Document:

EXHIBIT
10.9

 

SILICON
GRAPHICS, INC.

 

AMENDED
AND RESTATED

1998
EMPLOYEE STOCK PURCHASE PLAN

(as of February 1,
2005)

 

The following constitutes
the provisions of the Employee Stock Purchase Plan (herein called the “Plan”)
of Silicon Graphics, Inc.

 

1.             Purpose. 
The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the
Company through payroll deductions.  It
is the intention of the Company that the Plan qualify as an “Employee Stock
Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as
amended.  The provisions of the Plan
shall, accordingly, be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.

 

2.             Definitions.

 

(a)           “Board” means the Board of Directors
of the Company or, to the extent authorized by the Board, a committee of the
Board.

 

(b)           “Code” means the Internal Revenue
Code of 1986, as amended.

 

(c)           “Common Stock” means the Common
Stock, $0.001 par value, of the Company.

 

(d)           “Company” means Silicon Graphics,
Inc. and Designated Subsidiaries of the Company.

 

(e)           “Compensation” means base pay, plus
any amounts attributable to overtime, shift premium, incentive compensation,
bonuses and commissions (exclusive of “spot bonuses” and any other such item
specifically directed for all Employees by the Board or its committee).

 

(f)            “Designated Subsidiaries” means the
Subsidiaries which have been designated by the Board from time to time in its
sole discretion as eligible to participate in the Plan.

 

(g)           “Employee” means any individual who
is an Employee of the Company for tax purposes whose customary employment with
the Company is at least twenty (20) hours per week and more than five (5)
months in a calendar year.  For purposes
of the Plan, the employment relationship will be treated as continuing intact
while the individual is on sick leave or other leave of absence approved in
writing by the Company.  Where the period
of leave (other than a personal leave of absence) exceeds 90 days and the
individual’s right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.  In the case of a
personal leave of absence, the employment relationship shall be deemed to have
terminated on the commencement date.

 

(h)           “Enrollment Date” means the first
Trading Day of each Offering Period.

 

(i)            “Exercise Date” means the last
Trading Day of each Offering Period.

 

(j)            “Fair Market Value” means, as of any
date, the value of the Common Stock determined by the Board based on such
factors as the Board determines relevant, provided

 

 

however, that if there is
a public market for the Common Stock the fair market value will be determined
as follows:

 

(1)           If the Common Stock is listed on any
established stock exchange or a national market system, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day on or prior to the date of such determination, as reported in The Wall Street Journal or such other source as the Board
deems reliable; or

 

(2)           If the Common Stock is regularly
quoted by a recognized securities dealer but selling prices are not reported,
its Fair Market Value shall be the mean of the closing bid and asked prices for
the Common Stock on or prior to the date of such determination, as reported in The Wall Street Journal or such other source as the Board
deems reliable.

 

(k)           “Maximum Amount” means, subject to
applicable law, the maximum number of shares of Common Stock that a participant
may purchase on any given Exercise Date or the maximum contribution amounts, as
determined by the Board or its committee in its sole discretion.

 

(l)            “Offering Period” means the
approximately six-month period commencing after one Exercise Date and ending
with the next Exercise Date.  The
duration and timing of Offering Periods may be changed pursuant to Sections 4
and 19 of this Plan.

 

(m)          “Plan” means this 1998 Employee Stock
Purchase Plan, as amended.

 

(n)           “Purchase Price” means 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower; provided  however, that the Purchase Price may be adjusted by the
Board pursuant to Section 19.

 

(o)           “Reserves” means the number of shares
of Common Stock covered by each option under the Plan that has not yet been
exercised and the number of shares of Common Stock that have been authorized
for issuance under the Plan but not yet placed under option.

 

(p)           “Subsidiary” means any corporation,
domestic or foreign, in which the Company or a Subsidiary owns, directly or
indirectly, 50% or more of the voting shares, whether or not such corporation
now exists or is hereafter organized or acquired by the Company or a
Subsidiary.

 

(q)           “Trading Day” means a day on which
national stock exchanges and the Nasdaq System are open for trading.

 

3.             Eligibility.

 

(a)           General Rule.  Any Employee who is employed by the Company
on a given Enrollment Date shall be eligible to participate in the Plan,
subject to the requirements of Section 5(a) and the limitations imposed by
Section 423(b) of the Code.

 

(b)           Exceptions.  Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan if
(i) immediately after the grant, such Employee (or any other person whose
stock ownership would be attributed to such Employee pursuant to Section 424(d)
of the Code) would own capital stock and/or hold outstanding options to
purchase shares possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) the rate of withholding under such option would
permit the employee’s rights to purchase shares under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and its

 

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subsidiaries to accrue (i.e., become exercisable) at a rate which exceeds
Twenty-Five Thousand Dollars ($25,000) of fair market value of such shares
(determined at the time such option is granted) for each calendar year in which
such option is outstanding at any time.

 

(c)           Highly Compensated Employees.  The Board may determine that a designated
group of highly compensated Employees are ineligible to participate in the Plan
so long as the excluded category fits within the definition of “highly
compensated employee” in Section 414(q) of the Code.

 

4.             Offering Periods. 
The Plan shall be implemented by consecutive Offering Periods with a new
Offering Period commencing on the first Trading Day on or after February 1
and August 1 each year, or on such other date as the Board shall
determine, and continuing thereafter until terminated in accordance with
Section 19.  The Board shall have the
power to change the duration of Offering Periods (including the commencement
dates thereof) with respect to future offerings without stockholder approval,
if such change is announced at least five (5) days prior to the scheduled
beginning of the first Offering Period to be affected thereafter or at any time
as provided in Section 19.

 

5.             Participation.

 

(a)           An eligible Employee may become a
participant in the Plan by completing a subscription agreement authorizing
payroll deductions in the form provided by the Company and filing it with the
Company prior to the applicable Enrollment Date, unless a later time for filing
the subscription agreement is set for all eligible Employees with respect to
such Offering Period.  Unless otherwise
determined by the Board, an eligible Employee may participate in only one
Offering Period at a time.

 

(b)           Payroll deductions for a participant
shall commence with the first payroll following the Enrollment Date (or as soon
as administratively feasible) and shall end on the last payroll in the Offering
Period to which such authorization is applicable, unless the participant
withdraws from the Plan as provided in Section 10.

 

6.             Payroll Deductions.

 

(a)           At the time a participant files his
or her subscription agreement, he or she shall elect to have payroll deductions
made on each payday during all subsequent Offering Periods at a rate not
exceeding ten percent (10%) nor less than one percent (1%), or such other rate
as may be determined from time to time by the Board, of the Compensation which
he or she would otherwise receive on such payday without regard to deferral
elections, provided that the aggregate of such payroll deductions during any
Offering Period shall not exceed ten percent (10%), or such other percentage as
may be determined from time to time by the Board, of the aggregate Compensation
which he or she would otherwise have received during said Offering Period.

 

(b)           All payroll deductions authorized by
a participant shall be credited to his or her account under the Plan and shall
be withheld in whole percentages only.  A
participant may not make any additional payments into such account.

 

(c)           A participant may discontinue his or
her participation in the Plan as provided in Section 10, or, subject to
paragraph (a), may change the rate of his or her payroll deductions during an
Offering Period by completing and filing with the Company a new authorization
for payroll deduction.  The Board may, in
its discretion, limit the number of participation rate changes in any Offering
Period.  A change in rate shall be
effective as soon as administratively feasible following the Company’s receipt
of the new authorization.  A participant’s
subscription agreement shall remain in effect for successive Offering Periods
unless the participant withdraws from the Plan as provided in Section 10.

 

3

 

(d)           Notwithstanding the foregoing, to the
extent necessary to comply with Section 423(b)(8) of the Code, Section 3(b) of
the Plan or the Board’s determination of the Maximum Amount, a participant’s
payroll deductions may be automatically decreased to zero percent (0%) at any
time during an Offering Period.  Payroll
deductions shall recommence at the rate provided in such participant’s
subscription agreement at the beginning of the first Offering Period when
allowed by such sections, unless the participant has withdrawn pursuant to
Section 10.

 

(e)           At the time the option is exercised,
in whole or in part, or at the time some or all of the Company’s Common Stock
issued under the Plan is disposed of, the participant must make adequate
provision for the Company’s federal, state or other tax withholding
obligations, if any, which arise on the exercise of the option or the
disposition of the common Stock.  At any
time the Company may, but shall not be obligated to, withhold from the
participant’s compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.

 

7.             Grant of Option.

 

(a)           On each Enrollment Date of each
Offering Period, each eligible Employee participating in such Offering Period
shall be granted an option to purchase on each Exercise Date during such
Offering Period (at the applicable Purchase Price) a number of full shares of
the Company’s Common Stock arrived at by dividing such Employee’s payroll
deductions to be accumulated prior to such Exercise Date and retained in the
Employee’s account as of the Exercise Date by the applicable Purchase Price;
provided that the maximum number of shares a participant may purchase during
each Offering Period shall be determined by (i) dividing $40,000 by the
Fair Market Value of a share of the Company’s Common Stock on the Enrollment
Date or (ii) if less, by the “Maximum Cap” set for such Offering Period; and provided
further that such purchase shall be subject to the limitations set forth
in Sections 3(b) and 12.  The “Maximum
Cap” for each Offering Period shall be the number of shares purchasable under
the Plan during that Offering Period with the maximum payroll deductions
permitted by Section 6(d) (including the Maximum Amount), based on the Fair
Market Value of the Common Stock at the beginning of the Offering Period.  The Board may, for future Offering Periods,
increase or decrease, in its absolute discretion, the maximum number of shares
of the Company’s Common Stock an Employee may purchase during each Offering
Period.  Exercise of the option shall
occur as provided in Section 8 of the Plan, unless the participant has
withdrawn pursuant to Section 10.  The
option shall expire on the last day of the Offering Period.

 

8.             Exercise of Option.

 

(a)           Unless a participant withdraws from
the Offering Period as provided in Section 10, his or her option for the
purchase of shares will be exercised automatically at each Exercise Date, and
the maximum number of full shares subject to option will be purchased at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account.  No fractional shares will be
purchased.  The shares purchased upon
exercise of an option hereunder shall be deemed to be transferred to the
participant on the Exercise Date.  During
his or her lifetime, a participant’s option to purchase shares hereunder is
exercisable only by the participant.

 

(b)           If the Board determines that, on a
given Exercise Date, the number of shares with respect to which options are to
be exercised may exceed (i) the number of shares of Common Stock that were
available for sale under the Plan on the Enrollment Date of the applicable
Offering Period, or (ii) the number of shares available for sale under the Plan
on such Exercise Date, the Board may in its sole discretion provide that the
Company shall make a pro rata allocation of the shares of Common Stock
available for purchase on such Enrollment Date or Exercise Date, as applicable,
in as uniform a manner as shall be practicable and as it shall

 

4

 

determine in its sole
discretion to be equitable among all participants exercising options to
purchase Common Stock on such Exercise Date, and (x) continue all Offering
Periods then in effect, or (y) terminate any or all Offering Periods then in
effect pursuant to Section 19.  The
Company may make pro rata allocation of the shares available on the Enrollment
Date of any applicable Offering Period pursuant to the preceding sentence,
notwithstanding any authorization of additional shares for issuance under the
Plan by the Company’s stockholders subsequent to such Enrollment Date.

 

9.             Delivery. 
As promptly as practicable after each Exercise Date on which a purchase
of shares occurs, the Company shall arrange for the shares purchased upon
exercise of his or her option to be electronically credited to the participant’s
designated brokerage account at one of the securities brokerage firms
participating in the Company’s direct deposit program from time to time.  Any cash remaining to the credit of a
participant’s account under the Plan after a purchase by him or her of shares
at the Exercise Date of each Offering Period which merely represents a
fractional share shall be credited to the participant’s account for the next
subsequent Offering Period; any additional cash shall be returned to said
participant.

 

10.           Withdrawal; Termination of
Employment.

 

(a)           A participant may withdraw all, but
not less than all, the payroll deductions credited to his or her account and
not yet used to exercise his or her option under the Plan at any time by giving
written notice to the Company on a form provided for such purpose.  All of the participant’s payroll deductions
credited to his or her account will be paid to the participant as soon as
practicable after receipt of the notice of withdrawal, his or her option for
the current Offering Period will be automatically canceled, and no further
payroll deductions for the purchase of shares will be made during such Offering
Period.  If a participant withdraws from
an Offering Period, payroll deductions will not resume at the beginning of the
succeeding Offering Period unless the participant delivers to the Company a new
subscription agreement.

 

(b)           Upon a participant’s ceasing to be an
Employee for any reason, including retirement or death, he or she will be
deemed to have elected to withdraw from the Plan and the payroll deductions
accumulated in his or her account during the Offering Period but not yet used
to exercise the option will be returned to him or her as soon as practicable
after such termination or, in the case of death, to the person or persons
entitled thereto under Section 14, and his or her option will be automatically
canceled.  The preceding sentence
notwithstanding, a participant who receives payment in lieu of notice of
termination of employment shall be treated as continuing to be an Employee for
the participant’s customary number of hours per week of employment during the
period in which the participant is subject to such payment in lieu of notice.

 

(c)           A participant’s withdrawal from an
Offering Period will not have any effect upon his or her eligibility to
participate in a succeeding Offering Period or in any similar plan which may
hereafter be adopted by the Company.

 

11.           Interest.  No interest shall accrue on the payroll
deductions of a participant in the Plan.

 

12.           Stock.

 

(a)           Subject to adjustment upon changes in
capitalization of the Company as provided in Section 18, the maximum number of
shares of the Company’s Common Stock which shall be reserved for sale under the
Plan after July 30, 2003 shall be 12,000,592 shares.  “Issued Shares” shall mean the number of
shares of Common Stock of the Company outstanding on such date plus any shares
reacquired by the Company during the fiscal year that ends on such date.  The shares to be sold to participants in the
Plan may be, at the election of the Company, either treasury shares or shares
authorized but unissued.  If the total
number of shares which would otherwise be subject to options granted pursuant
to Section 7(a) hereof on the Enrollment Date of

 

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an Offering Period
exceeds the number of shares then available under the Plan (after deduction of
all shares for which options have been exercised or are then outstanding), the
Company shall make a pro rata allocation of the shares remaining available for
option grant in as uniform and equitable a manner as is practicable.  In such event, the Company shall give written
notice of such reduction of the number of shares subject to the option to each
participant affected thereby and shall similarly reduce the rate of payroll
deductions if necessary and return any excess funds accumulated in each
participant’s account as soon as practicable after the affected Exercise Date
of such Offering Period.

 

(b)           The participant will have no interest
or voting rights in shares covered by his or her option until such option has
been exercised.

 

(c)           Shares to be delivered to a
participant under the Plan will be credited electronically to a brokerage
account in the name of the participant at one of the brokerage firms
participating from time to time in the Company’s direct deposit program.

 

13.           Administration.  (a) The Plan shall be administered by the
Board or a committee of members of the Board appointed by the Board.  The Board or its committee shall have full
and exclusive discretionary authority to construe, interpret and apply the
terms of the Plan, to determine eligibility and to adjudicate all disputed
claims filed under the Plan.  Every
finding, decision and determination made by the Board or its committee shall,
to the full extent permitted by law, be final and binding upon all parties.

 

(b)           Notwithstanding any provision to the
contrary in this Plan, the Board or its designee may adopt rules or procedures
relating to the operation and administration of the Plan to accommodate the
specific requirements of local laws and procedures.  In addition, the Board may also adopt rules,
procedures or sub-plans applicable to particular Designated Subsidiaries or
locations, which sub-plans may be designed to be outside the scope of Section
423 of the Code.  To the extent
inconsistent with the requirements of Section 423 of the Code, such sub-plans
shall not be considered part of the Plan under Section 423 of the Code, and the
options granted thereunder shall not be considered to comply with Section 423
of the Code.

 

14.           Designation
of Beneficiary.

 

(a)           A participant may file a written
designation of a beneficiary who is to receive shares and/or cash, if any, from
the participant’s account under the Plan in the event of such participant’s death
at a time when cash or shares are held for his or her account.

 

(b)           Such designation of beneficiary may
be changed by the participant at any time by written notice.  In the event of the death of a participant in
the absence of a valid designation of a beneficiary who is living at the time
of such participant’s death, the Company shall deliver such shares and/or cash
to the executor or administrator of the estate of the participant; or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such shares and/or cash
to the spouse or to any one or more dependents or relatives of the participant,
or if no spouse, dependent or relative is known to the Company, then to such
other  person as the Company may
reasonably designate.

 

15.           Transferability.  Neither payroll deductions credited to a
participant’s account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14 hereof) by the participant.  Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw funds in accordance with Section
10.

 

6

 

16.           Use
of Funds.  All payroll deductions
received or held by the Company under the Plan may be used by the Company for
any corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.

 

17.           Reports.  Individual accounts will be maintained for
each participant in the Plan.  Statements
of account will be given to participating Employees at least annually, and will
set forth the amounts of payroll deductions, the Purchase Price, the number of
shares purchased and the remaining cash balance, if any.

 

18.           Adjustments
Upon Changes in Capitalization.

 

(a)           Changes in Capitalization.  Subject to any required action by the
stockholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Offering Period (under Section 7), as well as the
price per share and the number of shares of Common Stock covered by each option
under the Plan that has not yet been exercised, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock or any other increase or decrease in
the number of shares of Common Stock effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been “effected without
receipt of consideration.”  Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. 
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to option.

 

(b)           Dissolution or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Offering Period then in progress will be
shortened by setting a new Exercise Date (the “New Exercise Date”), and shall
terminate immediately prior to the consummation of such proposed dissolution or
liquidation, unless otherwise provided by the Board.  The New Exercise Date shall be before the
date of the Company’s proposed dissolution or liquidation.  The Company shall notify each participant in
writing prior to the New Exercise Date, that the Exercise Date for the
participant’s option has been changed to the New Exercise Date and that the
participant’s option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering
Period as provided in Section 10.

 

(c)           Merger or Asset Sale.  In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each option under the Plan shall be assumed
or an equivalent option shall be substituted by the successor corporation or a
parent or Subsidiary of the successor corporation.  If the successor corporation refuses to assume
or substitute for the option, any Offering Periods then in progress shall be
shortened by setting a new Exercise Date (the “New Exercise Date”) and any
Offering Periods then in progress shall end on the New Exercise Date.  The New Exercise Date shall be before the
date of the Company’s proposed sale or merger. 
The Board shall notify each participant in writing prior to the New
Exercise Date, that the Exercise Date for the participant’s option has been
changed to the New Exercise Date and that the participant’s option has been
changed to the New Exercise Date and that the participant’s option will be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10.

 

The Board may, if it so determines in the exercise of
its sole discretion, also make provision for adjusting the Reserves, as well as
the price per share of Common Stock covered by each outstanding option, in the
event that the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding

 

7

 

Common Stock, and in the event of the Company being consolidated with
or merged into any other corporation.

 

19.           Amendment
or Termination.

 

(a)           The Board of Directors of the Company
may at any time and for any reason terminate or amend the Plan.  Except as provided in Section 18, no such
termination will affect options previously granted, provided that an Offering
Period may be terminated by the Board on any Exercise Date if the Board
determines that the termination of the Offering Period or the Plan is in the
best interests of the Company and its stockholders.   Except as provided in Section 18 and this
Section 19, no amendment may make any change in any option theretofore granted
which adversely affects the rights of any participant.  In addition, to the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law, regulation or stock exchange rule), the Company shall
obtain stockholder approval in such a manner and to such a degree as required.

 

(b)           Without stockholder consent and
without regard to whether any participant rights may be considered to have been
“adversely affected,” the Board (or its committee) shall be entitled to change
the Offering Periods, limit the frequency and/or number of changes in the
amount withheld during an Offering Period, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, permit
payroll withholding in excess of the amount designated by a participant in
order to adjust for delays or mistakes in the Company’s processing of properly
completed withholding elections, establish reasonable waiting and adjustment
periods and/or accounting and crediting procedures to ensure that amounts
applied toward the purchase of Common Stock for each participant properly
correspond with amounts withheld from the participant’s Compensation and
establish such other limitations or procedures as the Board or its committee
determines in its sole discretion advisable which are consistent with the Plan.

 

(c)           In the event the Board determines
that the ongoing operation of the Plan may result in unfavorable financial
accounting consequences, the Board may, in its discretion and, to the extent
necessary or desirable, modify or amend the Plan to reduce or eliminate such
accounting consequence including, but not limited to:

 

(i)            altering the Purchase Price for any
Offering Period including an Offering Period underway at the time of the change
in Purchase Price;

 

(ii)           shortening any Offering Period so
that Offering Period ends on a new Exercise Date, including an Offering Period
underway at the time of the Board action; and

 

(iii)          allocating shares.

 

Such modifications or
amendments shall not require stockholder approval or the consent of any Plan
participants.

 

20.           Notices.  All notices or other communications by a
participant to the Company in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt
thereof.  Notices given by means of the
Company’s online HR or similar system will be deemed to be written notices
under the Plan.

 

21.           Stockholder
Approval.  Continuance of the Plan
shall be subject to approval by the stockholders of the Company within twelve
months before or after the date the Plan is initially adopted.  Such stockholder approval shall be obtained
in the manner and degree required under the Delaware General Corporate Law.

 

8

 

22.           Conditions
Upon Issuance of Shares.  Shares
shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares
may then be listed, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.

 

As a condition to the exercise of an option, if
required by applicable securities laws, the Company may require the participant
for whose account the option is being exercised to represent and warrant at the
time of such exercise that the shares are being purchased only for investment
and without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

 

23.           Term
of Plan.  The Plan shall become
effective upon the earlier to occur of its adoption by the Board of Directors
or its approval by the stockholders of the Company as described in Section 21.
It shall continue in effect for a term of twenty (20) years from its initial
effectiveness unless sooner terminated under Section 19.

 

9Exhibit 4.1

 

 

 

CARRIAGE SERVICES, INC.

 

7.875% Senior Notes due 2015

 

 

INDENTURE

 

Dated as of January 27, 2005

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION,

 

as Trustee

 

 

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE I

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  
	
   

  
	
  Section
  1.1

  	
  Definitions

  	
   

  
	
  Section
  1.2

  	
  Other
  Definitions

  	
   

  
	
  Section
  1.3

  	
  Incorporation by Reference of Trust
  Indenture Act

  	
   

  
	
  Section
  1.4

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  
	
   

  	
   

  	
   

  
	
  THE
  SECURITIES

  
	
   

  	
   

  	
   

  
	
  Section
  2.1

  	
  Form
  and Dating

  	
   

  
	
  Section
  2.2

  	
  Execution and Authentication

  	
   

  
	
  Section
  2.3

  	
  Registrar and Paying Agent

  	
   

  
	
  Section
  2.4

  	
  Paying Agent To Hold Money in Trust

  	
   

  
	
  Section
  2.5

  	
  Holder
  Lists

  	
   

  
	
  Section
  2.6

  	
  Transfer and Exchange

  	
   

  
	
  Section
  2.7

  	
  Replacement Securities

  	
   

  
	
  Section
  2.8

  	
  Outstanding Securities

  	
   

  
	
  Section
  2.9

  	
  Temporary Securities

  	
   

  
	
  Section
  2.10

  	
  Cancellation

  	
   

  
	
  Section
  2.11

  	
  Defaulted Interest

  	
   

  
	
  Section
  2.12

  	
  CUSIP
  Numbers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  
	
  REDEMPTION

  
	
   

  	
   

  	
   

  
	
  Section
  3.1

  	
  Notices to Trustee

  	
   

  
	
  Section
  3.2

  	
  Selection of Securities To Be Redeemed

  	
   

  
	
  Section
  3.3

  	
  Notice of Redemption

  	
   

  
	
  Section
  3.4

  	
  Effect of Notice of Redemption

  	
   

  
	
  Section
  3.5

  	
  Deposit of Redemption Price

  	
   

  
	
  Section
  3.6

  	
  Securities Redeemed in Part

  	
   

  
	
  Section
  3.7

  	
  Optional Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  
	
   

  	
   

  	
   

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  
	
  Section
  4.1

  	
  Payment of Securities

  	
   

  
	
  Section
  4.2

  	
  SEC
  Reports

  	
   

  
	
  Section
  4.3

  	
  Incurrence of Indebtedness

  	
   

  
	
  Section
  4.4

  	
  Restricted Payments

  	
   

  

 

i

 

	
  Section
  4.5

  	
  Liens

  	
   

  
	
  Section
  4.6

  	
  Dividend and Other Payment Restrictions
  Affecting Subsidiaries

  	
   

  
	
  Section
  4.7

  	
  Asset
  Sales

  	
   

  
	
  Section
  4.8

  	
  Transactions With Affiliates

  	
   

  
	
  Section
  4.9

  	
  Additional Subsidiary Guarantees

  	
   

  
	
  Section
  4.10

  	
  Business Activities

  	
   

  
	
  Section
  4.11

  	
  Change
  of Control

  	
   

  
	
  Section
  4.12

  	
  Maintenance of Office or Agency for
  Registration of Transfer, Exchange and Payment of Securities

  	
   

  
	
  Section
  4.13

  	
  Appointment to Fill a Vacancy in the Office
  of Trustee

  	
   

  
	
  Section
  4.14

  	
  Provision as to Paying Agent

  	
   

  
	
  Section
  4.15

  	
  Maintenance of Corporate Existence

  	
   

  
	
  Section
  4.16

  	
  Compliance Certificate

  	
   

  
	
  Section
  4.17

  	
  Taxes

  	
   

  
	
  Section
  4.18

  	
  Stay, Extension and Usury Laws

  	
   

  
	
  Section
  4.19

  	
  Payments for Consent

  	
   

  
	
  Section
  4.20

  	
  Limitation on Sale/Leaseback Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  
	
   

  	
   

  	
   

  
	
  SUCCESSOR
  COMPANY

  
	
   

  	
   

  	
   

  
	
  Section
  5.1

  	
  Merger, Consolidation or Sale of Assets

  	
   

  
	
  Section
  5.2

  	
  Successor Corporation Substituted.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  
	
   

  	
   

  	
   

  
	
  DEFAULTS
  AND REMEDIES

  
	
   

  	
   

  	
   

  
	
  Section
  6.1

  	
  Events
  of Default

  	
   

  
	
  Section
  6.2

  	
  Acceleration of Maturity; Rescission and
  Annulment

  	
   

  
	
  Section
  6.3

  	
  Other
  Remedies

  	
   

  
	
  Section
  6.4

  	
  Waiver of Past Defaults

  	
   

  
	
  Section
  6.5

  	
  Control by Majority

  	
   

  
	
  Section
  6.6

  	
  Limitation on Suits

  	
   

  
	
  Section
  6.7

  	
  Rights of Holders to Receive Payment

  	
   

  
	
  Section
  6.8

  	
  Collection Suit by Trustee

  	
   

  
	
  Section
  6.9

  	
  Trustee May File Proofs of Claim

  	
   

  
	
  Section
  6.10

  	
  Priorities

  	
   

  
	
  Section
  6.11

  	
  Undertaking for Costs

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  	
   

  
	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
  Section
  7.1

  	
  Duties
  of Trustee

  	
   

  
	
  Section
  7.2

  	
  Rights of Trustee.

  	
   

  

 

ii

 

	
  Section
  7.3

  	
  Individual Rights of Trustee

  	
   

  
	
  Section
  7.4

  	
  Trustee’s Disclaimer

  	
   

  
	
  Section
  7.5

  	
  Notice of Defaults

  	
   

  
	
  Section
  7.6

  	
  Reports by Trustee to Holders

  	
   

  
	
  Section
  7.7

  	
  Compensation and Indemnity

  	
   

  
	
  Section
  7.8

  	
  Replacement of Trustee

  	
   

  
	
  Section
  7.9

  	
  Successor Trustee by Merger

  	
   

  
	
  Section
  7.10

  	
  Eligibility; Disqualification

  	
   

  
	
  Section
  7.11

  	
  Preferential Collection of Claims Against
  Company

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  
	
  DISCHARGE OF INDENTURE; DEFEASANCE

  
	
   

  	
   

  	
   

  
	
  Section
  8.1

  	
  Discharge of Liability on Securities;
  Defeasance

  	
   

  
	
  Section
  8.2

  	
  Conditions to Defeasance

  	
   

  
	
  Section
  8.3

  	
  Delivery and Application of Trust Money

  	
   

  
	
  Section
  8.4

  	
  Repayment to Company

  	
   

  
	
  Section
  8.5

  	
  Indemnity for Government Securities

  	
   

  
	
  Section
  8.6

  	
  Reinstatement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  
	
   

  	
   

  	
   

  
	
  AMENDMENTS

  
	
   

  	
   

  	
   

  
	
  Section
  9.1

  	
  Without Consent of Holders

  	
   

  
	
  Section
  9.2

  	
  With Consent of Holders

  	
   

  
	
  Section
  9.3

  	
  Compliance with Trust Indenture Act

  	
   

  
	
  Section
  9.4

  	
  Revocation and Effect of Consents and
  Waivers

  	
   

  
	
  Section
  9.5

  	
  Notation on or Exchange of Securities

  	
   

  
	
  Section
  9.6

  	
  Trustee To Sign Amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  
	
   

  	
   

  	
   

  
	
  SUBSIDIARY
  GUARANTEE

  
	
   

  	
   

  	
   

  
	
  Section
  10.1

  	
  Subsidiary Guarantee

  	
   

  
	
  Section
  10.2

  	
  Limitation
  on Liability

  	
   

  
	
  Section
  10.3

  	
  Execution and Delivery of Subsidiary
  Guarantee

  	
   

  
	
  Section
  10.4

  	
  Successors and Assigns

  	
   

  
	
  Section
  10.5

  	
  No
  Waiver

  	
   

  
	
  Section
  10.6

  	
  Right of Contribution

  	
   

  
	
  Section
  10.7

  	
  No
  Subrogation

  	
   

  
	
  Section
  10.8

  	
  Modification

  	
   

  
	
  Section
  10.9

  	
  Merger, Consolidation or Sale of Assets of
  a Guarantor; Release of a Guarantor

  	
   

  

 

iii

 

	
  ARTICLE XI

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  Trust Indenture Act Controls

  	
   

  
	
  Section 11.2

  	
  Notices

  	
   

  
	
  Section 11.3

  	
  Communication by Holders with other Holders

  	
   

  
	
  Section 11.4

  	
  Certificate and Opinion as to Conditions
  Precedent

  	
   

  
	
  Section 11.5

  	
  Statements Required in Certificate or
  Opinion

  	
   

  
	
  Section 11.6

  	
  When Securities Disregarded

  	
   

  
	
  Section 11.7

  	
  Legal Holidays

  	
   

  
	
  Section 11.8

  	
  Governing Law

  	
   

  
	
  Section 11.9

  	
  No Personal Liability of Directors,
  Officers, Employees and Stockholders

  	
   

  
	
  Section 11.10

  	
  Successors

  	
   

  
	
  Section 11.11

  	
  Multiple Originals; Counterparts

  	
   

  
	
  Section 11.12

  	
  Severability

  	
   

  
	
  Section 11.13

  	
  Consent to Jurisdiction

  	
   

  
	
  Section 11.14

  	
  Table of Contents; Headings

  	
   

  
	
  Section 11.15

  	
  No Adverse Interpretation of Other
  Agreements

  	
   

  

 

	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  
	
  Exhibit
  A – Form of Security

  	
   

  
	
  Exhibit
  B – Form of Certificate of Transfer

  	
   

  
	
  Exhibit
  C – Form of Certificate of Exchange

  	
   

  
	
  Exhibit
  D – Form of Notation of Subsidiary Guarantee

  	
   

  
	
  Exhibit
  E – Form of Supplemental Indenture to be
  Delivered by Future Guarantors

  	
   

  
	
  Exhibit
  F – Form of Certificate to be Delivered by
  Institutional Accredited Investors

  	
   

  

 

iv

 

THIS INDENTURE, dated as
of January 27, 2005, is among Carriage Services, Inc., a Delaware corporation
(the “Company”), each of the Guarantors (as defined herein), and Wells Fargo
Bank, National Association, a national banking association, as trustee (the “Trustee”).

 

Each party agrees as
follows for the benefit of the other parties and for the equal and ratable
benefit of the Holders of the Company’s 7.875% Senior Notes due 2015 issued on
the date hereof (the “Initial Securities”), the Holders of Additional
Securities (as defined herein) and, if and when issued in exchange for the
Initial Securities or any Additional Securities as provided in a Registration
Rights Agreement (as hereinafter defined), the Company’s 7.875% Senior Notes
due 2015 provided in exchange for such Initial Securities or Additional
Securities:

 

ARTICLE
I

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section
1.1                                      Definitions

 

“144A Global Security” means a Global
Security substantially in the form of Exhibit A hereto bearing the
Global Security Legend and the Private Placement Legend and deposited with or
on behalf of, and registered in the name of, the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Securities sold in reliance on Rule 144A.

 

“Acquired Debt”
means, with respect to any specified Person:

 

(1)                                  Indebtedness
of any other Person existing at the time such other Person is merged with or into
or became a Subsidiary of such specified Person, whether or not such
Indebtedness is incurred in connection with, or in contemplation of, such other
Person merging with or into, or becoming a Subsidiary of, such specified
Person; and

 

(2)                                  Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.

 

“Additional Interest”
means the additional interest, if any, owing on any Securities pursuant to the
related Registration Rights Agreement.

 

“Additional Securities” means any Securities (other than the
Initial Securities, the Private Exchange Securities or the Exchange Securities)
issued under this Indenture in accordance with Sections 2.2 and 4.3
hereof, as part of the same series as the Initial Securities to the extent
outstanding and any Exchange Securities then outstanding.

 

“Affiliate” of
any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified
Person.  For purposes of this definition,
“control,” as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the Voting Stock

 

 

of
a Person shall be deemed to be control for such purpose.  For purposes of this definition, the terms “controlling,”
“controlled by” and “under common control with” shall have correlative
meanings.

 

“Agent” means any Registrar or Paying
Agent.

 

“Applicable Procedures” means,
with respect to any transfer or exchange of or for beneficial interests in any
Global Note, the rules and procedures of the Depositary, Euroclear or
Clearstream that apply to such transfer or exchange.

 

“Asset Sale” means:

 

(1)                                  the
sale, lease, conveyance or other disposition of any assets, including, without
limitation, by means of a Sale/Leaseback Transaction, provided that the sale, lease, conveyance
or other disposition of all or substantially all of the properties or assets of
the Company and its Subsidiaries taken as a whole will be governed by Section 4.11
hereof and/or Section 5.1 hereof and not by the provisions of Section 4.7 hereof; and

 

(2)                                  the issuance of Equity Interests by any of the Company’s
Restricted Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.

 

Notwithstanding the preceding, the following items
shall not be deemed to be Asset Sales:

 

(1)                                  any single transaction or series of related transactions that
involves assets having a Fair Market Value of less than $1.0 million;

 

(2)                                  a transfer of assets between or among the Company and its
Restricted Subsidiaries;

 

(3)                                  an issuance of Equity Interests by a Restricted Subsidiary
to the Company or to another Restricted Subsidiary;

 

(4)                                  a disposition of Cash Equivalents in the ordinary course of
business;

 

(5)                                  the sale or lease of equipment, inventory (including
cemetery plots or crypts) or other assets in the ordinary course of business;

 

(6)                                  a Restricted Payment that is permitted by Section 4.4
hereof;

 

(7)                                  the creation or perfection of a Permitted Lien; and

 

(8)                                  any
sale of assets that are purchased by the Company or any Restricted Subsidiary
thereof after the Issue Date as part of an acquisition of a group of funeral
homes or cemeteries or other assets that are part of a Permitted Business and
then sold (other than to an Affiliate of the Company) no later than 90 days after such acquisition in a
transaction in which the Company or such Restricted Subsidiary

 

2

 

receives
consideration at least equal to the Fair Market Value of such assets and the
proceeds of which are used to repay Indebtedness (other than Subordinated
Indebtedness) incurred to acquire such assets.

 

“Attributable Debt”
in respect of a Sale/Leaseback Transaction means, at the time of determination,
the present value of the obligation of the lessee for net rental payments
during the remaining term of the lease included in such Sale/Leaseback
Transaction including any period for which such lease has been extended or may,
at the option of the lessor, be extended. 
Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance
with GAAP.  As used in the preceding
sentence, the “net rental payments” under any lease for any such period shall
mean the sum of rental and other payments required to be paid with respect to
such period by the lessee thereunder, excluding any amounts required to be paid
by such lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges. 
In the case of any lease that is terminable by the lessee upon payment
of penalty, such net rental payment shall also include the amount of such
penalty, 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.

 

“Bankruptcy Law” means Title 11, United
States Code, or any similar U.S. federal or state law for the relief of
debtors.

 

“Beneficial Owner” has the meaning
assigned to such term in Rule l3d-3 and Rule l3d-5 under the Exchange
Act, except that in calculating the beneficial ownership of any particular “person”
(as such term is used in Section 13(d)(3) of the Exchange Act), such “person”
shall be deemed to have beneficial ownership of all securities that such “person”
has the right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition.

 

“Board of Directors” means, with
respect to any Person, the board of directors of such Person or any duly
authorized committee thereof.

 

“Board Resolution” means a copy of
a resolution certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by such Board of Directors and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.

 

“Business Day” means any day other
than a Saturday, Sunday or other day on which commercial banks in Houston,
Texas, Minneapolis, Minnesota or New York, New York are authorized or required
by law to close.

 

“Capital Lease Obligation” means,
at the time any determination thereof is to be made, the amount of the
liability of a Person in respect of a capital lease that would at that time be
required to be capitalized on a balance sheet of such Person in accordance with
GAAP.

 

“Capital Stock” means:

 

(1)                                  in the case of a corporation, corporate stock;

 

3

 

(2)                                  in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock;

 

(3)                                  in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and

 

(4)                                  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.

 

“Cash Equivalents” means:

 

(1)                                  United
States dollars;

 

(2)                                  securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full faith and credit of the United States
is pledged in support thereof) having maturities of not more than one year from
the date of acquisition;

 

(3)                                  certificates
of deposit and Eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers’ acceptances with maturities not
exceeding six months, demand deposits, trust accounts, time deposits and
overnight bank deposits, in each case, with any domestic commercial bank having
capital and surplus in excess of $250.0 million and a Thompson Bank Watch
Rating of “B” or better (or an equivalent rating by any successor to the
business of Thompson Bank Watch, including Fitch Ratings);

 

(4)                                  repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (2) and (3) above entered into with any
financial institution meeting the qualifications specified in clause (3) above;

 

(5)                                  commercial
paper having the highest rating obtainable from Moody’s Investors Service, Inc.
(or its successor) or Standard & Poor’s Ratings Services (or its successor)
and in each case maturing within 270 days after the date of acquisition; and

 

(6)                                  money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1) through (5)
of this definition.

 

“Change of Control”
means the occurrence of any of the following:

 

(1)                                  the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties or assets of the
Company and its Subsidiaries taken as a whole;

 

(2)                                  the adoption of a plan relating to the liquidation or
dissolution of the Company;

 

4

 

(3)                                  the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” (as such term is used
in Section 13(d)(3) of the Exchange Act), becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock
of the Company, measured by voting power rather than number of shares;

 

(4)                                  the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors; or

 

(5)                                  the
Company consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person immediately after giving
effect to such issuance.

 

“Clearstream” means Clearstream
Banking, société anonyme, or any
successor securities clearance agency.

 

“Code” means the U.S. Internal
Revenue Code of 1986, as amended.

 

“Commodity Agreement” means any commodity
hedging agreement and other agreement or arrangement designed to protect the
Company or a Restricted Subsidiary against fluctuations in commodity prices.

 

“Consolidated EBITDA” means, with respect to
any Person for any period, the Consolidated Net Income of such Person for such
period plus:

 

(1)                                  provision
for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
deducted in computing such Consolidated Net Income; plus

 

(2)                                  consolidated
interest expense of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with aspect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers’ acceptance financings, and net payments, if any, pursuant
to Interest Rate Agreements), to the extent that any such expense was deducted
in computing such Consolidated Net Income; plus

 

5

 

(3)                                  depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period), impairment and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that
was paid in a prior period) of such Person and its Restricted Subsidiaries for
such period to the extent that such amounts were deducted in computing such
Consolidated Net Income; minus

 

(4)                                  non-cash items increasing such Consolidated Net Income for
such period, other than items that were accrued in the ordinary course of
business, in each case, on a consolidated basis and determined in accordance
with GAAP.

 

Notwithstanding
the preceding, the provision for taxes based on the income or profits of, and
the depreciation, amortization, impairment and other non-cash charges of, a
Restricted Subsidiary of the Company shall be added to Consolidated Net Income
to compute Consolidated EBITDA of the Company only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.

 

“Consolidated Net Income” means,
for any period, the consolidated Net Income of the Company and its Restricted
Subsidiaries determined in accordance with GAAP; provided that there shall not be included in such
Consolidated Net Income:

 

(1)                                  any Net Income (or loss), of any Person if such Person is
not a Restricted Subsidiary, except that:

 

(a)                                  subject
to the limitations contained in clauses (3) and (4) below, the
Company’s equity in the Net Income of any such Person for such period will be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (2) below); and

 

(b)                                 the
Company’s equity in a net loss of any such Person (other than an unrestricted
Subsidiary) for such period will be included in determining such Consolidated
Net Income to the extent such loss has been funded with cash from the Company
or a Restricted Subsidiary;

 

(2)                                  any
Net Income (but not loss) of any Restricted Subsidiary if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that:

 

6

 

(a)                                  subject
to the limitations contained in clauses (3) and (4) below, the
Company’s equity in the Net Income of any such Restricted Subsidiary for such
period will be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary as a
dividend (subject, in the case of a dividend to another Restricted Subsidiary,
to the limitation contained in this clause); and

 

(b)                                 the Company’s equity in a net loss of any such Restricted
Subsidiary for such period will be included in determining such Consolidated
Net Income;

 

(3)                                  Net
Income or loss of any Person for any period prior to the acquisition of such
Person by the Company or a Restricted Subsidiary, or the Net Income or loss of
any Person who succeeds to the obligations of the Company under the indenture
for any period prior to such succession; and

 

(4)                                  the cumulative effect of a change in accounting principles.

 

“Continuing Directors”
means, as of any date of determination, any member of the Board of Directors of
the Company who:

 

(1)                                  was a member of such Board of Directors on the Issue Date;
or

 

(2)                                  was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.

 

“Credit Facilities”
means, with respect to the Company or any Guarantor, one or more debt
facilities or commercial paper facilities, in each case with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit.

 

“Currency Agreements”  means, at any time as to the
Company and its Restricted Subsidiaries, any foreign currency exchange
agreement, option or future contract or other similar agreement or arrangement
designed to protect against or manage the Company or any of its Restricted
Subsidiaries’ exposure to fluctuations in foreign currency exchange rates.

 

“Custodian” means any receiver,
trustee, assignee, liquidator, custodian or similar official under any
Bankruptcy Law.

 

“Default” means any event that is,
or with the passage of time or the giving of notice or both would be, an Event
of Default.

 

“Definitive Security” means a
certificated Security registered in the name of the Holder thereof and issued
in accordance with Section 2.6 hereof, substantially in the form of
Exhibit A 

 

7

 

hereto
except that such Security shall not bear the Global Security Legend and shall
not have the “Schedule of Exchanges of Interests in the Global Security”
attached thereto.

 

“Depositary” means The Depository
Trust Company, until a successor shall have been appointed and become such
Depositary pursuant to this Indenture and thereafter shall mean its successor.

 

“Disqualified Stock” means any
Capital Stock that, by its terms (or by the terms of any security into which it
is convertible, or for which it is exchangeable, in each case at the option of
the holder thereof), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the date that is 91 days after the date on which the Securities
mature.  Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require the Company to repurchase
such Capital Stock upon the occurrence of a change of control or an asset sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with Section 4.4
hereof.

 

“Equity Interests” mean Capital
Stock and all warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or exchangeable for,
Capital Stock).

 

“Equity Offering” means any
underwritten public offering for cash of Equity Interests (other than
Disqualified Stock) of the Company registered under the Securities Act (other
than on Form S-8 or any successor thereto) or any private placement for
cash of Equity Interests (other than Disqualified Stock) other than to an
Affiliate of the Company, in each case other than any issuance of securities
under any benefit plan of the Company or a Restricted Subsidiary.

 

“Euroclear” means Euroclear Bank
S.A./N.V., as operator of the Euroclear clearance
system, or any successor securities clearance agency.

 

“Exchange Act” means the
Securities Exchange Act of 1934 and any successor statute thereto, in each case
as amended from time to time.

 

“Exchange Securities” means Securities issued pursuant to this
Indenture in connection with a Registered Exchange Offer pursuant to a
Registration Rights Agreement.

 

“Exchanging Dealer” has the
meaning set forth in the appropriate Registration Rights Agreement.

 

“Fair Market Value” means, with respect to
any Asset Sale or Restricted Payment or other item, the price that would be
negotiated in an arm’s-length transaction for cash between a willing seller and
a willing and able buyer, neither of which is under any compulsion to complete
the transaction, as such price is determined in good faith by an officer of the
Company if such value is less than $5.0 million; provided, however, if the value of such
Asset Sale or Restricted Payment or other item is $5.0 million or greater,
such determination shall be made in good faith by the Board of Directors of the
Company; and provided further if
the value of such Asset Sale 

 

8

 

or Restricted Payment or
other item is $10.0 million or greater, such determination shall be made
by an accounting, appraisal or investment banking firm of national standing
that is not an Affiliate of the Company.

 

“Fixed Charge Coverage
Ratio” means, with respect to any specified Person for any period,
the ratio of the Consolidated EBITDA of such Person and its Restricted
Subsidiaries for such period to the Fixed Charges of such Person for such
period.  In the event that the specified
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, redeems,
repurchases or repays any Indebtedness (other than revolving credit borrowings
not constituting a permanent commitment reduction) or issues, repurchases or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee,
redemption, repurchase or repayment of Indebtedness, or such issuance,
repurchase or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period.

 

In
addition, for purposes of calculating the Fixed Charge Coverage Ratio:

 

(1)                                  acquisitions
that have been made by the specified Person or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be given pro forma effect as if they had occurred on the first day of the
four-quarter reference period;

 

(2)                                  the
Consolidated EBITDA attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded; and

 

(3)                                  the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of
the specified Person or any of its Restricted Subsidiaries following the
Calculation Date.

 

“Fixed Charges”
means, with respect to any Person for any period, the sum, without duplication,
of:

 

(1)                                  the
consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued, including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts, and
other fees and charges incurred in respect of letters of credit or bankers’

 

9

 

acceptance
financings, and net payments, if any, pursuant to Interest Rate Agreements; plus

 

(2)                                  the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus

 

(3)                                  any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries, whether or not such
Guarantee or Lien is called upon; plus

 

(4)                                  the product of:

 

(a)                                  all
dividend payments, whether or not in cash, on any series of preferred stock of
such Person or any of its Restricted Subsidiaries, other than dividend payments
on Equity Interests payable solely in Equity Interests of the Company (other
than Disqualified Stock) or to the Company or a Restricted Subsidiary of the
Company, times

 

(b)                                 a fraction, the numerator of which is one and the
denominator of which is one minus
the then current combined federal, state and local statutory tax rate of such
Person, expressed as a decimal, in each case, on a consolidated basis and in
accordance with GAAP.

 

For purposes of the
foregoing, distributions paid or accrued on the TIDES that are outstanding on
the Issue Date shall be deemed to be covered by clause (1) above and not
clause (4) above.

 

“GAAP” means generally accepted
accounting principles in the United States of America, as in effect as of the
Issue Date.  All ratios and calculations
under the indenture based on GAAP measures shall be computed in conformity with
GAAP.

 

“Global Securities” means, individually
and collectively, each of the Restricted Global Securities and the Unrestricted
Global Securities.

 

“Global Security Legend” means the
legend set forth in Section 2.6(g)(2),
which is required to be placed on all Global Securities issued under this
Indenture.

 

“Government Securities” means
direct obligations, or certificates representing an ownership interest in such
obligations, of the United States of America (including any agency or
instrumentality thereof) for the payment of which the full faith and credit of
the United States of America is pledged and that are not callable at the issuer’s
option.

 

“Guarantee”
means, without duplication, any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any other obligation, direct or indirect, contingent or otherwise, of such
Person:

 

10

 

(1)                                  to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness of such other Person (whether arising
by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise), or

 

(2)                                  entered into for the purpose of assuring in any other manner
the obligee of such Indebtedness of the payment therefor to protect such
obligee against loss in respect thereof (in whole or in part);

 

provided, however,
that the term “Guarantee” shall not include endorsements for collection or
deposit in the ordinary course of business. 
The term “Guarantee” used as a verb has a corresponding meaning.

 

“Guarantors” means each Subsidiary
that executes this Indenture as an initial Guarantor, any Restricted Subsidiary
of the Company that becomes a Guarantor in accordance with the provisions of
this Indenture, and their respective successors and assigns.  Carriage Services Capital Trust is a
Restricted Subsidiary but is not a Guarantor under this Indenture.

 

“Hedging Obligations” means, with
respect to any Person, the obligations of such Person under Currency
Agreements, Interest Rate Agreements and Commodity Agreements.

 

“Holder” means a person in whose name a
Security is registered on the Registrar’s books.

 

“IAI Global Security” means a Global
Security substantially in the form of Exhibit A hereto bearing the
Global Security Legend and the Private Placement Legend and deposited with or
on behalf of and registered in the name of the Depositary or its nominee,
issued in a denomination equal to the outstanding principal amount of the
Securities transferred to Institutional Accredited Investors.

 

“Indebtedness” means, with respect to any
specified Person, without duplication,

 

(1)                                  all obligations of such Person, whether or not contingent,
in respect of:

 

(a)                                  the principal component of indebtedness for borrowed money;

 

(b)                                 the principal component of indebtedness evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof);

 

(c)                                  bankers’ acceptances;

 

(d)                                 Capital
Lease Obligations; and

 

(e)                                  the balance deferred and unpaid of the purchase price of any
property due more than six months after the date of acquisition thereof, except
any such balance that constitutes a trade payable;

 

11

 

(2)                                  all net obligations in respect of Hedging Obligations;

 

(3)                                  all liabilities of others of the kind described in the
preceding clause (1) or (2) that such Person has Guaranteed or that
are otherwise its legal responsibility;

 

(4)                                  Indebtedness
(as otherwise defined in this definition) of another Person secured by a Lien
on any asset of such Person, whether or not such Indebtedness is assumed by
such Person, the amount of such obligations being deemed to be the lesser of

 

(a)                                  the full amount of such obligations so secured and

 

(b)                                 the Fair Market Value of such asset;

 

(5)                                  Disqualified
Stock of such Person or a Restricted Subsidiary in an amount equal to the
greater of the maximum mandatory redemption or repurchase price (not including,
in either case, any redemption or repurchase premium) or the liquidation
preference thereof; and

 

(6)                                  Attributable
Debt in respect of a Sale/Leaseback Transaction.

 

“Indenture” means this Indenture
as amended or supplemented from time to time.

 

“Indirect Participant” means a
Person who holds a beneficial interest in a Global Security through a
Participant.

 

“Initial Purchasers” means with respect to
the Initial Securities, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Banc of America Securities LLC, and with respect to each issuance of
Additional Securities, the Persons purchasing such Additional Securities from
the Company.

 

“Institutional Accredited Investor” means
an institution that is an “accredited investor” as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act that is not a QIB.

 

“Interest Payment Date,” when used with
respect to any Security, means the Stated Maturity of an installment of
interest on such Security.

 

“Interest Rate Agreements” means,
with respect to the Company and its Restricted Subsidiaries, interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements
and other agreements or arrangements designed to protect such Person against
fluctuations in interest rates, with respect to any floating rate Indebtedness
that is permitted to be incurred under this Indenture.

 

“Investments” means, with respect
to any Person, all investments by such Person in other Persons (including
Affiliates) in the forms of direct or indirect loans (including Guarantees of
Indebtedness or other obligations), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other

 

12

 

securities,
together with all items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP. 
If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Company,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the Fair Market Value of the Equity Interests of
such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the third to last paragraph of Section 4.4 hereof.

 

“Issue Date” means January 27, 2005.

 

“Lien” means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction.

 

“Net Available Proceeds”
means the aggregate cash or Cash Equivalents received by the Company or any of
its Restricted Subsidiaries as proceeds in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of,
without duplication:

 

(1)                                  the
direct costs relating to such Asset Sale, including, without limitation, legal,
accounting and investment banking fees, and sales commissions, recording fees,
title transfer fees and any relocation expenses incurred as a result thereof;

 

(2)                                  taxes paid or payable as a result thereof, in each case
after taking into account any available tax credits or deductions and any tax
sharing arrangements;

 

(3)                                  amounts required to be applied to the permanent repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale; and

 

(4)                                  any
reserve established in accordance with GAAP against liabilities associated with
such Asset Sale or any amount placed in escrow for adjustment in respect of the
purchase price of such Asset Sale, until such time as such reserve is reversed
or such escrow arrangement is terminated, in which case Net Available Proceeds
shall be increased by the amount of the reserve so reversed or the amount
returned to the Company or its Restricted Subsidiaries from such escrow
arrangement, as the case may be.

 

“Net Cash Proceeds,” with respect to any
issuance or sale of Equity Interests, means the cash proceeds of such issuance
or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement
agents’ fees, listing fees, discounts or commissions and brokerage, consultant
and other fees and charges actually incurred in connection with such issuance
or sale and net of taxes paid or payable as a result of such issuance or sale
(after taking into account any available tax credit or deductions and any tax
sharing arrangements).

 

13

 

“Net Income” means, with respect to any Person, the
consolidated net income (loss) of such Person and its Restricted Subsidiaries,
determined in accordance with GAAP and before any reduction in respect of
preferred stock dividends, excluding, however:

 

(1)                                  any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with:
(a) any Asset Sale; or (b) the disposition of any securities by such person or
any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and

 

(2)                                  any
extraordinary gain (but not loss), together with any related provision for
taxes on such extraordinary gain (but not loss).

 

“Non-Recourse Debt”
means Indebtedness:

 

(1)                                  as
to which neither the Company nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or indirectly
liable as a guarantor or otherwise, or (c) constitutes the lender with respect
to such Indebtedness; and

 

(2)                                  no
default with respect to which (including any rights that the holders thereof
may have to take enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any other Indebtedness
of the Company or any of its Restricted Subsidiaries to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity.

 

For purposes of
determining compliance with Section 4.3,
in the event that any Non-Recourse Debt of any of the Company’s Unrestricted
Subsidiaries ceases to be Non-Recourse Debt of such Unrestricted Subsidiary,
such event will be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company.

 

“Officer” means, with respect to
any Person, the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the Treasurer, the
Controller or the Secretary of such Person.

 

“Officers’ Certificate” means a
certificate signed on behalf of the Company by two Officers or by an officer
and either an Assistant Treasurer or and Assistant Secretary of the Company
(for which in the case of the annual Officers’ Certificate delivered pursuant
to Section 4.16, at least one of such Officers shall be the
principal executive officer, principal financial officer or principal
accounting officer of the Company) and that complies with Sections 11.4 and 11.5 of
this Indenture and is delivered to the Trustee.

 

“Opinion of Counsel” means a
written opinion from legal counsel who is reasonably acceptable to the Trustee
and that complies with Sections 11.4
and 11.5 of this Indenture and is delivered to the Trustee.  The counsel may be an employee of or counsel
to the Company.

 

14

 

“Participant” means, with respect
to the Depositary, Euroclear or Clearstream, a Person who has an account with
the Depositary, Euroclear or Clearstream, respectively (and, with respect to
The Depository Trust Company, shall include Euroclear and Clearstream).

 

“Permitted Business” means any
business conducted or proposed to be conducted (as described in the offering
memorandum relating to the issuance of the Initial Securities) by the Company
and its Restricted Subsidiaries on the Issue Date and any other business
reasonably related, ancillary, complementary or incidental thereto or
reasonable extensions or expansions thereof.

 

“Permitted Investments”
means:

 

(1)                                  any Investment in the Company or in a Restricted Subsidiary
of the Company;

 

(2)                                  any Investment in Cash Equivalents;

 

(3)                                  any Investment by the Company or any Restricted Subsidiary
of the Company in a Person if as a result of such Investment:

 

(a)                                  such Person becomes a Restricted Subsidiary of the Company;
or

 

(b)                                 such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its properties or assets to,
or is liquidated into, the Company or a Restricted Subsidiary of the Company;

 

(4)                                  any
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.7 hereof;

 

(5)                                  any acquisition of assets solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Company;

 

(6)                                  receivables
owing to the Company or any Restricted Subsidiary created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include
such concessionary trade terms as the Company or any such Restricted Subsidiary
deems reasonable under the circumstances;

 

(7)                                  Capital
Stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of a
debtor;

 

(8)                                  Hedging
Obligations, which transactions or obligations are incurred in the ordinary course
of business in compliance with Section 4.3
hereof;

 

(9)                                  Investments
in funds received by the Company and its Restricted Subsidiaries in the
ordinary course of business, which funds are held in trust for the benefit of

 

15

 

others by the Company or such Restricted Subsidiary,
as the case may be, in or by any perpetual care trust, merchandise trust,
pre-need trust, preconstruction trust or other trust arrangements established
by the Company or any of its Restricted Subsidiaries or their predecessors in
accordance with applicable laws, regulations and interpretations; and

 

(10)                            other
Investments in any Person having an aggregate Fair Market Value (measured on
the date each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant
to this clause (10) since the Issue Date, not to exceed
$10.0 million.

 

“Permitted Liens”
means:

 

(1)                                  Liens
on any property or assets of the Company and any Guarantor securing
Indebtedness under Credit Facilities incurred in accordance with, and subject
to the limits of, clause (1) of Section 4.3(b);

 

(2)                                  Liens
in favor of the Company or the Guarantors;

 

(3)                                  Liens
on any property or assets of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Restricted
Subsidiary of the Company, provided
that such Liens were in existence prior to the contemplation of such merger or
consolidation and not incurred in contemplation thereof and do not extend to
any property or assets other than those of the Person merged into or
consolidated with the Company or the Restricted Subsidiary;

 

(4)                                  Liens
on any property or assets existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the
contemplation of such acquisition and do not extend to any property or assets
of the Company or the Restricted Subsidiary;

 

(5)                                  Liens
to secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the
ordinary course of business;

 

(6)                                  Liens
existing on the Issue Date;

 

(7)                                  Liens
arising from Uniform Commercial Code financing statement filings regarding
operating leases entered into by the Company and its Restricted Subsidiaries in
the ordinary course of business;

 

(8)                                  Liens
securing Permitted Refinancing Indebtedness incurred to refinance Indebtedness
that was previously so secured as permitted hereby, provided that any such Lien is limited to all or part of the
same property or assets (plus improvements, accessions, proceeds or dividends
or distributions in respect thereof) that secured (or, under the written arrangements
under which the original

 

16

 

Lien arose, could secure) the Indebtedness being
refinanced or is in respect of property that is the security for a Permitted
Lien hereunder;

 

(9)                                  Liens
securing Hedging Obligations of the Company or any of its Restricted
Subsidiaries, which transactions or obligations are incurred in the ordinary
course of business for bona fide hedging purposes (and not financing or
speculative purposes) of the Company or its Restricted Subsidiaries (as
determined in good faith by the Board of Directors or senior management of the
Company);

 

(10)                            Liens
to secure Indebtedness (including Capital Lease Obligations) permitted by
clause (4) of Section 4.3(b); provided
that any such Lien (i) covers only the assets acquired, constructed or
improved with such Indebtedness and (ii) is created within 180 days
of such acquisition, construction or improvement; and

 

(11)                            other Liens incurred in the ordinary course of business of
the Company and its Restricted Subsidiaries with respect to Indebtedness in an
aggregate principal amount, together with all Indebtedness incurred to refund,
refinance or replace such Indebtedness (or refinancings, refundings or
replacements thereof), that does not exceed $5.0 million at any one time
outstanding.

 

“Permitted Refinancing
Indebtedness” means any Indebtedness of the Company or any of its
Restricted Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided
that:

 

(1)                                  the
principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal amount of, plus premium, if any, and accrued interest on the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith);

 

(2)                                  (a)                                  if
the final maturity date of the Indebtedness being extended, refinanced,
renewed, replaced, deferred or refunded is earlier than the final maturity date
of the Securities, the Permitted Refinancing Indebtedness has a final maturity
date no earlier than the final maturity date of the Indebtedness being extended,
refinanced, renewed, replaced, deferred or refunded, or

 

(b)                                 if
the final maturity date of the Indebtedness being extended, refinanced,
renewed, replaced, deferred or refunded is later than the final maturity date
of the Security, the Permitted Refinancing Indebtedness has a final maturity
date at least 91 days later than the final maturity date of the Securities;

 

(3)                                  the
Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity at
the time such Permitted Refinancing Indebtedness is incurred that is equal to
or greater than the Weighted Average Life to Maturity of the Indebtedness being
extended, refinanced, renewed, replaced, deferred or refunded;

 

17

 

(4)                                  if
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Securities or a Subsidiary
Guarantee, such Permitted Refinancing Indebtedness is subordinated in right of
payment to the Securities or such Subsidiary Guarantee on terms at least as
favorable, taken as a whole, to the Holders of Securities as those contained in
the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and

 

(5)                                  such
Indebtedness is not incurred by a Restricted Subsidiary (other than a
Guarantor) if the Company or a Guarantor is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; provided, however, that a Restricted
Subsidiary that is also a Guarantor may guarantee Permitted Refinancing
Indebtedness incurred by the Company, whether or not such Restricted Subsidiary
was an obligor or guarantor of the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; provided
further, however, that if such Permitted Refinancing Indebtedness is
subordinated to the Securities, such Guarantee shall be subordinated to such
Restricted Subsidiary’s Subsidiary Guarantee to at least the same extent.

 

“Person” means any individual, corporation,
partnership, limited liability company, joint venture,
association, joint stock company, trust, unincorporated organization,
government or any agency or political subsidiary thereof or any other entity.

 

“Private Exchange” means the offer by the
Company, pursuant to a Registration Rights Agreement, to the Initial Purchasers
to issue and deliver to each Initial Purchaser, in exchange for the Initial
Securities held by the Initial Purchaser as part of its initial distribution, a
like aggregate principal amount of Private Exchange Securities.

 

“Private Exchange Securities” means any
Securities issued in connection with a Private Exchange.

 

“Private Placement Legend” means
the legend set forth in Section 2.6(g)(1)
to be placed on all Securities issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.

 

“QIB” means any “qualified
institutional buyer” (as defined under Rule 144A).

 

“Redemption Date,” when used with
respect to any Security to be redeemed, means the date fixed for such
redemption by or pursuant to this Indenture.

 

“Redemption Price,” when used with
respect to any Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture.

 

“Registered Exchange Offer” means an offer
by the Company, pursuant to a Registration Rights Agreement, to certain Holders
of Initial Securities or Additional Securities that have not been registered
under the Securities Act, as the case may be, to issue and deliver to such
Holders, in exchange for their Securities, a like aggregate principal amount of
Exchange Securities that have been registered under the Securities Act.

 

18

 

“Registration Rights Agreement”
means the Registration Rights Agreement, dated as of the Issue Date, among the
Company, the Guarantors and the Initial Purchasers, or any similar registration
rights agreement with respect to Additional Securities.

 

“Regulation S” means Regulation S
promulgated under the Securities Act.

 

“Regulation S Global Security”
means a permanent Global Security substantially in the form of Exhibit A
hereto bearing the Global Security Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Securities initially sold in reliance on Regulation S.

 

“Restricted Definitive Security”
means a Definitive Security bearing the Private Placement Legend.

 

“Restricted Global Security” means
a Global Security bearing the Private Placement Legend (including a Regulation
S Global Security).

 

“Restricted Period” means the
40-day distribution compliance period as defined in Regulation S.

 

“Restricted Subsidiary” of a
Person means any Subsidiary of the referenced Person that is not an
Unrestricted Subsidiary.

 

“Rule 144” means Rule 144
promulgated under the Securities Act.

 

“Rule 144A” means Rule 144A
promulgated under the Securities Act.

 

“Rule 903” means Rule 903
promulgated under the Securities Act.

 

“Rule 904” means Rule 904
promulgated the Securities Act.

 

“Sale/Leaseback Transaction” means an
arrangement relating to property now owned or hereafter acquired whereby the
Company or a Restricted Subsidiary thereof transfers such property to a Person
and the Company or a Restricted Subsidiary leases it from such Person.

 

“SEC” means the U.S. Securities
and Exchange Commission.

 

“Securities” means securities
issued under this Indenture.  The Initial
Securities, the Exchange Securities, the Private Exchange Securities and the
Additional Securities shall be treated as a single class for all purposes under
this Indenture, including, without limitation, waivers, amendments, redemptions
and offers to purchase, and unless otherwise provided or the context otherwise
requires, all references to the Securities shall include the Initial
Securities, the Exchange Securities, the Private Exchange Securities and the
Additional Securities.

 

“Securities Act” means the
Securities Act of 1933 and any successor statute thereto, in each case as
amended from time to time.

 

19

 

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

 

“Shelf Registration Statement” means the
shelf registration statement issued by the Company in connection with the offer
and sale of Initial Securities or Private Exchange Securities pursuant to a
Registration Rights Agreement.

 

“Significant Subsidiary” means any
Subsidiary that would be a “significant subsidiary” as defined in Article 1,
Rule 1-02 of Regulation S-X, promulgated pursuant to the Act,
as such Regulation is in effect on the Issue Date.

 

“Stated Maturity” means, with
respect to any installment of interest or principal on any series of
Indebtedness, the date on which such payment of interest or principal was
scheduled to be paid in the original documentation governing such Indebtedness,
and shall not include any contingent obligations to repay, redeem or repurchase
any such interest or principal prior to the date originally scheduled for the
payment thereof.

 

“Subordinated Indebtedness” means
Indebtedness of the Company (or a Guarantor) that is subordinated or junior in
right of payment to the Securities (or a Subsidiary Guarantee, as appropriate)
pursuant to a written agreement to that effect.

 

“Subsidiary”
means any subsidiary of the Company.  A “subsidiary”
of any Person means:

 

(1)                                  a
corporation, limited liability company or similar entity a majority of whose
Voting Stock is at the time, directly or indirectly owned by such Person, by
one or more subsidiaries of such Person or by such Person and one or more
subsidiaries of such Person; or

 

(2)                                  a
partnership, joint venture or similar entity, in which such Person or a
subsidiary of such Person is, at the date of determination, in the case of a
partnership, a general or limited partner of such partnership, and, in the case
of each of the foregoing entities, is entitled to receive more than 50 percent
of the assets of such entity upon its dissolution.

 

“Subsidiary Guarantee” means a
Guarantee by a Subsidiary Guarantor of the Company’s obligations with respect
to the Securities pursuant to the provisions of Article X hereof.

 

“TIDES” means the preferred term income deferrable equity securities issued by
Carriage Services Capital Trust and outstanding on the Issue Date.

 

“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939
as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture
Act of 1939 is amended after such date, “Trust Indenture Act” means, to the
extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

 

“Trust Officer” means the Chairman
of the Board, the President or any other officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.

 

20

 

“Trustee” means the Person named
as the “Trustee” in the first paragraph of this Indenture until a successor
Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Trustee” shall mean or include each Person who is
then a Trustee hereunder.

 

“Unrestricted Definitive Security”
means one or more Definitive Securities that do not bear and are not required
to bear the Private Placement Legend.

 

“Unrestricted Global Security”
means a permanent Global Security substantially in the form of Exhibit A
attached hereto that bears the Global Security Legend and that has the “Schedule
of Exchanges of Interests in the Global Security” attached thereto, and that is
deposited with or on behalf of and registered in the name of the Depositary,
representing Securities that do not bear the Private Placement Legend.

 

“Unrestricted Subsidiary”
means any Subsidiary of the Company that is designated by the Board of
Directors of the Company as an Unrestricted Subsidiary pursuant to a Board Resolution,
but only to the extent that such Subsidiary:

 

(1)                                  has
no Indebtedness other than Non-Recourse Debt;

 

(2)                                  is
not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any
such agreement, contract, arrangement or understanding are no less favorable to
the Company or such Restricted Subsidiary than those that might be obtained at
the time from Persons who are not Affiliates of the Company;

 

(3)                                  is
a Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such Person’s
financial condition or to cause such Person to achieve any specified levels of
operating results;

 

(4)                                  such
Subsidiary, either alone or in the aggregate with all other Unrestricted
Subsidiaries, does not operate, directly or indirectly, all or substantially
all of the business of the Company and its Subsidiaries; and

 

(5)                                  has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company or any of its
Restricted Subsidiaries.

 

The
Board of Directors of the Company may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if that designation would not cause a Default.  If a Restricted Subsidiary is designated as
an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding
Investments owned by the Company and its Restricted Subsidiaries in the
Subsidiary so designated, will be deemed to be an Investment made as of the
time of such designation and will reduce the amount available for Restricted
Payments under clause (1) of Section 4.4(a) hereof or
represent Permitted Investments, as applicable. 
All such outstanding Investments will be valued at their Fair Market
Value at the time of such designation. 
That designation will only be permitted if such Restricted Payment would
be so permitted at that time and if such Restricted Subsidiary otherwise meets
the definition of an Unrestricted Subsidiary.

 

21

 

Any designation of a
Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to
the Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers’ Certificate certifying that
such designation complied with the preceding conditions and was permitted by Section 4.4,
in which case such designation shall be effective as of the date specified in
such resolution hereof.  If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.3
hereof, the Company shall be in default of such covenant.

 

The Board of Directors of
the Company may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1)
such Indebtedness is permitted under Section 4.3
hereof, calculated on a pro forma basis as if such designation had occurred at
the beginning of the four-quarter reference period; and (2) no Default would be
in existence following such designation.

 

“Voting Stock” of any Person as of
any date means the Capital Stock of such Person that is at the time entitled
(without reference to the occurrence of any contingency) to vote in the
election of the Board of Directors (or similar governing body) of such Person.

 

“Weighted Average Life to Maturity”
means, when applied to any Indebtedness at any date, the number of years
obtained by dividing:

 

(1)                                  the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments
of principal, including payment at final maturity, in respect thereof, by (b)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment; by

 

(2)                                  the sum of all such payments.

 

“Wholly-Owned Restricted
Subsidiary” of any Person means a Restricted Subsidiary of such
Person all of the outstanding Capital Stock of which (other than directors’
qualifying shares) shall at the time be owned by such Person and/or by one or
more other Wholly-Owned Restricted Subsidiaries of such Person.

 

Section
1.2                                      Other
Definitions

 

	
  “Affiliate Transaction”

  	
   

  	
  Section 4.8(a)

  
	
  “Asset Sale Offer”

  	
   

  	
  Section 4.7(c)

  
	
  “Asset Sale Payment”

  	
   

  	
  Section 4.7(c)

  
	
  “Asset Sale Payment Date”

  	
   

  	
  Section 4.7(d)

  
	
  “Authenticating Agent”

  	
   

  	
  Section 2.2

  
	
  “Change of Control Offer”

  	
   

  	
  Section 4.11(a)

  

 

22

 

	
  “Change of Control Payment”

  	
   

  	
  Section 4.11(a)

  
	
  “Change of Control Payment Date”

  	
   

  	
  Section 4.11(a)

  
	
  “covenant defeasance option”

  	
   

  	
  Section 8.1(b)

  
	
  “Defaulted Interest”

  	
   

  	
  Section 2.11

  
	
  “Event of Default”

  	
   

  	
  Section 6.1

  
	
  “Excess Proceeds”

  	
   

  	
  Section 4.7(c)

  
	
  “incur”

  	
   

  	
  Section 4.3(a)

  
	
  “Initial Securities”

  	
   

  	
  Preamble

  
	
  “legal defeasance option”

  	
   

  	
  Section 8.1(b)

  
	
  “Legal Holiday”

  	
   

  	
  Section 11.7

  
	
  “Obligations”

  	
   

  	
  Section 10.1

  
	
  “Paying Agent”

  	
   

  	
  Section 2.3

  
	
  “Payment Default”

  	
   

  	
  Section 6.1(6)

  
	
  “Permitted Indebtedness”

  	
   

  	
  Section 4.3(b)

  
	
  “Registrar”

  	
   

  	
  Section 2.3

  
	
  “Restricted Payment”

  	
   

  	
  Section 4.4(a)

  

 

Section
1.3                                      Incorporation
by Reference of Trust Indenture Act

 

Whether or not qualified
under the Trust Indenture Act, this Indenture is deemed to be subject to the
provisions of the Trust Indenture Act that are applicable to all indentures
qualified thereunder, such provisions being incorporated by reference in and
made a part of this Indenture.  The
following Trust Indenture Act terms have the following meanings:

 

“Commission” means the
SEC;

 

“indenture
securities” means the Securities;

 

“indenture
security holder” means a Holder;

 

“indenture
to be qualified” means this Indenture;

 

“indenture
trustee” or “institutional trustee” means the Trustee; and

 

“obligor”
on the indenture securities means the Company and any other obligor (including
any Guarantor) on the indenture securities.

 

All other Trust Indenture
Act terms used in this Indenture that are defined by the Trust Indenture Act,
defined by the Trust Indenture Act by reference to another statute or defined
by an SEC rule have the meanings assigned to them by such definitions.

 

Section
1.4                                      Rules
of Construction

 

Unless the context
otherwise requires:

 

(1)                                  a term has the meaning assigned to it;

 

23

 

 

(2)                                  an
accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;

 

(3)                                  “or”
is not exclusive;

 

(4)                                  “including”
means including without limitation;

 

(5)                                  words
in the singular include the plural and words in the plural include the
singular;

 

(6)                                  references
to sections of or rules under the Exchange Act or the Securities Act shall be
deemed to include substitute, replacement or successor sections or rules
adopted by the SEC from time to time; and

 

(7)                                  “herein,”
“hereof” and other words of similar import refer to this Indenture as a whole
(as amended or supplemented from time to time) and not to any particular
Article, Section or other subdivision.

 

ARTICLE II

THE SECURITIES

 

Section 2.1                                      Form and Dating

 

(a)                                  General. 
The Securities and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit A hereto.  The notations of Subsidiary Guarantees on the
Securities shall be substantially in the form of Exhibit D hereto.  The Securities may have other notations,
legends or endorsements required by law, stock exchange rule or usage.  Each Security shall be dated the date of its
authentication.  The Securities shall be
in denominations of $1,000 and integral multiples thereof.

 

The terms and provisions
contained in the Securities shall constitute, and are hereby expressly made, a
part of this Indenture and the Company, the Guarantors and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. 
However, to the extent any provision of any Security conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling to the extent permitted by law.

 

(b)                                 Global Securities.  Securities issued in global form shall be
substantially in the form of Exhibit A attached hereto (including the
Global Security Legend thereon and the “Schedule of Exchanges of Interests
in the Global Security” attached thereto). 
Securities issued in definitive form shall be substantially in the form
of Exhibit A attached hereto (but without the Global Security Legend
thereon and without the “Schedule of Exchanges of Interests in the Global
Security” attached thereto).  Each Global
Security shall represent such of the outstanding Securities as shall be
specified therein and each shall provide that it shall represent the aggregate
principal amount of outstanding Securities from time to time endorsed thereon
and that the aggregate principal amount of outstanding Securities represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges, repurchases, transfers of interests

 

24

 

and redemptions. 
Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding
Securities represented thereby shall be made by the Trustee, as Registrar and
Securities Custodian, in accordance with instructions given by the Holder thereof
as required by Section 2.6 hereof.

 

Securities
offered and sold to QIBs in reliance on Rule 144A shall be issued initially in
the form of one or more 144A Global Securities, which shall be deposited on
behalf of the purchasers of the Securities represented thereby with the
Securities Custodian and registered in the name of the Depositary or a nominee
of the Depositary, duly executed by the Company and authenticated by the
Trustee as hereinafter provided.  If beneficial
interests in any such 144A Global Security or in any Regulation S Global
Security are transferred to an Institutional Accredited Investor, then, for so
long as the Applicable Procedures shall so permit, such beneficial interests
shall be represented by an IAI Global Security having an initial principal
amount equal to the aggregate amount of such beneficial interests, and such IAI
Global Security shall be deposited on behalf of the beneficial owners of the
Securities represented thereby with the Securities Custodian and registered in
the name of the Depositary or a nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as hereinafter provided.  Securities offered and sold in reliance on
Regulation S shall be issued initially in the form of a Regulation S Global
Security, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Securities and registered in the name
of the Depositary or the nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as hereinafter provided.

 

(c)                                  Euroclear and Clearstream Procedures Applicable.  The procedures of Euroclear and Clearstream
shall be applicable to transfers of beneficial interests in the Global
Securities that are held by Participants through Euroclear or Clearstream.

 

Section 2.2                                      Execution and
Authentication

 

One Officer shall sign
the Securities for the Company by manual or facsimile signature.  One Officer shall sign each notation of
Subsidiary Guarantee for each Guarantor by manual or facsimile signature.

 

If an Officer whose
signature is on a Security no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.

 

A
Security shall not be valid until an authorized signatory of the Trustee
manually authenticates the Security.  The
signature of the Trustee on a Security shall be conclusive evidence that such
Security has been duly and validly authenticated and issued under this
Indenture.  The form of Trustee’s
certificate of authentication to be borne by the Securities shall be
substantially as set forth in Exhibit A hereto.

 

Each Security shall be
dated the date of its authentication.

 

The Trustee shall
authenticate and deliver: (i) Initial Securities for original issue in an
aggregate principal amount of $130 million, (ii) if and when issued,
Additional Securities (which may be in the form of Initial Securities or in the
form of Exchange Securities), (iii) Exchange Securities for issue only in a
Registered Exchange Offer pursuant to a Registration Rights

 

25

 

Agreement, and
only in exchange for Initial Securities or Additional Securities of an equal
principal amount, and (iv) Private Exchange Securities for issue only in a
Private Exchange pursuant to a Registration Rights Agreement, and only in
exchange for Initial Securities or Additional Securities of an equal principal
amount, in each case upon a written order of the Company signed by one Officer
of the Company.  Such order shall specify
the amount of the Securities to be authenticated and the date on which the
original issue of Securities is to be authenticated and whether the Securities
are to be in the form of Initial Securities or Exchange Securities.  The Company may issue Additional Securities
under this Indenture subsequent to the Issue Date, subject to Section 4.3 of this Indenture; provided, however, in no event may the
Company issue any Additional Securities at a price that would cause such
Additional Securities to have “original issue discount” within the meaning of Section 1273
of the Code.

 

The Trustee may appoint
an agent (the “Authenticating Agent”) reasonably acceptable to the Company to
authenticate the Securities.  Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so.  Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent.

 

Section 2.3                                      Registrar and
Paying Agent

 

The Company shall at all
times maintain in the continental United States an office or agency where
Securities may be presented for registration of transfer or for exchange (the “Registrar”),
and it shall maintain an office or agency in the City and State of New York
where Securities may be presented for payment (the “Paying Agent”).  The Registrar shall keep a register of the
Securities and of their transfer and exchange. 
The Company may have one or more co-registrars and one or more
additional paying agents.  The term “Registrar”
includes any co-registrar, and the term “Paying Agent” includes any such
additional paying agent.  The Company may
change any Paying Agent or Registrar without notice to any Holder.  The Company shall notify the Trustee in
writing of the name and address of any Agent not named in this Indenture.  If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as
such.  The Company shall enter into an
appropriate agency agreement with any Agent not a party to this Indenture, and
such agreement shall incorporate the TIA’s provisions of this Indenture that
relate to such Agent.  The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.

 

The Company initially
appoints the Trustee as Registrar and Securities Custodian at its office
indicated in Section 11.2. Initially, the office or agency of the
Company in the City and State of New York where Securities may be presented for
payment is Wells Fargo Corporate Trust, c/o DTC, 1st Floor, TADS Department, 55
Water Street, New York, New York 10041.

 

Section 2.4                                      Paying Agent To
Hold Money in Trust

 

By at least 11:00 a.m.
(New York City time) on the date on which any principal, premium, if any, or
interest on any Security is due and payable, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal, premium, if any, and
interest when due.  The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that
such Paying Agent shall hold in trust for the benefit of Holders or the Trustee
all money held by

 

26

 

such Paying Agent
for the payment of principal, premium, if any, and interest (if any) on the
Securities and shall notify the Trustee of any default by the Company in making
any such payment.  If the Company or a
Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund.  The Company at any time may require a Paying
Agent (other than the Trustee) to pay all money held by it to the Trustee and
to account for any funds disbursed by such Paying Agent.  Upon complying with this Section 2.4,
the Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money delivered to the Trustee.  Upon any bankruptcy, reorganization or
similar proceeding with respect to the Company, the Trustee shall serve as
Paying Agent for the Securities or, if it does not at such time maintain an
office in the City and State of New York where Securities may be presented or
surrendered for payment, then it shall cause such a Paying Agent to be
appointed.

 

Section 2.5                                      Holder Lists

 

The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Holders and shall otherwise
comply with TIA Section 312(a).  If
the Trustee is not the Registrar, the Company shall furnish to the Trustee, in
writing at least seven Business Days before each Interest Payment Date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of Holders, and the Company shall otherwise comply with TIA Section 312(a).

 

Section 2.6                                      Transfer and
Exchange

 

(a)                                  Transfer and Exchange of Global Securities.  A Global Security may not be transferred as a
whole except by the Depositary to a nominee of the Depositary, by a nominee of
the Depositary to the Depositary or to another nominee of the Depositary, or by
the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary.  Owners of
beneficial interests in Global Securities shall not be entitled to receive
Definitive Securities unless:

 

(1)                                  the
Company delivers to the Trustee and the Registrar notice from the Depositary
that it is unwilling or unable to continue to act as Depositary or that it is
no longer a clearing agency registered under the Exchange Act and, in either
case, a successor Depositary is not appointed by the Company within 90 days
after the date of such notice from the Depositary; or

 

(2)                                  there
has occurred and is continuing an Event of Default and DTC notifies the Trustee
and the Registrar of its decision to exchange the Global Securities for
Definitive Securities.

 

Upon the occurrence of
either of the preceding events in (1) or (2) above, Definitive Securities shall
be issued in such names as the Depositary shall instruct the Trustee and the
Registrar.  Global Securities also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.7 and Section 2.9
hereof.  Every Security authenticated and
delivered in exchange for, or in lieu of, a Global Security or any portion
thereof, pursuant to this Section 2.6,  Section 2.7 or Section 2.9
hereof, shall be authenticated and delivered in the form of, and shall

 

27

 

be, a Global
Security.  A Global Security may not be
exchanged for another Security other than as provided in this Section 2.6(a)
however, beneficial interests in a Global Security may be transferred and
exchanged as provided in Sections 2.6(b)
or (f) hereof.

 

(b)                                 Transfer and Exchange of Beneficial Interests in the
Global Securities.  The
transfer and exchange of beneficial interests in the Global Securities shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. 
Beneficial interests in the Restricted Global Securities shall be
subject to restrictions on transfer comparable to those set forth herein,
including those set forth in the Private Placement Legend to the extent
required by the Securities Act. 
Transfers of beneficial interests in the Global Securities also shall
require compliance with either subparagraph (1) or (2) below, as applicable, as
well as one or more of the other following subparagraphs, as applicable:

 

(1)                                  Transfer of Beneficial Interests in the Same Global
Security.  Beneficial
interests in any Restricted Global Security may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in the same
Restricted Global Security in accordance with the transfer restrictions set
forth in the Private Placement Legend; provided, however, that prior to the
expiration of the Restricted Period, transfers of beneficial interests in the
Regulation S Global Security may not be to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser).  Beneficial interests in any Unrestricted
Global Security may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Security.  No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described in
this Section 2.6(b)(1).

 

(2)                                  All Other Transfers and Exchanges of Beneficial
Interests in Global Securities. 
In connection with all transfers and exchanges of beneficial interests
that are not subject to Section 2.6(b)(1) above, the transferor of
such beneficial interest must deliver to the Registrar (i) a written order from
a Participant or an Indirect Participant given to the Depositary in accordance
with the Applicable Procedures directing the Depositary to credit or cause to
be credited a beneficial interest in another Global Security in an amount equal
to the beneficial interest to be transferred or exchanged; and (ii)
instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such
increase.

 

(3)                                  Transfer of Beneficial Interests to Another
Restricted Global Security.  A
beneficial interest in any Restricted Global Security may be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in another
Restricted Global Security if the transfer complies with the requirements of Section 2.6(b)(2)
above and the Registrar receives the following:

 

(A)                              if
the transferee will take delivery in the form of a beneficial interest in the
144A Global Security, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;

 

(B)                                if
the transferee will take delivery in the form of a beneficial interest in the
Regulation S Global Security, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in item (2)
thereof; and

 

28

 

(C)                                if
the transferee will take delivery in the form of a beneficial interest in the
IAI Global Security, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certification in item (3) thereof,
and the transferee must deliver a certificate in the form of Exhibit F
hereto, and, if such transfer is in respect of an aggregate principal amount of
Securities of less than $250,000, an Opinion of Counsel reasonably acceptable
to the Company and the Registrar that such transfer is in compliance with the
Securities Act and any applicable securities laws of any state of the United
States.

 

(4)                                  Transfer and Exchange of Beneficial Interests in a
Restricted Global Security for Beneficial Interests in the Unrestricted Global
Security.  A beneficial
interest in any Restricted Global Security may be exchanged by any holder
thereof for a beneficial interest in an Unrestricted Global Security or
transferred to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Security if the exchange or transfer
complies with the requirements of Section 2.6(b)(2) above and:

 

(A)                              such
exchange or transfer is effected pursuant to a Registered Exchange Offer in
accordance with the related Registration Rights Agreement and the holder of the
beneficial interest to be transferred, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter of
Transmittal or via the Depositary’s book-entry system to the effect that it is
not (i) a broker-dealer, (ii) a Person participating in the distribution of the
Exchange Securities or (iii) a Person who is an affiliate (as defined in Rule
144) of the Company;

 

(B)                                such
transfer is effected pursuant to a Shelf Registration Statement in accordance
with the related Registration Rights Agreement;

 

(C)                                such
transfer is effected by an Exchanging Dealer pursuant to an Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

(D)                               the
Registrar receives the following:

 

(i)                                     if
the holder of such beneficial interest in a Restricted Global Security proposes
to exchange such beneficial interest for a beneficial interest in an
Unrestricted Global Security, a certificate from such holder in the form of Exhibit
C hereto, including the certification in item (1)(a) thereof; or

 

(ii)                                  if
the holder of such beneficial interest in a Restricted Global Security proposes
to transfer such beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Security, a certificate from such holder in the form of Exhibit B
hereto, including the certification in item (4) thereof;

 

and, in each such case
set forth in this subparagraph (D), if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of Counsel in form reasonably
acceptable to the Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and state “blue sky” laws and that the
restrictions on transfer contained herein and in the Private

 

29

 

Placement Legend are no
longer required in order to maintain compliance with the Securities Act.

 

If any such transfer is
effected pursuant to subparagraph (B) or (D) above at a time when an
Unrestricted Global Security has not yet been issued, the Company shall issue
and, upon receipt of an Authentication Order in accordance with Section 2.2
hereof, the Trustee shall authenticate one or more Unrestricted Global
Securities in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above.

 

Beneficial interests in
an Unrestricted Global Security cannot be exchanged for, or transferred to
Persons who take delivery thereof in the form of, a beneficial interest in a
Restricted Global Security.

 

(c)                                  Transfer or Exchange of Beneficial Interests for
Definitive Securities. 
Beneficial interests in a Global Security may be exchanged or
transferred for Definitive Securities only as provided in Section 2.6(a)
hereof.

 

(d)                                 Transfer and Exchange of Definitive Securities for
Beneficial Interests.  If
issued, Definitive Securities may not be exchanged or transferred for
beneficial interests in a Global Security.

 

(e)                                  Transfer and Exchange of Definitive Securities for
Definitive Securities.  Upon
request by a Holder of Definitive Securities and such Holder’s compliance with
the provisions of this Section 2.6(e), the Registrar shall register
the transfer or exchange of Definitive Securities.  Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Securities duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. 
In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 2.6(e).

 

(1)                                  Restricted Definitive Securities to Restricted
Definitive Securities.  Any
Restricted Definitive Security may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Security if the Registrar receives the following:

 

(A)                              if
the transfer will be made pursuant to Rule 144A under the Securities Act, then
the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;

 

(B)                                if
the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (2) thereof; and

 

(C)                                if
the transfer will be made to an Institutional Accredited Investor, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certification in item (3) thereof, and the transferee must
deliver a certificate in the form of

 

30

 

Exhibit F hereto, and, if such
transfer is in respect of an aggregate principal amount of Securities of less
than $250,000, an Opinion of Counsel reasonably acceptable to the Company and
the Registrar that such transfer is in compliance with the Securities Act and
any applicable securities laws of any state of the United States.

 

(2)                                  Restricted Definitive Securities to Unrestricted
Definitive Securities.  Any
Restricted Definitive Security may be exchanged by the Holder thereof for an
Unrestricted Definitive Security or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Security if:

 

(A)                              such
exchange or transfer is effected pursuant to a Registered Exchange Offer in
accordance with the related Registration Rights Agreement and the Holder, in the
case of an exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal or via the Depositary’s book-entry system
to the effect that it is not (1) a broker-dealer, (2) a Person participating in
the distribution of the Exchange Securities or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;

 

(B)                                any
such transfer is effected pursuant to a Shelf Registration Statement in
accordance with the related Registration Rights Agreement;

 

(C)                                any
such transfer is effected by an Exchanging-Dealer pursuant to an Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

(D)                               the
Registrar receives the following:

 

(i)                                     if
the Holder of such Restricted Definitive Securities proposes to exchange such
Securities for an Unrestricted Definitive Security, a certificate from such
Holder in the form of Exhibit C hereto, including the certification in
item (1)(b) thereof; or

 

(ii)                                  if
the Holder of such Restricted Definitive Security proposes to transfer such
Securities to a Person who shall take delivery thereof in the form of an
Unrestricted Definitive Security, a certificate from such Holder in the form of
Exhibit B hereto, including the certification in item (4) thereof;

 

and, in each such case
set forth in this subparagraph (D), if the Registrar so requests, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and state “blue
sky” laws and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain compliance
with the Securities Act.

 

(3)                                  Unrestricted Definitive Securities to Unrestricted
Definitive Securities.  A
Holder of Unrestricted Definitive Securities may transfer such Securities to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Security.  Upon receipt of a request to
register such a transfer, the Registrar shall register the Unrestricted
Definitive Security pursuant to the instructions from the Holder thereof.

 

31

 

(f)                                    (1)                                  Registered Exchange Offer.  Upon the occurrence of a Registered Exchange
Offer in accordance with the related Registration Rights Agreement, the Company
shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2,
the Trustee shall authenticate:

 

(A)                              one
or more Unrestricted Global Securities in an aggregate principal amount equal
to the principal amount of the beneficial interests in the Restricted Global
Securities tendered for acceptance by Persons that certify in the applicable
Letters of Transmittal or via the Depositary’s book-entry system to the effect
that (I) they are not broker-dealers, (II) they are not participating in a
distribution of the Exchange Securities and (III) they are not affiliates (as
defined in Rule 144) of the Company, and accepted for exchange in the
Registered Exchange Offer; and

 

(B)                                Unrestricted
Definitive Securities in an aggregate principal amount equal to the principal
amount of any Restricted Definitive Securities accepted for exchange in the
Registered Exchange Offer.

 

Concurrently with the
issuance of such Securities, the Registrar shall cause the aggregate principal
amount of the applicable Restricted Global Securities to be reduced
accordingly, and the Company shall execute and the Trustee shall authenticate,
and deliver to the Persons designated by the Holders of any Definitive
Securities so accepted, Definitive Securities in the appropriate principal
amount.

 

(2)                                  If
upon consummation of a Registered Exchange Offer, any Initial Purchaser holds
Initial Securities acquired by it as part of the initial distribution thereof,
the Company, upon written request of such Initial Purchaser, simultaneously
with the delivery of the Exchange Securities pursuant to the Registered
Exchange Offer shall issue and deliver to such Initial Purchaser and, upon
receipt of an Authentication Order in accordance with Section 2.2
hereof, the Trustee shall authenticate, one or more Restricted Global
Securities representing Private Exchange Securities in a Private Exchange for
the Initial Securities held by such Initial Purchaser, in an aggregate
principal amount equal to the Initial Securities so exchanged by such Initial
Purchaser in the Private Exchange.

 

(g)                                 Legends. 
The following legends shall appear on the face of all Global Securities
and Definitive Securities issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture, until the
expiration of the applicable holding period with respect to the Securities set
forth in Rule 144(A) under the Securities Act (or, in the case of Securities
issued under Regulation S, the expiration of the Restricted Period).

 

(1)                                  Private Placement Legend.

 

(A)                              Except
as permitted by subparagraph (B) below, each Global Security and each
Definitive Security (and all Securities issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the following
form:

 

“THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES

 

32

 

ACT OF 1933 (THE “SECURITIES
ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

 

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF
THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 UNDER THE SECURITIES ACT, (IV)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE), (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, OR (VI) TO AN INSTITUTIONAL “ACCREDITED
INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT, AND IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN
(A) ABOVE.”

 

(B)                                Notwithstanding
the foregoing, any Global Security or Definitive Security issued pursuant to
subparagraphs (b)(4), (e)(3) or (f) to this Section 2.6 (and all
Securities issued in exchange therefor or substitution thereof) shall not bear
the Private Placement Legend.

 

(2)                                  Global Security Legend.  Each Global Security shall bear a legend in
substantially the following form:

 

“THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS
DEFINED IN THE INDENTURE 

 

33

 

GOVERNING THIS NOTE) OR
ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS
NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE
SECURITIES CUSTODIAN MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT
TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF
THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.10 OF THE INDENTURE AND (IV)
THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.  UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE COMPANY 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 MAY BE REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR SUCH OTHER ENTITY AS MAY BE 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.”

 

(h)                                 Cancellation and/or Adjustment of Global Securities.  At such time as all beneficial interests in a
particular Global Security have been exchanged for Definitive Securities or a
particular Global Security has been redeemed, repurchased or canceled in whole
and not in part, each such Global Security shall be returned to or retained and
canceled by the Trustee in accordance with Section 2.10
hereof.  At any time prior to such cancellation,
if any beneficial

 

34

 

interest in a Global Security is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Security or for Definitive Securities,
the principal amount of Securities represented by such Global Security shall be
reduced accordingly and an endorsement shall be made on such Global Security by
the Registrar or by the Depositary at the direction of the Registrar to reflect
such reduction; and if the beneficial interest is being exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Security, such other Global Security
shall be increased accordingly and an endorsement shall be made on such Global
Security by the Registrar or by the Depositary at the direction of the
Registrar to reflect such increase.

 

(i)                                     General Provisions Relating to Transfers and
Exchanges.

 

(1)                                  To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Global Securities and Definitive Securities upon
the Company’s order or at the Registrar’s request.

 

(2)                                  No
service charge shall be made to a holder of a beneficial interest in a Global
Security or to a Holder of a Definitive Security for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge or other fee required
by law and payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.9,
3.6, 3.7, 4.7 and 4.11 hereof).

 

(3)                                  All
Global Securities and Definitive Securities issued upon any registration of
transfer or exchange of Global Securities or Definitive Securities shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Global Securities or Definitive
Securities surrendered upon such registration of transfer or exchange.

 

(4)                                  None
of the Company, the Trustee or the Registrar shall be required (A) to issue, to
register the transfer of or to exchange any Securities during a period of 15
days before the day of any selection of Securities for redemption under Section 3.2
hereof and ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Securities so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part or (C) to register the transfer of or to exchange a
Security between a record date and the next succeeding Interest Payment Date.

 

(5)                                  Prior
to the due presentation for registration of transfer of any Security, the
Company, the Trustee, the Paying Agent and the Registrar may deem and treat the
Person in whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal, interest and
premium (if any) on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the Trustee,
the Paying Agent or the Registrar shall be affected by notice to the contrary.

 

(6)                                  The
Trustee shall authenticate Global Securities and Definitive Securities in
accordance with the provisions of Section 2.2 hereof.

 

35

 

(7)                                  All
certifications, certificates and Opinions of Counsel required to be submitted
to the Registrar pursuant to this Section 2.6 to effect a
registration of transfer or exchange may be submitted by facsimile.

 

Section 2.7                                      Replacement
Securities

 

If any mutilated Security
is surrendered to the Registrar or the Company and the Registrar receives
evidence to their satisfaction of the destruction, loss or theft of any
Security, the Company will issue and the Trustee, upon receipt of a written
order of the Company conforming to Section 2.2 hereof, will
authenticate a replacement Security (accompanied by a notation of the
Subsidiary Guarantees duly endorsed by the Guarantors) if the Registrar’s and
the Company’s reasonable requirements are met. 
If required by the Registrar or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Registrar, the
Trustee and the Company to protect the Company, the Trustee, the Registrar, any
other Agent and any Authenticating Agent from any loss that any of them may
suffer if a Security is replaced.  The
Company may charge for its expenses in replacing a Security.

 

Every replacement
Security is an additional obligation of the Company and will be entitled to all
of the benefits of this Indenture equally and proportionately with all other
Securities duly issued hereunder.

 

Section 2.8                                      Outstanding
Securities

 

The Securities
outstanding at any time are all the Securities authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Security effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding.  Except as set forth in Section 11.6
hereof, a Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.

 

If a Security is replaced
pursuant to Section 2.7 hereof, it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Security is
held by a protected purchaser.

 

If the principal amount
of any Security is considered paid under Section 4.1 hereof, it
ceases to be outstanding and interest on it ceases to accrue.

 

Section 2.9                                      Temporary
Securities

 

Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities. 
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities.  Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.  Holders of temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as a holder of
definitive Securities.

 

36

 

Section 2.10                                Cancellation

 

The Company at any time
may deliver Securities to the Trustee for cancellation.  The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment.  The
Trustee and no one else shall cancel and destroy (subject to the record
retention requirements of the Exchange Act) all Securities surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
deliver a certificate of such destruction to the Company unless the Company
directs the Trustee and the Registrar to deliver canceled Securities to the
Company.  The Company may not issue new Securities
to replace Securities it has redeemed, paid or delivered to the Trustee or the
Registrar for cancellation.

 

Section 2.11                                Defaulted Interest

 

If the Company defaults
in a payment of interest (“Defaulted Interest”) on the Securities, the Company
shall pay Defaulted Interest (as provided in Section 4.1) in any
lawful manner.  The Company may pay the
Defaulted Interest to the Persons who are Holders on a subsequent special
record date.  The Company shall fix or
cause to be fixed (or upon the Company’s failure to do so the Trustee shall fix
pursuant to a written instruction of Holders of at least a majority in
principal amount of the Securities) any such special record date and payment
date to the reasonable satisfaction of the Trustee which special record date
shall not be less than 10 days prior to the payment date for such Defaulted
Interest and the Company, or at the Company’s request, the Trustee, shall
promptly mail or cause to be mailed to each Holder a notice that states the
special record date, the payment date and the amount of Defaulted Interest to
be paid.  The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on
each Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when so deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest as
provided in this Section 2.11.

 

Section 2.12                                CUSIP Numbers

 

The Company in issuing
the Securities may use “CUSIP” numbers (if then generally in use) and, if so,
the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience
to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.

 

37

 

ARTICLE III

REDEMPTION

 

Section 3.1                                      Notices to
Trustee

 

If the Company elects to
redeem Securities pursuant to Section 3.7 hereof, it shall notify
the Trustee in writing of the Redemption Date and the principal amount of
Securities to be redeemed and whether it requests the Trustee to give notice to
such redemption.

 

The Company shall give
each notice to the Trustee provided for in this Section 3.1 at
least ten Business Days (unless the Trustee consents to a shorter period)
before the date of giving notice of a redemption pursuant to Section 3.3.  Such notice shall be accompanied by an
Officers’ Certificate to the effect that such redemption will comply with the
conditions herein.  If fewer than all the
Securities are to be redeemed, the record date relating to such redemption
shall be selected by the Company and set forth in the related notice given to
the Trustee, which record date shall be not less than 15 days after the date of
such notice.

 

Section 3.2                                      Selection of
Securities To Be Redeemed

 

In the case of any
partial redemption, selection of the Securities for redemption will be made by
the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Securities are listed or, if the
Securities are not listed, then on a pro
rata basis, by lot or in accordance with any other method the
Trustee considers fair and appropriate. 
The Trustee shall make the selection from outstanding Securities not
previously called for redemption.  The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. 
Securities and portions of them the Trustee selects shall be in amounts
of $1,000 or a whole multiple of $1,000. 
Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.  The Trustee shall notify the Company promptly
of the Securities or portions of Securities to be redeemed.  The Trustee may rely upon information
provided by the Registrar for purposes of this Section 3.2.

 

The provisions of the
preceding paragraph of this Section 3.2 shall not apply with
respect to any redemption affecting only a Global Security, whether such Global
Security is to be redeemed in whole or in part. In case of any such redemption
in part, the unredeemed portion of the principal amount of the Global Security
shall be in an authorized denomination.

 

Section 3.3                                      Notice of
Redemption

 

At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail, or cause to be mailed, a notice of redemption by first-class mail to each
Holder of Securities to be redeemed at such Holder’s registered address.

 

The notice shall identify
the Securities to be redeemed and shall state:

 

(1)                                  the
Redemption Date;

 

38

 

(2)                                  the
Redemption Price;

 

(3)                                  the
name and address of the Paying Agent where Securities are to be surrendered;

 

(4)                                  that
Securities called for redemption must be surrendered to the Paying Agent to
collect the Redemption Price;

 

(5)                                  if
fewer than all the outstanding Securities are to be redeemed, the
identification and principal amounts of the particular Securities to be
redeemed;

 

(6)                                  that,
unless the Company defaults in making such redemption payment, interest on
Securities (or portions thereof) called for redemption ceases to accrue on and
after the Redemption Date;

 

(7)                                  the
CUSIP number, if any, printed on the Securities being redeemed; and

 

(8)                                  that
no representation is made as to the correctness or accuracy of the CUSIP
number, if any, listed in such notice or printed on the Securities.

 

If any of the Securities
to be redeemed is in the form of a Global Security, then the Company shall
modify such notice to the extent necessary to accord with the procedures of the
Depositary applicable to redemption.

 

At the Company’s request
and in accordance with Section 3.1, the Trustee shall give the
notice of redemption in the Company’s name and at the Company’s expense.  In such event, the Company shall provide the
Trustee with the information required by this Section 3.3.

 

Section 3.4                                      Effect of Notice
of Redemption

 

Once notice of redemption
is mailed to Holders, Securities (or portions thereof) called for redemption
become irrevocably due and payable on the Redemption Date and at the Redemption
Price stated in the notice.  A notice of
redemption may not be conditional. 
Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.

 

Section 3.5                                      Deposit of
Redemption Price

 

No later than 10:00 a.m.
(New York City time) on the date on which any principal, interest and premium
(if any) on any Security is due and payable, the Company shall deposit with the
Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the Redemption Price of
and accrued interest on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which are owned by
the Company or a Subsidiary and have been delivered by the Company or such
Subsidiary to the Trustee for cancellation. 
If the Company complies with the provisions of this paragraph, then on
and after the Redemption Date, interest will cease to accrue on the Securities
or the portions of Securities called for redemption.

 

39

 

Section 3.6                                      Securities
Redeemed in Part

 

Upon cancellation of a
Security that is redeemed in part, the Company shall issue and the Trustee
shall authenticate for the Holder (at the Company’s expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.  The Trustee shall notify
the Registrar of the issuance of such new Security.

 

Section 3.7                                      Optional
Redemption

 

(a)                                  At
any time or from time to time on and after January 15, 2010, the Company
may redeem all or a part of the Securities upon not less than 30 nor more than
60 days’ notice at the Redemption Prices (expressed as percentages of the
principal amount) set forth below plus accrued and unpaid interest on the
Securities, if any, to the applicable Redemption Date (subject to the right of
Holders of record on the relevant record date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date), if redeemed
during the 12-month period beginning January 15 of the years indicated:

 

	
  Year

  	
   

  	
  Redemption Price

  
	
  2010

  	
   

  	
  103.938%

  
	
  2011

  	
   

  	
  102.625%

  
	
  2012

  	
   

  	
  101.313%

  
	
  2013 and thereafter

  	
   

  	
  100.000%

  

 

(b)                                 Prior
to January 15, 2008, the Company may on one or more occasions redeem up to
an aggregate amount equal to 35% of the aggregate principal amount of the
Securities (including Additional Securities) originally issued under this
Indenture at a Redemption Price of 107.875% of the principal amount of the
Securities, plus accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant Interest Payment Date) with the Net Cash Proceeds of one or more
Equity Offerings; provided, that
(i) at least 65% in aggregate principal amount of the Securities
(including any Additional Securities) originally issued hereunder remains
outstanding immediately after the occurrence of such redemption (excluding
Securities held by the Company and its Subsidiaries) and (ii) each such
redemption occurs within 90 days of the date of the closing of the related
Equity Offering.

 

Except pursuant to the
preceding paragraph, the Securities will not be redeemable at the Company’s
option prior to January 15, 2010. 
Except as set forth under Sections 4.7(c) and 4.11, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Securities or to repurchase the Securities at the
option the Holders.

 

(c)                                  Any
redemption pursuant to this Section 3.7 shall be made pursuant to
the provisions of Section 3.1 through 3.6 hereof.

 

40

 

ARTICLE IV

COVENANTS

 

Section 4.1                                      Payment of
Securities

 

The Company covenants and
agrees for the benefit of the Holders of the Securities that it shall promptly
pay the principal of, premium, if any, and interest on the Securities on the
dates and in the manner provided in the Securities and in this Indenture.  Payments of principal, premium, if any and
interest on the Securities shall be deemed due for all purposes under this
Indenture whether such payments are due at Stated Maturity, upon optional
redemption, upon required repurchase pursuant to Sections 4.7
or 4.11 hereof, upon declaration or otherwise.  Principal, premium, if any, and interest on
the Securities shall be considered paid on the date due if by 11:00 a.m., New York
City time, on such date a Paying Agent (other than the Company or an Affiliate
thereof) holds in accordance with this Indenture money sufficient to pay all
principal, premium, if any, and interest then due.

 

The Company will pay, to
the extent lawful, interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, at the rate
then in effect on the Securities to the extent lawful; it will pay, to the
extent lawful, interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest (without regard
to any applicable grace periods), from time to time on demand at the same rate
as on overdue principal.

 

All references in this
Indenture, the Securities or the Subsidiary Guarantees to interest shall be
deemed to include Additional Interest, unless the context indicates
otherwise.  The Company shall notify the
Trustee in writing of the amount of any Additional Interest payable on any
Securities in advance of the relevant Interest Payment Date.

 

Section 4.2                                      SEC Reports

 

Whether or not required
by the SEC, so long as any Securities are outstanding, the Company will furnish
to the Trustee and the Holders of Securities, within the time periods specified
in the SEC’s rules and regulations:

 

(1)                                  all
quarterly and annual financial information with respect to the Company and its
Subsidiaries that would be required to be contained in a filing with the SEC on
Forms 10-Q and 10-K if the Company were required to file such Forms,
including a section on “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 Company’s
certified independent public accountants; and

 

(2)                                  all
current reports that would be required to be filed with the SEC on Form 8-K
if the Company were required to file such reports.

 

If the Company has
designated any of its Subsidiaries as Unrestricted Subsidiaries, then the
quarterly and annual financial information required by the preceding paragraph
shall include a reasonably detailed presentation, either on the face of the
financial statements or in the

 

41

 

footnotes thereto,
and in Management’s Discussion and Analysis of Financial Condition and Results
of Operations, of the financial condition and results of operations of the
Company and its Restricted Subsidiaries separate from the financial condition
and results of operations of the Unrestricted Subsidiaries of the Company.

 

In addition, whether or
not required by the SEC, the Company will file a copy of all of the information
and reports referred to in clause (1) and (2) above with the SEC for public
availability within the time periods specified in the SEC’s rules and
regulations (unless the SEC will not accept or does not permit such a filing).

 

In addition, the Company
agrees that, for so long as any Securities remain outstanding, if at any time
it is not required to file with the SEC the reports required by the preceding
paragraphs, it will furnish to Holders of Securities and to prospective
investors, upon request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.

 

Section 4.3                                      Incurrence of
Indebtedness

 

(a)                                  The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, “incur”) any Indebtedness (including Acquired Debt); provided, however, that the Company and
any Guarantor may incur Indebtedness (including Acquired Debt), if the Fixed
Charge Coverage Ratio for the Company’s most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred would have
been at least 2.25 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred at the beginning of such four-quarter period.

 

(b)                                 So
long as no Default shall have occurred and be continuing or would be caused
thereby, the foregoing paragraph (a) of this Section 4.3
will not prohibit the incurrence of any of the following items of Indebtedness
(collectively, “Permitted Indebtedness”):

 

(1)                                  the
incurrence by the Company and any Guarantor of Indebtedness (including letters
of credit) under Credit Facilities; provided
that the aggregate principal amount of all Indebtedness of the Company and the
Guarantors outstanding at any time under this clause (1) under all Credit
Facilities after giving effect to such incurrence does not exceed $75.0 million
(with letters of credit being deemed to have a principal amount equal to the
maximum potential liability of the Company and its Subsidiaries thereunder)
less the amount of any Indebtedness under Credit Facilities that is permanently
retired with the proceeds of an Asset Sale in accordance with Section 4.7 hereof;

 

(2)                                  the
incurrence by the Company and the Guarantors of Indebtedness represented by (a)
the Initial Securities and the Subsidiary Guarantees, and (b) any Securities
issued pursuant to the Registration Rights Agreement in exchange for the
Initial Securities and any Additional Securities, and any Subsidiary Guarantees
related thereto;

 

(3)                                  the
incurrence of other Indebtedness outstanding on the Issue Date after giving
effect to the use of proceeds of the Securities;

 

42

 

(4)                                  the
incurrence by the Company or any Guarantor of Indebtedness represented by
Capital Lease Obligations, mortgage financings or purchase money obligations,
in each case incurred for the purpose of financing all or part of the purchase
price or cost of construction or improvement of property, plant or equipment
used in the business of the Company and its Restricted Subsidiaries, in an
aggregate principal amount, including all Indebtedness incurred to refund,
refinance or replace any such Indebtedness (or refinancings, refundings or
replacements thereof), not to exceed $15.0 million at any one time outstanding;

 

(5)                                  the
incurrence by the Company or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used
to refund, refinance or replace, Indebtedness (other than intercompany
Indebtedness) that was permitted by this Indenture to be incurred under
paragraph (a) of this Section 4.3
covenant or clause (2), (3) or this clause (5) of this
paragraph (b);

 

(6)                                  the
incurrence by the Company or any of its Restricted Subsidiaries of intercompany
Indebtedness between or among the Company and any of its Restricted Subsidiaries;
provided, however, that:

 

(A)                              (i) if
the Company is the obligor on such Indebtedness, such Indebtedness must be
expressly subordinated to the prior payment in full in cash of all obligations
with respect to the Securities, and (ii) if a Guarantor is the obligor of
such Indebtedness, such Indebtedness must be expressly subordinated to the
prior payment in full in cash of all obligations of such Guarantor with respect
to its Subsidiary Guarantee, and

 

(B)                                (i) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary thereof and (ii) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Restricted Subsidiary
thereof, shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the case may be,
that was not permitted by this clause;

 

(7)                                  the
accrual of interest, accretion or amortization of original issue discount, the
payment of interest on any Indebtedness in the form of additional Indebtedness
with the same terms, and the payment of dividends on Disqualified Stock in the
form of additional shares of the same class of Disqualified Stock; provided, in each such case, that the
amount thereof is included in Fixed Charges of the Company as accrued;

 

(8)                                  the
incurrence by the Company or any of its Restricted Subsidiaries of obligations
under Interest Rate Agreements, Currency Agreements and Commodity Agreements; provided, that such Interest Rate
Agreements, Currency Agreements and Commodity Agreements are related to
business transactions of the Company or its Restricted Subsidiaries entered
into in the ordinary course of business and are entered into for bona fide
hedging purposes (and not financing or speculative purposes) of the Company or
its Restricted Subsidiaries (as determined in good faith by the Board of
Directors or senior management of the Company);

 

43

 

(9)                                  any
obligation arising from agreements of the Company or a Restricted Subsidiary
providing for indemnification, guarantee, adjustment of purchase price,
holdback, contingency payment obligation based on the performance of the
disposed asset or similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, asset or Capital Stock of a
Restricted Subsidiary, provided
that the maximum aggregate liability in respect of all such Indebtedness shall
at no time exceed the gross proceeds actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;

 

(10)                            any
obligation arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of
business, provided, however, that such Indebtedness is
extinguished within five Business Days of incurrence; and

 

(11)                            Indebtedness
of the Company or any Guarantor in an aggregate principal amount which, when
taken together with all Indebtedness of the Company and the Guarantors
outstanding on the date of such incurrence other than Indebtedness permitted by
clauses (1) through (10) above of this paragraph (b) or in the
first paragraph (a) of this Section 4.3,
does not exceed $15.0 million.

 

The Company will not, and
will not permit any Guarantor to, directly or indirectly, incur any
Indebtedness which by its terms (or by the terms of any agreement governing
such Indebtedness) is subordinated to any other Indebtedness of the Company or
of such Guarantor, as the case may be, unless made expressly subordinate to the
Securities or the Subsidiary Guarantee of such Guarantor, as the case may be,
to the same extent and in the same manner as such Indebtedness is subordinated
pursuant to subordination provisions that are most favorable to the holders of
any other Indebtedness of the Company or of such Guarantor, as the case may be.

 

(c)                                  For
purposes of determining compliance with this Section 4.3:

 

(1)                                  in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Permitted Indebtedness described in clauses (1)
through (11) of paragraph (b) above, or is entitled to be incurred
pursuant to paragraph (a) of this Section 4.3,
the Company will be permitted to classify such item of Indebtedness on the date
of its incurrence (or later reclassify such Indebtedness) in any manner that
complies with this covenant, and only be required to include the amount and
type of such Indebtedness in one of such clauses;

 

(2)                                  Guarantees
of, or obligations in respect of letters of credit relating to, Indebtedness
which is otherwise included in the determination of a particular amount of
Indebtedness shall not be included;

 

(3)                                  Indebtedness
permitted by this covenant need not be permitted solely by reference to one
provision permitting such Indebtedness but may be permitted in part by one such
provision and in part by one or more other provisions of this covenant
permitting such Indebtedness; and

 

44

 

(4)                                  the
amount of Indebtedness issued at a price that is less than the principal amount
thereof will be equal to the amount of the liability in respect thereof
determined in accordance with GAAP.

 

(d)                                 For
purposes of determining compliance with any U.S. dollar-denominated restriction
on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be calculated based on
the relevant currency exchange rate in effect on the date such Indebtedness was
incurred, in the case of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness; provided
that if such Indebtedness is incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable U.S. dollar-dominated restriction to be exceeded if calculated at
the relevant currency exchange rate in effect on the date of such refinancing,
such U.S. dollar-dominated restriction shall be deemed not to have been
exceeded so long as the principal amount of such refinancing Indebtedness does
not exceed the principal amount of such Indebtedness being refinanced.  Notwithstanding any other provision of this
covenant, the maximum amount of Indebtedness that the Company may incur
pursuant to this covenant shall not be deemed to be exceeded solely as a result
of fluctuations in the exchange rate of currencies.  The principal amount of any Permitted
Refinancing Indebtedness, if incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the currency
exchange rate applicable to the currencies in which such Permitted Refinancing
Indebtedness is denominated that is in effect on the date of such refinancing.

 

(e)                                  For purposes of determining compliance with
this Section 4.3, Indebtedness of any Person existing at the time
such Person becomes a Restricted Subsidiary shall be deemed to have been
incurred by the Company and the Restricted Subsidiary at the time such Person
becomes a Restricted Subsidiary.

 

Section 4.4                                      Restricted
Payments

 

(a)                                  The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly:

 

(1)                                  declare
or pay any dividend or make any other payment or distribution on account of the
Company’s or any of its Restricted Subsidiaries’ Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) or to the direct
or indirect holders of the Company’s or any of its Restricted Subsidiaries’
Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or to the Company or a Restricted Subsidiary of the Company);

 

(2)                                  purchase,
redeem or otherwise acquire or retire for value (including, without limitation,
in connection with any merger or consolidation involving the Company) any
Equity Interests of the Company or any direct or indirect parent thereof (other
than any such Equity Interests owned by the Company or any Restricted
Subsidiary of the Company);

 

(3)                                  make
any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value, any Subordinated Indebtedness of the Company or
any

 

45

 

Guarantor held by persons other than the Company or a
Wholly-Owned Restricted Subsidiary of the Company, except a payment of interest
or principal at the Stated Maturity thereof; or

 

(4)                                  make
any Investment other than a Permitted Investment (all such payments and other
actions set forth in clauses (1) through (3) above and this clause (4) being
collectively referred to as “Restricted Payments”),

 

(b)                                 unless,
at the time of and after giving effect to such Restricted Payment:

 

(1)                                  no
Default shall have occurred and be continuing or would occur as a consequence
thereof;

 

(2)                                  the
Company would, at the time of such Restricted Payment and after giving pro
forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 4.3(a) hereof; and

 

(3)                                  such
Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Company and its Restricted Subsidiaries after the Issue
Date (excluding Restricted Payments permitted by clauses (2), (3), (6)
and (7) of the next succeeding paragraph (c) below, is less than the sum,
without duplication, of

 

(A)                              50%
of the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the full fiscal quarter during which
the Issue Date falls to the end of the Company’s most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus

 

(B)                                100%
of the aggregate Net Cash Proceeds received by the Company since the Issue Date
from the issue or sale of Equity Interests of the Company (other than Disqualified
Stock), other than Equity Interests (or Disqualified Stock or debt securities)
sold to a Subsidiary of the Company and other than an issuance or sale financed
directly or indirectly with Indebtedness to an employee stock ownership plan or
to a trust established by the Company or any of its Subsidiaries for the
benefit of their employees, plus

 

(C)                                the
amount by which Indebtedness issued after the Issue Date is reduced on the
Company’s consolidated balance sheet upon the conversion or exchange (other
than by a Subsidiary of the Company) of any such Indebtedness convertible or
exchangeable for Capital Stock (other than Disqualified Stock) of the Company
(plus the amount of any accrued interest then outstanding on such Indebtedness
to the extent the obligation to pay such interest is extinguished less the
amount of any cash, or the Fair Market Value of any property, distributed by
the Company upon such conversion or exchange); provided,
however, that the foregoing amount shall not exceed the Net Cash Proceeds
received by the Company or any Restricted Subsidiary from the sale of such
Indebtedness (excluding Net Cash Proceeds from sales to a Subsidiary of the
Company

 

46

 

or, in the case of a sale financed directly or indirectly with
Indebtedness, to an employee stock ownership plan or to a trust established by
the Company or any of its Subsidiaries for the benefit of their employees); plus

 

(D)                               an
amount equal to the sum of (i) the net reduction in the Investments (other than
Permitted Investments) made by the Company or any Restricted Subsidiary in any
Person resulting from repurchases, repayments or redemptions of such
Investments by such Person, proceeds realized on the sale of such Investment
and proceeds representing the return of capital (excluding dividends and
distributions), in each case received by the Company or any Restricted
Subsidiary, and (ii) to the extent such Person is an Unrestricted Subsidiary,
the portion (proportionate to the Company’s equity interest in such Subsidiary)
of the Fair Market Value of the net assets of such Unrestricted Subsidiary at
the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, however, that the foregoing sum
shall not exceed, in the case of any such Person or Unrestricted Subsidiary,
the amount of Investments (excluding Permitted Investments) previously made
(and treated as a Restricted Payment) by the Company or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary.

 

(c)                                  The
preceding provisions will not prohibit:

 

(1)                                  the
payment of any dividend within 60 days after the date of declaration thereof,
if at said date of declaration such payment would have complied with the
provisions of this Indenture;

 

(2)                                  so
long as no Default has occurred and is continuing, the redemption, repurchase,
retirement, defeasance or other acquisition of any Subordinated Indebtedness of the Company or any Guarantor
or of any Equity Interests of the Company or any Restricted Subsidiary in
exchange for, or out of the Net Cash Proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, Equity Interests of the
Company (other than Disqualified Stock); provided
that the amount of any such Net Cash Proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition shall be
excluded from clause (3)(B) of the preceding paragraph (b);

 

(3)                                  so
long as no Default has occurred and is continuing, the defeasance, redemption,
repurchase, retirement or other acquisition of Subordinated Indebtedness of the
Company or any Guarantor with the Net Cash Proceeds from a substantially
concurrent incurrence of Permitted Refinancing Indebtedness permitted to be
incurred under Section 4.3 hereof;

 

(4)                                  so
long as no Default has occurred and is continuing, the repurchase, redemption
or other acquisition or retirement for value of any Equity Interests of the
Company or any Restricted Subsidiary of the Company held by any employees,
former employees, directors or former directors of Company or any of its
Restricted Subsidiaries (or heirs, estates or other permitted transferees of
such employees or directors) pursuant to any agreements (including employment
agreements), management equity subscription agreements or stock option
agreements or plans (or amendments thereto), approved by the Board of
Directors, under which such individuals purchase or sell or are granted the
right to purchase or sell shares of Capital

 

47

 

Stock; provided
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $2.0 million in any twelve-month
period;

 

(5)                                  so
long as no Default has occurred and is continuing, upon the occurrence of a
Change of Control or an Asset Sale and within 60 days after the completion of
any required offer to repurchase the Securities under Section 4.11
or Section 4.7 hereof (including the purchase of all Securities
tendered), any purchase, repurchase, redemption, defeasance, acquisition or
other retirement for value of Subordinated Indebtedness required under the
terms thereof as a result of such Change of Control or Asset Sale at a purchase
or redemption price not to exceed 101% of the outstanding principal amount
thereof, plus accrued and unpaid interest thereon, if any, provided that, in the notice to Holders
relating to a Change of Control hereunder, the Company shall describe any offer
to be made pursuant to this clause (5); or

 

(6)                                  so
long as no Default has occurred and is continuing, regularly scheduled
distributions (including amounts due in respect of permitted deferrals thereof)
by Carriage Services Capital Trust on its TIDES (and by the Company on the
related debentures) in accordance with the terms thereof as in effect on the
Issue Date;

 

(7)                                  so
long as no Default has occurred and is continuing, repurchases of Capital Stock
deemed to occur upon the exercise of stock options, warrants or other
convertible securities if such Capital Stock represents a portion of the
exercise price thereof; and

 

(8)                                  so
long as no Default has occurred and is continuing, Restricted Payments that,
when taken together with all Restricted Payments made pursuant to this
clause (8), do not exceed $15.0 million.

 

The amount of all
Restricted Payments (other than cash) shall be the Fair Market Value on the
date of the Restricted Payment of the asset(s) or securities proposed to be
transferred or issued by the Company or such Restricted Subsidiary, as the case
may be, pursuant to the Restricted Payment. 
The Fair Market Value of any assets or securities that are required to
be valued by this covenant shall be evidenced by an Officers’ Certificate to be
delivered to the Trustee.  Not later than
five Business Days following the date of the making of any Restricted Payment
which, together with any Restricted Payment that has not been reported to the
Trustee, exceeds $1.0 million the Company shall deliver to the Trustee an
Officers’ Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this “Restricted
Payment” covenant, were computed, together with a copy of any fairness opinion
or appraisal required hereby.

 

For purposes of
determining compliance with this Section 4.4, if a Restricted
Payment meets the criteria of more than one of the types of Restricted Payments
described in clauses (1)-(8) above, the Company, in its sole discretion,
may order and classify such Restricted Payment in any manner in compliance with
this covenant.

 

In computing Consolidated
Net Income under clause (b)(3)(A) above, (1) the Company shall use audited
financial statements for the portions of the relevant period for which audited
financial statements are available on the date of determination and unaudited
financial statements and other current financial data based on the books and
records of the Company for the

 

48

 

remaining portion
of such period and (2) the Company shall be permitted to rely in good faith on
the financial statements and other financial data derived from the books and
records of the Company that are available on the date of determination.

 

Section 4.5                                      Liens

 

The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Lien on any property or asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens, to secure
(a) any Indebtedness of the Company unless prior to, or contemporaneously
therewith, the Securities are equally and ratably secured, or (b) any
Indebtedness of any Guarantor, unless prior to, or contemporaneously therewith,
the Subsidiary Guarantee of such Guarantor is equally and ratably secured; provided, however, that if such
Indebtedness is expressly subordinated to the Securities or a Subsidiary
Guarantee, the Lien securing such Indebtedness will be subordinated and junior
to the Lien securing the Securities or such Subsidiary Guarantee, as the case
may be, with the same relative priority as such Indebtedness has with respect
to the Securities or such Subsidiary Guarantee.

 

Section 4.6                                      Dividend and
Other Payment Restrictions Affecting Subsidiaries

 

(a)                                  The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted Subsidiary
to:

 

(1)                                  pay
dividends or make any other distributions on its Capital Stock to the Company
or any of the Company’s Restricted Subsidiaries, or pay any Indebtedness owed
to the Company or any of the Company’s Restricted Subsidiaries;

 

(2)                                  make
loans or advances to the Company or any of the Company’s Restricted
Subsidiaries; or

 

(3)                                  transfer
any of its properties or assets to the Company or any of the Company’s
Restricted Subsidiaries.

 

(b)                                 However,
the preceding restrictions will not apply to encumbrances or restrictions
existing under or by reason of:

 

(1)                                  instruments
governing Indebtedness (and guarantees or collateral documents relating
thereto) or the TIDES outstanding on the Issue Date;

 

(2)                                  any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture to
be incurred;

 

49

 

(3)                                  any
agreement for the sale or other disposition of a Restricted Subsidiary that
restricts distributions by such Restricted Subsidiary pending such sale or
other disposition;

 

(4)                                  any
Permitted Refinancing Indebtedness incurred in respect of Indebtedness referred
to in clause (1) or (2) of this paragraph (b), provided that the restrictions contained
in the agreements governing such Permitted Refinancing Indebtedness are no more
materially restrictive, taken as a whole, than those contained in the
agreements governing the Indebtedness being refinanced;

 

(5)                                  restrictions
on cash or other deposits or net worth imposed by customers or required by
insurance, surety or bonding companies, in each case pursuant to contracts
entered into in the ordinary course of business of the Company and its
Restricted Subsidiaries; and

 

(6)                                  with
respect to clause (3) of the preceding paragraph (a) only, any of the
following encumbrances or restrictions:

 

(A)                              customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices;

 

(B)                                purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions on the property so acquired;

 

(C)                                Liens
securing Indebtedness otherwise permitted to be incurred pursuant to the
provisions of Section 4.5 hereof
that limit the right of the Company or any of its Restricted Subsidiaries to
dispose of the assets subject to such Lien;

 

(D)                               customary
restrictions contained in asset sale agreements limiting the transfer of such
assets pending the closing of such sale;

 

(E)                                 customary
restrictions on the subletting, assignment or transfer of any property or asset
that is subject to a lease, license or similar contract, or the assignment or
transfer of any such lease, license or other contract; and

 

(F)                                 customary
restrictions on the disposition or distribution of assets or property in joint
venture agreements or other agreements that are customary in a Permitted
Business and entered into in the ordinary course of business of the Company and
its Restricted Subsidiaries.

 

Section 4.7                                      Asset Sales

 

(a)                                  The
Company will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:

 

(1)                                  the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the Equity Interests or other assets issued or sold or otherwise
disposed of; and

 

50

 

(2)                                  at
least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of (a) cash or Cash Equivalents or
(b) assets of the types described in clauses (2) and (3) of
paragraph (b) below.  For purposes
of this provision, each of the following shall be deemed to be cash:

 

(A)                              any
liabilities (as shown on the Company’s or such Restricted Subsidiary’s most
recent balance sheet) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Securities or any Subsidiary Guarantee) that are assumed by the transferee
of any such assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability; and

 

(B)                                any
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are converted within
45 days by the Company or such Restricted Subsidiary into cash (to the
extent of the cash received in that conversion).

 

(b)                                 Within
365 days after the receipt of any Net Available Proceeds from an Asset
Sale, the Company or a Restricted Subsidiary, as applicable, may apply such Net
Available Proceeds at its option, in any one or more of the following:

 

(1)                                  to
permanently repay, prepay, redeem or repurchase (i) Indebtedness that is
secured by the assets subject to the Asset Sale, provided such Indebtedness is
not Subordinated Indebtedness or (ii) secured Indebtedness under a Credit
Facility in each case and cause any related loan commitment to be permanently
reduced in an amount equal to the principal amount so repaid, prepaid, redeemed
or repurchased;

 

(2)                                  to
acquire all or substantially all of the assets of, or all of the Voting Stock
of, a company principally engaged in a Permitted Business; or

 

(3)                                  to
acquire other long-term assets that are used or useful in a Permitted Business
or make capital expenditures in a Permitted Business.

 

Pending the final
application of any such Net Available Proceeds, the Company may temporarily
reduce revolving credit borrowings or otherwise invest such Net Available
Proceeds in any manner not prohibited by this Indenture.

 

(c)                                  Any
Net Available Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute “Excess Proceeds.”  When the aggregate amount of Excess Proceeds
exceeds $10.0 million, the Company will make an offer (the “Asset Sale Offer”)
to all Holders of Securities and all holders of other Indebtedness that is pari passu with the Securities containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets to purchase the
maximum principal amount of Securities and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds. 
The offer price in any Asset Sale Offer will be equal to 100% of
principal amount plus accrued and unpaid interest, if any, to the date of
purchase (the “Asset Sale Payment”), subject to the right of Holders on the
relevant record date to receive interest due on an Interest Payment Date that
is on or prior to the date of purchase and will be payable in cash.  

 

51

 

If any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by this Indenture.  If the
aggregate principal amount of Securities and such other pari passu Indebtedness tendered into
such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall
select the Securities and such other pari
passu Indebtedness to be purchased on a pro rata basis based on the
principal amounts that are tendered in round denominations (which in the case
of the Securities will be denominations of $1,000 principal amount or multiples
thereof).  Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.

 

(d)                                 Within
30 days following the date when the Company becomes obligated to make an Asset
Sale Offer, the Company will mail a notice to each Holder describing the
transaction or transactions that constitute the Asset Sale and offering to repurchase
Securities on the date (the “Asset Sale Payment Date”) specified in such
notice, which date will be no earlier than 30 days nor later than 60 days from
the date such notice is mailed, pursuant to the procedures required by this
Indenture and described in such notice.

 

(e)                                  On
the Asset Sale Payment Date, the Company will, to the extent lawful:

 

(1)                                  accept
for payment all Securities or portions thereof properly tendered pursuant to
the Asset Sale Offer, subject to proration based on the amount of Excess
Proceeds pursuant to clause (c) above of this Section 4.7;

 

(2)                                  deposit
with the Paying Agent an amount equal to the amount of Excess Proceeds that,
after giving effect to proration with holders of pari passu Indebtedness pursuant to clause (c) above of this
Section 4.7, is allocable to the Securities or portions thereof so
tendered (or, if less, the aggregate Asset Sale Payment for all Securities
validly tendered and not withdrawn); and

 

(3)                                  deliver
or cause to be delivered to the Trustee the Securities so accepted together
with an Officers’ Certificate stating the aggregate principal amount of
Securities or portions thereof being purchased by the Company.

 

(f)                                    The
Paying Agent will promptly mail to each Holder of Securities so tendered and
not withdrawn and accepted for payment in accordance with this Section 4.7,
the Asset Sale Payment for such tendered Securities, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Security equal in principal amount to any unpurchased portion
of the Securities surrendered, if any, by such Holder; provided that each such new Security will
be in a principal amount of $1,000 or an integral multiple thereof.

 

(g)                                 If
the Asset Sale Offer Purchase Date is on or after an interest payment record
date and on or before the related Interest Payment Date, any accrued and unpaid
interest will be paid to the Person in whose name a Security is registered at
the close of business on such record date, and no other interest will be
payable to Holders who tender Securities pursuant to the Asset Sale Offer.

 

(h)                                 The
Company will comply with the requirements of Rule 14e-l under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with an Asset Sale
Offer.  To the extent that the

 

52

 

provisions of any securities laws or regulations
conflict with the provisions of this Section 4.7, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this covenant by virtue of the
Company’s compliance with such securities laws or regulations.

 

Section 4.8                                      Transactions With
Affiliates

 

(a)                                  The
Company will not, and will not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an
“Affiliate Transaction”), unless:

 

(1)                                  such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained at
the time of such transaction in arm’s-length dealings by the Company or such
Restricted Subsidiary with a Person who is not an Affiliate; and

 

(2)                                  The
Company delivers to the Trustee:

 

(A)                              with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million,
a Board Resolution set forth in an Officers’ Certificate certifying that such
Affiliate Transaction complies with this covenant and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors; and

 

(B)                                with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $10.0 million, a written
opinion that such Affiliate Transaction is fair, from a financial point of
view, to the Company and its Restricted Subsidiaries, taken as a whole, issued
by an accounting, appraisal or investment banking firm of national standing that is not an Affiliate of the Company.

 

(b)                                 The
following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of Section 4.8(a)
hereof:

 

(1)                                  any
employment agreement or other employee compensation plan or arrangement entered
into by the Company or any of its Restricted Subsidiaries in the ordinary
course of business and consistent with the past practice of the Company or such
Restricted Subsidiary;

 

(2)                                  transactions
between or among (a) the Company and one or more of its Restricted
Subsidiaries or (b) two or more Restricted Subsidiaries of the Company;

 

(3)                                  Restricted
Payments (other than Permitted Investments) that are made in accordance with
the provisions of Section 4.4 hereof;

 

53

 

 

(4)                                  indemnities
of officers, directors and employees of the Company or any Restricted
Subsidiary permitted by bylaw or statutory provisions;

 

(5)                                  the
payment of reasonable and customary regular fees to directors of the Company or
any of its Restricted Subsidiaries who are not employees of the Company or any
Subsidiary; and

 

(6)                                  the
performance of obligations of the Company or any of its Restricted Subsidiaries
under the terms of any agreement identified in the Indenture to which the
Company or any of its Restricted Subsidiaries is a party as of or on the Issue
Date of the indenture, as these agreements may be amended, modified,
supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification,
supplement, extension or renewal entered into after the Issue Date will be
permitted to the extent that its terms are not more disadvantageous to the
Holders than the terms of the agreements in effect on the Issue Date.

 

Section 4.9                                      Additional
Subsidiary Guarantees

 

If the Company or any of its Restricted Subsidiaries
acquires or creates another Restricted Subsidiary after the Issue Date, then
the Company shall cause that newly acquired or created Restricted Subsidiary to
become a Guarantor by executing a supplemental indenture substantially in the
form of Exhibit E hereto within ten Business Days after the date on
which it was acquired or created.

 

Section 4.10                                Business Activities

 

The Company will not, and will not permit any
Restricted Subsidiary to, engage in any business other than a Permitted
Business.

 

Section 4.11                                Change of Control

 

(a)                                  If
a Change of Control occurs, unless the Company has exercised its right to
redeem the Securities as provided under Section 3.7, each Holder of
Securities will have the right to require the Company to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of that Holder’s
Securities pursuant to the offer described below (the “Change of Control Offer”).  In the Change of Control Offer, the Company
will offer a payment (the “Change of Control Payment”) in cash equal to 101% of
the aggregate principal amount of Securities to be repurchased plus accrued and
unpaid interest thereon, if any, to the date of purchase, subject to the right
of Holders on the relevant record date to receive interest due on an Interest
Payment Date that is on or prior to the Change of Control Payment Date.  Within 30 days following any Change of
Control, unless the Company has exercised its right to redeem the Securities as
provided under Section 3.7, the Company will mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Securities on the date (the “Change of
Control Payment Date”) specified in such notice, which date will be no earlier
than 30 days nor later than 60 days from the date such notice is mailed,
pursuant to the procedures required by this Indenture and described in such
notice.  The Company will comply with the
requirements of Rule 14e-l under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Securities as a result of a
Change of Control.

 

54

 

To the extent that the
provisions of any securities laws or regulations conflict with the provisions
of this Section 4.11, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations hereunder by virtue of the Company’s compliance with such
securities laws or regulations.

 

(b)                                 On
the Change of Control Payment Date, the Company will, to the extent lawful:

 

(1)                                  accept
for payment all Securities or portions thereof properly tendered pursuant to
the Change of Control Offer;

 

(2)                                  deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Securities or portions thereof so tendered; and

 

(3)                                  deliver
or cause to be delivered to the Trustee the Securities so accepted together
with an Officers’ Certificate stating the aggregate principal amount of
Securities or portions thereof being purchased by the Company.

 

(c)                                  The
Paying Agent will promptly mail to each Holder of Securities so tendered and
not withdrawn the Change of Control Payment for such tendered Securities (or,
if all the Securities are then in global form, make payment through the
facilities of DTC), and the Trustee will promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Security equal in
principal amount to any unpurchased portion of the Securities surrendered, if
any, by such Holder; provided
that each such new Security will be in a principal amount of $1,000 or an
integral multiple thereof.

 

(d)                                 The
Company will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date.

 

(e)                                  The
provisions described above that require the Company to make a Change of Control
Offer following a Change of Control will be applicable regardless of whether or
not any other provisions of this Indenture are applicable.

 

(f)                                    The
Company will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Securities validly tendered and not withdrawn under such Change
of Control Offer.

 

Section 4.12                                Maintenance of Office
or Agency for Registration of Transfer, Exchange and Payment of Securities

 

So long as any of the Securities shall remain
outstanding, the Company will, in accordance with Section 2.3
hereof, maintain an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, or the Registrar) in the continental United
States, where the Securities may be surrendered for exchange or registration of
transfer as in this Indenture provided, and where notices and demands to or
upon the Company in respect to the Securities may be served, and the Company
will, in accordance with Section 2.3 hereof, maintain in the City
and State of New York an office or agency where the Securities may be presented
or

 

55

 

surrendered for
payment.  The Company may also from time
to time designate one or more other offices or agencies where Securities may be
presented or surrendered for any and all such purposes and may from time to
time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the City and State of New
York where Securities may be presented for payment.  The Company will give to Trustee prompt
written notice of the location of any such office or agency and of any change
of location thereof.

 

Section 4.13                                Appointment to Fill a
Vacancy in the Office of Trustee

 

The Company, whenever necessary to avoid or fill a
vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.8,
a successor Trustee, so that there shall at all times be a Trustee hereunder.

 

Section 4.14                                Provision as to Paying
Agent

 

(a)                                  If
the Company shall appoint a Paying Agent other than the initial Paying Agent or
the Trustee, in accordance with the terms of this Indenture, it will cause such
Paying Agent to execute and deliver to the Trustee an instrument in which such
Agent shall undertake, subject to the provisions of this Section 4.14:

 

(1)                                  that
it will hold all sums held by it as such agent for the payment of the principal
of, premium, if any, or interest on the Securities (whether such sums have been
paid to it by the Company or by any other obligor on the Securities) in trust
for the benefit of the Holders of the Securities and will notify the Trustee of
the receipt of sums to be so held;

 

(2)                                  that
it will give the Trustee notice of any failure by the Company (or by any other
obligor on the Securities) to make any payment of the principal of, premium, if
any, or interest on the Securities when the same shall be due and payable;

 

(3)                                  that
it will at any time during the continuance of any Event of Default specified in
Section 6.1, upon the written request
of the Trustee, deliver to the Trustee all sums so held in trust by it; and

 

(4)                                  that
it will acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and liabilities of
such Paying Agent.

 

(b)                                 If
the Company shall not act as its own Paying Agent, it will, by 10:00 a.m. (New
York City time) on the due date of the principal of or premium, if any, or
interest on any Securities, deposit with such Paying Agent a sum in same day
funds sufficient to pay the principal of, premium, if any, or interest so
becoming due, such sum to be held in trust for the benefit of the Holders of
Securities entitled to such principal of or premium, if any, or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its failure so to act.

 

(c)                                  If
the Company shall act as its own Paying Agent, it will, by 10:00 a.m. (New York
City time) on each due date of the principal of or premium, if any, or interest
on the Securities, set aside, segregate and hold in trust for the benefit of
the Persons entitled thereto, a

 

56

 

sum sufficient to pay
such principal or premium or interest so becoming due and will notify the
Trustee of any failure to take such action.

 

(d)                                 Anything
in this Section 4.14 to the contrary notwithstanding, the Company
may, at any time, for the purpose of obtaining a satisfaction and discharge of
this Indenture, or for any other reason, pay or cause to be paid to the Paying
Agent for delivery to the Trustee all sums held in trust by it, as required by
this Section 4.14, such sums to be delivered by the Paying Agent to
the Trustee to be held by the Trustee upon the trusts herein contained.

 

(e)                                  Anything
in this Section 4.14 to the contrary notwithstanding, the agreement
to hold sums in trust as provided in this Section 4.14 is subject
to the provisions of Section 8.4 and Section 8.6.

 

Section 4.15                                Maintenance of
Corporate Existence

 

So long as any of the Securities shall remain
outstanding, the Company will at all times (except as otherwise provided or
permitted in Article V of this Indenture) do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence and, subject to Article X hereof, the
corporate, partnership or other existence of each Restricted Subsidiary; provided that nothing herein shall require the Company to
continue the existence of any Restricted Subsidiary if in the judgment of the
Company it shall be necessary, advisable or in the interest of the Company to
discontinue the same.

 

Section 4.16                                Compliance Certificate

 

(a)                                  The
Company shall deliver to the Trustee within 90 days after the end of each
fiscal year of the Company ending after the Issue Date an Officers’ Certificate
stating that a review of the activities of the Company and its Restricted
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has performed its obligations under this Indenture, and further stating
whether or not the signers know of any Default or Event of Default that
occurred during such period.  If they do,
the certificate shall describe such Default or Event of Default, its status and
what action the Company is taking or proposes to take with respect
thereto.  The Company also shall comply
with Trust Indenture Act Section 314(a)(4).

 

(b)                                 So
long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants, the year-end financial statements
delivered pursuant to Section 4.2 above shall be accompanied by a written statement of the Company’s
independent public accountants (who shall be a firm of established national
reputation) that in making the examination necessary for certification of such
financial statements, nothing has come to their attention that would lead them
to believe that the Company has violated any provisions of Article IV
or Article V hereof or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.

 

(c)                                  So
long as any of the Securities are outstanding, the Company will deliver to the
Trustee, forthwith upon any Officer becoming aware of any Default or Event of
Default, an

 

57

 

Officers’ Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.

 

Section 4.17                                Taxes

 

The Company will pay, and will cause each of its
Significant Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment
would not have a material adverse effect on the Company and its Restricted
Subsidiaries, taken as a whole.

 

Section 4.18                                Stay, Extension and
Usury Laws

 

The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law has been enacted.

 

Section 4.19                                Payments for Consent

 

The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fees or otherwise, to any Holder of
any Securities for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions hereof or the Securities unless such
consideration is offered to be paid or is paid to all Holders of the Securities
that consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or amendment.

 

Section 4.20                                Limitation on
Sale/Leaseback Transactions

 

The Company will not, and will not permit any of its
Restricted Subsidiaries to, enter into any Sale/Leaseback Transaction unless:

 

(1)                                  the
Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Sale/Leaseback Transaction at least equal to
the Fair Market Value of the property subject to such transaction;

 

(2)                                  the
Company or such Restricted Subsidiary could have incurred Indebtedness in an
amount equal to the Attributable Debt in respect of such Sale/Leaseback
Transaction pursuant to Section 4.3;

 

(3)                                  the
Company or such Restricted Subsidiary would be permitted to create a Lien on
the property subject to such Sale/Leaseback Transaction without securing the
Securities or any Subsidiary Guarantee of such Restricted Subsidiary by Section 4.5; and

 

58

 

(4)                                  the
Sale/Leaseback Transaction is treated as an Asset Sale and all of the
conditions of Section 4.7
(including the provisions concerning the application of Net Available Proceeds)
are satisfied with respect to such Sale/Leaseback Transaction, treating all of
the consideration received in such Sale/Leaseback Transaction as Net Available
Proceeds for purposes of Section 4.7
hereof.

 

ARTICLE V

SUCCESSOR COMPANY

 

Section 5.1                                      Merger,
Consolidation or Sale of Assets

 

(a)                                  The
Company may not: (1) consolidate or merge with or into another Person; or (2)
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets, in one or more related
transactions, to another Person, unless:

 

(1)                                  either:

 

(A)                              the
Company is the surviving corporation; or

 

(B)                                the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation existing under the laws
of the United States, any state thereof or the District of Columbia;

 

(2)                                  the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Securities, the Indenture and the
Registration Rights Agreement pursuant to a supplemental indenture reasonably
satisfactory to the Trustee;

 

(3)                                  immediately
after such transaction no Default shall have occurred and be continuing;

 

(4)                                  the
Company or the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which sale, assignment, transfer, lease,
conveyance or other disposition has been made, will, on the date of such
transaction after giving pro forma effect thereto and any related financing
transactions as if the same had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.3(a)
hereof; and

 

(5)                                  the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and such
supplemental indenture (if any) comply with this Indenture.

 

59

 

(b)                                 For
purposes of this covenant, the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the properties or assets of
one or more Subsidiaries of the Company, which properties or assets, if held by
the Company instead of such Subsidiaries, would constitute all or substantially
all of the properties or assets of the Company on a consolidated basis, shall
be deemed to be the transfer of all or substantially all of the properties or
assets of the Company.

 

(c)                                  Clause
(a)(4) of this Section 5.1 will not apply to a merger or
consolidation of any Guarantor with or into the Company or another Guarantor.

 

Section 5.2                                      Successor
Corporation Substituted.

 

Upon any consolidation or merger, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the properties or assets of the Company in accordance with
Section 5.1 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition, the provisions of this Indenture referring to the “Company” shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor corporation had been named as the Company
herein; provided, however, that
the predecessor Company shall not be relieved from its obligations under this
Indenture or the Securities in the case of any such lease.

 

ARTICLE VI

DEFAULTS AND REMEDIES

 

Section 6.1                                      Events of Default

 

Each of the following is an “Event of Default:”

 

(1)                                  default
for 30 days in the payment when due of interest on the Securities;

 

(2)                                  default
in the payment when due of the principal of, or premium, if any, on the
Securities;

 

(3)                                  failure
by the Company to comply with Section 4.7, 4.11 or 5.1
hereof;

 

(4)                                  failure
by the Company to comply for 30 days after receipt of written notice specified
below with Section 4.2, 4.3, 4.4, 4.5, 4.6,
4.8, 4.9, 4.10,  4.19 or 4.20 hereof;

 

(5)                                  failure
by the Company for 60 days after receipt of written notice specified below to
comply with any of its other agreements contained in this Indenture;

 

(6)                                  default
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 Company or any of its Restricted Subsidiaries (or the payment of which
is

 

60

 

Guaranteed by the Company
or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee
now exists, or is created after the date of this Indenture, if that default:

 

(A)                              is
caused by a failure to pay principal of, or premium, if any, or interest on
such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness (a “Payment Default”); or

 

(B)                                results
in the acceleration of such Indebtedness prior to its Stated Maturity;

 

and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;

 

(7)                                  failure
by the Company or any of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $5.0 million (net of any amounts that a reputable and
creditworthy insurance company has acknowledged liability for in writing),
which judgments are not paid, discharged or stayed for a period of 60 days;

 

(8)                                  any
Subsidiary Guarantee of a Guarantor shall be held in any judicial proceeding to
be unenforceable or invalid or, except as permitted by this Indenture, shall
cease for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee, in each case only with respect to
any Guarantor that is also a Significant Subsidiary or any group of Guarantors
that, taken together, would constitute a Significant Subsidiary; and

 

(9)                                  (A)                              the
Company or a Significant Subsidiary or a group of Restricted Subsidiaries that,
taken together, would constitute a Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:

 

(i)                                     commences
a voluntary case or proceeding;

 

(ii)                                  consents
in writing to the entry of an order for relief against it in an involuntary
case or proceeding in which it is a debtor;

 

(iii)                               consents
in writing to the appointment of a Custodian of it or for any substantial part
of its property;

 

(iv)                              makes
a general assignment for the benefit of its creditors; or

 

(v)                                 consents
in writing to the institution of a bankruptcy or an insolvency proceeding
against it;

 

or takes any comparable action under any foreign laws
relating to insolvency; or

 

(B)                                a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:

 

61

 

(i)                                     is
for relief against the Company or any Significant Subsidiary or a group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary in an involuntary case in which it is a debtor;

 

(ii)                                  appoints
a Custodian of the Company or any Significant Subsidiary or a group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary or for any substantial part of its property; or

 

(iii)                               orders
the winding up or liquidation of the Company or any Significant Subsidiary or a
group of Restricted Subsidiaries that, taken together would constitute a
Significant Subsidiary;

 

or any similar relief is granted under any foreign
laws and the order, decree or relief remains unstayed and in effect for 60
consecutive days.

 

However, a Default under clause (4) or (5) of this Section 6.1
will not constitute an Event of Default until the Trustee or the Holders of 25%
in principal amount of the outstanding Securities notify the Company of the
Default and the Company does not cure such Default within the time specified in
clauses (4) and (5) of this Section 6.1 after receipt of such
notice.  Such notice must specify the
Default, demand that it be remedied and state that such notice is a “Notice of
Default.”

 

Section 6.2                                      Acceleration of
Maturity; Rescission and Annulment

 

If an Event of Default (other than an Event of Default
described in clause (9) of Section 6.1) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of at least 25% in
principal amount of the outstanding Securities by notice to the Company and the
Trustee, may declare the principal of, premium, if any, and accrued and unpaid
interest, if any, on all the Securities to be due and payable.  Upon such a declaration, such principal,
premium and accrued and unpaid interest will be due and payable
immediately.  If an Event of Default
described in clause (9) of Section 6.1 above occurs and is
continuing, the principal of, premium, if any, and accrued and unpaid interest
on all the Securities will become and be immediately due and payable without
any further action or notice on the part of the Trustee or any Holders.  The Holders of a majority in outstanding
principal amount of the Securities by notice to the Trustee may on behalf of
the Holders of all the Securities rescind any such acceleration with respect to
the Securities and its consequences if (1) rescission would not conflict with
any judgment or decree of a court of competent jurisdiction and (2) all existing
Events of Default, other than the nonpayment of the principal of, premium, if
any, and interest on the Securities that have become due solely by such
declaration of acceleration, have been cured or waived.  In the event of a declaration of acceleration
of the Securities because an Event of Default described in clause (6) of Section 6.1
above has occurred and is continuing, such declaration of acceleration shall be
automatically rescinded if the default or Payment Default triggering such Event
of Default shall be remedied or cured by the Company or a Restricted Subsidiary
of the Company or waived by the holders of the relevant Indebtedness within 30
days after the declaration of acceleration with respect thereto and if (1)
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (2) all existing Events of Default, other than the
nonpayment of the

 

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principal of, premium, if
any, and interest on the Securities that have become due solely by such
declaration of acceleration, have been cured or waived.

 

Section 6.3                                      Other Remedies

 

If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of principal of,
premium (if any) or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.

 

The Trustee may maintain a proceeding even if it does
not possess any of the Securities or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any
Holder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default.  No remedy is
exclusive of any other remedy.  All
available remedies are cumulative to the extent permitted by law.

 

Section 6.4                                      Waiver of Past
Defaults

 

The Holders of a majority in outstanding principal
amount of the Securities, by notice to the Trustee may on behalf of the Holders
of all the Securities waive an existing Default or Event of Default and its
consequences hereunder except (i) a Default or Event of Default in the payment
of the principal of, premium, if any, or interest on a Security or (ii) a
Default or Event of Default in respect of a provision that under Section 9.2 hereof cannot be amended
without the consent of each Holder affected. 
When a Default or Event of Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or Event of Default
or impair any consequent right.

 

Section 6.5                                      Control by
Majority

 

The Holders of a majority in outstanding principal
amount of the Securities have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
of exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 7.1
hereof, that the Trustee determines is unduly prejudicial to the rights of
other Holders or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction.  Subject to Section 7.1,
prior to taking any action hereunder, the Trustee shall be entitled to security
or indemnity reasonably satisfactory to it against all loss, liability and
expense caused by taking or not taking such action.

 

Section 6.6                                      Limitation on Suits

 

Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, a Holder may not pursue any
remedy with respect to this Indenture, the Securities or the Guarantees unless:

 

(1)                                  the
Holder has previously given the Trustee written notice stating that an Event of
Default is continuing;

 

63

 

(2)                                  Holders
of at least 25% in outstanding principal amount of the Securities have made a
written request to the Trustee to pursue the remedy;

 

(3)                                  such
Holder or Holders have furnished the Trustee reasonable security or indemnity
against any loss, liability or expense;

 

(4)                                  the
Trustee has not complied with the Holders’ request within 60 days after receipt
of the request and the furnishing of security or indemnity; and

 

(5)                                  the
Holders of a majority in outstanding principal amount of the Securities have
not given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with the request during such 60-day period.

 

A Holder may not use this Indenture to prejudice the
rights of another Holder or to obtain a preference or priority over another
Holder.

 

Section 6.7                                      Rights of Holders
to Receive Payment

 

Notwithstanding any other provision of this Indenture,
the right of any Holder to receive payment of principal of, premium, if any,
and interest on the Securities held by such Holder, on or after the respective
due dates expressed in the Securities, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.

 

Section 6.8                                      Collection Suit
by Trustee

 

If an Event of Default specified in Section 6.1(1) or Section 6.1(2) hereof occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount then due and owing on
the Securities (together with interest on overdue principal and premium, if
any, and on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.7 hereof to
cover the costs and expenses of collection, including the reasonable
compensation, disbursement and advances of the Trustee, its agents and counsel.

 

Section 6.9                                      Trustee May File
Proofs of Claim

 

The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee and the Holders allowed in any judicial proceedings
relative to the Company or any Guarantor or their respective creditors or
properties and, unless prohibited by law or applicable regulations, may vote on
behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.7 hereof.

 

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Section 6.10                                Priorities

 

If the Trustee collects any money or other property
pursuant to this Article VI, it
shall pay out the money or other property in the following order:

 

First: costs and expenses of collection, including all
sums paid or advanced by the Trustee hereunder and the compensation, expenses
and disbursements of the Trustee, its agents, and counsel and all other amounts
due to the Trustee under Section 7.7 hereof;

 

Second: to Holders for amounts due and unpaid on the
Securities for principal and interest and premium, if any, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Securities for principal and interest and premium, if any, respectively;
and

 

Third: to the Company.

 

The Trustee may fix a record date and payment date for
any payment to Holders pursuant to this Section 6.10.  At least 15 days before such record date, the
Trustee shall mail to each Holder and the Company a notice that states the
record date, the payment date and amount to be paid.

 

Section 6.11                                Undertaking for Costs

 

In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys’ fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant.  This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7
hereof or a suit by Holders of more than 10% in outstanding principal amount of
the Securities.

 

ARTICLE VII

TRUSTEE

 

Section 7.1                                      Duties of Trustee

 

(a)                                  If
an Event of Default has occurred and is continuing, the Trustee shall exercise
the rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of such person’s own affairs.

 

(b)                                 Except
during the continuance of an Event of Default: (i) the Trustee undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and (ii) in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions

 

65

 

furnished to the Trustee
and conforming to the requirements of this Indenture.  However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.

 

(c)                                  The
Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:

 

(1)                                  this
paragraph does not limit the effect of Section 7.1(b) hereof;

 

(2)                                  the
Trustee shall not be liable for any error of judgment made in good faith by a
Trust Officer unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and

 

(3)                                  the
Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 6.5
hereof.

 

(d)                                 Every
provision of this Indenture that in any way relates to the Trustee is subject
to Sections 7.1(a), 7.1(b) and 7.1(c) hereof.

 

(e)                                  The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company.

 

(f)                                    Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.

 

(g)                                 Subject
to Section 7.1(a) hereof, no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable grounds to
believe that repayment of such funds or adequate security or indemnity against
such risk or liability is not reasonably assured to it.

 

Section 7.2                                      Rights of
Trustee.

 

(a)                                  The
Trustee may rely on any document believed by it to be genuine and to have been
signed or presented by the proper Person. 
The Trustee need not investigate any fact or matter stated in the
document.

 

(b)                                 Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel or both. 
The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.

 

(c)                                  The
Trustee may act through its attorneys and agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.

 

(d)                                 The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or powers
conferred upon it by this Indenture; provided, however,
that the Trustee’s conduct does not constitute willful misconduct or
negligence.

 

66

 

(e)                                  The
Trustee may consult with counsel, and the advice or opinion of counsel with
respect to legal matters relating to this Indenture and the Securities shall be
full and complete authorization and protection from liability in respect to any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.

 

(f)                                    Except
for (i) a default under Section 6.1(1)
or Section 6.1(2) hereof, or (ii) any other event of which the
Trustee has actual knowledge and which event, with the giving of notice or the
passage of time or both, would constitute an Event of Default under this
Indenture, the Trustee shall not be deemed to have notice of any default or
event unless specifically notified in writing of such event by the Company or
any Holder of the Securities.

 

Section 7.3                                      Individual Rights
of Trustee

 

The Trustee in its individual or any other capacity
may become the owner or pledgee of Securities and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee.  Any Agent may do the same with
like rights.  However, the Trustee must
comply with Sections 7.10 and 7.11 hereof.

 

Section 7.4                                      Trustee’s
Disclaimer

 

The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Securities,
it shall not be accountable for the Company’s use of the proceeds from the
Securities, it shall not be responsible for the use or application of any money
received by any Paying Agent (other than itself as Paying Agent), and it shall
not be responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee’s certificate of authentication.

 

Section 7.5                                      Notice of
Defaults

 

If a Default or Event of Default occurs and if it is
known to the Trustee, the Trustee shall mail to each Holder notice of the
Default or Event of Default within 90 days after it occurs.  Except in the case of a Default or Event of
Default relating to payment of principal of, premium, if any, or interest on,
any Security (including payments pursuant to the optional redemption or
required repurchase provisions of such Security, if any), the Trustee may
withhold the notice if and so long as its board of directors, the Executive Committee
of its board of directors or a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Holders.

 

Section 7.6                                      Reports by
Trustee to Holders

 

(a)                                  Within
60 days after each May 15 beginning with the May 15 following the date of this
Indenture, the Trustee shall mail to each Holder a brief report that complies
with Trust Indenture Act Section 313(a) (but if no event described in
Trust Indenture Act §313(a) has occurred within the 12 months preceding the
reporting date, no report need be transmitted). 
The Trustee also shall comply with Trust Indenture Act Section 313(b).  The Trustee shall also transmit by mail all
reports required by Trust Indenture Act Section 313(c).

 

67

 

(b)                                 A
copy of each report at the time of its mailing to Holders shall be mailed to
the Company and filed with the SEC and each stock exchange (if any) on which
the Securities are listed.  The Company
agrees to notify promptly the Trustee whenever the Securities become listed on
any stock exchange and of any delisting thereof.

 

Section 7.7                                      Compensation and
Indemnity

 

(a)                                  The
Company shall pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for its services as set forth in a
separate fee agreement between the Trustee and the Company.  The Trustee’s compensation shall not be
limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, costs of preparing and reviewing reports,
certificates and other documents, costs of preparation and mailing of notices
to Holders and reasonable costs of counsel retained by the Trustee in
connection with the delivery of an Opinion of Counsel or otherwise, in addition
to the compensation for its services. 
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee’s agents and counsel.  The Company shall indemnify and hold harmless
the Trustee (in its individual and trustee capacities) and its officers,
directors and agents against any and all loss, liability, claims, action, suit,
cost or expense (including reasonable attorneys’ fees) of any kind and nature
whatsoever incurred by it in connection with the administration of this trust
and the performance of its duties hereunder, including the costs and expenses
of enforcing this Indenture (including this Section 7.7)
and of defending itself against any claims (whether asserted by any Holder, the
Company or otherwise).  The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder.  The Company shall defend the claim and the
Trustee may have separate counsel and the Company shall pay the fees and
expenses of such counsel; provided that
the Company will not be required to pay such fees and expenses if it assumes
the Trustee’s defense with counsel acceptable to and approved by the Trustee
and there is no conflict of interest between the Company and the Trustee in
connection with such defense.  The
Company need not pay for any settlement made without its consent, which consent
may not be unreasonably withheld.  The
Company is not required to reimburse any expense or indemnify against any loss,
liability claim, again, suit, cost or expense incurred by the Trustee through
the Trustee’s own willful misconduct or negligence.

 

(b)                                 To
secure the Company’s payment obligations in this Section 7.7,
the Trustee shall have a lien prior to the Securities on all money or other
property held or collected by the Trustee other than money or other property
held in trust to pay principal of, premium (if any) and interest on particular
Securities.

 

(c)                                  The
Company’s payment obligations pursuant to this Section 7.7
shall survive the discharge of this Indenture and the resignation or removal of
the Trustee.  When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.1(9) hereof with respect to
the Company, the expenses are intended to constitute expenses of administration
under any Bankruptcy Law.

 

68

 

Section 7.8                                      Replacement of
Trustee

 

(a)                                  A
resignation or removal of the Trustee and appointment of a successor Trustee
will become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section 7.8.

 

(b)                                 The
Trustee may resign at any time by so notifying the Company.  The Holders of a majority in outstanding
principal amount of the Securities may remove the Trustee by so notifying the
Trustee and the Company and may appoint a successor Trustee.  The Company may remove the Trustee if: (i) the
Trustee fails to comply with Section 7.10
hereof; (ii) the Trustee is adjudged bankrupt or insolvent; (iii) a Custodian
or other public officer takes charge of the Trustee or its property; or (iv)
the Trustee otherwise becomes incapable of acting.

 

(c)                                  If
the Trustee resigns or is removed by the Company or by the Holders of a
majority in outstanding principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.

 

(d)                                 A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. 
Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. 
The successor Trustee shall mail a notice of its succession to the
Holders.  The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.7
hereof.

 

(e)                                  If
a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in
outstanding principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

 

(f)                                    If
the Trustee fails to comply with Section 7.10
hereof after written notice thereto, the Holders of at least 10% in principal
amount of the then outstanding securities may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

 

(g)                                 Notwithstanding
the replacement of the Trustee pursuant to this Section 7.8,
the Company’s obligations under Section 7.7 hereof shall continue
for the benefit of the retiring Trustee.

 

Section 7.9                                      Successor Trustee
by Merger

 

(a)                                  If
the Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association without any further act shall be the
successor Trustee.  As soon as
practicable, the successor Trustee shall mail a notice of its succession to the
Company and the Holders.

 

69

 

(b)                                 If
at the time such successor or successors by merger, conversion or consolidation
to the Trustee shall succeed to the trusts created by this Indenture, any of
the Securities shall have been authenticated but not delivered, any such successor
to the Trustee may adopt the certificate of authentication of any predecessor
Trustee, and deliver such Securities so authenticated; and if at that time any
of the Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the
Securities or in this Indenture provided
that the certificate of the Trustee shall have.

 

Section 7.10                                Eligibility; Disqualification

 

The Trustee shall at all times satisfy the
requirements of Trust Indenture Act Section 310(a).  There shall at all times be a Trustee
hereunder that is a corporation organized and doing business under the laws of
the United States of America or of any state thereof that is authorized under
such laws to exercise corporate trustee power, that is subject to supervision
or examination by federal or state authorities and that has a combined capital
and surplus of at least $50 million as set forth in its most recent published
annual report of condition.  The Trustee
shall comply with Trust Indenture Act Section 310(b); provided,
however, that there shall be excluded from the operation of Trust
Indenture Act Section 310(b)(1) any indenture or indentures under which
other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such
exclusion set forth in Trust Indenture Act Section 310(b)(1) are met.

 

Section 7.11                                Preferential Collection
of Claims Against Company

 

The Trustee shall comply with Trust Indenture Act Section 311(a),
excluding any creditor relationship listed in Trust Indenture Act Section 311(b).  A Trustee who has resigned or been removed
shall be subject to Trust Indenture Act Section 311(a) to the extent
indicated.

 

ARTICLE VIII

DISCHARGE OF INDENTURE; DEFEASANCE

 

Section 8.1                                      Discharge of
Liability on Securities; Defeasance

 

(a)                                  Subject
to Section 8.1(c) hereof, when
(i)(x) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.7 hereof) for
cancellation or (y) all outstanding Securities not theretofore delivered for
cancellation have become due and payable at their scheduled maturity or (z) all
outstanding Securities not theretofore delivered for cancellation have become
scheduled for redemption under arrangements satisfactory to the Trustee as a
result of the giving of notice of redemption by the Trustee in the name and at
the expense of the Company in accordance with Article III hereof or
otherwise, or will become due and payable within one year, and the Company
irrevocably deposits or causes to be deposited with the Trustee as trust funds
in trust solely for the benefit of the Holders money in U.S. dollars,
Government Securities, or a combination thereof, in such amounts as will be
sufficient without consideration of any reinvestment of interest to pay and
discharge the entire

 

70

 

Indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation for
principal, premium, if any, and accrued interest to the date of maturity or
redemption, (ii) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company is a
party or by which the Company is bound; (iii) the Company or any Guarantor has
paid or caused to be paid all sums then payable by it under this Indenture and
the Securities; and (iv) the Company has delivered irrevocable instructions to
the Trustee under this Indenture to apply the deposited money toward the
payment of such Securities at maturity or the Redemption Date, as the case may
be, then the Trustee shall acknowledge satisfaction and discharge of this
Indenture, and the obligations of the Company and the Guarantors under the
Securities and the Subsidiary Guarantees, on demand of the Company (accompanied
by an Officers’ Certificate and an Opinion of Counsel stating that all
conditions precedent specified herein relating to the satisfaction and
discharge of this Indenture have been complied with) and at the cost and
expense of the Company.

 

(b)                                 Subject
to Section 8.2 hereof, the Company at its option at any time may
terminate (i) all its obligations, subject to Section 8.1(c)
hereof, under the Securities and this Indenture and all obligations of the
Guarantors with respect to their Subsidiary Guarantees (“legal defeasance
option”), and after giving effect to such legal defeasance, any omission to
comply with such obligations shall no longer constitute a Default or Event of
Default or (ii) its obligations under Section 4.2, Section 4.3,
Section 4.4, Section 4.5, Section 4.6,  Section 4.7, Section 4.8, Section 4.9, Section 4.10, Section 4.11, Section 4.19
and Section 4.20 hereof and clause (a)(4) of Section 5.1 hereof, and the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply with such covenants shall
no longer constitute a Default or an Event of Default under Section 6.1(3) (solely as it relates
to Section 4.7, Section 4.11 or clause (a)(4) of Section 5.1) and Section 6.1(4) hereof and the
operation of Section 6.1(6), Section 6.1(7) and Section 6.1(8)
hereof and (with respect only to Significant Subsidiaries) Section 6.1(9)
hereof, and the events specified in such Sections shall no longer constitute an
Event of Default (clause (ii) being referred to as the “covenant defeasance
option”), but except as specified above, the remainder of this Indenture
and the Securities shall be unaffected thereby. 
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option.  If the Company exercises its legal defeasance
option or its covenant defeasance option, each Guarantor shall be released from
its obligations with respect to its Subsidiary Guarantee, and any security for
the Securities (other than the trust referred to in Section 8.2(1)
) shall be released.

 

If the Company exercises its legal defeasance option,
payment of the Securities may not be accelerated because of an Event of
Default.  If the Company exercises its
covenant defeasance option, payment of the Securities may not be accelerated
because of an Event of Default specified in Section 6.1(4), Section 6.1(6),
Section 6.1(7), Section 6.1(8), and (with respect only
to Significant Subsidiaries) Section 6.1(9) hereof or the failure
of the Company to comply with clause (a)(4) of Section 5.1
hereof.

 

71

 

Upon satisfaction of the conditions set forth herein
and upon request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.

 

(c)                                  Notwithstanding
the provisions of Section 8.1(a)
and Section 8.1(b) hereof,
the obligations of the Company in Section 2.3,
Section 2.4, Section 2.5, Section 2.6, Section 2.7,
Section 2.9, Section 7.7, Section 7.8
hereof, and in this Article VIII
shall survive until the Securities have been paid in full.  Thereafter, the obligations of the Company in
Section 7.7, Section 8.4 and Section 8.5
hereof shall survive.

 

Section 8.2                                      Conditions to
Defeasance

 

The Company may exercise its legal defeasance option
or its covenant defeasance option only if:

 

(1)                                  the
Company shall have irrevocably deposited with the Trustee, in trust, for the
benefit of the Holders of the Securities, cash in U.S. dollars, Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on the outstanding
Securities on the Stated Maturity or on the applicable redemption date, as the
case may be, and the Company must specify whether the Securities are being
defeased to Stated Maturity or to a particular redemption date;

 

(2)                                  in
the case of the legal defeasance option, the Company shall have delivered to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (a) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (b) since the Issue Date, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall confirm that, the
Holders of the outstanding Securities will not recognize income, gain or loss
for federal income tax purposes as a result of such legal defeasance option and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such legal defeasance
option had not occurred;

 

(3)                                  in
the case of the covenant defeasance option, the Company shall have delivered to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
covenant defeasance option and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance option had not occurred;

 

(4)                                  no
Default shall have occurred and be continuing either: (a) on the date of such
deposit (other than a Default or Event of Default resulting from the borrowing of
funds to be applied to such deposit); or (b) insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit;

 

(5)                                  such
legal defeasance option or covenant defeasance option will not result in a
breach or violation of, or constitute a default under any material agreement or
instrument

 

72

 

(other than this
Indenture) to which the Company or any of its Restricted Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound;

 

(6)                                  the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors’ rights generally;

 

(7)                                  the
Company shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders of Securities over the other creditors of the Company with the intent
of defeating, hindering, delaying or defrauding creditors of the Company or
others; and

 

(8)                                  the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, stating that all conditions precedent relating to the legal
defeasance option or the covenant defeasance option have been complied with.

 

Section 8.3                                      Delivery and
Application of Trust Money

 

(a)                                  Any
money or Government Securities to be delivered to or deposited with the Trustee
by the Company shall be delivered to or deposited with the Paying Agent for
further delivery to or deposit with the Trustee.

 

(b)                                 The
Trustee shall hold in trust money or Government Securities deposited with it
pursuant to this  Article VIII.  It shall apply the deposited money and the
money from Government Securities through the Paying Agent and in accordance
with this Indenture to the payment of principal, premium, if any, of and interest
on the Securities.

 

Section 8.4                                      Repayment to
Company

 

Subject to any applicable abandoned property law, the
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal of, or premium, if any, or interest
on the Securities that remains unclaimed for two years (or any such money then
held by the Company or any Subsidiary shall be discharged from any trust
hereunder), and, thereafter, Holders entitled to the money must look to the
Company for payment as unsecured general creditors; provided,
however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in The  New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which will not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.

 

Nothing contained in this Section 8.4
shall be deemed to affect any obligation of the Trustee or any Paying Agent to
search for lost Holders pursuant to Rule 17Ad-17 under the Exchange Act.

 

73

 

Section 8.5                                      Indemnity for
Government Securities

 

The Company shall pay and shall indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against deposited
Government Securities or the principal and interest received on such Government
Securities.

 

Section 8.6                                      Reinstatement

 

If the Trustee or Paying Agent is unable to apply any
money or Government Securities in accordance with this Article VIII by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
obligations of the Company and the Guarantors under this Indenture, the
Subsidiary Guarantors and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to this Article VIII
until such time as the Trustee or Paying Agent is permitted to apply all such
money or Government Securities in accordance with this Article VIII; provided, however, that, if the
Company or any Guarantor has made any payment of interest on or principal of
any Securities because of the reinstatement of its obligations, then it shall
be subrogated to the rights of the Holders of such Securities to receive such
payment from the money or Government Securities held by the Trustee or Paying
Agent.

 

ARTICLE IX

AMENDMENTS

 

Section 9.1                                      Without Consent
of Holders

 

The Company, the Guarantors and the Trustee may amend
or supplement this Indenture or the Securities without notice to or consent of
any Holder:

 

(1)                                  to
cure any ambiguity, defect or inconsistency;

 

(2)                                  to
provide for uncertificated Securities in addition to or in place of
certificated Securities;

 

(3)                                  to
provide for the assumption of the Company’s or a Guarantor’s obligations to
Holders of the Securities in the case of a merger or consolidation or sale of
all or substantially all of the Company’s properties or assets in compliance
with this Indenture;

 

(4)                                  to
add or release Guarantors in compliance with this Indenture;

 

(5)                                  to
make any change that would provide any additional rights or benefits to the
Holders of the Securities or that does not materially adversely affect the
legal rights hereunder of any Holder;

 

(6)                                  to
secure the Securities or the Subsidiary Guarantees, including pursuant to the
requirements of Section 4.5; or

 

74

 

(7)                                  to
comply with the requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the Trust Indenture Act.

 

After an amendment or supplement under this Section 9.1 becomes effective, the
Company shall mail to each Holder a notice briefly describing such
amendment.  The failure to give such
notice to any or all Holders, or any defect therein, shall not impair or affect
the validity of any such amendment or supplement under this Section 9.1.

 

Section 9.2                                      With Consent of
Holders

 

The Company, the Guarantors and the Trustee may amend
or supplement this Indenture or the Securities with the written consent of the
Holders of at least a majority in outstanding principal amount of the
Securities (including, without limitation, consents obtained in connection with
the purchase of, or tender offer or exchange offer for, Securities).  Subject to the following sentence, any existing
Default or Event of Default or compliance with any provision of this Indenture,
the Securities or the Subsidiary Guarantees may be waived with the written
consent of the Holders of at least a majority in outstanding principal amount
of Securities (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Securities).  However, without the consent of each Holder
affected, an amendment, supplement or waiver may not (with respect to any Securities
held by a non-consenting Holder):

 

(1)                                  reduce
the principal amount of Securities whose Holders must consent to an amendment,
supplement or waiver;

 

(2)                                  reduce
the principal of or change the Stated Maturity of any Security or alter the
provisions with respect to the redemption or repurchase of the Securities
(whether through amendment or waiver of provisions in the covenants,
definitions or otherwise);

 

(3)                                  reduce
the rate of or change the time for payment of interest on any Security;

 

(4)                                  waive
a Default in the payment of principal of or premium, if any, or interest on the
Securities (except a rescission of acceleration of the Securities by the
Holders of at least a majority in aggregate principal amount of the Securities
and a waiver of the payment default that resulted from such acceleration);

 

(5)                                  make
any Security payable in money other than that stated in the Securities;

 

(6)                                  make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Securities to receive payments of
principal of or premium, if any, or interest on the Securities;

 

(7)                                  modify
any Subsidiary Guarantee in any manner adverse to the Holders of the Securities
or release any Guarantor from its obligations under its Subsidiary Guarantee
except in accordance with the terms of this Indenture;

 

75

 

(8)                                  make
any change in the ranking of the Securities or the Subsidiary Guarantees in a
manner adverse to the Holders of the Securities or the Subsidiary Guarantees;
or

 

(9)                                  make
any change in the preceding amendment, supplement and waiver provisions of this
Section 9.2.

 

The consent of the Holders is not necessary under this
Section 9.2 to approve the particular form of any proposed
amendment or waiver.  It is sufficient if
the consent approves the substance of the proposed amendment or waiver.

 

After an amendment, supplement or waiver under this Section 9.2 becomes effective, the
Company shall mail to each Holder of Securities affected thereby a notice
briefly describing such amendment.  The
failure to give such notice to any or all Holders, or any defect therein, shall
not impair or affect the validity of any amendment, supplement or waiver under
this Section 9.2.

 

Section 9.3                                      Compliance with
Trust Indenture Act

 

Every amendment to this Indenture, the Securities or
the Subsidiary Guarantees shall comply with the Trust Indenture Act as then in
effect.

 

Section 9.4                                      Revocation and
Effect of Consents and Waivers

 

A consent to an amendment, supplement or waiver by a
Holder of a Security shall bind the Holder and every subsequent Holder of that
Security or portion of the Security that evidences the same debt as the
consenting Holder’s Security (or any Holder of a Security issued upon the
registration of transfer or exchange thereof or in lieu thereof), even if
notation of the amendment, supplement or waiver is not made on the
Security.  However, any such Holder or
subsequent Holder may revoke the consent as to such Holder’s Security or
portion of the Security if the Trustee receives the written notice of
revocation before the date the amendment, supplement or waiver becomes
effective.  After an amendment,
supplement or waiver becomes effective in accordance with its terms, it shall
bind every Holder.

 

The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture.  If a
record date is fixed, then notwithstanding the immediately preceding paragraph,
those Persons who were Holders at the close of business on such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
give such consent or to revoke any consent previously given or to take any such
action, whether or not such Persons continue to be Holders after such record
date, and for this purpose the Securities then outstanding shall be computed as
of such record date.  No such consent
shall become valid or effective more than 120 days after such record date.

 

Section 9.5                                      Notation on or
Exchange of Securities

 

If an amendment or supplement changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee.  The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder.  Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Security
shall issue

 

76

 

and the Trustee shall
authenticate a new Security that reflects the changed terms, but the failure to
make the appropriate notation or to issue a new Security shall not affect the
validity and effect of such amendment or supplement.

 

Section 9.6                                      Trustee To Sign
Amendments

 

The Trustee shall sign any amendment or supplement
authorized pursuant to this Article IX
if the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. 
If it does, the Trustee may but need not sign it.  In signing such amendment or supplement the
Trustee shall be entitled to receive, and (subject to Section 7.1
hereof) shall be fully protected in relying upon, an Officers’ Certificate and
an Opinion of Counsel stating that the execution of such amendment or
supplement is authorized or permitted by this Indenture.

 

ARTICLE X

SUBSIDIARY GUARANTEE

 

Section 10.1                                Subsidiary Guarantee

 

Each Guarantor which is a party hereto or becomes a
party hereto by executing and delivering a supplement to this Indenture
pursuant to Section 4.9 hereof,
jointly and severally, unconditionally Guarantees to each Holder and to the
Trustee and its successors and assigns the full and punctual payment of
principal of, premium (if any) and interest on the Securities when due, whether
at Stated Maturity, or upon optional redemption, required repurchase pursuant
to Section 4.7 or Section 4.11 hereof, acceleration or
otherwise, and all other monetary obligations owing by the Company under this
Indenture (including obligations owing to the Trustee) and the Securities (all
the foregoing being hereinafter collectively called the “Obligations”).  The Guarantors further agree that the
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from the Guarantors, and that the Guarantors will remain bound
under this Article X notwithstanding any extension or renewal of
any Obligation.

 

The Guarantors waive presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waive notice of protest for nonpayment. 
The Guarantors waive notice of any Default under the Securities or the
Obligations.  The obligations of the
Guarantors hereunder shall not be affected by: (i) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person under this Indenture, the Securities or
any other agreement or otherwise; (ii) any extension or renewal of any
Obligation; (iii) any rescission, waiver, amendment, modification or supplement
of any of the terms or provisions of this Indenture (other than this Article X),
the Securities or any other agreement; (iv) the release of security, if any,
held by any Holder or the Trustee for the Obligations or any of them; (v) the
failure of any Holder or the Trustee to exercise any right or remedy against
any other guarantor of the Obligations; (vi) any change in the ownership of the
Company; or (vii) any other act or thing or omission or delay to do any other act
or thing which may or might in any manner or to any extent vary the risk of the
Guarantors or would otherwise operate as a discharge of the Guarantors as a
matter of law or equity (except for the payment of the Obligations in full).

 

77

 

The Guarantors, jointly and severally, further agree
that their Subsidiary Guarantees herein constitute a guarantee of payment when
due (and not a Subsidiary Guarantee of collection) and waive any right to
require that any resort be had by any Holder or the Trustee to security, if
any, held for payment of the Obligations.

 

The obligations of the Guarantors hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason (except to the extent provided in Section 10.2 hereof),
including any claim of waiver, release, surrender, alteration or compromise,
and shall not be subject to any defense, setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise.

 

The Guarantors, jointly and severally, further agree
that their Subsidiary Guarantees herein shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.

 

In furtherance of the foregoing and not in limitation
of any other right which any Holder or the Trustee has at law or in equity
against the Guarantors by virtue hereof, upon the failure of the Company to pay
any Obligation when and as the same shall become due, whether at Stated
Maturity, upon optional redemption, required repurchase, acceleration,
redemption or otherwise, the Guarantors hereby promise to and will forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount
equal to the sum of (i) the unpaid principal amount of such Obligations, (ii)
accrued and unpaid interest on such Obligations (but only to the extent not
prohibited by law) and (iii) all other monetary Obligations of the Company to
the Holders and the Trustee.

 

The Guarantors, jointly and severally, agree that, as
between the Guarantors, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article VI for the purposes of each
Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby,
and (y) in the event of any declaration of acceleration of such Obligations as
provided in Article VI, such Obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for the
purposes of this Section 10.1.

 

The Guarantors, jointly and severally, also agree to
pay any and all costs and expenses (including reasonable attorneys’ fees)
incurred by the Trustee or any Holder in enforcing any rights under this Section 10.1.

 

Section 10.2                                Limitation
on Liability

 

Each Guarantor, and by its acceptance of Securities,
each Holder, hereby confirms that it is the intention of all such parties that
the Subsidiary Guarantee of such Guarantor not constitute a fraudulent transfer
or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable to any Subsidiary Guarantee.  To effectuate the foregoing intention, the
Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of such

 

78

 

Guarantor will be limited
to the maximum amount that will, after giving effect to such maximum amount and
all other contingent and fixed liabilities of such Guarantor that are relevant
under such laws, and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under this Article X,
result in the obligations of such Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer or conveyance.

 

Section 10.3                                Execution and Delivery
of Subsidiary Guarantee

 

To evidence its Subsidiary Guarantee set forth in Section 10.1,
each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form attached as Exhibit D hereto will be endorsed
by manual or facsimile signature by an Officer of such Guarantor on each
Security authenticated and delivered by the Trustee and that this Indenture
will be executed on behalf of such Guarantor by one of its Officers by
execution of the signature page hereof or by execution of a supplemental
indenture substantially in form of Exhibit E hereof.

 

Each Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 10.1 will remain in full force and
effect notwithstanding any failure to endorse on each Security a notation of
such Subsidiary Guarantee.  If an Officer
whose signature is on this Indenture or on the Subsidiary Guarantee no longer
holds that office at the time the Trustee authenticates the Security on which a
Subsidiary Guarantee is endorsed, the Subsidiary Guarantee will be valid
nevertheless.

 

The delivery of any Security by the Trustee, after the
authentication thereof hereunder, will constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of each of the
Guarantors.

 

In the event that the Company or any of its Restricted
Subsidiaries acquires or creates another Restricted Subsidiary after the Issue
Date, the Company will comply with the provisions of Section 4.9 hereof.

 

Section 10.4                                Successors and Assigns

 

Except as otherwise provided in Section 10.9
hereof, this Article X shall be binding upon the Guarantors and
their successors and assigns and shall inure to the benefit of the successors
and assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights in accordance with the terms of this Indenture by any
Holder or the Trustee, the rights and privileges conferred upon that party in
this Indenture and in the Securities shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
of this Indenture, the Securities and the Subsidiary Guarantees.

 

Section 10.5                                No Waiver

 

Neither a failure nor a delay on the part of either
the Trustee or the Holders in exercising any right, power or privilege under this
Article X shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege.  The rights, remedies
and benefits of the Trustee and the Holders herein expressly

 

79

 

specified are cumulative
and not exclusive of any other rights, remedies or benefits which either may
have under this Article X at law, in equity, by statute or
otherwise.

 

Section 10.6                                Right of Contribution

 

Each Guarantor hereby agrees that to the extent that a
Guarantor shall have paid more than its proportionate share of any payment made
hereunder, such Guarantor shall be entitled to seek and receive contribution
from and against any other Guarantor hereunder who has not paid its
proportionate share of such payment. 
Each Guarantor’s right of contribution shall be subject to the terms and
conditions of this Article X.  The provisions of this Section 10.6
shall in no respect limit the obligations and liabilities of any Guarantor to
the Trustee and the Holders and each Guarantor shall remain liable to the
Trustee and the Holders for the full amount guaranteed by such Guarantor
hereunder.

 

Section 10.7                                No Subrogation

 

Notwithstanding any payment or payments made by any of
the Guarantors hereunder, no Guarantor shall be entitled to exercise any rights
of subrogation it may have to any of the rights of the Trustee or any Holder
against the Company or any other Guarantor or any collateral security or
guarantee or right of offset held by the Trustee or any Holder for the payment
of the Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Company or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing
to the Trustee and the Holders by the Company on account of the Obligations are
paid in full.  If any amount shall be
paid to any Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by such Guarantor in trust for the Trustee and the Holders, segregated
from other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Trustee in the exact form received by such
Guarantor (duly indorsed by such Guarantor to the Trustee, if required), to be
applied against the Obligations.

 

Section 10.8                                Modification

 

No modification, amendment or waiver of any provision
of this Article X, nor the consent to any departure by the
Guarantors therefrom, shall in any event be effective unless the same shall be
made in accordance with Article IX hereof.  No notice to or demand on the Guarantors in
any case shall entitle the Guarantors to any other or further notice or demand
in the same, similar or other circumstances.

 

Section 10.9                                Merger, Consolidation
or Sale of Assets of a Guarantor; Release of a Guarantor

 

(a)                                  The
Company shall not permit a Guarantor to consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person), another Person (other
than the Company or another Guarantor) unless:

 

(1)                                  immediately
after giving effect to that transaction, no Default shall have occurred and be
continuing; and

 

80

 

 

(2)                                  the
Person formed by or surviving any such consolidation or merger assumes all the
obligations of that Guarantor under its Subsidiary Guarantee pursuant to a
supplemental indenture satisfactory to the Trustee.

 

(b)                                 So
long as no Default or Event of Default has occurred and is continuing, the
Subsidiary Guarantee of a Guarantor will be released:

 

(1)  (A) in connection with any sale or other
disposition of all or substantially all of the assets of that Guarantor
(including by way of merger or consolidation) or (B) in connection with any
sale or other disposition of all of the Capital Stock of a Guarantor, in each
case to a Person that is not (either before or after giving effect to such
transaction) a Restricted Subsidiary of the Company and in each case provided that (I) the Company otherwise
complies with the terms of this Indenture (including, without limitation, Section 4.7 hereof) with respect to
such transaction and (II) upon completion of such transaction all obligations
of such Guarantor with respect to Guarantees of other Indebtedness of the
Company and its Restricted Subsidiaries terminate;

 

(2)  if the Company designates any Restricted
Subsidiary that is a Guarantor as an Unrestricted Subsidiary in accordance with
the provisions of this Indenture; or

 

(3)  if the Company exercises either its legal
defeasance option or its covenant defeasance option pursuant to Section 8.1
hereof.

 

Upon
delivery by the Company to the Trustee of an Officers’ Certificate to the
effect of any of clause (1), (2) or (3) of this Section 10.9(b),
the Trustee shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations under its Subsidiary
Guarantee and this Indenture.

 

ARTICLE XI

MISCELLANEOUS

 

Section 11.1                                Trust
Indenture Act Controls

 

If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the Trust Indenture Act, the
provision required by the Trust Indenture Act shall control.

 

Section 11.2                                Notices

 

Any notice or
communication shall be in writing in the English language and delivered in
person or mailed by first-class mail, telecopier or overnight air courier
guaranteeing next day delivery, addressed as follows (unless the Company and
the Trustee agree to another method of delivery):

 

81

 

if to the Company or the
Guarantors:

 

Carriage
Services, Inc.

1900 Saint James Place, 4th Floor
Houston, Texas  77056
Attention:  Chief Financial
Officer

Facsimile:  (713) 332-8401

 

with a copy to:

 

Thompson & Knight LLP

333 Clay Street, Suite 3300
Houston, Texas  77002
Attention:  W. Christopher Schaeper

Facsimile:  (713) 654-1871

 

if to the Trustee:

 

Wells Fargo Bank, National Association

505 Main Street, Suite 301

Fort Worth, Texas 
76102

Attention:  Corporate Trust Department

Facsimile:  (817) 885-8650

 

The Company or the
Guarantors, by notice to the Trustee, or the Trustee by notice to the Company
and the Guarantors, may designate additional or different addresses for
subsequent notices or communications.

 

Any notice or
communication to a Holder shall be delivered to the Holder at the Holder’s
address as it appears on the registration books of the Registrar by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar.

 

All notices and
communications shall be deemed to have been duly given; at the time delivered
by hand, if personally delivered; five Business Days after being deposited in
the mail, postage prepaid, if mailed; (other than those sent to Holders) when
answered back, if telecopied; and the next Business Day after timely delivery
to the courier, if sent by overnight air courier guaranteeing next day
delivery.

 

Failure to deliver a
notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders. 
If a notice or communication is delivered in the manner provided above,
it is duly given, whether or not the addressee receives it.

 

Section 11.3                                Communication
by Holders with other Holders

 

Holders may communicate
pursuant to the Trust Indenture Act Section 312(b) with other Holders with
respect to their rights under this Indenture or the Securities.  The Company, the

 

82

 

Trustee, the
Registrar and anyone else shall have the protection of the Trust Indenture Act Section 312(c).

 

Section 11.4                                Certificate
and Opinion as to Conditions Precedent

 

Upon any request or
application by the Company to the Trustee to take or refrain from taking any
action under this Indenture, the Company shall furnish to the Trustee: (i) an
Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent,
if any, provided
for in this Indenture relating to the proposed action have been complied with;
and (ii) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.

 

Section 11.5                                Statements
Required in Certificate or Opinion

 

Each certificate or
opinion with respect to compliance with a covenant or condition provided for in
this Indenture shall include: (i) a statement that the individual making such
certificate or opinion has read such covenant or condition; (ii) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (iii) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (iv) a statement as to whether or not, in the opinion of
such individual, such covenant or condition has been complied with.

 

Section 11.6                                When
Securities Disregarded

 

In determining whether
the Holders of the required principal amount of Securities have concurred in
any direction, waiver or consent, Securities owned by the Company or by any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company shall be disregarded and deemed not to
be outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so
disregarded.  Also, subject to the
foregoing, only Securities outstanding at the time shall be considered in any
such determination.

 

Section 11.7                                Legal
Holidays

 

A “Legal Holiday” is a
day that is not a Business Day. 
Notwithstanding any other provisions of this Indenture, the Securities
or the Subsidiary Guarantees, if a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.  If a regular record date is a Legal Holiday,
the record date shall not be affected.

 

83

 

Section 11.8                                Governing
Law

 

THE LAW OF THE STATE OF
NEW YORK WILL GOVERN AND BE USED TO CONSTRUE AND ENFORCE THIS INDENTURE, THE
SECURITIES AND THE SUBSIDIARY GUARANTEES.

 

Section 11.9                                No
Personal Liability of Directors, Officers, Employees and Stockholders

 

No director, officer,
employee, incorporator, member, partner or stockholder of the Company or any
Guarantor, as such, shall have any liability for any obligations of the Company
or the Guarantors under the Securities, this Indenture, the Subsidiary
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation.  By
accepting a Security, each Holder waives and releases all such liability.  The waiver and release shall be part of the
consideration for the issue of the Securities. 
The waiver may not be effective to waive liabilities under the federal
securities laws.

 

Section 11.10                          Successors

 

All agreements of the
Company and (except as otherwise provided in Section 10.9 hereof)
the Guarantors in this Indenture and the Securities and the Subsidiary
Guarantees shall bind their respective successors.  All agreements of the Trustee in this
Indenture shall bind its successors.

 

Section 11.11                          Multiple
Originals; Counterparts

 

The parties may sign any
number of copies of this Indenture.  Each
signed copy shall be an original, but all of them together represent the same
agreement.  One signed copy is enough to
prove this Indenture.  This Indenture may
be executed in multiple counterparts which, when taken together, shall
constitute one instrument.

 

Section 11.12                          Severability

 

In case any provision in
this Indenture or in the Securities or the Subsidiary Guarantees is invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.

 

Section 11.13                          Consent
to Jurisdiction

 

Each
of the Company and the Guarantors irrevocably submits to the non-exclusive
jurisdiction of any New York state or U.S. federal court located in the City
and State of New York over any suit, action or proceeding arising out of or
relating to this Indenture, a Registration Rights Agreement or any Guarantee or
Security.  Each of the Company and the
Guarantors irrevocably waives, to the fullest extent permitted by law, any
objection which it may have to the laying of the venue of any such suit, action
or proceeding brought in such a court and any claim that any such suit, action
or proceeding brought in such a court has been brought in any inconvenient
forum.

 

84

 

Nothing in this Section shall
limit the right of the Trustee or any Holder to bring proceedings against the
Company or any Guarantor in the courts of any other jurisdiction.

 

Section 11.14                          Table of
Contents; Headings

 

The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.

 

Section 11.15                          No
Adverse Interpretation of Other Agreements

 

This Indenture may not be
used to interpret any other indenture, loan or debt agreement of the Company or
its Subsidiaries or of any other Person. 
Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.

 

85

 

IN WITNESS WHEREOF, the
parties have caused this Indenture to be duly executed as of the date first
written above.

 

	
   

  	
  CARRIAGE SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Joseph Saporito

  
	
   

  	
   

  	
  Joseph Saporito

  
	
   

  	
   

  	
  Executive Vice President and

  
	
   

  	
   

  	
    Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  CARRIAGE FUNERAL HOLDINGS, INC.

  
	
   

  	
  CFS FUNERAL SERVICES, INC.

  
	
   

  	
  CARRIAGE HOLDING COMPANY, INC.

  
	
   

  	
  CARRIAGE FUNERAL SERVICES OF

  MICHIGAN, INC.

  
	
   

  	
  CARRIAGE FUNERAL SERVICES OF

  KENTUCKY, INC.

  
	
   

  	
  CARRIAGE FUNERAL SERVICES OF

  CALIFORNIA, INC.

  
	
   

  	
  CARRIAGE CEMETERY SERVICES OF

  IDAHO, INC.

  
	
   

  	
  WILSON & KRATZER MORTUARIES

  
	
   

  	
  ROLLING HILLS MEMORIAL PARK

  
	
   

  	
  CARRIAGE SERVICES OF CONNECTICUT,

  INC.

  
	
   

  	
  CSI FUNERAL SERVICES OF

  MASSACHUSETTS, INC.

  
	
   

  	
  CHC INSURANCE AGENCY OF OHIO, INC.

  
	
   

  	
  BARNETT, DEMROW & ERNST, INC.

  
	
   

  	
  CARRIAGE SERVICES OF NEW MEXICO,

  INC.

  
	
   

  	
  FORASTIERE FAMILY FUNERAL SERVICE,

  INC.

  
	
   

  	
  CARRIAGE CEMETERY SERVICES, INC.

  
	
   

  	
  CARRIAGE SERVICES OF OKLAHOMA,

  L.L.C.

  
	
   

  	
  CARRIAGE SERVICES OF NEVADA, INC.

  
	
   

  	
  HUBBARD FUNERAL HOME, INC.

  
	
   

  	
  CARRIAGE TEAM CALIFORNIA

  (CEMETERY), LLC

  
	
   

  	
  CARRIAGE TEAM CALIFORNIA

  (FUNERAL), LLC

  

 

Indenture Signature Page

 

 

	
   

  	
  CARRIAGE TEAM FLORIDA (CEMETERY),

  LLC

  
	
   

  	
  CARRIAGE TEAM FLORIDA (FUNERAL),

  LLC

  
	
   

  	
  CARRIAGE SERVICES OF OHIO, LLC

  
	
   

  	
  CARRIAGE TEAM KANSAS, LLC

  
	
   

  	
  CARRIAGE MUNICIPAL CEMETERY

  SERVICES OF NEVADA, INC.

  
	
   

  	
  CARRIAGE CEMETERY SERVICES OF

  CALIFORNIA, INC.

  
	
   

  	
  CARRIAGE INTERNET STRATEGIES, INC.

  
	
   

  	
  CARRIAGE INVESTMENTS, INC.

  
	
   

  	
  (FOR
  ITSELF AND AS GENERAL

  PARTNER OF CARRIAGE

  
	
   

  	
  MANAGEMENT, L.P)

  
	
   

  	
  CARRIAGE MANAGEMENT, L.P.

  
	
   

  	
  HORIZON CREMATION SOCIETY, INC.

  
	
   

  	
  CARRIAGE LIFE EVENTS, INC.

  
	
   

  	
  CARRIAGE MERGER I, INC.

  
	
   

  	
  CARRIAGE MERGER II, INC.

  
	
   

  	
  CARRIAGE MERGER III, INC.

  
	
   

  	
  CARRIAGE MERGER IV, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Joseph Saporito

  
	
   

  	
   

  	
  Joseph Saporito

  
	
   

  	
   

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  CARRIAGE INSURANCE AGENCY OF

  MASSACHUSETTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Melvin C. Payne

  
	
   

  	
   

  	
  Melvin C. Payne

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  COCHRANE’S CHAPEL OF THE ROSES,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Wendy Wilson Boyer

  
	
   

  	
   

  	
  Wendy Wilson Boyer

  
	
   

  	
   

  	
  President

  

 

Indenture Signature Page

 

 

 

	
   

  	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Melissa A. Scott

  
	
   

  	
   

  	
  Melissa A. Scott

  
	
   

  	
   

  	
  Vice President

  

 

Indenture Signature Page

 

 

EXHIBIT A

 

[FACE OF SECURITY]

 

CARRIAGE SERVICES, INC.

 

7.875% SENIOR NOTE DUE
2015

 

CUSIP NO. [143905 AG 2]

[U14532 AA 0]

 

	
  No.

  	
  Principal Amount
  $                           

  

 

CARRIAGE SERVICES, INC.,
a Delaware corporation, promises to pay to                       ,
or registered assigns, the principal sum of                                                             
dollars on January 15, 2015.

 

Interest Payment
Dates:  January 15 and July 15,
commencing July 15, 2005.

 

Record Dates:  January 1 and July 1.

 

Dated:                    
    ,         

 

	
   

  	
  CARRIAGE SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  
	
   

  
	
  WELLS FARGO BANK, NATIONAL
  ASSOCIATION

  
	
  as Trustee, certifies that this is one of the

  
	
  Securities referred to in the Indenture.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  
					

 

1

 

[BACK OF SECURITY]

 

CARRIAGE SERVICES, INC.

 

7.875% SENIOR NOTE DUE
2015

 

[Insert the
Global Note Legend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the
Private Placement Legend, if applicable pursuant to the provisions of the
Indenture]

 

Capitalized terms used
herein have the meanings assigned to them in the Indenture referred to below
unless otherwise indicated.

 

1.                                       Interest.  Carriage Services, Inc., a Delaware
corporation (the “Company”), promises to pay interest on the principal amount
of this Security at 7.875% per annum from January 27, 2005 until
maturity.  The Company will pay interest
semi-annually in arrears on January 15 and July 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day
(each, an “Interest Payment Date”). 
Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there
is no existing Default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be July 15,
2005.  The Company will pay, to the
extent lawful, interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, at the rate
then in effect; it will pay, to the extent lawful, interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate as on overdue principal.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.

 

2.                                       Method of Payment.  The Company will pay interest on the
Securities (except Defaulted Interest) to the Persons who are registered
Holders of Securities at the close of business on the January 1 or July 1
next preceding the Interest Payment Date, even if such Securities are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.11 of the Indenture with respect to Defaulted
Interest.  The Securities will be payable
as to principal, premium, if any, and interest at the office or agency of the
Paying Agent maintained for such purpose within the City and State of New York,
or, at the option of the Company, payment of interest may be made by check
mailed by such Paying Agent to the Holders at their addresses set forth in the
register of Holders; provided that
payment by such Paying Agent by wire transfer of immediately available funds
will be required with respect to principal of and interest, and premium, if
any, on all Global Securities and all other Securities, the Holders of which
have provided wire transfer instructions to the Company and the Paying
Agent.  Such payment will be in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. 
The principal of the Securities shall be payable only upon surrender of
any Security at the specified offices of any Paying Agent.

 

2

 

3.                                       Paying Agent and
Registrar.  Initially, Wells
Fargo Bank, National Association, will act as Paying Agent and Registrar.  The Company may appoint and change any Paying
Agent or Registrar without notice to any Holder, and the Company or any of its
Subsidiaries may act as Paying Agent or Registrar, all in accordance with the
Indenture.

 

4.                                       Indenture.  The Company issued the Securities under an
Indenture, dated as of January 27, 2005 (the “Indenture”), among the Company,
the Guarantors named on the signature pages thereto and the Trustee.  The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act.  The Securities
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. 
To the extent any provision of this Security conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and
be controlling to the extent permitted by law. 
The Securities are unsecured obligations of the Company.  The Company initially issued
$130,000,000 aggregate principal amount of Securities.  The Company may issue Additional Securities
under the Indenture, subject to Section 4.3
of the Indenture.

 

5.                                       Optional Redemption.

 

(a)                                  At
any time or from time to time on and after January 15, 2010 the Company
may redeem all or a part of the Securities upon not less than 30 nor more than
60 days’ notice mailed to each Holder of Securities at such Holder’s registered
address, in amounts of $1,000 or an integral multiple of $1,000, at the
Redemption Prices (expressed as percentages of the principal amount) set forth
below plus accrued and unpaid interest on the Securities, if any, to the
applicable Redemption Date (subject to the right of Holders of record on the
relevant record date to receive interest due on an Interest Payment Date that
is prior to the Redemption Date), if redeemed during the 12-month period
beginning January 15 of the years indicated:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2010

  	
   

  	
  103.938

  	
  %

  
	
  2011

  	
   

  	
  102.625

  	
  %

  
	
  2012

  	
   

  	
  101.313

  	
  %

  
	
  2013 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(b)                                 Prior
to January 15, 2008, the Company may on one or more occasions redeem up to
an aggregate amount equal to 35% of the aggregate principal amount of the
Securities (including any Additional Securities) originally issued under the
Indenture at a Redemption Price of 107.875% of the principal amount of the
Securities, plus accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant Interest Payment Date) with the Net Cash Proceeds of one or more
Equity Offerings; provided that
(i) at least 65% in aggregate principal amount of the Securities (including any
Additional Securities) originally issued under the Indenture remains
outstanding immediately after the occurrence of such redemption (excluding
Securities held by the Company and its Subsidiaries) and (ii) each such
redemption occurs within 90 days of the date of the closing of the related
Equity Offering.

 

Except pursuant to
the preceding paragraph, the Securities will not be redeemable at the Company’s
option prior to January 15, 2010. 
Except as set forth under Sections 4.7(c) and

 

3

 

4.11 of
the Indenture, the Company shall not be required to make mandatory redemption
or sinking fund payments with respect to the Securities or to repurchase the
Securities at the option of the Holders.

 

6.                                       Denominations, Transfer,
Exchange.  The Securities are
in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000.  The transfer of
Securities may be registered and Securities may be exchanged as provided in the
Indenture.  The Registrar or the Trustee
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and the Company may require a Holder to pay any transfer
taxes or similar governmental charges or other fees required by law.  The Company need not exchange or register the
transfer of any Security or portion of a Security selected for redemption,
except for the unredeemed portion of any Security being redeemed in part.  Also, the Company need not exchange or
register the transfer of any Securities for a period of 15 days before the day
of any selection of Securities to be redeemed or during the period between a
record date and the corresponding Interest Payment Date.

 

If this is a Global
Security, this Security represents the aggregate principal amount of
outstanding Securities from time to time endorsed hereon, and the aggregate
principal amount of outstanding Securities represented by this Security may
from time to time be reduced or increased, as appropriate, to reflect
exchanges, repurchases, transfers and redemptions in accordance with the
Indenture.

 

7.                                       Persons Deemed Owners.  The registered Holder of a Security may be
treated as its owner for all purposes.

 

8.                                       Amendment, Supplement and
Waiver.  Subject to certain
exceptions, the Indenture and the Securities may be amended or supplemented
with the written consent of the Holders of at least a majority in outstanding
principal amount of the Securities, and any existing Default or Event of
Default or compliance with any provision of the Indenture or the Securities may
be waived with the written consent of the Holders of at least a majority in
outstanding principal amount of the Securities. 
Without the consent of any Holder of a Security, the Indenture or the
Securities may be amended or supplemented to cure any ambiguity, defect or
inconsistency and as otherwise provided in Section 9.1 of the
Indenture.

 

9.                                       Defaults.  If an Event of Default shall occur and be
continuing, the Securities may be declared due and payable in the manner and
with the effect provided in the Indenture.

 

10.                                 Defeasance.  The
Indenture contains provisions for defeasance of (i) the entire indebtedness of
the Company on this Security and (ii) certain restrictive covenants and the
related Events of Default, subject to compliance by the Company with certain
conditions set forth in the Indenture, which provisions apply to this Security.

 

11.                                 Individual
Rights of Trustee.  The Trustee in its individual or any other
capacity may become the owner or pledgee of Securities and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it
were not Trustee.  Any Agent may do the
same with like rights.

 

4

 

12.                                 No
Personal Liability of Directors, Officers, Employees and Stockholders.  No director, officer, employee, incorporator, member,
partner or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or the Guarantors under the
Securities, the Indenture, the Subsidiary Guarantees or for any claim based on,
in respect of, or by reason of, such obligations or their creation.  By accepting a Security, each Holder waives
and releases all such liability.  The
waiver and release shall be part of the consideration for the issue of the
Securities.  The waiver may not be
effective to waive liabilities under the federal securities laws.

 

13.                                 Authentication.  This Security will not be valid until
authenticated by the manual signature of the Trustee or an Authenticating
Agent.

 

14.                                 Abbreviations.  Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).

 

15.                                 [Additional
Rights of Holders of Restricted Global Securities and Restricted Definitive
Securities.  In addition to
the rights provided to Holders of Securities under the Indenture, Holders of
Restricted Global Securities and Restricted Definitive Securities will have all
the rights set forth in the Registration Rights Agreement, dated as of January 27,
2005, among the Company, the Guarantors and the other parties named on the
signature pages thereof.]

 

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

 

The Company will furnish
to any Holder upon written request and without charge a copy of the Indenture [and/or the Registration Rights Agreement].*  Requests may be
made to:

 

Carriage
Services, Inc.

1900 Saint James Place, 4th Floor
Houston, Texas  77056
Attention:  Chief Financial
Officer

 

5

 

ASSIGNMENT FORM

 

To assign this Security,
fill in the form below:

 

	
  (I) or (we) assign and transfer this Security to:

  	
   

  
	
   

  	
  (Insert assignee’s legal name)

  
	
   

  
	
   

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

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

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

  
	
   

  
	
  and irrevocably appoint

  	
   

  
			

to transfer this Security on the books of the Company.  The agent may substitute another to act for
him.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on the face

  
	
   

  	
   

  	
  of this Security)

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  	
   

  
							

 

6

 

Option of Holder to Elect
Purchase

 

If you want to elect to
have this Security purchased by the Company pursuant to Section 4.7
or Section 4.11 of the Indenture, check the appropriate box below:

 

	
  o
  Section 4.7

  	
   

  	
  o
  Section 4.11

  

 

If you want to elect to
have only part of the Security purchased by the Company pursuant to Section 4.7
or Section 4.11 of the Indenture, state the amount you elect to
have purchased:

 

$                     

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on the face

  
	
   

  	
   

  	
  of this Security)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tax Identification No.:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  	
   

  
								

 

7

 

[TO BE ATTACHED TO
GLOBAL SECURITIES]

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY

 

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

 

	
  Date of Exchange

  	
   

  	
  Amount of Decrease in

  Principal Amount of this

  Global Security

  	
   

  	
  Amount of Increase in

  Principal Amount of this

  Global Security

  	
   

  	
  Principal Amount of this

  Global Security

  Following such Decrease

  or Increase

  	
   

  	
  Signature of Authorized

  Officer of Trustee or

  Securities Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

8

 

EXHIBIT B

 

FORM OF CERTIFICATE OF TRANSFER

 

Carriage Services, Inc.

1900 Saint James Place, 4th Floor
Houston, Texas  77056

 

Wells Fargo Bank, National Association

505 Main Street, Suite 301

Fort Worth, Texas  76102

Attention:  Corporate Trust
Department

 

Re: 
Carriage Services, Inc. 7.875% Senior Notes due 2015

 

(CUSIP [143905 AG 2]  [U14532 AA 0]

 

Reference is hereby made
to the Indenture, dated as of January 27, 2005 (the “Indenture”),
among Carriage Services, Inc., as issuer (the “Company”),
the Guarantors named on the signature pages thereto and Wells Fargo Bank,
National Association, as trustee. 
Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

 

                                      
(the “Transferor”) owns and proposes to
transfer the Security[ies] or interest in such Security[ies] specified in Annex A hereto, in the principal amount of $                      
in such Security[ies]
or interests (the “Transfer”),
to                                                        
(the “Transferee”).  In connection with the Transfer, the
Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.  o  Check if Transferee will
take delivery of a beneficial interest in the 144A Global Security or a
Restricted Definitive Security pursuant to Rule 144A.  The Transfer is being effected pursuant to
and in accordance with Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”), and, accordingly, the
Transferor hereby further certifies that the beneficial interest or Definitive
Security is being transferred to a Person that the Transferor reasonably
believes is purchasing the beneficial interest or Definitive Security for its
own account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such account is
a “qualified institutional buyer” within the meaning of Rule 144A in a
transaction meeting the requirements of Rule 144A, and such Transfer is in
compliance with any applicable securities laws of any state of the United
States.  Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Security will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the 144A
Global Security and/or the Restricted Definitive Security and in the Indenture.

 

2.  o  Check if Transferee will
take delivery of a beneficial interest in the Regulation S Global Security or a
Restricted Definitive Security pursuant to Regulation S.  The

 

1

 

Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a Person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y) the
transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the
United States, (ii) no directed selling efforts have been made in contravention
of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the
Securities Act, (iii) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Security will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Security and/or the Restricted Definitive Security and
in the Indenture and the Securities Act.

 

3.  o  Check if Transferee is an
Institutional Accredited Investor that will take delivery of a beneficial
interest in the IAI Global Security or a Restricted Definitive Security.  The Transfer is being effected in compliance
with the transfer restrictions applicable to beneficial interests in Restricted
Global Securities and Restricted Definitive Securities and pursuant to and in
accordance with the Securities Act and any applicable securities laws of any
state of the United States, and is supported by a certificate executed by the
Transferee in the form of Exhibit F to the Indenture and, if such
transfer is in respect of a principal amount of Securities of less than
$250,000, an Opinion of Counsel provided by the Transferor or Transferee.

 

4.  o  Check if Transferee will
take delivery of a beneficial interest in an Unrestricted Global Security or of
an Unrestricted Definitive Security.

 

(a)  o  Check if Transfer is
pursuant to Rule 144.  (i) The
Transfer is being effected pursuant to and in accordance with Rule 144 under
the Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act.  Upon consummation of
the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Security will no longer be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Securities, on Restricted Definitive Securities
and in the Indenture.

 

(b)  o  Check if Transfer is
Pursuant to Regulation S.  (i)
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable securities laws of
any state of the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. 
Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Security
will no longer be

 

2

 

subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Securities, on Restricted Definitive Securities and in
the Indenture.

 

(c)  o  Check if Transfer is
Pursuant to Other Exemption. 
(i) The Transfer is being effected pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act other than
Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions
contained in the Indenture and any applicable securities laws of any State of
the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. 
Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Security
will not be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Securities or Restricted Definitive
Securities and in the Indenture.

 

3

 

This certificate and the
statements contained herein are made for your benefit and the benefit of the
Company.

 

	
   

  	
   

  
	
   

  	
  [Insert
  Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					

 

4

 

EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

Carriage Services, Inc.

1900 Saint James Place, 4th Floor
Houston, Texas  77056

 

Wells Fargo Bank, National Association

505 Main Street, Suite 301

Fort Worth, Texas  76102

Attention:  Corporate Trust
Department

 

Re: 
Carriage Services, Inc. 7.875% Senior Notes due 2015

 

(CUSIP [143905 AG 2]  [U14532 AA 0]

 

Reference is hereby made
to the Indenture, dated as of January 27, 2005 (the “Indenture”),
among Carriage Services, Inc., as issuer (the “Company”),
the Guarantors named on the signature pages thereto and Wells Fargo Bank,
National Association, as trustee. 
Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

 

                                                    
(the “Owner”) owns and proposes to exchange
the Security[s]
or interest in such Security[s] specified herein, in the principal amount of $                        
in such Security[s]
or interests (the “Exchange”).  In connection with the Exchange, the Owner
hereby certifies that:

 

1.                                       Exchange of Restricted Definitive Securities or
Beneficial Interests in a Restricted Global Security for Unrestricted
Definitive Securities or Beneficial Interests in an Unrestricted Global
Security

 

(a)  o                Check if Exchange is from beneficial interest in a Restricted Global
Security to beneficial interest in an Unrestricted Global Security.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Security for a beneficial interest
in an Unrestricted Global Security in an equal principal amount, the Owner
hereby certifies (i) the beneficial interest is being acquired for the Owner’s
own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global Securities
and pursuant to and in accordance with the Securities Act of 1933, as amended
(the “Securities Act”), (iii) the restrictions
on transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Security is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.

 

(b)  o               Check if Exchange is from Restricted Definitive Security to
Unrestricted Definitive Security. 
In connection with the Owner’s Exchange of a Restricted Definitive
Security for an Unrestricted Definitive Security, the Owner hereby certifies
(i) the Unrestricted

 

1

 

Definitive
Security is being acquired for the Owner’s own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Securities and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Unrestricted
Definitive Security is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.

 

This certificate and the
statements contained herein are made for your benefit and the benefit of the
Company.

 

	
   

  	
   

  
	
   

  	
  [Insert
  Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					

 

2

 

EXHIBIT D

 

FORM OF NOTATION OF SUBSIDIARY GUARANTEE

 

For value received, the
undersigned Guarantor (which term includes any successor to such Guarantor
under the Indenture) has, jointly and severally, with each other Subsidiary
Guarantor, unconditionally guaranteed, to the extent set forth in, and subject
to the provisions of, the Indenture dated as of January 27, 2005 (the “Indenture”) among Carriage Services, Inc. (the “Company”), the Guarantors party thereto and Wells Fargo
Bank, National Association, as trustee (the “Trustee”),
the full and punctual payment of the principal of, premium if any, and interest
on the Securities (as defined in the Indenture) when due, whether at Stated
Maturity, or upon optional redemption, required repurchase pursuant to Section 4.7
or Section 4.11 of the Indenture, acceleration or otherwise, and
all other monetary obligations owing by the Company under the Indenture
(including obligations owing to the Trustee) and the Securities, all as more
fully provided in Article X of the Indenture.  The obligations of the undersigned Guarantor
to the Holders of Securities and to the Trustee pursuant to the Subsidiary
Guarantee and the Indenture are expressly set forth in Article X of
the Indenture and reference is hereby made to the Indenture for the precise
terms of the Subsidiary Guarantee.  Each
Holder of a Security, by accepting the same, (a) agrees to and shall be bound
by such provisions and (b) appoints the Trustee attorney-in-fact of such Holder
for such purpose; provided, however, that this
Subsidiary Guarantee shall be released in accordance with the provisions of Section 10.9(b)
of the Indenture.

 

	
   

  	
  [NAME OF GUARANTOR(S)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

1

 

EXHIBIT E

 

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY FUTURE GUARANTORS

 

THIS SUPPLEMENTAL
INDENTURE (this “Supplemental Indenture”), is
dated as of                                 ,
2      , among [Name
of Future Guarantor(s)]  (the “New
Guarantor”), a subsidiary of Carriage
Services, Inc., a Delaware corporation (the “Company”),
the existing Guarantors (as defined in the Indenture referred to herein), and
Wells Fargo Bank, National Association, as trustee under the Indenture referred
to herein (the “Trustee”). The New Guarantor and
the existing Guarantors are sometimes referred to collectively herein as the “Guarantors,”
or individually as a “Guarantor.”

 

W I T N E S S E T H

 

WHEREAS, the Company has
heretofore executed and delivered to the Trustee an indenture (the “Indenture”), dated as of January 27, 2005, relating to
the 7.875% Senior Notes due 2015 (the “Securities”) of
the Company;

 

WHEREAS, Section 4.9
of the Indenture provides that if the Company or any of its Restricted
Subsidiaries acquires or creates another Restricted Subsidiary after the Issue
Date, then the Company shall cause newly acquired or created Restricted
Subsidiary to become a Guarantor by executing a supplemental indenture as
provided in the Indenture; and

 

WHEREAS, pursuant to Section 9.1
of the Indenture, the Company and the Trustee are authorized to execute and
deliver this Supplemental Indenture to amend or supplement the Indenture
without the consent of any Holder.

 

NOW THEREFORE, to comply
with the provisions of the Indenture and in consideration of the foregoing and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the New Guarantor, the other Guarantors, the Company and the
Trustee mutually covenant and agree for the equal and ratable benefit of the
Holders of the Securities as follows:

 

1.                                    CAPITALIZED
TERMS.  Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.

 

2.                                    AGREEMENT
TO GUARANTEE.  The New Guarantor hereby
agrees, jointly and severally, with all other Guarantors, to unconditionally
Guarantee to each Holder and to the Trustee the Obligations, to the extent set
forth in the Indenture and subject to the provisions in the Indenture.  The obligations of the Guarantors to the
Holders of Securities and to the Trustee pursuant to the Subsidiary Guarantees
and the Indenture are expressly set forth in Article X of the
Indenture and reference is hereby made to the Indenture for the precise terms
of the Subsidiary Guarantees.

 

3.                                    EXECUTION
AND DELIVERY.  Each Guarantor agrees that
the Subsidiary Guarantees shall remain in full force and effect notwithstanding
any failure to endorse on each Security a notation of any such Subsidiary
Guarantee of any Guarantor.

 

1

 

4.                                    NEW
YORK LAW TO GOVERN.  THE LAW OF THE STATE
OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE AND ENFORCE THIS SUPPLEMENTAL
INDENTURE.

 

5.                                    COUNTERPARTS.  The parties may sign any number of copies of
this Supplemental Indenture.  Each signed
copy shall be an original, but all of them together represent the same
agreement.  This Supplemental Indenture
may be executed in multiple counterparts which, when taken together, shall
constitute one instrument.

 

6.                                    EFFECT
OF HEADINGS.  The Section headings
herein are for convenience only and shall not affect the construction hereof.

 

7.                                    THE
TRUSTEE.  Except as otherwise expressly
provided herein, no duties, responsibilities or liabilities are assumed, or
shall be construed to be assumed, by the Trustee by reason of this Supplemental
Indenture.  This Supplemental Indenture
is executed and accepted by the Trustee subject to all the terms and conditions
set forth in the Indenture with the same force and effect as if those terms and
conditions were repeated at length herein and made applicable to the Trustee
with respect hereto.

 

2

 

IN WITNESS
WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed and attested, all as of the date first above written.

 

	
   

  	
  [NEW
  GUARANTOR]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  [OTHER
  GUARANTORS]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  CARRIAGE SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION, as

  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

3

 

EXHIBIT F

 

FORM OF CERTIFICATE TO BE
DELIVERED BY

INSTITUTIONAL ACCREDITED INVESTORS

 

                              ,
          

 

Wells Fargo Bank, National
Association,

as Trustee and
Registrar

505 Main Street, Suite 301

Fort Worth, Texas  76102

Attention:  Corporate Trust Department

 

Ladies
and Gentlemen:

 

We
are delivering this letter in connection with our purchase of 7.875% Senior
Notes due 2015 (the “Notes”) of
Carriage Services, Inc. (the “Company”). 
We hereby confirm that:

 

(i)                                     we are an “accredited investor”
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
of 1933, as amended (the “Securities Act”), or an entity in which all of the
equity owners are accredited investors within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act (an “Institutional Accredited Investor”);

 

(ii)                                  any purchase of Notes by us will
be for our own account or, if we are buying for one or more institutional
accounts for which we are acting as fiduciary or agent and we are not a bank
(as defined in Section 3(a)(2) of the Securities Act) or a savings and
loan association or other institution (as defined in Section 3(a)(5)(A) of
the Securities Act), each such account is an Institutional Accredited Investor;

 

(iii)                               we have such knowledge and
experience in financial and business matters that we are capable of evaluating
the merits and risks of purchasing Notes and we, and any accounts for which we
are acting, are able to bear the economic risks of its or their investment;

 

(iv)                              we are not acquiring Notes with
a view to any distribution thereof in a transaction that would violate the
Securities Act or the securities laws of any State of the United States or any
other applicable jurisdiction; provided,
however, that the disposition of
our property and the property of any accounts for which we are acting as
fiduciary shall remain at all times within our control; and

 

(v)                                 we acknowledge that we have had
access to such financial and other information, and have been afforded the opportunity
to ask such questions of representatives of the Company and receive answers
thereto, as we deem necessary in connection with our decision to purchase
Notes.

 

We
understand that the Notes were offered in a transaction not involving any
public offering within the meaning of the Securities Act and that the Notes
have not been registered under the Securities Act, and we agree, on our own
behalf and on behalf of each account for which we acquire any Notes, that such
Notes may be offered, resold, pledged or otherwise

 

1

 

transferred only (i) in the United States to a person whom
we reasonably believe to be a qualified institutional buyer (as defined in Rule
144A under the Securities Act) in a transaction meeting the requirements of
Rule 144A under the Securities Act, (ii) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (iii) outside the United
States in a transaction meeting the requirements of Rule 903 or 904 under the
Securities Act, (iv) to the Company, (v) to another Institutional accredited
Investor, or (vi) pursuant to an effective registration statement, and, in each
case, in accordance with any applicable securities laws of any State of the
United States, and we will, and each subsequent holder of the Notes is required
to, notify any subsequent purchaser from us or it of the resale restrictions
set forth in clauses (i) – (vi) above. 
We acknowledge that the Notes will bear legends substantially to the
foregoing effect.  We understand that the
registrar will not be required to accept for registration of transfer any
Notes, except upon presentation of evidence satisfactory to the Company that
the foregoing restrictions on transfer have been complied with.

 

We
acknowledge that you and the Company will rely upon our confirmations,
acknowledgments and agreements set forth herein, and we agree to notify you
promptly in writing if any of our representations or warranties herein ceases
to be accurate and complete.

 

THIS
LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.

 

	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name of Purchaser]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
				

 

2

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