Document:

EX-4.2

 Exhibit 4.2 

SERVICE CORPORATION INTERNATIONAL 

as Issuer 
 and 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. 

as Original Trustee 
 and

 BOKF, NA 
 as
Series Trustee 
 $850,000,000 

3.375% SENIOR NOTES DUE 2030 

SEVENTEENTH 

SUPPLEMENTAL 
 INDENTURE

  
  

Dated as of August 10, 2020 

 TABLE OF CONTENTS 

 

							
	 ARTICLE I ESTABLISHMENT OF NEW SERIES
	  	 	5	 
			
	 Section 1.01
	 	Establishment of New Series	  	 	5	 
		
	 ARTICLE II APPOINTMENT OF SERIES TRUSTEE
	  	 	6	 
			
	 Section 2.01
	 	Appointment of Series Trustee	  	 	6	 
	 Section 2.02
	 	Appointment of Paying Agent and Registrar	  	 	6	 
	 Section 2.03
	 	Corporate Trust Office	  	 	6	 
	 Section 2.04
	 	Series Trustee’s Limitation of Liability	  	 	6	 
	 Section 2.05
	 	Original Trustee’s Limitation of Liability	  	 	6	 
	 Section 2.06
	 	Series Trustee’s Indemnity	  	 	6	 
	 Section 2.07
	 	Original Trustee’s Indemnity	  	 	7	 
		
	 ARTICLE III THE ORIGINAL TRUSTEE
	  	 	7	 
			
	 Section 3.01
	 	Representations & Warranties	  	 	7	 
	 Section 3.02
	 	Original Trustee’s Acknowledgement	  	 	7	 
	 Section 3.03
	 	Duties Under Supplemental Indenture	  	 	7	 
		
	 ARTICLE IV THE ISSUER
	  	 	7	 
			
	 Section 4.01
	 	Representations and Warranties	  	 	7	 
	 Section 4.02
	 	Deliverables	  	 	8	 
		
	 ARTICLE V THE SERIES TRUSTEE
	  	 	8	 
			
	 Section 5.01
	 	Representations and Warranties	  	 	8	 
	 Section 5.02
	 	Acceptance of Appointment	  	 	8	 
		
	 ARTICLE VI DEFINITIONS
	  	 	9	 
		
	 ARTICLE VII THE NOTES
	  	 	10	 
			
	 Section 7.01
	 	Form	  	 	10	 
		
	 ARTICLE VIII REDEMPTION
	  	 	11	 
			
	 Section 8.01
	 	Optional Redemption	  	 	11	 
	 Section 8.02
	 	Mandatory Redemption	  	 	11	 
	 Section 8.03
	 	Change of Control	  	 	11	 
		
	 ARTICLE IX AMENDMENT OF ORIGINAL INDENTURE
	  	 	13	 
			
	 Section 9.01
	 	Amendment of Article One of Original Indenture	  	 	13	 
	 Section 9.02
	 	Amendment of Article Two of Original Indenture	  	 	13	 
	 Section 9.03
	 	Amendment of Article Two of Original Indenture	  	 	13	 

  
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	 Section 9.04
	 	Amendments of Article Three of Original Indenture	  	 	13	 
	 Section 9.05
	 	Amendment of Article Four of Original Indenture	  	 	14	 
	 Section 9.06
	 	Amendments of Article Five of Original Indenture	  	 	15	 
	 Section 9.07
	 	Amendment of Article Eleven of Original Indenture	  	 	16	 
		
	 ARTICLE X MISCELLANEOUS
	  	 	16	 
			
	 Section 10.01
	 	Integral Part	  	 	16	 
	 Section 10.02
	 	Adoption, Ratification and Confirmation	  	 	16	 
	 Section 10.03
	 	Compensation and Reimbursement	  	 	16	 
	 Section 10.04
	 	Counterparts	  	 	16	 
	 Section 10.05
	 	Governing Law	  	 	16	 
	 Section 10.06
	 	Trustee Makes No Representation	  	 	16	 
	 Section 10.07
	 	Additional Trustee Provisions	  	 	16	 
	 Section 10.08
	 	Notice	  	 	18	 
	 Section 10.09
	 	Waiver of Jury Trial	  	 	18	 

  

			
	EXHIBIT A:	  	Form of 3.375% Senior Note due 2030

  
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 SEVENTEENTH SUPPLEMENTAL INDENTURE, dated as of August 10, 2020 (this
“Supplemental Indenture”), among Service Corporation International, a Texas corporation (the “Issuer”), The Bank of New York Mellon Trust Company, N.A., a national banking association, as successor to The Bank of
New York, as the original trustee (the “Original Trustee”), and BOKF, NA, a national banking association, as the series trustee (the “Series Trustee”). 

W I T N E S S E T H: 
 WHEREAS,
the Issuer has heretofore entered into a Senior Indenture, dated as of February 1, 1993 (the “Original Indenture”), with the Original Trustee, a First Supplemental Indenture, dated as of April 14, 2004, with the Original
Trustee, a Second Supplemental Indenture, dated as of June 15, 2005, with the Original Trustee, a Third Supplemental Indenture, dated as of October 3, 2006, with the Original Trustee, a Fourth Supplemental Indenture, dated as of
October 3, 2006, with the Original Trustee, a Fifth Supplemental Indenture, dated as of November 28, 2006, with the Original Trustee, a Sixth Supplemental Indenture, dated as of April 9, 2007, with the Original Trustee, a Seventh
Supplemental Indenture, dated as of April 9, 2007, with the Original Trustee, an Eighth Supplemental Indenture, dated as of November 10, 2009, with the Original Trustee, a Ninth Supplemental Indenture, dated as of November 22, 2010,
with the Original Trustee, a Tenth Supplemental Indenture, dated as of November 8, 2012, with the Original Trustee, an Eleventh Supplemental Indenture, dated as of July 1, 2013, with the Original Trustee, a Twelfth Supplemental Indenture,
dated as of May 12, 2014, with the Original Trustee, a Thirteenth Supplemental Indenture, dated as of May 12, 2014, with the Original Trustee, a Fourteenth Supplemental Indenture, dated as of December 12, 2017, with the Original
Trustee and the Series Trustee, a Fifteenth Supplemental Indenture, dated as of May 21, 2019, with the Original Trustee and the Series Trustee, and a Sixteenth Supplemental Indenture, dated May 21, 2019, with the Original Trustee; 

WHEREAS, the Original Indenture, as supplemented by this Supplemental Indenture, is herein called the “Indenture”; 

WHEREAS, under the Original Indenture, the form and terms of any new series of unsecured debentures, notes or other evidences of indebtedness
(the “Securities”) may at any time be established by a supplemental indenture executed by the Issuer and the Original Trustee; 

WHEREAS, the Issuer proposes to create under the Indenture a new series of Securities; 

WHEREAS, additional Securities of this series and other series hereafter established, except as may be limited in the Original Indenture as at
the time supplemented and modified, may be issued from time to time pursuant to the Original Indenture as at the time supplemented and modified; 

WHEREAS, the Issuer desires to appoint the Series Trustee to serve as the Trustee under the Indenture solely with respect to the Notes (as
defined below); 
 WHEREAS, the Series Trustee is willing to accept such appointment with respect to the Notes; 

  
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 WHEREAS, the amendments to the Original Indenture set forth in Article IX hereof with
respect to the Notes do not require the consent of any existing Securityholder; 
 WHEREAS, the Issuer desires the Original Trustee to
continue to serve as the Original Trustee under the Indenture for all purposes under the Original Indenture other than with respect to the Notes; and 

WHEREAS, all actions necessary to authorize the execution and delivery of this Supplemental Indenture and to make it a valid and binding
obligation of the Issuer have been done or performed; 
 NOW, THEREFORE, in consideration of the agreements and obligations set forth herein
and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 

ARTICLE I 
 ESTABLISHMENT
OF NEW SERIES 
 Section 1.01 Establishment of New Series. 

(a) There is hereby established a new series of Securities to be issued under the Indenture, to be designated as the
Issuer’s 3.375% Senior Notes due 2030 (the “Notes”). 
 (b) On the Issue Date (as defined below), the
Series Trustee shall authenticate and deliver $850,000,000 of the Notes and, at any time and from time to time thereafter, the Series Trustee shall authenticate and deliver Additional Notes (as defined below) for original issue in accordance with
Sections 2.3 and 2.4 of the Original Indenture in an aggregate principal amount specified in the applicable Issuer Order. Further, from time to time after the original issue date, Notes shall be authenticated and delivered upon registration of
transfer of or in exchange for, or in lieu of other Notes as set forth in the Original Indenture. Notwithstanding Sections 2.5 and 2.6 of the Original Indenture, the Trustee may authenticate the Notes and the Additional Notes by manual or electronic
signature and the Notes and the Additional Notes may be signed by the Issuer by manual, facsimile or electronic signatures. 

(c) The Notes shall be issued initially in the form of one or more Global Securities in substantially the form set out in
Exhibit A hereto. The Depositary with respect to the Notes shall be The Depository Trust Company. 
 (d) Each Note shall be
dated the date of authentication thereof and shall bear interest as provided in the form of Note in Exhibit A hereto. The date on which principal is payable on the Notes shall be as provided in the form of Note in Exhibit A hereto. 

(e) The record dates for the Notes and the manner of payment of principal and interest on the Notes shall be as provided in the
form of Note in Exhibit A hereto. The Place of Payment shall be as designated in Section 3.2 of the Original Indenture. 

  
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 (f) The terms of Section 10.1(C) of the Original Indenture shall be
applicable to the Notes. If and to the extent that the provisions of the Original Indenture are duplicative of, or in contradiction with, the provisions of this Supplemental Indenture, the provisions of this Supplemental Indenture shall govern, but
solely with respect to the Notes. 
 ARTICLE II 

APPOINTMENT OF SERIES TRUSTEE 

Section 2.01 Appointment of Series Trustee. Pursuant to the Indenture, the Issuer hereby appoints the Series Trustee as Trustee
under the Indenture with respect to the Notes, and only with respect to the Notes, and vests in and confirms with the Series Trustee all rights, powers, trusts, privileges, duties and obligations of the Trustee under the Indenture with respect to
the Notes. There shall continue to be vested in and confirmed with the Original Trustee all of its rights, powers, trusts, privileges, duties and obligations as Trustee under the Original Indenture with respect to all of the series of Securities as
to which it has served and continues to serve as Trustee under the Original Indenture. With respect to the Notes, all references to the Trustee in the Original Indenture shall be understood to be references to the Series Trustee, unless the context
requires otherwise. 
 Section 2.02 Appointment of Paying Agent and Registrar. The Issuer hereby appoints the Series Trustee as
Paying Agent, Registrar and agent upon whom notices and demands may be served, in each case, with respect to the Notes. 
 Section 2.03
Corporate Trust Office. For any purposes relating to the Notes or the Series Trustee, references in the Original Indenture to the “Corporate Trust Office” shall be deemed to refer to the corporate trust office of the Series
Trustee, which is located at 1401 McKinney, Suite 1000, Houston, TX 77010, Attention: Corporate Trust, or any other office of the Series Trustee at which, at any particular time, this Supplemental Indenture shall be administered. 

Section 2.04 Series Trustee’s Limitation of Liability. The parties hereto agree that this Supplemental
Indenture does not constitute an assumption by the Series Trustee of any liability of the Original Trustee arising out of any breach, negligence or willful misconduct by the Original Trustee in the performance of any of its duties as Trustee under
the Original Indenture or by any representative of the Original Trustee. 
 Section 2.05 Original Trustee’s
Limitation of Liability. The parties hereto agree that the Original Trustee shall not have any liability in connection with any acts or omissions taken or not taken by the Series Trustee in the performance or
non-performance of any of its duties as Trustee under the Indenture with respect to the Notes or by any representative of the Series Trustee. 

Section 2.06 Series Trustee’s Indemnity. The Issuer agrees to indemnify the Series Trustee for, and to hold it
harmless against, any loss, liability or expense (including the reasonable compensation and the expenses and disbursements of its agents and counsel) arising out of or in connection with the performance or
non-performance by the Original Trustee of its duties under the Original Indenture, including the costs and expenses of defending itself against any claim or liability in connection therewith. This
indemnification shall survive the termination of this Supplemental Indenture. 

  
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 Section 2.07 Original Trustee’s Indemnity. The Issuer agrees
to indemnify the Original Trustee for, and to hold it harmless against, any loss, liability or expense (including the reasonable compensation and the expenses and disbursements of its agents and counsel) arising out of or in connection with this
Supplemental Indenture, the performance or non-performance by the Series Trustee of its duties under the Indenture with respect to the Notes, including, without limitation, the costs and expenses of defending
itself against any claim or liability in connection therewith. This indemnification shall survive the termination of the Indenture and resignation or removal of the Original Trustee. 

ARTICLE III 
 THE
ORIGINAL TRUSTEE 
 Section 3.01 Representations & Warranties. The Original Trustee hereby represents
and warrants to the Series Trustee that: 
 (a) This Supplemental Indenture has been duly authorized, executed and delivered
on behalf of the Original Trustee and constitutes its legal, valid and binding obligation. 
 (b) The Original Trustee has
made, or will make, available to the Series Trustee, upon the Issuer’s reasonable request therefor and at the Issuer’s sole cost and expense, copies in its possession of documents not otherwise available from the Issuer and necessary for
the administration of the Notes. 
 Section 3.02 Original Trustee’s Acknowledgement. The Original Trustee
hereby acknowledges that it will not serve as the Trustee under the Original Indenture with respect to the Notes; and the parties hereto expressly acknowledge and agree that the Original Trustee shall have no liabilities, duties or obligations of
any kind (under the Indenture or otherwise) with respect to the Notes or the issuance thereof and that the Original Trustee shall have no responsibility or liability for the sufficiency or effectiveness of this Supplemental Indenture for any
purpose. 
 Section 3.03 Duties Under Supplemental Indenture. The Original Trustee shall have no liabilities,
duties or obligations under or in respect of this Supplemental Indenture, and no implied duties or obligations of any kind shall be read into this Supplemental Indenture on the part of the Original Trustee. 

ARTICLE IV 
 THE ISSUER

 Section 4.01 Representations and Warranties. The Issuer hereby represents and warrants to the Series Trustee and to the
Original Trustee that: 
 (a) The Issuer is a corporation duly and validly organized and existing pursuant to the laws of the
State of Texas. 

  
 7 

 (b) The Original Indenture was validly and lawfully executed and delivered
by the Issuer, has not been amended or modified and is in full force and effect. 
 (c) No event has occurred and is
continuing to occur which is, or after notice or lapse of time would become, an Event of Default under the Indenture. 
 (d)
There is no action, suit or proceeding pending or, to the best of the Issuer’s knowledge, threatened against the Issuer before any court or any governmental authority arising out of any action or omission by the Issuer under the Indenture. 

(e) This Supplemental Indenture has been duly authorized, executed and delivered on behalf of the Issuer and constitutes its
legal, valid and binding obligation. 
 (f) All conditions precedent relating to the appointment of the Series Trustee as a
Trustee under the Indenture have been complied with by the Issuer. 
 Section 4.02 Deliverables. The Issuer shall execute and
deliver such further instruments and shall do such other things as the Series Trustee may reasonably require so as to more fully and certainly vest in and confirm with the Series Trustee all rights, powers, duties and obligations hereby vested in
the Series Trustee. Without limiting the generality of the foregoing, and for the avoidance of doubt, the Issuer hereby expressly agrees that all reports, Opinions of Counsel, Officer’s Certificates, compliance certificates and other documents
required to be delivered from time to time pursuant to the terms of Sections 4.3, 8.4, 9.4, 10.1 and 11.5 of the Original Indenture shall be delivered and addressed to each of the Original Trustee (to the extent required under the Indenture) and the
Series Trustee (for so long as the Notes remain Outstanding). 
 ARTICLE V 

THE SERIES TRUSTEE 

Section 5.01 Representations and Warranties. The Series Trustee hereby represents and warrants to the Original Trustee and to the
Issuer that: 
 (a) The Series Trustee is qualified and eligible, under the provisions of Section 6.9 of the Original
Indenture and the Trust Indenture Act of 1939, as amended, to act as Trustee under the Indenture. 
 (b) This Supplemental
Indenture has been duly authorized, executed and delivered on behalf of the Series Trustee and constitutes its legal, valid and binding obligation. 

Section 5.02 Acceptance of Appointment. The Series Trustee hereby accepts its appointment as Trustee, Paying Agent, Registrar and
agent upon whom notices and demands may be served under the Indenture with respect to the Notes and shall hereby be vested with all rights, powers, protections, privileges, benefits, immunities, indemnities, duties and obligations of the Trustee,
Paying Agent, Registrar and agent upon whom notices and demands may be served under the Indenture with respect to the Notes and with respect to all property and monies held or to be held under the Indenture with respect to the Notes. 

  
 8 

 ARTICLE VI 

DEFINITIONS 
 For purposes
of this Supplemental Indenture and the Notes, the following terms have the meanings indicated below. All capitalized terms used herein and not otherwise defined below shall have the meanings ascribed thereto in the Original Indenture. 

“Additional Notes” means Notes issued in compliance with the terms of this Supplemental Indenture subsequent to the Issue
Date and in compliance with Sections 2.3 and 2.4 of the Original Indenture, it being understood that any notes issued in exchange for or replacement of any Notes issued on the Issue Date shall not be Additional Notes. 

“Adjusted Consolidated Net Tangible Assets” means, at the time of determination, the aggregate amount of total assets
included in the Issuer’s most recent quarterly or annual consolidated balance sheet prepared in accordance with generally accepted accounting principles, net of applicable reserves reflected in such balance sheet, after deducting the following
amounts reflected in such balance sheet: (a) goodwill; (b) deferred charges and other assets; (c) preneed receivables, net, and trust investments; (d) cemetery Perpetual Care Trust investments; (e) current assets of discontinued
operations; (f) non-current assets of discontinued operations; (g) other like intangibles; and (h) current liabilities (excluding, however, current maturities of long-term debt). 

“Attributable Indebtedness,” when used with respect to any sale and leaseback transaction (as contemplated by
Section 3.7 of the Original Indenture), means, at the time of determination, the present value (discounted at the rate set forth or implicit in the terms of the lease included in such transaction) of the total obligations of the lessee for
rental payments (other than amounts required to be paid on account of property taxes, maintenance, repairs, insurance, assessments, utilities, operating and labor costs and other items that do not constitute payments for property rights) during the
remaining term of the lease included in such transaction (including any period for which such lease has been extended). In the case of any lease that is terminable by the lessee upon the payment of a penalty or other termination payment, such amount
shall be the lesser of the amount determined assuming termination upon the first date such lease may be terminated (in which case the amount shall also include the amount of the penalty or termination payment, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it may be so terminated) and the amount determined assuming no such termination. 

“Capital Stock” of any Person means any and all shares, interests (including partnership interests), rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, but excluding any debt securities convertible into such equity. 

“Change of Control” has the meaning attributed thereto in Section 8.03 of this Supplemental Indenture. 

“Change of Control Offer” has the meaning attributed thereto in Section 8.03 of this Supplemental Indenture. 

“Credit Facilities” means one or more debt facilities with banks or other institutional lenders providing for revolving
credit or term loans or letters of credit. 

  
 9 

 “Holder” means, in the case of any Note, the Person in whose name such Note
is registered in the security register kept by the Issuer for that purpose in accordance with the terms of the Indenture. 
 “Issue
Date” means August 10, 2020. 
 “Notes” has the meaning assigned to it in Section 1.01(a) hereof. 

“Optional Redemption Premium” has the meaning attributed thereto in Exhibit A hereto. 

“Perpetual Care Trust” means a trust established to provide perpetual care or maintenance for any cemetery, mausoleum or
columbarium. 
 “Pre-Need Trust” means a trust established to hold funds related to
the purchase of funeral or cemetery goods or services on a pre-need basis. 
 “Securities
Act” means the Securities Act of 1933, as amended. 
 “Subsidiary” means, with respect to any Person: (a) any
corporation, association, limited liability company or other business entity (other than a partnership) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of that Person (or a combination thereof); and (b) any partnership,
(i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person, or (ii) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any
combination thereof); provided, however, that no Pre-Need Trust or Perpetual Care Trust shall be deemed to be a Subsidiary for purposes of this Supplemental Indenture. 

“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled (without
regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. 
 ARTICLE VII 

THE NOTES 

Section 7.01 Form. Provisions relating to the Notes are set forth in Exhibit A hereto, which are hereby incorporated in and
expressly made a part of this Supplemental Indenture. The provisions of Exhibit A hereto shall supersede the applicable provisions of Section 2.8 of the Original Indenture to the extent applicable. The Notes and the Series Trustee’s
certificate of authentication thereto shall be substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part of this Supplemental Indenture. The Notes may have notations, legends or endorsements required by law,
stock exchange rule, agreements to which the Issuer is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Issuer). Each Note shall be dated the date of its authentication. The Notes shall
be issuable only in registered form without interest coupons and only in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The terms of the Notes set forth in Exhibit A are part of the terms of this Supplemental Indenture.

  
 10 

 ARTICLE VIII 

REDEMPTION 

Section 8.01 Optional Redemption. 

(a) At its option, the Issuer may choose to redeem all or any portion of the Notes, at once or from time to time. 

(b) To redeem the Notes, the Issuer must pay a redemption price in an amount determined in accordance with the provisions of
the form of Note set forth in Exhibit A hereto. 
 (c) Any redemption pursuant to this Section 8.01 shall be made
pursuant to the provisions of Sections 12.1, 12.2, 12.3 and 12.4 of the Original Indenture, in each case, as amended, supplemented or otherwise modified by this Supplemental Indenture, including pursuant to the terms of the Notes set forth in
Exhibit A hereto. 
 Section 8.02 Mandatory Redemption. The Issuer shall not be required to make mandatory redemption or sinking
fund payments with respect to the Notes. However, the Issuer may be required to offer to purchase Notes as described in Section 8.03 below. The Issuer may at any time and from time to time purchase Notes in the open market or otherwise. 

Section 8.03 Change of Control. Upon the occurrence of any of the following events (each a “Change of Control”),
each Holder shall have the right to require that the Issuer repurchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date): 
  

	(1)	 any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that for purposes of this clause (1) such person shall be deemed to have “beneficial ownership” of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Issuer; 

  

	(2)	 the Issuer is liquidated or dissolved or adopts a plan of liquidation or dissolution; or 

 

	(3)	 the merger or consolidation of the Issuer with or into another Person or the merger of another Person with or
into the Issuer, or the sale of all or substantially all the assets of the Issuer (determined on a consolidated basis) to another Person, other than a transaction following which (i) in the case of a merger or consolidation transaction, holders
of securities that represented 100% of the Voting Stock of the Issuer immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly
at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and (ii) in the case of a sale of assets transaction, each transferee becomes an
obligor in respect of the Notes and a subsidiary of the transferor of such assets. 

  
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 Within 30 days following any Change of Control, the Issuer will mail a notice to each Holder with a copy to
the Series Trustee (the “Change of Control Offer”) stating: 
  

	(1)	 that a Change of Control has occurred and that such Holder has the right to require the Issuer to purchase such
Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date); 

  

	(2)	 the circumstances and relevant facts regarding such Change of Control (including information with respect to
pro forma historical income, cash flow and capitalization, in each case after giving effect to such Change of Control); 

  

	(3)	 the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is
mailed); and 

  

	(4)	 the instructions, as determined by the Issuer, consistent with this Section 8.03, that a Holder must
follow in order to have its Notes purchased. 

 The Issuer will not be required to make a Change of Control Offer with respect to a series
of Notes following a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth hereunder applicable to a Change of Control Offer made by the
Issuer and purchases all Notes of such series validly tendered and not withdrawn under such Change of Control Offer or (2) a notice of redemption of all of such series of Notes has been given pursuant hereto unless and until there has been a
default in payment of the applicable redemption price. A Change of Control Offer may be made in advance of a Change of Control, conditional upon the Change of Control, if a definitive agreement is in place for the Change of Control at the time of
the making of the Change of Control Offer. 
 The Issuer shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange
Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 8.03. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this
Section 8.03, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 8.03 by virtue thereof. 

Holders electing to have a Note purchased will be required to surrender the Note, with an appropriate form duly completed, to the Issuer at the address
specified in the notice at least three Business Days prior to the purchase date. Holders will be entitled to withdraw their election if the Series Trustee or the Issuer receives not later than one Business Day prior to the purchase date, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered for purchase by the Holder and a statement that the Holder is withdrawing his election to have such Note purchased.

  
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 On the purchase date, all Notes purchased by the Issuer under this Section 8.03 shall be delivered by
the Issuer to the Series Trustee for cancellation, and the Issuer shall pay the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto. 

In the event that at the time of any Change of Control the terms of any Credit Facility restrict or prohibit the purchase of Notes following such Change of
Control, then prior to the mailing of the notice to Holders but in any event within 30 days following any Change of Control, the Issuer shall undertake to (1) repay in full all such indebtedness under any applicable Credit Facility or
(2) obtain the requisite consents under any applicable Credit Facility to permit the repurchase of the Notes. 
 ARTICLE IX 

AMENDMENT OF ORIGINAL INDENTURE 

Section 9.01 Amendment of Article One of Original Indenture. The second paragraph of Section 1.1 of the Original Indenture is
hereby amended and restated, but only with respect to the Notes, to read in its entirety as follows: 
 “All accounting terms used
herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term “generally accepted accounting principles” means such accounting principles as
are generally accepted in the United States at the date of the supplemental indenture authorizing the issuance of the related Securities of such series.” 

Section 9.02 Amendment of Article Two of Original Indenture. The second sentence of the first paragraph of Section 2.5 of the
Original Indenture is hereby amended and restated, but only with respect to the Notes, to read in its entirety as follows: 
 “Such
signatures may be the manual, facsimile or electronic signatures of the present or any future such officers.” 
 Section 9.03
Amendment of Article Two of Original Indenture. The first sentence of Section 2.6 of the Original Indenture is hereby amended and restated, but only with respect to the Notes, to read in its entirety as follows: 

“Only such Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by
the Trustee by the manual or electronic signature of one of its authorized signatories or its Authenticating Agent, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose.” 

Section 9.04 Amendment of Article Three of Original Indenture. Section 3.6 of the Original Indenture is hereby amended and
restated, but only with respect to the Notes, to read in its entirety as follows: 
 “The Issuer will not, and will not permit any of
its Subsidiaries to, mortgage, pledge, encumber or subject to any lien or security interest to secure any Indebtedness of the Issuer or any Indebtedness of any Subsidiary (other than Indebtedness owing to the Issuer or a wholly-owned Subsidiary) any
assets, without providing that the Securities shall thereby 

  
 13 

 
be secured equally and ratably with (or prior to) any other Indebtedness so secured, unless, after giving effect thereto, the aggregate outstanding amount of all such secured Indebtedness of the
Issuer and its Subsidiaries (excluding secured Indebtedness existing as of June 30, 2020, and any extensions, renewals or refundings thereof that do not increase the principal amount of Indebtedness so extended, renewed or refunded and
excluding secured Indebtedness incurred pursuant to subparagraphs (a), (b), (c), (d) and (e) below), together with all outstanding Attributable Indebtedness from sale and leaseback transactions described in Section 3.7(1) of this
Indenture, would not exceed 20% of Adjusted Consolidated Net Tangible Assets of the Issuer and its Subsidiaries on the date such Indebtedness is so secured; provided, however, that nothing in this Section 3.6 shall prevent the
Issuer or any Subsidiary: 
 (a) from acquiring and retaining property subject to mortgages, pledges, encumbrances, liens or
security interests existing thereon at the date of acquisition thereof, or from creating within one year of such acquisition mortgages, pledges, encumbrances or liens upon property acquired by it after June 30, 2020, as security for purchase
money obligations incurred by it in connection with the acquisition of such property, whether payable to the Person from whom such property is acquired or otherwise; 

(b) from mortgaging, pledging, encumbering or subjecting to any lien or security interest Current Assets to secure Current
Liabilities; 
 (c) from mortgaging, pledging, encumbering or subjecting to any lien or security interest property to secure
Indebtedness under one or more Credit Facilities in an aggregate principal amount not to exceed $1 billion; 
 (d) from
extending, renewing or refunding any Indebtedness secured by a mortgage, pledge, encumbrance, lien or security interest on the same property theretofore subject thereto, provided that the principal amount of such Indebtedness so extended, renewed or
refunded shall not be increased; or 
 (e) from securing the payment of workmen’s compensation or insurance premiums or
from making good faith pledges or deposits in connection with bids, tenders, contracts (other than contracts for the payment of money) or leases, deposits to secure public or statutory obligations, deposits to secure surety or appeal bonds, pledges
or deposits in connection with contracts made with or at the request of the United States Government or any agency thereof, or pledges or deposits for similar purposes in the ordinary course of business.” 

Section 9.05 Amendment of Article Four of Original Indenture. Section 4.3 of the Original Indenture is hereby amended and
restated, but only with respect to the Notes, to read in its entirety as follows: 
 “Section 4.3 Reports by the Issuer.
(a) Whether or not required by the Commission, so long as any Securities of any series are Outstanding, the Issuer will furnish to the Trustee and to any Holders of Securities of such series who so request, within 15 days of the time
periods specified in the Commission’s rules and regulations: 

  
 14 

 (i) all quarterly and annual financial information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if the Issuer were required to file such Forms, including a “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Issuer’s independent accountants; and 

(ii) all current reports that would be required to be filed with the Commission on Form
8-K if the Issuer were required to file such reports. 
 Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the
Issuer’s compliance with any of its covenants hereunder. 
 (b) Whether or not required by the Commission, the Issuer
will file a copy of all of the information and reports referred to in Sections 4.3(a)(i) and (ii) with the Commission for public availability within the time periods specified in the Commission’s rules and regulations (unless the
Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. 

(c) For so long as any Securities of any series remain Outstanding, the Issuer will furnish to the Holders of Securities of
such series and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. 

(d) The Issuer will comply with the requirements of Section 314 of the Trust Indenture Act of 1939, as amended. 

(e) The Issuer will furnish to the Trustee, within 90 days after the end of each fiscal year of the Issuer, an officer’s
certificate from the principal executive officer, principal financial officer or principal accounting officer as to his knowledge of the Issuer’s compliance with all conditions and covenants under this Indenture. For purposes of this subsection
(e), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture.” 

Section 9.06 Amendments of Article Five of Original Indenture. 

(a) Section 5.1(g) of the Original Indenture is hereby amended and restated, but only with respect to the Notes, to read
in its entirety as follows: 
 “(g) default under any bond, debenture, note or other evidence of Indebtedness for money borrowed by the
Issuer or any Subsidiary or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Issuer or any Subsidiary (other than Non-Recourse Indebtedness), whether such Indebtedness exists on the date hereof or shall hereafter be created, which default shall have resulted in such Indebtedness becoming or being declared due and payable prior
to the date on 

  
 15 

 
which it would otherwise have become due and payable, or any default in payment of such Indebtedness (after the expiration of any applicable grace periods and the presentation of any debt
instruments, if required), if the aggregate amount of all such Indebtedness which has been so accelerated and with respect to which there has been such a default in payment shall exceed $10,000,000, without each such default and acceleration having
been rescinded or annulled within a period of 30 days after there shall have been given to the Issuer by the Trustee by registered mail, or to the Issuer and the Trustee by the Holders of at least 25 percent in aggregate principal amount of the
Securities of such series then Outstanding, a written notice specifying each such default and requiring the Issuer to cause each such default and acceleration to be rescinded or annulled and stating that such notice is a “Notice of
Default” hereunder; or” 
 (b) The first sentence of the first paragraph following Section 5.1(h) of the
Original Indenture is hereby amended and restated, but only with respect to the Notes, to read in its entirety as follows: 
 “If an
Event of Default with respect to Securities of any series then Outstanding occurs and is continuing, then and in each and every such case, unless the principal of all of the Securities of such series shall have already become due and payable, either
the Trustee or the Holders of not less than 25 percent in aggregate principal amount of the Securities of such series then Outstanding, by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the unpaid
principal amount of all the Securities of such series then Outstanding and the Optional Redemption Premium, if any, due thereon, and the interest, if any, accrued thereon to be due and payable immediately, and upon any such declaration the same
shall become and shall be immediately due and payable.” 
 Section 9.07 Amendment of Article Eleven of Original Indenture.
Article Eleven of the Original Indenture is hereby amended, but only with respect to the Notes, by the addition of the following new Section at the end thereof: 

“Section 11.11 Usury. It is the intent of the parties in the execution and performance of the Securities of any series and the
Indenture to contract in strict compliance with applicable usury laws from time to time in effect. The Issuer and the Trustee on behalf of the Holders stipulate and agree that none of the terms in the Securities of such series or the Indenture are
intended or shall ever be construed to create a contract to pay interest in an amount in excess of the maximum nonusurious amount or at a rate in excess of the highest lawful rate. In the event any payment includes any such excess interest, the
Issuer stipulates that such excess interest shall have been paid as a result of error on the part of the Issuer.” 

  
 16 

 ARTICLE X 

MISCELLANEOUS 

Section 10.01 Integral Part. This Supplemental Indenture constitutes an integral part of the Indenture. 

Section 10.02 Adoption, Ratification and Confirmation. The Original Indenture, as supplemented and amended by this Supplemental
Indenture, is in all respects hereby adopted, ratified and confirmed. 
 Section 10.03 Compensation and Reimbursement. The
Original Trustee shall be entitled to compensation and reimbursement to the extent provided under Section 6.6 of the Original Indenture in connection with its ongoing trusteeship under the Original Indenture, including its costs with respect to
entering into this Supplemental Indenture; and the Original Trustee shall continue to be entitled to indemnification as provided in Section 6.6 of the Original Indenture. The Series Trustee shall be entitled to compensation, reimbursement and
indemnification as set forth in Section 6.6 of the Original Indenture with respect to the Notes, which rights and obligations shall survive the execution hereof. 

Section 10.04 Counterparts. This Supplemental Indenture may be executed in any number of counterparts, each of which when so
executed shall be deemed an original; and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of this Supplemental Indenture by facsimile or electronically in portable document format
(including any electronic signature covered by the U.S. federal ESIGN Act of 2000 or other applicable law) or in any other format will be effective as delivery of a manually executed counterpart. 

Section 10.05 Governing Law. THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS. 
 Section 10.06 Trustee Makes No Representation. Neither the Original Trustee nor the Series
Trustee makes any representation (other than those made expressly by the Series Trustee or the Original Trustee) as to the validity or sufficiency of this Supplemental Indenture. The recitals and statements herein (other than those made expressly by
the Series Trustee or the Original Trustee) are deemed to be those of the Issuer and not of the Series Trustee or the Original Trustee. 

Section 10.07 Additional Trustee Provisions. In no event shall the Original Trustee or the Series Trustee be liable for special,
indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits), even if the Original Trustee or the Series Trustee has been advised of the likelihood of such loss or damage and regardless of
the form of action. For the avoidance of doubt, the Original Trustee shall have no liabilities, duties or obligations under or in respect of this Supplemental Indenture. 

Each of the Original Trustee and the Series Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under
this Supplemental Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage;
epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions; it being understood that each of
the Original Trustee and the Series Trustee shall use its best efforts to resume performance as soon as practicable under the circumstances. 

  
 17 

 The permissive rights of each of the Original Trustee and the Series Trustee enumerated herein shall not be
construed as duties. 
 Section 10.08 Notice. Any request, demand, authorization, direction, notice, consent, waiver or other
document provided or permitted by this Supplemental Indenture to be made upon, given or furnished to, or filed with 
 (a)
the Original Trustee by the Issuer or by the Series Trustee shall be sufficient for every purpose herein if made, given, furnished or filed in writing to or with the Original Trustee at The Bank of New York Mellon Trust Company, N.A. 400 South Hope
Street, Suite 500, Los Angeles, California, or 
 (b) the Series Trustee by the Issuer or by the Original Trustee shall be
sufficient for every purpose herein if made, given, furnished or filed in writing to or with the Series Trustee at BOKF, NA, 1401 McKinney, Suite 1000, Houston, TX 77010, Attention: Corporate Trust, or 

(c) the Issuer by the Original Trustee or by the Series Trustee shall be sufficient for every purpose herein if in writing and
mailed, first-class postage prepaid, to the Issuer addressed to it at Service Corporation International, 1929 Allen Parkway, Houston, TX 77019, Attention: Treasurer or at any other address previously furnished in writing to the Original Trustee and
Series Trustee by the Issuer. 
 Section 10.09 Waiver of Jury Trial. THE PARTIES HERETO AND EACH HOLDER OF A NOTE BY ITS
ACCEPTANCE THEREOF, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE OR THE NOTES. 

[Signatures on following page] 
  

  
 18 

 IN WITNESS WHEREOF, the parties hereto have executed this Supplemental Indenture on the date
first set forth above. 
  

			
	ISSUER:
	
	SERVICE CORPORATION INTERNATIONAL
		
	By:	 	 /s/ Eric D. Tanzberger

		 	Name: Eric D. Tanzberger
		 	 Title:   Senior Vice President and

Chief Financial Officer

	
	ORIGINAL TRUSTEE:
	
	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Original Trustee
		
	By:	 	 /s/ Shannon Matthews

		 	Name: Shannon Matthews
		 	Title: Vice President
	
	SERIES TRUSTEE:
	
	BOKF, NA, as Series Trustee
		
	By:	 	 /s/ Rosalyn Davis

		 	Name: Rosalyn Davis
		 	Title:   Vice President

 EXHIBIT A 

 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
 TRANSFERS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. 

					
	REGISTERED	 		  	CUSIP: 817565 CF9
	No.	 		  	ISIN: US817565CF96
		 		  	
		 		  	$

 3.375% Senior Notes Due 2030 

Service Corporation International, a Texas corporation, promises to pay to Cede & Co., or registered assigns, the principal sum
of                U.S. dollars ($                ) on August 15, 2030. 

Interest Payment Dates: February 15 and August 15. 

Record Dates: February 1 and August 1. 

Additional provisions of this Note are set forth on the other side of this Note. 

 Dated: 
  

			
	 SERVICE CORPORATION

INTERNATIONAL

		
	By	 	              

		 	Name:
		 	Title:

  

			
	 TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

	
	 BOKF, NA
 as
Trustee, certifies
 that this is one of

the Securities referred

to in the Supplemental Indenture.

		
	By	 	              

		 	Authorized Signatory

 1. Interest 

Service Corporation International, a Texas corporation (such corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the “Issuer”), promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Issuer will pay interest semiannually on February 15 and August 15 of
each year, commencing February 15, 2021. Interest on the Notes will accrue from August 10, 2020. Interest will be computed on the basis of a 360-day year of twelve
30-day months. 
 2. Method of Payment 

The Issuer will pay interest on the Notes (except defaulted interest) to the Persons who are registered holders of Notes at the close of
business on the February 1 or August 1 immediately preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Issuer will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Security
(including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depositary. The Issuer will make all payments in respect of a certificated Note (including principal, premium
and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Note will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or
such other date as the Trustee may accept in its discretion). 
 3. Paying Agent and Registrar 

Initially, BOKF, NA, a national banking association (the “Trustee”), will act as Paying Agent and Registrar. The Issuer may
appoint and change any Paying Agent, Registrar or co-registrar without notice. 
 4. Indenture 

The Issuer issued the Notes under the Senior Indenture dated as of February 1, 1993 (the “Original Indenture”), between
the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Base Trustee”), as amended by the Seventeenth Supplemental Indenture dated as of August 10, 2020 (the “Seventeenth Supplemental
Indenture” and, the Original Indenture, as supplemented by the Seventeenth Supplemental Indenture, the “Indenture”), among the Issuer, the Base Trustee and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Seventeenth Supplemental Indenture (the “Act”). Terms
defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the Act for a statement of those terms. 

The Notes are general unsecured obligations of the Issuer. The Issuer shall be entitled to issue Additional Notes pursuant to Section 2.3
of the Original Indenture. The Notes issued on the Issue Date and any Additional Notes will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the ability of the Issuer and its subsidiaries
to create liens on assets; consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries; and engage in sale and leaseback transactions. These covenants are subject to important exceptions and
qualifications. 

 5. Optional Redemption 

Except as set forth below, the Issuer shall not be entitled to redeem the Notes. 

Prior to August 15, 2025, the Notes will be redeemable, in whole or in part, at the Issuer’s option at any time, upon at least 10
days’ and not more than 60 days’ notice to the Holders, at a redemption price equal to the greater of (1) 100% of the principal amount of such Notes to be redeemed, and (2) as determined by the Quotation Agent, the sum of the present
values of the remaining scheduled payments of principal (at the redemption price set forth in the table below as if redeemed on August 15, 2025) and interest thereon (not including any portion of such payments of interest accrued as of the date
of redemption) through August 15, 2025, discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate plus 50 basis points (the greater of (1) and (2), the “Optional Redemption Premium”), plus, in each case, accrued interest thereon to the date of redemption. 

On and after August 15, 2025, the notes will be redeemable, in whole or in part, at the Issuer’s option at any time, upon at least
10 days’ and not more than 60 days’ notice to the Holders, at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date, if redeemed during
the 12-month period commencing on August 15 of the years set forth below: 
  

					
	 Period
	  	Redemption
Price	 
	 2025
	  	 	101.688	% 
	 2026
	  	 	101.125	% 
	 2027
	  	 	100.563	% 
	 2028 and thereafter
	  	 	100.000	% 

 At the Issuer’s option, a notice of redemption may be conditioned on the satisfaction of one or more
conditions. If so conditioned, such a notice of redemption shall state that, in the Issuer’s discretion, the redemption date may be delayed until such time as any or all of such conditions shall be satisfied (or waived by the Issuer in its
discretion), or such redemption may not occur and such notice may be rescinded in the event that any or all of such conditions have not been satisfied (or waived by the Issuer in its discretion) by the redemption date, or the redemption date so
delayed. 

 Notice of optional redemption pursuant to this Section 5 will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at his registered address. Notes in denominations larger than $2,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If
money sufficient to pay the redemption price of and accrued interest on all Notes (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Notes (or such portions thereof) called for redemption. 

“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity
most nearly equal to August 15, 2025, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities with a maturity of August 15, 2025. 

“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, (ii) if the Quotation Agent obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such
quotations or (iii) if the Quotation Agent obtains only one such Reference Treasury Dealer Quotation, such quotation. 

“Quotation Agent” means the Reference Treasury Dealer appointed by the Issuer. 

“Reference Treasury Dealer” means each of BofA Securities, Inc. (and its successors) and any other nationally recognized
investment banking firm that is a primary U.S. government securities dealer specified from time to time by the Issuer. 
 “Reference
Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Issuer, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Issuer by such Reference Treasury Dealer as of 5:00 p.m., New York City time, on the third Business Day preceding the redemption date. 

6. Put Provisions 
 Upon a Change of
Control, any Holder of Notes will have the right to cause the Issuer to repurchase the Notes of such Holder at a repurchase price equal to 101% of the principal amount of the Notes to be repurchased plus accrued interest to the date of repurchase
(subject to the right of holders of record on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture. 

7. Denominations; Transfer; Exchange 
 The
Notes are in registered form without coupons in denominations of $2,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things,
to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case
of a Note to be redeemed in part, the portion of the Note not to be redeemed) or any Notes for a period of 15 days before a selection of Notes to be redeemed or 15 days before an interest payment date. 

 8. Persons Deemed Owners 

Except as provided in Section 2 hereto, the registered Holder of this Note may be treated as the owner of it for all purposes. 

9. Unclaimed Money 
 If money for the
payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuer at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled
to the money must look only to the Issuer as general creditors and not to the Trustee for payment. 
 10. Discharge and Defeasance 

Subject to certain conditions, the Issuer at any time shall be entitled to terminate some or all of its obligations under the Notes and the
Indenture (insofar as the Indenture applies to the Notes) if the Issuer deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Notes to redemption or maturity, as the case may be. 

11. Amendment; Waiver 
 Subject to certain
exceptions set forth in the Indenture, (a) the Indenture (insofar as the Indenture applies to the Notes) and the Notes may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Notes
and (b) any default or noncompliance with any provision may be waived with respect to the Notes with the written consent of the Holders of a majority in principal amount outstanding of the Notes. Subject to certain exceptions set forth in the
Indenture, without the consent of any Noteholder, the Issuer, the Base Trustee and the Trustee shall be entitled to amend the Indenture or the Notes to evidence the assumption by a successor corporation of the Issuer’s obligations under the
Indenture, or to add covenants or make the occurrence and continuance of a default in such additional covenants a new Event of Default for the protection of the Holders of debt securities, or to cure any ambiguity or correct any inconsistency in the
Indenture or amend the Indenture in any other manner which the Issuer may deem necessary or desirable and which will not adversely affect the interests of the Holders of senior debt securities issued thereunder, or to establish the form and terms of
any series of senior debt securities to be issued pursuant to the Indenture, or to evidence the acceptance of appointment by a successor Trustee, or to secure the senior debt securities with any property or assets. 

12. Defaults and Remedies 
 Under the
Indenture, Events of Default include (a) default for 30 days in payment of interest on the Notes; (b) default in payment of principal on the Notes at maturity, upon redemption pursuant to Section 5 hereto, upon acceleration or
otherwise, or failure by the Issuer to redeem or purchase Notes when required; (c) failure by the Issuer to comply with other agreements in the Indenture or the Notes, in certain cases subject to notice and lapse of time; (d) certain
accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Issuer if the amount accelerated (or so unpaid) exceeds $10 million; and (e) certain events of bankruptcy or insolvency with
respect to the Issuer. If an Event of Default occurs 

 
and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all the Notes to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default. 

Noteholders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from
Noteholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 

13. Trustee Dealings with the Issuer 

Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Issuer or its Affiliates and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Trustee. 

14. No Recourse Against Others 
 A
director, officer, employee or stockholder, as such, of the Issuer or the Trustee shall not have any liability for any obligations of the Issuer under the Notes or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Note, each Noteholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes. 

15. Authentication 
 This Note shall not
be valid until an authorized signatory of the Trustee (or an authenticating agent) manually or electronically signs the certificate of authentication on the other side of this Note. 

16. Abbreviations 
 Customary
abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian),
and U/G/M/A (=Uniform Gift to Minors Act). 
 17. CUSIP Numbers 

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Issuer has caused CUSIP numbers to
be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Noteholders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

 18. Governing Law 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. 

The Issuer will furnish to any Noteholder upon written request and without charge to the Note holder a copy of the Indenture which has in it
the text of this Note in larger type. Requests may be made to: 
 1929 Allen Parkway 

Houston, Texas 77019 
 Attention:
Secretary 

  

ASSIGNMENT FORM 
 To assign this Security, fill
in the form below: 
 I or we assign and transfer this Security to 

(Print or type assignee’s name, address and zip code) 

(Insert assignee’s soc. sec. or tax I.D. No.) 

and irrevocably appoint                  agent to transfer this Security on
the books of the Issuer. The agent may substitute another to act for him. 
  

 
  

							
	 DATE:
	 	          
	 	YOUR SIGNATURE:	 	
              
   

  
  

Sign exactly as your name appears on the other side of this Security 

 OPTION OF HOLDER TO ELECT PURCHASE 

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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the fifteenth (15th) day of May 2020 by and among Thomas S. McHugh, currently residing at 6 Harborage Court, Bluffton, South Carolina 29910 (the “Executive”), and Avadel Management Corporation, a Delaware corporation with a principal office located at 16640 Chesterfield Grove Road, Suite 200, Chesterfield, Missouri 63005 (the “Company”).  The Company is an indirect wholly owned subsidiary of Avadel Pharmaceuticals plc, an Irish public limited company with a principal office located at Block 10-1, Blanchardstown Corporate Park, Ballycoolin, Dublin 15 Ireland (“Avadel plc”).

W I T N E S S E T H
WHEREAS, the Executive began his employment with the Company as of December 2, 2019 (the “Effective Date”), and the Executive and the Company wish to set forth in this Agreement the terms of such employment.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1.EMPLOYMENT TERMS
1.Position.
(a)Positions.  The Executive shall serve as the Chief Financial Officer of Avadel plc and as the Chief Financial Officer of the Company, and shall carry out such work as may be reasonably required by the Company in connection with the business of Avadel plc and the Company consistent with such positions and the terms and conditions of this Agreement.  The Executive shall primarily work at the Company’s headquarters (currently in Chesterfield, Missouri), provided that the Executive may be required to travel frequently for business, consistent with the Company’s business needs.  The reasonable costs associated with such travel will be reimbursed by the Company.  The Executive will devote substantially all of the Executive’s business time, attention and efforts to Avadel plc and the Company and during such time the Executive will make the best use of his energy, knowledge and training for the purpose of advancing the interests of Avadel plc and the Company.  Except as may be otherwise expressly authorized in writing by the Chief Executive Officer of Avadel plc, during his employment with the Company the Executive will accept no other employment nor serve as an officer, director or principal of any other company or organization (other than a member of the Avadel Group of Companies (as hereinafter defined).  Notwithstanding the foregoing, the Executive may engage in religious, charitable or other community activities (which may include service as a board member of a religious, charitable or other not-for-profit organization) as long as such activities do not interfere with the Executive’s performance of his duties to or with respect to Avadel plc and each of its direct or indirect subsidiaries including the Company (collectively, the “Avadel Group of Companies”).  The Executive will comply with all written policies of the Avadel Group of Companies to the extent applicable to the Executive.
(b)Reporting.  In his capacities as the Chief Financial Officer of Avadel plc and the Company, the Executive shall report directly to the Company’s Chief Executive Officer, currently Gregory J. Divis. 
2.Duration.  The duration of the Executive’s employment commenced as of the Effective Date and shall continue under the terms and condition of this Agreement, for one (1) year following the Effective Date, with this Agreement automatically renewing thereafter for successive periods of one (1) year unless the Executive or the Company provides written notice to the other of his or its intention not to renew the Agreement at least thirty (30) days prior to the next upcoming expiration date.  Notwithstanding 

the foregoing, this Agreement and the Executive’s at-will employment hereunder may be terminated at any time pursuant to Section 3.1 hereof.  At the termination of this Agreement, the Executive’s employment with the Company shall terminate simultaneously.
2.COMPENSATION; BENEFITS
1.Base Salary.  The Company shall pay to the Executive a gross annual base salary of Three Hundred Eighty-Five Thousand Dollars ($385,000) per year, paid on a semi-monthly basis and subject to ordinary and lawful deductions.  The Company will review the Executive’s base salary on or about the first of every calendar year, and, in the Company’s sole discretion, make any increases that the Company deems warranted.  If the Executive’s base salary is increased, the new increased base salary will be the base salary for purposes of this Agreement.
2.Bonus.  The Executive shall be eligible for a potential annual bonus with a target payout of no less than forty percent (40%) of the Executive’s base salary based upon the Executive’s achievement of certain business and individual performance objectives as well as the performance of Avadel plc against its objectives as determined by the Company.  Subject to the requirement that the Executive shall be employed by a member of the Avadel Group of Companies on the date that the bonus is deemed earned by the Compensation Committee of the Company’s Board of Directors, any bonus payments due hereunder shall be paid to the Executive no later than March 15 of the calendar year following the applicable year to which the annual bonus relates, subject to ordinary and lawful deductions.
3.Stock Options and Additional Equity Grants. In connection with the commencement of his employment, the Executive has been awarded 250,000 stock options that will vest pursuant to the terms of the applicable stock option agreement and the Avadel plc 2017 Omnibus Incentive Compensation Plan (together, the “Equity Documents”). The Executive will also be eligible to participate in future equity awards which may be granted to executive management, based upon Company and individual performance, at the sole discretion of the Company’s Board of Directors.
4.Insurance and Benefits.
(a)Plan Participation.  The Company shall facilitate the participation by the Executive and his family in medical, health, vision, dental, hospitalization, term life, and workers compensation insurance, long-term disability, short-term disability, and 401k savings plan programs of the Company, to the extent now existing or hereafter established, that are generally made available to executives or employees of the Company, in each case according to the terms and conditions (including eligibility requirements) of such plans or programs.  Under current policies, the Company pays 85% annually toward employee medical (United Healthcare) coverage, plus 70% of dependent medical coverage; 85% employee coverage for dental insurance (Principal); optional vision coverage (Eyemed); and a $1000 annual corporate contribution to a health savings account (HSA) (if such medical insurance is elected).  The Executive acknowledges that the current insurance plans and Company policies are subject to changes at the business discretion of the Company.
(b)Vacation and Paid Time Off.  The Executive shall be eligible for vacation of twenty (20) days per year which shall be accrued or earned each month.  The Executive shall also be entitled to the Company’s usual and customary holidays, including two (2) floating holidays per year and corporate holidays (of which there are eleven (11) scheduled during 2020) to be taken in accordance with the normal Company paid vacation and time-off policies. The Company also grants the Executive five (5) sick days annually.
(c)Indemnification; General Liability.
(i)To the fullest extent permitted by applicable law, the Company, its receiver, or its trustee shall indemnify, defend, and hold the Executive harmless from and against any expense, loss, damage, or liability incurred or connected with any claim, suit, demand, loss, judgment, liability, cost, or expense (including reasonable attorneys’ fees) arising from or related to the services performed by him under the terms of this Agreement and amounts paid in settlement of any of the foregoing; provided that the same were not the result of the 

Executive’s fraud, gross negligence, or reckless or intentional misconduct.  The Company may advance to the Executive the costs of defending any claim, suit, or action against him if he undertakes to repay the funds advanced, with interest, should it later be determined that he is not entitled to indemnification under this Section 2.4(c); provided, however, and notwithstanding the foregoing, this sentence shall not apply to the defense of any claim that may be brought by the Company or any of the Avadel Group of Companies against the Executive.
(ii)The Company shall provide coverage to the Executive for his general liability, director and officer liability, and professional liability insurance at the same levels and on the same terms as provided to its other executive officers.
5.Reimbursement of Expenses.  The Company shall reimburse the Executive, subject to presentation of adequate substantiation, including receipts, for the reasonable travel, entertainment, lodging and other business expenses incurred by the Executive in accordance with the Company’s expense reimbursement policy in effect at the time such expenses are incurred. In no event will such reimbursements, if any, be made later than the last day of the year following the year in which the Executive incurs the expense.
3.TERMINATION AND SEVERANCE
1.Termination.
(a)Nothing in this Agreement shall prevent the Company from terminating the Executive’s employment with the Company and this Agreement at any time, with or without “Cause.”  “Cause” means: (i) conviction of the Executive of, or the Executive’s plea of nolo contendere to, a felony or crime involving moral turpitude; (ii) fraud, theft, or misappropriation by the Executive of any asset or property of any member of the Avadel Group of Companies, including, without limitation, any theft or embezzlement or any diversion of any corporate opportunity; (iii) breach by the Executive of any of the material obligations contained in this Agreement; (iv) conduct by the Executive materially contrary to the material policies of any member of the Avadel Group of Companies; (v) material failure by the Executive to meet the goals and objectives established by any member of the Avadel Group of Companies; provided that the Executive has failed to cure such failure within a reasonable period of time after written notice to him regarding such failure; or (vi) conduct by the Executive that results in a material detriment to any member of the Avadel Group of Companies, or its program, or goals or that is inimical to its reputation and interest; provided that the Executive has failed to cure such failure within a reasonable period of time after written notice to him regarding such conduct.  Any reoccurrence of such acts constituting Cause within one (1) year of the original occurrence will require no such pre-termination right of the Executive to cure. 
(b)The Executive may terminate the Executive’s employment with the Company and this Agreement for or other than for “Good Reason”. “Good Reason” means, without the Executive’s consent, any of the following: (i) the Company’s diminution in the Executive’s authority, duties or responsibilities with respect to Avadel plc or the Company in any material respect or the Company’s assignment to the Executive of duties or responsibilities that are materially inconsistent with the Executive’s position with Avadel plc or the Company as stated in this Agreement; (ii) a change in the location of the Executive’s employment which increases the Executive’s one-way commute by more than sixty (60) miles; or (iii) a material breach by the Company of this Agreement.  
(c)In the event that the Executive desires to resign from the Company, he shall promptly give the Company written notice of the date that such resignation will be effective, provided that the notice period shall be no less than thirty (30) days; provided further, that the Company may unilaterally accelerate the date of termination and such acceleration shall not result in a termination by the Company for purposes of this Agreement.  In the event that the Executive desires to resign from the Company for Good Reason, he shall provide the Company with written notice setting forth the acts constituting Good Reason within ninety (90) days of the initial occurrence of the Good Reason condition and providing that 

the Company may cure such acts within thirty (30) days of receipt of such notice.  If such condition is not remedied within such thirty- (30-) day cure period, any termination of employment by the Executive for “Good Reason” must occur within ninety (90) days after the period for remedying such condition has expired.  
(d)In the event that the Company desires to terminate the Executive’s employment, with or without Cause, the Company shall give the Executive written notice thereof, and the termination shall be effective as of the date specified in the written notice.
(e)The Executive’s employment and this Agreement shall terminate automatically upon the Executive’s death.  If the Company determines that the Executive is subject to an Incapacity (as hereinafter defined), the Company may terminate the Executive’s employment and this Agreement effective upon the Executive’s Incapacity.  “Incapacity” shall mean the inability of the Executive to perform the essential functions of the Executive’s job, with or without reasonable accommodation, for a period of 90 days in the aggregate in any 180-day period. 
(f)If the Executive’s employment is terminated for any reason, the Company shall pay to the Executive (or, after the Executive’s death, his estate) any accrued or awarded but unpaid annual bonus and accrued but unused vacation pay, expense reimbursement and other benefits due to the Executive under any Company-provided benefit plans, policies and arrangements, with such accrued but unpaid annual bonus and vacation pay and expense reimbursements payable no later than thirty (30) days after the date of termination of employment (sooner to the extent required by applicable law or to the extent the bonus is payable prior to such time) and any other benefits payable in accordance with the applicable terms of the benefit plans, policies and arrangements.  The payments in this Section 3.1(f) are collectively referred to as the “Accrued Obligations.”
2.Severance.  If the Executive terminates this Agreement and his employment with the Company for Good Reason or if the Executive’s employment with the Company is terminated by the Company without Cause or by non-renewal of this Agreement by the Company, the Company shall pay severance to the Executive as follows:
(i) severance pay in an amount equal to 1.0 times the Executive’s then-current annual base salary, such amount to be paid in a one-time installment; and
(ii) if the Executive elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), then the Company each month will pay for the Executive’s COBRA premiums for such coverage (at coverage levels in effect immediately prior to the Executive’s termination) until the earlier of: (A) the expiration of a period of twelve (12) months from the date of termination or (B) the date upon which the Executive becomes covered under similar plans of any subsequent employer or is otherwise ineligible for COBRA; provided, however, if the Company determines that it cannot pay such amounts to the group health plan provider or the COBRA provider (if applicable) without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then the Company shall convert such payments to payroll payments directly to the Executive for the time period specified above.  Such payments shall be subject to applicable tax-related deductions and withholdings and paid on the Company’s regular payroll dates.
All payments and benefits set forth in the foregoing items (i) and (ii) hereof are defined as the “Severance Pay and Benefits.”  The Executive’s receipt of the foregoing Severance Pay and Benefits is conditioned upon his execution and delivery to the Company of a separation and release agreement acceptable to the Company governing the termination of the employment relationship between the Executive and the 

Company and the Executive’s release of all claims against all members of the Avadel Group of Companies and their employees, officers, directors, contractors and other related persons (the “Separation and Release Agreement”), and allowing the applicable revocation period required by law to expire without revoking or causing revocation of same, within the time period set forth in the Separation and Release Agreement and in no event more than sixty (60) days following the date of termination of the Executive’s employment.  The amounts payable under this Section 3.2, to the extent taxable, shall be paid or commence to be paid within 60 days after the Executive’s date of termination; provided, however, that if the 60-day period spans more than one calendar year, any payments that the Executive is entitled to receive during such period shall be accumulated and paid in a lump sum only in the subsequent calendar year.
3.Change of Control.  
(a)If the Executive terminates this Agreement and his employment with the Company for Good Reason or if the Executive’s employment with the Company is terminated by the Company without Cause or by non-renewal of this Agreement by the Company, and such termination occurs during a Change of Control Period (as hereinafter defined), then, in addition to the Executive being eligible for the Severance Pay and Benefits, subject to the terms of Section 3.2 above, and notwithstanding any other provision in any applicable equity compensation plan and/or individual stock option plan or agreement, the Executive’s outstanding and vested stock options as of the Executive’s termination of employment date will remain exercisable until the eighteen (18) month anniversary of the termination of employment date; provided, however, that the post-termination exercise period for any individual stock option right will not extend beyond its original maximum term as of the original date of the grant (the “Extended Exercise Period”).
(b)The Executive’s receipt of the foregoing Extended Exercise Period is conditioned upon his execution and delivery to the Company of the Separation and Release Agreement within the time period set forth in the Separation and Release Agreement and in no event more than sixty (60) days following the date of termination of the Executive’s employment. 
4.Change of Control Definitions.  For purposes of Section 3.3 above, the following definitions shall apply: 
(a)“Change of Control” means the occurrence of any of the following events: 
(i) a change in the ownership of Avadel plc, Avadel US Holdings, Inc. or the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of equity interests of Avadel plc, Avadel US Holdings, Inc. or the Company that, together with the other equity interests held by such Person, constitute more than fifty percent (50%) of the total voting power of the equity interests of Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable); provided, however, that for purposes of this subsection, the acquisition of additional equity interests by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the equity interests of Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable) will not be considered a Change or Control; or 
(ii) a change in the effective control of Avadel plc, Avadel US Holdings, Inc. or the Company which occurs on the date that a majority of the members of the Board of Directors of Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable) is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors of Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable) prior to the date of the 

appointment or election.  For purposes of this subsection (ii), if any Person is considered to be in effective control of Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable), the acquisition of additional control of Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable) by the same Person will not be considered a Change of Control; or 
(iii) a change in the ownership of a substantial portion of the assets of Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable) which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable) that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable) immediately prior to such acquisition or acquisitions.  
Notwithstanding the foregoing, the Change in Control must constitute a change in ownership, effective control or substantial portion of the assets of Avadel plc, Avadel US Holdings, Inc. or the Company (as applicable) within the meaning of Section 409A of the Code. 
(b) “Change of Control Period” means the period ending eighteen (18) months following a Change of Control.
5.Other Termination.  If the Executive terminates this Agreement and his employment with the Company other than for Good Reason or by non-renewal of this Agreement by the Executive, or if the Executive’s employment with the Company is terminated by the Company for Cause or as the result of the Executive’s Incapacity, or the Executive dies while employed by the Company, the Company shall pay to the Executive the Accrued Obligations, but the Executive shall not be entitled to any further compensation from the Company pursuant to this Agreement or otherwise. 
6.Resignations.  Notwithstanding any other provision of this Agreement, the Executive agrees to resign, as soon as administratively practicable, from any and all positions held with all members of the Avadel Group of Companies, at the time of termination of the Executive’s employment with any member of the Avadel Group of Companies.
4.RESTRICTIVE COVENANTS
1.Confidentiality.  
(a)Restriction.  To the fullest extent permitted under applicable law, at all times during the Executive’s employment by the Company and for a period of five (5) years after termination of the Executive’s employment with the Company, the Executive (i) shall hold in strictest confidence all Restricted Information (as hereinafter defined), (ii) shall not directly or indirectly use, copy, disclose or otherwise distribute any Restricted Information, except for the benefit of a member of the Avadel Group of Companies to the extent necessary to perform his obligations to Avadel plc and the Company under this Agreement, and (iii) shall not disclose any Restricted Information to any person, firm, corporation or other entity without written authorization of the Chief Executive Officer or Board of Directors of Avadel plc.  Any breach of any provision of this Section 4.1(a) shall be considered a material breach of this Agreement.
(b)Definitions.  As used in this Section 4, the following terms shall have the meanings set forth below:
(i)  “Restricted Information” means any Confidential Information (as hereinafter defined) and any Trade Secrets (as hereinafter defined).
(ii)  “Confidential Information” means any information of or about any member of 

the Avadel Group of Companies, and any of the employees, customers and/or suppliers of any member of the Avadel Group of Companies, which is not generally known outside of the Avadel Group of Companies, which the Executive obtains (whether before, on or after the date of this Agreement) in connection with the Executive’s employment with the Company, and which may be useful to any competitor of the Avadel Group of Companies or the disclosure of which would be damaging to any member of the Avadel Group of Companies.  Confidential Information includes, but is not limited to, any and all of the following information about any member of the Avadel Group of Companies: (A) information about products, product candidates, and research and development plans, activities and results (including information about planned and in-process clinical trials); (B) information about business and employment policies, marketing methods and the targets of those methods, finances, business plans, promotional materials and price lists; (C) the manner or terms upon which products or services are obtained from suppliers or on which products or services are provided to customers; (D) without duplication of item (A) above, the nature, origin, composition, performance and development of any products or services; (E) information about finances, financial condition, results of operations and prospects; and (F) information about employees, consultants or customers or suppliers.  For the avoidance of doubt, Confidential Information shall not include information that (1) is or has been made generally available to the public through the disclosure thereof in a manner that was authorized by the Company and did not violate any common law or contractual right of the applicable party; (2) is or becomes generally available to the public other than as a result of a disclosure by the Executive in violation of the provisions hereof; or (3) was already in the possession of the Executive without an obligation of confidentiality prior to the date his employment with the Company began.
(iii) “Trade Secret” means any Confidential Information to the extent such information constitutes a trade secret under applicable law.  
(c)Certain Permitted Disclosures.  Notwithstanding the foregoing, the Executive will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a Trade Secret that (i) is made (A) in confidence to a Federal, State or local government official, either directly or indirectly, or to an attorney, and (B) solely for purposes of reporting or investigating a suspected violation of law, or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding filed in a lawsuit or other proceeding, if such filing is made under seal.  If the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Executive may disclose the Trade Secret to the Executive’s attorney and use the Trade Secret in the court proceeding, if the Executive (i) files any document containing the Trade Secret under seal and (ii) does not disclose the Trade Secret, except pursuant to court order.
2.Non-Solicitation of Employees and Contractors.  During the Executive’s employment with the Company and for a period of one (1) year after the termination of the Executive’s employment with the Company, the Executive shall not directly or indirectly solicit or attempt to solicit any employee, consultant or other contractor of or service provider to any member of the Avadel Group of Companies with whom the Executive had Material Contact to perform services for the Executive or for any other business or entity, whether as an executive, consultant, partner or participant in any such business or entity, or to terminate or lessen any such employee’s, consultant’s or other contractor’s service with any member of the Avadel Group of Companies.  “Material Contact” means contact in person, by telephone, or by paper or electronic correspondence in furtherance of the business of any member of the Avadel Group of Companies.  This Section 4.2 shall cease to be applicable to any activity of the Executive from 

and after such time as all members of the Avadel Group of Companies have ceased all business activities or have made a decision to cease all business activities.
3.Non-Solicitation of Customers and Suppliers.  During the Executive’s employment with the Company and for a period of one (1) year after the termination of the Executive’s employment with the Company, the Executive shall not directly or indirectly solicit any actual or prospective customers or suppliers of any member of the Avadel Group of Companies with whom the Executive had material contact, for the purpose of selling any products or services which compete with the business of any member of the Avadel Group of Companies. This Section 4.3 shall cease to be applicable to any activity of the Executive from and after such time as all members of the Avadel Group of Companies have ceased all business activities or have made a decision to cease all business activities.
4.Relief.  The Executive agrees that it would be difficult to measure any damages caused to the Company that might result from any breach by the Executive of any portion of Sections 4.1 through 4.3, and that in any event money damages would be an inadequate remedy for any such breach.  Accordingly, the Executive agrees that if the Executive breaches, or proposes to breach, any portion of Section 4.1 through 4.3, the Company shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the Company and without the posting of a bond.
5.Protected Rights.  Notwithstanding any other provision of this Agreement, the Company and the Executive hereby acknowledge and agree that:
(i)  Nothing in this Agreement shall prohibit the Executive from reporting possible violations of Federal, State or other law or regulations to, or filing a charge or other complaint with, any governmental agency or entity, including but not limited to the Department of Justice, the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission, Congress, and any Inspector General, or making any other disclosures that are protected under any whistleblower provisions of Federal, State or other law or regulation or assisting in any such investigation or proceeding.
(ii)  Nothing herein limits the Executive’s ability to communicate with any such governmental agency or entity or otherwise participate in any such investigation or proceeding that may be conducted by any such governmental agency or entity, including providing documents or other information, without notice to the Company. 
(iii)  The Executive does not need the prior authorization of the Company to make any such reports or disclosures, and the Executive is not required to notify the Company that the Executive made any such reports or disclosures or is assisting in any such investigation.  
(iv)  The Executive (A) does not waive any rights to any individual monetary recovery or other awards in connection with reporting any such information to any such governmental agency or entity, (B) does not breach any confidentiality or other provision hereunder in connection with any such reporting or disclosures, and (C) will not be prohibited from receiving any amounts hereunder as the result of making any such reports or disclosures or assisting with any such investigation or proceeding.  
5.MISCELLANEOUS
1.Entire Agreement.  This Agreement (including any exhibits hereto) supersedes any and all other understandings and agreements, either oral or in writing, among the parties (including affiliates of the Company) with respect to the subject matter, including without limitation the offer letter dated October 24, 2019, and constitutes the sole agreement among the parties with respect to the subject matter hereof; provided, however, and notwithstanding the foregoing, the Equity Documents and any 

confidentiality or nondisclosure agreements between the Company and the Executive shall remain in full force and effect.
2.Severability.  If any term or provision of this Agreement or any application of this Agreement shall be declared or held invalid, illegal, or unenforceable, in whole or in part, whether generally or in any particular jurisdiction, such provision shall be deemed amended to the extent, but only to the extent, necessary to cure such invalidity, illegality, or unenforceability, and the validity, legality, and enforceability of the remaining provisions, both generally and in every other jurisdiction, shall not in any way be affected or impaired thereby.
3.Survival.  Notwithstanding any expiration or termination of this Agreement, Section 2.4(c) hereof, Section 4 hereof and this Section 5 shall survive such expiration or termination to the extent necessary to effectuate the terms contained herein.
4.Interpretation of Agreement.
(a)Unless otherwise indicated to the contrary herein by the context or use thereof: (i) the words, “herein,” “hereto,” “hereof,” and words of similar import refer to this Agreement as a whole and not to any particular Article, Section, subsection, or paragraph hereof; (ii) words importing the masculine gender shall include the feminine and neuter genders and vice versa; and (iii) words importing the singular shall include the plural, and vice versa.
(b)All parties to this Agreement have participated in the drafting and negotiation of this Agreement.  This Agreement has been prepared by all parties equally, and is to be interpreted according to its terms.  No inference shall be drawn that the Agreement was prepared by or is the product of any particular party or parties.
5.Taxes.  
(a)The parties hereto acknowledge that the requirements of Section 409A of the Internal Revenue Code (“Section 409A”) are still being developed and interpreted by government agencies and that the parties hereto have made a good faith effort to comply with current guidance under Section 409A.  Notwithstanding anything in this Agreement to the contrary, in the event that amendments to this Agreement are necessary in order to continue to comply with future guidance or interpretations under Section 409A, including amendments necessary to ensure that compensation will not be subject to tax under Section 409A (which may require deferral of severance or other compensation), the Company and the Executive agree to negotiate in good faith the applicable terms of such amendments and to implement such negotiated amendments, on a prospective and/or retroactive basis as needed.  Further, to the extent any amount or benefit under this Agreement is subject to the requirements of Section 409A, then, with respect to such amount or benefit, this Agreement will be interpreted in a manner to comply with the requirements of Section 409A.  
(b)Further, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or as a result of a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination”, “termination of employment”, “Termination Date”, or the like shall mean “separation from service”.  
(c)For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code.  
(d)If the Executive is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of Avadel’s securities are publicly traded on an established securities market or otherwise, then payment of any amount or provision of any benefit under this Agreement which is considered deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after termination of Executive’s employment or, if earlier, Executive’s death, if and as required by Section 409A(a)(2)(B)(i) of the Code (the “409A Deferral Period”).  In the event such payments are 

otherwise due to be made in installments or periodically during the 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled.  In the event benefits are required to be deferred, any such benefit may be provided during the 409A Deferral Period at the Executive’s expense, with the Executive having a right to reimbursement from the Company once the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled.  
(e)To the extent that some portion of the payments under this Agreement may be bifurcated and treated as exempt from Code Section 409A under the “short-term deferral” or “separation pay” exemptions, then such amounts shall be so treated as exempt from Code Section 409A (and in particular, the earliest amounts to be paid under Section 3 of the Agreement will be first treated as exempt from Code Section 409A under the short-term deferral exemption and then the separation pay exemption to the extent available).  
(f)Any reimbursements, in-kind benefits or offset provided under this Agreement that constitutes deferred compensation under Code Section 409A shall be made or provided in accordance with the requirement of Code Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expense incurred during the period of time specified in this Agreement, (ii) the amount of expense eligible for reimbursement, or in-kind benefits, provided during a calendar year may not affect the expense eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the calendar in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation of exchange for another benefit.
(g)The Company makes no warranty regarding the tax treatment to the Executive of payments provided for under this Agreement, including the tax treatment of such payments that may be subject to Section 409A.  The Executive will be responsible for paying all federal, state, and local income and employment taxes that may be due on such payment, provided that the Company will be responsible for any withholding obligations under applicable law.  The Company will not be liable to the Executive if any payment or benefit which is to be provided pursuant to this Agreement and which is considered deferred compensation subject to Code Section 409A otherwise fails to comply with, or be exempt from, the requirements of Code Section 409A.  
6.Mandatory Reduction of Payments in Certain Events.  Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, then, prior to the making of any Payment to Executive, a calculation shall be made comparing (i) the net benefit to Executive of the Payment after payment of the Excise Tax to (ii) the net benefit to Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax.  If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “Reduced Amount”).  In that event, cash payments shall be modified or reduced first from the latest amounts to be paid and then any other benefits.  The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in clauses (i) and (ii) of the foregoing sentence shall be made by an independent accounting firm selected by Company and reasonably acceptable to the Executive, at the Company’s expense (the “Accounting Firm”), and the Accounting Firm shall provide detailed supporting calculations.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.  As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Payments which Executive was entitled to, but did not receive pursuant to this Section 5.6 could have been made without the imposition 

of the Excise Tax (“Underpayment”).  In such event, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.  
7.Governing Law.  Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all of the terms and provisions hereof shall be construed in accordance with and governed by the laws of the State of Missouri, or, to the extent applicable the laws of the United States of America, in each case without giving effect to the principles of choice or conflicts of laws thereof.  Each of the parties hereto consents and agrees to the exclusive personal jurisdiction of any state or federal court sitting in the State of Missouri, and waives any objection based on venue or forum non conveniens with respect to any action instituted therein, and agrees that any dispute concerning the conduct of any party in connection with this Agreement shall be heard only in the courts described above.
8.Binding Arbitration.
(a)All disputes arising under this Agreement or arising out of or relating to the Executive’s employment relationship with the Company shall be submitted to final and binding arbitration.  Arbitration of such matters shall proceed consistent with the Employment Arbitration Rules and Mediation Procedures as established by the American Arbitration Association (“AAA”).  Venue for any arbitration shall be St.  Louis, Missouri or any other location mutually agreed upon by the Executive and the Company.
(b)The arbitration shall be conducted using the Expedited Procedures of the AAA Rules, regardless of the amount in dispute.
(c)The disputing parties shall agree on an arbitrator qualified to conduct AAA arbitration.  If the disputing parties cannot agree on the choice of arbitrator, then each party shall choose one independent arbitrator.  The two arbitrators so chosen shall jointly select a third arbitrator, who shall conduct the arbitration.
(d)All disputes relating to this Agreement shall be governed by the laws of the State of Missouri, and the arbitrator shall apply such law without regard to the principles of choice or conflicts of laws thereof.
(e)All aspects of the arbitration shall be treated as confidential.
(f)The Company and the Executive shall each pay 50% of the arbitrator’s fees and costs. Each party shall pay its own deposition, witness, expert, and attorneys’ fees and other expenses to the same extent as if the matter were being heard in court.  However, if any party prevails on a statutory claim that affords the prevailing party attorneys’ fees and costs, or if there is a written agreement providing for attorneys’ fees and costs to be awarded to the prevailing party, the arbitrator may award reasonable attorneys’ fees in accordance with the applicable statute or written agreement.  The arbitrator shall resolve any dispute as to the reasonableness of any fees or costs awarded under this paragraph.
(g)The decision of the arbitrator shall be final, and the parties agree to entry of such decision as judgments in all courts of appropriate jurisdiction.
(h)Notwithstanding the foregoing, this Section 5.8 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, including, without limitation, relief sought under Section 4 of this Agreement; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 5.8.
9.Amendments.  This Agreement shall not be modified or amended except by a writing signed by all of the parties.
10.Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of each party hereto.
11.Assignment.

(a)This Agreement and all of the Executive’s rights and obligations hereunder are personal to the Executive and may not be transferred or assigned by him at any time, except that any assets accruing to the Executive in connection with this Agreement shall accrue to the benefit of the Executive’s heirs, executors, administrators, successors, permitted assigns, trustees, and legal representatives.
(b)The Company may assign its rights under this Agreement to any entity that assumes the Company’s obligations hereunder in connection with a merger, consolidation or sale or transfer of all or substantially all of the Company’s assets to such entity; provided further, that the Company will require any successor to the Company in the case of a merger, consolidation or sale or transfer of all or substantially all of the assets of Avadel plc or the Company to assume this Agreement.
12.Waiver.  Any of the terms or conditions of this Agreement may be waived at any time by the party or parties entitled to the benefit thereof, but only by a writing signed by the party or parties waiving such terms or conditions.  No waiver of any provision of this Agreement or of any right or benefit arising hereunder shall be deemed to constitute or shall constitute a waiver of any other provision of this Agreement (whether or not similar), nor shall any such waiver constitute a continuing waiver, unless otherwise expressly so provided in writing.
13.Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Signatures on this Agreement may be conveyed by facsimile or other electronic transmission and shall be binding upon the parties so transmitting their signatures.  Counterparts with original signatures shall be provided to the other parties following the applicable facsimile or other electronic transmission; provided, that failure to provide the original counterpart shall have no effect on the validity or the binding nature of this Agreement.
[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date and year first above written.

THE COMPANY
AVADEL MANAGEMENT CORPORATION
By:  ____________________________________
Name:  Gregory J. Divis
Title:  President

THE EXECUTIVE

________________________________________
Name: Thomas S. McHugh

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