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                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

      This Employment Agreement is dated June 10, 2005. Its parties are NORTH
POINTE HOLDINGS CORPORATION, a Michigan corporation ("Company"), and B. MATTHEW
PETCOFF ("Executive").

                                   BACKGROUND

      The Executive currently serves in various executive capacities for the
Company and its affiliates, including that of Chief Operating Officer, Executive
Vice President and Secretary. His services in those capacities are highly
important to the Company's continued successful conduct of its business.

      The Company recognizes that circumstances in which a change of control of
the Company occurs, through acquisition or otherwise, are highly disruptive and
will cause uncertainty about the Executive's future employment with the Company
without regard to the Executive's competence or past contributions. This
uncertainty may materially adversely affect the Company.

      The Company and the Executive want any proposal for a change of control or
acquisition of the Company to be considered by the Executive objectively, with
reference only to the best interests of the Company and its shareholders and
without undue regard for his own personal interests.

      The Executive will be in a better position to consider the Company's and
its shareholders' best interests if the Executive is afforded reasonable
security, as provided in this Agreement, against altered conditions of
employment which could result from any such change of control or acquisition.

      The Company believes it to be in the best interests of its shareholders to
enter into this Agreement with the Executive.

      The parties intend that this Agreement supersede and replace in its
entirety the Executive's Employment Agreement, dated October 1, 1993, as amended
to date.

                                      TERMS

      NOW, THEREFORE, the parties agree as follows:

      1. EMPLOYMENT. The Company employs the Executive and the Executive accepts
employment as the Company's Chief Operating Officer, Executive Vice President
and Secretary on the terms set forth herein. This employment includes serving as
an officer or director of the Company's subsidiaries or affiliates.

      2. TERM OF EMPLOYMENT. The Executive's term of employment under this
Agreement shall commence effective as of this Agreement's date, and will
continue for a term of

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5 years. The term shall be automatically extended for successive additional
one-year periods, unless 90 days prior to the expiration of a term, either the
Executive or the Company gives written notice to the other that the term is not
to be renewed. The term during which this Agreement is in effect is the
"Contract Term". Notwithstanding the foregoing, this Agreement may terminate
prior to expiration of its term as provided in Section 9 hereof.

      3. DUTIES OF EXECUTIVE. During the Contract Term, the Executive will
perform those tasks and discharge those duties of his positions as set forth in
Section 1 above and similar duties for the Company's subsidiaries. The Company's
Board of Directors ("Board") may set forth his positions' particular duties from
time to time. The Executive will devote his best efforts and all of his business
time, attention and skill to the Company's then-current business and affairs.
The Executive's services are to be rendered in the Detroit metropolitan area.
Without the Executive's consent, which may be withheld in his discretion, he
will not be required to be absent from this metropolitan area more than 45 days
in any 12-month period or for more than 14 consecutive days. The Executive shall
report to the Board.

      4. COMPENSATION. The Executive initially shall receive an annual base
salary of $367,000 for his services hereunder, payable in accordance with the
Company's normal payroll practices. The Compensation Committee (the
"Compensation Committee") of the Board (or full Board, if there is no
Compensation Committee) will review the Executive's base salary not less than
once each year. It may be increased or decreased based upon performance,
generally prevailing property and casualty insurance industry compensation
practices and other factors that the Compensation Committee deems relevant and
reasonable. The Compensation Committee may also award bonus compensation to the
Executive from time to time, based upon the Company's performance and
profitability, in its sole discretion.

      5. BENEFITS. During the Contract Term, the Executive shall be entitled to
participate at the highest level in all of the Company's employee benefit plans
or arrangements (including all life insurance plans, surgical, medical, dental
and hospital expense benefit plans, long-term disability plans,
retirement-income plans and profit sharing plans) that are in effect during the
Contract term and to receive benefits under those plans on a basis consistent
with their overall administration. The Executive also shall be included in all
plans providing additional benefits to Company executives of comparable status
and position to the Executive, including deferred compensation, life insurance,
supplemental retirement, stock option, equity incentive, stock appreciation,
stock bonus, cash bonus and similar or comparable plans. One or more of these
benefits may be offered by benefit plans maintained by one of the Company's
subsidiaries, and in those cases references in this section to the Company
include the subsidiary.

      6. VACATION AND SICK LEAVE. The Executive shall be entitled to 8 weeks of
vacation per year. The sick leave policies stated in the North Pointe Financial
Services Employee Handbook (or any successor handbook applicable to employees of
the Company and its subsidiaries generally) shall apply to the Executive.

      7. REIMBURSEMENT OF BUSINESS EXPENSES. Entertainment of business
associates benefits the Company and is an essential part of the Executive's
duties and responsibilities. The

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Company shall reimburse the Executive for all reasonable business expenses that
he incurs in conducting the business of the Company, including reasonable
expenditures for dining, entertainment, gifts and travel. In addition, the
Executive shall be entitled to reimbursement of up to $30,000 annually for
country club and athletic club dues. These amounts are to be considered
expenditures by the Company for its benefit. The Executive must furnish to the
Company adequate records and other documentary evidence required by federal and
state tax statutes and regulations relating to the substantiation of these
expenditures as an income tax deduction. Notwithstanding any other provisions in
this Agreement, if any of these expenditures are not a proper income tax
deduction to the Company as a business expense, the cost of the items shall be
deemed additional compensation under this Agreement and shall not reduce any
other salary or bonus payment to the Executive.

      8. OTHER BENEFITS. The Company will reimburse the Executive for the
following business expenses, which will not be considered taxable compensation
to the Executive, but rather expenditures by the Company for its benefit: (a)
the Executive will be reimbursed for reasonable expenditures for travel to
seminars, board meetings, conventions and other similar events, civic clubs and
related expenditures, including dues and meals; (b) the Company shall provide
the Executive an automobile allowance of $1,500 per month, subject to
agreed-upon increases; and (c) the Company will reimburse the Executive for all
fees and dues related to membership in professional organizations and all
reasonable expenses related to these memberships. Notwithstanding any other
provisions in this Agreement, if any of these expenditures are not a proper
income tax deduction to the Company as a business expense, the cost of the items
shall be deemed additional compensation under this Agreement and shall not
reduce any other salary or bonus payment to the Executive.

      9. TERMINATION OF AGREEMENT.

      (a) AUTOMATIC TERMINATION. This Agreement shall terminate immediately if
the Executive dies or becomes disabled. The Executive is "disabled" (and suffers
from a "disability") if any of the following occurs:

            (i)   A court with jurisdiction over the matter appoints a guardian
                  or conservator over the Executive or his property.

            (ii)  The Executive has been determined to be unable to provide for
                  his own basic physical needs such as food, shelter and
                  clothing due to a mental or physical condition for at least
                  six consecutive months, as determined by his regularly
                  attending physician. If the Board does not agree with this
                  physician's determination, it will engage at its expense a
                  physician to examine the Executive. If those two physicians
                  cannot agree on a final opinion, they will choose a third
                  physician, and that physician's opinion will control. The
                  Executive and the Company will evenly divide the expense of
                  the third physician. The Executive consents to these
                  examinations and waives any related patient-physician
                  privileges.

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            (iii) Proceeds are paid under a long-term disability insurance
                  policy on the Executive.

            (iv)  The Executive receives Social Security disability benefits.

      (b) DISCRETIONARY TERMINATION. If any of the following occurs, the Company
shall have the right to terminate this Agreement immediately upon giving the
Executive advance written notice of the termination:

            (i)   The Executive breaches any material term of this Agreement.

            (ii)  The Executive continuously neglects his employment duties.

            (iii) The Executive commits any acts of gross negligence,
                  dishonesty, embezzlement, fraud, misrepresentation, or
                  intentional disclosure of confidential information related to
                  the Company's business that would be detrimental to the
                  Company if disclosed.

            (iv)  The Executive commits acts of habitual illegal substance abuse
                  or drunkenness.

            (v)   The Executive is convicted of or pleads guilty or no contest
                  to, a felony or a crime involving moral turpitude.

            (vi)  The Executive commits intentional acts that the Board
                  reasonably determines to be substantially detrimental to the
                  Company's best interests, including (without limitation)
                  material violations of the Company's codes of conduct.

      A termination under this subsection will be considered a termination "for
cause."

      (c) TERMINATION BY EXECUTIVE FOR CAUSE. If the Company fails to make any
payment of base salary or bonus or other amounts provided for in this Agreement
to the Executive within 30 days after such payment is due, or otherwise
materially breaches this Agreement, the Executive may terminate this Agreement
upon giving to the Company 30 days advance written notice of the termination.
The Executive shall not be entitled to terminate this Agreement pursuant to this
subsection, however, if the Company makes an overdue payment to the Executive or
otherwise cures in all material respects the default prior to expiration of the
30-day notice period. Any notice given to the Company pursuant to this
subsection shall indicate the reason for termination and the type and amount of
any overdue payment.

      (d) TERMINATION BY COMPANY WITHOUT CAUSE. Notwithstanding any other
provisions in this Agreement to the contrary, the Company may terminate this
Agreement upon giving to the Executive 30 days advance written notice of the
termination.

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      10. POST-TERMINATION PAYMENTS.

      (a) COMPENSATION UPON DISCRETIONARY TERMINATION. If this Agreement is
terminated for any of the reasons set forth above in Subsection 9(b), the
Executive will be entitled to the base salary earned by him prior to the date of
the termination as provided for in this Agreement computed pro rata up to and
including the date of termination.

      (b) PAYMENT UPON AUTOMATIC TERMINATION. If the Company terminates this
Agreement upon the Executive's death or disability pursuant to Section 9(a), the
Company shall pay to the Executive (or if the Executive is deceased or disabled
to the Executive's estate or personal representative), a monthly sum equal to
the highest monthly rate of base salary paid to the Executive during the last
full prior calendar year pursuant to Section 4 above, less any disability
payments from insurance for which the Company has paid the premiums. If this
termination occurs prior to the last day of the Contract Term, these payments
shall continue until the last day of the last full calendar month of the full
Contract Term, or until Executive reaches 70 years of age, whichever occurs
first. In addition, Executive shall also be entitled to payment in an amount
equal to 3 times his cash bonus(es) for the last previous full calendar year.
Notwithstanding the foregoing, if the Executive is a "specified employee" within
the meaning of Internal Revenue Code Section 409A, then to the extent payments
described in this Section 10(b) are not considered payments made under a bona
fide disability or death benefit plan within the meaning of Code Section 409A,
such payments shall be delayed for six (6) months from the date of termination
of this Agreement. In such event, all past due payments shall be paid in a lump
sum (without interest thereon) as soon as practicable after the six (6)-month
waiting period has expired.

      (c) PAYMENT UPON TERMINATION BY EXECUTIVE FOR CAUSE. If this Agreement is
terminated by the Executive for cause pursuant to Subsection 9(c), the Executive
shall be entitled to his base salary as provided for in this Agreement for the
remaining Contract Term plus an amount equal to three (3) times his cash
bonus(es) for the last previous full calendar year. Notwithstanding the
foregoing, if the Executive is a "specified employee" within the meaning of
Internal Revenue Code Section 409A, then such payments shall be delayed for six
(6) months from the date of termination of this Agreement. In such event, all
past due payments shall be paid in a lump sum (without interest thereon) as soon
as practicable after the six (6)-month waiting period has expired.

      (d) PAYMENT UPON TERMINATION BY COMPANY WITHOUT CAUSE. If this Agreement
is terminated by the Company without cause pursuant to Subsection 9(d), the
Executive shall be entitled to the greater of (i) his base salary as provided
for in this Agreement for the remaining Contract Term or (ii) a termination
payment equal to 3 times the sum of (A) the Executive's annual base salary in
effect on the Termination Date plus (B) 50% of the cash bonus paid or due to the
Executive under the Company's bonus plan applicable to the Executive for the
last fiscal year ending prior to the Termination Date. This termination payment
shall be paid to the Executive in cash no later than 10 business days after the
termination. The Executive shall not be required to mitigate the amount of the
termination payment by securing other employment or otherwise, nor will this
termination payment be reduced by reason of the Executive securing other
employment or for any other reason. Notwithstanding the foregoing, if the
Executive is a "specified employee" within the meaning of Internal Revenue Code
Section 409A, then such

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payments shall be delayed for six (6) months from the date of termination of
this Agreement. In such event, all past due payments shall be paid in a lump sum
(without interest thereon) as soon as practicable after the six (6)-month
waiting period has expired.

      11.   CHANGE OF CONTROL.

      (a)   DEFINITIONS. The following definitions are used in this section.

            (i)   A "Change of Control" means any of the following events:

                  A.    The acquisition, other than from the Company, by any
                        individual, entity or group (within the meaning of
                        Section 13(d)(3) or 14(d)(2) of the Securities Exchange
                        Act of 1934, as amended (the "Exchange Act")) of
                        beneficial ownership (within the meaning of Rule 13d-3
                        promulgated under the Exchange Act) of 40% or more of
                        either:

                        (1)   The then outstanding shares of common stock of the
                              Company (the "Outstanding Company Common Stock")
                              or

                        (2)   The combined voting power of the then outstanding
                              voting securities of the Company entitled to vote
                              generally in the election of directors (the
                              "Company Voting Securities");

                        provided, however, that any acquisition by an Excluded
                        Person shall not constitute a Change of Control of the
                        Company. For purposes hereof, an "Excluded Person" shall
                        mean any of the following: (x) B. Matthew Petcoff, James
                        G. Petcoff or members of either of their immediate
                        families; (y) the Company or any of its subsidiaries, or
                        any employee benefit plan (or related trust) sponsored
                        or maintained by the Company or any of its subsidiaries
                        or; (z) any corporation with respect to which, following
                        such acquisition, more than 60% of, respectively, the
                        then outstanding shares of common stock of such
                        corporation and the combined voting power of the then
                        outstanding voting securities of such corporation
                        entitled to vote generally in the election of directors
                        is then beneficially owned, directly or indirectly, by
                        all or substantially all of the individuals and entities
                        who were the beneficial owners, respectively, of the
                        Outstanding Company Common Stock and Company Voting
                        Securities immediately prior to such acquisition in
                        substantially the same proportion as their ownership,
                        immediately prior to such acquisition, of the
                        Outstanding Company Common Stock and Company Voting
                        Securities, as the case may be; or

                  B.    Individuals who, as of the day immediately following the
                        closing of the initial public offering of shares of the
                        Company's common

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                        stock (the "Post-Offering Date"), constitute the Board
                        (the "Incumbent Board") cease for any reason to
                        constitute at least a majority of the Board, provided
                        that any individual becoming a director subsequent to
                        the Post-Offering Date, whose election or nomination for
                        election by the Company's shareholders was approved by a
                        vote of at least a majority of the directors then
                        comprising the Incumbent Board, shall be considered as
                        though such individual were a member of the Incumbent
                        Board, but excluding, for this purpose, any such
                        individual whose initial assumption of office is in
                        connection with an actual or threatened election contest
                        relating to the election of the Directors of the Company
                        (as such terms are used in Rule 14a-11 of Regulation 14A
                        promulgated under the Exchange Act); or

                  C.    Consummation of a reorganization, merger or
                        consolidation (a "Business Combination"), in each case,
                        with respect to which all or substantially all of the
                        individuals and entities who were the respective
                        beneficial owners of the Outstanding Company Common
                        Stock and Company Voting Securities immediately prior to
                        such Business Combination do not, following such
                        Business Combination, beneficially own, directly or
                        indirectly, more than 60% of, respectively, the then
                        outstanding shares of common stock and the combined
                        voting power of the then outstanding voting securities
                        entitled to vote generally in the election of directors,
                        as the case may be, of the corporation resulting from
                        such Business Combination in substantially the same
                        proportion as their ownership immediately prior to such
                        Business Combination of the Outstanding Company Common
                        Stock and Company Voting Securities, as the case may be;
                        or

                  D.    A complete liquidation or dissolution of the Company or
                        sale or other disposition of all or substantially all of
                        the assets of the Company other than to a corporation
                        with respect to which, following such sale or
                        disposition, more than 60% of, respectively, the then
                        outstanding shares of common stock and the combined
                        voting power of the then outstanding voting securities
                        entitled to vote generally in the election of directors
                        is then owned beneficially, directly or indirectly, by
                        all or substantially all of the individuals and entities
                        who were the beneficial owners, respectively, of the
                        Outstanding Company Common Stock and Company Voting
                        Securities immediately prior to such sale or disposition
                        in substantially the same proportion as their ownership
                        of the Outstanding Company Common Stock and Company
                        Voting Securities, as the case may be, immediately prior
                        to such sale or disposition.

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            (ii)  A "Beneficial Owner" of Company shares includes any person
                  who, directly or indirectly, through any contract,
                  understanding, or otherwise has, shares, or within 60 days has
                  the right to acquire, voting power (which includes the power
                  to vote, or to direct the voting of, any such security) and/or
                  investment power (which includes the power to dispose, or to
                  direct the disposition of, any such security) relating to the
                  Company's equity securities.

            (iii) The Executive shall be deemed to have "Good Reason" to
                  terminate his employment with the Company if any of the
                  following events occur without the Executive's express written
                  consent:

                  A.    The assignment to the Executive of any duties materially
                        inconsistent with the Executive's positions, duties and
                        responsibilities with the Company or its subsidiaries
                        immediately prior to the Change of Control.

                  B.    A reduction in the Executive's base salary in effect
                        immediately prior to the Change of Control.

                  C.    A failure by the Company to continue any incentive
                        programs for executives applicable to the Executive
                        immediately prior to the Change of Control, the effect
                        of which failure would be to materially reduce the
                        incentive compensation which would be payable to the
                        Executive but for discontinuance of any such programs.

                  D.    The Executive is requested to relocate his office to a
                        location more than 100 miles from its location
                        immediately prior to the Change of Control.

                  E.    If the Executive consents to a relocation of his office
                        that necessitates moving from his then current residence
                        ("Prior Residence"), the failure of the Company to pay
                        or reimburse the Executive's reasonable moving expenses
                        and indemnify the Executive against any loss he incurs
                        in the sale of his Prior Residence (such a loss being
                        the amount by which the Prior Residence's actual sales
                        price is exceeded by the higher of the Executive's
                        aggregate investment in the prior Residence or its fair
                        market value as established by an independent appraiser
                        designated by the Executive and acceptable to the
                        Company).

                  F.    The Company's failure to continue in effect or
                        adequately replace any benefit or compensation plan or
                        arrangement in which the Executive was participating
                        immediately preceding the Change of Control, or the
                        taking of any action by the Company not required
                        by law which would adversely affect the Executive's
                        participation in or materially reduce Executive's
                        benefits from such a plan.

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      (b) THE EXECUTIVE'S RIGHT TO TERMINATE AGREEMENT. If (i) a Change of
Control has occurred within the preceding 24 months and (ii) there is a
significant change in the nature and scope of the Executive's duties as
described in this Agreement or prior Board determination or the Executive has
Good Reason to terminate, then the Executive shall be entitled (upon giving 30
days advance written notice to the Company within 90 days after the Executive
becomes aware of the circumstances constituting Good Reason to terminate) to
terminate this Agreement and shall, within 90 days after the effective date of
that termination, receive a lump sum amount equal to amounts that would be paid
to the Executive if he had been terminated without cause, as described in
Section 10(d). Notwithstanding the foregoing, if the Executive is a "specified
employee" within the meaning of Internal Revenue Code Section 409A, then such
payment shall be delayed for six (6) months from the date of termination of this
Agreement.

      12. TERMINATION PAYMENT MAXIMUM. The parties intend that no portion of any
termination payment, or any other payment or benefit under this Agreement, or
payments or benefits to or for the benefit of the Executive under any other
agreement or plan of the Company, regardless of whether the payment or benefit
was paid or provided for prior to a termination discussed in this Agreement
(collectively, "Total Payments"), be deemed to be an "excess parachute payment"
as defined in Section 280G of the Internal Revenue Code ("Code"). The present
value of the Total Payments and any other payments to or for the benefit of the
Executive in the nature of compensation, receipt of which are contingent on a
Change of Control and to which Code Section 280G applies (in the aggregate
"Total Benefits") shall not exceed an amount equal to one dollar less than the
maximum amount which the Executive may receive without becoming subject to the
tax imposed by Code Section 4999 ("Excise Tax") or which the Company may pay
without loss of deduction under Code Section 280G(a) . Present value for
purposes of this Agreement shall be calculated in accordance with Code Section
280G(d)(4). Within 45 days following a termination or notice by either party to
the other of its belief that there is a payment or benefit due the Executive
which will result in an excess parachute payment, the Executive and the Company,
at the Company's expense, shall obtain the opinion of those legal counsel (the
opinion of which need not to be unqualified), and certified public accountants
as the Executive may choose, which sets forth (a) the amount of the Base Period
Income (as defined below) of the Executive, (b) the present value of Total
Benefits, and (c) the amount and present value of any excess parachute payments.
If these opinions determine that there would be an excess parachute payment, the
termination payment or any other payment determined by the counsel or accountant
to be includible in the Total Benefits, shall be reduced or eliminated as
specified by the Executive in writing delivered to the Company within 30 days of
his receipt of the opinion(s). If the Executive fails to so notify the Company,
then the Company shall reasonably determine which payment to reduce or
eliminate, so that under the bases of calculation set forth in such opinions the
Total Benefits paid to the Executive shall be an amount equal to one dollar less
than the maximum amount which the Executive may receive without becoming subject
to the Excise Tax ("Reduced Amount"). For purposes of this Agreement, the term
"Base Period Income" shall be an amount equal to the Executive's "annualized
includible compensation" from the Company for the "base period" as defined in
Code Sections 280G(d)(1)

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and (2)o. If the Code provisions of Sections 280G and 4999 or any successor
provision are repealed without succession this provision shall be of no further
effect.

      As a result of the uncertainty in the application of Code Section 280G at
the time of the initial determination by legal counsel and accountants as
provided in this provision, it is possible that amounts will have been paid or
distributed by the Company to or for the benefit of the Executive pursuant to
this Agreement which should not have been so paid or distributed ("Overpayment")
or that additional amounts which will have not been paid or distributed by the
Company to or for the benefit of the Executive pursuant to this Agreement could
have been so paid or distributed ("Underpayment"), in each case, consistent with
the calculation of the Reduced Amount. If the legal counsel and certified public
accountants described above, or if Executive's legal counsel, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Executive which such legal counsel believes has a high probability of
success or other controlling precedent or substantial authority, determine that
an Overpayment has been made, any such Overpayment paid or distributed by the
Company to or for the benefit of the Executive shall be treated for all purposes
as a loan to the Executive which the Executive shall repay to the Company
together with interest at the applicable federal rate provided for in Code
Section 7872(f)(2); provided, however, that no amount shall be payable by the
Executive to the Company if and to the extent such payment would not reduce the
amount which is subject to the excise tax under Code Section 4999. If the
Executive's legal counsel, based upon controlling precedent or other substantial
authority, determines that an Underpayment has occurred, any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive
together with interest at the applicable federal rate provided for in Code
Section 7872(f)(2). References to Code sections in this Agreement are deemed to
include any successor or replacement provisions.

      13. CONFIDENTIALITY OBLIGATIONS; NONCOMPETITION; NONSOLICITATION;
NONDISPARAGEMENT.

      (a) Confidentiality. The Executive shall not, at any time during the
Contract Term or thereafter, make use of or disclose, directly or indirectly,
any (i) Works (as defined in Section 13(e) below), (ii) trade secret or other
confidential or secret information of the Company or of any of its affiliates or
subsidiaries or (iii) other technical, business, marketing, proprietary,
financial, policyholder, pricing or personnel information of the Company or of
any of its affiliates or subsidiaries not intended to be available to the public
generally or to the competitors of the Company or to the competitors of any of
its affiliates or subsidiaries ("Confidential Information"), except to the
extent that such Confidential Information (a) becomes a matter of public record
or is published in a newspaper, magazine or other periodical or on electronic or
other media available to the general public, other than as a result of any act
or omission of the Executive, (b) is required to be disclosed by any law,
regulation or order of any court or regulatory commission, department or agency,
provided that the Executive gives prompt notice of such requirement to the
Company to enable the Company to seek an appropriate protective order, or (c) is
required to be used or disclosed by the Executive to perform properly the
Executive's duties under this Agreement. The Confidential Information is solely
the property of the Company. Promptly following the termination of the Contract
Term, the Executive shall surrender and return to the Company all Confidential
Information and other property of the

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Company and its affiliates and subsidiaries and all information relating to the
actual and prospective policyholders of the Company and its affiliates and
subsidiaries that the Executive may then possess or have under the Executive's
control (together with all copies thereof), including but not limited to
records, memoranda, notes, plans, reports, computer tapes and software and other
documents and data which constitute Confidential Information.

      (b) Noncompetition. Executive acknowledges that in the course of the
Executive's employment with the Company, the Executive has and will become
familiar with trade secrets and other confidential information concerning the
Company and its affiliates and subsidiaries and has established and will
establish substantial relationships with certain policyholders, agents,
reinsurers and other key business partners of the Company and its affiliates and
subsidiaries. The Executive further acknowledges that the Executive's services
will be of special, unique and extraordinary value to the Company and its
affiliates and subsidiaries. The Executive agrees that during the period of the
Executive's employment with the Company, and for a period thereafter of 24
months (the "Noncompetition Period"), the Executive shall not in any manner,
directly or indirectly, through any person, firm or corporation, alone or as a
member of a partnership or as an officer, director, stockholder, investor or
employee of or consultant to any other corporation or enterprise or otherwise,
engage or be engaged, or assist any other person, firm, corporation or
enterprise in engaging or being engaged, in an insurance underwriting or agency
business activity that is competitive with the business of the Company or its
affiliates or subsidiaries, or in any other business being conducted by the
Company or any of its subsidiaries as of the termination of the Executive's
employment in which the Executive was involved during the Executive's
employment, in any geographic area in which the Company or any of its affiliates
or subsidiaries is then conducting such business. Nothing in this Section 13
shall prohibit the Executive from being (i) a stockholder in a mutual fund or a
diversified investment company or (ii) an owner of not more than two percent
(2%) of the outstanding stock of any class of a corporation, any securities of
which are publicly traded so long as the Executive has no active participation
in the business of such corporation.

      (c) Nonsolicitation. The Executive further agrees that during the
Noncompetition Period, the Executive shall not (i) in any manner, directly or
indirectly, induce or attempt to induce any employee or consultant of the
Company or any of its affiliates or subsidiaries to terminate or abandon his or
her employment or services for any purpose whatsoever or (ii) in connection with
any business to which Section 13(b) applies, call on, service, solicit or
otherwise do business with any policyholder (determined as of the effective date
of the termination of Executive's employment) of the Company or any of its
affiliates or subsidiaries.

      (d) Nondisparagement. Except as otherwise required by applicable law, the
Executive agrees not to make, or cause to be made, any oral or written
statement, or take any other action, which disparages, criticizes, damages the
reputation of, or is hostile to, the Company or its administration, employees,
management, officers, shareholders, agents and/or directors. In the event that
the Executive violates this provision, including making statements to the media,
it will be considered a material breach hereof.

      (e) Definition of Works. As used in this Agreement, "Works" means (i) any
inventions, trade secrets, ideas, know-how, developments, designs or original
works of authorship, whether or not legally protectable, that the Executive at
any time has or will have

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conceived, created, developed, discovered, made or acquired in whole or in part
during or pursuant to the course of the Executive's employment relationship with
the Company or any of its affiliates, whether such employment relationship was
prior to, during or after the Contract Term (such period being the "Relationship
Period"), or that in any way relate to the Company or its businesses or the
Company's actual or demonstrably anticipated research or development, (ii) any
inventions, trade secrets, ideas or original works of authorship that the
Executive at any time has or will have conceived, created, developed, discovered
or made in whole or in part during or after the Executive's employment with the
Company or its affiliates and that are made through the use of any of the
Company's Confidential Information, equipment, facilities, materials, supplies,
trade secrets or time, or that result from any work performed for the Company or
its affiliates and (iii) any part or aspect of any of the foregoing.

      (f) Remedies. The Executive acknowledges that the provisions contained in
Section 13 are reasonable and necessary because of the substantial harm that
could be caused to the Company or its affiliates and subsidiaries by the
Executive engaging in any of the prohibited or restricted activities contained
in such Section. The Executive represents and warrants that the prohibitions and
restrictions contained in Section 13 will not impair the Executive's ability to
earn a livelihood because the Executive has the ability and experience to engage
in employment that will not breach or violate the prohibitions and restrictions
contained in such Sections. The parties hereto agree that the Company and its
affiliates and subsidiaries would be damaged irreparably in the event that any
provision of Section 13 of this Agreement were not performed in accordance with
its terms or were otherwise breached and that money damages would be an
inadequate remedy for any such nonperformance or breach. Accordingly, the
Company and its successors and permitted assigns shall be entitled, in addition
to other rights and remedies existing in their favor, to an injunction or
injunctions to prevent any breach or threatened breach of any of such provisions
and to enforce such provisions specifically (without posting a bond or other
security). The Executive and the Company agree that in the event any of the
prohibitions or restrictions set forth in Section 13 of this Agreement are found
by a court of final and competent jurisdiction to be unreasonable and
accordingly unenforceable, it is the purpose and intent of the parties that any
prohibitions or restrictions be deemed modified or limited so that, as modified
or limited, such prohibitions or restrictions may be enforced to the fullest
extent permitted by law.

      14. SETTLEMENT OF CONTROVERSY AND EXPENSES.

      (a) Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Oakland County,
Michigan, in accordance with the Arbitration Rules of the American Arbitration
Association then in effect. The parties will choose the arbitrator, who will not
have jurisdiction or authority to change, add to or subtract from any of the
provisions of this Agreement. The arbitration decision shall be final and
binding and judgment may be entered on the arbitrator's award in any court
having jurisdiction. If the parties cannot decide on an arbitrator, the American
Arbitration Association shall empanel three arbitrators, as it shall select in
accordance with its then applicable rules, who shall hear the controversy and
decide all issues (including the allocation of fees and costs) by majority vote.

      (b) Notwithstanding subsection (a) above, either party hereto shall have
the right to petition any state or federal court having jurisdiction, to provide
equitable relief to enjoin or

                                       12
<PAGE>

prohibit ongoing and irreparable injury to the petitioning party due to any
violation of this Agreement.

      15. SUCCESSORS; BINDING AGREEMENT

      (a) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the Company's business and/or assets, by written agreement in a form
satisfactory to the Executive, to agree to perform this Agreement in the same
manner that the Company would be required to perform this Agreement if no such
succession had taken place. As used in this Agreement, "the Company" shall
include any successor to its business and/or assets as aforesaid, which
successor executes and delivers the agreement provided for in this section or
which otherwise becomes bound by this Agreement's terms by operation of law.

      (b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

      16. NOTICES. Any notices to be given under this Agreement by a party to
the other may be effected either by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the following addresses, but each
party may change his address by written notice in accordance with this section.
Notices delivered personally shall be deemed communicated as of actual receipt;
notices mailed by certified or registered mail shall be deemed communicated as
of actual receipt; notices mailed first class shall be deemed communicated as of
5 days after mailing:

      To the Company:            28819 Franklin Road, Suite 300
                                 Southfield, MI 48034
                                 Attn: John H. Berry
                                       Chief Financial Officer

      To the Executive:          B. Matthew Petcoff

                                 __________________
                                 __________________

      17. ENTIRE AGREEMENT. This Agreement supersedes all other agreements,
either oral or in writing, between the parties with respect to the Company's
employment of the Executive. It contains all of the agreements between the
parties with respect to this employment. No modification of this Agreement shall
be enforceable unless it is in writing signed by both parties. This Agreement is
not assignable by the Executive.

      18. GOVERNING LAW. This Agreement and the rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the State of
Michigan without regard to any of its conflicts of law principles.

                                       13
<PAGE>

      19. OPPORTUNITY FOR REVIEW. The Executive acknowledges that he has had an
opportunity to consult with counsel separate from that of Company's prior to
execution of this Agreement.

      20. PARTIAL INVALIDITY. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.

      IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first written above.

                                 "Company"

                                 NORTH POINTE HOLDINGS CORPORATION,
                                 a Michigan corporation

                                 By: /s/ John H. Berry
                                     -----------------------------------
                                     John H. Berry
                                 Its: Chief Financial Officer

                                 "Executive"

                                 /s/ B. Matthew Petcoff
                                 ---------------------------------------
                                 B. MATTHEW PETCOFF

                                       14exv4w1

 

Exhibit 4.1

 

SERVICE CORPORATION INTERNATIONAL

as Issuer

and

THE BANK OF NEW YORK

as Trustee

$300,000,000

SERIES A AND SERIES B

7% SENIOR NOTES DUE 2017

SECOND

SUPPLEMENTAL

INDENTURE

Dated as of June 15, 2005

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE I ESTABLISHMENT OF NEW SERIES	 	 	2	 
	Section 1.01
	 	Establishment of New Series	 	 	2	 
	 
	ARTICLE II DEFINITIONS AND INCORPORATION BY REFERENCE	 	 	4	 
	Section 2.01
	 	Definitions	 	 	4	 
	Section 2.02
	 	Other Definitions	 	 	8	 
	 
	ARTICLE III THE NOTES	 	 	8	 
	Section 3.01
	 	Form	 	 	8	 
	Section 3.02
	 	Transfer of Transfer Restricted Securities	 	 	9	 
	 
	ARTICLE IV REDEMPTION	 	 	10	 
	Section 4.01
	 	Optional Redemption	 	 	10	 
	Section 4.02
	 	Mandatory Redemption	 	 	11	 
	 
	ARTICLE V AMENDMENT OF ORIGINAL INDENTURE	 	 	11	 
	Section 5.01
	 	Amendment of Article One of Original Indenture	 	 	11	 
	Section 5.02
	 	Amendment of Article Three of Original Indenture	 	 	11	 
	Section 5.03
	 	Amendment of Article Four of Original Indenture	 	 	14	 
	Section 5.04
	 	Amendments of Article Five of Original Indenture	 	 	15	 
	Section 5.05
	 	Amendment of Article Eleven of Original Indenture	 	 	17	 
	 
	ARTICLE VI MISCELLANEOUS	 	 	18	 
	Section 6.01
	 	Integral Part	 	 	18	 
	Section 6.02
	 	Additional Interest	 	 	18	 
	Section 6.03
	 	Adoption, Ratification and Confirmation	 	 	18	 
	Section 6.04
	 	Counterparts	 	 	19	 
	Section 6.05
	 	Governing Law	 	 	19	 
	Section 6.06
	 	Trustee Makes No Representation	 	 	19	 
	 
	 	 	 	 	 	 
	EXHIBIT A: Form of Note	 	 	 	 

-i-

 

 

Exhibit A

     SECOND SUPPLEMENTAL INDENTURE dated as of June 15, 2005 (this “Supplemental Indenture”)
between Service Corporation International, a Texas corporation (the “Issuer”), and The Bank of New
York, a New York banking corporation, as trustee (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Issuer has heretofore entered into a Senior Indenture, dated as of February 1,
1993 (the “Original Indenture”), with the Trustee, and a First Supplemental Indenture, dated as of
April 14, 2004, with the Trustee (the “First 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 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 7% Senior Notes due 2017 (the “Notes”). The
Notes shall be issued as either Series A Notes or Series B Notes, and any Notes may have
such additional designation.

     (b) There are to be authenticated and delivered the aggregate maximum principal amount
of $300,000,000 of the Series A Notes (except for Notes authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to
Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Original Indenture or this Section and Sections
3.01 and 3.02 of this Supplemental Indenture). Further, from time to time after the
original issue date, Series B Notes may be authenticated and delivered in a principal amount
equal to the

 

 

principal amount of the Series A Notes exchanged therefor either pursuant to the
Exchange Offer or otherwise in accordance with Section 3.02 hereof.

     (c) The Notes shall be issued initially in the form of one or more Global Securities in
substantially the form set out in Exhibit A hereto. The Depositary with respect to the
Notes shall be The Depository Trust Company.

     (d) Each Note shall be dated the date of authentication thereof and shall bear interest
as provided in the form of Note in Exhibit A hereto. The date on which principal is payable
on the Notes shall be as provided in the form of Note in Exhibit A hereto.

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

     (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 AND INCORPORATION BY REFERENCE

     Section 2.01 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 the Registration Rights Agreement.

     “Adjusted Consolidated Net Tangible Assets” means, at the time of determination, the aggregate
amount of total assets included in the Issuer’s most recent quarterly or annual consolidated
balance sheet prepared in accordance with generally accepted accounting principles, net of
applicable reserves reflected in such balance sheet, after deducting the following amounts
reflected in such balance sheet: (a) goodwill; (b) deferred charges and other assets; (c) preneed
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).

     “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

2

 

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” means (a) in the case of a corporation, corporate stock; (b) in the case of a
partnership or limited liability company, partnership or membership interests (whether general or
limited); and (c) any other interest or participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of assets of, the issuing Person.

     “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.

     “Exchange Offer” means the offer by the Issuer to the Holders of all outstanding Transfer
Restricted Securities to exchange all such outstanding Transfer Restricted Securities held by such
Holders for Series B Notes, in an aggregate principal amount equal to the aggregate principal
amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders.

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

     “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.

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

     “Perpetual Care Trust” means a trust established to provide perpetual care or maintenance for
any cemetery, mausoleum or columbarium.

     “Pre-Need Trust” means a trust established to hold funds related to the purchase of funeral or
cemetery goods or services on a pre-need basis.

     “Registration Rights Agreement” means the Registration Rights Agreement among the Issuer and
the Initial Purchasers dated June 10, 2005 relating to the Series A Notes to be issued, as such
agreement may be amended or modified from time to time.

     “Resale Restriction Termination Date” means the date which is two years after the later of the
original issue date of a Note and the last date on which the Issuer or any of its Affiliates was
the owner of such Note (or any predecessor thereof) or, in the case of Notes sold under Regulation
S, until 40 days after the later of the commencement of the offering of the Series A Notes and such
original issue date.

3

 

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

     “Series A Notes” means the Issuer’s 7% Series A Senior Notes due 2017 to be issued pursuant to
this Supplemental Indenture.

     “Series B Notes” means the Issuer’s 7% Series B Senior Notes due 2017 to be issued pursuant to
the Exchange Offer, or in another transaction pursuant to Section 3.02 hereof.

     “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 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

     “Transfer Restricted Securities” means any Notes outstanding prior to the Resale Restriction
Termination Date with respect to such Notes and which must bear the legend required under Section
3.02 hereof.

     Section 2.02 Other Definitions.

	 	 	 	 	 
	Defined Term	 	in Section
	“IAIs”

	 	 	3.01	 
	“QIBs”

	 	 	3.01	 
	“Regulation S”

	 	 	3.01	 
	“Rule 144A”

	 	 	3.01	 
	“U.S. Persons”

	 	 	3.01	 

ARTICLE III

THE NOTES

     Section 3.01 Form. The Notes shall be issued initially in the form of one or more
Global Securities as Series A Notes, and the Series A Notes and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Supplemental Indenture, and the Issuer and the Trustee, by
their execution and

4

 

delivery of this Supplemental Indenture, expressly agree to such terms and provisions and to
be bound thereby. The Notes shall be dated the date of their authentication. The Series A Notes
constituting Transfer Restricted Securities will be resold initially only to (a) Qualified
Institutional Buyers (as such term is defined in Section 144A of the Securities Act) (“QIBs”) in
reliance on Rule 144A of the Securities Act (“Rule 144A”) and (b) Persons other than U.S. Persons
(as defined under Regulation S under the Securities Act (“Regulation S”)) (“U.S. Persons”) in
reliance on Regulation S. Thereafter, the Series A Notes may be transferred to, among others,
QIBs, purchasers in reliance upon Regulation S and institutional “accredited investors” (as defined
in subparagraph (a)(1), (2), (3) or (7) of Rule 501 of the Securities Act (“IAIs”)) in accordance
with the procedures set forth in Rule 501 of the Securities Act. Pursuant to the terms of the
Registration Rights Agreement, upon consummation of the Exchange Offer contemplated thereby, the
Series A Notes constituting Transfer Restricted Securities will be exchanged by the Holders for
Series B Notes to be issued by the Issuer in accordance with Section 3.02 hereof. The Series B
Notes shall be issued initially in the form of one or more Global Securities, and the Series B
Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit
A hereto, but without the first paragraph of the legend appearing on the face thereof.

     Section 3.02 Transfer of Transfer Restricted Securities. Every Note that is a
Transfer Restricted Security shall be subject to the restrictions on transfer provided in the
legend appearing on the face thereof; provided that the restrictions imposed by the legend upon the
transferability of any Note shall cease and terminate when such Note has been sold pursuant to an
effective registration statement under the Securities Act or transferred in compliance with Rule
144 under the Securities Act (or any successor provision thereto) or, if earlier, upon the Resale
Restriction Termination Date . Any Note as to which such restrictions on transfer shall have
expired in accordance with their terms or shall have terminated may, upon a surrender of such Note
for exchange to the Registrar, be exchanged for a new Note, of like tenor and aggregate principal
amount, which shall not bear the restrictive legend. The Issuer shall inform the Trustee of the
effective date of any registration statement registering the Notes under the Securities Act.

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 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.

5

 

     Section 4.02 Mandatory Redemption. The Issuer shall not be required to make mandatory
redemption or sinking fund payments with respect to the Notes and shall have no obligation to
repurchase any Notes at the option of the Holders.

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.”

     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, whether owned on March 31, 2005, or thereafter acquired,
without effectively 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 March 31, 2005 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 March 31, 2005, as
security for purchase money obligations incurred by it in connection with the
acquisition of

6

 

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
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

7

 

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.

     (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”

8

 

     (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 and the Optional
Redemption Premium, if any, due thereon and the interest, if any, accrued
thereon to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable.”

     Section 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

MISCELLANEOUS

     Section 6.01 Integral Part. This Supplemental Indenture constitutes an integral part
of the Indenture.

     Section 6.02 Additional Interest. In relation to the Notes, all references to
“interest” in the Original Indenture and in the Notes shall be deemed to include Additional
Interest, if any, unless the context otherwise requires.

     Section 6.03 Adoption, Ratification and Confirmation. The Original Indenture, as
supplemented and amended by this Supplemental Indenture, is in all respects hereby adopted,
ratified and confirmed.

9

 

     Section 6.04 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.

     Section 6.05 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 6.06 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]

10

 

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

	 	 	 	 	 
	 	ISSUER:
	 
	 	 	 	 
	 	SERVICE CORPORATION INTERNATIONAL
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jeffrey E. Curtiss                        
	 

	 	 	 	Jeffrey E. Curtiss
	 

	 	 	 	Senior Vice President, Chief
	 

	 	 	 	Financial Officer and Treasurer
	 
	 	 	 	 
	 	TRUSTEE:
	 
	 	 	 	 
	 	THE BANK OF NEW YORK, as Trustee
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Van K. Brown                             
	 

	 	 	 	Name:  Van K. Brown
	 

	 	 	 	Title:    Vice
President

11

 

Exhibit A

[FACE OF SECURITY]

     [THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE 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 UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”)), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION OR (C) IT IS AN INSTITUTIONAL ACCREDITED INVESTOR (WITHIN THE MEANING OF RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN “INSTITUTIONAL ACCREDITED INVESTOR”) AND
(2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE PRIOR TO THE DATE WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY OF
ITS AFFILIATES WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) OR IN THE CASE OF NOTES
SOLD UNDER REGULATION S, UNTIL 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING OF THE
NOTES AND SUCH ORIGINAL ISSUE DATE, ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, INSIDE THE UNITED STATES, TO A PERSON IT REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER 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) OUTSIDE THE UNITED STATES PURSUANT TO OFFERS AND SALES TO NON-U. S.
PERSONS IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
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 (I) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II)
IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE OTHER SIDE OF THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. AS USED
HEREIN, THE TERMS “UNITED STATES,” “OFFSHORE TRANSACTION” AND “U.S.

A-1

 

Exhibit A

PERSON” HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.]1

     [UNLESS AND UNTIL THIS GLOBAL SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR THE NOTES IN
DEFINITIVE REGISTERED FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY (AS DEFINED IN THE INDENTURE) TO THE 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.]2

     [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER (AS DEFINED BELOW) 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.]3

	 	 	 
	No.                     

	 	U.S. $                                        
	CUSIP                                         
	 	 

SERVICE CORPORATION INTERNATIONAL

7% Series [A][B] Senior Notes due 2017

     SERVICE CORPORATION INTERNATIONAL, a Texas corporation (the “Issuer”), for value received,
hereby promises to pay to ___or registered assigns, at the office or agency of the
Issuer, the principal sum of $___U.S. dollars [or such greater or lesser amount as is
indicated on the Schedule of Transfers and Exchanges of Interests in the Global Security attached
hereto]4 on June 15, 2017 in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private debts, and to pay
interest

 

	1	 	To be included on Transfer Restricted Securities
only.
	 
	2	 	To be included only if the Note is issued in
global form.
	 
	3	 	To be included only if the Note is issued in
global form.
	 
	4	 	To be included only if the Note is issued in
global form.

A-2

 

Exhibit A

at an annual rate of 7.0% payable on June 15 and December 15 in each year, to the person or
persons in whose name the Note is registered at the close of business on the record date for such
interest which shall be the preceding June 1 or December 1 (whether or not such record date is a
Business Day (as defined in the Indenture)), respectively, commencing December 15, 2005, with
interest payable on December 15, 2005 consisting of interest accrued from June 15, 2005.

     Reference is made to the further provisions of this Note set forth on the reverse hereof.
Such further provisions shall for all purposes have the same effect as though fully set forth at
this place.

     The statements set forth in the legend set forth above are an integral part of the terms of
this Note and by acceptance hereof the Holder of this Note agrees to be subject to, and bound by,
the terms and provisions set forth in each such legend, if any.

     This Note is issued in respect of an issue of an aggregate of U.S. $300,000,000 principal
amount of 7% Senior Notes due 2017 of the Issuer and is governed by the Senior Indenture dated as
of February 1, 1993 (the “Original Indenture”), duly executed and delivered by the Issuer to The
Bank of New York, as Trustee, as supplemented by the Second Supplemental Indenture dated as of June
15, 2005 (the “Second Supplemental Indenture” and, together with the Original Indenture as
supplemented by the Second Supplemental Indenture, the “Indenture”). The terms of the Indenture
are incorporated herein by reference. This Note shall in all respects be entitled to the same
benefits as definitive Notes under the Indenture.

     If and to the extent that any provision of the Indenture limits, qualifies, or conflicts with
any other provision of the Indenture which is required to be included in the Indenture by any of
Sections 310 to 317, inclusive, or is deemed applicable to the Indenture by virtue of the
provisions, of the Trust Indenture Act of 1939, as amended, such required provision shall control.

     The Issuer hereby irrevocably undertakes to the Holder hereof to exchange this Note in
accordance with the terms of the Indenture without charge.

     This Note shall not be valid or become obligatory for any purpose until the Certificate of
Authentication hereon shall have been mutually signed by the Trustee under the Indenture.

A-3

 

Exhibit A

     IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its
corporate seal.

	 	 	 	 	 	 	 
	 	 	 	 	SERVICE CORPORATION INTERNATIONAL
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	                                                            
	 

	 	 	 	 	 	Name:

Title:
	Corporate Seal	 	 	 	 
	 
	 	 	 	 	 	 
	Attest:	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	                                                            	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

CERTIFICATE OF AUTHENTICATION

     This is one of the Notes of the series designated herein referred to in the within-mentioned
Indenture.

	 	 	 	 	 
	Dated: ___, 2005
	 	 	 	 
	 	 	THE BANK OF NEW YORK, as Trustee
	 
	 	 	 	 
	 

	 	By:
	 	                                                            
	 

	 	 	 	Authorized Signatory

A-4

 

Exhibit A

[REVERSE SIDE OF SECURITY]

SERVICE CORPORATION INTERNATIONAL

7% Series [A][B] Senior Notes due 2017

     This Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of
indebtedness of the Issuer (the “Securities”) of the series hereinafter specified, all issued or to
be issued under and pursuant to the Indenture, to which Indenture reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Issuer and the Holders of the Securities. The Securities may be issued in one or
more series, which different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may be subject to
different sinking, purchase or analogous funds (if any) and may otherwise vary as provided in the
Indenture. This Note is one of a series designated as the 7% Senior Notes due 2017 of the Issuer,
limited in aggregate principal amount to $300,000,000.

     If an Event of Default with respect to the Notes then Outstanding occurs and is continuing,
then and in each and every such case, unless the principal of all the Notes shall have already
become due and payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Notes then Outstanding, by notice in writing to the Issuer (and to the
Trustee if given by Holders), may declare the unpaid principal amount of all the Notes 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. Notwithstanding the preceding sentence, however, if at any time after
the unpaid principal amount of the Notes shall have been so declared due and payable and before any
judgment or decree for the payment of the moneys due shall have been obtained or entered as
provided in the Indenture, the Issuer shall pay or shall deposit with the Trustee a sum sufficient
to pay all matured installments of interest, if any, upon all of the Notes and the principal of any
and all the Notes with shall have become due otherwise than by acceleration and the reasonable
compensation, disbursements, expenses and advances of the Trustee, and any and all defaults under
the Indenture, other than the nonpayment of such portion of the principal amount of and accrued
interest, if any, on the Notes which shall become due by acceleration, shall have been cured or
shall have been waived or provision deemed by the Trustee to be adequate shall have been made
therefor – then in every such case the Holders of a majority in aggregate principal amount of the
Notes then Outstanding, by written notice to the Issuer and to the Trustee, may rescind and annul
such declaration and its consequences; but no such recession and annulment shall extend to or shall
affect any subsequent default, or shall impair any right consequent thereon.

     It is also provided in the Indenture that, with respect to certain defaults or Events of
Default regarding the Securities of any series, the Holders of 66-2/3% in aggregate principal
amount then Outstanding of the Securities of such series may on behalf of the Holders of all the
Securities of such series waive any such past default or Event of Default and its consequences.
The preceding sentence shall not, however, apply to a default in the payment of the principal of or
interest on any of the Securities of such series. Any such consent or waiver by the Holder of this
Note (unless revoked as

A-5

 

Exhibit A

provided in the Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Note and any Notes which may be issued in exchange or
substitution herefor, irrespective of whether or not any notation thereof is made upon this Note or
such other Notes.

     The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of
the Holders of not less than a majority in aggregate principal amount of the Securities at the time
Outstanding of any series affected, evidenced as provided in the Indenture, to execute supplemental
indentures adding any provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or modifying in any manner the rights of the
Holders of the Securities of each such series; provided, however, that no such supplemental
indenture shall (i) extend the final maturity of any Security, or reduce the principal amount
thereof or reduce the rate or extend the time of payment of any interest thereon, reduce or alter
the method of computation of any amount payable on redemption thereof, change the coin or currency
in which principal and interest are payable, or impair or affect the rights of any Holder to
institute suit for the payment thereof, without the consent of the Holder of each Security so
affected, or (ii) reduce the aforesaid percentage of Securities of any series, the Holders of which
are required to consent to any such supplemental indenture, without the consent of the Holder of
each Security affected.

     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.

     “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 Notes 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 Notes.

A-6

 

Exhibit A

     “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 Merrill Lynch, Pierce, Fenner & Smith Incorporated
(and its successors), J.P. Morgan Securities Inc. (and its successors) and any other nationally
recognized investment banking firm that is a primary U.S. government securities dealer specified
from time to time by the Issuer.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Issuer, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer as of 5:00 p.m., New York time,
on the third Business Day preceding the redemption date.

     No reference herein to the Indenture and no provision of this Note or the Indenture shall
alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note in the manner, at the respective times, at the rate and in
the coin or currency herein prescribed.

     The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the
registered Holder hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of
receiving payment of, or on account of, the principal hereof and subject to the provisions on the
face hereof, interest hereon, and for all other purposes, and neither the Issuer nor the Trustee
nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary.

     No recourse under or upon any obligation, covenant or agreement contained in the Indenture or
in any Security, or because of any indebtedness evidenced thereby, shall be had against any
incorporator, past, present or future stockholder, officer or director, as such of the Issuer or of
any successor, either directly or through the Issuer or of any successor, either directly or
through the Issuer or any successor, under any rule of law, statute or constitutional provision or
by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the Security by the Holder and
as part of the consideration for the issue of the Security.

     Interest shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days
each.

     This Note shall be construed in accordance with and governed by the laws of the State of
Texas.

A-7

 

Exhibit A

     Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Indenture.

A-8

 

Exhibit A

SCHEDULE OF TRANSFERS AND EXCHANGES OF INTERESTS

IN THE GLOBAL SECURITY5

     The following exchanges of a part of this Global Security for an interest in another Global
Security, or exchanges of a part of another Global Security for an interest in this Global
Security, have been made:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Principal Amount at	 	 
	 	 	 	 	 	 	Maturity	 	Signature of
	 	 	Amount of Decrease in	 	Amount of Increase in	 	of this Global Security	 	Authorized Officer
	 	 	Principal Amount	 	Principal Amount	 	Following such	 	of Trustee or
	Date of Exchange	 	of this Global Security	 	of this Global Security	 	Decrease (or Increase)	 	Custodian
	 

	 	 
	 	 
	 	 
	 	 

 

	5	 	To be included only if the Note is issued in
global form.

A-9

 

Exhibit A

ASSIGNMENT

     Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the
undersigned hereby sells, assigns and transfers unto

__________________________________________________________________________________________________________

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
______________________, attorney, to transfer said Note on the books kept for registration thereof,
with full power of substitution in the premises.

	 	 	 
	Dated:                                         

	 	                                                            */
	 
	 	 
	 

	 	[AFFIX MEDALLION SIGNATURE GUARANTEE]

	*/ 	NOTE: The signature to this assignment must correspond with the name of the registered
owner as it appears on the face of the within Note in every particular without alteration,
enlargement or any change whatsoever. Such signature must be guaranteed by an “eligible guarantor
institution” meeting the requirements of the Registrar, which requirements include membership or
participation in 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.

A-10

 

Exhibit A

CERTIFICATE OF TRANSFER TO BE DELIVERED UPON REGISTRATION OF

TRANSFER OR EXCHANGE OF RESTRICTED NOTES6

	 	 	 	 	 
	To:	 	Service Corporation International
	 	 	1929 Allen Parkway
	 	 	Houston, Texas 77019
	 
	 	 	 	 
	 

	 	Re:
	 	7% Senior Notes due 2017 (CUSIP:___) (the “Notes”) of Service
Corporation International (the “Company”).

This certificate of transfer relates to $_________________ principal amount of Notes beneficially
owned by ____________________ (the “Transferor”) in (check applicable box):

     o
book-entry or   o certificated form

     The Transferor has requested a Registrar or the Trustee of the Notes to exchange or register
the transfer of such Notes.

     In connection with any transfer of any of the Notes prior to the Resale Restriction
Termination Date (as defined in the Indenture for the Notes), the undersigned registered owner of
this Security hereby certifies the Transferor is familiar with transfer restrictions relating to
the Notes, and with respect to
$________ principal amount of the above-captioned Notes
presented or surrendered on the date hereof (the “Surrendered Notes”) for registration of transfer
or exchange where the Notes deliverable upon such exchange or conversion are to be registered in a
name other than that of the undersigned registered owner (each such transaction being a
“transfer”), that such transfer complies with the restrictive legend set forth on the face of the
Surrendered Notes for the reason checked below:

	 	 	 
	o

	 	A transfer of the Surrendered Notes is made to the Company; or
	 
	 	 
	o

	 	The transfer of the Surrendered Notes is pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the “Securities Act”); or
	 
	 	 
	o

	 	The transfer of the Surrendered Notes complies with Rule 144A under the
Securities Act and is to a person whom the Transferor reasonably believes is a
Qualified Institutional Buyer (as defined in Rule 144A) purchasing for its own account
or the account of a Qualified Institutional Buyer and to whom notice has been given
that such transfer of the Surrendered Notes is being made in reliance on Rule 144A; or

 

	6	 	 This certificate should only be
included if this Security is a Restricted Security.

A-20

 

Exhibit A

	 	 	 
	o

	 	The transfer of the Surrendered Notes is to an institutional Accredited
Investor within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
Act and the Transferor further certifies that the transfer complies with the
applicable transfer restrictions and the requirements of the exemptions claimed, which
certification is supported by a certificate executed by the transferee in the form
approved by the Issuer (which may be obtained from the Trustee); or
	 
	o

	 	The transfer of the Surrendered Notes is to a non-U.S. Person in an offshore
transaction in accordance with Regulation S under the Securities Act;

and, in each case, that such transfer complies with all applicable securities laws of the States
and the United States. Unless the box below is checked, the undersigned confirms that, to the
undersigned’s knowledge, such Notes are not being transferred to an “affiliate” of the Company as
defined in Rule 144 under the Securities Act (an “Affiliate”).

	 	 	 
	o

	 	The transferee is an Affiliate of the Company.
	 

	 	Date:                                         

                                                            

Signature(s)

                      (If the registered owner is a corporation, partnership or fiduciary, the title of the Person
signing on behalf of such registered owner must be stated.)

	 	 	 
	 

	 	Signature Guaranteed
	 
	 	 
	 

	 	                                                                                
	 

	 	Participant in a Recognized Signature
	 

	 	Guarantee Medallion Program
	 
	 	 
	 

	 	By:                                                             
	 

	 	          Authorized Signatory

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