Document:

exv4w4

 

Exhibit 4.4

AMENDMENT NO. 1

TO

CREDIT AGREEMENT

          THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (the “Amendment”) is made as of August 31, 2006 by
and among Steelcase Inc., a Michigan corporation (the “Company”), the institutions listed on the
signature pages hereto and JPMorgan Chase Bank, National Association, as the administrative agent
for the “Lenders” referred to below (the “Administrative Agent”). Capitalized terms used but not
otherwise defined herein shall have the respective meanings given to them in the “Credit Agreement”
referred to below.

W I T N E S S E T H:

          WHEREAS, the signatories hereto are parties to that certain Credit Agreement, dated as of July
26, 2005, among the Company, the Subsidiary Borrowers from time to time parties thereto, the
financial institutions from time to time parties thereto (the “Lenders”), the Administrative Agent,
Bank of America, N.A. and BNP Paribas, as co-syndication agents, and Fifth Third Bank and Société
Générale, as co-documentation agents (the “Credit Agreement”);

          WHEREAS, the parties hereto have agreed to amend the Credit Agreement on the terms and
conditions set forth herein;

          NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company, the Lenders and the Administrative Agent have agreed to the
following amendment to the Credit Agreement.

          1. Amendments. Effective as of the date hereof and subject to the
satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement
is hereby amended as follows:

          (a) The Credit Agreement is hereby amended to insert the following sentence at the end of
Section 7.4(A):

     Notwithstanding the foregoing, solely with respect to the calculation (pursuant to the
terms of this Agreement) of the Leverage Ratio for the quarterly period ending August 25,
2006, the term “Indebtedness” of the Company and its consolidated Subsidiaries shall be
deemed to exclude indebtedness attributable to the Company’s $250,000,000, 6.5% Senior Notes
Due 2011.

1

 

          2. Conditions of Effectiveness. This Amendment shall become effective as of the
date hereof when the Administrative Agent shall have received: (a) executed copies of this
Amendment from the Company and the Required Lenders and (b) executed copies of the
Reaffirmation attached hereto in the form of Exhibit A from the existing Subsidiary
Guarantors.

          3. Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:

          (a) The Company has the requisite power and authority to execute and deliver this Amendment
and to perform this Amendment and the Credit Agreement (as modified hereby).

          (b) The execution and delivery of this Amendment and the performance of this Amendment and the
Credit Agreement (as modified hereby), and the consummation of the transactions contemplated hereby
and thereby, have been duly authorized by all requisite corporate, partnership or limited liability
company acts, including any required shareholder approval of the Company.

          (c) This Amendment has been duly executed and delivered by the Company and the Credit
Agreement (as modified hereby) constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms (except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights generally and general
equitable principles).

          (d) The execution and delivery of this Amendment and the performance of this Amendment and the
Credit Agreement (as modified hereby) do not and will not (i) conflict with the articles of
incorporation or by-laws of the Company, (ii) conflict with, result in a breach of or constitute
(with or without notice or lapse of time or both) a default under any Requirement of Law
(including, without limitation, any Environmental Property Transfer Act) or Contractual Obligation
of the Company, or require termination of any Contractual Obligation, except any such conflict,
breach, default or termination which individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect, or (iii) result in or require the creation or
imposition of any Lien whatsoever upon any of the property or assets of the Company, other than
Liens permitted or created by the Loan Documents. The execution and delivery of this Amendment and
the performance by the Company of this Amendment and the Credit Agreement (as modified hereby) do
not and will not require any registration with, consent or approval of, or notice to, or other
action to, with or by any Governmental Authority (including under any Environmental Property
Transfer Act) or any other third party except such registrations, consents, approvals, notices and
other actions which have been made, obtained or given, or which, if not made, obtained or given,
individually or in the aggregate could not reasonably be expected to have a Material Adverse
Effect.

          (e) As of the date hereof, after giving effect to the terms of this Amendment, (i) there
exists no Default or Unmatured Default and (ii) the representations and warranties contained in
Article VI of the Credit Agreement (as modified hereby) are true and correct in all
material respects (unless such representation and warranty is made as of a specific date, in which
case, such representation and warranty shall be true and correct in all material respects as of
such date; it being understood and agreed that the representations and warranties set forth in
Sections 6.5 and 6.7 of the Credit Agreement were only made as of the Closing
Date).

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          4. Reference to and Effect on the Credit Agreement and Loan Documents.

          (a) Upon the effectiveness of this Amendment, each reference to the Credit Agreement in the
Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement
as modified hereby. This Amendment is a Loan Document pursuant to the Credit Agreement and shall
(unless expressly indicated herein or therein) be construed, administered, and applied, in
accordance with all of the terms and provisions of the Credit Agreement.

          (b) The Company (i) agrees that, except as specifically provided herein, this Amendment and
the transactions contemplated hereby shall not limit or diminish the obligations of the Company
arising under or pursuant to the Credit Agreement and the other Loan Documents to which it is a
party, (ii) reaffirms its obligations under the Credit Agreement and each and every other Loan
Document to which it is a party and (iii) acknowledges and agrees that, except as specifically
modified above, the Credit Agreement and all other Loan Documents executed and/or delivered in
connection therewith shall remain in full force and effect and are hereby ratified and confirmed.

          (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of the Administrative Agent or
the Lenders, nor constitute a waiver of or consent to any modification of any provision of the
Credit Agreement or any other Loan Documents executed and/or delivered in connection therewith.

          5. Governing Law. THIS AMENDMENT SHALL BE GOVERNED IN ACCORDANCE WITH THE
INTERNAL LAWS (INCLUDING 735 ILCS SECTION 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.

          6. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment for any other
purpose.

          7. Counterparts. This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts (including by means of facsimile or
electronic transmission), and all of said counterparts taken together shall be deemed to constitute
one and the same instrument.

*******

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          IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above
written.

	 	 	 	 	 
	 	STEELCASE INC.,

as the Company

 	 
	 	By:  	/s/  Brian J. O'Donnell
 	 
	 	Name:  	Brian J. O'Donnell 	 
	 	Title:  	Director, Corporate Treasury Services 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

as the Administrative Agent, the Issuing Bank, the Swing Line Bank and as a Lender

 	 
	 	By:  	/s/ James M. Sumoski
 	 
	 	Name:  	James M. Sumoski 	 
	 	Title:  	Vice President 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as the Syndication Agent and as a Lender

 	 
	 	By:  	/s/  Charles R. Dickerson
 	 
	 	Name:  	Charles R. Dickerson 	 
	 	Title:  	Managing Director 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	BNP PARIBAS,

as a Syndication Agent and as a Lender

 	 
	 	By:  	/s/ Gaye Plunkett
 	 
	 	Name:  	Gaye Plunkett 	 
	 	Title:  	Vice-President 	 
	 
	 	 	 
	 	By:  	/s/ Jo Ellen Bender
 	 
	 	Name:  	Jo Ellen Bender 	 
	 	Title:  	Managing Director 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	SOCIÉTÉ GÉNÉRALE,

as a Documentation Agent and as a Lender

 	 
	 	By:  	/s/ Milissa Goeden
 	 
	 	Name:  	Milissa Goeden 	 
	 	Title:  	Vice President 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	FIFTH THIRD BANK,

as a Documentation Agent and as a Lender

 	 
	 	By:  	/s/ Randal S. Wolffis
 	 
	 	Name:  	Randal S. Wolffis 	 
	 	Title:  	Vice President 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	CCF HSBC,

as a Lender

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	HSBC BANK plc,

as a Lender

 	 
	 	By:  	/s/ N G Raye
 	 
	 	Name:  	N G Raye 	 
	 	Title:  	Corporate Banking Manager

HSBC Bank plc

Thames Valley Corporate

Banking Centre

26 Broad St

Reading

Berks

England

RC1 2BV 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	HSBC BANK USA, N.A.,

as a Lender

 	 
	 	By:  	/s/  Adriana Collins
 	 
	 	Name:  	Adriana Collins 	 
	 	Title:  	Vice President 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	CREDIT LYONNAIS STRASBOURG,

as a Lender

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	LASALLE BANK MIDWEST, N.A.,

as a Lender

 	 
	 	By:  	/s/  Joel Brandt
 	 
	 	Name:  	Joel Brandt 	 
	 	Title:  	Vice President 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	THE NORTHERN TRUST COMPANY,

as a Lender

 	 
	 	By:  	/s/  Lisa McDermott
 	 
	 	Name:  	Lisa McDermott 	 
	 	Title:  	VP 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

	 	 	 	 	 
	 	THE BANK OF NOVA SCOTIA,

as a Lender

 	 
	 	By:  	/s/  V. H. Gibson
 	 
	 	Name:  	V. Gibson 	 
	 	Title:  	Assistant Agent 	 
	 

Signature Page to Amendment No. 1 to Credit Agreement

 

 

EXHIBIT A

Reaffirmation

          Each of the undersigned hereby acknowledges receipt of a copy of Amendment No. 1, dated as of
August 31, 2006 (the “Amendment”), to the Credit Agreement, dated as of July 26, 2005, by and among
Steelcase Inc., a Michigan corporation (the “Company”), the Subsidiary Borrowers from time to time
parties thereto, the institutions from time to time parties thereto (the “Lenders”), JPMorgan Chase
Bank, National Association, as the administrative agent for the Lenders (the “Administrative
Agent”), Bank of America, N.A. and BNP Paribas, as co-syndication agents, and Fifth Third Bank and
Société Générale, as co-documentation agents (as the same may from time to time hereafter be
amended, restated, supplemented or otherwise modified, the “Credit Agreement”). Capitalized terms
used in this Reaffirmation and not defined herein shall have the meanings given to them in the
Credit Agreement.

          Each of the undersigned, by its signature below, hereby (a) acknowledges and consents to the
execution and delivery of the Amendment by the parties thereto, (b) agrees that, except as
specifically provided therein, the Amendment and the transactions contemplated thereby shall not
limit or diminish the obligations of such Person arising under or pursuant to the Loan Documents to
which it is a party (including, without limitation, the Subsidiary Guaranty), (c) reaffirms all of
its obligations under the Loan Documents to which it is a party, and (d) acknowledges and agrees
that each Loan Document executed by it remains in full force and effect and is hereby reaffirmed,
ratified and confirmed. All references to the Credit Agreement contained in any Loan Document
shall be a reference to the Credit Agreement as so modified by the Amendment and as the same may
from time to time hereafter be amended, restated, supplemented or otherwise modified. The
Amendment is a Loan Document pursuant to the Credit Agreement and shall (unless expressly indicated
therein) be construed, administered, and applied, in accordance with all of the terms and
provisions of the Credit Agreement.

Dated as of August 31, 2006

 

 

          IN WITNESS WHEREOF, this Reaffirmation has been duly executed as of the day and year first
above written.

	 	 	 	 	 
	 	ANDERSON DESK, INC.

BRAYTON INTERNATIONAL, INC.

IDEO INC.

OFFICE DETAILS INC.

POLYVISION CORPORATION

STEELCASE DEVELOPMENT CORPORATION

THE DESIGN TEX GROUP INC.

 	 
	 	By:  	/s/  Gary P. Malburg
 	 
	 	Name:  	Gary P. Malburg 	 
	 	Title:  	Treasurer 	 
	 
	 	STEELCASE FINANCIAL SERVICES INC.

 	 
	 	By:  	/s/  Gary P. Malburg
 	 
	 	Name:  	Gary P. Malburg 	 
	 	Title:  	President and Treasurer 	 
	 
	 	STEELCASE EUROPE, L.L.C.

 	 
	 	By:  	/s/  James P. Keane
 	 
	 	Name:  	James P. Keane 	 
	 	Title:  	Manager 	 
	 
	 	STEELCASE SAS

 	 
	 	By:  	/s/  Yvan Stehly
 	 
	 	Name:  	Yvan Stehly 	 
	 	Title:  	President 	 
	 

Signature Page to Reaffirmationexv4w1

 

Exhibit 4.1

SERVICE CORPORATION INTERNATIONAL

as Issuer

and

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

as Trustee

$250,000,000

SERIES A AND SERIES B

73/8% SENIOR NOTES DUE 2014

THIRD

SUPPLEMENTAL

INDENTURE

 

Dated as of October 3, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I ESTABLISHMENT OF NEW SERIES
	 	 	1	 
	Section 1.01 Establishment of New Series
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	ARTICLE III THE NOTES
	 	 	6	 
	Section 3.01 Form
	 	 	6	 
	Section 3.02 Limitation on Ability of the Issuer to Release Funds from Escrow
	 	 	6	 
	 
	 	 	 	 
	ARTICLE IV REDEMPTION
	 	 	7	 
	Section 4.01 Optional Redemption
	 	 	7	 
	Section 4.02 Mandatory Redemption
	 	 	7	 
	Section 4.03 Change of Control
	 	 	7	 
	Section 4.04 Special Redemption
	 	 	9	 
	Section 4.05 Deposit of Redemption Price in the Event of Special Redemption
	 	 	9	 
	 
	 	 	 	 
	ARTICLE V AMENDMENT OF ORIGINAL INDENTURE
	 	 	9	 
	Section 5.01 Amendment of Article One of Original Indenture
	 	 	9	 
	Section 5.02 Amendment of Article Three of Original Indenture
	 	 	10	 
	Section 5.03 Amendment of Article Four of Original Indenture
	 	 	11	 
	Section 5.04 Amendments of Article Five of Original Indenture
	 	 	11	 
	Section 5.05 Amendment of Article Eleven of Original Indenture
	 	 	13	 
	 
	 	 	 	 
	ARTICLE VI ADDITIONAL EVENT OF DEFAULT
	 	 	13	 
	Section 6.01 Event of Default
	 	 	13	 
	Section 6.02 Notice of Default
	 	 	13	 
	 
	 	 	 	 
	ARTICLE VII MISCELLANEOUS
	 	 	13	 
	Section 7.01 Integral Part
	 	 	13	 
	Section 7.02 Additional Interest
	 	 	13	 
	Section 7.03 Adoption, Ratification and Confirmation
	 	 	13	 
	Section 7.04 Counterparts
	 	 	13	 
	Section 7.05 Governing Law
	 	 	14	 
	Section 7.06 Trustee Makes No Representation
	 	 	14	 

	 	 	 
	APPENDIX:

	 	Provisions Relating to Series A and Series B Notes
	EXHIBIT 1 TO APPENDIX:

	 	Form of Series A Note
	EXHIBIT 2 TO APPENDIX:

	 	Form of Transferee Letter of Representation
	EXHIBIT A:

	 	Form of Series B Note
	EXHIBIT B:

	 	Form of Escrow Agreement

 

 

     THIRD SUPPLEMENTAL INDENTURE dated as of October 3, 2006 (this “Supplemental Indenture”)
between Service Corporation International, a Texas corporation (the “Issuer”), and The Bank of New
York Trust Company, N.A., a national banking corporation, as successor to The Bank of New York, as
trustee (the “Trustee”).

WITNESSETH:

     WHEREAS, the Issuer has heretofore entered into a Senior Indenture, dated as of February 1,
1993 (the “Original Indenture”), with the Trustee, a First Supplemental Indenture, dated as of
April 14, 2004, with the Trustee (the “First Supplemental Indenture”), and a Second Supplemental
Indenture, dated as of June 15, 2005, with the Trustee (the “Second Supplemental Indenture”);

     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 a new series of Securities may at
any time be established by a supplemental indenture executed by the Issuer and the 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; and

     WHEREAS, all conditions 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 73/8% Senior Notes due
2014 (the “Notes”). The Notes shall be issued as either Series A Notes or Series B Notes,
and any Notes issued under this Supplemental Indenture shall be designated as either Series
A Notes or Series B Notes.

     (b) On the Issue Date, the Trustee shall authenticate and deliver $250,000,000 of the
Series A Notes and, at any time and from time to time thereafter, the Trustee shall
authenticate and deliver Additional Notes for original issue in accordance with Sections 2.3

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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 or in the Appendix hereto.

     (c) The Notes shall be issued initially in the form of one or more Global Securities in
substantially the form set out in the Appendix or 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 the Appendix or Exhibit A hereto. The date on which
principal is payable on the Notes shall be as provided in the form of Note in the Appendix
or 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 the Appendix or Exhibit A hereto.
The Place of Payment shall be as designated in Section 3.2 of the Original Indenture.

     (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

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 Interest” means all additional interest owing on the Notes pursuant to a
registration default under a Registration Rights Agreement.

     “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 Series A
Notes issued on the Issue Date shall not be Additional Notes, including any such Notes issued
pursuant to a Registration Rights Agreement.

     “Acquisition” means, collectively, the acquisition by the Issuer of Alderwoods pursuant to a
merger agreement dated April 2, 2006, and the related financing transactions described in the
Offering
Memorandum dated September 27, 2006, including the issuance of additional debt securities in a
private placement, borrowings under a new senior credit facility, the repurchase of certain
outstanding notes of Alderwoods and the Issuer pursuant to tender offers and the repayment of
certain other existing debt of Alderwoods.

     “Adjusted Consolidated Net Tangible Assets” means, at the time of determination, the

2

 

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
funeral receivables and trust investments; (d) preneed cemetery receivables and trust investments;
(e) cemetery perpetual care trust investments; (f) current assets of discontinued operations; (g)
non-current assets of discontinued operations; (h) other like intangibles; and (i) current
liabilities (excluding, however, current maturities of long-term debt).

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     “Alderwoods” means Alderwoods Group, Inc., a Delaware corporation.

     “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) or 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 4.03 of this Supplemental
Indenture.

     “Change of Control Offer” has the meaning attributed thereto in Section 4.03 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.

     “Escrow Agent” means The Bank of New York Trust Company, N.A.

     “Escrow Agreement” means the escrow agreement relating to the Notes dated as of the date
hereof among the Issuer, the Escrow Agent and the Trustee.

     “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.

     “Initial Purchasers” means J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Banc of America Securities LLC, Lehman Brothers Inc., Raymond James & Associates,
Inc., and Morgan Keegan & Company, Inc.

     “Issue Date” means October 3, 2006.

     “Notes” has the meaning assigned to it in Section 1.01(a) hereof, and includes both the Series
A Notes and the Series B Notes.

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     “Optional Redemption Premium” has the meaning attributed thereto in Exhibit 1 to the Appendix
and 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.

     “Registered Exchange Offer” means the offer by the Issuer, pursuant to a Registration Rights
Agreement, to certain Holders of Series A Notes, to issue and deliver to such Holders, in exchange
for the Series A Notes, a like aggregate principal amount of Series B Notes registered under the
Securities Act.

     “Registration Rights Agreement” means (1) with respect to the Series A Notes issued on the
Issue Date, the Registration Rights Agreement dated October 3, 2006, among the Issuer and the
Initial Purchasers and (2) with respect to each issuance of Additional Notes issued in a
transaction exempt from the registration requirements of the Securities Act, the registration
rights agreement, if any, among the Issuer and the Persons purchasing such Additional Notes under
the related Purchase Agreement.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Series A Notes” means (1) $250,000,000 aggregate principal amount of
73/8% Senior Notes Due 2014 issued on the Issue Date and (2) Additional
Notes, if any, issued in a transaction exempt from the registration requirements of the Securities
Act.

     “Series B Notes” means (1) the 73/8% Senior Notes Due 2014 issued
pursuant to the Supplemental Indenture in connection with a Registered Exchange Offer pursuant to a
Registration Rights Agreement and (2) Additional Notes, if any, issued pursuant to a registration
statement filed with the SEC under the Securities Act.

     “Special Redemption” means (i) the mandatory redemption, in whole, but not in part, of the
Notes pursuant to the Escrow Agreement and paragraph 6 of the Notes required to take place in the
event the Acquisition is not consummated on or prior to December 31, 2006, or (ii) the optional
redemption, in whole, but not in part, at any time prior to December 31, 2006, if, in the Issuer’s
sole judgment, the Acquisition will not be consummated by that date.

     “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 of the other
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

5

 

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 III

THE NOTES

     Section 3.01 Form. Provisions relating to the Series A Notes and the Series B Notes
are set forth in the Appendix and Exhibit A hereto, which are hereby incorporated in and expressly
made a part of this Supplemental Indenture. The provisions of the Appendix hereto shall supercede
the applicable provisions of Section 2.8 of the Original Indenture to the extent applicable. The
Series A Notes and the Trustee’s certificate of authentication thereto, shall be substantially in
the form of Exhibit 1 to the Appendix, which is hereby incorporated in and expressly made a part of
this Supplemental Indenture. The Series B Notes and the 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. The terms of the Notes set forth in the Appendix and Exhibit A are part of
the terms of this Supplemental Indenture.

     Section 3.02 Limitation on Ability of the Issuer to Release Funds from Escrow. At the
date of this Supplemental Indenture, the Trustee, the Issuer and the Escrow Agent shall enter into
an Escrow Agreement substantially in the form attached as Exhibit B hereto. The net proceeds from
the offering of the Notes will be paid into an Escrow Account by the Initial Purchasers of the
Notes and held in the name of the Trustee on behalf of the Holders under the terms of the Escrow
Agreement. In accordance with the terms of the Escrow Agreement, the Escrow Property (as defined
in the Escrow Agreement) will be released to the Issuer upon delivery to the Escrow Agent and the
Trustee of a certificate signed by an officer of the Issuer (the “Escrow Release Certificate”), in
the form attached to the Escrow Agreement. The Issuer agrees for the benefit of the Holders to
comply with the terms and conditions of the Escrow Agreement and shall use its reasonable best
efforts to satisfy the conditions precedent to release of the Escrow Property, deliver the Escrow
Release Certificate and receive the net proceeds from the offering and sale of the Notes as
provided in the Escrow Agreement, as soon as practicable following the date hereof. The Issuer
agrees that (i) the terms of the Escrow Agreement shall exclusively control the conditions under
which and procedures pursuant to which Escrow Property (as defined in the Escrow Agreement) can be
released and
(ii) it will not attempt to have any Escrow Property (as defined in the Escrow Agreement)
released from escrow except in accordance with the Escrow Agreement.

6

 

ARTICLE IV

REDEMPTION

     Section 4.01 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 in Exhibit 1 to the Appendix or in
Exhibit A hereto.

     (c) Any redemption pursuant to this Section 4.01 shall be made pursuant to the
provisions of Sections 12.1 through 12.3 of the Original Indenture.

     Section 4.02 Mandatory Redemption. Except as set forth in Section 4.04 below, 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
4.03 below. The Issuer may at any time and from time to time purchase Notes in the open market or
otherwise.

     Section 4.03 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 any 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)	 	individuals who on the Issue Date constituted the board of directors (together with any new
directors whose election by such board of directors or whose nomination for election by the
shareholders of the Issuer was approved by a vote of at least a majority of the directors of
the Issuer then still in office who were either directors on the Issue Date or whose election
or nomination for election was previously so approved) cease for any reason to constitute a
majority of the board of directors then in office;
	 
	(3)	 	the Issuer is liquidated or dissolved or adopts a plan of liquidation or dissolution; or

	(4)	 	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

7

 

	 	 	(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.

Within 30 days following any Change of Control, the Issuer will mail a notice to each Holder with a
copy to the 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 us, consistent with the covenant described hereunder, 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) 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 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 4.03. To the extent that the provisions of any securities laws or regulations conflict
with the provisions of this Section 4.03, the Issuer shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations under this Section
4.03 by virtue thereof.

8

 

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 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 such Holder is withdrawing his election to have such Note purchased.

On the purchase date, all Notes purchased by the Issuer under this Section 4.03 shall be delivered
by the Issuer to the 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 the agreements governing such indebtedness under any applicable
Credit Facility to permit the repurchase of the Notes.

     Section 4.04 Special Redemption. Any Special Redemption shall be made in whole, and
not in part, pursuant to the provisions of Sections 12.1 through 12.3 of the Original Indenture;
provided, however, that notice of redemption shall be given one Business Day before the redemption
date; provided, further, that if the Acquisition has not been consummated on or prior to December
31, 2006, the Issuer does not need to provide notice of Special Redemption.

     Section 4.05 Deposit of Redemption Price in the Event of Special Redemption. In the
event of a Special Redemption, the Issuer shall cause the Escrow Agent to deposit with the Trustee
or the Paying Agent an amount of money sufficient to redeem on the redemption date all the Notes so
called for redemption at the appropriate redemption price, together with accrued interest, if any,
to the date fixed for redemption.

ARTICLE V

AMENDMENT OF ORIGINAL INDENTURE

     Section 5.01 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.”

9

 

     Section 5.02 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 mortgage, pledge, encumber or subject to any lien or security
interest, and no Subsidiary will 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 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, 2006, 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 10% 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, 2006, 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 $500 million;

(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

10

 

United States Government or any agency thereof, or pledges or deposits for similar
purposes in the ordinary course of business.”

     Section 5.03 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:

     (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.

(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 pubic 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.

(e) The Issuer will furnish to the Trustee, not less than annually, a brief
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 5.04 Amendments of Article Five of Original Indenture.

11

 

     (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 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 (or, if the Securities of such series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) 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.”

12

 

     Section 5.05 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 Trustee
and the Issuer.”

ARTICLE VI

ADDITIONAL EVENT OF DEFAULT

     Section 6.01 Event of Default. An additional Event of Default under Section 5.1 of
the Original Indenture occurs if the Issuer fails to comply with, or breaches, any material
provision of the Escrow Agreement.

     Section 6.02 Notice of Default. During the term of the Escrow Agreement, the Trustee
shall provide written notice to the Escrow Agent thereunder (i) upon the occurrence of an Event of
Default or (ii) if the principal amount of and accrued but unpaid interest on the Notes has become
immediately due and payable pursuant to Section 5.1 of the Original Indenture.

ARTICLE VII

MISCELLANEOUS

     Section 7.01 Integral Part. This Supplemental Indenture constitutes an integral part
of the Indenture.

     Section 7.02 Additional Interest. In relation to the Notes, all references to
“interest” in the Original Indenture, this Supplemental Indenture and in the Notes shall be deemed
to include Additional Interest, if any, unless the context otherwise requires.

     Section 7.03 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 7.04 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.

13

 

     Section 7.05 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 7.06 Trustee Makes No Representation. The Trustee makes no representation as
to the validity or sufficiency of this Supplemental Indenture. The recitals and statements herein
are deemed to be those of the Issuer and not of the Trustee.

[Signatures on following page]

14

 

     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	 
	 	 	Eric D. Tanzberger 	 
	 	 	Senior Vice President and Chief

Financial Officer 	 
	 
	 	TRUSTEE:

THE BANK OF NEW YORK TRUST COMPANY, 

N.A., as Trustee

 	 
	 	By:  	/s/ John Stohlmann	 
	 	 	Name:  	John C. Stohlmann 	 
	 	 	Title:  	Vice President 	 

15

 

	 	 	 	 	 

APPENDIX

PROVISIONS RELATING TO SERIES A NOTES AND SERIES B NOTES

     1. Definitions

     1.1 Definitions

     For the purposes of this Appendix the following terms shall have the meanings indicated below:

          “Applicable Procedures” means, with respect to any transfer or transaction involving a
Temporary Regulation S Global Security or beneficial interest therein, the rules and procedures of
the Depositary for such a Temporary Regulation S Global Security, to the extent applicable to such
transaction and as in effect from time to time.

          “Definitive Security” means a certificated Series A Note or Series B Note bearing, if
required, the appropriate restricted securities legend set forth in Section 2.3(e).

          “Depositary” means The Depository Trust Company, its nominees and their respective successors.

          “Distribution Compliance Period”, with respect to any Securities, means the period of 40
consecutive days beginning on and including the later of (i) the day on which such Securities are
first offered to Persons other than distributors (as defined in Regulation S under the Securities
Act) in reliance on Regulation S and (ii) the issue date with respect to such Securities.

          “IAI” means an institutional “accredited investor”, as defined in Rule 501(a)(1), (2), (3) and
(7) of Regulation D under the Securities Act.

          “Initial Purchasers” means J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Banc of America Securities LLC, Lehman Brothers Inc., Raymond James & Associates,
Inc. and Morgan Keegan & Company, Inc.

          “Purchase Agreement” means (1) with respect to the Series A Notes issued on the Issue Date,
the Purchase Agreement dated September 27, 2006, among the Issuer and the Initial Purchasers, and
(2) with respect to each issuance of Additional Notes, the purchase agreement or underwriting
agreement among the Issuer and the Persons purchasing such Additional Notes.

          “QIB” means a “qualified institutional buyer” as defined in Rule 144A.

          “Registered Exchange Offer” means the offer by the Issuer, pursuant to a Registration Rights
Agreement, to certain Holders of Series A Notes, to issue and deliver to

 

 

 2

such Holders, in exchange
for the Series A Notes, a like aggregate principal amount of Series B Notes registered under the
Securities Act.

          “Registration Rights Agreement” means (1) with respect to the Series A Notes issued on the
Issue Date, the Registration Rights Agreement dated October 3, 2006, among the Issuer and the
Initial Purchasers and (2) with respect to each issuance of Additional Notes issued in a
transaction exempt from the registration requirements of the Securities Act, the registration
rights agreement, if any, among the Issuer and the Persons purchasing such Additional Notes under
the related Purchase Agreement.

          “Rule 144A Securities” means all Securities offered and sold to QIBs in reliance on Rule 144A.

          “Securities” means the Series A Notes and the Series B Notes, treated as a single class.

          “Securities Act” means the Securities Act of 1933.

          “Securities Custodian” means the custodian with respect to a Global Security (as appointed by
the Depositary), or any successor Person thereto and shall initially be the Trustee.

          “Series A Notes” means (1) $250,000,000 aggregate principal amount of
73/8% Senior Notes Due 2014 issued on the Issue Date and (2) Additional
Notes, if any, issued in a transaction exempt from the registration requirements of the Securities
Act.

          “Series B Notes” means (1) the 73/8% Senior Notes Due 2014 issued
pursuant to the Supplemental Indenture in connection with a Registered Exchange Offer pursuant to a
Registration Rights Agreement and (2) Additional Notes, if any, issued pursuant to a registration
statement filed with the SEC under the Securities Act.

          “Shelf Registration Statement” means the registration statement issued by the Issuer in
connection with the offer and sale of Series A Notes pursuant to a Registration Rights Agreement.

          “Transfer Restricted Securities” means Securities that bear or are required to bear the legend
relating to restrictions on transfer relating to the Securities Act set forth in Section 2.3(e)
hereto.

          1.2 Other Definitions

 

 

 3

	 	 	 
	 	 	DEFINED IN
	TERM	 	SECTION:
	“Agent Members”
	 	2.1(b)
	“Global Securities”
	 	2.1(a)
	“IAI Global Security”
	 	2.1(a)
	“Permanent Regulation S Global Security”
	 	2.1(a)
	“Regulation S”
	 	2.1(a)
	“Regulation S Global Security”
	 	2.1(a)
	“Rule 144A”
	 	2.1(a)
	“Rule 144A Global Security”
	 	2.1(a)
	“Temporary Regulation S Global Security”
	 	2.1(a)

     2. The Securities

     2.1 (a) Form and Dating. The Series A Notes will be offered and sold by the Issuer
pursuant to a Purchase Agreement. The Series A Notes will be resold initially only to (i) QIBs in
reliance on Rule 144A under the Securities Act (“Rule 144A”) and (ii) Persons other than U.S.
Persons (as defined in Regulation S) in reliance on Regulation S under the Securities Act
(“Regulation S”). Series A Notes may thereafter be transferred to, among others, QIBs, IAIs and
purchasers in reliance on Regulation S, subject to the restrictions on transfer set forth herein.
Series A Notes initially resold pursuant to Rule 144A shall be issued initially in the form of one
or more permanent global Securities in definitive, fully registered form (collectively, the “Rule
144A Global Security”); and Series A Notes initially resold pursuant to Regulation S shall be
issued initially in the form of one or more temporary global securities in fully registered form
(collectively, the “Temporary Regulation S Global Security”), in each case without interest coupons
and with the global securities legend and the applicable restricted securities legend set forth in
Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the Series A Notes
represented thereby with the Securities Custodian and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Issuer and authenticated by the Trustee as provided
in the Indenture. One or more global securities in definitive, fully registered form without
interest coupons and with the global securities legend and the applicable restricted securities
legend set forth in Exhibit 1 hereto (collectively, the “IAI Global Security”) shall also be issued
on the Issue Date, deposited with the Securities Custodian, and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Issuer and authenticated by the
Trustee as provided in the Indenture to accommodate transfers of beneficial interests in the
Securities to IAIs subsequent to the initial distribution. Except as set forth in this Section
2.1(a), beneficial ownership interests in the Temporary Regulation S Global Security will not be
exchangeable for interests in the Rule 144A Global Security, the IAI Global Security, a permanent
global security (the “Permanent Regulation S Global Security”, and together with the Temporary
Regulation S Global Security, the “Regulation S Global Security”) or any other Security prior to
the expiration of the Distribution Compliance
Period and then, after the expiration of the Distribution Compliance Period, may be

 

 

 4

exchanged
for interests in a Rule 144A Global Security, an IAI Global Security or the Permanent Regulation S
Global Security only upon certification in form reasonably satisfactory to the Trustee that (i)
beneficial ownership interests in such Temporary Regulation S Global Security are owned either by
non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require
registration under the Securities Act and (ii) in the case of an exchange for an IAI Global
Security, certification that the interest in the Temporary Regulation S Global Security is being
transferred to an institutional “accredited investor” under the Securities Act that is an
institutional accredited investor acquiring the securities for its own account or for the account
of an institutional accredited investor.

          Beneficial interests in Temporary Regulation S Global Securities or IAI Global Securities may
be exchanged for interests in Rule 144A Global Securities if (1) such exchange occurs in connection
with a transfer of Securities in compliance with Rule 144A and (2) the transferor of the beneficial
interest in the Temporary Regulation S Global Security or the IAI Global Security, as applicable,
first delivers to the Trustee a written certificate (in a form satisfactory to the Trustee) to the
effect that the beneficial interest in the Temporary Regulation S Global Security or the IAI Global
Security, as applicable, is being transferred to a Person (a) who the transferor reasonably
believes to be a QIB, (b) purchasing for its own account or the account of a QIB in a transaction
meeting the requirements of Rule 144A, and (c) in accordance with all applicable securities laws of
the States of the United States and other jurisdictions.

          Beneficial interests in Temporary Regulation S Global Securities and Rule 144A Global
Securities may be exchanged for an interest in IAI Global Securities if (1) such exchange occurs in
connection with a transfer of the securities in compliance with an exemption under the Securities
Act and (2) the transferor of the Regulation S Global Security or Rule 144A Global Security, as
applicable, first delivers to the Trustee a written certificate (substantially in the form of
Exhibit 2) to the effect that (A) the Regulation S Global Security or Rule 144A Global Security, as
applicable, is being transferred (a) to an “accredited investor” within the meaning of
501(a)(1),(2),(3) and (7) under the Securities Act that is an institutional investor acquiring the
securities for its own account or for the account of such an institutional accredited investor, in
each case in a minimum principal amount of the securities of $250,000, for investment purposes and
not with a view to or for offer or sale in connection with any distribution in violation of the
Securities Act and (B) in accordance with all applicable securities laws of the States of the
United States and other jurisdictions.

          Beneficial interests in a Rule 144A Global Security or an IAI Global Security may be
transferred to a Person who takes delivery in the form of an interest in a Regulation S Global
Security, whether before or after the expiration of the Distribution Compliance Period, only if the
transferor first delivers to the Trustee a written certificate to the effect that such transfer is
being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if applicable).

 

 

 5

          The Rule 144A Global Security, the IAI Global Security, the Temporary Regulation S Global
Security and the Permanent Regulation S Global Security are collectively referred to herein as
“Global Securities”. The aggregate principal amount of the Global Securities may from time to time
be increased or decreased by adjustments made on the records of the Trustee and the Depositary or
its nominee as hereinafter provided.

          (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Security
deposited with or on behalf of the Depositary.

          The Issuer shall execute and the Trustee shall, in accordance with this Section 2.1(b),
authenticate and deliver initially one or more Global Securities that (a) shall be registered in
the name of the Depositary for such Global Security or Global Securities or the nominee of such
Depositary and (b) shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary’s instructions or held by the Trustee as custodian for the Depositary.

          Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under
the Indenture with respect to any Global Security held on their behalf by the Depositary or by the
Trustee as the custodian of the Depositary or under such Global Security, and the Issuer, the
Trustee and any agent of the Issuer or the Trustee shall be entitled to treat the Depositary as the
absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from
giving effect to any written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Agent Members, the operation of customary
practices of such Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.

          (c) Definitive Securities. Except as provided in this Section 2.1 or Section 2.3 or
2.4, owners of beneficial interests in Global Securities shall not be entitled to receive physical
delivery of Definitive Securities.

     2.2 Authentication. The Trustee shall authenticate and deliver: (1) on the Issue
Date, an aggregate principal amount of $250,000,000 73/8% Senior Notes Due
2014, (2) any Additional Notes for an original issue in an aggregate principal amount specified in
the written order of the Issuer pursuant to Sections 2.3 and 2.4 of the Original Indenture and (3)
Series B Notes for issue in a Registered Exchange Offer pursuant to a Registration Rights
Agreement, for a like principal amount of Series A Notes, in each case upon a written order of the
Issuer pursuant to Sections 2.3 and 2.4 of the Original Indenture. Such order shall specify the
amount of the Securities to be authenticated and the date on which the original issue of Securities
is to be authenticated.

          2.3 Transfer and Exchange.

          (a) Transfer and Exchange of Definitive Securities. When Definitive Securities are
presented to the Registrar with a request:

 

 

 6

	 	(x)	 	to register the transfer of such Definitive Securities; or
	 
	 	(y)	 	to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,

the Registrar shall register the transfer or make the exchange as requested if its reasonable
requirements for such transaction are met; provided, however, that the Definitive
Securities surrendered for transfer or exchange:

     (i) shall be duly endorsed or accompanied by a written instrument of transfer in form
reasonably satisfactory to the Issuer and the Registrar, duly executed by the Holder
thereof or its attorney duly authorized in writing; and

     (ii) if such Definitive Securities are required to bear a restricted securities
legend, they are being transferred or exchanged pursuant to an effective registration
statement under the Securities Act, pursuant to Section 2.3(b) or pursuant to clause (A),
(B) or (C) below, and are accompanied by the following additional information and
documents, as applicable:

     (A) if such Definitive Securities are being delivered to the Registrar by a Holder for
registration in the name of such Holder, without transfer, a certification from such Holder
to that effect; or

     (B) if such Definitive Securities are being transferred to the Issuer, a certification
to that effect; or

     (C) if such Definitive Securities are being transferred (x) pursuant to an exemption
from registration in accordance with Rule 144A, Regulation S or Rule 144 under the
Securities Act; or (y) in reliance upon another exemption from the requirements of the
Securities Act: (i) a certification to that effect (in the form set forth on the reverse of
the Security) and (ii) if the Issuer so requests, an opinion of counsel or other evidence
reasonably satisfactory to it as to the compliance with the restrictions set forth in the
legend set forth in Section 2.3(e)(i).

          (b) Restrictions on Transfer of a Definitive Security for a Beneficial Interest in a
Global Security. A Definitive Security may not be exchanged for a beneficial interest in a
Rule 144A Global Security, an IAI Global Security or a Permanent Regulation S Global Security
except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a
Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:

        (i) certification, in the form set forth on the reverse of the Security, that such
Definitive Security is either (A) being transferred to a QIB in accordance with Rule
144A, (B) being transferred to an IAI that has furnished to the Trustee a signed letter
in the form of Exhibit 2 hereto or (C) being transferred after expiration of the
Distribution Compliance Period by a Person who initially

 

 

 7

purchased such Security in
reliance on Regulation S to a buyer who elects to hold its interest in such Security in
the form of a beneficial interest in the Permanent Regulation S Global Security; and

        (ii) written instructions directing the Trustee to make, or to direct the
Securities Custodian to make, an adjustment on its books and records with respect to such
Rule 144A Global Security (in the case of a transfer pursuant to clause (b)(i)(A)), IAI
Global Security (in the case of a transfer pursuant to clause (b)(1)(B)) or Permanent
Regulation S Global Security (in the case of a transfer pursuant to clause (b)(i)(B)) to
reflect an increase in the aggregate principal amount of the Securities represented by
the Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global
Security, as applicable, such instructions to contain information regarding the
Depositary account to be credited with such increase,

then the Trustee shall cancel such Definitive Security and cause, or direct the Securities
Custodian to cause, in accordance with the standing instructions and procedures existing between
the Depositary and the Securities Custodian, the aggregate principal amount of Securities
represented by the Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global
Security, as applicable, to be increased by the aggregate principal amount of the Definitive
Security to be exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Rule 144A Global Security, IAI Global
Security or Permanent Regulation S Global Security, as applicable, equal to the principal amount of
the Definitive Security so canceled. If no Rule 144A Global Securities, IAI Global Securities or
Permanent Regulation S Global Securities, as applicable, are then outstanding, the Issuer shall
issue and the Trustee shall authenticate, upon written order of the Issuer in the form of an
Officers’ Certificate of the Issuer, a new Rule 144A Global Security, IAI Global Security or
Permanent Regulation S Global Security, as applicable, in the appropriate principal amount.

          (c) Transfer and Exchange of Global Securities.

        (i) The transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with the Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. A transferor of a beneficial interest in a Global Security shall
deliver to the Registrar a written order given in accordance with the Depositary’s
procedures containing information regarding the participant account of the Depositary to
be credited with a beneficial interest in the Global Security. The Registrar shall, in
accordance with such instructions instruct the Depositary to credit to the account of the
Person specified in such instructions a beneficial interest in the Global Security and to
debit the account of the Person making the transfer the beneficial interest in the Global
Security being transferred.

        (ii) If the proposed transfer is a transfer of a beneficial interest in one Global
Security to a beneficial interest in another Global Security, the Registrar

 

 

 8

shall reflect on its books and records the date and an increase in the principal amount of the Global
Security to which such interest is being transferred in an amount equal to the principal
amount of the interest to be so transferred, and the Registrar shall reflect on its books
and records the date and a corresponding decrease in the principal amount of the Global
Security from which such interest is being transferred.

        (iii) Notwithstanding any other provisions of this Appendix (other than the
provisions set forth in Section 2.4), a Global Security may not be transferred as a whole
except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.

        (iv) In the event that Global Security is exchanged for Definitive Securities to
Section 2.4 of this Appendix, prior to the consummation of a Registered Exchange Offer or
the effectiveness of a Shelf Registration Statement with respect to such Securities, such
Securities may be exchanged only in accordance with such procedures as are substantially
consistent with the provisions of this Section 2.3 (including the certification
requirements set forth on the reverse of the Series A Notes intended to ensure that such
transfers comply with Rule 144A, Regulation S or another applicable exemption under the
Securities Act, as the case may be) and such other procedures as may from time to time be
adopted by the Issuer.

          (d) Restrictions on Transfer of Temporary Regulation S Global Securities. During the
Distribution Compliance Period, beneficial ownership interests in Temporary Regulation S Global
Securities may only be sold, pledged or transferred in accordance with the Applicable Procedures
and only (i) to the Issuer, (ii) in an offshore transaction in accordance with Regulation S (other
than a transaction resulting in an exchange for an interest in a Permanent Regulation S Global
Security) or (iii) pursuant to an effective registration statement under the Securities Act, in
each case in accordance with any applicable securities laws of any State of the United States.

          (e) Legend.

        (i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each
Security certificate evidencing the Global Securities and the Definitive Securities (and
all Securities issued in exchange therefor or in substitution thereof), in the case of
Securities offered otherwise than in reliance on Regulation S shall bear a legend in
substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER
THIS SECURITY NOR ANY

 

 

 9

INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN
BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
“ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR

 

 

 10

TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

     Each certificate evidencing a Security offered in reliance on Regulation S shall, in
addition to the foregoing, bear a legend in substantially the following form:

     THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO
THEM IN REGULATION S UNDER THE SECURITIES ACT.

Each Definitive Security shall also bear the following additional legend:

     IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.

        (ii) Upon any sale or transfer of a Transfer Restricted Security (including any
Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under
the Securities Act, the Registrar shall permit the transferee thereof to exchange such
Transfer Restricted Security for a certificated Security that does not bear the legend
set forth above and rescind any restriction on the transfer of such Transfer Restricted
Security, if the transferor thereof certifies in writing to the Registrar that such sale
or transfer was made in reliance on Rule 144 (such certification to be in the form set
forth on the reverse of the Security).

        (iii) After a transfer of any Series A Notes pursuant to and during the period of
the effectiveness of a Shelf Registration Statement with respect to such Series A Notes,
all requirements pertaining to legends on such Series A Notes will cease to apply and the
requirements requiring any such Series A Notes issued to certain Holders be issued in
global form will continue to apply.

 

 

 11

        (iv) Upon the consummation of a Registered Exchange Offer with respect to the
Series A Notes, all requirements pertaining to such Series A Notes that Series A Notes be
issued in global form will continue to apply, and Series B Notes in global form without
the restricted securities legend set forth in Exhibit 1 hereto will be available to
Holders that exchange such Series A Notes in such Registered Exchange Offer.

          (f) Cancellation or Adjustment of Global Security. At such time as all beneficial
interests in a Global Security have either been exchanged for Definitive Securities, redeemed,
purchased or canceled, such Global Security shall be returned to the Depositary for cancellation or
retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for Definitive Securities, redeemed, purchased or
canceled, the principal amount of Securities represented by such Global Security shall be reduced
and an adjustment shall be made on the books and records of the Trustee (if it is then the
Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee
or the Securities Custodian, to reflect such reduction.

          (g) No Obligation of the Trustee.

        (i) The Trustee shall have no responsibility or obligation to any beneficial owner
of a Global Security, a member of, or a participant in the Depositary or other Person
with respect to the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the Securities
or with respect to the delivery to any participant, member, beneficial owner or other
Person (other than the Depositary) of any notice (including any notice of redemption) or
the payment of any amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made to Holders under
the Securities shall be given or made only to or upon the order of the registered Holders
(which shall be the Depositary or its nominee in the case of a Global Security). The
rights of beneficial owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the Depositary. The Trustee
may rely and shall be fully protected in relying upon information furnished by the
Depositary with respect to its members, participants and any beneficial owners.

        (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire
as to compliance with any restrictions on transfer imposed under the Indenture or under
applicable law with respect to any transfer of any interest in any Security (including
any transfers between or among Depositary participants, members or beneficial owners
in any Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of the Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

 

 

 12

          2.4 Definitive Securities.

          (a) A Global Security deposited with the Depositary or with the Trustee as Securities
Custodian for the Depositary pursuant to Section 2.1 shall be transferred to the beneficial owners
thereof in the form of Definitive Securities in an aggregate principal amount equal to the
principal amount of such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 hereof and (i) the Depositary notifies the Issuer that it is
unwilling or unable to continue as Depositary for such Global Security and the Depositary fails to
appoint a successor depositary or if at any time such Depositary ceases to be a “clearing agency”
registered under the Exchange Act, in either case, and a successor depositary is not appointed by
the Issuer within 90 days of such notice, or (ii) an Event of Default has occurred and is
continuing or (iii) the Issuer, in its sole discretion, notifies the Trustee in writing that it
elects to cause the issuance of Definitive Securities under the Indenture.

          (b) Any Global Security that is transferable to the beneficial owners thereof pursuant to
this Section 2.4 shall be surrendered by the Depositary to the Trustee located at its principal
corporate trust office in the State of Texas, The City of Dallas, to be so transferred, in whole or
from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate principal amount of
Definitive Securities of authorized denominations. Any portion of a Global Security transferred
pursuant to this Section 2.4 shall be executed, authenticated and delivered only in denominations
of $2,000 principal amount and any integral multiple of $1,000 and registered in such names as the
Depositary shall direct. Any Definitive Security delivered in exchange for an interest in the
Transfer Restricted Security shall, except as otherwise provided by Section 2.3(e) hereof, bear the
applicable restricted securities legend and definitive securities legend set forth in Exhibit 1
hereto.

          (c) Subject to the provisions of Section 2.4(b) hereof, the registered Holder of a Global
Security shall be entitled to grant proxies and otherwise authorize any Person, including Agent
Members and Persons that may hold interests through Agent Members, to take any action which a
Holder is entitled to take under the Indenture or the Securities.

          (d) In the event of the occurrence of one of the events specified in Section 2.4(a) hereof,
the Issuer shall promptly make available to the Trustee a reasonable supply of Definitive
Securities in definitive, fully registered form without interest coupons. In the event that such
Definitive Securities are not issued, the Issuer expressly acknowledges, with respect to the right
of any Holder to pursue a remedy pursuant to Section 5.4 of the Original Indenture, the right of
any beneficial owner of Securities to pursue such remedy with respect to the portion of the Global
Security that represents such beneficial owner’s Securities as if such Definitive Securities
had been issued.

 

 

EXHIBIT 1

to

APPENDIX

[FORM OF FACE OF SERIES A NOTES]

[Global Securities Legend]

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, 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 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.

          [[FOR REGULATION S GLOBAL SECURITY ONLY] UNTIL 40 DAYS AFTER THE LATER OF COMMENCEMENT OR
COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS
DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF
SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]

[Restricted Securities Legend for Securities offered otherwise than in Reliance on Regulation S]

          THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR

 

 

 2

UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION.

          THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF
OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY
(A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER”
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED
INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D),
(E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.

[Restricted Securities Legend for Securities Offered in Reliance on Regulation S.]

          THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
U.S. PERSON EXCEPT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL
APPLICABLE STATE SECURITIES LAWS. TERMS

 

 

 3

USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S
UNDER THE SECURITIES ACT.

[Temporary Regulation S Global Security Legend]

          EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S
GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE PERMANENT REGULATION S GLOBAL
SECURITY OR ANY OTHER SECURITY REPRESENTING AN INTEREST IN THE SECURITIES REPRESENTED HEREBY WHICH
DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE “40-DAY
DISTRIBUTION COMPLIANCE PERIOD” (WITHIN THE MEANING OF RULE 903(b)(2) OF REGULATION S UNDER THE
SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE
THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED
SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING
SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY
REGULATION S GLOBAL SECURITY MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED (I) TO THE ISSUER, (II)
OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES. HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL
NOTIFY ANY PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN
APPLICABLE.

          AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD BENEFICIAL INTERESTS IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN A RULE 144A GLOBAL
SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN
COMPLIANCE WITH RULE 144A AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY FIRST DELIVERS
TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT
THE REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED (A) TO A PERSON WHO THE TRANSFEROR REASONABLY
BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (B) TO A PERSON WHO
IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

 

 

 4

          AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL INTERESTS IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN AN IAI GLOBAL SECURITY
ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH
AN EXEMPTION UNDER THE SECURITIES ACT AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY
FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO
THE EFFECT THAT THE REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED (A) TO AN “ACCREDITED
INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT, PRIOR
TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND OTHER JURISDICTIONS.

          BENEFICIAL INTERESTS IN A RULE 144A GLOBAL SECURITY OR AN IAI GLOBAL SECURITY MAY BE
TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL
SECURITY, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY
IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS
CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF
REGULATION S OR RULE 144 (IF AVAILABLE).

[Definitive Securities Legend]

          IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT
SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM
THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

 

 5

			
	 	 	 
	No.___
	 	$ ___

73/8% Senior Notes Due 2014

          Service Corporation International, a Texas corporation, promises to pay to ___, or registered assigns, the principal sum of ___Dollars on October 1, 2014.

          Interest Payment Dates: April 1 and October 1.

          Record Dates: March 15 and September 15.

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

Dated:

	 	 	 	 	 	 	 	 	 
	 	 	SERVICE CORPORATION	 	 
	 	 	INTERNATIONAL,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 

Name:
	 	 
	 

	 	 	 	 	 	Title:	 	 

TRUSTEE’S CERTIFICATE OF

     AUTHENTICATION

THE BANK OF NEW YORK TRUST

     COMPANY, N.A.

   as Trustee, certifies

       that this is one of

       the Securities referred

       to in the Supplemental Indenture.

	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 

 

 

 6

[FORM OF REVERSE SIDE OF SERIES A NOTES]

73/8% Senior Note Due 2014

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 Security at the rate per annum shown
above; provided, however, that if a Registration Default (as defined in the
Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate
of 0.25% per annum (increasing by an additional 0.25% per annum after each consecutive 90-day
period that occurs after the date on which such Registration Default occurs up to a maximum
additional interest rate of 1.00%) from and including the date on which any such Registration
Default shall occur to but excluding the date on which all Registration Defaults have been cured.
The Issuer will pay interest semiannually on April 1 and October 1 of each year, commencing April
1, 2007. Interest on the Securities will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from October 3, 2006. 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 Securities (except defaulted interest) to the Persons who
are registered holders of Securities at the close of business on the March 15 or September 15 next
preceding the interest payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities 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 Securities 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 Security (including
principal, premium and interest) by mailing a check to the registered address of each Holder
thereof; provided, however, that payments on a certificated Security 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, The Bank of New York Trust Company N.A., a New York banking corporation (the
“Trustee”), will act as Paying Agent and Registrar. The Issuer may appoint and change any Paying
Agent, Registrar or co-registrar without notice.

 

 

 7

4. Indenture

          The Issuer issued the Securities under an Indenture dated as of February 1, 1993, as amended
by the Third Supplemental Indenture dated as of October 3, 2006 (together, the “Indenture”), each
between the Issuer and the Trustee. The terms of the Securities 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 Supplemental Indenture (the “Act”).
Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Securityholders are referred to the
Indenture and the Act for a statement of those terms.

          The Securities 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 Series A Notes
issued on the Issue Date, any Additional Notes and all Series B Notes issued in exchange therefor
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/leaseback transactions. These covenants are subject to important
exceptions and qualifications.

5. Optional Redemption

          Except as set forth below and in Section 6, the Issuer shall not be entitled to redeem the
Securities.

          The Notes will be redeemable, in whole or in part, at the Issuer’s option at any time, upon at
least 30 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, and (2) as determined by the Quotation
Agent, the sum of the present values of the remaining scheduled payments of principal and interest
thereon (not including any portion of such payments of interest accrued as of the date of
redemption) 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
(but not including) the date of redemption.

          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 Securities to be redeemed at his
registered address. Securities in denominations larger than $1,000 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 Securities (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 Securities
(or such portions thereof) called for redemption.

 

 

 8

          “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 comparable to the remaining term of the Securities to be
redeemed that would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Securities.

          “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, or (ii) if the Trustee obtains fewer than three
such Reference Treasury Dealer Quotations, the average of all such Quotations.

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

          “Reference Treasury Dealer” means each of J.P. Morgan Securities Inc. (and its successors),
Merrill Lynch, Pierce, Fenner & Smith Incorporated (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 Trustee by such Reference Treasury Dealer as of 5:00 p.m., New York time,
on the third Business Day preceding the redemption date.

6. Escrow; Special Mandatory Redemption

          Pursuant to the Escrow Agreement, the net proceeds of the Series A Notes issued on the Issue
Date will be deposited into an escrow account. The Series A Notes issued on the Issue Date and the
Series B Notes issued in exchange therefor are subject to special mandatory redemption, in whole,
but not in part, in the event that the Acquisition is not consummated on or prior to December 31,
2006. All of the Series A Notes issued on the Issue Date and the Series B Notes issued in exchange
therefor may also be redeemed, at the Issuer’s option, in whole, but not in part, at any time prior
to December 31, 2006, if, in the Issuer’s sole judgment, the Acquisition will not be consummated by
that date. The redemption price in either case will be 100% of the issue price of the Securities,
plus accrued and unpaid interest to the redemption date.

 

 

 9

7. Put Provisions

          Upon a Change of Control, any Holder of Securities will have the right to cause the Issuer to
repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of
the principal amount of the Securities 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.

8. Denominations; Transfer; Exchange

          The Securities 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 Securities 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 Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.

9. Persons Deemed Owners

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

10. 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.

11. 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 Securities and the Indenture (insofar as the Indenture applies to
the Securities) if the Issuer deposits with the Trustee money or U.S. Government Obligations for
the payment of principal and interest on the Securities to redemption or maturity, as the case may
be.

12. Amendment, Waiver

          Subject to certain exceptions set forth in the Indenture, (a) the Indenture (insofar as the
Indenture applies to the Securities) and the Securities may be amended with the written consent of
the Holders of at least a majority in principal amount outstanding of

 

 

 10

the Securities and (b) any
default or noncompliance with any provision may be waived with respect to the Securities with the
written consent of the Holders of a majority in principal amount outstanding of the
Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any
Securityholder, the Issuer and the Trustee shall be entitled to amend the Indenture or the
Securities 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.

13. Defaults and Remedies

          Under the Indenture, Events of Default include (a) default for 30 days in payment of interest
on the Securities; (b) default in payment of principal on the Securities at maturity, upon
redemption pursuant to Section 5 hereto, upon acceleration or otherwise, or failure by the Issuer
to redeem or purchase Securities when required; (c) failure by the Issuer to comply with other
agreements in the Indenture or the Securities, 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; (e) certain events of bankruptcy or insolvency with respect to the Issuer; and (f) with
respect to the Series A Notes issued on the Issue Date and any Series B Notes issued in exchange
therefor, failure by the Issuer to comply with, or any breach of, any material provision of the
Escrow Agreement. If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence of such Events of
Default.

          Securityholders may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives
indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Securityholders 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.

14. 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 Securities and may otherwise
deal with and collect obligations owed to it by the Issuer or its

 

 

 11

Affiliates and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Trustee.

15. 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 Securities or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their creation. By accepting
a Security, each Securityholder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.

16. Authentication

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

17. Abbreviations

          Customary abbreviations may be used in the name of a Securityholder 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).

18. 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 Securities and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.

19. Holders’ Compliance with Registration Rights Agreement

          Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of
the Registration Rights Agreement, including the obligations of the Holders with respect to a
registration and the indemnification of the Issuer to the extent provided therein.

20. Governing Law

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

 

 

 12

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

          1929 Allen Parkway

          Houston, Texas 77019

          Attention: Secretary

 

 

 13

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.

In connection with any transfer of any of the Securities evidenced by this certificate occurring
prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the
later of the date of original issuance of such Securities and the last date, if any, on which such
Securities were owned by the Issuer or any Affiliate of the Issuer, the undersigned confirms that
such Securities are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

o to the Issuer; or

o pursuant to an effective registration statement under the Securities Act of
1933; or

o inside the United States to a “qualified institutional buyer” (as defined in
Rule 144A under the Securities Act of 1933) that purchases for its own account or for
the account of a qualified institutional buyer to whom notice is given that such
transfer is being made in reliance on Rule 144A, in each case pursuant to and in
compliance with Rule 144A under the Securities Act of 1933; or

 

 

14

o outside the United States in an offshore transaction within the meaning of
Regulation S under the Securities Act in compliance with Rule 904 under the Securities
Act of 1933; or

o pursuant to the exemption from registration provided by Rule 144 under the
Securities Act of 1933; or

o to an institutional “accredited investor” (as defined in Rule
501(a)(1),(2),(3) or (7) under the Securities Act of 1933) that has furnished to the
Trustee a signed letter containing certain representations and agreements.

     Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other than
the registered holder thereof; provided, however, that if box (4)
is checked, the Trustee shall be entitled to require, prior to registering any such
transfer of the Securities, such legal opinions, certifications and other
information as the Issuer has reasonably requested to confirm that such transfer is
being made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.

	 	 	 
	 

	 	 
	 

	 	Signature

Signature Guarantee:

	 	 	 
	 

	 	 
	Signature must be guaranteed

	 	Signature

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Registrar, which requirements include membership or participation in the Security Transfer
Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined
by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

 

 

 

15

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.

          The undersigned represents and warrants that it is purchasing this Security for its own
account or an account with respect to which it exercises sole investment discretion and that it and
any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the undersigned has
requested pursuant to Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned’s foregoing representations in order to
claim the exemption from registration provided by Rule 144A.

	 	 	 
	Dated:
	 	 
	 

	 	 
	 

	 	Notice: To be executed by
	 

	 	                  an executive officer

 

 

16

[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

The following increases or decreases in this Global Security have been made:

	 	 	 	 	 	 	 	 	 
	 	 	Amount of decrease in	 	Amount of increase in	 	Principal amount of this	 	Signature of authorized
	Date of	 	Principal amount of this	 	Principal amount of this	 	Global Security following	 	officer of Trustee or
	Exchange	 	Global Security	 	Global Security	 	such decrease or increase)	 	Securities Custodian
	 
	 	 	 	 	 	 	 	 

 

 

17

OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Security purchased by the Issuer pursuant to Section 4.03 of
the Supplemental Indenture, check the box:  o

           If you want to elect to have only part of this Security purchased by the Issuer pursuant to
Section 4.03 of the Supplemental Indenture, state the amount in principal amount: $

	 	 	 	 	 
	Dated:___

	 	Your Signature:	 	 
	 

	 	 	 	 
	 

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

	 	 	 
	Signature Guarantee:
	 	 
	 

	 	 
	 

	 	(Signature must be guaranteed)

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Registrar, which requirements include membership or participation in the Security Transfer
Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined
by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

 

 

EXHIBIT 2 to APPENDIX

Form of

Transferee Letter of Representation

[Issuer]

In care of

[          ]

[          ]

[          ]

Ladies and Gentlemen:

     This certificate is delivered to request a transfer of $      principal amount of the
73/8% Senior Notes due 2014 (the “Securities”) of Service Corporation
International (the “Issuer”).

     Upon transfer, the Securities would be registered in the name of the new beneficial owner as
follows:

	 	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 	 	 
	Taxpayer ID Number:
	 	 	 	 
	 

	 	 

	 	 

     The undersigned represents and warrants to you that:

     1. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act of 1933, as amended (the “Securities Act”)), purchasing for our own
account or for the account of such an institutional “accredited investor” at least $250,000
principal amount of the Securities, and we are acquiring the Securities not with a view to, or for
offer or sale in connection with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Securities, and we invest in or purchase securities
similar to the Securities in the normal course of our business. We, and any accounts for which we
are acting, are each able to bear the economic risk of our or its investment.

 

 

 2

     2. We understand that the Securities have not been registered under the Securities Act and,
unless so registered, may not be sold except as permitted in the following sentence. We agree on
our own behalf and on behalf of any investor account for which we are purchasing Securities to
offer, sell or otherwise transfer such Securities prior to the date that is two years after the
later of the date of original issue and the last date on which the Issuer or any affiliate of the
Issuer was the owner of such Securities (or any predecessor thereto) (the “Resale Restriction
Termination Date”) only (i) to the Issuer, (ii) in the United States to a person whom the seller
reasonably believes is a qualified institutional buyer in a transaction meeting the requirements of
Rule 144A, (iii) to an institutional “accredited investor” within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act that is an institutional accredited investor purchasing
for its own account or for the account of an institutional accredited investor, in each case in a
minimum principal amount of the Securities of $250,000, (iv) outside the United States in a
transaction complying with the provisions of Rule 904 under the Securities Act, (v) pursuant to an
exemption from registration under the Securities Act provided by Rule 144 (if available) or (vi)
pursuant to an effective registration statement under the Securities Act, in each of cases (i)
through (vi) subject to any requirement of law that the disposition of our property or the property
of such investor account or accounts be at all times within our or their control and in compliance
with any applicable state securities laws. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the
Securities is proposed to be made pursuant to clause (iii) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee substantially in the
form of this letter to the Issuer and the Trustee, which shall provide, among other things, that
the transferee is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act and that it is acquiring such Securities for investment
purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges
that the Issuer and the Trustee reserve the right prior to the offer, sale or other transfer prior
to the Resale Restriction Termination Date of the Securities pursuant to clause (iii), (iv) or (v)
above to require the delivery of an opinion of counsel, certifications or other information
satisfactory to the Issuer and the Trustee.

	 	 	 
	 

	 	TRANSFEREE:                                        ,
	 
	 	 
	 

	 	          by:                                        

 

 

EXHIBIT A

[FORM OF FACE OF SERIES B NOTES]

 

			
	*/	 	[If the Security is to be issued in global form add the Global Securities Legend from
Exhibit 1 to Appendix A and the attachment from such Exhibit 1 captioned “[TO BE ATTACHED TO GLOBAL
SECURITIES] — SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY”.]

 

2

			
	 	 	 
	No.                    
	 	$                     

73/8% Senior Notes Due 2014

     Service Corporation International, a Texas corporation, promises to pay to                     , or registered assigns, the principal sum of                      Dollars on October
1, 2014.

     Interest Payment Dates: April 1 and October 1.

     Record Dates: March 15 and September 15.

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

Dated:

	 	 	 	 	 
	 	SERVICE CORPORATION INTERNATIONAL,

 	 
	 	By  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	TRUSTEE’S CERTIFICATE OF 
AUTHENTICATION	 	 
	THE BANK OF NEW YORK TRUST 
COMPANY, N.A.	 	 
	     as Trustee, certifies	 	 
	 

	 	that this is one of

the Securities referred

to in the Supplemental Indenture.	 	 
	 
	By
	 	 	 	 
	 

	 	 	 	 
	 

	 	Authorized Signatory	 	 

 

3

[FORM OF REVERSE SIDE OF SERIES B NOTES]

73/8% Senior Note Due 2014

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 Security at the rate per annum shown
above[; provided, however, that if a Registration Default (as defined in the
Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate
of 0.25% per annum (increasing by an additional 0.25% per annum after each consecutive 90-day
period that occurs after the date on which such Registration default occurs up to a maximum
additional interest rate of 1.00%) from and including the date on which any such Registration
Default shall occur to but excluding the date on which all Registration Defaults have been
cured.]1 The Issuer will pay interest semiannually on April 1 and October 1 of each
year, commencing April 1, 2007. Interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from October 3, 2006. 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 Securities (except defaulted interest) to the Persons who
are registered holders of Securities at the close of business on the March 15 or September 15 next
preceding the interest payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities 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 Securities 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 Security (including
principal, premium and interest) by mailing a check to the registered address of each Holder
thereof; provided, however, that payments on a certificated Security 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).

 

			
	1	 	Insert if at the date of issuance of the Series B
Note (as the case may be) any Registration Default has occurred with respect to
the related Series A Notes during the interest period in which such date of
issuance occurs.

 

4

3. Paying Agent and Registrar

     Initially, The Bank of New York Trust Company, N.A., a New York banking corporation (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 Securities under an Indenture dated as of February 1, 1993, as amended
by the Third Supplemental Indenture dated as of October 3, 2006 (together, the “Indenture”), each
between the Issuer and the Trustee. The terms of the Securities 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 Supplemental Indenture (the “Act”).
Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Securityholders are referred to the
Indenture and the Act for a statement of those terms.

     The Securities 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 Series A Notes
issued on the Issue Date, any Additional Notes and all Series B Notes issued in exchange therefor
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/leaseback transactions. These covenants are subject to important
exceptions and qualifications.

5. Optional Redemption

     Except as set forth below and in Section 6, the Issuer shall not be entitled to redeem the
Securities.

     The Notes will be redeemable, in whole or in part, at the Issuer’s option at any time, upon at
least 30 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, and (2) as determined by the Quotation
Agent, the sum of the present values of the remaining scheduled payments of principal and interest
thereon (not including any portion of such payments of interest accrued as of the date of
redemption) 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
(but not including) the date of redemption.

     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 Securities to be redeemed at his
registered address. Securities in denominations larger than $1,000 principal

 

5

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 Securities (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 Securities (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 comparable to the remaining term of the Securities to be
redeemed that would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Securities.

     “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, or (ii) if the Trustee obtains fewer than three
such Reference Treasury Dealer Quotations, the average of all such Quotations.

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

     “Reference Treasury Dealer” means each of J.P. Morgan Securities Inc. (and its successors),
Merrill Lynch, Pierce, Fenner & Smith Incorporated (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 Trustee by such Reference Treasury Dealer as of 5:00 p.m., New York time,
on the third Business Day preceding the redemption date.

6. Escrow; Special Mandatory Redemption

     Pursuant to the Escrow Agreement, the net proceeds of the Series A Notes issued on the Issue
Date will be deposited into escrow. The Series A Notes issued on the Issue Date and the Series B
Notes issued in exchange therefor are subject to special mandatory redemption, in whole, but not in
part, in the event that the Acquisition is not consummated on or prior to December 31, 2006. All
of the Series A Notes issued on the Issue Date and the Series B Notes issued in exchange therefor
may also be redeemed, at the Issuer’s option, in whole, but not in part, at any time prior to
December 31, 2006, if, in the Issuer’s sole

 

6

judgment, the Acquisition will not be consummated by
that date. The redemption price in either case will be 100% of the issue price of the Notes, plus
accrued and unpaid interest to the redemption date.

7. Put Provisions

     Upon a Change of Control, any Holder of Securities will have the right to cause the Issuer to
repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of
the principal amount of the Securities 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.

8. Denominations; Transfer; Exchange

     The Securities 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 Securities 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 Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.

9. Persons Deemed Owners

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

10. 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.

11. 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 Securities and the Indenture (insofar as the Indenture applies to
the Securities) if the Issuer deposits with the Trustee money or U.S. Government Obligations for
the payment of principal and interest on the Securities to redemption or maturity, as the case may
be.

12. Amendment; Waiver

 

7

     Subject to certain exceptions set forth in the Indenture, (a) the Indenture (insofar as the
Indenture applies to the Securities) and the Securities may be amended with the written consent of
the Holders of at least a majority in principal amount outstanding of the Securities and (b) any
default or noncompliance with any provision may be waived with respect to the Securities with the
written consent of the Holders of a majority in principal amount
outstanding of the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Issuer and the Trustee shall be entitled to amend
the Indenture or the Securities 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.

13. Defaults and Remedies

     Under the Indenture, Events of Default include (a) default for 30 days in payment of interest
on the Securities; (b) default in payment of principal on the Securities at maturity, upon
redemption pursuant to Section 5 hereto, upon acceleration or otherwise, or failure by the Issuer
to redeem or purchase Securities when required; (c) failure by the Issuer to comply with other
agreements in the Indenture or the Securities, 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; (e) certain events of bankruptcy or insolvency with respect to the Issuer; and (f) with
respect to the Series A Notes issued on the Issue Date and any Series B Notes issued in exchange
therefor, failure by the Issuer to comply with, or any breach of, any material provision of the
Escrow Agreement. If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence of such Events of
Default.

     Securityholders may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives
indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Securityholders 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.

14. Trustee Dealings with the Issuer

 

8

     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 Securities 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.

15. 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 Securities or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their creation. By accepting
a Security, each Securityholder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.

16. Authentication

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

17. Abbreviations

          Customary abbreviations may be used in the name of a Securityholder 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).

18. 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 Securities and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.

19. Holders’ Compliance with Registration Rights Agreement

          Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of
the Registration Rights Agreement, including the obligations of the Holders with respect to a
registration and the indemnification of the Issuer to the extent provided therein.]2

 

			
	2	 	Delete if this Security is not being issued in
exchange for a Series A Note.

 

 

9

20. Governing Law

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

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

1929 Allen Parkway

Houston, Texas 77019

Attention: Secretary

 

10

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

          If you want to elect to have this Security purchased by the Issuer pursuant to Section 4.03 of
the Supplemental Indenture, check the box:     o

          If you want to elect to have only part of this Security purchased by the Issuer pursuant to
Section 4.03 of the Supplemental Indenture, state the amount in principal amount: $

	 	 	 	 	 	 	 
	Dated:

	 	Your Signature:	 	 	 	 
	 

	 	 	 	 

(Sign Exactly As Your Name Appears
On The Other Side Of This Security.)

	 
	 	 	 	 	 	 
	 

	 	 	 	 	 
	Signature Guarantee:
	 	 	 	 
	 

	 	 

	 

	 	(Signature Must Be Guaranteed)	 	 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of
the Registrar, which requirements include membership or participation in the Security Transfer
Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined
by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

 

 

EXHIBIT B

Form of Escrow Agreement

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