EXHIBIT 1.1
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") is made and entered into
as of _____________, 2001, by and between Service Corporation International, a
Texas corporation ("SCI"), and X.X. Xxxxxx Securities Inc., a Delaware
corporation ("JPMorgan"). Each of SCI and JPMorgan is a "Party" and sometimes
they are referred to, collectively, as the "Parties."
RECITALS
WHEREAS, SCI maintains the SERP and Senior SERP, pursuant to which
participants vested in one or both of those plans are currently entitled to
retirement benefits in the form of annual cash payments generally paid after
retirement;
WHEREAS, SCI anticipates (1) providing each participant vested in one
or both of the SERP and Senior SERP with a one-time opportunity to elect to
receive a lump-sum distribution of the present value (using a 10% discount rate)
of all or part of his or her retirement benefits in shares of Common Stock and
(2) if the participant so elects, distributing shares of Common Stock to such
Participant;
WHEREAS, SCI and JPMorgan anticipate providing each Participant with an
opportunity to elect to immediately sell all or some of the shares of Common
Stock received by such Participant to JPMorgan, the proceeds of which may be
used, in whole or in part, to satisfy such Participant's withholding tax
liability to SCI;
WHEREAS, the number of shares of Common Stock to be issued and
distributed to each Participant under the SERP and Senior SERP will be
calculated by dividing the amount of such Participant's retirement benefit which
such Participant elects to receive in Common Stock by the Distribution Price;
WHEREAS, if a Participant elects to sell shares of Common Stock to
JPMorgan pursuant to the above-referenced elections, JPMorgan will, subject to
the condition set forth herein, purchase such shares at the Distribution Price
per share, and SCI will pay JPMorgan, on behalf of such Participant, any
commission due on such transaction;
WHEREAS, JPMorgan anticipates reselling the shares of Common Stock it
purchases from the Participants into the market;
WHEREAS, if the aggregate amount of the prices at which the Shares are
sold by JPMorgan is less than the Distribution Price multiplied by the total
number of Shares sold, SCI will pay JPMorgan an amount equal to such difference;
WHEREAS, if the aggregate amount of the prices at which the Shares are
sold by JPMorgan exceeds the Distribution Price multiplied by the total number
of Shares sold, JPMorgan will pay SCI an amount equal to such excess; and
WHEREAS, capitalized terms have the meanings ascribed to them in
Article I or elsewhere in this Agreement.
NOW, THEREFORE, for and in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of all of which is
hereby acknowledged, the Parties agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
1.1. "Adjustment Amount," which can be a positive or negative number,
means Aggregate Resale Price minus (1) the Aggregate Distribution Price and (2)
the Aggregate Commissions.
1.2. "Aggregate Commissions" means the sum of the Sales Commissions.
1.3. "Aggregate Distribution Price" means the Distribution Price
multiplied by the total number of Shares either sold by JPMorgan into the
market or delivered to SCI in accordance with Section 2.2(b), as contemplated by
Article II hereof.
1.4. "Aggregate Resale Price" means the aggregate amount of the prices
at which the Shares are sold by JPMorgan into the market, as contemplated by
Article II hereof.
1.5. "Closing Date" means the first business day after the Pricing
Period.
1.6. "Sales Commission" means, for each Covered Purchase, a sales
commission equal to $0.04 per share purchased by JPMorgan in the Covered
Purchase.
1.7. "Common Stock" means SCI's common stock, $1.00 par value.
1.8. "Covered Purchase" means a purchase by JPMorgan of shares of
Common Stock from a Participant pursuant to such Participant's Election.
1.9. "Distribution Price" means the average closing price per share of
the Common Stock on the New York Stock Exchange for the Pricing Period.
1.10. "Election" means an election by a Participant (1) to receive a
lump-sum distribution of the present value (using a 10% discount rate) of all or
part of his or her retirement benefits under the Senior SERP and/or the SERP in
shares of Common Stock and (2) to resell immediately all or some of the shares
of Common Stock received by such Participant to JPMorgan.
1.11. "Election Deadline" means ____________, 2001, the date by which
the Participants must make an Election.
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1.12. "Participant" means each participant vested in one or both of the
SERP and Senior SERP electing to receive a lump-sum distribution of the
discounted present value (using a 10% discount rate) of all or part of his or
her vested retirement benefits in shares of Common Stock in lieu of all or part
of the remaining annual cash payments provided for pursuant to the SERP or
Senior SERP, as applicable.
1.13. "Pricing Period" means the five trading days immediately after
the Election Deadline.
1.14. "Senior SERP" means the Service Corporation International
Supplemental Executive Retirement Plan for Senior Officers (As Amended and
Restated Effective as of January 1, 1998), as further amended effective January
1, 2001.
1.15. "SERP" means the Amended and Restated Service Corporation
International Supplemental Executive Retirement Plan (effective as of January 1,
1998), as further amended effective January 1, 2001.
1.16. "Settlement Date" means the date on which JPMorgan completes the
sale of the Shares as contemplated by Section 2.1, below.
1.17. "Shares" means all shares of Common Stock that JPMorgan purchases
from the Participants pursuant to an Election.
ARTICLE II.
SETTLEMENT
2.1. Purchase and Sale of the Shares. Subject to the terms and
conditions set forth herein, JPMorgan hereby agrees to purchase from the
Participants on the Closing Date, at the Distribution Price per share, all
shares of Common Stock which the Participants receive from SCI pursuant to one
or more Elections and elect to sell to JPMorgan pursuant to one or more
Elections; provided, however, that in no event will JPMorgan be required to
purchase more than 6,000,000 shares of Common Stock from the Participants.
Subject to the terms and conditions set forth herein, JPMorgan hereby further
agrees to use its best efforts to sell the Shares into the market in an orderly
fashion as soon as practicable after the Closing Date and prior to the
Settlement Date. JPMorgan's obligations hereunder are not contingent on the
exercise of any minimum number of Elections.
2.2. Settlement. If the Adjustment Amount is a negative number (i.e.,
the Aggregate Distribution Price plus the Aggregate Commissions exceeds the
Aggregate Resale Price), SCI shall pay to JPMorgan in immediately available
funds an amount equal to the negative Adjustment Amount. If the Adjustment
Amount is a positive number (i.e., the Aggregate Distribution Price plus the
Aggregate Commissions is less than the
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Aggregate Resale Price), JPMorgan shall pay to SCI in immediately available
funds an amount equal to the Adjustment Amount. Any such excess or deficit
payment shall be due and payable three business days after the Settlement Date.
Notwithstanding anything herein to the contrary, if for any reason JPMorgan is
unable to sell some or all of the Shares into the market prior to the 15th
business day following the Closing Date, JPMorgan will have the option at
anytime until the Settlement Date to deliver up to $5,000,000 of such unsold
Shares to SCI for repurchase at the Distribution Price, in which case the
Aggregate Resale Price will be calculated on the Settlement Date as if such
Shares had been sold into the market at the Distribution Price.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. SCI hereby represents and warrants to JPMorgan, as of the Election
Date and the Settlement Date, as follows:
(a) A registration statement on Form S-3 (Registration No.
333-__________) (the "Registration Statement"), including a prospectus (the
"Prospectus") (i) has been prepared by SCI in conformity with the requirements
of the Securities Act of 1933, as amended, and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder (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 Election Deadline; any
such amendment to the applicable Registration Statement was so prepared and
filed and any such amendment has become effective. Any reference in this
Agreement to the Registration Statement, any preliminary form of prospectus or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act which were filed under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") on or before the effective date of the
Registration Statement or the date of any preliminary prospectus or the
Prospectus, as the case may be; and any reference to "amend", "amendment" or
"supplement" with respect to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to refer to and include any
documents filed under the Exchange Act after such date which are deemed to be
incorporated by reference therein. Copies of such Registration Statement and the
Prospectus relating thereto, any such amendment or supplement, and all documents
incorporated by reference therein which were filed with the Commission on or
prior to the Election Date have been delivered to JPMorgan. SCI has included in
the Registration Statement, as amended at the date the Registration Statement
was declared effective, all information required by the Securities Act to be
included in the Prospectus with respect to the Shares and the offering and sale
thereof as contemplated by this Agreement. Except to the extent that JPMorgan
shall agree in writing to a modification, the Registration Statement and the
Prospectus shall be in all substantive respects in the form furnished to
JPMorgan prior to the Election Deadline or, to the extent not completed at the
Election Deadline, shall contain only such
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specific additional information and other changes as SCI has advised, a
reasonable time prior to the Election Deadline, is to be included or made
therein and as to which JPMorgan has not reasonably objected.
(b) 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 Election
Deadline and at the Settlement Date, and any amendment or supplement thereto,
conformed or will conform in all material respects to the requirements of the
Securities Act; and no such document included or will include an untrue
statement of a material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in the light of the circumstances under which they
were made) not misleading.
(c) No order preventing or suspending the effectiveness of the
Registration Statement or the use of any preliminary prospectus or the
Prospectus 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.
(d) PricewaterhouseCoopers, who are reporting upon the audited
financial statements and the supporting schedules of SCI 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 SCI 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.
(e) SCI 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 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 SCI and its subsidiaries, taken as a whole (each, a
"Material Adverse Effect").
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(f) Each direct and indirect foreign and domestic subsidiary
of SCI (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.
(g) This Agreement has been duly and validly authorized,
executed and delivered by SCI.
(h) Since the date of the latest consolidated financial
statements of SCI and its subsidiaries included or incorporated by reference
into 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 any material adverse change in the management, condition (financial
or otherwise), earnings, business affairs or business prospects of SCI 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.
(i) 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 SCI or any of its subsidiaries
(other than those in the ordinary course of business) which are material to SCI
and its subsidiaries, taken as a whole and (B) there has been no dividend or
distribution of any kind declared, paid or made by SCI on any class of its
capital stock, other than regularly scheduled quarterly dividends in accordance
with the past practice of SCI.
(j) SCI has the authorized, issued and outstanding
capitalization set forth in the Prospectus under "Description of Capital Stock."
The authorized capital stock of SCI 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 SCI have been duly
authorized and validly issued, are fully paid and nonassessable and are not
subject to any preemptive or similar rights. Each of the Rights Agreement dated
as of May 14, 1998, between SCI and the Xxxxxx Trust and Savings Bank, and the
Agreement Appointing a Successor Rights Agent under Rights Agreement dated June
1, 1999, among SCI, the Xxxxxx Trust and Savings Bank and The Bank of New York,
has been duly authorized, executed and delivered by SCI; the rights to purchase
SCI's Series D Junior Participating Preferred Stock outstanding thereunder have
been
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duly authorized. Except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without limitation,
pre-emptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interest
in SCI or any of its subsidiaries, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any capital
stock of SCI or any such subsidiary, any such convertible or exchangeable
securities or any such rights, warrants or options.
(k) All corporate action required to be taken for the
authorization, issuance and sale of the Shares as contemplated by this Agreement
has been validly and sufficiently taken. The Shares will constitute the valid
and binding obligations of SCI.
(l) The Shares have been duly authorized and validly reserved
for issuance by all necessary corporate action and such Shares, when issued 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 Shares will not be subject to preemptive rights.
(m) Neither SCI nor any of its subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation of or in
default under, its articles of incorporation or by-laws or any indenture,
mortgage, deed of trust, loan agreement, note, lease, license, partnership
agreement, franchise agreement or other agreement or instrument to which SCI or
any of its subsidiaries is a party or by which it or any of them may be bound or
affected or to which any of their respective properties may be subject (each a
"Contract," and collectively, the "Contracts"), except for violations and
defaults which individually and in the aggregate are not material to SCI and its
subsidiaries taken as a whole. The execution and delivery by SCI of, and the
full and timely performance by SCI of its obligations under, this Agreement, the
compliance by SCI with the terms hereof, and the consummation of the
transactions contemplated herein, (A) have been duly authorized by all necessary
corporate action on the part of SCI, (B) do not and will not result in any
violation of the articles of incorporation or by-laws of SCI 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 SCI or any of its
subsidiaries under (I) 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 SCI or any of its subsidiaries or any of their
respective properties or assets.
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(n) No authorization, approval, consent or license of, or
filing with, any government, governmental instrumentality or court, domestic or
foreign (other than as have been made and obtained and are in full force and
effect under the Securities Act or as may be required under the securities or
Blue Sky laws of the various states and other jurisdictions of the United States
of America) is required for the valid authorization, issuance, sale and delivery
of the Shares by SCI, the execution and delivery by SCI of, or the full and
timely performance by SCI of each of its obligations under or contemplated by,
this Agreement and the compliance by SCI with its obligations hereunder.
(o) 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.
(p) No holder of any securities of SCI has any rights, not
effectively satisfied or waived, to require SCI 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.
(q) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or proceedings
pending or, to the knowledge of SCI, threatened against or affecting SCI or any
of its subsidiaries or any of their respective properties or to which SCI or any
of its subsidiaries is or may be a party or to which any property of SCI or any
of its subsidiaries is or may be the subject which, if determined adversely to
SCI or any of its subsidiaries, could individually or in the aggregate have, or
reasonably be expected to have a Material Adverse Effect, and, to the best of
the SCI's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(r) SCI and its subsidiaries have good and marketable title in
fee simple to all items of real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described or referred to in the
Prospectus or such as do not materially affect the value of such property and do
not interfere with the use made or proposed to be made of such property by SCI
and its subsidiaries; and any real property and buildings held under lease by
SCI and its subsidiaries are held by them under valid, existing and enforceable
leases with such exceptions as are not material and do not interfere with the
use made or proposed to be made of such property and buildings by SCI or its
subsidiaries.
(s) SCI 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 (the "Investment Company Act").
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(t) SCI has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business
with the Government of Cuba or with any person or affiliate located in Cuba.
(u) SCI and its subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and have paid
all taxes shown thereon and all assessments received by them or any of them to
the extent that such taxes have become due and are not being contested in good
faith; and, except as disclosed in the Registration Statement and the
Prospectus, there is no tax deficiency which has been or might reasonably be
expected to be asserted or threatened against SCI or any subsidiary.
(v) SCI has not taken nor will it take, directly or
indirectly, any action designed to, or that might reasonably be expected to,
cause or result in the stabilization or manipulation of the price of the Common
Stock.
(w) Each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
("ERISA") that is maintained, administered or contributed to by SCI or any of
its affiliates for employees or former employees of SCI and its affiliates has
been maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended, (the "Code"). No
prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code has occurred with respect to any such plan excluding
transactions effected pursuant to a statutory or administrative exemption. For
each such plan which is subject to the funding rules of Section 412 of the Code
or Section 302 of ERISA no "accumulated funding deficiency" as defined in
Section 412 of the Code has been incurred, whether or not waived, and the fair
market value of the assets of each such plan (excluding for these purposes
accrued but unpaid contributions) exceeded the present value of all benefits
accrued under such plan determined using reasonable actuarial assumptions.
3.2. JPMorgan hereby represents and warrants to SCI, as of the Election
Date and the Settlement Date, as follows:
(a) JPMorgan is a corporation validly existing and in good
standing under the laws of the State of Delaware with corporate power and
corporate authority to perform its obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement
by JPMorgan and the consummation by JPMorgan of the transactions described
herein have been duly authorized by all necessary corporate action on the part
of JPMorgan; and this Agreement, when duly executed and delivered by JPMorgan,
will constitute a valid and legally binding instrument of JPMorgan enforceable
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar
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laws of general applicability relating to or affecting creditors' rights and
general equitable principles.
ARTICLE IV.
INDEMNIFICATION AND CONTRIBUTION
4.1. SCI agrees to indemnify and hold harmless JPMorgan and each
person, if any, who controls JPMorgan 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 SCI shall have
furnished any amendments or supplements thereto in compliance with the terms
hereof), 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 JPMorgan furnished to SCI in writing by JPMorgan expressly for use
therein.
4.2. JPMorgan agrees to indemnify and hold harmless SCI, the directors
of SCI, the officers of SCI who sign the Registration Statement and each person,
if any, who controls SCI 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 SCI shall have
furnished any amendments or supplements thereto in compliance with the terms
hereof), 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
JPMorgan furnished to SCI in writing by JPMorgan expressly for use in the
Registration Statement or any amendment or supplement thereto.
4.3. 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 4, such person (hereinafter called the
"Indemnified Person") shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the "Indemnifying Person") in
writing, and the Indemnifying Person, upon request of the Indemnified Person,
shall promptly retain counsel satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding; provided, that the failure to notify the
Indemnifying Person shall not
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relieve it from any liability which it may have pursuant to this Section 4
except to the extent it has been materially prejudiced (through forfeiture of
substantive rights) by such failure. 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, in connection
with any proceeding or related proceedings in the same jurisdiction, (a) SCI
shall not be liable for the fees and expenses of more than one separate firm (in
addition to any local counsel) for JPMorgan and all persons, if any, who control
JPMorgan within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act and (b) JPMorgan shall not be liable for the fees
and expenses of more than one separate firm (in addition to any local counsel)
for SCI, its directors, its officers who sign the Registration Statement and
each person, if any, who controls SCI 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 JPMorgan and such control persons of
JPMorgan, such firm shall be designated in writing by JPMorgan. In the case of
any such separate firm for SCI, and such directors, officers and control persons
of SCI, such firm shall be designated in writing by SCI. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by the
third sentence of this paragraph, the Indemnifying Person agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying
Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (1) includes
an unconditional written release of such Indemnified Person, in form and
substance satisfactory to such Indemnified Person, from all liability on claims
that are the subject matter of such proceeding and (2) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of any Indemnified Person.
4.4. If the indemnification provided for in Section 4.1 or Section 4.2
is unavailable to any extent to an Indemnified Person under such paragraph in
respect of any
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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 SCI on the one hand and JPMorgan on the other
(i) in such proportion as is appropriate to reflect the aggregate relative
benefits received by SCI and by JPMorgan from the offering of the shares of
Common Stock as contemplated by this Agreement 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 SCI and of JPMorgan 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 SCI on the one hand and
JPMorgan on the other hand shall be deemed to be in the same respective
proportions as Aggregate Distribution Price, in the case of SCI, and the
Aggregate Commissions in the case of JPMorgan. The relative fault of SCI on the
one hand and of JPMorgan on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of the material
fact or the omission or alleged omission to state a material fact relates to
information supplied by SCI or by JPMorgan and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
4.5. SCI and JPMorgan agree that it would not be just and equitable if
contribution pursuant to this Article IV were determined by pro rata allocation
or by any other method or 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 Article IV, in no event shall JPMorgan be required to
contribute any amount in excess of the Aggregate Commissions. 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.
4.6. The indemnity and contribution agreements contained in this
Article IV are in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
4.7. The indemnity and contribution agreements contained in this
Article IV and the representations and warranties of SCI 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 JPMorgan or any person controlling JPMorgan or SCI, its officers or directors
or any other person controlling SCI and (iii) acceptance of and payment for any
of the shares of Common Stock.
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ARTICLE V.
COVENANTS OF SCI
5.1. SCI covenants and agrees with JPMorgan as follows:
(a) to file promptly all reports and any definitive proxy or
information statements required to be filed by SCI with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of the Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Shares; and to furnish copies of the
Prospectus to JPMorgan in New York City prior to 10:00 a.m., New York City time,
on the business day next succeeding the date of this Agreement in such
quantities as JPMorgan may reasonably request;
(b) to deliver, at the expense of SCI, to JPMorgan one signed
copy of the Registration Statement (as originally filed) and each amendment
thereto, in each case including exhibits and documents incorporated by reference
therein and, during the period mentioned in paragraph (e) below, to JPMorgan as
many copies of the Prospectus (including all amendments and supplements thereto)
and documents incorporated by reference therein as JPMorgan may reasonably
request;
(c) before filing any amendment or supplement to the
Registration Statement or the Prospectus, to furnish to JPMorgan a copy of the
proposed amendment or supplement for review and not to file any such proposed
amendment or supplement to which JPMorgan reasonably objects;
(d) to advise JPMorgan promptly, and to confirm such advice in
writing (i) when the Registration Statement has become effective, (ii) when any
amendment to the Registration Statement has been filed or becomes effective,
(iii) when any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish JPMorgan with copies thereof, (iv) 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, (v) 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
preliminary prospectus or the Prospectus or the initiation or threatening of any
proceeding for that purpose, (vi) of the occurrence of any event, within the
period referenced in paragraph (e) below, as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, and (vii) of the receipt by SCI of any
notification with respect to any suspension of the qualification of the Shares
for offer and sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and to use its best efforts to prevent the issuance
of any such stop order, or of any order preventing or suspending the use of any
preliminary prospectus or the Prospectus, or of any order suspending any such
qualification of the Shares, or notification of any such order thereof and, if
issued, to obtain as soon as possible the withdrawal thereof;
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(e) if, during such period of time after the first date of the
public offering of the Shares as in the opinion of counsel for JPMorgan a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by JPMorgan, any event shall occur as a result of which it
is necessary to amend or supplement the Prospectus in order to make the
statements therein, in light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare and furnish,
at the expense of SCI, to JPMorgan 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 Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as JPMorgan shall
reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Shares; provided that SCI shall not
be required to file a general consent to service of process in any jurisdiction;
(g) to use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange (the "Exchange");
(h) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all costs and expenses incident to the performance of the transactions
contemplated hereby, including without limiting the generality of the foregoing,
all costs and expenses (i) incident to the preparation, registration, transfer,
execution and delivery of the Shares, (ii) all SEC fees in connection with the
sale of the Shares by JPMorgan into the market, (iii) incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement, the Prospectus and any preliminary prospectus (including in each case
all exhibits, amendments and supplements thereto), (iv) incurred in connection
with the registration or qualification of the Shares under the laws of such
jurisdictions as JPMorgan may designate (including fees of counsel for JPMorgan
and its disbursements), (v) in connection with the listing of the Shares on the
New York Stock Exchange, (vi) related to the filing with, and clearance of the
offering by, the National Association of Securities Dealers, Inc., (vii) in
connection with the printing (including word processing and duplication costs)
and delivery of this Agreement, the Preliminary and Supplemental Blue Sky
Memoranda and the furnishing to JPMorgan of copies of the Registration Statement
and the Prospectus, including mailing and shipping, as herein provided, (viii)
the cost of preparing stock certificates and (ix) the cost and charges of any
transfer agent and any registrar;
(i) to deliver to JPMorgan, on the Closing Date, a signed
opinion of Xxxxx Xxxxxxx & Xxxx LLP ("LLS"), special counsel for SCI, addressed
to JPMorgan, dated the Closing Date and reasonably satisfactory to counsel for
JPMorgan, to the effect that LLS has participated in conferences with
representatives of SCI and representatives of its independent counsel at which
the contents of the
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Registration Statement and the Prospectus and any amendment and supplement
thereto and related matters were discussed and, although LLS assumes no
responsibility for the accuracy, completeness or fairness of the Registration
Statement, the Prospectus or any amendment or supplement thereto (except as
expressly provided therein), nothing has come to the attention of LLS which
leads LLS to believe that (1) the Registration Statement (including any
information deemed to be part of the Registration Statement at the time of
effectiveness, but excluding the financial statements and schedules and other
financial and statistical data included or incorporated by reference therein, as
to which LLS need not make any statement or express any opinion), when it became
effective and at the Election Deadline and the Settlement 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 materials 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 special counsel need not make any statement or express any
opinion), as of its date and at the Election Deadline and the Settlement 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 materials fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(j) to notify JPMorgan in writing, on or before the Closing
Date, of the wiring instructions for any amounts to be paid to SCI by JPMorgan
either on behalf of Participants in settlement of applicable withholding taxes
or pursuant to Section 2.2 hereof; and
(k) to provide to JPMorgan, before the Closing Date, (i) a
completed Brokerage Account Application signed by each Participant (other than
those Participants who elect to use a pre-existing account at JPMorgan on Form 1
of the Participant Settlement Agreement) and (ii) a schedule setting forth, with
respect to each Participant, the following information: (A) the Participant's
name and address, (B) the total number of shares of Common Stock which such
Participant will receive from SCI on the Closing Date, (C) the total number of
shares of Common Stock to be sold by such Participant and purchased by JPMorgan
and (D) the cash amount, if any, to be sent to the Company on such Participant's
behalf in payment of applicable withholding taxes.
ARTICLE VI.
GENERAL PROVISIONS
6.1. Notices. All communications hereunder shall be in writing and
shall be mailed (by first-class mail, registered or certified, postage prepaid),
delivered personally or telecopied and confirmed:
if to SCI, at:
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Service Corporation International
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx Xxxxxxx
Facsimile: 000-000-0000
with a copy to:
Xxxxx Liddell & Xxxx LLP
0000 Xxxxx Xxxxx, 000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to JPMorgan, at:
X. X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
6.2. Binding Effect; Assignment. This Agreement shall be binding upon,
and shall inure solely to the benefit of, each of the Parties, and each of their
respective heirs, executors, administrators, successors and permitted assigns,
and no other person, partnership, association, corporation or other entity shall
acquire or have any right under or by virtue of this Agreement. Neither Party
may assign any of its rights or obligations hereunder to any other person or
entity without the prior written consent of the other Party.
6.3. Governing Law; Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York in effect at
the time of the execution hereof (without application of any conflicts of law
principles). Each of the parties hereto irrevocably agrees that, except as
otherwise set forth in this paragraph, any state or federal court sitting in the
City of New York shall have exclusive jurisdiction to hear and determine any
suit, action or proceeding and to settle any dispute arising out of or relating
to this Agreement and, for such purposes, irrevocably submits to the
jurisdiction of such courts. SCI hereby agrees that service of any process,
summons, notice or document by hand delivery or registered mail addressed to the
SCI, shall be effective service of process for any suit, action or proceeding
brought in any such court. SCI irrevocably and unconditionally waives any
objection to the laying of venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding has
been brought in an inconvenient forum. SCI agrees that a final judgment in any
such suit, action or proceeding brought in any such court shall be conclusive
and binding upon SCI and may be enforced in any other court to whose
jurisdiction SCI is or may in the future be subject, by suit upon judgment. SCI
further
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agrees that nothing herein shall affect JPMorgan's right to effect service of
process in any other manner permitted by law or to bring a suit, action or
proceeding (including a proceeding for enforcement of a judgment) in any other
court or jurisdiction in accordance with applicable law.
6.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which counterparts when so executed and delivered shall be
deemed to be an original, but all such respective counterparts shall together
constitute but one and the same instrument.
6.5. Entire Agreement. This Agreement constitutes the entire agreement
of the Parties with respect to the subject matter hereof.
6.6. Amendments. This Agreement may not be amended, modified or changed
in whole or in part, except by an instrument in writing signed by SCI and
JPMorgan.
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IN WITNESS WHEREOF, and intending to be legally bound thereby, each of
Service Corporation International and X.X. Xxxxxx Securities Inc. has signed or
caused to be signed its name, all as of the day and year first above written.
SERVICE CORPORATION INTERNATIONAL
By:
---------------------------------
Xxxxx X. Shelger
Senior Vice President, General
Counsel and Secretary
X.X. XXXXXX SECURITIES INC.
By:
---------------------------------
Xxxxx Xxxxxx
Managing Director
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