remarketing Dealer for purchase and remarketing on such Remarketing Date, upon the terms and subject to the conditions described herein and in the Remarketing Agreement. The purchase price of the Drs. shall be equal to 100% of the principal amount thereof. No holder or beneficial owner of any Securities shall have any rights or claims under the Remarketing Agreement or against the Company or the Remarketing Dealer as a result of the Remarketing Dealer not purchasing such Securities on either Remarketing Date. 3. Maintenance of Book-Entry System. (a) The tender and settlement procedures with respect to the Securities set forth in the Remarketing Agreement shall be subject to modification, without the consent of the holders of the Securities, to the extent required by DTC or, if the book-entry system is no longer available for the Securities at the time of the remarketing, to the extent required to facilitate the tendering and remarketing of Securities in certificated form. In addition, R-1 5 the Remarketing Dealer may modify the settlement procedures without the consent of the holders of the Securities in order to facilitate the settlement process. (b) The Company hereby agrees with the Trustee and the holders of Securities that (i) at all times, it will use its best efforts to maintain the Securities in book-entry form with DTC or any successor thereto and to appoint a successor depositary to the extent necessary to maintain the Securities in book-entry form and (ii) it waives any discretionary right that it otherwise may have under the Indenture to cause the Securities to be issued in certificated form. 4. Determination of Reset Interest Rates; Notification Thereof. The Remarketing Dealer shall determine the interest rate the Drs. will bear from and including the First Remarketing Date to but excluding the Second Remarketing Date (the "FIRST RESET INTEREST RATE") and from and including the Second Remarketing Date to but excluding the Stated Maturity Date (the "SECOND RESET INTEREST RATE" and together with the First Reset Interest Rate, the "RESET INTEREST RATES") on the third Business Day immediately preceding the relevant Remarketing Date (each a "DETERMINATION DATE") by soliciting by 3:30 p.m., New York City time, the Reference Corporate Dealers (defined below) for firm, committed bids to purchase all outstanding Drs. at the Dollar Price (defined below), and by selecting the lowest such firm, committed bid (regardless of whether each of the Reference Corporate Dealers actually submits a bid). Each bid shall be expressed in terms of the Reset Interest Rate that the Drs. would bear (quoted as a spread over 5.63% per annum (the "BASE RATE")) based on the following assumptions: (i) the Drs. would be sold to the Reference Corporate Dealer on the relevant Remarketing Date for settlement on the same day; (ii) the Drs. would mature on the Second Remarketing Date or the Stated Maturity Date, as the case may be; and (iii) the Drs. would bear interest at the rate bid by such Reference Corporate Dealer, payable semi-annually on the Interest Payment Dates from and including the First Remarketing Date to but excluding the Second Remarketing Date or from and including the Second Remarketing Date to but excluding the Stated Maturity Date, as the case may be. The relevant Reset Interest Rate announced by the Remarketing Dealer as a result of such process will be quoted to the nearest one hundred-thousandth (0.00001) of one percent per annum and, absent manifest error, will be binding and conclusive upon holders of the Drs., the Company and the Trustee. The Remarketing Dealer shall have the discretion to select the time at which each Reset Interest Rate is determined on the relevant Determination Date. The Remarketing Dealer shall have the right in its sole discretion to either (i) remarket the Drs. for its own account or (ii) sell the Drs. to the Reference Corporate Dealer submitting the lowest firm, committed bid pursuant to Section 4 of this Security. If two or more Reference Corporate Dealers submit equivalent bids which constitute the lowest firm, committed bid, the Remarketing Dealer may in its sole discretion elect to sell the Drs. to any such Reference Corporate Dealer. R-2 6 If the Remarketing Dealer has elected to remarket the Drs. on either Remarketing Date as provided herein, then it shall notify the Company, the Trustee and DTC by telephone, confirmed in writing (which may include facsimile or other electronic transmission), by 5:00 p.m., New York City time, on the relevant Determination Date of the relevant Reset Interest Rate applicable to the Drs. effective from and including the First Remarketing Date or from and including the Second Remarketing Date, as the case may be. "DOLLAR PRICE" means, with respect to each Remarketing Date, the greater of (1) 100% of the principal amount of the Drs. and (2) the discounted present value to such Remarketing Date of the cash flows on a bond: (x) with a principal amount equal to the aggregate principal amount of the Drs., (y) maturing on (a) the Second Remarketing Date (in the case of a determination made in connection with the First Remarketing Date), or (b) the Stated Maturity Date (in the case of a determination made in connection with the Second Remarketing Date) and (z) bearing interest at a rate equal to the Base Rate, using a discount rate equal to the Treasury Rate (defined below), payable semi-annually (assuming a 360-day year consisting of twelve 30-day months) on the Interest Payment Dates, (i) in the case of a determination made in connection with the First Remarketing Date, from and including the First Remarketing Date to but excluding the Second Remarketing Date, or (ii) in the case of a determination made in connection with the Second Remarketing Date, from and including the Second Remarketing Date to but excluding the Stated Maturity Date. "REFERENCE CORPORATE DEALER" means J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Chase Securities Inc. If any of such persons shall cease to be a leading dealer of publicly-traded debt securities of the Company, then the Remarketing Dealer may replace, with the approval of the Company (not to be unreasonably withheld), such person with any other leading dealer of publicly-traded debt securities of the Company. "TREASURY RATE" means, with respect to any Determination Date, the annual rate equal to the semi-annual equivalent yield to maturity or interpolated (on a 30/360 day count basis) yield to maturity on such Determination Date of the Comparable Treasury Issue (defined below) for value on the relevant Remarketing Date, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price (as defined below). "COMPARABLE TREASURY ISSUE" means, with respect to any Determination Date, the United States Treasury security selected by the Remarketing Dealer as having an actual maturity on such Determination Date (or the United States Treasury security selected by the Remarketing Dealer to derive an interpolated maturity on such Determination Date) comparable to (i) the time remaining to the Second Remarketing Date (in the case of a determination made in connection with the First Remarketing Date), or (ii) the remaining term of the Drs. (in the case of a determination made in connection with the Second Remarketing Date). R-3 7 "COMPARABLE TREASURY PRICE" means, with respect to any Determination Date, (a) the offer prices for the Comparable Treasury Issue (expressed as a percentage of its principal amount) on such Determination Date, as set forth on Telerate Page 500 (as defined below), adjusted to reflect settlement on the relevant Remarketing Date if prices quoted on Telerate Page 500 are for settlement on any date other than such Remarketing Date, or (b) if such page (or any successor page) is not displayed or does not contain such offer prices on such Business Day, (i) the average of five Reference Treasury Dealer Quotations for such Remarketing Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations (unless there is more than one highest or lowest quotation, in which case only one such highest and/or lowest quotation shall be excluded), or (ii) if the Remarketing Dealer obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations. "TELERATE PAGE 500" means the display designated as "Telerate Page 500" on Dow Jones Markets Limited (or such other page as may replace Telerate Page 500 on such service) or such other service displaying the offer prices specified in clause (a) of the definition of Comparable Treasury Price as may replace Dow Jones Markets Limited. "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each Determination Date and each Reference Treasury Dealer, the offer price for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) for settlement on the relevant Remarketing Date, quoted in writing to the Remarketing Dealer by such Reference Treasury Dealer by 3:30 p.m., New York City time, on such Determination Date. "REFERENCE TREASURY DEALER" means a primary U.S. Government securities dealer in The City of New York (which may include the Remarketing Dealer) selected by the Remarketing Dealer. 5. Repurchase. If the Remarketing Dealer for any reason does not purchase all of the Drs. on either Remarketing Date, then the Company shall repurchase on such Remarketing Date, at a price equal to 100% of the principal amount of the Drs. plus all accrued interest, if any, on the Drs. to (but excluding) the relevant Remarketing Date, any Drs. that have not been purchased by the Remarketing Dealer on such Remarketing Date. 6. Redemption. If the Remarketing Dealer has elected to remarket the Drs. on either Remarketing Date, the Company shall have the right to redeem the Drs., in whole but not in part, from the Remarketing Dealer on such Remarketing Date at a redemption price equal to the sum of (i) 100% of the aggregate principal amount of the Drs. and (ii) the Call Price (as defined below), by giving written notice of such redemption to the Remarketing Dealer no later than the later of (x) one Business Day prior to the relevant Determination Date or R-4 8 (y) if fewer than three Reference Corporate Dealers timely submit firm, committed bids for all outstanding Drs. to the Remarketing Dealer on the relevant Determination Date in accordance with Section 4 of this Security, immediately after the deadline set by the Remarketing Dealer for receiving such bids has passed. In either such case, the Company shall pay such redemption price for the Drs. in same-day funds by wire transfer on the relevant Remarketing Date to an account designated by the Remarketing Dealer. For purposes of calculating the Call Price, the Remarketing Dealer shall be deemed to have made the request for the Call Price on the date the Company makes its election to redeem the Drs. The Drs. are not otherwise subject to redemption. "CALL PRICE" means the fair market value of the embedded interest rate option implicit in the Remarketing Dealer's right to purchase at par and remarket on each Remarketing Date of any Drs. not purchased by the Remarketing Dealer on the relevant Remarketing Date (such principal amount of Drs., the "UNPURCHASED DRS."). This amount shall equal: (i) if the Remarketing Dealer's request for the Call Price payment is made before the first Determination Date, the Commercially Reasonable Option Value (as defined below) on the date of such request; (ii) if the Remarketing Dealer's request for the Call Price payment is made on or after the first Determination Date and on or prior to the First Remarketing Date, the amount, if positive, equal to: (1) the Commercially Reasonable Option Value, determined as if the date of determination thereof was the first day after the First Remarketing Date; plus (2)(a) the Drs. Premium for the first Determination Date; multiplied by (b)(x) the Unpurchased Drs. on the First Remarketing Date; divided by (y) the Original Amount of Drs. "ORIGINAL AMOUNT OF DRS." means $300,000,000; and "DRS. PREMIUM" equals the Dollar Price relating to the relevant Determination Date less the Original Amount of Drs.; R-5 9 (iii) if the Remarketing Dealer's request for a Call Price payment is made after the First Remarketing Date but before the second Determination Date, the amount equal to the Commercially Reasonable Option Value on the date of such request; (iv) if the Remarketing Dealer's request for the Call Price payment is made on or after the second Determination Date, an amount (if positive) equal to: (1) the Drs. Premium for the second Determination Date; multiplied by (2)(a) the Unpurchased Drs. on the Second Remarketing Date; divided by (b) the Original Amount of Drs. "COMMERCIALLY REASONABLE OPTION VALUE" means, on any specified date, the amount determined by the Remarketing Dealer on such date under Section 6(e) of the ISDA Master Agreement dated as of July 1, 1996 (the "MASTER AGREEMENT") between Morgan Guaranty Trust Company of New York and the Company, on a "Market Quotation" basis in respect of the embedded interest rate option(s) implicit in the Remarketing Dealer's option to purchase at par the Unpurchased Drs. on each remaining Remarketing Date, as if a "Termination Event" had occurred on such specified date under such interest rate option with respect to the Company under the Master Agreement and the Company was the "Affected Party". The determination of the Commercially Reasonable Option Value shall be made using the provisions of the Master Agreement regardless of any termination of the Master Agreement. 7. Certain Covenants. The Indenture restricts the Company's ability to merge, consolidate or sell, lease, exchange or otherwise dispose of all or substantially all of its assets. In addition, the Company is obliged to abide by certain covenants, including a covenant limiting the ability of the Company or any of its Subsidiaries to mortgage, pledge, encumber or subject to any lien or security interest any of their assets and a covenant limiting entering into any sale and leaseback transaction by the Company or any of its Subsidiaries, all as more fully described in the Indenture. All of such covenants are subject to the covenant defeasance procedures outlined in the Indenture. 8. Effect of Event of Default. If an Event of Default (as defined in the Indenture) with respect to Debt Securities of any series then Outstanding (as defined in the Indenture) occurs and is continuing, then and in each and every such case, unless the principal of all of the Debt Securities of such series shall have already become due and payable, either the Trustee or the Holders (as defined in the Indenture) of not less than 25 percent in aggregate principal amount of the Debt Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if given by Holders), may declare the unpaid principal amount of all the Debt Securities of such series and the interest, if any, accrued thereon to be due and payable immediately, and upon any such R-6 10 declaration the same shall become and shall be immediately due and payable. Notwithstanding the preceding sentence, however, if at any time after the unpaid principal amount of the Debt 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 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 Debt Securities of such series and the principal of any and all Debt Securities of such series which shall have become due otherwise than by acceleration and the reasonable compensation, disbursements, expenses and advances of the Trustee, and any and all defaults under the Indenture, other than the nonpayment of such portion of the principal amount of and accrued interest, if any, on Debt Securities of such series which shall become due by acceleration, shall have been cured or shall have been waived or provision deemed by the Trustee to be adequate shall have been made therefor -- then in every such case the Holders of a majority in aggregate principal amount of the 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. 9. Tax Treatment; Agreement to Tender. The Company and the holders of this Security (and each holder of a beneficial interest herein) by accepting this Security, agree to treat the Drs. as fixed rate debt instruments that mature on the First Remarketing Date for United States Federal income tax purposes. Furthermore, each holder of this Security irrevocably agrees that this Security shall automatically be tendered to the Remarketing Dealer if the Remarketing Dealer elects to remarket the Securities on the terms and conditions set forth herein. 10. Amendments and Waivers. Modifications and amendments of the Indenture will be permitted to be made only with the consent of the holders of not less than a majority in principal amount of all Outstanding Debt Securities issued under the Indenture that are affected by such modification or amendment; provided, however, that no such modification or amendment may, without the consent of the holder of each such Debt Security affected thereby, (a) extend the stated maturity of the principal of such 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, change the coin or currency in which the 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 (b) reduce the percentage in aggregate principal amount of Debt Securities of any series issued under the Indenture, the consent of the holders of which is required for any such modification or amendment. The holders of a majority in aggregate principal amount of the Outstanding Debt Securities of each series may, on behalf of all holders of Debt Securities of that series, waive, insofar as that series is concerned, compliance by the Company with certain restrictive covenants of the Indenture. Modifications and amendments of the Indenture will be permitted to be made by the Company and the Trustee without the consent of any holder of the Debt Securities: (a) to evidence the assumption by a successor corporation of the obligations of the Company under the Indenture; (b) to add covenants or new events of default for the protection of the holders of such Debt Securities; (c) to establish the form and terms of any series of Debt Securities; (d) to evidence the acceptance of R-7 11 appointment by a successor Trustee; (e) to secure such Debt Securities with any property or assets; and (f) to cure any ambiguity or correct any inconsistency in the Indenture or to amend the Indenture in any other manner which the Company may deem necessary or desirable and which, in each case, will not adversely affect the interests of the holders of the Debt Securities of any series issued under the Indenture. 11. Denominations, Transfer and Exchange. (a) The Securities are issuable in registered form without coupons in denominations of $1,000 and any integral multiple thereof. (b) Where certificated Securities are presented to at the corporate trust offices of the Trustee or other transfer agent designated by the Company for such purpose with a request to register their transfer or to exchange them for an equal principal amount of Securities of other authorized denominations, the Trustee or other transfer agent shall register the transfer or make the exchange if its requirements for such transactions are met. The Company will not make any charge for any registration of transfer or exchange but may require the payment by the party requesting such registration of transfer or exchange of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (c) Neither the Company nor any Trustee shall be required to (a) issue, register the transfer of or exchange any Securities during a period beginning at the opening of business 15 days before the selection of any Securities for redemption and ending at the close of business on the day of mailing of the notice of redemption; (b) register the transfer of or exchange any Security, or portion thereof, so selected for redemption, in whole or in part, except the unredeemed portion of any Security being redeemed in part; or (c) issue, register the transfer of or exchange any Security that has been surrendered for repayment at the option of the holder, except the portion, if any, of such Security not to be so repaid. 12. No Liability of Certain Persons. No past, present or future stockholder, employee, officer or director of the Company or any successor thereof shall have any liability for any obligation, covenant or agreement of the Company contained in this Security or the Indenture. Each holder by accepting this Security waives and releases all such liability. This waiver and release are part of the consideration for the issue of this Security. 13. Governing Law. The laws of the State of New York govern the Indenture and this Security. R-8 12 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto: PLEASE INSERT TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE - ------------------------------------------ - ------------------------------------------ - -------------------------------------------------------------------------------- PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the within Security of Service Corporation International and all rights thereunder and hereby irrevocably constitutes and appoints _____________________ attorney to transfer said Security on the books of the Company, with full power of substitution in the premises Dated: -------------------------------- Signature NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURES MUST BE GUARANTEED BY AN "ELIGIBLE GUARANTOR INSTITUTION" MEETING THE REQUIREMENTS OF THE TRUSTEE, WHICH REQUIREMENTS INCLUDE MEMBERSHIP OR PARTICIPATION IN THE SECURITY TRANSFER AGENT MEDALLION PROGRAM ("STAMP") OR SUCH OTHER "SIGNATURE GUARANTEE PROGRAM" AS MAY BE DETERMINED BY THE TRUSTEE IN ADDITION TO, OR IN SUBSTITUTION FOR, STAMP, ALL IN ACCORDANCE WITH THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. R-9 -----END PRIVACY-ENHANCED MESSAGE-----