Service Corporation International Underwriting Agreement
Exhibit 1.1
EXECUTION COPY
$150,000,000
8.00% Senior Notes due 2021
Underwriting Agreement
November 5, 2009
X.X. Xxxxxx Securities Inc.
As Representative of the
several Underwriters listed
in Schedule 1 hereto
As Representative of the
several Underwriters listed
in Schedule 1 hereto
c/o X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Service Corporation International, a Texas corporation (the “Company”), proposes to issue and
sell to the several Underwriters listed in Schedule 1 hereto (the “Underwriters”), for whom X.X.
Xxxxxx Securities Inc. is acting as representative (the “Representative”), $150,000,000 aggregate
principal amount of its 8.00% Senior Notes due 2021 (the “Securities”). The Securities will be
issued pursuant to an indenture dated as of February 1, 1993 (the “Base Indenture”), between the
Company and The Bank of New York Mellon Trust Company, N.A., as successor to The Bank of New York,
as trustee (the “Trustee”), as supplemented by the Eighth Supplemental Indenture to be dated as of
the Closing Date (as defined below) (the “Supplemental Indenture” and, together with the Base
Indenture, the “Indenture”).
Pursuant to a support agreement dated as of October 14, 2009 (together with the schedules and
exhibits thereto, the “Acquisition Agreement”), among the Company, SCI Alliance Acquisition
Corporation, a wholly-owned subsidiary of the Company governed by the laws of the Province of
Ontario (“Acquisition Sub”), and Keystone North America Inc., a corporation governed by the laws of
the Province of Ontario (“Keystone”), Acquisition Sub will make an offer to acquire all of the
issued and outstanding shares of Keystone (the “Offer”) and, upon satisfaction of the conditions
thereto set forth in the Acquisition Agreement, will take up and pay for all of the shares of
Keystone tendered in the Offer (the “Acquisition”) and, as promptly as practicable thereafter,
consummate the acquisition of all of the shares of Keystone not tendered in the Offer in accordance
with applicable law. Keystone will survive the foregoing transaction as a direct, wholly owned
subsidiary of the Company.
If the Closing Date occurs prior to the consummation of the Acquisition, the net proceeds of
the offering of the Securities will be held in escrow pending the consummation of the Acquisition.
In that case, the Company will execute an escrow agreement in form and substance reasonably
satisfactory to counsel for the Underwriters (the “Escrow Agreement”),
and will deposit into an escrow account (the “Escrow Account”) with The Bank of New York Mellon
Trust Company, N.A., as escrow agent (in such capacity, the “Escrow Agent”), the net
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proceeds of
the offering of the Securities and cash or treasury securities in an amount such that the funds
therein (the “Escrow Funds”) are sufficient to redeem the Securities in cash at a redemption price
equal to 101% of the principal amount of the Securities plus accrued and unpaid interest thereon to
the redemption date. The Escrow Agreement shall provide that the Escrowed Funds shall only be
withdrawn and paid out pursuant to the terms of the Escrow Agreement.
This Agreement, the Indenture (including the Supplemental Indenture), the Securities, and the
Escrow Agreement, if any, are collectively referred to herein as the “Note Documents” and, together
with the Acquisition Agreement, are collectively referred to herein as the “Transaction Documents”.
The Acquisition and the execution of, and consummation of the transactions contemplated by, the
Transaction Documents, in each case as described in the Registration Statement, the Time of Sale
Information and the Prospectus (as such terms are defined below), are collectively referred to
herein as the “Transactions”.
The Company hereby confirms its agreement with the several Underwriters concerning the
purchase and sale of the Securities, as follows:
1. Registration Statement. The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the “Securities Act”), a registration
statement on Form S-3 (File No. 333-162894), including a prospectus, relating to the Securities.
Such registration statement, as amended at the time it becomes effective, including the
information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part
of the registration statement at the time of its effectiveness (“Rule 430 Information”), is
referred to herein as the “Registration Statement”; and as used herein, the term “Preliminary
Prospectus” means each prospectus included in such registration statement (and any amendments or
supplements thereto) before it becomes effective, any prospectus filed with the Commission pursuant
to Rule 424(a) under the Securities Act and the prospectus included in the Registration Statement
at the time of its effectiveness that omits Rule 430 Information, and the term “Prospectus” means
the prospectus in the form first used (or made available upon request of purchasers pursuant to
Rule 173 under the Securities Act) in connection with confirmation of sales of the Securities. If
the Company has filed an abbreviated registration statement pursuant to Rule 462(b) under the
Securities Act (the “Rule 462 Registration Statement”), then any reference herein to the term
“Registration Statement” shall be deemed to include such Rule 462 Registration Statement. Any
reference in this Agreement to the Registration Statement, any Preliminary 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, as of the effective date of the
Registration Statement or the date of such 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 after such date under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively, the “Exchange Act”) that are
deemed to be incorporated by reference therein. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Registration Statement and the Prospectus.
At or prior to the time when sales of the Securities were first made (the “Time of Sale”), the
Company had prepared the following information (collectively, the “Time of Sale Information”): a
Preliminary Prospectus dated November 5, 2009, and each “free-writing
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prospectus” (as defined
pursuant to Rule 405 under the Securities Act) listed on Annex D hereto as constituting part of the
Time of Sale Information.
2. Purchase of the Securities by the Underwriters. (a) The Company agrees to issue
and sell the Securities to the several Underwriters as provided in this Agreement, and each
Underwriter, on the basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the
Company the respective principal amount of Securities set forth opposite such Underwriter’s name in
Schedule 1 hereto at a price equal to 95.865% of the principal amount thereof plus accrued
interest, if any, from November 10, 2009 to the Closing Date (as defined below). The Company will
not be obligated to deliver any of the Securities except upon payment for all the Securities to be
purchased as provided herein.
(b) The Company understands that the Underwriters intend to make a public offering of the
Securities as soon after the effectiveness of this Agreement as in the judgment of the
Representative is advisable, and initially to offer the Securities on the terms set forth in the
Prospectus. The Company acknowledges and agrees that the Underwriters may offer and sell
Securities to or through any affiliate of an Underwriter and that any such affiliate may offer and
sell Securities purchased by it to or through any Underwriter.
(c) Payment for and delivery of the Securities will be made at the offices of Cravath, Swaine
& Xxxxx LLP at 10:00 A.M., New York City time, on November 10, 2009, or at such other time or place
on the same or such other date, not later than the fifth business day thereafter, as the
Representative and the Company may agree upon in writing. The time and date of such payment and
delivery is referred to herein as the “Closing Date”.
(d) Payment for the Securities shall be made by wire transfer in immediately available funds
to the account(s) specified by (i) if the Closing Date occurs before the consummation of the
Acquisition, the Escrow Agent or (ii) if the Closing Date occurs on or after the consummation of
the Acquisition, the Company, in each case to the Representative against delivery to the nominee of
The Depository Trust Company, for the account of the Underwriters, of one or more global notes
representing the Securities (collectively, the “Global Note”), with any transfer taxes payable in
connection with the sale of the Securities duly paid by the Company. The Global Note will be made
available for inspection by the Representative not later than 1:00 P.M., New York City time, on the
business day prior to the Closing Date.
(e) The Company acknowledges and agrees that the Underwriters are acting solely in the
capacity of an arm’s length contractual counterparty to the Company with respect to the offering of
Securities contemplated hereby (including in connection with determining the terms of the offering)
and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person.
Additionally, neither the Representative nor any other Underwriter is advising the Company or any
other person as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. The Company shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the transactions
contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company
with respect thereto. Any review by the Underwriters of the Company,
the transactions contemplated hereby or other matters relating to such transactions will be
performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.
3. Representations and Warranties of the Company. The Company represents and warrants
to each Underwriter that:
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(a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of
filing thereof, complied in all material respects with the Securities Act and did not contain any
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; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by such Underwriter
through the Representative expressly for use in any Preliminary Prospectus.
(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale, did not, and
at the Closing Date will not, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the Company makes no
representation and warranty with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representative expressly for use in such Time of Sale Information. No
statement of material fact included in the Prospectus has been omitted from the Time of Sale
Information and no statement of material fact included in the Time of Sale Information that is
required to be included in the Prospectus has been omitted therefrom.
(c) Issuer Free Writing Prospectus. The Company (including its agents and representatives,
other than the Underwriters in their capacity as such) has not prepared, made, used, authorized,
approved or referred to and will not prepare, make, use, authorize, approve or refer to any
“written communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer
to sell or solicitation of an offer to buy the Securities (each such communication by the Company
or its agents and representatives (other than a communication referred to in clauses (i), (ii) and
(iii) below) an “Issuer Free Writing Prospectus”) other than (i) any document not constituting a
prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities
Act, (ii) the Preliminary Prospectus, (iii) the Prospectus, (iv) the documents listed on Annex D
hereto as constituting the Time of Sale Information and (v) any electronic road show or other
written communications, in each case approved in writing in advance by the Representative. Each
such Issuer Free Writing Prospectus complied in all material respects with the Securities Act, has
been or will be (within the time period specified in Rule 433) filed in accordance with the
Securities Act (to the extent required thereby) and, when taken together with the Preliminary
Prospectus filed prior to the first use of such Issuer Free Writing Prospectus, did not, and at the
Closing Date will not, contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in each such Issuer Free Writing
Prospectus in reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the Representative expressly for
use in any Issuer Free Writing Prospectus.
(d) Registration Statement and Prospectus. The Registration Statement is an “automatic shelf
registration statement” as defined under Rule 405 of the Securities Act that has been filed with
the Commission not earlier than three years prior to the date hereof; and no notice of objection of
the Commission to the use of such registration statement or any post-effective amendment thereto
pursuant to Rule 401(g)(2) under the Securities Act has been
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received by the Company. No order
suspending the effectiveness of the Registration Statement has been issued by the Commission and no
proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or
related to the offering has been initiated or threatened by the Commission; as of the applicable
effective date of the Registration Statement and any amendment thereto, the Registration Statement
complied and will comply in all material respects with the Securities Act and the Trust Indenture
Act of 1939, as amended, and the rules and regulations of the Commission thereunder (collectively,
the “Trust Indenture Act”), and did not and will not contain any 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 not misleading; and as of the date of the Prospectus and any amendment or
supplement thereto and as of the Closing Date, the Prospectus will not contain any 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; provided that the Company makes no representation and warranty with
respect to (i) that part of the Registration Statement that constitutes the Statement of
Eligibility and Qualification (Form T-1) of the Trustee under the Trust Indenture Act or (ii) any
statements or omissions made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter through the Representative
expressly for use in the Registration Statement and the Prospectus and any amendment or supplement
thereto.
(e) Incorporated Documents. The documents incorporated by reference in the Registration
Statement, the Prospectus and the Time of Sale Information, when they were filed with the
Commission, conformed in all material respects to the requirements of the Exchange Act, of 1934, as
amended, and the rules and regulation of the Commission thereunder (collectively, the “Exchange
Act”) and none of such documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Registration Statement, the Prospectus or
the Time of Sale Information, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not
misleading.
(f) Financial Statements. The financial statements and the related notes thereto included or
incorporated by reference in the Registration Statement, the Time of Sale Information and the
Prospectus comply in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as applicable, and present fairly the financial position of the Company and
its subsidiaries, as of the dates indicated and the results of their operations and the changes in
their cash flows for the periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent basis throughout
the periods covered thereby, and the supporting
schedules included or incorporated by reference in the Registration Statement, the Time of
Sale Information and the Prospectus present fairly the information required to be stated therein;
and the other financial information included or incorporated by reference in the Registration
Statement, the Time of Sale Information and the Prospectus has been derived from the accounting
records of the Company and its subsidiaries or Keystone and its subsidiaries, as the case may be,
and presents fairly the information shown thereby.
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(g) No Company Material Adverse Change. Since the date of the most recent financial
statements of the Company included or incorporated by reference in the Registration Statement, the
Time of Sale Information and the Prospectus, (i) there has not been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries, or any dividend or distribution of any
kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or
any material adverse change, or any development involving a prospective material adverse change, in
or affecting the business, properties, management, financial position, results of operations or
prospects of the Company and its subsidiaries that is material to the Company and its subsidiaries,
taken as a whole, after giving effect to the Transactions and the other transactions contemplated
hereby; (ii) neither the Company nor any of its subsidiaries has entered into any transaction or
agreement that is material to the Company and its subsidiaries, taken as a whole, or incurred any
liability or obligation, direct or contingent, that is material to the Company and its subsidiaries
taken as a whole, in each case after giving effect to the Transactions and the other transactions
contemplated hereby; and (iii) neither the Company nor any of its subsidiaries has sustained any
material loss or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor disturbance or dispute or any action, order
or decree of any court or arbitrator or governmental or regulatory authority, except in each case
as otherwise disclosed in the Registration Statement, the Time of Sale Information and the
Prospectus.
(h) No Keystone Material Adverse Change. Since the date of the most recent financial
information of Keystone included in the Registration Statement, the Time of Sale Information and
the Prospectus, (i) there has not been any change in the capital stock or long-term debt of
Keystone or any of its subsidiaries, or any dividend or distribution of any kind declared, set
aside for payment, paid or made by Keystone on any class of capital stock, or any material adverse
change, or any development involving a prospective material adverse change, in or affecting the
business, properties, management, financial position, results of operations or prospects of
Keystone and its subsidiaries that is material to Keystone and its subsidiaries, taken as a whole,
after giving effect to the Transactions and the other transactions contemplated hereby; (ii)
neither Keystone nor any of its subsidiaries has entered into any transaction or agreement that is
material to Keystone and its subsidiaries taken as a whole or incurred any liability or obligation,
direct or contingent, that is material to Keystone and its subsidiaries taken as a whole, in each
case after giving effect to the Transactions and the other transactions contemplated hereby; and
(iii) neither Keystone nor any of its subsidiaries has sustained any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action, order or decree of any court or
arbitrator or governmental or regulatory authority, except in each case as otherwise disclosed in
the Registration Statement, the Time of Sale Information and the Prospectus.
(i) Organization and Good Standing. The Company and each of its subsidiaries and Keystone and
each of its subsidiaries have been duly organized and are validly existing and in good standing
under the laws of their respective jurisdictions of organization, are duly
qualified to do business and are in good standing in each jurisdiction in which their
respective ownership or lease of property or the conduct of their respective businesses requires
such qualification, and have all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged, except where the failure to be
so qualified, in good standing or have such power or authority would not, individually or in the
aggregate, have a material adverse effect on the business, properties, management, financial
position, results of operations or prospects of the Company and its subsidiaries taken as a whole,
after giving effect to the Transactions and the other transactions contemplated hereby, or on the
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performance by the Company of its obligations under the Securities (a “Material Adverse Effect”).
The subsidiaries of the Company listed in Schedule 2 to this Agreement are the only significant
subsidiaries of the Company (each a “Company Significant Subsidiary” and collectively the “Company
Significant Subsidiaries”). Keystone will not be, upon completion of the Acquisition, a Company
Significant Subsidiary.
(j) Capitalization. The Company has an authorized capitalization as set forth in the
Registration Statement, the Time of Sale Information and the Prospectus and all the outstanding
shares of capital stock or other equity interests of each of the Company Significant Subsidiaries
have been duly and validly authorized and issued, are fully paid and non-assessable (except, in the
case of any foreign subsidiary, for directors’ qualifying shares and except as otherwise described
in the Registration Statement, the Time of Sale Information and the Prospectus) and are owned
directly or indirectly by the Company, free and clear of any lien, charge, encumbrance, security
interest, restriction on voting or transfer or any other claim of any third party.
(k) Due Authorization. Each of the Company and Keystone has full right, power and authority
to execute and deliver each of the Transaction Documents to which it is a party and to perform its
obligations hereunder and thereunder; and all action required to be taken for the due and proper
authorization, execution and delivery of each of the Transaction Documents and the consummation of
the Transactions and the other transactions contemplated thereby will have been duly and validly
taken on or prior to the Closing Date.
(l) The Indenture. The Base Indenture has been duly authorized by the Company and upon
effectiveness of the Registration Statement was or will have been duly qualified under the Trust
Indenture Act, and, when the Supplemental Indenture has been duly executed and delivered in
accordance with its terms by each of the parties thereto, will constitute a valid and legally
binding agreement of the Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally or by equitable principles relating to
enforceability (collectively, the “Enforceability Exceptions”).
(m) Trust Indenture Act. On the Closing Date, the Base Indenture as supplemented by the
Supplemental Indenture will conform in all material respects to the requirements of the Trust
Indenture Act and the rules and regulations of the Commission applicable to an indenture that is
qualified thereunder.
(n) The Securities. The Securities have been duly authorized by the Company and, when duly
executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided
herein, will be duly and validly issued and outstanding and will constitute valid and legally
binding obligations of the Company enforceable against the Company in accordance with their terms,
subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture.
(o) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered
by the Company.
(p) Acquisition Agreement. The Acquisition Agreement has been duly authorized, executed and
delivered by the Company and SCI Alliance Acquisition Sub, and constitutes a valid and legally
binding agreement of the Company and its subsidiaries party thereto as the case may be, enforceable
against such parties in accordance with its terms, subject to the Enforceability Exceptions.
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(q) Escrow Agreement. The Escrow Agreement has been duly authorized by the Company, and, when
duly executed and delivered in accordance with its terms by each of the parties thereto, the Escrow
Agreement will constitute a valid and legally binding agreement of the Company and its subsidiaries
party thereto, enforceable against such parties in accordance with its terms, subject to the
Enforceability Exceptions.
(r) Descriptions of the Transaction Documents. Each Transaction Document conforms in all
material respects to the description thereof contained in the Registration Statement, the Time of
Sale Information and the Prospectus.
(s) No Violation or Default. Neither the Company nor any of its subsidiaries, nor Keystone
nor any of its subsidiaries, is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of
time or both, would constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries or Keystone or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or Keystone or any of
its subsidiaries is bound or to which any of the property or assets of the Company or any of its
subsidiaries or Keystone or any of its subsidiaries is subject; or (iii) in violation of any law or
statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or
regulatory authority, except, in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a Material Adverse Effect.
(t) No Conflicts. The execution, delivery and performance by the Company and each of its
subsidiaries and Keystone and each of its subsidiaries of each of the Transaction Documents to
which it is a party, the issuance and sale of the Securities and compliance by the Company and its
subsidiaries with the terms thereof and the consummation of the Transactions and the other
transactions contemplated hereby will not (i) conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute 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
its subsidiaries or Keystone of any of its subsidiaries pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the Company or any of its
subsidiaries or Keystone or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or Keystone or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries or Keystone or any of its subsidiaries is subject,
(ii) result in any violation of the provisions of the charter or by-laws or similar organizational
documents of the Company or any of its subsidiaries or Keystone or any of its subsidiaries or (iii)
result in the violation of any law or statute or any judgment, order, rule or regulation of any
court or arbitrator or governmental or regulatory authority, except,
in the case of clauses (i) and (iii) above, for any such conflict, breach, violation or
default that would not, individually or in the aggregate, have a Material Adverse Effect.
(u) No Consents Required. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory authority is
required for (i) the execution, delivery and performance by the Company or Keystone or any of their
respective subsidiaries of each of the Transaction Documents to which it is a party or (ii) the
issuance and sale of the Securities and compliance by the Company with the terms thereof and the
consummation of the Transactions or the other transactions contemplated hereby, except in each
case, as applicable, for such consents, approvals, authorizations, orders and registrations or
qualifications (x) which shall have been obtained or made on or prior to the Closing Date, (y) as
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may be required under applicable state securities laws in connection with the purchase and
distribution of the Securities by the Underwriters and (z) as described in Schedule “C” to the
Acquisition Agreement.
(v) Legal Proceedings. Except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of its subsidiaries or Keystone
of any of its subsidiaries is or may be a party or to which any property of the Company or any of
its subsidiaries or Keystone or any of its subsidiaries is or may be the subject that, individually
or in the aggregate, if determined adversely to the Company or any of its subsidiaries or Keystone
or any of its subsidiaries, could reasonably be expected to have a Material Adverse Effect; no such
investigations, actions, suits or proceedings are threatened or, to the best knowledge of the
Company, contemplated by any governmental or regulatory authority or threatened by others; and (i)
there are no current or pending legal, governmental or regulatory actions, suits or proceedings
that are required under the Securities Act to be described in the Registration Statement or the
Prospectus that are not so described in the Registration Statement, the Time of Sale Information
and the Prospectus and (ii) there are no statutes, regulations or contracts or other documents that
are required under the Securities Act to be filed as exhibits to the Registration Statement or
described in the Registration Statement and the Prospectus that are not so filed as exhibits to the
Registration Statement or described in the Registration Statement, the Time of Sale Information and
the Prospectus.
(w) Independent Accountants. PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public accountants with respect to
the Company and its subsidiaries within the applicable rules and regulations adopted by the
Commission and the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and as
required by the Securities Act. Ernst & Young LLP, who have certified certain financial statements
of Keystone and its subsidiaries, are independent public accountants with respect to Keystone and
its subsidiaries and are independent within the meaning of applicable Canadian securities laws and
regulations.
(x) Title to Real and Personal Property. The Company and its subsidiaries and Keystone and
its subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property that are material to the respective
businesses of the Company and its subsidiaries and Keystone and its subsidiaries, in each case free
and clear of all liens, encumbrances, claims and defects and imperfections of title except those
that (i) do not materially interfere with the use made and proposed to be made of such property by
the Company and its subsidiaries or Keystone or its subsidiaries or (ii) could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
(y) Title to Intellectual Property. The Company and its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights, licenses and know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective businesses; and the conduct of
their respective businesses will not conflict in any material respect with any such rights of
others, and the Company and its subsidiaries have not received any notice of any claim of
infringement of or conflict with any such rights of others.
(z) No Undisclosed Relationships. After giving effect to the Transactions and the other
transactions contemplated hereby, no relationship, direct or indirect, exists between or
9
among the
Company or any of its subsidiaries, on the one hand, and the directors, officers, stockholders,
customers or affiliates of the Company or any of its subsidiaries, on the other, that is required
by the Securities Act to be described in the Registration Statement and the Prospectus and that is
not so described in such documents and in the Time of Sale Information.
(aa) Investment Company Act. The Company is not, and after giving effect to the Transactions,
including the offering and sale of the Securities and the application of the proceeds thereof as
described in the Registration Statement, the Time of Sale Information and the Prospectus, will not
be, an “investment company” or an entity “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, the “Investment Company Act”).
(bb) Taxes. The Company and its subsidiaries and Keystone and its subsidiaries have paid all
federal, state, local and foreign taxes and filed all tax returns required to be paid or filed
through the date hereof, except for such taxes, if any, which are being contested in good faith and
for which adequate reserves have been provided; and except as otherwise disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, there is no tax deficiency
that has been, or could reasonably be expected to be, asserted against the Company or any of its
subsidiaries or Keystone or any of its subsidiaries or any of their respective properties or assets
that could, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(cc) Licenses and Permits. The Company and its subsidiaries and Keystone and its subsidiaries
possess all licenses, certificates, permits and other authorizations issued by, and have made all
declarations and filings with, the appropriate federal, state, local or foreign governmental or
regulatory authorities that are necessary for the ownership or lease of their respective properties
or the conduct of their respective businesses as described in the Registration Statement, the Time
of Sale Information and the Prospectus, except where the failure to possess or make the same would
not, individually or in the aggregate, have a Material Adverse Effect; and except as described in
the Registration Statement, the Time of Sale Information and the Prospectus, neither the Company
nor any of its subsidiaries nor Keystone nor its subsidiaries has received notice of any revocation
or modification of any such license, certificate, permit or authorization or has any reason to
believe that any such license, certificate, permit or authorization will not be renewed in the
ordinary course.
(dd) No Labor Disputes. No labor disturbance by or dispute with employees of the Company or
any of its subsidiaries or Keystone or any of its subsidiaries exists or, to the best
knowledge of the Company, is contemplated or threatened and the Company is not aware of any
existing or imminent labor disturbance by, or dispute with, the employees of any of the Company’s
or any of the Company’s subsidiaries’ or Keystone’s or any of Keystone’s subsidiaries’ principal
suppliers, contractors or customers, except as would not have a Material Adverse Effect.
(ee) Compliance With Environmental Laws. (i) The Company and its subsidiaries and Keystone
and its subsidiaries (x) are in compliance with any and all applicable federal, state, local and
foreign laws, rules, regulations, requirements, decisions and orders relating to the protection of
human health or safety, the environment, natural resources, hazardous or toxic substances or
wastes, pollutants or contaminants (collectively, “Environmental Laws”); (y) have received and are
in compliance with all permits, licenses, certificates or other authorizations or approvals
required of them under applicable Environmental Laws to conduct their respective
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businesses; and
(z) have not received notice of any actual or potential liability under or relating to any
Environmental Laws, including for the investigation or remediation of any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants, and have no knowledge of any
event or condition that would reasonably be expected to result in any such notice, and (ii) there
are no costs or liabilities associated with Environmental Laws of or relating to the Company or its
subsidiaries or Keystone or its subsidiaries, except in the case of each of (i) and (ii) above, for
any such failure to comply, or failure to receive required permits, licenses or approvals, or cost
or liability, as would not, individually or in the aggregate, have a Material Adverse Effect; and
(iii) except as described in each of the Time of Sale Information and the Prospectus, (x) there are
no proceedings that are pending, or that are known to be contemplated, against the Company or any
of its subsidiaries or Keystone or any of its subsidiaries under any Environmental Laws in which a
governmental entity is also a party, other than such proceedings regarding which it is reasonably
believed no monetary sanctions of $100,000 or more will be imposed, (y) the Company and its
subsidiaries and Keystone and its subsidiaries are not aware of any issues regarding compliance
with Environmental Laws, or liabilities or other obligations under Environmental Laws or concerning
hazardous or toxic substances or wastes, pollutants or contaminants, that could reasonably be
expected to have a material effect on the capital expenditures, earnings or competitive position of
the Company and its subsidiaries and Keystone and its subsidiaries, and (z) none of the Company,
Keystone or any of their respective subsidiaries anticipates material capital expenditures relating
to any Environmental Laws.
(ff) Compliance With ERISA. (i) Each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for which the
Company or any member of its “Controlled Group” (defined as any organization which is a member of a
controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”)) would have any liability (each, a “Plan”) 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 Code, except where the failure to be in
such compliance would not, individually or in the aggregate, have a Material Adverse Effect; (ii)
no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code,
has occurred with respect to any Plan excluding transactions effected pursuant to a statutory or
administrative exemption; (iii) for each Plan that 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, whether or not waived, has occurred or is reasonably expected to occur; (iv) the fair
market value of the assets of each Plan exceeds the present value of all benefits accrued under
such Plan (determined based on
those assumptions used to fund such Plan) except for any deficiency that would not,
individually or in the aggregate, have a Material Adverse Effect; (v) no “reportable event” (within
the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur for which
the Company would have any liability, except where such liability would not, individually or in the
aggregate, have a Material Adverse Effect; and (vi) neither the Company nor any member of its
Controlled Group has incurred, nor reasonably expects to incur, any liability under Title IV of
ERISA (other than contributions to the Plan or premiums to the Pension Benefit Guaranty
Corporation, in the ordinary course and without default) in respect of a Plan (including a
“multiemployer plan”, within the meaning of Section 4001(a)(3) of ERISA), except where such
liability would not, individually or in the aggregate, have a Material Adverse Effect.
(gg) Disclosure Controls. The Company and its subsidiaries each maintain an effective system
of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is
designed to ensure that information required to be disclosed by the
11
Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commission’s rules and forms, including controls and procedures
designed to ensure that such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required disclosure. The Company and
its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and
procedures as required by Rule 13a-15 of the Exchange Act.
(hh) Company Accounting Controls. The Company and its subsidiaries maintain systems of
“internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that
comply with the requirements of the Exchange Act and have been designed by, or under the
supervision of, their respective principal executive and principal financial officers, or persons
performing similar functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. The Company and its subsidiaries each maintain
internal accounting controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii) access to assets is
permitted only in accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, there are no material
weaknesses in the Company’s internal controls.
(ii) Keystone Accounting Controls. Keystone and its subsidiaries maintain systems of internal
accounting controls sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management’s general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles of Canada and to maintain asset accountability; (iii) access to assets is
permitted only in accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except as disclosed in Registration
Statement, the Time of Sale Information and the Prospectus, there are no material weaknesses or
significant deficiencies in Keystone’s internal controls.
(jj) No Unlawful Payments. None of the Company, Keystone nor any of their respective
subsidiaries nor, to the best knowledge of the Company, any director, officer, agent, employee or
other person associated with or acting on behalf of the Company or any of its subsidiaries or
Keystone or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(kk) Insurance. The Company, the Company Significant Subsidiaries, Keystone and its
subsidiaries have insurance covering their respective properties, operations, personnel and
businesses, including business interruption insurance, which insurance is in amounts and insures
against such losses and risks as are adequate to protect the Company, the Company Significant
Subsidiaries, Keystone and its subsidiaries and their respective businesses; and none of the
12
Company and the Company Significant Subsidiaries, or Keystone and its subsidiaries have (i)
received notice from any insurer or agent of such insurer that capital improvements or other
expenditures are required or necessary to be made in order to continue such insurance or (ii) any
reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may
be necessary to continue its business.
(ll) Compliance with Money Laundering Laws. The operations of the Company and its
subsidiaries and Keystone and its subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any governmental agency (collectively, the
“Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its subsidiaries or
Keystone or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened.
(mm) Compliance with OFAC. None of the Company, Keystone or any of their respective
subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury
(“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering of the
Securities hereunder, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by OFAC.
(nn) Solvency. On and immediately after the Closing Date, the Company (after giving effect to
the issuance of the Securities, the Transactions and the other transactions contemplated hereby)
will be Solvent. As used in this paragraph, the term “Solvent” means, with respect to a particular
date, that on such date (i) the present fair market value (or present fair saleable value) of the
assets of the Company is not less than the total amount required to pay the liabilities of the
Company on its total existing debts and liabilities (including contingent liabilities) as they
become
absolute and matured; (ii) the Company is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and commitments as they mature and become due in the
normal course of business; (iii) assuming consummation of the issuance of the Securities as
contemplated by this Agreement, the Registration Statement, the Time of Sale Information and the
Prospectus, the Company is not incurring debts or liabilities beyond its ability to pay as such
debts and liabilities mature; (iv) the Company is not engaged in any business or transaction, and
does not propose to engage in any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the prevailing practice in the
industry in which the Company is engaged; and (v) the Company is not a defendant in any civil
action that would result in a judgment that the Company is or would become unable to satisfy.
(oo) No Restrictions on Subsidiaries. After giving effect to the Transactions and the other
transactions contemplated hereby, no subsidiary of the Company will be prohibited, directly or
indirectly, under any agreement or other instrument to which it is a party or is subject, from
paying any dividends to the Company, from making any other distribution on such subsidiary’s
capital stock, from repaying to the Company any loans or advances to such subsidiary from the
Company or, except pursuant to customary restrictions set forth in the Credit
13
Agreement, from
transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary
of the Company.
(pp) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would give
rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a
brokerage commission, finder’s fee or like payment in connection with the offering and sale of the
Securities.
(qq) No Stabilization. The Company has not taken, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Securities.
(rr) Margin Rules. Neither the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Company as described in the Registration Statement, the
Time of Sale Information and the Prospectus will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of Governors.
(ss) Forward-Looking Statements. No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) included or incorporated by
reference in the Registration Statement, the Time of Sale Information and the Prospectus has been
made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(tt) Statistical and Market Data. Nothing has come to the attention of the Company that has
caused the Company to believe that the statistical and market-related data included or incorporated
by reference in the Registration Statement, the Time of Sale Information and the Prospectus is not
based on or derived from sources that are reliable and accurate in all material respects.
(uu) Xxxxxxxx-Xxxxx Act. There is and has been no failure on the part of the Company or any
of the Company’s directors or officers, in their capacities as such, to comply with any provision
of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated in connection therewith (the “Xxxxxxxx-Xxxxx Act”), including Section 402 related
to loans and Sections 302 and 906 related to certifications.
(vv) Status under the Securities Act. The Company is not an ineligible issuer and is a
well-known seasoned issuer, in each case as defined under the Securities Act, in each case at the
times specified in the Securities Act in connection with the offering of the Securities.
4. Further Agreements of the Company. The Company covenants and agrees with each
Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act,
will file any Issuer Free Writing Prospectus (including the Term Sheet in the form of Annex E
hereto) to the extent required by Rule 433 under the Securities Act and will file promptly 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 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 Securities; and the Company will furnish copies of the Prospectus
and each Issuer Free Writing Prospectus (to the
14
extent not previously delivered) to the
Underwriters 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 the Representative may reasonably
request. The Company will pay the registration fees for this offering within the time period
required by Rule 456(b)(1)(i) under the Securities Act (without giving effect to the proviso
therein) and in any event prior to the Closing Date.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to the Representative,
two signed copies of the Registration Statement as originally filed and each amendment thereto, in
each case including all exhibits and consents filed therewith and documents incorporated by
reference therein; and (ii) to each Underwriter (A) a conformed copy of the Registration Statement
as originally filed and each amendment thereto, in each case including all exhibits and consents
filed therewith and (B) during the Prospectus Delivery Period (as defined below), as many copies of
the Prospectus (including all amendments and supplements thereto and documents incorporated by
reference therein) and each Issuer Free Writing Prospectus as the Representative may reasonably
request. As used herein, the term “Prospectus Delivery Period” means such period of time after the
first date of the public offering of the Securities as in the opinion of counsel for the
Underwriters a prospectus relating to the Securities is required by law to be delivered (or
required to be delivered but for Rule 172 under the Securities Act) in connection with sales of the
Securities by any Underwriter or dealer.
(c) Amendments or Supplements; Issuer Free Writing Prospectuses. Before making, preparing,
using, authorizing, approving, referring to or filing any Issuer Free Writing Prospectus, whether
before or after the time that the Registration Statement becomes effective, and before filing any
amendment or supplement to the Registration Statement or the Prospectus, the Company will furnish
to the Representative and counsel for the Underwriters a copy of the proposed Issuer Free Writing
Prospectus, amendment or supplement for review and the Company will not make, prepare, use,
authorize, approve, refer to or file any such Issuer Free Writing Prospectus or file any such
proposed amendment or supplement to which the Representative reasonably objects.
(d) Notice to the Representative. The Company will advise the Representative promptly, and
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 amendment to the Prospectus or any Issuer Free Writing
Prospectus has been filed; (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or the receipt of any
comments from the Commission relating to the Registration Statement or any other request by the
Commission for any additional information; (v) of the issuance by the Commission of any order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or the initiation or threatening of any proceeding for
that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event
within the Prospectus Delivery Period as a result of which the Prospectus, the Time of Sale
Information or any Issuer Free Writing Prospectus as then amended or supplemented would include any
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 existing
when the Prospectus, the Time of Sale Information or any such Issuer Free Writing Prospectus is
delivered to a purchaser, not misleading; (vii) of the receipt by the Company of any notice of
objection of the Commission to the use of the Registration Statement or any post-effective
amendment thereto pursuant to Rule 401(g)(2) under the Securities Act; and (viii) of the receipt by
the Company of any notice with respect to any suspension of the qualification of the Securities for
offer and sale in any
15
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such
order suspending the effectiveness of the Registration Statement, preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such qualification of the
Securities and, if any such order is issued, will obtain as soon as possible the withdrawal
thereof.
(e) Time of Sale Information. If at any time prior to the Closing Date (i) any event shall
occur or condition shall exist as a result of which the Time of Sale Information as then amended or
supplemented would include any 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, not
misleading or (ii) it is necessary to amend or supplement the Time of Sale Information to comply
with law, the Company will immediately notify the Underwriters thereof and forthwith prepare and,
subject to paragraph (c) above, file with the Commission (to the extent required) and furnish to
the Underwriters and to such dealers as the Representative may designate, such amendments or
supplements to the Time of Sale Information as may be necessary so that the statements in the Time
of Sale Information as so amended or supplemented will not, in the light of the circumstances, be
misleading or so that the Time of Sale Information will comply with law.
(f) Ongoing Compliance. If during the Prospectus Delivery Period (i) any event shall occur or
condition shall exist as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it
is necessary to amend or supplement the Prospectus to comply with law, the Company will immediately
notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file
with the Commission and furnish to the Underwriters and to such dealers as the Representative may
designate, 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 existing when the Prospectus is delivered
to a purchaser, be misleading or so that the Prospectus will comply with law
(g) Blue Sky Compliance. The Company will qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representative shall reasonably request
and will continue such qualifications in effect so long as required for distribution of the
Securities; provided that the Company shall not be required to (i) qualify as a foreign
corporation or other entity or as a dealer in securities in any such jurisdiction where it would
not otherwise be required to so qualify, (ii) file any general consent to service of process in any
such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not
otherwise so subject.
(h) Earning Statement. The Company will make generally available to its security holders and
the Representative as soon as practicable an earning statement that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering
a period of at least twelve months beginning with the first fiscal quarter of the Company occurring
after the “effective date” (as defined in Rule 158) of the Registration Statement.
(i) Clear Market. During the period from the date hereof through and including the date that
is 90 days after the date hereof, the Company will not, without the prior written consent
16
of the Representative, offer, sell, contract to sell or otherwise dispose of any debt securities
issued or guaranteed by the Company and having a tenor of more than one year.
(j) Use of Proceeds. The Company will apply the net proceeds from the sale of the Securities
as described in the Registration Statement, the Time of Sale Information and the Prospectus under
the heading “Use of Proceeds”.
(k) No Stabilization. The Company will not take, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Securities.
(l) Record Retention. The Company will, pursuant to reasonable procedures developed in good
faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the Commission
in accordance with Rule 433 under the Securities Act.
5. Certain Agreements of the Underwriters. Each Underwriter hereby represents and
agrees that
(a) It has not and will not use, authorize use of, refer to, or participate in the planning
for use of, any “free writing prospectus”, as defined in Rule 405 under the Securities Act (which
term includes use of any written information furnished to the Commission by the Company and not
incorporated by reference into the Registration Statement and any press release issued by the
Company) other than (i) a free writing prospectus that, solely as a result of use by such
Underwriter, would not trigger an obligation to file such free writing prospectus with the
Commission pursuant to Rule 433, (ii) any Issuer Free Writing Prospectus listed on Annex D or
prepared pursuant to Section 3(c) or Section 4(c) above (including any electronic road show), or
(iii) any free writing prospectus prepared by such Underwriter and approved by the Company in
advance in writing (each such free writing prospectus referred to in clauses (i) or (iii), an
“Underwriter Free Writing Prospectus”). Notwithstanding the foregoing, the Underwriters may use a
term sheet substantially in the form of Annex E hereto without the consent of the Company.
(b) It is not subject to any pending proceeding under Section 8A of the Securities Act with
respect to the offering (and will promptly notify the Company if any such proceeding against it is
initiated during the Prospectus Delivery Period).
6. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to
purchase Securities on the Closing Date as provided herein is subject to the performance by the
Company of its covenants and other obligations hereunder and to the following additional
conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceeding for such purpose, pursuant to Rule
401(g)(2) or pursuant to Section 8A under the Securities Act shall be pending before or threatened
by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely
filed with the Commission under the Securities Act (in the case of a Issuer Free Writing
Prospectus, to the extent required by Rule 433 under the Securities Act) and in accordance with
Section 4(a) hereof; and all requests by the Commission for additional information shall have been
complied with to the reasonable satisfaction of the Representative.
17
(b) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct on the date hereof and on and as of the Closing Date;
and the statements of the Company and its officers made in any certificates delivered pursuant to
this Agreement shall be true and correct on and as of the Closing Date.
(c) No Downgrade. Subsequent to the earlier of (A) the Time of Sale and (B) the execution and
delivery of this Agreement, (i) no downgrading shall have occurred in the rating accorded the
Securities or any other debt securities or preferred stock issued or guaranteed by the Company or
any of its subsidiaries by any “nationally recognized statistical rating organization”, as such
term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act and (ii)
no such organization shall have publicly announced that it has under surveillance or review, or has
changed its outlook with respect to, its rating of the Securities or of any other debt securities
or preferred stock issued or guaranteed by the Company or any of its subsidiaries (other than an
announcement with positive implications of a possible upgrading).
(d) No Material Adverse Change. No event or condition of a type described in Sections 3(g) or
3(h) hereof shall have occurred or shall exist, which event or condition is not described in the
Time of Sale Information (excluding any amendment or supplement thereto) and the Prospectus
(excluding any amendment or supplement thereto) and the effect of which in the judgment of the
Representative makes it impracticable or inadvisable to proceed with the offering, sale or delivery
of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale
Information and the Prospectus.
(e) Officer’s Certificate. The Representative shall have received on and as of the Closing
Date a certificate of an executive officer of the Company who has specific knowledge of the
Company’s financial matters and is satisfactory to the Representative (i) confirming that such
officer has carefully reviewed the Registration Statement, the Time of Sale Information and the
Prospectus and, to the best knowledge of such officer, the representations set forth in Sections
3(b) or 3(d) hereof are true and correct, (ii) confirming that the other representations and
warranties of the Company in this Agreement are true and correct and that the Company has complied
with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date and (iii) to the effect set forth in paragraphs (a), (c) and (d)
above.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date, (i)
PricewaterhouseCoopers LLP shall have furnished to the Representative, at the request of the
Company, letters, dated the respective dates of delivery thereof and addressed to the Underwriters,
in form and substance reasonably satisfactory to the Representative, 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 of the Company and its
subsidiaries contained or incorporated by reference in the Registration Statement, the Time of Sale
Information and the Prospectus; provided that the letter delivered on the Closing Date
shall use a “cut-off” date no more than three business days prior to the Closing Date and (ii)
Ernst & Young LLP shall have furnished to the Representative, at the request of the Company,
letters, dated the respective dates of delivery thereof and addressed to the Underwriters, in form
and substance reasonably satisfactory to the Representative, containing statements and information
of the type customarily included in accountants’ “comfort letters” to underwriters with respect to
certain financial information of Keystone contained in the Registration Statement, the Time of Sale
Information and the Prospectus; provided that the letter delivered on the Closing Date
shall use a “cut-off” date no more than three business days prior to the Closing Date.
18
(g) Opinion and 10b-5 Statement of Counsel for the Company. Xxxxx Lord Xxxxxxx & Xxxxxxx LLP,
counsel for the Company, shall have furnished to the Representative, at the request of the Company,
their written opinion and 10b-5 Statement, dated the Closing Date and addressed to the
Underwriters, in form and substance reasonably satisfactory to the Representative, to the effect
set forth in Annex A hereto.
(h) Opinion of Ontario Counsel for the Company. Fraser Xxxxxx Casgrain LLP, Ontario Counsel
for the Company, shall have furnished to the Representative, at the request of the Company, their
written opinion, dated the Closing Date and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Representative, to the effect set forth in Annex B hereto.
(i) Opinion and 10b-5 Statement of the General Counsel for the Company. Xxxxxxx X. Xxxxxxxx,
Senior Vice President, General Counsel and Secretary for the Company, shall have furnished to the
Representative, at the request of the Company, his written opinion and 10b-5 Statement, dated the
Closing Date and addressed to the Underwriters, in form and substance reasonably satisfactory to
the Representative, to the effect set forth in Annex C hereto.
(j) Opinion and 10b-5 Statement of Counsel for the Underwriters. The Representative shall
have received on and as of the Closing Date an opinion and 10b-5 Statement of Cravath, Swaine &
Xxxxx LLP, counsel for the Underwriters, with respect to such matters as the Representative may
reasonably request, and such counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.
(k) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or
sale of the Securities or the consummation of the Transactions; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent
the issuance or sale of the Securities or the consummation of the Transactions.
(l) Good Standing. The Representative shall have received on and as of the Closing Date
satisfactory evidence of the good standing of the Company and its Significant Subsidiaries in their
respective jurisdictions of organization and their good standing in such other jurisdictions as the
Representative may reasonably request, in each case in writing or any standard form of
telecommunication from the appropriate governmental authorities of such jurisdictions.
(m) Transaction. If the consummation of the Acquisition occurs prior to or on the Closing
Date, at or simultaneously with the Closing, the consummation of the Acquisition in accordance with
the Acquisition Agreement on terms substantially similar to the description in the Registration
Statement, the Time of Sale Information and the Prospectus, as applicable, shall have occurred or
shall occur substantially concurrently with the consummation of the offering of the Securities
(without giving effect to any waivers of conditions thereto not consented to by the
Representative).
(n) Escrow Agreement. If the Closing Date occurs prior to the consummation of the
Acquisition, the Representative shall have received a counterpart of the Escrow Agreement that
shall have been executed and delivered by a duly authorized officer of the Company, and upon
19
the consummation of the issuance of the Securities, (i) the net proceeds of the offering and (ii)
cash, cash equivalents or treasury securities, in an amount such that the Escrow Funds, together
with such cash, cash equivalents or treasury securities deposited, are sufficient to redeem the
Securities in cash at a redemption price equal to 101% of the issue price of the Securities plus
accrued and unpaid interest to the redemption date, shall be deposited in the Escrow Account.
(o) Additional Documents. On or prior to the Closing Date, the Company shall have furnished
to the Representative such further certificates and documents as the Representative may reasonably
request.
All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless
each Underwriter, its affiliates, directors and officers and each person, if any, who controls such
Underwriter within the meaning of 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, legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that
arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to make the statements
therein, not misleading, (ii) or any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing
Prospectus or any Time of Sale Information, or caused by any omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case except insofar as such
losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in conformity with any
information relating to any Underwriter furnished to the Company in writing by such Underwriter
through the Representative expressly for use therein.
(b) Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise
out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such Underwriter furnished
to the Company in writing by such Underwriter through the Representative expressly for use in the
Registration Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free
Writing Prospectus or any Time of Sale Information, it being understood and agreed that the only
such information consists of the following: the statements concerning the Underwriters contained
in the third paragraph and the third and fourth sentences of the sixth paragraph and the seventh
paragraph under the caption
20
“Underwriting” and, with respect to each Underwriter, such Underwriters’ name as it appears on the
cover.
(c) Notice and Procedures. 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 indemnification may be sought pursuant to either paragraph (a) or (b) above, such
person (the “Indemnified Person”) shall promptly notify the person against whom such
indemnification may be sought (the “Indemnifying Person”) in writing; provided that the
failure to notify the Indemnifying Person shall not relieve it from any liability that it may have
under paragraph (a) or (b) above except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b)
above. If any such proceeding shall be brought or asserted against an Indemnified Person and it
shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the
Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and
any others entitled to indemnification pursuant to this Section 7 that the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such proceeding and shall pay
the fees and expenses of such counsel related to such proceeding, as incurred. 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 shall have failed within a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it that are different from or in addition
to those available to the Indemnifying Person; or (iv) 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 and agreed 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 any Underwriter, its affiliates, directors and
officers and any control persons of such Underwriter shall be designated in writing by X.X. Xxxxxx
Securities Inc. and any such separate firm for the Company, its directors, its officers who signed
the Registration Statement and any control persons of the Company 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 each 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 that an
Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person 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 the Indemnifying Person of such request, (ii) such Indemnifying Person shall
have received notice of the terms of such settlement at least 30 days prior to such settlement
being entered into, and (iii) the 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 written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of
21
which any Indemnified Person is or could have been a party and indemnification could have been
sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional
release of such Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of such proceeding and
(y) does not include any statement as to or any admission of fault, culpability or a failure to act
by or on behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient 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 (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the Securities or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) but also the
relative fault of the Company on the one hand and the Underwriters on the other in connection with
the statements or omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the same respective
proportions as the net proceeds (before deducting expenses) received by the Company from the sale
of the Securities and the total underwriting discounts and commissions received by the Underwriters
in connection therewith, in each case as set forth in the table on the cover of the Prospectus,
bear to the aggregate offering price of the Securities. The relative fault of the Company on the
one hand and 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.
(e) Limitation on Liability. 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 paragraph (d) above. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in paragraph (d) above 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 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 underwriting discounts and commissions received by such
Underwriter with respect to the offering of the Securities 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 their respective purchase
obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at
law or in equity.
22
8. Effectiveness of Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
9. Termination. This Agreement may be terminated in the absolute discretion of the
Representative, by notice to the Company, if after the execution and delivery of this Agreement and
on or prior to the Closing Date (i) trading generally shall have been suspended or materially
limited on the New York Stock Exchange or the over-the-counter market; (ii) trading of any
securities issued or guaranteed by the Company shall have been suspended on any exchange or in any
over-the-counter market; (iii) a general moratorium on commercial banking activities shall have
been declared by federal or New York State authorities; or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis,
either within or outside the United States, that, in the judgment of the Representative, is
material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale
or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the
Time of Sale Information and the Prospectus.
10. Defaulting Underwriter. (a) If, on the Closing Date, any Underwriter defaults on
its obligation to purchase the Securities that it has agreed to purchase hereunder, the
non-defaulting Underwriters may in their discretion arrange for the purchase of such Securities by
other persons satisfactory to the Company on the terms contained in this Agreement. If, within 36
hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for
the purchase of such Securities, then the Company shall be entitled to a further period of 36 hours
within which to procure other persons satisfactory to the non-defaulting Underwriters to purchase
such Securities on such terms. If other persons become obligated or agree to purchase the
Securities of a defaulting Underwriter, either the non-defaulting Underwriters or the Company may
postpone the Closing Date for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or arrangement, and the Company
agrees to promptly prepare any amendment or supplement to the Registration Statement and the
Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter”
includes, for all purposes of this Agreement unless the context otherwise requires, any person not
listed in Schedule 1 hereto that, pursuant to this Section 10, purchases Securities that a
defaulting Underwriter agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in paragraph (a) above, the aggregate principal amount of such Securities that remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities,
then the Company shall have the right to require each non-defaulting Underwriter to purchase the
principal amount of Securities that such Underwriter agreed to purchase hereunder plus such
Underwriter’s pro rata share (based on the principal amount of Securities that such
Underwriter agreed to purchase hereunder) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in paragraph (a) above, the aggregate principal amount of such Securities that remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the
Company shall not exercise the right described in paragraph (b) above, then this Agreement shall
terminate without liability on the part of the non-defaulting Underwriters. Any termination of
this
23
Agreement pursuant to this Section 10 shall be without liability on the part of the Company, except
that the Company will continue to be liable for the payment of expenses as set forth in Section 11
hereof and except that the provisions of Section 7 hereof shall not terminate and shall remain in
effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company or any non-defaulting Underwriter for damages caused by its default.
11. Payment of Expenses. (a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay or cause to be paid
all costs and expenses incident to the performance of its obligations hereunder, including without
limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery
of the Securities and any taxes payable in that connection; (ii) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration Statement, the
Preliminary Prospectus, any Issuer Free Writing Prospectus, any Time of Sale Information and the
Prospectus (including all exhibits, amendments and supplements thereto) and the distribution
thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents; (iv)
the fees and expenses of the Company’s counsel and independent accountants; (v) the fees and
expenses incurred in connection with the registration or qualification and determination of
eligibility for investment of the Securities under the laws of such jurisdictions as the
Representative may designate and the preparation, printing and distribution of a Blue Sky
Memorandum (including the related fees and expenses of counsel for the Underwriters); (vi) any fees
charged by rating agencies for rating the Securities; (vii) the fees and expenses of the Trustee
and any paying agent (including related fees and expenses of any counsel to such parties); (viii)
all expenses and application fees incurred in connection with any filing with, and clearance of the
offering by, the Financial Industry Regulatory Authority; and (ix) all expenses incurred by the
Company in connection with any “road show” presentation to potential investors.
(b) If (i) this Agreement is terminated pursuant to Section 9, (ii) the Company for any reason
fails to tender the Securities for delivery to the Underwriters or (iii) the Underwriters decline
to purchase the Securities for any reason permitted under this Agreement, the Company agrees to
reimburse the Underwriters for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Underwriters in connection with this
Agreement and the offering contemplated hereby.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and the officers
and directors and any controlling persons referred to herein, and the affiliates of each
Underwriter referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein. No purchaser of Securities from any
Underwriter shall be deemed to be a successor merely by reason of such purchase.
13. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company and the Underwriters contained in this Agreement or made
by or on behalf of the Company or the Underwriters pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the Securities and shall
remain in full force and effect, regardless of any termination of this Agreement or any
investigation made by or on behalf of the Company or the Underwriters.
24
14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities
Act; (b) 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; (c) the term “subsidiary” has the meaning set forth in Rule
405 under the Securities Act; and (d) the term “significant subsidiary” has the meaning set forth
in Rule 1-02 of Regulation S-X under the Exchange Act.
15. Miscellaneous. (a) Authority of the Representative. Any action by the
Underwriters hereunder may be taken by the Representative on behalf of the Underwriters, and any
such action taken by the Representative shall be binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Underwriters shall be given to the Representative c/o X.X.
Xxxxxx Securities Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax: 000-000-0000); Attention:
Xxxxxx Xxxx. Notices to the Company shall be given to it at 0000 Xxxxx Xxxxxxx, Xxxxxxx, Xxxxx
00000, (fax: 000-000-0000); Attention: Xxxx X. Xxxxxxxxxx.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.
(f) Headings. The headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
25
If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.
| Very truly yours, SERVICE CORPORATION INTERNATIONAL, |
||||
| By | /s/ Xxxx X. Xxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxx | |||
| Title: | Senior Vice President, Chief Financial Officer and Treasurer | |||
| Accepted: November 5, 2009 X.X. XXXXXX SECURITIES INC., For itself and on behalf of the several Underwriters listed in Schedule I hereto |
||||
| By | /s/ Xxxxxxxx X. Xxxxxx | |||
| Authorized Signatory | ||||
26
Schedule 1
| Underwriter | Principal Amount | |||
X.X. Xxxxxx Securities Inc. |
$ | 75,000,000 | ||
Banc of America Securities LLC |
$ | 45,000,000 | ||
Scotia Capital (USA) Inc. |
$ | 7,500,000 | ||
Xxxxxx Xxxxxx & Company, Inc. |
$ | 7,500,000 | ||
Xxxxxxx Xxxxx & Associates, Inc. |
$ | 7,500,000 | ||
SunTrust Xxxxxxxx Xxxxxxxx, Inc. |
$ | 7,500,000 | ||
Total |
$ | 150,000,000 | ||
27
Schedule 2
Significant Subsidiaries
Company Significant Subsidiaries
| Name | State of Incorporation | |
SCI International Limited
|
Delaware | |
SCI Cerberus, LLC
|
Delaware | |
Service Corporation International (Canada) Limited
|
Canadian Federal | |
Alderwoods Group, LLC
|
Delaware | |
SCI Funeral Services, LLC
|
Iowa | |
SCI Texas Funeral Services, Inc.
|
Delaware | |
SCI Funeral Services of Florida, Inc.
|
Florida | |
SCI California Funeral Services, Inc.
|
California |
28
Annex A
[Form of Opinion of Xxxxx Lord Xxxxxxx & Xxxxxxx LLP]
(a) The Registration Statement is an “automatic shelf registration statement” as defined under
Rule 405 of the Securities Act that has been filed with the Commission not earlier than three years
prior to the date of the Underwriting Agreement; each of the Preliminary Prospectus and the
Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the
Securities Act specified in such opinion on the date specified therein; and no order suspending the
effectiveness of the Registration Statement has been issued, no notice of objection of the
Commission to the use of such registration statement or any post-effective amendment thereto
pursuant to Rule 401(g)(2) under the Securities Act has been received by the Company and no
proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or
in connection with the offering is pending or, to the knowledge of such counsel, threatened by the
Commission.
(b) The Registration Statement, the Preliminary Prospectus, each Issuer Free Writing
Prospectus included in the Time of Sale Information and the Prospectus (other than the financial
statements and related schedules therein, as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the Securities Act; and the Indenture
complies as to form in all material respects with the requirements of the Trust Indenture Act.
(c) Based solely upon certificates from public officials, the Company and each of the Company
Significant Subsidiaries have been duly organized, are validly existing and in good standing under
the laws of their respective jurisdictions of organization, are duly qualified to do business and
are in good standing in each jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct the businesses in
which they are engaged, except where the failure to be so qualified or have such power or authority
would not, individually or in the aggregate, have a Material Adverse Effect.
(d) The Company has an authorized capitalization as set forth in the Registration Statement,
the Time of Sale Information and the Prospectus; and, after giving effect to the Transactions and
the other transactions contemplated by the Transaction Documents, all the outstanding shares of
capital stock or other equity interests of each of the Company Significant Subsidiaries have been
duly and validly authorized and issued, are fully paid and non-assessable (except, in the case of
any foreign subsidiary, for directors’ qualifying shares and except as otherwise described in the
Registration Statement, the Time of Sale Information and the Prospectus) and are owned directly or
indirectly by the Company, free and clear of any lien, charge, encumbrance, security interest,
restriction on voting or transfer or any other claim of any third party.
(e) The Company has full right, power and authority to execute and deliver the Transaction
Documents and perform its obligations thereunder; and all corporate action required to be taken by
the Company for the due and proper authorization, execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated thereby has been duly and validly
taken.
(f) The Base Indenture has been duly authorized, executed and delivered by the Company and
(assuming the due authorization, execution and delivery thereof by the Trustee) constitutes a valid
and legally binding agreement of the Company enforceable against the
29
Company in accordance with its terms, subject to the Enforceability Exceptions; and the Base
Indenture as supplemented by the Supplemental Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of the Commission applicable
to an indenture that is qualified thereunder.
(g) The Supplemental Indenture has been duly authorized, executed and delivered by the Company
and (assuming due authorization, execution and delivery thereof by the Trustee) constitutes a valid
and legally binding agreement of the Company enforceable against the Company in accordance with its
terms, subject to the Enforceability Exceptions.
(h) The Securities have been duly authorized, executed and delivered by the Company and, when
duly authenticated as provided in the Indenture and paid for as provided in this Agreement, will be
duly and validly issued and outstanding and will constitute valid and legally binding obligations
of the Company enforceable against the Company in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the Indenture.
(i) This Agreement has been duly authorized, executed and delivered by the Company and the
Escrow Agreement has been duly authorized, executed and delivered by the Company and, when duly
executed and delivered by the other parties thereto, will constitute valid and legally binding
agreements of the Company, enforceable against the Company in accordance with their terms, subject
to the Enforceability Exceptions, and except that rights to indemnity and contribution thereunder
may be limited by applicable law and public policy.
(j) Each Transaction Document conforms in all material respects to the description thereof
contained in the Registration Statement, the Time of Sale Information and the Prospectus.
(k) The execution, delivery and performance by the Company and each of its subsidiaries of
each of the Transaction Documents to which it is a party, the issuance and sale of the Securities
and compliance by the Company and its subsidiaries with the terms thereof and the consummation of
the transactions contemplated by the Transaction Documents will not (i) conflict with or result in
a breach or violation of any of the terms or provisions of, or constitute 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 its subsidiaries pursuant to, 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) result in any violation of the
provisions of the charter or by-laws or similar organizational documents of the Company or any of
its subsidiaries or (iii) result in the violation of any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in
the case of clauses (i) and (iii) above, for any such conflict, breach, violation or default that
would not, individually or in the aggregate, have a Material Adverse Effect.
(l) No consent, approval, authorization, order, registration or qualification of or with any
court or arbitrator or governmental or regulatory authority is required for the execution, delivery
and performance by the Company of each of the Transaction Documents, the issuance and sale of the
Securities and compliance by the Company with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents, except for such consents, approvals,
authorizations, orders and registrations or qualifications (x) which shall have been obtained or
made
30
on or prior to the Closing Date, (y) as may be required under applicable state securities laws
in connection with the purchase and distribution of the Securities by the Underwriters, and (z) as
described in Schedule “C” to the Acquisition Agreement.
(m) The statements in the Preliminary Prospectus and Prospectus under the heading “Material
U.S. federal income tax considerations”, to the extent that they constitute summaries of matters of
law or regulation or legal conclusions, fairly summarize the matters described therein in all
material respects.
(n) The Company is not and, after giving effect to the offering and sale of the Securities and
the application of the proceeds thereof as described in the Registration Statement, the Time of
Sale Information and the Prospectus, will not be an “investment company” or an entity “controlled”
by an “investment company” within the meaning of the Investment Company Act.
(o) Neither the issuance, sale and delivery of the Securities nor the application of the
proceeds thereof by the Company as described in the Prospectus will violate Regulation T, U or X of
the Board of Governors of the Federal Reserve System or any other regulation of such Board of
Governors.
Such counsel shall also state that they have participated in conferences with representatives
of the Company and with representatives of its independent accountants and counsel at which
conferences the contents of the Registration Statement, the Time of Sale Information and the
Prospectus and any amendment and supplement thereto and related matters were discussed and,
although such counsel assume no responsibility for the accuracy, completeness or fairness of the
Registration Statement, the Time of Sale Information, the Prospectus and any amendment or
supplement thereto (except as expressly provided above), nothing has come to the attention of such
counsel to cause such counsel to believe that the Registration Statement, at the time of its
effective date (including the information, if any, deemed pursuant to Rule 430A, 430B or 430C to be
part of the Registration Statement at the time of effectiveness), contained any untrue statement of
a material fact or omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, that the Time of Sale Information, at the Time of Sale
(which such counsel may assume to be the date of the Underwriting Agreement) contained any untrue
statement of a material fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading or that the
Prospectus or any amendment or supplement thereto as of its date and the Closing Date contains any
untrue statement of a material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading
(other than the financial statements and other financial information contained therein, as to
which such counsel need express no belief).
In rendering such opinion, such counsel may rely as to matters of fact on certificates of
responsible officers of the Company and public officials that are furnished to the Underwriters.
The opinion of Xxxxx Lord Bissell & Liddell LLP described above shall be rendered to the
Underwriters at the request of the Company and shall so state therein.
31
Annex B
[Form of Opinion of Fraser Xxxxxx Casgrain LLP]
(a) SCI Alliance Acquisition Corporation has full right, power and authority to execute and
deliver the Acquisition Agreement and perform its obligations thereunder, and all corporate action
required to be taken by SCI Alliance Acquisition Corporation for the due and proper authorization,
execution and delivery of the Acquisition Agreement and the consummation of the transactions
contemplated thereby has been duly and validly taken, except for any corporate action that may be
required with respect to a Subsequent Acquisition Transaction or a Compulsory Acquisition (within
the respective meanings given to such terms in the Acquisition Agreement).
(b) No consent, approval, authorization, order, registration or qualification of or with any
court or arbitrator or governmental or regulatory authority is required for the execution, delivery
and performance by SCI Alliance Acquisition Corporation of the Acquisition Agreement, except for
any consent, approval, authorization, order, registration and qualification described in Schedule
“C” to the Acquisition Agreement or that may be required with respect to a Subsequent Acquisition
Transaction or a Compulsory Acquisition (within the respective meanings given to such terms in the
Acquisition Agreement).
32
Annex C
[Form of Opinion of General Counsel for the Company]
(a) The Company and each of the Company Significant Subsidiaries have all power and authority
necessary to own or hold their respective properties and to conduct the businesses in which they
are engaged, except where the failure to have such power or authority would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) After giving effect to the Transactions, all the outstanding shares of capital stock or
other equity interests of each Company Significant Subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable (except, in the case of any foreign subsidiary, for
directors’ qualifying shares).
(c) To the knowledge of such counsel, except as described in the Registration Statement, the
Time of Sale Information and the Prospectus, there are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending to which the Company or any of its
subsidiaries is or may be a party or to which any property of the Company or any of its
subsidiaries is or may be the subject which, individually or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect; and no such investigations, actions, suits or proceedings are threatened
or, to the knowledge of such counsel, contemplated by any governmental or regulatory authority or
threatened by others.
(d) The descriptions in the Registration Statement, the Time of Sale Information and the
Prospectus of statutes, legal, governmental and regulatory proceedings and contracts and other
documents are accurate in all material respects; the statements incorporated by reference in the
Preliminary Prospectus and the Prospectus from Item 3 of Part I of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2008, to the extent that they constitute summaries of
matters of law or regulation or legal conclusions, fairly summarize the matters described therein
in all material respects; and, to the knowledge of such counsel, (A) there are no current or
pending legal, governmental or regulatory actions, suits or proceedings that are required under the
Securities Act to be described in the Registration Statement or the Prospectus and that are not so
described in the Registration Statement, the Time of Sale Information and the Prospectus and (B)
there are no statutes, regulations or contracts and other documents that are required under the
Securities Act to be filed as exhibits to the Registration Statement or described in the
Registration Statement or the Prospectus and that have not been so filed as exhibits to the
Registration Statement or described in the Registration Statement, the Time of Sale Information and
the Prospectus.
(e) Such counsel shall also state that they have reviewed the contents of the Registration
Statement, the Time of Sale Information and the Prospectus and any amendment and supplement thereto
and, although such counsel assume no responsibility for the accuracy, completeness or fairness of
the Registration Statement, Prospectus and Time of Sale Information and any amendment or supplement
thereto (except as expressly provided above), nothing has come to the attention of such counsel to
cause such counsel to believe that the Time of Sale Information, at the Time of Sale (which such
counsel may assume to be the date of this Agreement), contained any untrue statement of a material
fact or omitted to state a material fact or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or that the Registration Statement
or Prospectus
33
or any amendment or supplement thereto, as of its date and the Closing Date, contained or
contains any untrue statement of a material fact or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading (other than, in each case, the financial statements and other financial information
contained therein, as to which such counsel need express no belief).
In rendering such opinion, such counsel may rely as to matters of fact on certificates of
public officials that are furnished to the Underwriters.
The opinion of counsel described above shall be rendered to the Underwriters at the request of
the Company and shall so state therein.
34
Annex D
Time of Sale Information
| 1. | Term Sheet containing the terms of the Securities, substantially in the form of Annex E. |
35
Annex E
Pricing Term Sheet
Issuer: |
Service Corporation International | |||
Security Description: |
8.00% Senior Notes due 2021 | |||
Distribution: |
SEC Registered | |||
Face: |
$150,000,000 | |||
Gross Proceeds: |
$147,172,500 | |||
Net Proceeds to Issuer
(before expenses): |
$143,797,500 | |||
Coupon: |
8.00% | |||
Maturity: |
November 15, 2021 | |||
Offering Price: |
98.115% | |||
Yield to Maturity: |
8.25% | |||
Spread to Treasury: |
+ 472 basis points | |||
Benchmark: |
UST 3.625% due 8/15/2019 | |||
Ratings: |
B1/BB- | |||
Interest Pay Dates: |
November 15 and May 15 | |||
Beginning: |
May 15, 2010 | |||
Optional redemption: |
Make-whole call @ T+50bps | |||
Change of control: |
Put @ 101% of principal plus accrued interest | |||
Trade Date: |
November 5, 2009 | |||
Settlement Date: |
(T+3) | November 10, 2009 | ||
CUSIP: |
000000XX0 | |||
ISIN: |
US817565BU72 | |||
Denominations: |
2,000x1,000 | |||
Bookrunners: |
JPMorgan | |||
| BofA Xxxxxxx Xxxxx | ||||
Co-Managers: |
Xxxxxx Xxxxxx & Company, Inc. | |||
| Xxxxxxx Xxxxx | ||||
| Scotia Capital | ||||
| SunTrust Xxxxxxxx Xxxxxxxx |
The issuer has filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should read the prospectus in
that registration statement and other documents the issuer has filed with the SEC for more complete
information about the issuer and this offering. You may get these documents for free by visiting
XXXXX on the SEC Web site at xxx.xxx.xxx. Alternatively, the issuer, any underwriter or any dealer
participating in the offering will arrange to send you the prospectus if you request it by calling
collect 0-000-000-0000.
Note: A securities rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time.
36
