##### 



Exhibit 10.4
 Confirmation of OTC Warrant Transaction
 Date:
    
    June 21 2007To:
    
    Stewart Enterprises, Inc. (Counterparty)Attention:
    
    Thomas M. Kitchen, Chief Financial OfficerFacsimile No.:
    
    (504) 729-1407Telephone No.:
    
    (504) 729-1425From:
    
    Merrill Lynch Financial Markets, Inc. (MLFM)4 World Financial Center 5th FloorNew York, New York 10080Attention: Corporate DerivativesFacsimile No.: (212) 738-1069Telephone No.: (212) 449-6763
 MLFM Reference:
  Confirmation Agent MLPFS Transaction ).
 Swap
Definitions Equity
Definitions Definitions ),
 Master Agreement Agreement
  Confirmation OTC Warrant




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General Terms:
 Trade Date:
    
    June 21 2007Effective Date:
    
    June 27 2007 subject to cancellation of the OTC Warrant Transaction prior
to 5:00 p.m. (New York City time) on such date by the Counterparty. In
the event of such cancellation, any payments previously made hereunder,
including the Premium, shall be returned to the person making such
payment.Warrant Style:
    
    The Warrants shall be exercisable as set forth under Procedures for
Exercise below.Warrant Type:
    
    CallSeller:
    
    CounterpartyBuyer:
    
    MLFMShares:
    
    Shares of Class A common stock, no par value, of Counterparty (Security
Symbol: STEI).Number of Warrants:
    
    11,311,700Daily Number of Warrants:
    
    For any day, the unexercised Number of Warrants on such day dividedby the
remaining number of Expiration Dates (including such day) and rounded down
to the nearest whole number, with the balance of the Number of Warrants
exercised on the final Expiration Date.Warrant Entitlement:
    
    One (1) Share per WarrantStrike Price:
    
    $ 12.9270Premium:
    
    $ 20,412,500Premium Payment Date:
    
    The Effective Date; provided no cancellation of the Transaction has
occurred prior to 5:00 p.m. (New York City time) on such date by the
Counterparty.Exchange:
    
    NASDAQRelated Exchange(s):
    
    All ExchangesFull Exchange Business Day:
    
    A Scheduled Trading Day that has a scheduled closing time for its regular
trading session at 4:00 p.m. (New York City time) or the then standard
closing time for regular trading on the Exchange and is not a Disrupted
Day.Procedures for Exercise:Expiration Time:
    
    11:59 p.m. (New York City time).Expiration Dates:
    
    The 100 consecutive Full Exchange Business Days beginning on and including
October 13, 2014 each shall be the Expiration Date for a number of
Warrants equal to the Daily Number of Warrants on such date.
 Confirmation OTC Warrant
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Exercise Dates:
    
    Each Expiration Date shall be an Exercise Date for a number of Warrants
equal to the Daily Number of Warrants on such date.Automatic Exercise:
    
    Applicable; provided that Section 3.4(a) of the Equity Definitions shall
apply to Cash Settlement and Net Physical Settlement; and provided further
that, unless all Warrants have been previously exercised hereunder, a
number of Warrants for each Expiration Date equal to the Daily Number of
Warrants for such Expiration Date shall be deemed to be automatically
exercised.Address:
    
    Stewart Enterprises, Inc.Counterpartys Telephone
Number and Telex and/or
Facsimile Number and
Contact Details for
purpose of Giving Notice:
    
    Attention: 
Facsimile No.: 
Telephone No.:
    
    1333 S. Clearview Parkway 
Jefferson, LA 70121
Thomas M. Kitchen, Chief Financial Officer(504)-729-1407
(504) 729-1425Valuation:Valuation Dates:
    
    Each Exercise DateSettlement Terms:Cash Settlement:
    
    Applicable; provided that it shall be a condition of Counterpartys right
to elect Cash Settlement that on the date of the Cash Settlement election,
none of Counterparty, its directors, executive officers, or any person
controlling, or exercising influence over, its decision to elect Cash
Settlement is in possession of any material non-public information with
respect to Counterparty or the Shares. If Counterparty elects to settle
the Transaction by Cash Settlement, Counterparty represents and agrees
that:(i) Counterparty is not, on the date of the Cash Settlement election, and
will not be, on any day during the period from and including the first
Expiration Date to and including the final Expiration Date, engaged in a
distribution, as such term is used in Regulation M under the Securities
Exchange Act of 1934, as amended (the Exchange Act); and(ii) during the period from and including the first Expiration Date to and
including the final Expiration Date, without the prior written consent of
MLFM, the Counterparty shall not, and shall cause its affiliates and
affiliated purchasers (each as defined in Rule 10b-18 under the Exchange
Act) not to, directly or indirectly (including, without limitation, by
means of a derivative instrument) purchase, offer to purchase, place any
bid or limit order that would effect a purchase of, or commence any tender
offer relating to, any Shares (or equivalent interest, including a unit of
beneficial interest in a trust or limited partnership or a depository
share) or any security convertible into or exchangeable for the Shares.Settlement Currency:
    
    USDSettlement Price:
    
    For each Valuation Date, the Rule 10b-18 Dollar Volume Weighted Average
Price of the Shares (VWAP) calculated from 9:45 a.m. to 3:45 p.m., as
observed under the heading Bloomberg VWAP on Bloomberg page STEI.Q
 Confirmation OTC Warrant
 3




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<equity> AQR (or any successor thereto) (or if such volume-weighted
average price is unavailable, the market value of one Share on such
Valuation Date, as determined by the Calculation Agent); provided that if
the scheduled weekday closing time of the Exchange for any Valuation Date
is later than 4:00 p.m. (without regard to after hours or any other
trading outside of the regular trading session hours) the VWAP shall be
calculated for such Valuation Date from 9:45 a.m. until 15 minutes prior
to such later closing time of the Exchange.Section 6.3(a) of the Equity Definitions is hereby amended by replacing
clause (ii) in its entirety with (ii) an Exchange Disruption, or and
inserting immediately following clause (iii) the phrase ; in each case
that the Calculation Agent determines is material.Cash Settlement Payment
Date:
    
    With respect to each Valuation Date, three (3) Currency Business Days
after the final Valuation Date.Settlement Method Election:
    
    Applicable with respect to Cash Settlement or Net Physical Settlement only.Electing Party:
    
    CounterpartySettlement Method Election
Date:
    
    Ten (10) Business Days prior to the first Expiration DateDefault Settlement Method:
    
    Net Physical Settlement.Net Physical Settlement:
    
    In the event that the Counterparty elects to settle this Transaction by
Net Physical Settlement, Counterparty shall deliver to MLFM on the
Settlement Date a number of Shares (the Delivered Shares) equal to the
Share Delivery Quantity, provided that in the event that the number of
Shares calculated comprises any fractional Share, only whole Shares shall
be delivered and an amount in cash equal to the value of such fractional
share shall be payable by the Counterparty to MLFM in lieu of such
fractional Share.Share Delivery Quantity:
    
    For each Exercise Date, a number of Shares, as calculated by the
Calculation Agent, equal to the Net Physical Settlement Amount for such
Exercise Date divided by the Settlement Price on the Valuation Date in
respect of such Settlement Date plus an amount in cash in lieu of any
fractional shares (based on the applicable Settlement Price).Net Physical Settlement 
Amount:
    
    For any Exercise Date, an amount equal to the product of (i) the Number of
Warrants being exercised on the relevant Exercise Date, (ii) the Strike
Price Differential for such Exercise Date and (iii) the Warrant
Entitlement.Strike Price Differential:
    
    For any Valuation Date, (i) if the Settlement Price is greater than the
Strike Price, an amount equal to the excess of such Settlement Price over
the Strike Price for such Valuation Date or (ii) if such Settlement Price
is less than or equal to the Strike Price, zero.Settlement Date:
    
    Settlement with respect to each Exercise Date shall occur on the third
(3rd) Full Exchange Business Day following the final Valuation Date,
provided that MLFM shall have the right to request by prior written notice
to Counterparty a Settlement Date with respect to any Exercise Date and
the related Share Delivery Quantity that is three (3) Full Exchange
Business Days following such Exercise Date. Such request shall not
unreasonably be denied.
 Confirmation OTC Warrant
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Notwithstanding anything herein or in the Agreement to the contrary, the
number of Shares that may be delivered at settlement by Counterparty shall
not exceed 10,000,000 at any time (Maximum Deliverable Share Amount),as
adjusted by Calculation Agent to account for any subdivision, stock-split,
stock combination, reclassification or similar dilutive or anti-dilutive
event with respect to the Shares.Limitations on Net 
Physical Settlement by 
Counterparty:
    
    Counterparty represents and warrants that the number of Available Shares
as of the Trade Date is greater than the Maximum Deliverable Share Amount.
Counterparty covenants and agrees that (i) Counterparty shall not take any
action of corporate governance or otherwise to reduce the number of
Available Shares below the Maximum Deliverable Share and (ii) Counterparty
shall use its reasonable efforts to cause the number of Available Shares
at all times to be greater than the Maximum Deliverable Share Amount.
For this purpose, Available Shares means the number of Shares
Counterparty currently has authorized (but not issued and outstanding)
less the maximum number of Shares that may be required to be issued by
Counterparty in connection with stock options, convertibles, and other
commitments of Counterparty that may require the issuance or delivery of
Shares in connection therewith.Dividends:Dividends:
    
    If at any time during the period from and including the Trade Date, to and
including the date on which Counterparty has fully performed its
obligations to deliver Shares hereunder, an ex-dividend date for a cash
dividend occurs with respect to the Shares (an Ex-Dividend Date), and
that dividend is different from the Regular Dividend on a per Share basis,
then the Calculation Agent will, in its reasonable discretion, adjust the
Strike Price, the Number of Warrants, the Daily Number of Warrants, the
Warrant Entitlement and any other variable it deems appropriate to
preserve the fair value of the Warrants after taking into account such
dividend, on the assumption that Counterparty will pay future regular
dividends equal to the New Dividend Amount.Regular Dividend:
    
    Initially USD $0.025 per Share per quarter in respect of the Shares. In
the event that, in any quarter, a regular quarterly Ex-Dividend Date
occurs for which the amount of the corresponding cash dividend is
different (the New Dividend Amount) from the Regular Dividend or no
Ex-Dividend Date occurs (in which case the New Dividend Amount shall be
zero), then following the adjustment by the Calculation Agent pursuant to
Dividends above, the Regular Dividend shall equal the New Dividend
Amount.Extraordinary Dividends:
    
    Any dividend other than Regular Dividends. For the avoidance of doubt, if
more than one Ex-Dividend Date occurs in a quarter, the Calculation Agent
shall designate any cash dividend other than a Regular Dividend as an
Extraordinary Dividend and will, in its reasonable discretion, adjust the
Strike Price, the Number of Warrants, the Daily Number of Warrants, the
Warrant Entitlement and any other variable it deems appropriate to
preserve the fair value of the Warrants after taking into account such
Extraordinary Dividend, on the assumption that Counterparty will not pay
such Extraordinary Dividend, in future quarterly periods.
 Confirmation OTC Warrant
 5




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Adjustments:Method of Adjustment:
    
    Calculation Agent AdjustmentExtraordinary Events:Consequences of Merger
Events:
    
    (a) Share-for-Share: Modified Calculation Agent Determination)
(b) Share-for-Other: Cancellation and Payment (Calculation Agent
Determination)
(c) Share-for-Combined: Component Adjustment (Calculation Agent
Determination)Tender Offer:
    
    Applicable; providedthat Section 12.1(d) of the Equity Definitions is
hereby amended by replacing the words 10% in the third line thereof with
50%.Consequences of Tender
Offers:
Nationalization,
Insolvency or Delisting:
    
    (a) Share-for-Share: Modified Calculation Agent Adjustment
(b) Share-for-Other: Cancellation and Payment (Calculation Agent
Determination)
(b) Share-for-Combined: Component Adjustment (Calculation Agent
Determination) 
With respect to any Extraordinary Events hereunder, upon the occurrence of
Cancellation and Payment in whole or in part, the parties agree that the
amount to be paid, in accordance with the Equity Definitions, shall
constitute a Transaction Early Termination Amount, subject to
satisfaction by the payment or delivery of Shares or cash as set forth in the Early
Termination section below. 
Cancellation and Payment (Calculation Agent Determination) (subject to
satisfaction by payment or delivery of Shares or cash as set forth in
Early Termination below). In addition to the provisions of Section
12.6(a)(iii) of the Equity Definitions, it will also constitute a
Delisting if the Exchange is located in the United States and the Shares
are not immediately re-listed, re-traded or re-quoted on any of the New
York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market
or the NASDAQ Global Select Market (or their respective successors); if
the Shares are immediately re-listed, re-traded or re-quoted on any such
exchange or quotation system, such exchange or quotation system shall
thereafter be deemed to be the Exchange.Determining Party:
    
    MLFMAdditional Disruption 
Events:Change in Law:
    
    Applicable; providedthat Section 12.9(a)(ii) of the Equity Definitions is
hereby amended by deleting clause (Y) thereof in its entirety.Failure to Deliver:
    
    Not ApplicableInsolvency Filing:
    
    Applicable
 Confirmation OTC Warrant
 6




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Hedging Disruption Event:
    
    ApplicableIncreased Cost of Hedging:
    
    Not ApplicableLoss of Stock Borrow:
    
    Applicable. Section 12.9(b)(iv) of the Equity Definitions is hereby
amended by deleting the text from and including (A) to and including
(B) and by deleting the words in each case.Maximum Stock Loan Rate:
    
    0.60 %
 Confirmation OTC Warrant
 7




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Increased Cost of Stock
Borrow:
    
    Applicable; provided that Section 12.9(b)(v) of
the Equity Definitions is hereby amended by
deleting the text from and including (X) to and
including (Y).Initial Stock Loan Rate:
    
    0.25%Hedging Party:
    
    MLFMDetermining Party:
    
    MLFMNon-Reliance:
    
    ApplicableAgreements and
Acknowledgments Regarding
Hedging Activities:
    
    ApplicableAdditional Acknowledgments:
    
    ApplicableOther Provisions:Additional Agreements:
    
    If Counterparty would be obligated to pay cash to
MLFM pursuant to the terms of this Agreement for
any reason without having had the right (other
than pursuant to this paragraph) to elect to
deliver Shares in satisfaction of such payment
obligation, then Counterparty may elect to
deliver to MLFM a number of Shares (whether
registered or unregistered) having a cash value
equal to the amount of such payment obligation.
Such number of Shares to be delivered shall be
the number of Shares, determined by the
Calculation Agent, sufficient for MLFM to realize
the cash equivalent of such payment obligation
from proceeds of the sale of such number of
Shares over a reasonable period of time taking
into account any applicable discount (determined
in a commercially reasonable manner) to reflect
any restrictions on transfer as well as the
market value of the Shares). Settlement relating
to any delivery of Shares pursuant to this
paragraph shall occur within a reasonable period
of time. The number of Shares delivered pursuant
to this paragraph shall not exceed the Maximum
Deliverable Share Amount and shall be subject to
the provisions under Early Termination hereof
regarding Proceeds Amount and the provisions set
forth in subsection (c) under Additional
Agreements, Representations and Covenants of
Counterparty, Etc. below.Early Termination:
    
    Notwithstanding any provision to the contrary,
upon the designation of an Early Termination Date
or the occurrence of Cancellation and Payment in
whole or in part hereunder, Counterpartys
payment obligation in respect of this Transaction
(which shall, in the case of an Early Termination
Date be determined in accordance with Second
Method and Loss) (the Transaction Early
Termination Amount) may, at the option of
Counterparty, be satisfied by the delivery of a
number of Shares equal to the Transaction Early
Termination Amount divided by the Termination
Price (Early Termination Stock Settlement);
provided, however, that Counterparty must notify
MLFM of its election of Early Termination Stock
Settlement by the close of business on the day
that is two Exchange Business Days following the
day that the notice designating the Early
Termination Date, or notice that an Extraordinary
Event has resulted in the cancellation or
termination of the Transaction in whole or in
part, is effective. Termination Price means the
market value per Share on the Early
 Confirmation OTC Warrant
 8




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Termination
Date, as determined by the Calculation Agent in a
commercially reasonable manner taking into
account any applicable discount to reflect any
restrictions on transfer.A number of Shares calculated as being due in
respect of any Early Termination Stock Settlement
will be deliverable on the third Clearance System
Business Day following the date that notice
specifying the number of Shares deliverable is
effective. Section 6(d)(i) of the Agreement is
hereby amended by adding the following words
after the word paid in the fifth line thereof: or any delivery is to be made, as applicable.On or prior to the Early Termination Date or date
on which notice that an Extraordinary Event has
resulted in the cancellation or termination of
the Transaction in whole or in part is effective,
as applicable, if Early Termination Stock
Settlement is elected and if so requested by MLFM
upon advice of counsel, Counterparty shall
(subject to its right to make the election
described in the immediately succeeding
paragraph) enter into a registration rights
agreement with MLFM in form and substance
reasonably acceptable to MLFM which agreement
will contain among other things, customary
representations and warranties and
indemnification, restrictions on sales during
blackout dates as provided for in the
Registration Rights Agreement and shall satisfy
the conditions contained therein and Counterparty
shall file and diligently pursue to effectiveness
a Registration Statement pursuant to Rule 415
under the Securities Act. If and when such
Registration Statement shall have been declared
effective by the Securities and Exchange
Commission, Counterparty shall have made
available to MLFM such Prospectuses as MLFM may
reasonably request to comply with the applicable
prospectus delivery requirements for the resale
by MLFM of such number of Shares as MLFM shall
specify (or, if greater, the number of Shares
that Counterparty shall specify). Such
Registration Statement shall be effective and
Prospectus shall be current until the earliest of
the date on which (i) all Shares delivered by
Counterparty in connection with an Early
Termination Date have been sold, (ii) both
parties have determined that such Registration
Statement need not be effective any longer or
(iii) all remaining Shares could be sold by MLFM
without registration pursuant to Rule 144
promulgated under the Securities Act (the
Termination Registration Period).It is
understood that the Registration Statement and
Prospectus will cover a number of Shares equal to
the aggregate number of Shares (if any)
reasonably estimated by MLFM to be potentially
deliverable by Counterparty in connection with
Early Termination Stock Settlement hereunder, but
in no event exceeding the Maximum Deliverable
Share Amount. On each day during the Termination
Registration Period Counterparty shall represent
that each of its filings under the Securities
Act, the Exchange Act or other applicable
securities laws that are required to be filed
have been filed and that, as of the respective
dates thereof and as of the date of this
representation, they do not contain any untrue
statement of a material fact or omission of a
material fact required to be stated therein or
necessary to make the statements made, in the
light of the circumstances under which they were
made, not misleading.If Counterparty elects not to deliver Shares
subject to an effective Registration Statement
(or if some or all of the Shares delivered cannot
be used to close out stock loans in the shares of
Counterparty entered into to establish or
maintain short positions by MLFM in connection
with this Transaction without a prospectus being
required by applicable law to be delivered to
such lender), then promptly following such
notification from MLFM
 Confirmation OTC Warrant
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(a) Counterparty shall afford MLFM and any
potential institutional purchaser of any Shares
identified by MLFM a reasonable opportunity to
conduct a due diligence investigation with
respect to Counterparty that is customary in
scope for private placements of equity securities
subject to execution of any customary
confidentiality agreements;(b) Counterparty shall enter into an agreement (a
Private Placement Agreement) with MLFM on
commercially reasonable terms in connection with
the private placement of such Shares by
Counterparty to MLFM or an affiliate and the
private resale of such shares by MLFM or such
affiliate, substantially similar to private
placement purchase agreements customary for
private placements of equity securities, in form
and substance commercially reasonably
satisfactory to MLFM and Counterparty, which
Private Placement Agreement shall include
provisions relating to the indemnification of,
and contribution in connection with the liability
of, MLFM and its affiliates, shall provide for
the payment by Counterparty of all expenses in
connection with such resale, including all
reasonable and documented fees and expenses of
counsel for MLFM, shall contain representations,
warranties and agreements of Counterparty
reasonably necessary or advisable to establish
and maintain the availability of an exemption
from the registration requirements of the
Securities Act for such resales, and shall use
commercially reasonable efforts to provide for
the delivery of accountants comfort letters to
MLFM or such affiliate with respect to the
financial statements and certain financial
information contained in or incorporated by
reference into the offering memorandum prepared
for the resale of such Shares;(c) MLFM shall sell the Shares delivered by
Counterparty in a commercially reasonable manner
until the amount received by MLFM for the sale of
the Shares (the Proceeds Amount) is equal to
the Transaction Early Termination Amount. Any
remaining Shares shall be returned to
Counterparty. If the Proceeds Amount is less than
the Transaction Early Termination Amount,
Counterparty shall promptly deliver upon notice
from MLFM additional Shares to MLFM until the
dollar amount from the sale of such Shares by
MLFM equals the difference between the
Transaction Early Termination Amount and the
Proceeds Amount. In no event shall Counterparty
be required to deliver to MLFM a number of Shares
greater than the Maximum Deliverable Share
Amount.
 Notwithstanding the foregoing: (I) if
Counterparty has elected to deliver Shares and
either (a) Counterparty does not provide for the
sale of the Shares under the Registration
Statement as provided in the Registration Rights
Agreement or (b) some Shares cannot be registered
under the Registration Statement due to Rule
415(a)(4) under the Securities Act, then the
provisions of the preceding paragraph shall apply
to the extent Counterparty has not satisfied its
obligations hereunder. (II) If the preceding
paragraph is applicable and Counterparty fails to
satisfy its obligations under such paragraph,
then Counterparty may deliver unregistered Shares
of equivalent value to the Transaction Early
Termination Amount (or, if applicable, the
unsatisfied portion thereof). The value of any
unregistered Shares so delivered shall be
discounted to reflect an appropriate liquidity
discount (determined by MLFM in a commercially
reasonable manner, taking into account MLFMs
policies and determinations with respect to any
transfer restrictions that
 Confirmation OTC Warrant
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MLFM deems it
advisable to observe in connection with sales of
such Shares). (III) If some or all of the Shares
cannot be used to close out stock loans in the
shares of Counterparty entered into to establish
or maintain short positions by MLFM in connection
with this Transaction without a prospectus being
required by applicable law to be delivered to
such lender, then the value of any such Shares
shall reflect the cost (determined by MLFM in
good faith and in a commercially reasonable
manner) to MLFM of trading Shares in order to
close out its hedge position if any, in all cases
for purposes of calculating the number of Shares
deliverable by Counterparty. In no event shall
Counterparty be required to (i) top-up the
delivery in cash or (ii) deliver to MLFM a number
of Shares greater than the Maximum Deliverable
Share Amount.Compliance With Securities 
Laws:
    
    Counterparty represents and agrees that it has
complied, and will comply, in connection with
this Transaction and all related or
contemporaneous sales and purchases of Shares,
with the applicable provisions of the Securities
Act, the Exchange Act and the rules and
regulations promulgated thereunder, including,
without limitation, Rule 10b-5 and 13e and
Regulation M under the Exchange Act. 
Each party acknowledges that the offer and sale
of the Transaction to it is intended to be exempt
from registration under the Securities Act by
virtue of Section 4(2) thereof. Accordingly, each
party represents and warrants to the other party
that (i) it has the financial ability to bear the
economic risk of its investment in the
Transaction and is able to bear a total loss of
its investment, (ii) it is an accredited
investor as that term is defined in Regulation D
as promulgated under the Securities Act and (iii)
the disposition of the Transaction is restricted
under this Confirmation, the Securities Act and
state securities laws. 
Counterparty further represents and warrants that: 
(a) Counterparty
is not entering into this
Transaction to create actual or apparent trading
activity in the Shares (or any security
convertible into or exchangeable for Shares) or
to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible
into or exchangeable for Shares);
(b) Counterparty represents and acknowledges that
as of the date hereof and without limiting the
generality of Section 13.1 of the Equity
Definitions, MLFM is not making any
representations or warranties with respect to the
treatment of the Transaction under FASB
Statements 149 or 150, EITF Issue No. 00-19 (or
any successor issue statements) or under FASBs
Liabilities & Equity Project;
(c) Counterparty is not, and after giving effect
to the Transaction contemplated hereby, will not
be, an investment company as such term is
defined in the Investment Company Act of 1940, as
amended;
(d) As of the Trade Date and each date on which a
payment of cash is made by Counterparty
hereunder, (i) the assets of Counterparty at
their fair valuation exceed the liabilities of
Counterparty, including contingent liabilities;
(ii) the capital of Counterparty is adequate to
conduct its business; and (iii) Counterparty has
the ability to pay its debts and other
obligations as such obligations mature and does
not intend to, or believe that it will, incur
debt or other obligations beyond its ability to
pay as such obligations mature.Account Details:
    
    Account for payments to Counterparty:SunTrust Bank
 Confirmation OTC Warrant
 11




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Atlanta, Georgia
ABA #061000104
Credit Stewart Enterprises, Inc
1000032706300
SWIFT Code (for international wires): SNTRUS3AAccount for payments to MLFM:To be advised.Account for delivery of Shares to MLFM:To be advised.Agreement Regarding Shares:
    
    Counterparty agrees that, in respect of any
Shares delivered to MLFM, such Shares shall be,
upon such delivery, duly and validly authorized,
issued and outstanding, fully paid and
non-assessable and subject to no adverse claims
of any other party. The issuance of such Shares
does not and will not require the consent,
approval, authorization, registration or
qualification of any government authority, except
such as shall have been obtained on or before the
delivery date of any Shares or as may be required
in connection with any Registration Statement
filed with respect to any Shares.Bankruptcy Rights:
    
    In the event of Counterpartys bankruptcy, MLFMs
rights in connection with this Transaction shall
not exceed those rights held by common
shareholders. For the avoidance of doubt, the
parties acknowledge and agree that MLFMs rights
with respect to any other claim arising from this
Transaction prior to Counterpartys bankruptcy
shall remain in full force and effect and shall
not be otherwise abridged or modified in
connection herewith.Set-Off:
    
    Each party waives any and all rights it may have
to set-off, whether arising under any agreement,
applicable law or otherwise.Any Transfer:
    
    Neither party may transfer its rights or delegate
its obligations under this Transaction without
the prior written consent of the other party,
except that MLFM, after payment in full of the
Premium, may assign its rights and delegate its
obligations hereunder, in whole or in part, to
any other person (an Assignee) without the
prior consent of the Counterparty, so long as (i)
Assignee makes to Counterparty the
representations set forth in the second paragraph
under Compliance with Securities Laws,
effective (the Transfer Effective Date) upon
delivery to Counterparty of an executed
acceptance and assumption by the Assignee (an
Assumption) of the transferred obligations of
MLFM under this Transaction (the Transferred
Obligations), (ii) Assignee informs the
Counterparty of the jurisdiction of its
incorporation and (iii) Assignee either (X)
confirms the representation contained in clause
(i) under Tax Representations (II) Payee
Representations below, or (Y) the gross-up
specified in Section 2(d) of the Master Agreement
shall not apply as to such Assignee.
Notwithstanding any other provision in this
Confirmation to the contrary requiring or
allowing MLFM to purchase, sell, receive or
deliver any Shares or other securities to or from
Counterparty, MLFM may designate any of its
affiliates to purchase, sell, receive or deliver
such Shares or other securities and otherwise to
perform MLFMs obligations in respect of this
Transaction and any such designee may assume such
obligations. MLFM shall be discharged of its
obligations to Counterparty to the extent of any
such performance.
 Confirmation OTC Warrant
 12




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Additional Agreements, Representations and Covenants of Counterparty, Etc.:
 (a)
    
    Counterparty hereby represents and warrants to MLFM, on each day from the Trade Date to and
including the earlier of (i) July 27, 2007 and (ii) the date by which MLFM is able to
initially complete a hedge of its position created by this Transaction, that:
 (1)
    
    it will not, and will not permit any person or entity subject to its control
to, bid for or purchase Shares during such period except pursuant to transactions or
arrangements which have been approved by MLFM or an affiliate of MLFM; and(2)
    
    it has publicly disclosed all material information necessary for it to be able
to purchase or sell Shares in compliance with applicable federal securities laws.
 (b)
    
    No collateral shall be required by either party for any reason in connection with this
Transaction.(c)
    
    Notwithstanding anything to the contrary herein, MLFM shall not be entitled to exercise any
Warrant or receive any Shares deliverable hereunder, and Automatic Exercise shall not apply
with respect to any Warrant to the extent (but only to the extent) that after such receipt of
any Shares upon the exercise of such Warrant or otherwise hereunder MLFM, or its ultimate
parent entity would, directly or indirectly, be the beneficial owner (as such term is defined
for purposes of Section 13(d) of the Exchange Act) at any time of more than 8.0 percent of the
class of the Counterpartys outstanding equity securities that is comprised of the Shares (an
Excess Share Owner).MLFM shall provide prior notice to Counterparty if the exercise of any Warrant or delivery of
Shares hereunder would cause MLFM to become directly or indirectly, an Excess Share Owner;
providedthat the failure of MLFM to provide such notice shall not alter the
effectiveness of the provisions set forth in the preceding sentence and any purported
exercise or delivery in violation of such provisions shall be void and have no effect. If any
delivery owed to MLFM hereunder is not made, in whole or in part, as a result of this
provision, Counterpartys obligation to make such delivery shall not be extinguished and
Counterparty shall make such delivery as promptly as practicable after MLFM gives notice that
such delivery would not result in MLFM being an Excess Share Owner.If MLFM is not entitled to exercise any Warrant because such exercise would cause MLFM to
become, directly or indirectly, an Excess Share Owner and MLFM thereafter disposes of Shares
owned by it or any action is taken that would then permit MLFM to exercise such Warrant
without such exercise causing it to become, directly or indirectly, an Excess Share Owner,
then MLFM shall provide notice of the taking of such action to Counterparty and such Warrant
shall then become exercisable by MLFM to the extent such Warrant is otherwise or had
otherwise become exercisable hereunder. In such event, the Expiration Date with respect to
such Warrant shall be the date on which Counterparty receives such notice from MLFM, and the
related Settlement Date shall be as soon as reasonably practicable after receipt of such
notice but no more than three (3) Exchange Business Days thereafter (but in no event shall
the Settlement Date occur prior to the date on which it would have otherwise occurred but for
the provisions of this subsection); providedthat the related Net Physical Settlement
Amount shall be the same as the Net Physical Settlement Amount but for the provisions of this
subsection.
 Additional Representations of MLFM:
   Confirmation OTC Warrant
 13




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Matters Relating to Agent:
 1.
    
    MLPFS will be responsible for the operational aspects of the Transactions effected through
it, such as record keeping, reporting, and confirming Transactions to Counterparty and MLFM;2.
    
    Unless Counterparty is a major U.S. institutional investor, as defined in Rule 15a-6 of the
Exchange Act, neither Counterparty nor MLFM will contact the other without the direct
involvement of MLPFS;3.
    
    MLPFSs sole role under this Agreement and with respect to any Transaction is as an agent of
Counterparty and MLFM on a disclosed basis and MLPFS shall have no responsibility or liability
to Counterparty or MLFM hereunder except for gross negligence or willful misconduct in the
performance of its duties as agent. MLPFS is authorized to act as agent for MLFM, but only to
the extent expressly required to satisfy the requirements of Rule 15a-6 under the Exchange Act
in respect of the Options described hereunder. MLPFS shall have no authority to act as agent
for Counterparty generally or with respect to transactions or other matters governed by this
Agreement, except to the extent expressly required to satisfy the requirements of Rule 1 5a-6
or in accordance with express instructions from Counterparty.
 ISDA Master Agreement:
  Specified Entity
 Specified Transaction
 Cross Default Section 5(a)(vi)
 Threshold Amount
 Credit Event Upon Merger Section 5(b)(iv)
 Confirmation OTC Warrant
 14




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Additional Termination Event
 provided
       Continuing directors
  Automatic Early Termination Section 6(a)
 Confirmation OTC Warrant
 15




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##### 



Payments on Early Termination. Section 6(e)
 Termination Currency
 Tax Representations.
 (I)
    
    Payer Representations.For the purpose of Section 3(e) of the Agreement, each party
represents to the other party that it is not required by any applicable law, as modified by
the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to
make any deduction or withholding for or on account of any Tax from any payment (other than
interest under Section 2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the other
party under the Agreement. In making this representation, each party may rely on (i) the
accuracy of any representations made by the other party pursuant to Section 3(f) of the
Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of
the Agreement, and the accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii) the satisfaction of the
agreement of the other party contained in Section 4(d) of the Agreement; providedthat
it will not be a breach of this representation where reliance is placed on clause (ii) above
and the other party does not deliver a form or document under Section 4(a)(iii) of the
Agreement by reason of material prejudice to its legal or commercial position.(II)
    
    Payee Representations.For the purpose of Section 3(f) of the Agreement, each party makes the
following representations to the other party:(i) MLFM or any Assignee represents that it is a company incorporated in a jurisdiction
within the United States.(ii) Counterparty represents that it is a corporation incorporated in Louisiana.
 Delivery Requirements. Sections 4(a)(i) (ii)
 (a)
    
    Tax forms, documents or certificates to be delivered are:MLFM agrees to complete (accurately and in a manner reasonably satisfactory to
Counterparty), execute, and deliver to Counterparty, United States Internal Revenue Service
Form W-9 and all required attachments, or any successor of such form(s): (i) before the
first payment date under this agreement; (ii) promptly upon reasonable demand by
Counterparty; and (iii) promptly upon learning that any such Form previously provided by
MLFM has become obsolete or incorrect.Counterparty agrees to complete (accurately and in a manner reasonably satisfactory to
MLFM), execute, and deliver to MLFM, United States Internal Revenue Service Form W-9, or any
successor of such form(s): (i) before the first payment date under this agreement; (ii)
promptly upon reasonable demand by MLFM; and (iii) promptly upon learning that any such
form(s) previously provided by Counterparty has become obsolete or incorrect.(b)
    
    Other documents to be delivered:
 Confirmation OTC Warrant
 16




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##### 



Covered byParty Required to
    
    
    
    
    
    Section 3(d)Deliver Document
    
    Document Required to be Delivered
    
    When Required
    
    RepresentationCounterparty
    
    Evidence of the authority and true
signatures of each official or
representative signing this
Confirmation
    
    Upon or before execution
and delivery of this
Confirmation
    
    YesCounterparty
    
    Certified copy of the resolution of the
Board of Directors or equivalent
document authorizing the execution and
delivery of this Confirmation and such
other certificate or certificates as
MLFM shall reasonably request
    
    Upon or before execution
and delivery of this
Confirmation
    
    YesMLFM
    
    Guarantee of its Credit Support
Provider, substantially in the
form of Exhibit A attached
hereto, together with evidence
of the authority and true
signatures of the signatories,
if applicable
    
    Upon or before execution
and delivery of this
Confirmation
    
    Yes
 Addresses for Notices: Section
 Address for notices or communications to MLFM for all purposes:
 Address:
    
    Merrill Lynch Financial Markets, Inc.
4 World Financial Center, 17th Floor
New York, New York 10080
Merrill Lynch Financial CentreAttention:
    
    Manager of Equity DocumentationFacsimile No.:
    
    (917) 778-0835Telephone No.:
    
    (212) 449-1951
 Address for notices or communications to Counterparty for all purposes:
 Address:
    
    Stewart Enterprises, Inc.
1333 S. Clearview Parkway
Jefferson, LA 70121Attention:
    
    Thomas M. Kitchen, Chief Financial OfficerFacsimile No.:
    
    (504)-729-1407Telephone No.:
    
    (504) 729-1425In addition, in the case of notices or communications relating to Section 5, 6, 11 or 13 of
this Agreement, a second copy of any such notice or communication shall be addressed to the
attention of Counterpartys General Counsel as follows:Address:
    
    Jones, Walker, Waechter, Poitevent,
Carrère and Denègre, L.L.P.
201 St. Charles Avenue
New Orleans, LA 70170-5100Attention:
    
    Dionne M. RousseauFacsimile No.:
    
    (504) 589-8338Telephone No.:
    
    (504) 582-8338Process Agent:For the purpose of Section 13(c) of the Agreement, MLFM appoints as its process agent:
 Confirmation OTC Warrant
 17




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##### 



Address:
    
    Merrill Lynch, Pierce, Fenner & Smith Incorporated
222 Broadway, 16th Floor
New York, New York 10038Attention:
    
    Litigation DepartmentCounterparty does not appoint a Process Agent.
 Multibranch Party. Section 10(c)
 Calculation Agent. provided further
 Credit Support Document.
   Credit Support Provider.
   Governing Law.
 Waiver of Jury Trial.
 Netting of Payments. Section 2(c)
 Basic Representations. Section 3(a) Section 3(a)(iv); Section 3(a)(v) Sections 3(a)(vi),
 Eligible Contract Participant; Line of Business. ( CEA ),
 Confirmation OTC Warrant
 18




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##### 



Acknowledgements:
 (a)
    
    The parties acknowledge and agree that there are no other representations, agreements or
other undertakings of the parties in relation to this Transaction, except as set forth in this
Confirmation.(b)
    
    The parties hereto intend for:
 (i)
    
    Buyer to be a financial institution as defined in Section 101(22) of Title 11
of the United States Code (the Bankruptcy Code)and this Transaction to be a
securities contract as defined in Section 741(7) of the Bankruptcy Code and a swap
agreement as defined in Section 101(53C) of the Bankruptcy Code, qualifying for the
protections of, among other sections, Sections 362(b)(6), 362 (b)(17), 546(e), 546(g),
555 and 560 of the Bankruptcy Code;(ii)
    
    a partys right to liquidate this Transaction and to exercise any other
remedies upon the occurrence of any Event of Default under the Agreement with respect
to the other party to constitute a contractual right as defined in the Bankruptcy
Code;(iii)
    
    all payments for, under or in connection with this Transaction, all payments
for the Shares and the transfer of such Shares to constitute settlement payments as
defined in the Bankruptcy Code.
 (c)
    
    The parties acknowledge and agree that in the event of an Early Termination Date as a result
of an Event of Default that is within Counterpartys control, the amount payable under the
Agreement will be a cash amount calculated as described therein and that any delivery
specified in this Transaction will no longer be required.
 Amendment of Section 6(d)(ii) . Section 6(d)(ii)
 Amendment of Definition of Reference Market-Makers. Section 14
 Consent to Recording.
 Disclosure.
 Severability.
 Confirmation OTC Warrant
 19




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##### 



provided, however, Section 2 5 6 13 Section
14
 Affected Parties. Section 6(e)
 Certain Important Information.
  Signatures follow on separate page]
 Confirmation OTC Warrant
 20




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##### 



Very truly yours,MERRILL LYNCH FINANCIAL MARKETS, INC.By:Name:Title:
 Confirmed as of the date first above written:STEWART ENTERPRISES, INC.By:Name:Title:Acknowledged and agreed as to matters to the Agent:MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATEDSolely in its capacity as Agent hereunderBy:Name:Title:
 Confirmation OTC Warrant




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##### 



EXHIBIT A
 GUARANTEE OF MERRILL LYNCH & CO., INC.
       Confirmation OTC Warrant




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##### 



MERRILL LYNCH & CO., INC.By:Name:Title:Date: Confirmation OTC Warrant