SERVICE CORPORATION INTERNATIONAL, S-3, 1994-10-19

SERVICE CORPORATION INTERNATIONAL
S-3, 1994-10-19
PERSONAL SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 1994
REGISTRATION NO. 33-
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------------
SERVICE CORPORATION INTERNATIONAL AND
SCI FINANCE LLC
(EXACT NAME OF EACH REGISTRANT AS SPECIFIED IN ITS CHARTER)

TEXAS -- SERVICE CORPORATION
INTERNATIONAL
TEXAS -- SCI FINANCE LLC
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

1929 ALLEN PARKWAY
HOUSTON, TEXAS 77019
(713) 522-5141
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)

74-1488375 -- SERVICE CORPORATION
INTERNATIONAL
76-0449139 -- SCI FINANCE LLC
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

------------------------
JAMES M. SHELGER, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
SERVICE CORPORATION INTERNATIONAL
1929 ALLEN PARKWAY
HOUSTON, TEXAS 77019
(713) 522-5141
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copies to:

<TABLE>
<S> <C>
SETH A. KAPLAN, ESQ. GERALD S. TANENBAUM, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ CAHILL GORDON & REINDEL
51 WEST 52ND STREET EIGHTY PINE STREET
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10005
(212) 403-1000 (212) 701-3000
</TABLE>

------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME
AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, AS DETERMINED BY MARKET
CONDITIONS.
------------------------
If the only Securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans,
please check the following box. / /

If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than Securities offered only in
connection with dividend or reinvestment
plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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AMOUNT PROPOSED MAXIMUM PROPOSED MINIMUM
TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1)(2) PER UNIT(3) PRICE(2)(3)(4) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Debt Securities
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Preferred Stock
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Common Stock Warrants {$1,000,000,000 100% $1,000,000,000 $344,828}
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Common Stock(1)
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Series C Junior Participating Preferred Stock
Purchase Rights (currently traded with Common
Stock)(1)
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LLC Preferred Securities
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Guarantee of LLC Preferred Securities(5)
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</TABLE>

(1) There are being registered hereunder such presently indeterminate number of
shares of Common Stock and Series C Junior Participating Preferred Stock
Purchase Rights into which certain series of the Debt Securities, Preferred
Stock and LLC Preferred Securities may be converted and for which no separate
consideration will be received and for which Common Stock Warrants may be
exercised.

(2) In U.S. dollars or the equivalent in foreign currency or currency units.

(3) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.

(4) Exclusive of accrued interest or dividends, if any.

(5) No separate consideration will be received for the Guarantee of LLC
Preferred Securities.

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

PROSPECTUS Subject to Completion
October 18, 1994
$1,000,000,000
SERVICE CORPORATION INTERNATIONAL
Debt Securities, Common Stock, Preferred Stock and
Common Stock Warrants
SCI FINANCE LLC
LLC Preferred Securities

Service Corporation International (the "Company" or "SCI") may from time to time
offer (i) Debt Securities consisting of debentures, notes and/or other unsecured
evidences of indebtedness, (ii) Common Stock, par value $1.00 per share ("Common
Stock" or "SCI Common Stock"), along with Series C Junior Participating
Preferred Stock Purchase Rights, (iii) Preferred Stock, par value $1.00 per
share ("Preferred Stock"), and (iv) Common Stock Warrants. SCI Finance LLC ("SCI
Finance") may from time to time offer LLC Preferred Securities in one or more
series with the payment of dividends and the payments on liquidation or
redemption of the LLC Preferred Securities guaranteed on a subordinated basis by
SCI to the extent described herein or in the accompanying Prospectus Supplement.
See "Description of the LLC Preferred Securities -- Description of the
Guarantee" and "-- Description of the Loans" for a description of various
contractual backup undertakings of SCI with respect to the LLC Preferred
Securities. The Debt Securities, the Common Stock, along with Series C Junior
Participating Preferred Stock Purchase Rights, the Preferred Stock, the Common
Stock Warrants and the LLC Preferred Securities are collectively referred to as
the "Securities," and will have an aggregate initial offering price of up to
$1,000,000,000 (or the equivalent thereof if Debt Securities are denominated in
a currency other than U.S. dollars or in currency units). The Securities may be
offered as separate series, in amounts, at prices and on terms to be determined
at the time of sale.

The accompanying Prospectus Supplement sets forth with regard to the Securities
in respect of which this Prospectus is being delivered the terms of such
Securities, including, where applicable, (i) in the case of Debt Securities, the
specific title (including whether senior, senior subordinated or subordinated
and whether or not convertible), aggregate principal amount, denominations
(which may be in U.S. dollars, in any other currency or in composite
currencies), maturity (which may be fixed or extendible), interest rate, if any
(which may be fixed or variable), and time of payment of any interest, any terms
for redemption at the option of the Company or the holder, any terms for sinking
fund payments, any class or classes of stock into which the Debt Securities are
convertible and other conversion terms, if any, any covenants or events of
default that are in addition to or different from those described herein, any
listing on a securities exchange, the initial public offering price and any
other terms in connection with the offering and sale of such Debt Securities,
(ii) in the case of Common Stock, the initial public offering price, (iii) in
the case of Preferred Stock, the specific title, any dividend, liquidation and
other rights, any class or classes of stock into which the Preferred Stock is
convertible and other conversion terms, if any, any redemption provisions, any
sinking fund provisions, any covenants, any listing on a securities exchange,
the initial public offering price and any other terms in connection with the
offering and sale of such Preferred Stock, (iv) in the case of Common Stock
Warrants, the duration, exercise price, initial public offering price and any
other terms in connection with the offering and sale of such Common Stock
Warrants and (v) in the case of the LLC Preferred Securities, any dividend,
conversion and other rights, any listing on a securities exchange, the initial
public offering price and any other terms in connection with the offering and
sale of such LLC Preferred Securities.

The Company and SCI Finance may sell Securities to or through underwriters, and
also may sell Securities directly to other purchasers or through agents. The
accompanying Prospectus Supplement sets forth the names of any underwriters or
agents involved in the sale of the Securities in respect of which this
Prospectus is being delivered, the principal amounts, if any, to be purchased by
underwriters and the compensation, if any, of such underwriters or agents.

SEE "CERTAIN INVESTMENT CONSIDERATIONS" FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

, 1994
<PAGE> 3

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS, IF ANY, MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
SECURITIES AND, IF THE SECURITIES ARE CONVERTIBLE, THE OUTSTANDING CLASS OR
CLASSES OF STOCK OF THE COMPANY INTO WHICH THEY ARE CONVERTIBLE, AT LEVELS ABOVE
THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON ANY SECURITIES EXCHANGE ON WHICH SUCH SECURITIES MAY BE LISTED, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus or
the accompanying Prospectus Supplement and, if given or made, such information
or representation must not be relied upon as having been authorized by the
Company or any underwriter, dealer or agent. Neither this Prospectus nor the
accompanying Prospectus Supplement constitutes an offer to sell or a
solicitation of an offer to buy Securities in any jurisdiction in which such
offer or solicitation is not authorized or in which the person making such offer
or solicitation is not qualified to do so or to any person to whom it is
unlawful to make such offer or solicitation.

In this Prospectus, references to "dollar" and "$" are to United States dollars,
and the terms "United States" and "U.S." mean the United States of America, its
states, its territories, its possessions and all areas subject to its
jurisdiction.

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 3
Incorporation of Certain Documents by
Reference.......................... 4
The Company.......................... 5
SCI Finance.......................... 5
Certain Investment Considerations.... 6
Use of Proceeds...................... 6
Description of Debt Securities....... 7
Description of Preferred Stock....... 22
Description of Common Stock
Warrants........................... 25
Description of the LLC Preferred
Securities......................... 28
Certain Federal Income Tax
Considerations Regarding the LLC
Preferred Securities............... 45
Plan of Distribution................. 49
Legal Matters........................ 50
Experts.............................. 50
</TABLE>

2
<PAGE> 4

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street N.W., Washington,
D.C. 20549; 500 West Madison Street, Chicago, Illinois 60661; and 7 World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
from the public reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, such material can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.

Additional information regarding the Company, SCI Finance and the Securities is
contained in the Registration Statement of which this Prospectus is a part and
the exhibits relating thereto (the "Registration Statement") filed with the
Commission under the Securities Act of 1933, as amended (the "Act"). For further
information pertaining to the Company, SCI Finance and the Securities reference
is made to the Registration Statement, which may be inspected without charge at
the office of the Commission at 450 Fifth Street N.W., Washington, D.C. 20549,
and copies thereof may be obtained from the Commission at prescribed rates. This
Prospectus and the accompanying Prospectus Supplement do not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements made in this Prospectus and the accompanying Prospectus Supplement as
to the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.

No separate financial statements of SCI Finance have been included or
incorporated by reference herein. SCI Finance and SCI do not consider that such
financial statements would be material to holders of the LLC Preferred
Securities, because SCI Finance is a newly-organized special purpose entity, has
no operating history and no independent operations and is not engaged in any
activity other than the issuance of its preferred interests (the "LLC Preferred
Shares"), such as the LLC Preferred Securities, and its common interests (the
"LLC Common Shares"), and the lending of 99% of the proceeds thereof to SCI
International Limited, a wholly-owned subsidiary of SCI ("SCI Limited"), and
because SCI will guarantee SCI Finance's obligations under the terms of the LLC
Preferred Securities to the extent set forth herein. See "SCI Finance." SCI
Finance is a limited liability company organized under the laws of the State of
Texas and will be managed by SCI, as manager (sometimes referred to herein as
the "Manager"). SCI owns all of the LLC Common Shares, which are
nontransferable.

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<PAGE> 5

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed by SCI with the Commission are
incorporated herein by reference:

1. SCI's Annual Report on Form 10-K for the fiscal year ended December 31, 1993,
as amended on Form 10-K/A, dated April 5, 1994;

2. SCI's Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 1994 and June 30, 1994;

3. The Company's Current Report on Form 8-K dated October 18, 1994;

4. Description of the Company's capital stock set forth under the caption
"Item 1. Description of Securities to be Registered -- Capital Stock" in the
Form 8, Amendment No. 3, dated September 15, 1982, to the Company's Registration
Statement on Form 8-A; and

5. Description of the Company's preferred share purchase rights contained in the
Company's Registration Statement on Form 8-A dated July 26, 1988, as amended by
Amendment No. 1 thereto filed under cover of Form 8 and dated May 11, 1990.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the date
of filing such documents. Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein (or in any other
subsequently filed document which also is incorporated by reference herein)
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed to constitute a part hereof except as so modified or
superseded.

The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the request of any such person, a copy of any or
all of the documents which are incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to Service
Corporation International, 1929 Allen Parkway, Houston, Texas 77019, Attention:
James M. Shelger, Senior Vice President, General Counsel and Secretary (Tel.
(713) 522-5141).

4
<PAGE> 6

THE COMPANY

The Company is the largest publicly-held provider of funeral and cemetery
services and products in the world. Giving effect to the recent acquisitions of
Great Southern Group plc ("GSG") and Plantsbrook Group plc ("PG"), as of
September 30, 1994, the Company owned and operated 1,431 funeral homes, 213
cemeteries (including 92 funeral home and cemetery combinations) and 99
crematoria located in 40 U.S. states, the District of Columbia, Australia,
Canada and the United Kingdom.

The Company was incorporated in Texas on July 5, 1962. The Company's principal
executive offices are located at 1929 Allen Parkway, Houston, Texas 77019,
telephone number (713) 522-5141. As used herein, unless the context indicates
otherwise, the terms "Company" and "SCI" refer to the Company and its
subsidiaries.

SCI FINANCE

SCI Finance is a limited liability company organized under the laws of the State
of Texas. The address of SCI Finance's principal executive offices is 1929 Allen
Parkway, Houston, Texas 77019. SCI owns all of the LLC Common Shares, which are
nontransferable. SCI Finance exists for the sole purpose of issuing LLC Common
Shares and LLC Preferred Shares and lending 99% of the proceeds thereof to SCI
Limited. The remaining 1% of the proceeds from the issuance of LLC Common Shares
and LLC Preferred Shares will be invested by SCI Finance in Eligible Investments
(as defined in SCI Finance's Articles of Organization (the "LLC Articles")). See
"Use of Proceeds."

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CERTAIN INVESTMENT CONSIDERATIONS

In evaluating an investment in the Securities, prospective purchasers should
carefully consider the following factor, together with (i) other information
included in the accompanying Prospectus Supplement (which may include additional
factors and may contain information modifying or superseding the factor set
forth below), (ii) information included elsewhere in this Prospectus, and (iii)
information incorporated herein by reference (which may modify or supersede the
factor set forth below).

SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

The staff of the Division of Enforcement of the Commission has advised SCI that
it is considering recommending to the Commission that it institute an
administrative proceeding pursuant to Section 21C of the Exchange Act seeking
cease and desist orders against SCI, R. L. Waltrip, Chairman of the Board and
Chief Executive Officer, L. William Heiligbrodt, President and Chief Operating
Officer, and Samuel W. Rizzo, Executive Vice President and Chief Financial
Officer/Treasurer, for violations of certain reporting and disclosure
requirements of the Exchange Act and the regulations promulgated thereunder. The
recommendation under consideration by the staff arises out of the informal
private investigation previously disclosed by SCI relating to, among other
things, the change in SCI's accountants and SCI's Form 8-K dated March 31, 1993,
as amended in April 1993, reporting such change. See Items 3 and 9 of SCI's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993. The
staff has offered SCI and the named individuals the opportunity to make a
presentation with respect to the recommendation under consideration.

USE OF PROCEEDS

Except as may be otherwise set forth in the Prospectus Supplement accompanying
this Prospectus, the net proceeds to the Company from the sale or sales of the
Securities other than LLC Preferred Securities will be used for general
corporate purposes. Except as set forth in the Prospectus Supplement
accompanying this Prospectus, 99% of the proceeds from any offering of the LLC
Preferred Securities will be lent by SCI Finance to SCI Limited (the "Loans"),
which will use such proceeds in connection with SCI's foreign acquisition
program, and the remaining 1% will be invested by SCI Finance in Eligible
Investments.

6
<PAGE> 8

DESCRIPTION OF DEBT SECURITIES

The Debt Securities will constitute either senior, senior subordinated or
subordinated debt of the Company and will be issued, in the case of Debt
Securities that will be senior debt ("Senior Debt Securities"), under a Senior
Indenture (the "Senior Debt Indenture") dated as of February 1, 1993, between
the Company and The Bank of New York, as trustee; in the case of Debt Securities
that will be senior subordinated debt ("Senior Subordinated Debt Securities"),
under a Senior Subordinated Indenture (the "Senior Subordinated Debt Indenture")
dated as of , 1994 between the Company and Texas Commerce Bank
National Association ("Texas Commerce Bank"), as trustee; and, in the case of
Debt Securities that will be subordinated debt ("Subordinated Debt Securities"
and, together with the Senior Subordinated Debt Securities, the "Subordinated
Securities") under a Subordinated Indenture (the "Subordinated Debt Indenture"
and, together with the Senior Subordinated Debt Indenture, the "Subordinated
Indentures") dated as of September 1, 1991 between the Company and Texas
Commerce Bank, as trustee. The Senior Debt Indenture, the Senior Subordinated
Debt Indenture and the Subordinated Debt Indenture are sometimes hereinafter
referred to individually as an "Indenture" and collectively as the "Indentures."
Each of The Bank of New York and Texas Commerce Bank (and any successors thereto
as trustees under the respective Indentures) is hereinafter referred to as the
"Trustee" with respect to the Indenture under which it acts as Trustee. The
Indentures are filed as exhibits to the Registration Statement. The following
summaries of certain provisions of the Indentures and the Debt Securities do not
purport to be complete, and such summaries are subject to the detailed
provisions of the applicable Indenture to which reference is hereby made for a
full description of such provisions, including the definition of certain
capitalized terms used herein but not otherwise defined herein. Whenever defined
terms of the applicable Indenture are referred to, such defined terms are
incorporated herein by reference as part of the statement made, and the
statement is qualified in its entirety by such reference. The Indentures are
substantially identical, except for certain covenants of the Company, events of
default and provisions relating to subordination and conversion.

The Debt Securities may be issued from time to time in one or more series. The
following description of the Debt Securities sets forth certain general terms
and provisions of the Debt Securities of all series. The particular terms of
each series of Debt Securities offered by any Prospectus Supplement will be
described therein.

PROVISIONS APPLICABLE TO SENIOR, SENIOR SUBORDINATED AND SUBORDINATED DEBT
SECURITIES

General. The Debt Securities will be unsecured senior, senior subordinated or
subordinated obligations of the Company and may be issued from time to time in
one or more series. The Indentures will not limit the amount of Debt Securities,
Senior Indebtedness, debentures, notes or other types of indebtedness that may
be issued by the Company or any of its Subsidiaries nor will they restrict
transactions between the Company and its Affiliates, the payment of dividends or
the making of investments by the Company or the transfer of assets by the
Company to its Subsidiaries. The Company currently conducts substantially all
its operations through Subsidiaries. Consequently, the rights of the Company to
receive assets of any Subsidiary (and thus the ability of holders of Debt
Securities to benefit indirectly from such assets) are subject to the prior
claims of creditors of that Subsidiary. Other than as may be set forth in any
Prospectus Supplement, the Indentures and the Debt Securities will not contain
any covenants or other provisions that are intended to afford holders of the
Debt Securities special protection in the event of a highly leveraged
transaction by the Company. As of June 30, 1994, the Company had outstanding
approximately $714 million of secured debt or Senior Indebtedness (including
approximately $34 million principal amount of guarantees) and approximately $471
million of unsecured subordinated debt.

Reference is made to the Prospectus Supplement relating to any Debt Securities
for the following terms of and information relating to such Debt Securities (to
the extent such terms are applicable thereto): (i) the title of such Debt
Securities; (ii) classification as Senior Debt Securities, Senior Subordinated
Debt Securities or Subordinated Debt Securities, aggregate principal amount,
purchase price and denomination; (iii) whether such Debt Securities that
constitute Senior Subordinated Debt Securities or Subordinated Debt Securities
are convertible into Common Stock and, if so, the terms and conditions upon
which such conversion will be effected including the initial conversion price or
conversion rate and any adjustments thereto in addition to or different from
those described herein, the conversion period and other conversion provisions in
addition to or in lieu of

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<PAGE> 9

those described herein; (iv) the date or dates on which such Debt Securities
will mature; (v) the method by which amounts payable in respect of principal of
or premium, if any, or interest, if any, on or upon the redemption of such Debt
Securities may be calculated; (vi) the interest rate or rates (or the method by
which such will be determined), and the dates from which such interest, if any,
will accrue; (vii) the date or dates on which any such interest will be payable;
(viii) the place or places where and the manner in which the principal of and
premium, if any, and interest, if any, on such Debt Securities will be payable
and the place or places where such Debt Securities may be presented for transfer
and, if applicable, conversion; (ix) the obligations, if any, of the Company to
redeem, repay or purchase such Debt Securities pursuant to any sinking fund or
analogous provisions or at the option of a holder thereof or the right, if any,
of the Company to redeem, repay or purchase such Debt Securities at its option
and the period or periods within which, the price or prices at which and the
terms and conditions upon which such Debt Securities will be redeemed, repaid or
purchased pursuant to any such obligation or right (including the form or method
of payment thereof if other than cash); (x) any terms applicable to such Debt
Securities issued at an original issue discount below their stated principal
amount, including the issue price thereof and the rate or rates at which such
original issue discount shall accrue; (xi) any index used to determine the
amount of payments of principal of and any premium and interest on such Debt
Securities; (xii) any special United States federal income tax consequences; and
(xiii) any other specified terms of such Debt Securities, including any
additional or different events of default or remedies or any additional
covenants provided with respect to such Debt Securities, and any terms which may
be required by or advisable under applicable laws or regulations.

Unless otherwise specified in any Prospectus Supplement, the Debt Securities
will be issued only in fully registered form and in denominations of $1,000 and
any integral multiple thereof. No service charge will be made for any transfer
or exchange of any Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

Debt Securities may bear interest at a fixed rate or a floating rate. Debt
Securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate may be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any such discounted Debt Securities or to certain
Debt Securities issued at par that are treated as having been issued at a
discount for United States federal income tax purposes will be described in the
applicable Prospectus Supplement.

The Indentures and the Debt Securities will be governed by Texas law.

Global Securities. The Debt Securities of a series may be issued in whole or in
part in the form of one or more global securities ("Global Securities") that
will be deposited with, or on behalf of, a depositary (the "Depositary")
identified in the Prospectus Supplement relating to such series. Global
Securities may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual Debt Securities represented thereby, a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to the
nominee of the Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.

The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will generally
apply to depositary arrangements.

Upon the issuance of a Global Security, the Depositary for such Global Security
or its nominee will credit, on its book-entry registration and transfer system,
the respective principal amounts of the individual Debt Securities represented
by such Global Security to the accounts of persons that have accounts with such
Depositary. Such accounts shall be designated by the dealers, underwriters or
agents with respect to such Debt Securities or by the Company if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in a Global Security will be limited to persons that have accounts
with the applicable Depositary ("participants") or persons that may hold
interests through participants. Ownership of beneficial interests in such Global
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depositary or its nominee
(with respect to interests of participants) and the

8
<PAGE> 10

records of participants (with respect to interests of persons other than
participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security.

So long as the Depositary for a Global Security or its nominee is the registered
owner of such Global Security, such Depositary or its nominee, as the case may
be, will be considered the sole owner or holder of the Debt Securities of the
series represented by such Global Security for all purposes under the Indenture
governing such Debt Securities. Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have any of the
individual Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Debt Securities in definitive form and will not be
considered the owners or holders thereof under the Indenture governing such Debt
Securities.

Payments of principal of and premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominees will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. Neither the Company, the Trustee for such
Debt Securities, any paying agent nor the registrar for such Debt Securities
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of the Global
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.

The Company expects that the Depositary for a series of Debt Securities or its
nominee, upon receipt of any payment of principal, premium or interest in
respect of a Global Security representing any such Debt Securities, immediately
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security for such Debt Securities as shown on the records of such Depositary or
its nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name." Such payments will be the responsibility of such participants.

If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual Debt
Securities of such series in exchange for the Global Security representing such
series of Debt Securities. In addition, the Company may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities, determine not to have any Debt
Securities of a series represented by one or more Global Securities and, in such
event, will issue individual Debt Securities of such series in exchange for the
Global Security or Securities representing such series of Debt Securities.
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security representing Debt
Securities of such series may, on terms acceptable to the Company and the
Depositary for such Global Security, receive individual Debt Securities of such
series in exchange for such beneficial interests, subject to any limitations
described in the Prospectus Supplement relating to such Debt Securities. In any
such instance, an owner of a beneficial interest in a Global Security will be
entitled to a physical delivery of individual Debt Securities of the series
represented by such Global Security equal in principal amount to such beneficial
interest and to have such Debt Securities registered in its name. Individual
Debt Securities of such series so issued will be issued in denominations, unless
otherwise specified by the Company, of $1,000 and integral multiples thereof.

Consolidation, Merger, Sale. Each Indenture provides that the Company may
consolidate or merge with or into any other corporation, and may sell, lease,
exchange or otherwise dispose of all or substantially all of its property and
assets to any other corporation authorized to acquire and operate the same,
provided that in any such case (i) immediately after such transaction the
Company or such other corporation formed by or surviving any such consolidation
or merger, or to which such sale, lease, exchange or other disposition shall
have been made, will not be in default in the performance or observance of any
of the terms, covenants and conditions in the Indenture to be kept or performed
by the Company, (ii) the corporation (if other than the Company) formed by or
surviving any such consolidation or merger, or to which such sale, lease
exchange or other disposition shall have been made, shall be a corporation
organized under the laws of the United States of America, any state

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<PAGE> 11

thereof or the District of Columbia, and (iii) the corporation (if other than
the Company) formed by such consolidation, or into which the Company shall have
been merged, or the corporation which shall have acquired or leased such
property and assets, shall assume, by a supplemental indenture, the Company's
obligations under such Indenture. In case of any such consolidation, merger,
sale, lease, exchange or other disposition and upon any such assumption by the
successor corporation, such successor corporation shall succeed to and be
substituted for the Company, with the same effect as if it had been named in
such Indenture as the Company and subject to the conditions set forth in the
Indenture, and the Company shall be relieved of any further obligation under
such Indenture and any Debt Securities issued thereunder.

Discharge and Defeasance. The Company may discharge or defease its obligations
with respect to each series of Debt Securities as set forth below.

The Company may discharge all of its obligations (except those set forth below)
to holders of any series of Debt Securities issued under any Indenture, which
Debt Securities have not already been delivered to the Trustee for cancellation
and which either have become due and payable or are by their terms due and
payable within one year (or are to be called for redemption within one year) by
depositing with the Trustee cash or U.S. Government Obligations, or a
combination thereof, as trust funds in an amount certified to be sufficient to
pay when due the principal of and premium, if any, and interest, if any, on all
outstanding Debt Securities of such series and to make any mandatory sinking
fund payments thereon when due.

Unless otherwise provided in the applicable Prospectus Supplement, the Company
may also discharge at any time all of its obligations (except those set forth
below) to holders of any series of Debt Securities issued under any Indenture
(other than convertible Debt Securities) ("defeasance") if, among other things:
(i) the Company irrevocably deposits with the Trustee cash or U.S. Government
Obligations, or a combination thereof, as trust funds in an amount certified to
be sufficient to pay the principal of and premium, if any, and interest, if any,
on all outstanding Debt Securities of such series when due and to make any
mandatory sinking fund payments thereon when due, and such funds have been so
deposited for 91 days; (ii) such deposit will not result in a breach or
violation of, or cause a default under, any agreement or instrument to which the
Company is a party or by which it is bound; and (iii) the Company delivers to
the Trustee an opinion of counsel to the effect that the holders of such series
of Debt Securities will not recognize income, gain or loss for United States
federal income tax purposes as a result of such defeasance, and that such
defeasance will not otherwise alter the United States federal income tax
treatment of principal and interest payments on such series of Debt Securities.
Such opinion of counsel must be based on a ruling of the Internal Revenue
Service or a change in United States federal income tax law occurring after the
date of the Indenture relating to the Debt Securities of such series, since such
a result would not occur under current tax law.

In the event of such discharge and defeasance of a series of Debt Securities,
the holders thereof would be entitled to look only to such trust funds for
payment of the principal of and any premium and interest on such Debt
Securities.

Notwithstanding the foregoing, no discharge or defeasance described above shall
affect the following obligations to or rights of the holders of any series of
Debt Securities: (i) rights of registration of transfer and exchange of Debt
Securities of such series; (ii) rights of substitution of mutilated, defaced,
destroyed, lost or stolen Debt Securities of such series; (iii) rights of
holders of Debt Securities of such series to receive payments of principal
thereof and interest, if any, thereon when due and to receive mandatory sinking
fund payments, if any, thereon when due from the trust funds held by the
Trustee; (iv) the rights, obligations, duties and immunities of the Trustee; (v)
the rights of holders of Debt Securities of such series as beneficiaries with
respect to property deposited with the Trustee payable to all or any of them;
(vi) the obligations of the Company to maintain an office or agency in respect
of Debt Securities of such series; and (vii) if applicable, the obligations of
the Company with respect to the conversion of Debt Securities of such series
into Common Stock.

Modification of the Indenture. Each Indenture provides that the Company and the
Trustee may enter into supplemental indentures without the consent of the
holders of the Debt Securities to (i) evidence the assumption by a successor
corporation of the obligations of the Company under such Indenture, (ii) add
covenants or new events of default for the protection of the holders of such
Debt Securities, (iii) cure any ambiguity or correct any inconsistency in the
Indenture, (iv) establish the form and terms of any series of Debt Securities
and to

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<PAGE> 12

provide for adjustment of conversion rights, (v) evidence the acceptance of
appointment by a successor trustee, (vi) amend the Indenture in any other manner
which the Company may deem necessary or desirable and which will not adversely
affect the interests of the holders of Debt Securities issued thereunder or
(vii) in the case of Senior Debt Securities, secure such Debt Securities.

Each Indenture also contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Debt Securities then Outstanding of each series affected
by such supplemental Indenture, to add any provisions to, or change in any
manner or eliminate any of the provisions of, such Indenture or modify in any
manner the rights of the holders of the Debt Securities of such series; provided
that the Company and the Trustee may not, without the consent of the holder of
each outstanding Debt Security affected thereby, (i) extend the stated maturity
of the principal of any Debt Security, reduce the principal amount thereof,
reduce the rate or extend the time of payment of any interest thereon, reduce or
alter the method of computation of any amount payable on redemption, repayment
or purchase thereof, reduce the portion of the principal amount of any Original
Issue Discount Security payable upon acceleration or provable in bankruptcy,
change the coin or currency in which principal and interest, if any, are
payable, impair or affect the right to institute suit for the enforcement of any
payment, repayment or purchase thereof or, if applicable, adversely affect the
right to convert Debt Securities, any right of repayment at the option of the
holder or (solely with respect to the Senior Subordinated Debt Indenture)
change, amend or modify the subordination provisions of such Indenture or any of
the definitions used in the subordination provisions of such Indenture or
consent to the departure from any of the terms of the subordination provisions
of such Indenture in each case in any manner that would adversely affect the
holders of any of the Senior Subordinated Debt Securities issued thereunder or
(ii) reduce the percentage in aggregate principal amount of Debt Securities of
any series issued under such Indenture, the consent of the holders of which is
required for any such modification.

The Senior Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding Senior Subordinated Debt Securities, and the
Subordinated Debt Indenture may not be amended to alter the subordination of any
outstanding Subordinated Debt Securities, in each case without the consent of
each holder of Senior Indebtedness then outstanding that would be adversely
affected thereby.

Each of the Indentures provides that the term "Original Issue Discount Security"
means any Debt Security that provides for an amount less than the principal
amount thereof to be due and payable upon a declaration of acceleration of the
maturity thereof pursuant to the terms of the Indenture.

In each of the Indentures, the definition of the term "Outstanding," with
reference to Debt Securities, provides that in determining whether the holders
of the requisite aggregate principal amount of Outstanding Debt Securities of
any or all series have given any request, demand, authorization, direction,
notice, consent or waiver under the applicable Indenture, the principal amount
of an Original Issue Discount Security that shall be deemed to be Outstanding
for such purposes shall be the portion of the principal amount thereof that
would be due and payable as of the date of such determination (as certified by
the Company to the Trustee) upon a declaration of acceleration of the maturity
thereof pursuant to the terms of the Indenture.

PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES

General. Senior Debt Securities will be issued under the Senior Debt Indenture,
and each series will rank pari passu as to the right of payment of principal,
premium, if any, and interest, if any, with each other series and with all other
Senior Indebtedness of the Company.

Events of Default. Unless otherwise specified in the Prospectus Supplement, an
Event of Default is defined under the Senior Debt Indenture with respect to the
Senior Debt Securities of any series issued thereunder as being any one or more
of the following events:

(i) default in the payment of any installment of interest upon any of the Senior
Debt Securities of such series as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or

(ii) default in the payment of the principal of any of the Senior Debt
Securities of such series as and when the same shall become due and payable
either at maturity, upon redemption, by declaration or otherwise; or

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(iii) default in the payment or satisfaction of any sinking fund or other
purchase obligation with respect to Senior Debt Securities of such series, as
and when such obligation shall become due and payable; or

(iv) failure on the part of the Company duly to observe or perform any other of
the covenants or agreements on the part of the Company in the Senior Debt
Securities of such series or in the Senior Debt Indenture continued for a period
of 60 days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Company by the Trustee by
registered or certified mail, or to the Company and the Trustee by the holders
of at least 25 percent in aggregate principal amount of the Senior Debt
Securities of such series then Outstanding; or

(v) without the consent of the Company a court having jurisdiction shall enter
an order for relief with respect to the Company under the Bankruptcy Code or
without the consent of the Company a court having jurisdiction shall enter a
judgment, order or decree adjudging the Company a bankrupt or insolvent, or
enter an order for relief for reorganization, arrangement, adjustment or
composition of or in respect of the Company under the Bankruptcy Code or
applicable state insolvency law and the continuance of any such judgment, order
or decree is unstayed and in effect for a period of 60 consecutive days; or

(vi) the Company shall institute proceedings for entry of an order for relief
with respect to the Company under the Bankruptcy Code or for an adjudication of
insolvency, or shall consent to the institution of bankruptcy or insolvency
proceedings against it, or shall file a petition seeking, or seek or consent to,
reorganization, arrangement, composition or relief under the Bankruptcy Code or
any applicable state law, or shall consent to the filing of such petition or to
the appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of substantially all of its
property, or the Company shall make a general assignment for the benefit of
creditors as recognized under the Bankruptcy Code; or

(vii) default under any bond, debenture, note or other evidence of Indebtedness
for money borrowed by the Company or any Subsidiary or under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
Subsidiary (other than Non-Recourse Indebtedness), whether such Indebtedness
exists on the date of the Senior Debt Indenture or shall thereafter be created,
which default shall have resulted in such Indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, or any default in payment of such Indebtedness (after
the expiration of any applicable grace periods and the presentation of any debt
instruments, if required), if the aggregate amount of all such Indebtedness
which has been so accelerated and with respect to which there has been such a
default in payment shall exceed $5,000,000, without each such default and
acceleration having been rescinded or annulled within a period of 30 days after
there shall have been given to the Company by the Trustee by registered mail, or
to the Company and the Trustee by the holders of at least 25 percent in
aggregate principal amount of the Senior Debt Securities of such series then
Outstanding, a written notice specifying each such default and requiring the
Company to cause each such default and acceleration to be rescinded or annulled
and stating that such notice is a "Notice of Default" under the Senior Debt
Indenture; or

(viii) any other Event of Default provided with respect to the Senior Debt
Securities of such series.

If an Event of Default with respect to Senior Debt Securities of any series then
Outstanding occurs and is continuing, then and in each and every such case,
unless the principal of all of the Senior Debt Securities of such series shall
have already become due and payable, either the Trustee or the holders of not
less than 25 percent in aggregate principal amount of the Senior Debt Securities
of such series then Outstanding, by notice in writing to the Company (and to the
Trustee if given by Securityholders), may declare the unpaid principal amount
(or, if the Senior Debt Securities of such series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) of all the Senior Debt Securities of such series and the
interest, if any, accrued thereon to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and
payable, anything in the Senior Debt Indenture or in the Senior Debt Securities
of such series contained to the contrary notwithstanding. This provision,
however, is subject to the condition that, if at any time after the unpaid
principal amount (or such specified amount) of the Senior Debt Securities of
such series shall have been so declared due and payable and before any judgment
or

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decree for the payment of the moneys due shall have been obtained or entered,
the Company shall pay or shall deposit with the Trustee a sum sufficient to pay
all matured installments of interest, if any, upon all of the Senior Debt
Securities of such series and the principal of any and all Senior Debt
Securities of such series which shall have become due otherwise than by
acceleration (with interest on overdue installments of interest, if any, to the
extent that payment of such interest is enforceable under applicable law and on
such principal at the rate borne by the Senior Debt Securities of such series to
the date of such payment or deposit) and the reasonable compensation,
disbursements, expenses and advances of the Trustee, and any and all defaults
under the Senior Debt Indenture, other than the nonpayment of such portion of
the principal amount of and accrued interest, if any, on Senior Debt Securities
of such series which shall have become due by acceleration, shall have been
cured or shall have been waived in accordance with the Senior Debt Indenture or
provision deemed by the Trustee to be adequate shall have been made
therefor -- then and in every such case the holders of a majority in aggregate
principal amount of the Senior Debt Securities of such series then Outstanding,
by written notice to the Company and to the Trustee, may rescind and annul such
declaration and its consequences; but no such rescission and annulment shall
extend to or shall affect any subsequent default, or shall impair any right
consequent thereon. If any Event of Default with respect to the Company
specified in clause (v) or (vi) above occurs, the unpaid principal amount (or,
if the Senior Debt Securities of any series then Outstanding are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of each such series) and accrued interest on all Senior Debt
Securities of each series then Outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act by the Trustee
or any Securityholder. If the Trustee shall have proceeded to enforce any right
under the Senior Debt Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee, then and in
every such case the Company, the Trustee and the Securityholders shall be
restored respectively to their several positions and rights under the Senior
Debt Indenture, and all rights, remedies and powers of the Company, the Trustee
and the Securityholders shall continue as though no such proceeding had been
taken. Except with respect to an Event of Default pursuant to clause (i), (ii)
or (iii) above, the Trustee shall not be charged with knowledge of any Event of
Default unless written notice thereof shall have been given to the Trustee by
the Company, a Paying Agent or any Securityholder.

The Senior Debt Indenture provides that, subject to the duty of the Trustee
during default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the Senior
Debt Indenture at the request or direction of any of the holders of Senior Debt
Securities issued under the Senior Debt Indenture, unless such holders shall
have offered to the Trustee reasonable security or indemnity.

No holder of any Senior Debt Securities of any series then Outstanding shall
have any right by virtue of or by availing of any provision of the Senior Debt
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to the Senior Debt Indenture or the Senior Debt
Securities or for the appointment of a receiver or trustee or similar official,
or for any other remedy under the Senior Debt Indenture or under the Senior Debt
Securities, unless such holder previously shall have given to the Trustee
written notice of default and of the continuance thereof, and unless the holders
of not less than 25 percent in aggregate principal amount of the Senior Debt
Securities of such series then Outstanding shall have made written request to
the Trustee to institute such action, suit or proceeding in its own name as
Trustee and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding. Notwithstanding any other provisions in the
Senior Debt Indenture, however, the right of any holder of any Senior Debt
Security to receive payment of the principal of and interest, if any, on such
Senior Debt Security, on or after the respective due dates expressed in such
Senior Debt Security, or to institute 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.

The holders of at least a majority in aggregate principal amount of the Senior
Debt Securities of any series then Outstanding shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred on the Trustee with
respect to Senior Debt Securities of such series; provided, however, that
(subject to certain exceptions) the Trustee shall have the

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<PAGE> 15

right to decline to follow any such direction if the Trustee shall determine
upon advice of counsel that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith shall determine that the
action or proceeding so directed would involve the Trustee in personal
liability. The holders of 66 2/3% in aggregate principal amount of the Senior
Debt Securities of any series then Outstanding may on behalf of the holders of
all of the Senior Debt Securities of such series waive any past default or Event
of Default and its consequences except a default in the payment of interest, if
any, on, or the principal of, the Senior Debt Securities of such series. Upon
any such waiver the Company, the Trustee and the holders of the Senior Debt
Securities of such series shall be restored to their former positions and rights
under the Senior Debt Indenture, respectively; but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon. Whenever any default or Event of Default shall have been
waived as permitted, said default or Event of Default shall for all purposes of
the Senior Debt Securities and the Senior Debt Indenture be deemed to have been
cured and to be not continuing.

The Trustee shall, within 90 days after the occurrence of a default, with
respect to Senior Debt Securities of any series then Outstanding, mail to all
holders of Senior Debt Securities of such series, as the names and the addresses
of such holders appear upon the Senior Debt Securities register, notice of all
defaults known to the Trustee with respect to such series, unless such defaults
shall have been cured before the giving of such notice (the term "defaults" for
the purpose of these provisions being hereby defined to be the events specified
in clauses (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) of "-- Provisions
Applicable Solely to Senior Debt Securities -- Events of Default" above, not
including periods of grace, if any, provided for therein and irrespective of the
giving of the written notice specified in said clause (iv) or (vii) but in the
case of any default of the character specified in said clause (iv) or (vii) no
such notice to Securityholders shall be given until at least 60 days after the
giving of written notice thereof to the Company pursuant to said clause (iv) or
(vii), as the case may be); provided, however, that, except in the case of
default in the payment of the principal of or interest, if any, on any of the
Senior Debt Securities, or in the payment or satisfaction of any sinking fund or
other purchase obligation, the Trustee shall be protected in withholding such
notice if and so long as the Trustee in good faith determines that the
withholding of such notice is in the best interests of the Securityholders.

The Company is required to furnish to the Trustee annually a statement as to the
fulfillment by the Company of all of its obligations under the Senior Debt
Indenture.

Limitation on Liens. The Company may not, nor may any Subsidiary, mortgage,
pledge, encumber or subject to any lien or security interest to secure any
obligation of the Company or any obligation of any Subsidiary (other than
obligations owing to the Company or a wholly-owned Subsidiary) any assets,
whether owned as of the date the Senior Debt Indenture was executed or
thereafter acquired, without effectively providing that the Senior Debt
Securities shall be secured equally and ratably with (or prior to) such
obligation, unless, after given effect thereto, the aggregate amount of all such
secured debt of the Company and its Subsidiaries (excluding secured Indebtedness
existing as of the date the Senior Debt Indenture was executed and any
extensions, renewals or refundings thereof that do not increase the principal
amount of Indebtedness so extended, renewed or refunded and excluding secured
Indebtedness incurred pursuant to clauses (a), (b), (c) and (d) set forth below)
would not exceed 10% of Consolidated Net Worth of the Company and its
Subsidiaries; provided, however, that this restriction will not prevent the
Company or any Subsidiary: (a) from acquiring and retaining property subject to
mortgages, pledges, encumbrances, liens or security interests existing thereon
at the date of acquisition thereof, or from creating within one year of such
acquisition mortgages, pledges, encumbrances or liens upon property acquired by
it after the date of the Senior Debt Indenture, as security for purchase money
obligations incurred by it in connection with the acquisition of such property,
whether payable to the person from whom such property is acquired or otherwise;
(b) from mortgaging, pledging, encumbering or subjecting to any lien or security
interest Current Assets to secure Current Liabilities; (c) from extending,
renewing or refunding any Indebtedness secured by a mortgage, pledge,
encumbrance, lien or security interest on the same property theretofore subject
thereto, provided that the principal amount of such Indebtedness so extended,
renewed or refunded shall not be increased; or (d) from securing the payment of
workmen's compensation or insurance premiums or from making good faith pledges
or deposits in connection with bids, tenders, contracts (other than contracts
for the payment of money) or leases, deposits to secure public or statutory
obligations, deposits to secure surety or

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appeal bonds, pledges or deposits in connection with contracts made with or at
the request of the United States Government or any agency thereof, or pledges or
deposits for similar purposes in the ordinary course of business.

"Consolidated Net Worth" means, at any date, the sum of (i) the par value (or
value stated on the books of the Company) of the capital stock of all classes of
the Company (including preferred stock), plus (or minus in the case of a
deficit) (ii) the amount of the consolidated surplus, whether capital or earned,
of the Company and its Subsidiaries, determined in accordance with generally
accepted accounting principles.

"Current Assets" of any Person includes all assets of such Person which would be
classified as current assets in accordance with generally accepted accounting
principles.

"Current Liabilities" of any Person includes all liabilities of such Person
which would be classified as current liabilities in accordance with generally
accepted accounting principles.

Limitation on Sale and Leaseback Transactions. Neither the Company nor any
Subsidiary will enter into any transaction with any bank, insurance company or
other lender or investor, or to which any such lender or investor is a party,
providing for the leasing to the Company or a Subsidiary of any real property
(except a lease for a temporary period not to exceed three years by the end of
which it is intended that the use of such real property by the lessee will be
discontinued) which has been or is to be sold or transferred by the Company or
such Subsidiary to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of such
real property unless either: (1) such transaction is the substantial equivalent
of a mortgage, pledge, encumbrance, lien or security interest which the Company
or any Subsidiary would have been permitted to create under the "Limitation on
Liens" covenant without equally and ratably securing the Senior Debt Securities,
or (2) the Company within 120 days after such transaction applied (and in any
such case the Company covenants that it will so apply) an amount equal to the
greater of (i) the net proceeds of the sale of the real property leased pursuant
to such transaction or (ii) the fair value of the real property so leased at the
time of entering into such transaction (as determined by the Board of
Directors), to the retirement of Funded Debt of the Company; provided that the
amount to be applied to the retirement of Funded Debt of the Company shall be
reduced by: (a) the principal amount of any Senior Debt Securities (for this
purpose if the Senior Debt Securities of that series are Original Issue Discount
Securities, the principal amount of the Outstanding Senior Debt Securities of
that series shall be computed and adjusted as may be specified in the terms of
that series) delivered within 120 days after such sale to the Trustee for
retirement and cancellation and (b) the principal amount of Funded Debt, other
than Senior Debt Securities, voluntarily retired by the Company within 120 days
after such sale; provided that no retirement referred to in this clause (2) may
be effected by payment at maturity or pursuant to any mandatory sinking fund
payment or any mandatory prepayment provision.

"Funded Debt" means Indebtedness for money borrowed which by its terms matures
at or is extendible or renewable at the option of the obligor to a date more
than 12 months after the date of the creation of such Indebtedness.

PROVISION APPLICABLE SOLELY TO SENIOR SUBORDINATED DEBT SECURITIES

Prohibition on Incurrence of Senior Subordinated Debt. The Company will not
incur or suffer to exist Indebtedness that is or purports to be, pursuant to its
terms or the terms of any agreement relating thereto, senior in right of payment
to the Senior Subordinated Debt Securities and subordinate or junior in right of
payment to any other Indebtedness of the Company, provided that no Indebtedness
of the Company shall be deemed to be subordinate to any other Indebtedness of
the Company solely by virtue of any such other Indebtedness being secured or
otherwise having the benefit of any lien or security interest.

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PROVISIONS APPLICABLE SOLELY TO SENIOR SUBORDINATED AND SUBORDINATED DEBT
SECURITIES

Events of Default. Unless otherwise specified in the Prospectus Supplement, an
Event of Default is defined under each of the Subordinated Indentures with
respect to the Subordinated Securities of any series issued under such Indenture
as being as one or more of the following events:

(i) default in the payment of any installment of interest upon any of the
Subordinated Securities of such series as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or

(ii) default in the payment of the principal of any of the Subordinated
Securities of such series as and when the same shall become due and payable
either at maturity, upon redemption, by declaration or otherwise; or

(iii) default in the payment or satisfaction of any sinking fund or other
purchase obligation with respect to Subordinated Securities of such series, as
and when such obligation shall become due and payable; or

(iv) failure on the part of the Company duly to observe or perform any other of
the covenants or agreements on the part of the Company in the Subordinated
Securities of such series or in the Subordinated Indenture applicable to such
series continued for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Company by the Trustee by registered mail, or to the Company and the Trustee by
the holders of at least 25 percent in aggregate principal amount of the
Subordinated Securities of such series issued under the applicable Subordinated
Indenture then Outstanding; or

(v) without the consent of the Company a court having jurisdiction shall enter
an order for relief with respect to the Company under the Bankruptcy Code or
without the consent of the Company a court having jurisdiction shall enter a
judgment, order or decree adjudging the Company a bankrupt or insolvent, or
enter an order for relief for reorganization, arrangement, adjustment or
composition of or in respect of the Company under the Bankruptcy Code or
applicable state insolvency law and the continuance or any such judgment, order
or decree is unstayed and in effect for a period of 60 consecutive days; or

(vi) the Company shall institute proceedings for entry of an order for relief
with respect to the Company under the Bankruptcy Code or for an adjudication of
insolvency, or shall consent to the institution of bankruptcy or insolvency
proceedings against it, or shall file a petition seeking, or seek or consent to
reorganization, arrangement composition or relief under the Bankruptcy Code or
any applicable state law, or shall consent to filing of such petition or to the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of substantially all of its
property, or the Company shall make a general assignment for the benefit of
creditors as recognized under the Bankruptcy Code; or

(vii) default under any bond, debenture, note or other evidence of Indebtedness
for money borrowed by the Company or under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company, whether such Indebtedness
exists on the date of such Subordinated Indenture or shall thereafter be
created, which default shall have resulted in such Indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable, or any default in payment of such Indebtedness
(after the expiration of any applicable grace periods and the presentation of
any debt instrument, if required), if the aggregate amount of all such
Indebtedness which has been so accelerated and with respect to which there has
been such a default in payment shall exceed $5,000,000, without each such
default and acceleration having been rescinded or annulled within a period of 30
days after there shall have been given to the Company by the Trustee by
registered mail, or to the Company and the Trustee by the holders of at least 25
percent in aggregate principal amount of the Subordinated Securities of such
series then Outstanding, a written notice specifying each such default and
requiring the Company to cause each such default and acceleration to be
rescinded or annulled and stating that such notice is a "Notice of Default"
under the applicable Subordinated Indenture; or

(viii) any other Event of Default provided with respect to the Subordinated
Securities of such series under the applicable Subordinated Indenture.

If an Event of Default with respect to Subordinated Securities of any series
then Outstanding occurs and is continuing, then and in each and every such case,
unless the principal of all of the Subordinated Securities of

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<PAGE> 18

such series shall have already become due and payable, either the Trustee or the
holders of not less than 25 percent in aggregate principal amount of the
Subordinated Securities of such series then Outstanding, by notice in writing to
the Company (and to the Trustee if given by Securityholders), may declare the
unpaid principal amount (or, if the Subordinated Securities of such series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of such series) of all the Subordinated Securities of
such series and the interest, if any, accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in the applicable Subordinated Indenture
or in the Subordinated Securities of such series contained to the contrary
notwithstanding. This provision, however, is subject to the condition that, if
at any time after the unpaid principal amount (or such specified amount) of the
Subordinated Securities of such series shall have been so declared due and
payable and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered, the Company shall pay or shall deposit with
the Trustee a sum sufficient to pay all matured installments of interest, if
any, upon all of the Subordinated Securities of such series and the principal of
any and all Subordinated Securities of such series which shall have become due
otherwise than by acceleration (with interest on overdue installments of
interest, if any, to the extent that payment of such interest is enforceable
under applicable law and on such principal at the rate borne by the Subordinated
Securities of such series to the date of such payment or deposit) and the
reasonable compensation, disbursements, expenses and advances of the Trustee,
its agents, attorneys and counsel, and any and all defaults under the applicable
Subordinated Indenture, other than the nonpayment of such portion of the
principal amount of and accrued interest, if any, on Subordinated Securities of
such series which shall have become due by acceleration, shall have been cured
or shall have been waived in accordance with the applicable Subordinated
Indenture or provision deemed by the Trustee to be adequate shall have been made
therefor -- then and in every such case the holders of a majority in aggregate
principal amount of the Subordinated Securities of such series then Outstanding,
by written notice to the Company and to the Trustee, may rescind and annul such
declaration and its consequences; but no such rescission and annulment shall
extend to or shall affect any subsequent default, or shall impair any right
consequent thereon. If any Event of Default with respect to the Company
specified in clause (v) or (vi) above occurs, the unpaid principal amount (or,
if the Subordinated Securities of any series then Outstanding are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of each such series) and accrued interest on all Subordinated
Securities of each series then Outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act by the Trustee
or any Securityholder. If the Trustee shall have proceeded to enforce any right
under the applicable Subordinated Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee, then and in
every such case the Company, the Trustee and the Securityholders shall be
restored respectively to their several positions and rights under the applicable
Subordinated Indenture, and all rights, remedies and powers of the Company, the
Trustee and the Securityholders shall continue as though no such proceeding had
been taken. Except with respect to an Event of Default pursuant to clause (i),
(ii) or (iii) above, the Trustee shall not be charged with knowledge of any
Event of Default unless written notice thereof shall have been given to the
Trustee by the Company, a Paying Agent or any Securityholder.

Each of the Subordinated Indentures provides that, subject to the duty of the
Trustee during default to act with the required standard of care, the Trustee
will be under no obligation to exercise any of its rights or powers under such
Subordinated Indenture at the request or direction of any of the holders or
Subordinated Securities issued under the such Subordinated Indenture, unless
such holders shall have offered to the Trustee reasonable security or indemnity.

No holder of any Subordinated Securities of any series then Outstanding shall
have any right by virtue of or by availing of any provision of the applicable
Subordinated Indenture to institute any suit, action or proceeding in equity or
at law upon or under or with respect to such Subordinated Indenture or the
Subordinated Securities issued under such Subordinated Indenture or for the
appointment of a receiver or trustee or similar official, or for any other
remedy under such Subordinated Indenture or thereunder, unless such holder
previously shall have given to the Trustee written notice of default and of the
continuance thereof, as provided in such Subordinated Indenture, and unless the
holders of not less than 25 percent in aggregate principal amount of the
Subordinated Securities of such series then Outstanding shall have made written
request to the Trustee to institute such

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action, suit or proceeding in its own name as Trustee under such Subordinated
Indenture and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding. Notwithstanding any other provisions in the
applicable Subordinated Indenture, but subject to the subordination provisions
of the applicable Subordinated Indenture, the right of any holder of any
Subordinated Security to receive payment of the principal of and interest, if
any, on such Subordinated Security, on or after the respective due dates
expressed in such Subordinated Security, or, if applicable, to convert such
Subordinated Security as provided in the applicable Subordinated Indenture, or
to institute suit for the enforcement of any such payment on or after such
respective dates or for the enforcement of any such right to convert shall not
be impaired or affected without the consent of such holder.

The holders of a majority in aggregate principal amount of the Subordinated
Securities of any series then Outstanding shall have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee with
respect to Subordinated Securities of such series; provided, however, that
(subject to certain exceptions) the Trustee shall have the right to decline to
follow any such direction if the Trustee shall determine upon advice of counsel
that the action or proceeding so directed may not lawfully be taken or if the
Trustee in good faith shall determine that the action or proceeding so directed
would involve the Trustee in personal liability. The holders of a majority in
aggregate principal amount of the Subordinated Securities of any series then
Outstanding may on behalf of the holders of all of the Subordinated Securities
of such series waive any past default or Event of Default under the applicable
Subordinated Indenture and its consequences except a default in the payment of
interest, if any, on, or the principal of, the Subordinated Securities of such
series. Upon any such waiver the Company, the Trustee and the holders of the
Subordinated Securities of such series shall be restored to their former
positions and rights under the applicable Subordinated Indenture, respectively;
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Whenever any default or Event of
Default shall have been waived as permitted, said default or Event of Default
shall for all purposes of the applicable Subordinated Securities and the
applicable Subordinated Indenture be deemed to have been cured and to be not
continuing.

The Trustee shall, within 90 days after the occurrence of a default, with
respect to Subordinated Securities of any series then Outstanding, mail to all
holders of Subordinated Securities of such series, as the names and the
addresses of such holders appear upon the applicable Subordinated Security
register, notice of all defaults known to the Trustee with respect to such
series, unless such defaults shall have been cured before the giving of such
notice (the term "defaults" for the purpose of these provisions being hereby
defined to be the events specified in clauses (i), (ii), (iii), (iv), (v), (vi),
(vii) and (viii) of " -- Provisions Applicable Solely to Senior Subordinated and
Subordinated Debt Securities -- Events of Default" above, not including periods
of grace, if any, provided for therein and irrespective of the giving of the
written notice specified in said clause (iv) or (vii) but in the case of any
default of the character specified in said clause (iv) or (vii) no such notice
to Securityholders shall be given until at least 60 days after the giving of
written notice thereof to the Company pursuant to said clause (iv) or (vii), as
the case may be); provided, however, that, except in the case of default in the
payment of the principal of or interest, if any, on any of the Subordinated
Securities, or in the payment or satisfaction of any sinking fund or other
purchase obligation, the Trustee shall be protected in withholding such notice
if and so long as the Trustee in good faith determines that the withholding of
such notice is in the best interests of the Securityholders.

The Company is required to furnish to the Trustee annually a statement as to the
fulfillment by the Company of all of its obligations under the applicable
Subordinated Indenture.

Subordination. The Subordinated Securities will be subordinate and junior in
right to payment, to the extent set forth in the applicable Subordinated
Indenture, to all Senior Indebtedness (as defined below for each of the
Subordinated Indentures) of the Company. If the Company should default in the
payment of any principal of or premium or interest on any Senior Indebtedness
when the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration of acceleration or otherwise, then, upon
written notice of such default to the Company by the holders of such Senior
Indebtedness or any trustee therefor and subject to

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certain rights of the Company to dispute such default and subject to proper
notification of the Trustee, unless and until such default shall have been cured
or waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) will be made or agreed to be made
for principal of or premium, if any, or interest, if any, on the applicable
Subordinated Securities, or in respect of any redemption, retirement, purchase
or other acquisition of the applicable Subordinated Securities other than those
made in capital stock of the Company (or cash in lieu of fractional shares
thereof) pursuant to any conversion right of the Subordinated Securities or
otherwise made in capital stock of the Company.

"Senior Indebtedness" is defined in the Senior Subordinated Debt Indenture as
Indebtedness of the Company outstanding at any time except (a) any Indebtedness
of the Company that pursuant to its terms or the terms of any agreement relating
thereto or by operation of law is subordinate or junior in right of payment to
any other Indebtedness of the Company, provided that no Indebtedness of the
Company shall be deemed to be subordinate to any other Indebtedness of the
Company solely by virtue of any such other Indebtedness being secured or
otherwise having the benefit of any lien or security interest, (b) any
Indebtedness as to which, by the terms of the instrument creating or evidencing
the same, it is provided that such Indebtedness is not senior in right of
payment to the Senior Subordinated Debt Securities, (c) the Senior Subordinated
Debt Securities, (d) the Company's subordinated indebtedness existing on the
date of the Senior Subordinated Debt Indenture, (e) any Indebtedness of the
Company to a wholly-owned Subsidiary of the Company, (f) interest accruing after
the filing of a petition initiating certain bankruptcy or insolvency proceedings
unless such interest is an allowed claim enforceable against the Company in a
proceeding under federal or state bankruptcy laws and (g) trade accounts
payable.

"Senior Indebtedness" is defined in the Subordinated Debt Indenture as
Indebtedness of the Company outstanding at any time except (a) any Indebtedness
as to which, by the terms of the instrument creating or evidencing the same, it
is provided that such Indebtedness is not senior in right of payment to the
Subordinated Debt Securities, (b) the Subordinated Debt Securities, (c) the
Company's subordinated indebtedness existing on the date of the Subordinated
Debt Indenture, (d) any Indebtedness of the Company to a wholly owned Subsidiary
of the Company, (e) interest accruing after the filing of a petition initiating
certain bankruptcy or insolvency proceedings unless such interest is an allowed
claim enforceable against the Company in a proceeding under federal or state
bankruptcy laws and (f) trade accounts payable.

"Indebtedness" is defined in each Subordinated Indenture as, with respect to any
Person, (a)(i) the principal of and premium and interest, if any, on
indebtedness for money borrowed of such Person evidenced by bonds, notes,
debentures or similar obligations, including any guaranty by such person of any
indebtedness for money borrowed of any other Person, whether any such
indebtedness or guaranty is outstanding on the date of such Subordinated
Indenture or is thereafter created, assumed or incurred, (ii) the principal of
and premium and interest, if any, on indebtedness for money borrowed, incurred,
assumed or guaranteed by such Person in connection with the acquisition by it or
any of its subsidiaries of any other businesses, properties or other assets and
(iii) lease obligations which such Person capitalizes in accordance with
Statement of Financial Accounting Standards No. 13 promulgated by the Financial
Accounting Standards Board or such other generally accepted accounting
principles as may be from time to time in effect, (b) any other indebtedness of
such Person, including any indebtedness representing the deferred and unpaid
balance of the purchase price of any property or interest therein, including any
such balance that constitutes a trade account payable, and any guaranty,
endorsement or other contingent obligation of such Person in respect of any
indebtedness of another, which is outstanding on the date of such Subordinated
Indenture or is thereafter created, assumed or incurred by such Person and (c)
any amendments, modifications, refundings, renewals or extensions of any
indebtedness or obligation described as Indebtedness in clause (a) or (b) above.

If (i) without the consent of the Company a court having jurisdiction shall
enter (A) an order for relief with respect to the Company under the United
States federal bankruptcy laws, (B) a judgment, order or decree adjudging the
Company as bankrupt or insolvent or (C) an order for relief for reorganization,
arrangement, adjustment or composition of or in respect of the Company under the
United States federal bankruptcy laws or state insolvency laws or (ii) the
Company shall institute proceedings for the entry of an order for relief with
respect to the Company under the United States federal bankruptcy laws or for an
adjudication of insolvency, or shall consent to the institution of bankruptcy or
insolvency proceedings against it, or shall file a petition

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seeking, or seek or consent to reorganization, arrangement, composition or
similar relief under the United States federal bankruptcy laws or any applicable
state law, or shall consent to the filing of such petition or to the appointment
of a receiver, custodian, liquidator, assignee, trustee, sequestrator or similar
official in respect of the Company or of substantially all of its property, or
the Company shall make a general assignment for the benefit of creditors, then
all Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) will first be paid in full before any
payment or distribution, whether in cash, securities or other property, is made
on account of the principal of or premium, if any, or interest, if any, on the
applicable Subordinated Securities. In such event, any payment or distribution
on account of the principal of or premium, if any, or interest, if any, on the
applicable Subordinated Securities, whether in cash, securities or other
property (other than securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in the subordination provisions
with respect to the applicable Subordinated Securities, to the payment of all
Senior Indebtedness then outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would
otherwise (but for the subordination provisions) be payable or deliverable in
respect of the applicable Subordinated Securities will be paid or delivered
directly to the holders of Senior Indebtedness in accordance with the priorities
then existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such proceedings) has
been paid in full. In the event of any such proceeding, after payment in full of
all sums owing with respect to Senior Indebtedness, the holders of Subordinated
Securities, together with the holders of any obligations of the Company ranking
on a parity with the Subordinated Securities issued under the applicable
Subordinated Indenture, will be entitled to be repaid from the remaining assets
of the Company the amounts at the time due and owing on account of unpaid
principal of or any premium or any interest on the Subordinated Securities
issued under the applicable Subordinated Indenture and such other obligations
before any payment or other distribution, whether in cash, property or
otherwise, shall be made on account of any capital stock or obligations of the
Company ranking junior to the Subordinated Securities issued under the
applicable Subordinated Indenture and such other obligations. If,
notwithstanding the foregoing, any payment or distribution on the Subordinated
Securities issued under the applicable Subordinated Indenture of any character,
whether in cash, securities or other property (other than securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in the subordination provisions with respect to the Subordinated
Securities issued under the applicable Subordinated Indenture, to the payment of
all Senior Indebtedness then outstanding and to any securities issued in respect
thereof under any such plan or reorganization or readjustment), shall be
received by the Trustee or any holder of any Subordinated Securities issued
under the applicable Subordinated Indenture in contravention of any of the terms
of the applicable Subordinated Indenture, such payment or distribution will be
received in trust for the benefit of, and will be paid over or delivered and
transferred to, the holders of the Senior Indebtedness then outstanding in
accordance with the priorities then existing among such holders for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all such Senior Indebtedness in full. In the event of the
failure of the Trustee or any holder to endorse or assign any such payment,
distribution or security, each holder of Senior Indebtedness is irrevocably
authorized to endorse or assign the same.

Each of the Subordinated Indentures will provide that Senior Indebtedness shall
not be deemed to have been paid in full unless the holders thereof shall have
received cash, securities or other property equal to the amount of such Senior
Indebtedness then outstanding. Upon the payment in full of all Senior
Indebtedness, the holders of Subordinated Securities of each series shall be
subrogated to all rights of any holders of Senior Indebtedness to receive any
further payments or distributions applicable to such Senior Indebtedness until
the indebtedness evidenced by the Subordinated Securities of such series shall
have been paid in full, and such payments or distributions received by such
holders, by reason of such subrogation, of cash, securities or other property
which otherwise would be paid or distributed to the holders of Senior
Indebtedness with respect to such Series, shall, as between the Company and its
creditors other than the holders of such Senior Indebtedness, on the one hand,
and such holders, on the other hand, be deemed to be a payment by the Company on
account of such Senior Indebtedness, and not on account of the Subordinated
Securities of such series.

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By reason of such subordination, in the event of the insolvency of the Company,
holders of Senior Indebtedness and holders of other obligations of the Company
that are not subordinated to Senior Indebtedness may receive more, ratably, than
holders of the Subordinated Securities. Such subordination will not prevent the
occurrence of an Event of Default or limit the right of acceleration in respect
of the Subordinated Securities.

Conversion. Each of the Subordinated Indentures will provide that a series of
Subordinated Securities may be convertible into Common Stock (or cash in lieu
thereof). The following provisions will apply to Debt Securities that are
convertible Subordinated Securities unless otherwise provided in the Prospectus
Supplement for such Debt Securities.

The holder of any convertible Subordinated Securities will have the right
exercisable at any time prior to maturity, subject to prior redemption by the
Company, to convert such Subordinated Securities into shares of Common Stock at
the conversion price or conversion rate set forth in the Prospectus Supplement,
subject to adjustment. The holder of convertible Subordinated Securities may
convert any portion thereof which is $1,000 in principal amount or any integral
multiple thereof.

In certain events, the conversion price or conversion rate will be subject to
adjustment as set forth in the applicable Subordinated Indenture. Such events
include issuance of shares of Common Stock as a dividend or distribution on the
Common Stock; subdivisions, combinations and reclassifications of the Common
Stock; redemption of the preferred share purchase rights associated with the
Common Stock; the issuance to all holders of Common Stock of rights or warrants
entitling the holders thereof (for a period not exceeding 45 days) to subscribe
for or purchase shares of Common Stock at a price per share less than the then
current market price per share of Common Stock (as determined pursuant to the
applicable Subordinated Indenture); and the distribution to substantially all
holders of Common Stock of evidences of indebtedness, equity securities
(including equity interests in the Company's Subsidiaries) other than Common
Stock, or other assets (excluding cash dividends paid from surplus) or
subscription rights or warrants (other than those referred to above). No
adjustment of the conversion price or conversion rate will be required unless an
adjustment would require a cumulative increase or decrease of at least 1% in
such price or rate. The Company has been advised by its counsel that certain
adjustments in the conversion price or conversion rate in accordance with the
foregoing provisions may result in constructive distributions to either holders
of the Subordinated Securities issued under the applicable Subordinated
Indenture or holders of Common Stock which would be taxable pursuant to Treasury
Regulations issued under Section 305 of the Internal Revenue Code of 1986. The
amount of any such taxable constructive distribution will be the fair market
value of the Common Stock that is treated as having been constructively
received, such value being determined as of the time the adjustment resulting in
the constructive distribution is made.

Fractional shares of Common Stock will not be issued upon conversion, but, in
lieu thereof, the Company will pay a cash adjustment based on the then current
market price for the Common Stock. Upon conversion, no adjustments will be made
for accrued interest or dividends, and therefore convertible Subordinated
Securities surrendered for conversion between the record date for an interest
payment and the interest payment date (except convertible Subordinated
Securities called for redemption on a redemption date during such period) must
be accompanied by payment of an amount equal to the interest thereon which the
registered holder is to receive.

In the case of any consolidation or merger of the Company (with certain
exceptions) or any sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company, the holder of
convertible Subordinated Securities, after the consolidation, merger, sale,
lease, exchange or other disposition, will have the right to convert such
convertible Subordinated Securities into the kind and amount of securities, cash
and other property which the holder would have been entitled to receive upon or
in connection with such consolidation, merger, sale, lease, exchange or other
disposition, if the holder had held the Common Stock issuable upon conversion of
such convertible Subordinated Securities issued under the applicable
Subordinated Indenture immediately prior to such consolidation, merger, sale,
lease, exchange or other disposition.

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CONCERNING THE TRUSTEES

Each of the Trustees is a depositary for funds of, makes loans to and performs
other services for the Company in the normal course of business.

In addition to serving as Trustee under the Senior Subordinated Indenture and
the Subordinated Indenture, Texas Commerce Bank also serves as Trustee under (i)
the Debenture Indenture (the "Debenture Indenture") dated as of June 15, 1992,
between the Company and Texas Commerce Bank, as trustee, and (ii) the Guarantees
of Notes of Subsidiaries Indenture (the "Guarantees Indenture") dated as of May
1, 1970, between the Company and Texas Commerce Bank, as trustee. Debt of the
Company issued pursuant to the Debenture Indenture and the Guarantees Indenture
constitutes Senior Indebtedness. As of June 30, 1994, the Company had
outstanding approximately $26 million principal amount of Senior Indebtedness
issued pursuant to the Debenture Indenture and approximately $34 million
principal amount of guarantees issued pursuant to the Guarantees Indenture.

Pursuant to the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), a trustee under an indenture may be deemed to have a conflicting
interest, and may, under certain circumstances set forth in the Trust Indenture
Act, be required to resign as trustee under such indenture, if the securities
issued under such indenture are in default (as such term is defined in such
indenture) and the trustee is the trustee under another indenture under which
any other securities of the same obligor are outstanding, subject to certain
exceptions set forth in the Trust Indenture Act. In such event, the obligor must
take prompt steps to have a successor trustee appointed in the manner provided
in the indenture from which the trustee has resigned.

Pursuant to the Trust Indenture Act, Texas Commerce Bank, as trustee under the
Senior Subordinated Indenture, the Subordinated Indenture, the Debenture
Indenture and the Guarantees Indenture, could be required to resign as trustee
under one or more of such indentures should a default occur under one or more of
such indentures. In such event, the Company would be required to take prompt
steps to have a successor trustee or successor trustees appointed in the manner
provided in the applicable indenture or indentures.

DESCRIPTION OF PREFERRED STOCK

Under SCI's Restated Articles of Incorporation, as amended (the "Articles"), SCI
has the authority to issue 1,000,000 shares of preferred stock, $1.00 par value
per share (the "Preferred Stock"). The Preferred Stock may be divided into such
amounts and issued from time to time in one or more series as may be fixed and
determined by the Board of Directors. The relative rights and preferences among
each series of Preferred Stock shall be such as are provided in any resolutions
adopted by the Board of Directors providing for the issue of such series of
Preferred Stock (each such resolution, a "Directors' Resolution"). The Board of
Directors is authorized to fix and determine such variations and the relative
rights and preferences as between series as shall be stated in a Directors'
Resolution. The preemptive rights of shareholders of Preferred Stock to acquire
authorized but unissued shares, or to acquire treasury shares, is expressly
denied. There are no shares of any series of SCI Preferred Stock currently
outstanding. However, in connection with the adoption of the Company's
shareholders' rights plans the Company has designated and reserved for issuance
upon exercise of rights granted to its shareholders 600,000 shares of Series C
Junior Participating Preferred Stock.

The Preferred Stock may be issued or sold to such persons and for such
consideration as may be determined from time to time by the Board of Directors
and, whether or not convertible into Common Stock, need not first be offered to
the holders of Common Stock, and when issued such shares of Preferred Stock
shall be considered fully paid and non-assessable.

The following summaries of certain provisions of the Preferred Stock do not
purport to be complete and are subject, and are qualified in their entirety by
reference, with respect to any particular series of Preferred Stock, to the
description of the terms thereof included in the applicable Prospectus
Supplement and to the applicable

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<PAGE> 24

provisions of the Articles and the Company's Bylaws (the "Bylaws"). The
accompanying Prospectus Supplement with respect to any series of Preferred Stock
will set forth the following terms:

(a) The designation of such series;

(b) The number of shares constituting such series;

(d) The price at and the terms and conditions on which shares of such series may
be redeemed;

(e) The amount payable upon shares of such series in the event of involuntary
liquidation;

(f) The amount payable upon shares of each series in the event of voluntary
liquidation;

(g) Sinking fund provisions for the redemption or purchase of such series;

(h) The terms and conditions on which shares of such series may be converted;
and

(i) Any special rights of the shares of such series (and the accompanying
Prospectus Supplement may state that any of the terms set forth herein is
inapplicable to such series).

DIVIDENDS

The Preferred Stock of each series will be entitled to receive dividends, when
and as declared by the Board of Directors, at the rate and on such other terms
and conditions as may be fixed for such series, in preference to dividends on
the Common Stock or on other shares of capital stock of the Company ranking
junior to the Preferred Stock as to dividends ("Junior Stock").

DIVIDEND PREFERENCE

Subject to such further conditions or restrictions as may be imposed in any
Directors' Resolution, so long as any shares of Preferred Stock are outstanding,
the Company will not declare or pay any dividend, in cash or stock or otherwise
(other than dividends payable in shares of Junior Stock), on any shares of
Junior Stock or make any distribution upon or purchase or redeem or otherwise
acquire for a valuable consideration any shares of Junior Stock (a) unless all
dividends for Preferred Stock for all past dividend periods will have been paid
or declared and a sum sufficient for the payment thereof set apart for payment
and be in the process of payment, and the full dividend thereon for the current
dividend period will have been paid or declared, and (b) unless, as to each
series of the Preferred Stock for which a sinking fund will have been provided,
the Company will have retired the number of shares of Preferred Stock of such
series required to have been retired for the sinking fund or otherwise will have
met the obligations of said sinking fund.

REDEMPTION

Subject to such further conditions or restrictions as may be imposed in any
Directors' Resolution, the shares of any series of Preferred Stock will be
subject to redemption in whole or in part at the applicable redemption price as
provided for such series on the terms and conditions and upon notice as set
forth in the applicable Prospectus Supplement.

Notice of any such redemption will be given to each holder of shares being
called, either personally or by mail, not less than 20 nor more than 50 days
before the date fixed for redemption. If mailed, such notice will be deemed to
be delivered when deposited in the United States mail addressed to the
shareholder at the address as it appears on the stock transfer book of the
Company, with postage thereon prepaid.

If less than all outstanding shares of the series are to be redeemed, the shares
to be redeemed will be selected for redemption ratably or by lot in such manner
as may be prescribed by resolution of the Board of Directors. The notice of
redemption will set forth the designation of the series of which the shares to
be redeemed constitute a part, the date fixed for redemption, the redemption
price, the place at which the shareholders may obtain payment of the redemption
price upon the surrender of their respective share certificates and will include
a

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<PAGE> 25

statement with respect to the existence of any right of conversion with respect
to the shares to be redeemed and the period within which such right may be
exercised.

The Company may, on or prior to the date fixed for redemption of any shares of
Preferred Stock, deposit with any bank or trust company in Texas, or any bank or
trust company in the United States, duly appointed and acting as transfer agent
for the Company, as a trust fund, a sum sufficient to redeem shares called for
redemption with irrevocable instructions and authority to such bank or trust
company to give or complete the notice of redemption thereof and to pay, on or
after the date fixed for such redemption, to the respective holders of the
shares as evidenced by a list of holders, the redemption price upon the
surrender of their respective share certificates. Thereafter, from and after the
date fixed for redemption, such shares will be redeemed and dividends thereon
will cease to accrue after such date fixed for redemption. Such deposit will be
deemed to constitute full payment of such shares to their holders. Thereafter,
such shares will no longer be deemed to be outstanding, and the holders thereof
will cease to be shareholders with respect to such shares, and will have no
rights with respect thereto except the right to receive from the bank or trust
company payment of the redemption price of such shares without interest, upon
the surrender of their respective certificates therefor, and any right to
convert such shares which may exist. In case the holders of such shares will
not, within six years after such deposit, claim the amount deposited for
redemption thereof, such bank or trust company will upon demand pay over to the
Company the balance of such amounts so deposited to be held in trust in such
bank or trust company and such trust company thereupon will be relieved of all
responsibility to the holders thereof.

Any shares of Preferred Stock which are redeemed or purchased by the Company and
cancelled will be restored to the status of authorized but unissued shares and
may be reissued as shares of another series.

VOTING

The holders of the Preferred Stock together with the holders of the Common
Stock, all voting as one class, will possess voting power for the election of
directors and for all other purposes, subject to such limitations as may be
imposed by law and by any provision of the Articles. In the exercise of its
voting power, the Preferred Stock will be entitled to one vote for each share
held.

SPECIAL DIRECTORS

Whenever, at any time or times, dividends payable on any series of Preferred
Stock are in arrears in an aggregate amount equivalent as to such series to six
full dividends, there will be vested in the holders of shares of all outstanding
Preferred Stock, voting as one class and with one vote for each share, the right
to elect two directors of the Company. Such right of the holders of Preferred
Stock to vote for the election of two directors may be exercised at any annual
meeting or at any special meeting called for such purpose, or at any adjournment
thereof, until all arrearages and dividends on the outstanding shares of
Preferred Stock have been paid in full or declared and funds sufficient for the
payment thereof deposited in trust, and when so paid or provided for, then such
right will cease. So long as such right to vote continues, the Secretary of the
Company may call, and upon written request of the holders of record of ten per
cent or more of the outstanding Preferred Stock, addressed to the Secretary at
the principal office of the Company, will call a special meeting of the holders
of Preferred Stock for the election of such two directors. Such meeting will be
held within 50 days after delivery of such request to such Secretary, at the
place and upon the notice provided by law and in the Bylaws for the holding of
meeting of its shareholders. If at any such meeting or any adjournment thereof
the holders of at least a majority of the then outstanding shares of Preferred
Stock then entitled to vote in such election are present or represented by
proxy, then, by vote of the holders of at least a majority of all such shares of
Preferred Stock present or represented in such meeting, the then authorized
number of directors of the Company will be increased by two and the holders of
such shares of Preferred Stock will be entitled to elect such two additional
directors. Directors so elected will serve until the next annual meeting or
until their successors are elected and will qualify; provided, however, that
whenever all arrearages and dividends on all outstanding shares of Preferred
Stock have been paid or declared and funds sufficient for the payment thereof
deposited in trust, the term of the office of the persons so elected as
directors will forthwith terminate, and the number of the whole Board of
Directors of the Company will be reduced accordingly. In case of any vacancy
occurring among the directors so elected, the remaining director who has been so
elected may appoint a successor to hold office for the unexpired term of the
director whose place is

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<PAGE> 26

vacant. If both directors so elected by the holders of the Preferred Stock cease
to serve as directors before their term expires, the holders of Preferred Stock
then outstanding may, at a special meeting of such holders called as provided in
the Articles, elect successors to hold office for the unexpired terms of the
directors whose places are vacant. In any vote for directors as provided in the
Articles, each share of Preferred Stock will be entitled to vote.

APPROVAL OF CHANGES

The Company will not, without the approval (by vote at a meeting or by consent
in writing) of the holders of at least two-thirds of the outstanding shares of
Preferred Stock and subject to the provisions in the Articles with respect to
certain additional supermajority voting requirements:

(i) Amend or repeal any provision of, or add any provision to the Articles or
Bylaws if such action would alter or change the preferences, rights, privileges
or powers of, or the restrictions provided for the benefit of, the Preferred
Stock; or

(ii) Authorize or create shares of any class of stock having any preference or
priority as to dividends, assets or other characteristics superior to the
Preferred Stock, or authorize or create shares of stock of any class or any
bonds, indentures, notes or other obligations convertible into or exchangeable
for or having option or rights to purchase, any shares of stock having any such
preference or priority; or

(iii) Reclassify any Junior Stock into Preferred Stock or into shares having any
preference or priority as to dividends, assets or any other characteristics
superior to the Preferred Stock; or

(iv) Increase the aggregate number of authorized shares of Preferred Stock or
create a new class of shares having rights and preferences equal to the shares
of Preferred Stock.

LIQUIDATION PREFERENCE

In the event of any liquidation, dissolution or winding up of the Company, the
Preferred Stock of each series shall be entitled to payment of such amount or
amounts in preference to any payment on Junior Stock as shall be provided in the
Directors' Resolution providing for the issuance of such shares of Preferred
Stock. In any such event, if the assets available for distribution shall be
insufficient to permit payment of the full preferential amount to all holders of
Preferred Stock, then distribution shall be made ratably among such holders
according to the amount due to each.

DESCRIPTION OF COMMON STOCK WARRANTS

The Company may issue warrants (which may be titled either "options" or
"warrants") for the purchase of Common Stock (the "Common Stock Warrants"). The
Common Stock Warrants may be issued independently or together with any
Securities offered by any Prospectus Supplement and may be attached to or
separate from such Securities. Each series of Common Stock Warrants will be
issued under a separate warrant agreement (a "Warrant Agreement") to be entered
into between the Company and a bank or trust company, as Warrant Agent, all as
set forth in the Prospectus Supplement relating to the particular issue of
offered Common Stock Warrants. The Warrant Agent will act solely as an agent of
the Company in connection with the Common Stock Warrant Certificates and will
not assume any obligation or relationship of agency or trust for or with any
holders of Common Stock Warrant Certificates or beneficial owners of Common
Stock Warrants. The form of Warrant Agreement, including the form of Common
Stock Warrant Certificate representing the Common Stock Warrants, is filed as an
exhibit to the Registration Statement to which this Prospectus pertains. The
following summaries of certain provisions of the form of Warrant Agreement and
Common Stock Warrant Certificate do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all the provisions of
the Warrant Agreement and the Common Stock Warrant Certificate.

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<PAGE> 27

GENERAL

Reference is made to the accompanying Prospectus Supplement relating to the
Common Stock Warrants for the following terms of the Common Stock Warrants:

(i) the offering price;

(ii) the number of shares of Common Stock purchasable upon exercise of each such
Common Stock Warrant and the price at which such number of shares of Common
Stock may be purchased upon such exercise;

(iii) the date on which the right to exercise such Common Stock Warrants shall
commence and the date on which such right shall expire (the "Expiration Date");
and

(iv) any other terms of such Common Stock Warrants (and the accompanying
Prospectus Supplement may state that any of the terms set forth herein is
inapplicable to such series).

Common Stock Warrants for the purchase of Common Stock will be offered and
exercisable for U.S. dollars only and will be in registered form only.

Common Stock Warrant Certificates may be exchanged for new Common Stock Warrant
Certificates of different denominations, may (if in registered form) be
presented for registration or transfer, and may be exercised at the corporate
trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement. Prior to the exercise of any Common Stock
Warrants, holders of such Common Stock Warrants will not have any rights of
holders of the Common Stock purchasable upon such exercise, including the right
to receive payments of dividends, if any, on the Common Stock purchasable upon
such exercise or to exercise any applicable right to vote.

EXERCISE OF COMMON STOCK WARRANTS

Each Common Stock Warrant will entitle the holder thereof to purchase such
shares of Common Stock at such exercise price as shall in each case be set forth
in, or calculable from, the Prospectus Supplement relating to the offered Common
Stock Warrants. After the close of business on the Expiration Date (or such
later date to which such Expiration Date may be extended by the Company)
unexercised Common Stock Warrants will become void.

Common Stock Warrants may be exercised by delivering to the Warrant Agent
payment as provided in the applicable Prospectus Supplement of the amount
required to purchase the Common Stock purchasable upon such exercise together
with certain information set forth on the reverse side of the Common Stock
Warrant Certificate. Common Stock Warrants will be deemed to have been exercised
upon receipt of payment of the exercise price, subject to the receipt, within
five business days, of the Common Stock Warrant Certificate evidencing such
Common Stock Warrants. Upon receipt of such payment and the Common Stock Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the applicable Prospectus
Supplement, the Company will, as soon as practicable, issue and deliver the
Common Stock purchasable upon such exercise. If fewer than all of the Common
Stock Warrants represented by such Common Stock Warrant Certificate are
exercised, a new Common Stock Warrant Certificate will be issued for the
remaining amount of Common Stock Warrants.

AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT

The Warrant Agreement for a series of Common Stock Warrants may be amended or
supplemented without the consent of the holders of the Common Stock Warrants
issued thereunder to effect changes that are not inconsistent with the
provisions of the Common Stock Warrants and that do not adversely affect the
interests of the holders of the Common Stock Warrants.

COMMON STOCK WARRANT ADJUSTMENTS

Unless otherwise indicated in the applicable Prospectus Supplement, the exercise
price of, and the number of shares of Common Stock covered by, a Common Stock
Warrant are subject to adjustment in certain events,

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<PAGE> 28

including: (i) the issuance of Common Stock as a dividend or distribution on the
Common Stock; (ii) subdivisions and combinations of the Common Stock; (iii) the
issuance to all holders of Common Stock of certain rights or warrants entitling
them to subscribe for or purchase Common Stock within 45 days after the date
fixed for the determination of the stockholders entitled to receive such rights
or warrants, at less than the current market price (as defined in the Warrant
Agreement for such series of Common Stock Warrants); and (iv) the distribution
to all holders of Common Stock of evidences of indebtedness or assets of the
Company (excluding certain cash dividends and distributions described below) or
rights or warrants (excluding those referred to above). In the event that the
Company shall distribute any rights or warrants to acquire capital stock
pursuant to clause (iv) above (the "Capital Stock Rights"), pursuant to which
separate certificates representing such Capital Stock Rights will be distributed
subsequent to the initial distribution of such Capital Stock Rights (whether or
not such distribution shall have occurred prior to the date of the issuance of a
series of Common Stock Warrants), such subsequent distribution shall be deemed
to be the distribution of such Capital Stock Rights; provided that the Company
may, in lieu of making any adjustment in the exercise price of, and the number
of shares of Common Stock covered by, a Common Stock Warrant upon a distribution
of separate certificates representing such Capital Stock Rights, make proper
provision so that each holder of such a Common Stock Warrant who exercises such
Common Stock Warrant (or any portion thereof) (a) before the record date for
such distribution of separate certificates shall be entitled to receive upon
such exercise shares of Common Stock issued with Capital Stock Rights and (b)
after such record date and prior to the expiration, redemption or termination of
such Capital Stock Rights shall be entitled to receive upon such exercise, in
addition to the shares of Common Stock issuable upon such exercise, the same
number of such Capital Stock Rights as would a holder of the number of shares of
Common Stock that such Common Stock Warrant so exercised would have entitled the
holder thereof to acquire in accordance with the terms and provisions applicable
to the Capital Stock Rights if such Common Stock Warrant was exercised
immediately prior to the record date for such distribution. Common Stock owned
by or held for the account of the Company or any majority owned subsidiary shall
not be deemed outstanding for the purpose of any adjustment required pursuant to
clause (iv) above.

No adjustment in the exercise price of, and the number of shares of Common Stock
covered by, a Common Stock Warrant will be made for regular quarterly or other
periodic or recurring cash dividends or distributions or for cash dividends or
distributions to the extent paid from retained earnings. No adjustment will be
required unless such adjustment would require a change of at least 1% in the
exercise price then in effect; provided that any such adjustment not so made
will be carried forward and taken into account in any subsequent adjustment; and
provided further that any such adjustment not so made shall be made no later
than three years after the occurrence of the event requiring such adjustment to
be made or carried forward. Except as stated above, the exercise price of, and
the number of shares of Common Stock covered by, a Common Stock Warrant will not
be adjusted for the issuance of Common Stock or any securities convertible into
or exchangeable for Common Stock, or securities carrying the right to purchase
any of the foregoing.

In the case of (i) a reclassification or change of the Common Stock, (ii) a
consolidation or merger involving the Company or (iii) a sale or conveyance to
another corporation of the property and assets of the Company as an entirety or
substantially as an entirety, in each case as a result of which holders of the
Company's Common Stock shall be entitled to receive stock, securities, other
property or assets (including cash) with respect to or in exchange for such
Common Stock, the holders of the Common Stock Warrants then outstanding will be
entitled thereafter to convert such Common Stock Warrants into the kind and
amount of shares of stock and other securities or property which they would have
received upon such reclassification, change, consolidation, merger, sale or
conveyance had such Common Stock Warrants been exercised immediately prior to
such reclassification, change, consolidation, merger, sale or conveyance.

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<PAGE> 29

DESCRIPTION OF THE LLC PREFERRED SECURITIES

The following is a summary of certain terms and provisions of the LLC Preferred
Securities offered hereby. Reference is made to the LLC Articles, the
Regulations of SCI Finance (the "LLC Regulations") and the amendment to the LLC
Regulations adopted or to be adopted by the Manager establishing the rights,
preferences, privileges, limitations and restrictions relating to the LLC
Preferred Securities (the "Declaration"). The summaries set forth below and in
the accompanying Prospectus Supplement address the material terms of the LLC
Preferred Securities of any particular series but do not purport to be complete
and are subject to, and qualified in their entirety by reference to, the LLC
Articles, the LLC Regulations and the Declaration. Capitalized terms used in the
summaries below and not otherwise defined herein have the respective meanings
set forth in the LLC Articles, the LLC Regulations and the Declaration.

GENERAL

SCI Finance is authorized to issue up to 7,000,000 LLC Preferred Shares, in one
or more series or classes, with such dividend rights, liquidation preferences
per share, redemption provisions, voting rights, conversion or exchange rights
and other rights, preferences, privileges, limitations and restrictions as are
set forth in the LLC Articles, the LLC Regulations and the Declaration adopted
or to be adopted by the Manager. All of the LLC Preferred Shares which may be
issued in one or more series or classes, including the LLC Preferred Securities,
will rank pari passu with each other with respect to participation in profits
and assets. The LLC Articles and the LLC Regulations as currently in effect do
not permit the issuance of any preference interests ranking, as to participation
in the profits or the assets of SCI Finance, senior to the LLC Preferred Shares.

Reference is made to the accompanying Prospectus Supplement relating to the LLC
Preferred Securities for the following terms of the LLC Preferred Securities:

(a) title;

(b) the dividend terms (when dividends will accrue and be payable);

(d) the liquidation preference per LLC Preferred Security;

(e) the conversion rights for, and conversion price per share of, SCI Common
Stock;

(f) certain provisions relating to Non-Stock or Common Stock Fundamental Changes
(as defined below);

(g) the initial Reference Market Price (as defined below);

(h) book entry provisions, if other than as set forth below; and

(i) any other terms of the series (and the accompanying Prospectus Supplement
may state that any of the terms set forth herein is inapplicable to such
series).

DIVIDENDS

Cumulative dividends on the LLC Preferred Securities will accrue and be payable
as set forth in the accompanying Prospectus Supplement, when, as and if declared
by SCI Finance, except as otherwise described below.

The annual dividend payable on each LLC Preferred Security will be fixed as set
forth in the accompanying Prospectus Supplement. The amount of dividends is
computed on the basis of twelve 30-day months and a 360-day year and, for any
period shorter than a full monthly dividend period, will be computed on the
basis of the actual number of days elapsed in such period. Payment of dividends
generally is limited to the amount of funds held by SCI Finance and legally
available therefor.

Dividends declared on the LLC Preferred Securities are payable to the record
holders thereof as they appear on the register for the LLC Preferred Securities
on the record date, which will be one Business Day prior to the relevant payment
date. In the event that any date on which dividends are payable on the LLC
Preferred

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<PAGE> 30

Securities is not a Business Day, then payment of the dividend payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date. The term "Business Day" shall mean any
day other than a day on which banking institutions in The City of New York are
authorized or required by law to close.

Dividends on the LLC Preferred Securities of any series will be cumulative
(whether or not declared and whether or not there are profits, surplus or other
funds legally available for the payment of dividends). Dividends on the LLC
Preferred Securities must be declared by SCI Finance, by action of the Manager,
in any calendar year or portion thereof to the extent that the Manager
reasonably anticipates that at the time of payment SCI Finance will have, and
must be paid by SCI Finance to the extent that at the time of proposed payment
SCI Finance has, (x) funds legally available for the payment of such dividends
and (y) cash on hand sufficient to permit such payments. It is anticipated that
SCI Finance's earnings will result almost exclusively from payments under the
Loans of proceeds from the sale of the LLC Preferred Securities and the issuance
of LLC Common Shares (as described under "-- Description of the Loans"). SCI
Limited will have the right to extend interest payments on the Loans for up to
60 monthly interest payment periods over the term of the Loans. Interest shall
accrue on and be payable in respect of any dividend payment on the LLC Preferred
Securities which is in arrears at the interest rate payable in respect of the
Loans to the extent permitted by applicable law.

CERTAIN RESTRICTIONS ON SCI FINANCE

If dividends have not been paid in full on the LLC Preferred Securities, SCI
Finance may not:

(i) pay, or declare and set aside for payment, any dividends on any other LLC
Preferred Shares ranking pari passu with the LLC Preferred Securities as regards
participation in profits of SCI Finance ("SCI Finance Dividend Parity Shares"),
unless the amount of any dividends declared on any SCI Finance Dividend Parity
Shares is paid on SCI Finance Dividend Parity Shares and the LLC Preferred
Securities on a pro rata basis on the date such dividends are paid on such SCI
Finance Dividend Parity Shares, so that

(x)(a) the aggregate amount of dividends paid on the LLC Preferred
Securities bears the same ratio to (b) the aggregate amount of dividends
paid on such SCI Finance Dividend Parity Shares as

(y)(a) the aggregate amount of all accumulated arrears of unpaid dividends
in respect of the LLC Preferred Securities bears to (b) the aggregate
amount of all accumulated arrears of unpaid dividends in respect of such
SCI Finance Dividend Parity Shares;

(ii) pay, or declare and set aside for payment, any dividends on any interests
in SCI Finance ranking junior to the LLC Preferred Securities as to dividends
("SCI Finance Dividend Junior Shares"); or

(iii) call for redemption or redeem, purchase or otherwise acquire any SCI
Finance Dividend Parity Shares or SCI Finance Dividend Junior Shares or any LLC
Preferred Securities other than (x) the redemption of all outstanding LLC
Preferred Securities at the Redemption Price (as defined below), (y) pursuant to
a pro rata redemption of the LLC Preferred Securities at the Redemption Price or
(z) pursuant to a purchase or exchange offer made on the same terms to all
holders of the LLC Preferred Securities, it being understood that this provision
shall not limit the rights of holders of LLC Preferred Securities to exercise
their conversion rights

until, in each case, such time as all accumulated arrears of unpaid dividends
(whether or not declared) on the LLC Preferred Securities shall have been paid
in full for all dividend periods terminating on or prior to, in the case of
clauses (i) and (ii), such payment, and in the case of clause (iii), the date of
such call, redemption, purchase or acquisition. As of the date of this
Prospectus, SCI Finance has no SCI Finance Dividend Parity Shares outstanding
and has no plans to issue such shares.

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<PAGE> 31

MANDATORY REDEMPTION

The proceeds from any prepayment or repayment of principal on the Loans to SCI
Limited of proceeds from the issuance and sale of LLC Preferred Securities and
LLC Common Shares must be applied to redeem the LLC Preferred Securities at the
Redemption Price upon not less than 30 nor more than 60 days' notice in writing
by SCI Finance to the holders of the LLC Preferred Securities except at final
maturity of the Loans, in which case the redemption of LLC Preferred Securities
will occur as soon as practicable thereafter.

OPTIONAL REDEMPTION

The LLC Preferred Securities are redeemable, at the option of SCI Finance
subject to the prior consent of the Manager, in whole or in part from time to
time, on or after the date and subject to the terms set forth in the
accompanying Prospectus Supplement, upon not less than 30 nor more than 60 days'
notice in writing by SCI Finance to the holders of LLC Preferred Securities, at
the prices set forth in the accompanying Prospectus Supplement (the "Redemption
Price"), in each case plus accrued and unpaid dividends (whether or not
declared) to the date fixed for redemption.

In the event that fewer than all the outstanding LLC Preferred Securities are to
be redeemed, the LLC Preferred Securities to be redeemed will be selected as
described under "-- Book-Entry Issuance; the Depository Trust Company" below,
pro rata as nearly as practicable or by lot, or by such other method as the
Paying and Conversion Agent may determine to be fair and appropriate. In the
event that any monthly dividend payable on the LLC Preferred Securities is in
arrears, LLC Preferred Securities may not be redeemed unless by conversion of
LLC Preferred Securities into shares of SCI Common Stock, and neither SCI nor
SCI Finance nor any other subsidiary of SCI may purchase or acquire any of such
shares otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of record of the LLC Preferred Securities.

If SCI Finance gives a notice of redemption in respect of LLC Preferred
Securities, then, by 12:00 noon, New York time, on the redemption date, SCI
Finance will irrevocably deposit with the Paying and Conversion Agent or the
Depository Trust Company ("DTC"), as the case may be, funds sufficient to pay
the Redemption Price and will give the Paying and Conversion Agent or DTC, as
the case may be, irrevocable instructions and authority to pay the Redemption
Price to the holders thereof. If notice of redemption shall have been given and
funds deposited as required, then upon the date of such deposit, all rights of
holders of LLC Preferred Securities so called for redemption will cease, except
the right of the holders of such shares to receive the Redemption Price, but
without interest, and such shares will cease to be outstanding. In the event
that any date on which any payment in respect of the redemption of LLC Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date. In the event that payment of the Redemption
Price in respect of LLC Preferred Securities is improperly withheld or refused
and not paid either by SCI Finance or by SCI pursuant to the Guarantee (as
defined below), dividends on such shares will continue to accrue, at the then-
applicable rate, from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.

Subject to the foregoing, SCI or its subsidiaries may at any time and from time
to time purchase outstanding LLC Preferred Securities by tender, in the open
market or by private agreement.

TAX EVENT REDEMPTION

If a Tax Event (as defined below) shall occur and be continuing, the LLC
Preferred Securities will be subject to redemption, at the option of SCI
Finance, in whole but not in part, upon not less than 30 nor more than 60 days'
notice in writing by the Company to the holders of such LLC Preferred
Securities, such notice to be given within 90 days following the occurrence of
such Tax Event at a redemption price or prices set forth in the accompanying
Prospectus Supplement.

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<PAGE> 32

"Tax Event" means, with respect to any LLC Preferred Securities, that SCI shall
have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that, on or after the date of the
accompanying Prospectus Supplement relating to such LLC Preferred Securities, as
a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) any amendment
to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any official interpretation
or pronouncement that provides for a position with respect to such laws or
regulations that differs from the generally accepted position or (d) any action
taken by any governmental agency or regulatory authority, which amendment or
change is enacted, promulgated, issued or effective or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the date of such accompanying Prospectus Supplement, there is more than
an insubstantial risk that (i) SCI Finance is subject to federal income tax with
respect to interest accrued or received on the Loans or (ii) SCI Finance is
subject to liability for more than a de minimis amount of taxes, duties or other
governmental charges.

LIQUIDATION DISTRIBUTION

In the event of any voluntary or involuntary liquidation, dissolution or winding
up of SCI Finance, the holders of LLC Preferred Securities at the time
outstanding will be entitled to receive out of the assets of SCI Finance legally
available for distribution to shareholders, before any distribution of assets is
made to holders of the LLC Common Shares or any other class of interests in SCI
Finance ranking junior to the LLC Preferred Securities as regards participation
in assets of SCI Finance, but together with the holders of every other series of
LLC Preferred Shares outstanding, if any, ranking pari passu with the LLC
Preferred Securities as regards participation in the assets of SCI Finance ("SCI
Finance Liquidation Parity Shares"), an amount equal, in the case of the holders
of the LLC Preferred Securities, to the aggregate of the liquidation preference
per LLC Preferred Security set forth in the accompanying Prospectus Supplement
and all accumulated and unpaid dividends (whether or not declared) to the date
of payment (the "Liquidation Distribution"). If, upon any such liquidation, the
Liquidation Distribution can be paid only in part because SCI Finance has
insufficient assets available to pay in full the aggregate Liquidation
Distribution and the aggregate maximum liquidation distributions on SCI Finance
Liquidation Parity Shares, then the amounts payable by SCI Finance on the LLC
Preferred Securities and on such SCI Finance Liquidation Parity Shares shall be
paid on a pro rata basis, so that

(i)(x) the aggregate amount paid in respect of the Liquidation Distribution
bears the same ratio to (y) the aggregate amount paid as liquidation
distributions (including accrued and unpaid dividends) on SCI Finance
Liquidation Parity Shares as

(ii)(x) the aggregate Liquidation Distribution bears to (y) the aggregate
liquidation preference (including accrued and unpaid dividends) on SCI Finance
Liquidation Parity Shares.

Pursuant to the LLC Regulations, SCI Finance will be considered to have
commenced voluntary wind-up and dissolution automatically (i) when the period
fixed for the duration of SCI Finance expires, (ii) if the holders of the LLC
Common Shares pass a resolution requiring SCI Finance to be wound up and
dissolved, (iii) upon the bankruptcy, resignation, withdrawal, expulsion,
termination, cessation or dissolution of SCI or the Manager (if other than SCI),
(iv) upon the happening of any event that would cause a holder of LLC Common
Shares to cease to be a holder thereof or (v) if SCI transfers any LLC Common
Shares or if all of the LLC Common Shares are redeemed, repurchased or cancelled
by SCI Finance.

VOTING RIGHTS

Except as provided below and under "-- Description of the
Guarantee -- Amendments and Assignments" and "-- Description of the
Loans -- Miscellaneous," the holders of the LLC Preferred Securities will have
no voting rights.

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If (i) SCI Finance fails to pay dividends in full on the LLC Preferred
Securities (whether or not there are funds legally available therefor) for more
than 60 consecutive monthly dividend periods, (ii) an Event of Default (as
defined in the Loan Agreement relating to the Loans) occurs and is continuing on
the Loans or (iii) SCI is in default under any of its payment or other
obligations under the Payment, Guarantee and Conversion Agreement entered into
by the Company for the benefit of each holder of LLC Securities (the
"Guarantee"), then the holders of outstanding LLC Preferred Securities, together
with the holders of any other series of LLC Preferred Shares having the right to
vote for the appointment of a trustee in such event, acting as a single class,
will be entitled, by resolution passed by the holders of a majority in
liquidation preference (plus all accrued and unpaid dividends per share) of such
shares present in person or represented by proxy at a meeting of such holders
convened for such purpose (or by written consent), to appoint and authorize a
trustee to enforce SCI Finance's rights as a creditor under the Loans against
SCI Limited and SCI (including the acceleration of principal and accrued
interest on the Loans), enforce the obligations undertaken by SCI under the
Guarantee and the Liability Assumption Agreement (as defined below) and declare
and pay dividends on the LLC Preferred Securities. For purposes of determining
whether SCI Finance has failed to pay dividends in full for more than 60
consecutive monthly dividend periods, dividends shall be deemed to remain in
arrears, notwithstanding any payments in respect thereof, until full cumulative
dividends have been or contemporaneously are declared and paid with respect to
all monthly dividend periods terminating on or prior to the date of payment of
such full cumulative dividends. Not later than 45 days after such entitlement
arises, the Manager will convene a meeting for the above purposes. If the
Manager fails to convene such meeting within such 45-day period, the holders of
10% in liquidation preference (plus all accrued and unpaid dividends per share)
of the outstanding LLC Preferred Securities and such other LLC Preferred Shares
will be entitled to convene such meeting. The provisions of the LLC Regulations
regarding the convening and conduct of meetings will apply with respect to any
such meeting. Any trustee so appointed shall vacate office immediately with
respect to the LLC Preferred Securities, if SCI Finance (or SCI pursuant to the
Guarantee) shall have paid in full all accrued and unpaid dividends on the LLC
Preferred Securities or such default or breach by SCI shall have been cured.

If any resolution is presented to the members of SCI Finance providing for, or
the Manager otherwise proposes to effect (it being understood that the automatic
dissolution and liquidation events described in clauses (iii), (iv) and (v)
under "-- Liquidation Distribution" above will not be deemed to be a proposal by
the Manager, and are not subject to the approval procedures described in this
paragraph), (x) any amendment of the LLC Articles, the LLC Regulations, the
Declaration or other action that adversely varies or abrogates the rights,
preferences or privileges of the LLC Preferred Securities (including, without
limitation, the authorization or issuance of any interests in SCI Finance
ranking, as to participation in the profits or assets of SCI Finance, senior to
the LLC Preferred Securities, or the issuance of any debt by SCI Finance), (y)
the liquidation, dissolution or winding up of SCI Finance or (z) the
modification of the provisions of the LLC Articles and the LLC Regulations which
absolutely prohibit transfers of LLC Common Shares, then the holders of
outstanding LLC Preferred Shares of all series (and, in the case of a resolution
described in clause (x) above which would equally adversely affect the rights,
preferences or privileges of any SCI Finance Dividend Parity Shares or any SCI
Finance Liquidation Parity Shares, such SCI Finance Dividend Parity Shares or
such SCI Finance Liquidation Parity Shares, as the case may be, or, in the case
of any resolution described in clause (y) or (z) above, all SCI Finance
Liquidation Parity Shares) will be entitled to vote together as a class on such
resolution or action of the Manager (but not on any other resolution or action),
and such resolution or action shall not be effective except with the approval of
the holders of 66 2/3% in liquidation preference (plus all accrued and unpaid
dividends) of such outstanding shares; provided, however, that no such approval
or ratification shall be required if the liquidation, dissolution and winding up
of SCI Finance is proposed or initiated upon the initiation of proceedings, or
after proceedings have been initiated, for the liquidation, dissolution or
winding up of SCI or the Manager (if other than SCI).

No vote or consent of the holders of the LLC Preferred Securities will be
required for SCI Finance to redeem and cancel LLC Preferred Securities in
accordance with the LLC Regulations and the Declaration.

The rights attached to the LLC Preferred Securities will be deemed not to be
varied by the creation or issue of, and no vote will be required for the
creation of, any further series of LLC Preferred Shares or any other interests
in SCI Finance ranking as regards participation in the profits or assets of SCI
Finance pari passu with or junior to the LLC Preferred Securities.

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Any required approval of holders of LLC Preferred Securities may be given at a
meeting of such holders convened for such purpose, at a general meeting of
shareholders of SCI Finance or pursuant to written consent. SCI Finance will
cause a notice of any meeting at which holders of the LLC Preferred Securities
are entitled to vote, or of any matter upon which action by written consent of
such holders is to be taken, to be mailed to each holder of record of the LLC
Preferred Securities. Each such notice will include a statement setting forth
(i) the date of such meeting or the date by which such action is to be taken,
(ii) a description of any resolution proposed for adoption at such meeting on
which such holders are entitled to vote or of such matter upon which written
consent is sought and (iii) instructions for the delivery of proxies or written
consents.

Notwithstanding that holders of LLC Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the LLC Preferred
Securities and such other LLC Preferred Shares entitled to vote or consent with
such LLC Preferred Securities as a single class outstanding at such time that
are owned by SCI or any entity owned 50% or more by SCI, either directly or
indirectly, shall not be entitled to vote or consent and shall, for the purposes
of such vote or consent, be treated as if they were not outstanding.

CONVERSION RIGHTS

Except as otherwise provided in the Prospectus Supplement, the holders of the
LLC Preferred Securities will have the conversion rights as set forth below:

Each LLC Preferred Security will be convertible at any time at the option of the
holder thereof into such number of whole shares of SCI Common Stock as is equal
to the per share liquidation preference of the LLC Preferred Securities
surrendered for conversion divided by the initial conversion price per share of
SCI Common Stock set forth in the accompanying Prospectus Supplement, subject to
adjustment as described below. LLC Preferred Securities called for redemption
will not be convertible after the close of business on the second Business Day
preceding the date fixed for redemption, unless SCI Finance defaults in payment
of the applicable Redemption Price or SCI defaults in its obligation to deliver
SCI Common Stock in exchange for shares of LLC Preferred Securities previously
surrendered for conversion. No fractional shares of SCI Common Stock will be
issued as a result of conversion, but in lieu thereof, in the sole discretion of
SCI, either (i) such fractional interest will be rounded upon the next whole
share or (ii) an appropriate amount will be paid in cash by SCI.

The initial conversion price is subject to adjustment (under formulae set forth
in the Declaration) in certain events, including: (i) the issuance of SCI Common
Stock as a dividend or distribution on SCI Common Stock; (ii) certain
subdivisions and combinations of the SCI Common Stock; (iii) the issuance to all
holders of SCI Common Stock of certain rights or warrants to purchase SCI Common
Stock; (iv) the distribution to all holders of SCI Common Stock of (A) shares of
capital stock of SCI (other than SCI Common Stock), (B) evidences of
indebtedness of SCI and/or (C) other assets (including securities, but excluding
any rights or warrants referred to in clause (iii) above, any dividends or
distributions in connection with the liquidation, dissolution or winding-up of
SCI, any dividends payable solely in cash that may from time to time be fixed by
the Board of Directors of SCI and any dividends or distributions referred to in
clause (i) above); (v) distributions consisting of cash, excluding (a) any cash
dividends on the SCI Common Stock to the extent that the aggregate cash
dividends per share of SCI Common Stock in any consecutive 12-month period do
not exceed the greater of (x) the amount per share of SCI Common Stock of the
cash dividends paid on the SCI Common Stock in the immediately preceding
12-month period, to the extent that such dividends for the immediately preceding
12-month period did not require an adjustment of the conversion price pursuant
to this clause (v) (as adjusted to reflect subdivisions or combinations of the
SCI Common Stock), and (y) 15% of the average of the daily Closing Price (as
defined in the Declaration) of the SCI Common Stock for the ten consecutive
Trading Days (as defined in the Declaration) immediately prior to the date of
declaration of such dividend, and (b) any dividend or distribution in connection
with the liquidation, dissolution or winding up of SCI or a redemption of any
rights issued under a rights agreement (provided, however that no adjustment
shall be made pursuant to this clause (v) if such distribution would otherwise
constitute a Fundamental Change (as defined below) and be reflected in a
resulting adjustment described below); and (vi) payment in respect of a tender
or exchange offer by SCI or any subsidiary of SCI for SCI Common Stock to the
extent that the cash and value of any other consideration included in such
payment per share of SCI Common Stock exceeds (by more than 10%, with any
smaller excess being disregarded in computing the adjustment provided hereby)
the first

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reported sale price per share of SCI Common Stock on the Trading Day next
succeeding the Expiration Time (as defined in the Declaration) for such tender
or exchange offer. If any adjustment is required to be made as set forth in
clause (v) above as a result of a distribution which is a dividend described in
subclause (a) of clause (v) above, such adjustment would be based upon the
amount by which such distribution exceeds the amount of the dividend permitted
to be excluded pursuant to such subclause (a) of clause (v). If an adjustment is
required to be made as set forth in clause (v) above as a result of a
distribution which is not such a dividend, such adjustment would be based upon
the full amount of such distribution. If an adjustment is required to be made as
set forth in clause (vi) above, such adjustment would be calculated based upon
the amount by which the aggregate consideration paid for SCI Common Stock
acquired in the tender or exchange offer exceeds the value of such shares based
on the first reported sale price of the SCI Common Stock on the Trading Day next
succeeding the Expiration Time. In lieu of making such a conversion price
adjustment in the case of certain dividends or distributions, SCI may provide
that upon the conversion of LLC Preferred Securities the holder converting such
LLC Preferred Securities will receive, in addition to the shares of SCI Common
Stock of which such holder is entitled, the cash, securities or other property
which such holder would have received if such holder had, immediately prior to
the record date for such dividend or distribution, converted its LLC Preferred
Securities into SCI Common Stock.

SCI Finance from time to time may, to the extent permitted by law and with the
consent of the Manager, reduce the conversion price by any amount for any period
of at least 20 Business Days, in which case SCI Finance shall give at least 15
days' notice of such reduction to the holders of the LLC Preferred Securities.
SCI Finance may, at its option and with the consent of the Manager, make such
reduction in the conversion price, in addition to those set forth above, as SCI
Finance deems advisable to avoid or diminish any income tax to holders of SCI
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for tax purposes or for any
other reasons.

In the event that SCI shall be a party to any transaction or series of
transactions constituting a Fundamental Change, including, without limitation,
(i) any recapitalization or reclassification of the SCI Common Stock (other than
a change in par value or as a result of a subdivision or combination of the SCI
Common Stock); (ii) any consolidation or merger of SCI with or into another
corporation as a result of which holders of SCI Common Stock shall be entitled
to receive securities or other property or assets (including cash) with respect
to or in exchange for the SCI Common Stock (other than a merger which does not
result in a reclassification, conversion, exchange or cancellation of
outstanding shares of SCI Common Stock); (iii) any sale or transfer of all or
substantially all of the assets of SCI; or (iv) any compulsory share exchange,
pursuant to any of which holders of SCI Common Stock shall be entitled to
receive other securities, cash or other property, then appropriate provision
shall be made so that the holder of each LLC Preferred Security then outstanding
shall have the right thereafter to convert such security only into (x) if any
such transaction constitutes a Non-Stock Fundamental Change (as defined below),
the kind and amount of the securities, cash or other property that would have
been receivable upon such recapitalization, reclassification, consolidation,
merger, sale, transfer or share exchange by a holder of the number of shares of
SCI Common Stock issuable upon conversion of such LLC Preferred Security
immediately prior to such recapitalization, reclassification, consolidation,
merger, sale, transfer or share exchange, after giving effect to any adjustment
in the conversion price in accordance with clause (i) of the following
paragraph, and (y) if any such transaction constitutes a Common Stock
Fundamental Change (as defined below), common stock of the kind received by
holders of SCI Common Stock as a result of such Common Stock Fundamental Change
in an amount determined in accordance with clause (ii) of the following
paragraph. The company formed by such consolidation or resulting from such
merger or which acquires such assets or which acquires the SCI Common Stock, as
the case may be, shall make provisions in its certificate or articles of
incorporation or other constituent document to establish such right. Such
certificate or articles of incorporation or other constituent document shall
provide for adjustments which, for events subsequent to the effective date of
such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as practical to the relevant adjustments provided
for in the preceding paragraphs and in this paragraph.

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Notwithstanding any other provision in the preceding paragraphs, if any
Fundamental Change (as defined below) occurs, the conversion price in effect
will be adjusted immediately after that Fundamental Change as follows:

(i) in the case of a Non-Stock Fundamental Change, the conversion price per
share of SCI Common Stock immediately following such Non-Stock Fundamental
Change will be the lower of (A) the conversion price in effect immediately prior
to such Non-Stock Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to the preceding paragraphs, and (B) the result
obtained by multiplying the greater of the Applicable Price (as defined below)
or the then applicable Reference Market Price (as defined below) by a fraction
of which the numerator will be the liquidation preference of the LLC Preference
Securities as set forth in the applicable Prospectus Supplement and the
denominator of which will be the then current Redemption Price per LLC Preferred
Security (or, if such Redemption Price is to be determined prior to the date on
which the LLC Preferred Securities may first be called for redemption, the
prices set forth in the Prospectus Settlement); and

(ii) in the case of a Common Stock Fundamental Change, the conversion price per
share of SCI Common Stock immediately following the Common Stock Fundamental
Change will be the conversion price in effect immediately prior to the Common
Stock Fundamental Change, but after giving effect to any other prior adjustments
effected pursuant to the preceding paragraphs, multiplied by a fraction, the
numerator of which is the Purchaser Stock Price (as defined below) and the
denominator of which is the Applicable Price; provided, however, that in the
event of a Common Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of SCI Common Stock is common stock of the
successor, acquiror or other third party (and cash, if any, paid with respect to
any fractional interests in that common stock resulting from the Common Stock
Fundamental Change) and (B) all of the SCI Common Stock shall have been
exchanged for, converted into, or acquired for, common stock of the successor,
acquiror or other third party, the conversion price per share of SCI Common
Stock immediately following the Common Stock Fundamental Change shall be the
conversion price in effect immediately prior to the Common Stock Fundamental
Change multiplied by a fraction, the numerator of which is one (1) and the
denominator of which is the number of shares of common stock of the successor,
acquiror, or other third party received by a holder of one share of SCI Common
Stock as a result of the Common Stock Fundamental Change.

Depending upon whether the Fundamental Change is a Non-Stock Fundamental Change
or Common Stock Fundamental Change, a holder may receive significantly different
consideration upon conversion. In the event of a Non-Stock Fundamental Change,
the holder has the right to convert LLC Preferred Securities into the kind and
amount of shares of stock and other securities or property or assets (including
cash), except as otherwise provided above, as is determined by the number of
shares of SCI Common Stock receivable upon conversion at the conversion price as
adjusted in accordance with clause (i) of the preceding paragraph. However, in
the event of a Common Stock Fundamental Change in which less than 100% of the
value of the consideration received by a holder of SCI Common Stock is common
stock of the successor, acquiror or other third party, a holder of a LLC
Preferred Security who converts such share following the Common Stock
Fundamental Change will receive consideration in the form of such common stock
only, whereas a holder who converted such share prior to the Common Stock
Fundamental Change will have received consideration in the form of such common
stock as well as any other securities or assets (which may include cash)
issuable upon conversion of such LLC Preferred Security immediately prior to
such Common Stock Fundamental Change.

The term "Applicable Price" means (i) in the event of a Non-Stock Fundamental
Change in which the holders of SCI Common Stock receive only cash, the amount of
cash receivable by a holder of one share of SCI Common Stock and (ii) in the
event of any other Non-Stock Fundamental Change or any Common Stock Fundamental
Change, the average of the reported last sale price for one share of the SCI
Common Stock (determined as provided in the Declaration) during the ten Trading
Days immediately prior to the record date for the determination of the holders
of SCI Common Stock entitled to receive cash, securities, property or other
assets in connection with such Non-Stock Fundamental Change or Common Stock
Fundamental Change or, if there is no such record date, prior to the date on
which the holders of the SCI Common Stock will have the right to receive such
cash, securities, property or other assets.

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The term "Common Stock Fundamental Change" means any Fundamental Change in which
more than 50% of the value (as determined in good faith by SCI's Board of
Directors) of the consideration received by holders of SCI Common Stock pursuant
to such transaction consists of common stock that, for the ten consecutive
Trading Days immediately prior to such Fundamental Change, has been admitted for
listing or admitted for listing subject to notice of issuance on a national
securities exchange or quoted on the Nasdaq National Market; provided, however,
that a Fundamental Change will not be a Common Stock Fundamental Change unless
either (i) SCI continues to exist after the occurrence of such Fundamental
Change and the outstanding LLC Preferred Securities continue to exist as
outstanding LLC Preferred Securities, or (ii) the outstanding LLC Preferred
Securities continue to exist as LLC Preferred Securities and are convertible
into common stock of the successor to SCI.

The term "Fundamental Change" means the occurrence of any transaction or event
or series of transactions or events pursuant to which all or substantially all
of the SCI Common Stock is exchanged for, converted into, acquired for or
constitutes solely the right to receive cash, securities, property or other
assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of a plan involving more than one
such transaction or event, for purposes of adjustment of the conversion price,
such Fundamental Change will be deemed to have occurred when substantially all
of the SCI Common Stock received in such transaction has been exchanged for,
converted into, or acquired for or constitutes solely the right to receive cash,
securities, property or other assets but the adjustment shall be based upon the
consideration that the holders of SCI Common Stock received in the transaction
or event as a result of which more than 50% of the SCI Common Stock shall have
been exchanged for, converted into, or acquired for, or shall constitute solely
the right to receive such cash, securities, properties or other assets; and
provided further, that such term does not include (i) any transaction or event
in which SCI and/or any of its subsidiaries are the issuers of all the cash,
securities, property or other assets exchanged, acquired or otherwise issued in
the transaction or event, or (ii) any transaction or event in which the holders
of SCI Common Stock receive securities of an issuer other than SCI if,
immediately following such transaction or event, holders of SCI Common Stock
hold a majority of the securities having the power to vote normally in the
election of directors of such other issuer outstanding immediately following
such transaction or other event.

The term "Non-Stock Fundamental Change" means any Fundamental Change other than
a Common Stock Fundamental Change.

The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the reported last sale prices for one share
of the common stock received by holders of SCI Common Stock in such Common Stock
Fundamental Change during the ten Trading Days immediately prior to the record
date for the determination of the holders of SCI Common Stock entitled to
receive such common stock or, if there is no such record date, prior to the date
upon which the holders of SCI Common Stock shall have the right to receive the
common stock.

The term "Reference Market Price" will initially mean the price set forth in the
accompanying Prospectus Supplement (which unless otherwise specified in the
accompanying Prospectus Supplement will be 66 2/3% of the last reported sale
price for SCI Common Stock on the New York Stock Exchange on the date of such
Prospectus Supplement) and, in the event of any adjustment to the conversion
price other than as a result of a Fundamental Change, the Reference Market Price
will also be adjusted so that the ratio of the Reference Market Price to the
conversion price after giving effect to any adjustment will always be the same
as the ratio of the initial Reference Market Price to the initial conversion
price of the LLC Preferred Securities.

No adjustment in the conversion price will be required unless the adjustment
would require a change of at least 1% in the conversion price then in effect;
provided, however, that any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment.

The holders of LLC Preferred Securities at the close of the business on a
dividend payment record date will be entitled to receive the dividend payment on
those shares on the corresponding dividend payment date notwithstanding the
subsequent conversion thereof or SCI Finance's default in payment of the
dividend due on that dividend payment date. A holder of LLC Preferred Securities
on a dividend payment record date who (or

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whose transferee) tenders any shares for conversion on a dividend payment date
will receive the dividend payable by SCI Finance on LLC Preferred Securities on
that date.

BOOK-ENTRY ISSUANCE; THE DEPOSITORY TRUST COMPANY

DTC will act only as securities depository for the LLC Preferred Securities. The
LLC Preferred Securities will be issued as fully-registered in the name of Cede
& Co. (DTC's partnership nominee). One or more fully-registered global LLC
Preferred Security certificates will be issued, representing in the aggregate
the total number of LLC Preferred Securities, and will be deposited with DTC.
DTC may act as securities depository for any of the other Securities; if it does
so, a description of the applicable book-entry procedures will be set forth in
the applicable Prospectus Supplement.

DTC is a limited-purpose trust company organized under the New York Banking Law,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations ("Direct Participants").
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The Rules applicable to DTC
and its Participants are on file with the Commission.

Purchases of LLC Preferred Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the LLC Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each LLC Preferred Security ("Beneficial Owner") is in turn to be recorded on
the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmations from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner purchased LLC
Preferred Securities. Transfers of ownership interests in the LLC Preferred
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in LLC Preferred Securities,
except in the event that use of the book-entry system for the LLC Preferred
Securities is discontinued. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such laws may impair the ability to transfer beneficial interests in a
global LLC Preferred Security certificate.

DTC has no knowledge of the actual Beneficial Owners of the LLC Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such LLC Preferred Securities are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.

Redemption notices will be sent to Cede & Co. If less than all of the LLC
Preferred Securities are being redeemed, DTC's practice is to determine by lot
the amount of the interest of each Direct Participant in such series to be
redeemed.

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Although voting with respect to the LLC Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will consent or
vote with respect to LLC Preferred Securities. Under its usual procedures, DTC
mails an Omnibus Proxy to SCI Finance as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the LLC Preferred Securities are credited
on the record date (identified in a listing attached to the Omnibus Proxy).

Dividend payments on the LLC Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, SCI Finance or SCI, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
dividends to DTC is the responsibility of SCI Finance, disbursement of such
payments to Direct Participants will be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owner will be the responsibility
of Direct and Indirect Participants.

DTC has advised SCI and SCI Finance that it will take any action permitted to be
taken by a holder of LLC Preferred Securities (including, without limitation,
the presentation of a LLC Preferred Security certificate for conversion) only at
the direction of one or more Participants to whose account with DTC interest in
such shares represented by a global certificate are credited and only in respect
of such number of LLC Preferred Securities represented by a global certificate
as to which such Participant or Participants has or have given such direction.

DTC may discontinue providing its services as securities depository with respect
to the LLC Preferred Securities at any time by giving reasonable notice to SCI
Finance. Under such circumstances, in the event that a successor securities
depository is not obtained, LLC Preferred Securities certificates are required
to be printed and delivered.

The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that SCI Finance believes to be reliable, but neither
SCI Finance, SCI nor any underwriter or agent takes responsibility for the
accuracy thereof.

MISCELLANEOUS

The Transfer Agent, Registrant and Paying and Conversion Agent for the LLC
Preferred Securities will be Society National Bank.

Registration of transfers of LLC Preferred Securities will be effected without
charge by the Transfer Agent, but upon payment (with the giving of such
indemnity as the Transfer Agent may require) in respect of any tax or other
governmental charges which may be imposed in relation to it.

The Transfer Agent will not be required to register or cause to be registered
the transfer of LLC Preferred Securities after such shares have been called for
redemption.

SCI Finance is not subject to any mandatory redemption or sinking fund
provisions with respect to the LLC Preferred Securities. Holders of LLC
Preferred Securities have no preemptive rights.

SCI and SCI Finance will enter into an agreement (the "Liability Assumption
Agreement") pursuant to which SCI, in its capacity as Manager and otherwise,
agrees to guarantee the payment of any liabilities incurred by SCI Finance
(other than obligations to holders of LLC Preferred Securities). The Liability
Assumption Agreement expressly provides that such agreement is for the benefit
of, and is enforceable by, third parties to whom SCI Finance owes such
obligations.

DESCRIPTION OF THE GUARANTEE

Set forth below is a summary of information concerning the Guarantee which will
be executed and delivered by SCI for the benefit of the holders from time to
time of the LLC Preferred Securities.

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General

SCI will irrevocably and unconditionally agree, to the extent set forth herein,
to pay in full, to the holders of LLC Preferred Shares of any series which may
be issued by SCI Finance, including the LLC Preferred Securities, the Guarantee
Payments (as defined below) (except to the extent paid by SCI Finance), as and
when due, regardless of any defense, right of set-off or counterclaim which SCI
Finance may have or assert. The following payments constitute the "Guarantee
Payments" for the LLC Preferred Shares: (i) any accumulated and unpaid dividends
which have been theretofore declared on the LLC Preferred Shares of any series
out of monies legally available therefor, (ii) the redemption price (including
all accumulated and unpaid dividends) to the date of payment payable with
respect to LLC Preferred Shares of any series called for redemption by SCI
Finance out of monies legally available therefor, and (iii) upon a liquidation
of SCI Finance, the lesser of (a) the aggregate liquidation preference per LLC
Preferred Share and all accumulated and unpaid dividends (whether or not
declared) to the date of payment and (b) the amount of remaining assets of SCI
Finance legally available to holders of LLC Preferred Shares. The Guarantee also
requires SCI to deliver upon conversion of any LLC Preferred Shares all shares
of SCI Common Stock or other property into which such LLC Preferred Shares are
convertible. SCI's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amount by SCI to the holders of LLC Preferred
Shares of any series or by causing SCI Finance to pay such amounts to such
holders.

Certain Covenants of SCI

In the Guarantee, SCI will covenant that, so long as any LLC Preferred Shares of
any series remain outstanding, SCI shall not declare or pay any dividend on, and
SCI shall not, and SCI shall not permit any of its majority-owned subsidiaries
to, redeem, purchase, acquire or make a liquidation payment with respect to, any
of SCI's capital stock (other than the redemption by the Company of Series C
Junior Participating Preferred Stock Purchase Rights in accordance with the
Rights Agreement relating thereto and any reacquisition by the Company of any of
its stock issued in any acquisition as a result of a purchase price adjustment
or settlement of breach of warranties in connection with such acquisition) or
make any guarantee payments with respect to the foregoing (other than payments
under the Guarantee), if at such time (i) there shall have occurred any event
that constitutes an Event of Default under the Loan Agreement, (ii) SCI shall be
in default with respect to its payment or other obligations under the Guarantee
or the Manager shall be in default under its obligations under the Liability
Assumption Agreement or (iii) there shall exist any nonpayment of interest under
the Loans, including during any valid extension of the interest payment periods.

In the Guarantee, SCI will also covenant that, so long as any LLC Preferred
Shares of any series remaining outstanding, it will (i) maintain direct 100%
ownership of the LLC Common Shares and any other interests in SCI Finance (other
than the LLC Preferred Shares); (ii) cause more than 20% of the total value
(initially measured by shareholders' equity determined under generally accepted
accounting principles) of SCI Finance and, subject to the preferential rights of
the holders of LLC Preferred Securities as to dividends and liquidation
distributions, more than 20% of all interests in the capital, income, gain,
loss, deduction and credit of SCI Finance to be represented by LLC Common
Shares; (iii) not voluntarily dissolve, wind-up or liquidate SCI Finance; (iv)
remain the Manager of SCI Finance and timely perform all of its duties as
Manager of SCI Finance (including the duty to declare and pay dividends on the
LLC Preferred Shares to the extent set forth in the LLC Articles) and (v) use
reasonable efforts to cause SCI Finance to remain a limited liability company
under the laws of the State of Texas (provided however that SCI Finance may
reorganize under the laws of another jurisdiction provided that SCI Finance has
received an opinion from nationally recognized legal counsel that such
reorganization will not have an adverse effect, including, without limitation,
an adverse tax effect, on the holders of the LLC Preferred Securities) and use
reasonable efforts to cause SCI Finance to continue to be treated as a
partnership for United States Federal income tax purposes.

Amendments and Assignments

Except with respect to any changes which do not adversely affect the rights of
holders of LLC Preferred Shares (in which case no vote will be required), the
Guarantee may be changed only with the prior approval of the holders of not less
than 66 2/3% in liquidation preference (plus all accrued and unpaid dividends
per share) of

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each series of LLC Preferred Shares then outstanding. The manner of obtaining
any such approval of holders of LLC Preferred Shares will be as set forth under
"Description of the LLC Preferred Securities -- Voting Rights." All guarantees
and agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of SCI and shall inure to the benefit of
all LLC Preferred Shares then outstanding.

Termination of the Guarantee

The Guarantee will terminate and be of no further force and effect as to a
series of LLC Preferred Shares upon full payment of the redemption price
(including all accrued and unpaid dividends), or the retirement or cancellation
of all of such series of LLC Preferred Shares, or delivery of all shares of SCI
Common Stock or other property required to be delivered upon conversion, with
respect to all outstanding LLC Preferred Shares of that series, or shall
terminate completely upon full payment of the amounts payable upon liquidation
of SCI Finance including the delivery of all shares of SCI Common Stock or other
property required to be delivered upon conversion of any LLC Preferred Shares.
The Guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of LLC Preferred Shares of such series must
restore payment of any sums, SCI Common Stock or other property paid under the
LLC Preferred Shares of such series or the Guarantee.

Status of the Guarantee

The Guarantee will constitute an unsecured obligation of SCI and will rank (i)
junior in right of payment to all other liabilities of SCI and will be
subordinated in right of payment in the same manner and to the same extent as
SCI's guarantee of obligations under the Loan Agreement is subordinated to
Senior Indebtedness, (ii) senior to the preferred stock of any series issued at
or after the date of the Guarantee by SCI and (iii) pari passu with any
guarantee entered into at or after the date of the Guarantee by SCI in respect
of any preferred or preference stock of any affiliate of SCI. See
"-- Description of the Loans -- Subordination." The Guarantee will constitute a
guarantee of payment and not of collection. A holder of LLC Preferred Shares may
enforce the Guarantee directly against SCI, and SCI will waive any right or
remedy to require that any action be brought against SCI Finance or any person
or entity before proceeding against SCI. The Guarantee will not be discharged
except by payment of the Guarantee Payments in full (to the extent not paid by
SCI Finance) and by complete performance of all obligations under the Guarantee.

Governing Law

The Guarantee will be governed by and construed in accordance with the laws of
the State of New York.

DESCRIPTION OF THE LOANS

Set forth below is a summary of information concerning the Loans from SCI
Finance to SCI Limited of 99% of the proceeds from the issuance of (i) the LLC
Preferred Securities and (ii) the LLC Common Shares and related capital
contributions ("Common Share Payments").

General

Pursuant to the Loan Agreement, SCI Finance has agreed to make the Loans to SCI
Limited in an aggregate principal amount equal to 99% of the sum of the
aggregate liquidation preference of the LLC Preferred Securities issued and sold
by SCI Finance and the aggregate Common Share Payments.

The entire principal amount of the Loans will become due and payable (together
with any accrued and unpaid interest thereon) on the earlier of the date set
forth in the accompanying Prospectus Supplement or the date upon which SCI, SCI
Limited or SCI Finance shall be dissolved, wound-up or liquidated.

The Loans and SCI Limited's obligations under the Loan Agreement (i) will be
senior obligations of SCI Limited and will be secured by fifty percent of the
outstanding capital stock of Service Corporation International plc, the
principal assets of which are the capital stock of GSG and PG, and (ii) will be
unconditionally guaranteed by SCI on an unsecured subordinated basis.

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Mandatory Payment

If SCI Finance redeems LLC Preferred Securities in accordance with the terms
thereof, the Loans will become due and payable in a principal amount equal to
the aggregate liquidation preference of the LLC Preferred Securities so
redeemed, together with any and all accrued but unpaid interest thereon and any
premium in excess of such principal amount. Any payment pursuant to this
provision shall be made in immediately available funds prior to 12:00 noon, New
York time, on the date fixed for such redemption or at such other time on such
earlier date as SCI Finance, SCI Limited and SCI shall agree.

Optional Prepayment

SCI Limited will have the right to prepay the Loans, in whole or in part
(together with (i) a premium computed based on the same percentage as the
percentage difference between the then applicable Redemption Price on the LLC
Preferred Securities and the stated liquidation preference of the LLC Preferred
Securities and (ii) any accrued but unpaid interest), as set forth in the
accompanying Prospectus Supplement.

Interest

The Loans will bear interest at an annual rate as set forth in the accompanying
Prospectus Supplement from the date they are made until maturity. Such interest
shall be payable on the last day of each calendar month of each year, commencing
as set forth in the accompanying Prospectus Supplement. In the event that any
date on which interest is payable on the Loans is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date, subject to certain rights of extension described below.

Extended Interest Payment Period

SCI Limited shall have the right at any time or from time to time during the
term of the Loans, so long as SCI Limited is not in default in the payment of
interest on the Loans, to extend interest payments under the Loans for up to 60
monthly interest payment periods; and at the end of such extended period SCI
Limited shall pay all interest then accrued and unpaid (together with interest
thereon at the rate specified for the Loans to the extent permitted by
applicable law); provided, however, that, during any such extended interest
payment period, or at any time during which there is an Event of Default under
the Loans, SCI shall not declare or pay any dividend on, and SCI shall not, and
shall not permit any of its majority-owned subsidiaries to, redeem, purchase,
acquire or make a liquidation payment with respect to, any of shares of common
or preferred stock of SCI (other than the redemption by the Company of Series C
Junior Participating Preferred Stock Purchase Rights in accordance with the
Rights Agreement relating thereto and any reacquisition by the Company of any of
its stock issued in any acquisition as a result of a purchase price adjustment
or settlement of breach of warranties in connection with such acquisition) or
make any guarantee payments with respect to the foregoing (other than payments
under the Guarantee). Prior to the termination of any such extended interest
payment period, SCI Limited may further extend the interest payment period,
provided, that such extended interest payment period together with all such
further extensions thereof may not exceed 60 monthly interest payments in the
aggregate over the term of the Loans. SCI Limited shall give SCI Finance notice
of its selection of an extended interest payment period at least one Business
Day prior to the earlier of (i) the date SCI Finance declares, or would be
scheduled to declare, the related dividend or (ii) the date SCI Finance is
required to give notice of the record or payment date of such related dividend
to any national securities exchange on which the LLC Preferred Securities are
listed or other applicable self-regulatory organization or to holders of the LLC
Preferred Securities, but in any event not less than two Business Days prior to
such record date. SCI shall cause SCI Finance to give such notice of SCI
Limited's selection of such extended interest payment period to the holders of
the LLC Preferred Securities concurrently therewith.

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Additional Interest

If at any time SCI Finance is or will be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, SCI Limited also will pay as additional interest such amounts as
shall be required so that the net amounts received and retained by SCI Finance
after paying any such taxes, duties, assessments or governmental charges will
not be less than the amounts SCI Finance would have received had no such taxes,
duties, assessments or governmental charges been imposed.

Method and Date of Payment

Each payment by SCI Limited of principal of, premium, if any, and interest on
the Loans shall be made to SCI Finance in lawful money of the United States, at
such place and to such accounts as may be designated by SCI Finance.

Subordination

The Loan Agreement provides that SCI's guarantee of the Loans is subordinate and
junior in right of payment to all Senior Indebtedness as provided in the Loan
Agreement. In this section, the term "Senior Indebtedness" means the principal
of, and premium, if any, and interest on (i) all indebtedness of SCI, other than
ordinary trade credit and other accounts payable arising in the ordinary course
of business, whether outstanding on the date of the Loan Agreement or thereafter
created, incurred or assumed, which is for money borrowed, or evidenced by a
note or similar instrument given in connection with the acquisition of any
business, properties or assets, including securities, (ii) any indebtedness of
others of the kinds described in the preceding clause (i) for which SCI is
responsible or liable as guarantor and (iii) amendments, renewals, extensions
and refundings of any such indebtedness, unless in any instrument or instruments
evidencing or securing such indebtedness or pursuant to which the same is
outstanding, or in any such amendment, renewal, extension or refunding, it is
expressly provided that such indebtedness is not superior in right of payment to
SCI's guarantee of the Loans. The Senior Indebtedness shall continue to be
Senior Indebtedness and entitled to the benefits of the subordination provisions
of the Loan Agreement irrespective of any amendment, modification or waiver of
any term of the Senior Indebtedness or extension or renewal of the Senior
Indebtedness.

The rights of SCI Limited and its creditors, including SCI Finance as to the
Loans, and SCI and its creditors, including SCI Finance pursuant to SCI's
guarantee of the Loans and the holders under the Guarantee, to participate in
the assets of any subsidiary of SCI Limited or SCI upon any liquidation or
reorganization of such subsidiary or otherwise will be subject to the prior
claims of creditors of such subsidiary, except to the extent that SCI Limited or
SCI may itself be a creditor with recognized claims against the subsidiary. The
ability of SCI Limited or SCI to meet its obligations may be dependent upon the
payment to it of dividends, interest and other charges by its subsidiaries. The
ability of SCI Limited's subsidiaries and SCI's subsidiaries to pay dividends or
make other payments to SCI Limited or SCI, as the case may be, is not currently
subject to any contractual or legal restriction (except for limitations imposed
by applicable state corporation laws) which could materially affect SCI
Limited's and SCI's ability to meet their obligations under the Loan Agreement
and the Guarantee. Through their ownership of their subsidiaries, SCI Limited
and SCI currently control (subject to applicable state corporation laws) such
subsidiaries' payment of dividends or other distributions; there can be no
assurance, however, that SCI Limited and SCI will continue such ownership and
control of their subsidiaries.

In the event that (i) SCI shall default in the payment of any principal of,
premium, if any, or interest on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or
declaration or otherwise or (ii) an event of default occurs with respect to any
Senior Indebtedness permitting the holders thereof to accelerate the maturity
thereof and written notice of such event of default is given to SCI by the
holders of such Senior Indebtedness, then unless and until such default in
payment or event of default shall have been cured or waived or shall have ceased
to exist, no direct or indirect payment (in cash, property, securities, by
set-off or otherwise) may be made or agreed to be made by SCI on account of
SCI's guarantee of the Loans or interest thereon or by SCI in respect of any
repayment, redemption, retirement, purchase or other acquisition of the Loans.

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In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to SCI or its property or for the benefit of its creditors, (ii) any proceeding
for the liquidation, dissolution or other winding up of SCI, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by SCI for the benefit of creditors or (iv) any other
marshaling of the assets of SCI, all Senior Indebtedness (including, without
limitation, interest accruing thereon after the commencement of any such
proceeding, assignment or marshaling of assets) shall first be paid in full
before any payment or distribution, whether in cash, securities or other
property, may be made by SCI on account of its guarantee obligations under the
Loan Agreement and the Loans. In any such event, any payment or distribution,
whether in cash, securities or other property (other than securities of SCI or
any other corporation provided for by a plan of reorganization or a
readjustment, the payment of which is subordinate, at least to the extent
provided in the subordination provisions relating to SCI's guarantee obligations
under the Loan Agreement and the Loans with respect to the indebtedness
evidenced by the Loans, to the payment of all Senior Indebtedness at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), which would otherwise (but for the
subordination provision) be payable or deliverable in respect of SCI's guarantee
obligations under the Loan Agreement and the Loans shall be paid or delivered
directly to the holders of Senior Indebtedness (or their representative or
trustee) in accordance with the priorities then existing among such holders
until all Senior Indebtedness shall have been paid in full. No present or future
holder of any Senior Indebtedness may be prejudiced in the right to enforce
subordination of SCI's guarantee obligations under the Loan Agreement and the
Loans by any act or failure to act on the part of SCI.

Senior Indebtedness shall not be deemed to have been paid in full unless the
holders thereof shall have received cash, securities or other property equal to
the amount of such Senior Indebtedness then outstanding. Upon the payment in
full of all Senior Indebtedness, SCI Finance shall be subrogated to all the
rights of any holders of Senior Indebtedness to receive any further payments or
distributions applicable to the Senior Indebtedness until the Loans shall have
been paid in full, and such payments or distributions of cash, securities or
other property received by SCI Finance, by reason of such subrogation, which
otherwise would be paid or distributed to the holders of Senior Indebtedness,
shall, as between SCI and its creditors other than the holders of Senior
Indebtedness on the one hand, and SCI Finance, on the other, be deemed to be a
payment by SCI on account of Senior Indebtedness, and not on account of SCI's
guarantee obligations under the Loan Agreement and the Loans.

Covenants

SCI will covenant that SCI will not declare or pay any dividend on, and SCI will
not, and will not permit any of its majority-owned subsidiaries to, redeem,
purchase, acquire or make a liquidation payment with respect to, any of SCI's
capital stock (other than the redemption by the Company of Series C Junior
Participating Preferred Stock Purchase Rights in accordance with the Rights
Agreement relating thereto and any reacquisition by the Company of any of its
stock issued in any acquisition as a result of a purchase price adjustment or
settlement of breach of warranties in connection with such acquisition), or make
any guarantee payments with respect to the foregoing (other than payments under
the Guarantee), if at such time (i) there shall have occurred any event that
constitutes an Event of Default under the Loan Agreement, (ii) SCI shall be in
default with respect to its payment or other obligations under the Guarantee or
SCI or the Manager shall be in default under its obligations under the Liability
Assumption Agreement or (iii) there shall exist any nonpayment of interest under
the Loans, including during any valid extension of the interest payment periods.
SCI will also covenant (i) to maintain direct 100% ownership of the LLC Common
Shares and any other interests of SCI Finance other than the LLC Preferred
Shares, (ii) to cause more than 20% of the total value (initially measured by
shareholders' equity determined in accordance with generally accepted accounting
principles) of SCI Finance and, subject to the preferential rights of the
holders of LLC Preferred Shares as to dividends and liquidation distributions,
more than 20% of all interests in the capital, income, gain, loss, deduction and
credit of SCI Finance to be represented by LLC Common Shares, (iii) not to
dissolve, wind-up or liquidate SCI Finance voluntarily, (iv) to remain the
Manager of SCI Finance and to timely perform all of its duties as Manager
(including the duty to declare and pay dividends on the LLC Preferred Shares as
described in "-- Dividends") and (v) to use its reasonable efforts to cause SCI
Finance to remain a limited liability company under the laws

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of the State of Texas (provided however that SCI Finance may reorganize under
the laws of another jurisdiction provided that SCI Finance has received a legal
opinion from nationally recognized legal counsel that such reorganization will
not have an adverse effect, including, without limitation, an adverse tax
effect, on the holders of the LLC Preferred Securities) and use reasonable
efforts to cause SCI Finance to continue to be treated as a partnership for
United States Federal income tax purposes. In addition, SCI has agreed to
maintain and reserve sufficient authorized but unissued Common Stock sufficient
to satisfy all conversion rights under the LLC Preferred Securities and to have
available for issuance such other property as may be subject to delivery
pursuant to such conversion rights.

SCI Finance may not waive compliance or waive any default in compliance by SCI
Limited of any covenant or other term in the Loan Agreement or by SCI of its
guarantee of the Loans without the approval of the same percentage of the
holders of LLC Preferred Securities, obtained in the same manner, as would be
required for an amendment of the Loan Agreement to the same effect.

Events of Default

If one or more of the following events (each an "Event of Default") shall occur
and be continuing:

(a) default in the payment of any interest on the Loans when due for 10 Business
Days; provided, however, that a valid extension of the interest payment period
by SCI Limited shall not constitute a default in the payment of interest for
this purpose (see "-- Description of the Loans-- Interest"); or

(b) default in the payment of principal of or premium of any, on the Loans when
due; or

(d) the dissolution, winding-up or liquidation of SCI Finance; or

(e) the bankruptcy, insolvency or liquidation of SCI or SCI Limited; or

(f) breach by SCI Limited or SCI of any of its covenants under the Loan
Agreement continued for 30 days after notice to SCI Limited and SCI from the
holders of not less than 25 percent in liquidation preference of the LLC
Preferred Securities then outstanding;

then, SCI Finance will have the right to declare the principal of and the
interest on the Loans (including any interest subject to an extension election)
and all other amounts payable under the Loan Agreement to be forthwith due and
payable and to enforce its other rights as a creditor with respect to the Loans.
Under the terms of the LLC Preferred Securities, the holders of outstanding LLC
Preferred Securities will have the rights referred to under "-- Description of
the LLC Preferred Securities -- Voting Rights," including the right to appoint a
trustee, which trustee will be authorized to exercise SCI Finance's right to
accelerate the principal amount of the Loans and to enforce SCI Finance's other
creditor rights under the Loans and the Loan Agreement, and SCI Limited and SCI
agree to cooperate with such trustee.

Miscellaneous

SCI Limited will have the right at all times to assign any of its rights or
obligations under the Loan Agreement to a direct or indirect wholly-owned
subsidiary of SCI; provided, however, that, in the event of any such assignment,
SCI Limited will remain jointly and severally liable for all such obligations;
and provided further, that SCI Limited shall receive an opinion of legal counsel
that the effect of any such assignment does not cause SCI Finance to be
considered an "investment company" under the Investment Company Act of 1940, as
amended. SCI Finance may not assign any of its rights under the Loan Agreement
without the prior written consent of SCI Limited and SCI. Subject to the
foregoing, the Loan Agreement will be binding upon and inure to the benefit of
SCI Limited, SCI and SCI Finance and their respective successors and assigns.
The Loan Agreement provides that it may not otherwise be assigned by SCI
Limited, SCI Finance or SCI.

The Loan Agreement will provide that neither SCI Limited nor SCI may permit
another entity to merge with or into SCI Limited or SCI, as the case may be,
unless (i) at such time no Event of Default has occurred and is continuing, or
would occur as a result of such merger, and (ii) either (a) SCI Limited or SCI,
as the case may

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be, is the survivor of such merger or (b) the survivor is a corporation
organized under the laws of the United States or any state thereof and expressly
assumes all of the obligations of SCI Limited or SCI, as the case may be, under
the Loan Agreement and the Loans and SCI Limited receives an opinion of counsel
from nationally recognized legal counsel that the merger will not result in the
recognition of taxable gain or loss by the holders of the LLC Preferred
Securities.

The Loan Agreement will be governed by and construed in accordance with the laws
of the State of New York.

The Loan Agreement may be amended by mutual consent of the parties in the manner
the parties shall agree; provided, however, that, so long as any of the LLC
Preferred Securities remain outstanding, no such amendment shall be made that
adversely affects the holders of LLC Preferred Securities, no termination of the
Loan Agreement shall occur, and no Event of Default or compliance with any
covenant under the Loan Agreement may be waived by SCI Finance, without the
prior consent of the holders of 66 2/3% in liquidation preference of the
outstanding LLC Preferred Securities, in writing or at a duly constituted
meeting of such holders.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
REGARDING THE LLC PREFERRED SECURITIES

GENERAL

In the opinion of Miller & Chevalier, Chartered, special tax counsel to SCI and
SCI Finance, the following discussion accurately describes, subject to the
qualifications stated herein, the material federal income tax considerations
relevant to the purchase, ownership and disposition of the LLC Preferred
Securities. This discussion, which may be modified or supplemented in a
Prospectus Supplement, is a summary that does not purport to deal with all
aspects of federal income taxation that may be relevant to holders of the LLC
Preferred Securities, nor to certain types of holders subject to special
treatment under the federal income tax laws (for example, banks, life insurance
companies, dealers, tax-exempt organizations, persons whose functional currency
is not the U.S. dollar, or foreign persons and foreign entities). Unless
otherwise stated, this discussion is directed at initial purchasers who acquire
the LLC Preferred Securities at original issue and hold the LLC Preferred
Securities as capital assets.

This discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations, judicial decisions and Internal Revenue Service
("IRS") rulings and notices currently in effect, all of which are subject to
change, which change may possibly be applied in a retroactive manner that could
adversely affect a holder of the LLC Preferred Securities. While the discussion
is based on the opinion of Miller & Chevalier, Chartered, an opinion of counsel
is not binding on the IRS or the courts. Neither SCI nor SCI Finance has sought,
or intends to seek, a ruling from the IRS that the positions stated in the
discussion will be accepted by the IRS. Moreover, there are no cases or rulings
on similar transactions, and there can be no assurance that the IRS will agree
with the conclusions expressed below.

PROSPECTIVE PURCHASERS OF LLC PREFERRED SECURITIES ARE ADVISED TO CONSULT THEIR
OWN TAX ADVISORS AS TO THE FEDERAL INCOME, ESTATE AND GIFT TAX CONSEQUENCES OF
PURCHASING, HOLDING AND DISPOSING OF LLC PREFERRED SECURITIES, AS WELL AS THE
TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, FOREIGN COUNTRY OR OTHER
JURISDICTION.

TAX CLASSIFICATION

While the following matters are not free from doubt, Miller & Chevalier,
Chartered is of the opinion that (i) SCI Finance will be classified as a
partnership for federal income tax purposes and not as an association (or as a
publicly traded partnership) taxable as a corporation, and (ii) the Loans will
be classified as indebtedness for such purposes. This advice is based upon the
terms of the Loans, the LLC Articles, the LLC Regulations and

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related documents and transactions as described in this Prospectus (and assumes
ongoing compliance with such documents).

Prospective investors and their advisors should be aware, however, that the
proper characterization of the arrangement involving SCI Finance, the Loans and
the LLC Preferred Securities is not entirely clear, and the IRS has recently
announced that it will scrutinize and may challenge transactions with some
features that are similar to this arrangement. If, contrary to the opinion of
tax counsel, the IRS successfully argued that SCI Finance should be taxable as a
corporation, SCI Finance would be subject to federal income tax at corporate
rates and distributions to holders of LLC Preferred Securities likely would be
taxable as dividend income. Similarly, if, contrary to the opinion of tax
counsel, the IRS successfully asserted that the Loans were properly classified
as stock or other equity, then payments on the Loans would not be deductible by
SCI Limited as interest, but instead likely would be treated as distributions to
holders taxable as dividends.

Prospective investors should also be aware that the IRS recently issued a
proposed Treasury regulation under which the IRS can disregard or recast the
form of a partnership transaction if the partnership is formed or availed of in
connection with a transaction (or series of related transactions) "with a
principal purpose of substantially reducing the present value of the partners'
aggregate federal tax liability" in a manner inconsistent with the intent of the
partnership provisions of the Code. The regulation is proposed to be effective
for all transactions occurring on or after May 12, 1994. In the view of Miller &
Chevalier, Chartered, SCI Finance should not be considered to be formed or
availed of with the purpose proscribed by the proposed regulation because the
transactions involving SCI Finance are not of the type intended to fall within
the scope of the proposed regulation. There can be no assurance, however, that
the IRS will agree with this view. It also is impossible to predict what changes
might be made in the proposed regulation before it is adopted in final form.
Unless otherwise noted, the remainder of this summary assumes, in accordance
with the opinion of Miller & Chevalier, Chartered, that SCI Finance is properly
classified as a partnership and the Loans are properly classified as
indebtedness for federal income tax purposes.

INCOME FROM LLC PREFERRED SECURITIES

As partners in a partnership, each holder of LLC Preferred Securities will be
required to include in gross income its distributive share of the net income of
SCI Finance, which net income generally will be equal to the amount of interest
received or accrued on the Loans. See "Original Issue Discount" below. Any
amount so included in a holder's gross income will increase its tax basis in the
LLC Preferred Securities, and the amount of distributions of cash or other
property by SCI Finance to the holder will reduce such holder's tax basis in the
LLC Preferred Securities. No portion of the amounts received on the LLC
Preferred Securities will be eligible for the dividends received deduction.

SCI Finance does not presently intend to make an election under Section 754 of
the Code. As a result, a subsequent purchaser of LLC Preferred Securities will
not be permitted to adjust the tax basis in its allocable share of SCI Finance's
assets so as to reflect any difference between its purchase price for the LLC
Preferred Securities and the underlying tax basis of SCI Finance in its assets.
As a result, a holder of LLC Preferred Securities may be required to report a
larger or smaller amount of income from holding LLC Preferred Securities than
would otherwise be appropriate based upon the holder's purchase price for the
LLC Preferred Securities.

ORIGINAL ISSUE DISCOUNT

Under the terms of the Loans, SCI Limited will have the right to extend interest
payments under the Loans for up to 60 monthly interest payment periods. If the
payment period is extended, SCI Finance will continue to accrue income, equal to
the amount of the interest payment due at the end of the extended payment
period, over the length of the extended payment period. As a result, holders of
record during an extended interest payment period will include interest in gross
income in advance of the receipt of cash, and any such holders who dispose of
LLC Preferred Securities prior to the record date for the payment of dividends
following such extended interest payment period will include such holder's
allocable share of such interest in gross income but will not receive any cash
from SCI Finance related thereto. The tax basis of an LLC Preferred Security
will be increased by the

46
<PAGE> 48

amount of any interest that is included in income without a receipt of cash and
will be decreased when and if such cash is subsequently received from SCI
Finance.

A holder should not be required to allocate a portion of the amount paid for an
LLC Preferred Security to any right to convert such LLC Preferred Security into
SCI Common Stock and, therefore, should not be required to include any amount in
income by reason of original issue discount on the LLC Preferred Security. The
IRS might take a contrary view, however, and require holders to allocate a
portion of the price paid for a convertible LLC Preferred Security to the right
to convert into SCI Common Stock. If the IRS were successful in requiring such
an allocation, a holder could be required to include an incremental amount of
original issue discount (in addition to stated interest) in income over the life
of such LLC Preferred Security. SCI intends to take the position that no
allocation that would result in additional original issue discount (in excess of
stated interest) is required.

USE OF CONVENTION

SCI Finance may adopt a convention for allocating all of the net income accrued
by SCI Finance in any calendar month, such as by allocating the net income to
the holders of record of the LLC Preferred Securities and the Common Shares on
the dividend record date. It is unclear whether this convention will be
respected for federal income tax purposes. If it is not respected, the
distributive share of SCI Finance's net income allocable to LLC Preferred
Securities in respect of a month in which such shares are sold may be allocated
between the seller and the purchaser on some other basis. Any amount so
allocated to the holder of record of the LLC Preferred Securities, whether as
seller or purchaser, would be includible in the holder's income and would
increase the holder's basis in the LLC Preferred Securities.

DISPOSITION OF LLC PREFERRED SECURITIES

Gain or loss will be recognized on a sale of LLC Preferred Securities, including
a complete redemption for cash, equal to the difference between the amount
realized and the holder's tax basis for the LLC Preferred Securities sold. Gain
or loss on the sale or exchange of LLC Preferred Securities held for more than
one year generally will be taxable as long-term capital gain or loss. The
adjusted tax basis of the LLC Preferred Securities sold by a holder will equal
the amount paid by such holder for the LLC Preferred Securities, plus the share
of partnership income allocated to such holder and reduced by any cash or other
property distributed to such holder by SCI Finance. A holder acquiring LLC
Preferred Securities at different prices may be required to maintain a single
aggregate adjusted tax basis in such LLC Preferred Securities, and, upon sale or
other disposition of some of the LLC Preferred Securities, allocate a pro rata
portion of such aggregate tax basis to the LLC Preferred Securities sold (rather
than maintaining a separate tax basis in each LLC Preferred Security for
purposes of computing gain or loss on a sale of that LLC Preferred Security).

If a holder of LLC Preferred Securities is required to recognize an aggregate
amount of income over the life of the LLC Preferred Securities that exceeds the
aggregate cash distributions with respect thereto, such excess generally will
result in a capital loss upon the retirement of the LLC Preferred Securities.

To the extent SCI Limited is required to pay a prepayment premium to SCI Finance
in connection with a prepayment of the Loans, SCI Finance will pay a
corresponding redemption premium to holders of LLC Preferred Securities whose
LLC Preferred Securities are redeemed. SCI Finance will recognize capital gain
on a prepayment of the Loans to the extent of the prepayment premium. SCI
Finance's gain will be allocated to the holders whose LLC Preferred Securities
are subsequently redeemed by SCI Finance, and the allocated gain should increase
such holders' adjusted tax basis in these LLC Preferred Securities. A holder who
has a basis increase due to such allocation will not have additional taxable
gain attributable to the redemption premium upon SCI Finance's subsequent
redemption of the holder's LLC Preferred Securities.

CONVERSION OF LLC PREFERRED SECURITIES

A holder who converts convertible LLC Preferred Securities into SCI Common Stock
will recognize gain or loss in an amount equal to the difference between the tax
basis of the LLC Preferred Securities and the fair market value of the SCI
Common Stock received plus the amount of cash received in lieu of fractional
shares. Such gain

47
<PAGE> 49

or loss will be long-term capital gain or loss if the LLC Preferred Securities
have been held for more than one year. The holder's tax basis in the SCI Common
Stock received in the conversion will equal its fair market value.

ADJUSTMENT OF CONVERSION PRICE

Treasury regulations under Section 305 of the Code would treat holders of LLC
Preferred Securities as having received a constructive distribution from SCI in
the event the conversion ratio of convertible LLC Preferred Securities were
adjusted if (i) as a result, the proportionate interest of the holders of such
LLC Preferred Securities in the assets or earnings and profits of SCI were
increased and (ii) the adjustment was not made pursuant to a bona fide,
reasonable antidilution formula. An adjustment in the conversion ratio would not
be considered made pursuant to such a formula if the adjustment was made to
compensate for certain taxable distributions with respect to the stock into
which such LLC Preferred Securities are convertible. Thus, under certain
circumstances, a reduction in the conversion price for the LLC Preferred
Securities is likely to be taxable to the holders thereof as dividend to the
extent of the earnings and profits of SCI.

INFORMATION RETURNS AND AUDIT PROCEDURES

The Manager will furnish each holder with a Schedule K-1 each year setting forth
such holder's allocable share of income for the prior calendar year. The Manager
is required, under the LLC Regulations, to furnish such Schedule K-1 as soon as
practicable following the end of the taxable year, but in any event prior to
March 31st of each succeeding year (assuming, as anticipated, that SCI Finance's
taxable year is a calendar year).

Any person who holds LLC Preferred Securities as nominee for another person is
required to furnish to SCI Finance (a) the name, address and taxpayer
identification number of the beneficial owner and the nominee; (b) information
as to whether the beneficial owner is (i) a person that is not a United States
person, (ii) a foreign government, an international organization or any
wholly-owned agency or instrumentality of either of the foregoing or (iii) a
tax-exempt entity; (c) the amount and description of LLC Preferred Securities
held, acquired or transferred for the beneficial owner; and (d) certain
information including the dates of acquisitions and transfers, means of such
acquisitions and transfers, and acquisition costs for purchases, as well as the
amount of net proceeds from sales. Brokers and financial institutions are
required to furnish additional information, including whether they are United
States persons and certain information on LLC Preferred Securities they acquire,
hold or transfer for their own accounts. A penalty of $50 per failure (up to a
maximum of $100,000 per calendar year) is imposed by the Code for failure to
report such information to SCI Finance. The nominee is required to supply the
beneficial owners of the LLC Preferred Securities with the information furnished
to SCI Finance.

SCI, as the tax matters partner, will be responsible for representing the
holders in any dispute with the IRS. The Code provides for administrative
examination of a partnership as if the partnership were a separate and distinct
taxpayer. Generally, the statute of limitations for partnership items does not
expire before three years from the later of the filing or the last date for
filing of the partnership information return. Any adverse determination
following an audit of the return of SCI Finance by the appropriate taxing
authorities could result in an adjustment of the tax returns of the holders,
and, under certain circumstances, a holder may be precluded from separately
litigating a proposed adjustment to the items of the partnership. An adjustment
could also result in an audit of a holder's tax return and adjustments of items
not related to the income and losses of SCI Finance.

BACKUP WITHHOLDING AND INFORMATION REPORTING

In general, information reporting requirements will apply to payments to
noncorporate U.S. holders from the sale of LLC Preferred Securities within the
United States, and "backup withholding" at a rate of 31% will apply to such
payments if the United States holder fails to provide an accurate taxpayer
identification number.

Payments of the proceeds from the sale by a United States Alien Holder (as
defined below) of LLC Preferred Securities made to or through a foreign office
of a broker will not be subject to information reporting or backup withholding,
except that, if the broker is a United States person, a controlled foreign
corporation for United States tax purposes, or a foreign person 50% or more of
whose gross income is effectively connected with a United States trade or
business for a specified three-year period, information reporting may apply to
such payments.

48
<PAGE> 50

Payments of the proceeds from the sale of LLC Preferred Securities to or through
the United States office of a broker is subject to information reporting and
backup withholding unless the holder or beneficial owner certifies as to its
non-United States status or otherwise establishes an exemption for information
reporting and backup withholding.

UNITED STATES ALIEN HOLDERS

For purposes of this discussion, a "United States Alien Holder" is any holder
who or which is (i) a nonresident alien individual or (ii) a foreign
corporation, foreign partnership, foreign estate or foreign trust, in any such
case not subject to United States federal income tax on a net income basis in
respect of an LLC Preferred Security.

Under present United States federal income tax law:

(i) payments with respect to interest from SCI Limited made to SCI Finance or
any of its paying agents to any holder of an LLC Preferred Security who or which
is a United States Alien Holder will not be subject to United States federal
withholding tax; provided that (a) the beneficial owner of the LLC Preferred
Security does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of SCI Limited entitled to vote,
(b) the beneficial owner of the LLC Preferred Security is not a controlled
foreign corporation that is related to SCI Limited through stock ownership, and
(c) either (A) the beneficial owner of the LLC Preferred Security certifies to
SCI Finance or its agent, under penalties of perjury, that it is not a United
States Holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the LLC Preferred Security certifies to SCI Finance or
its agent under penalties of perjury that such statement has been received from
the beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof; and

(ii) a United States Alien Holder of an LLC Preferred Security will not be
subject to United States withholding tax on any gain realized on the sale or
exchange of a LLC Preferred Security.

PLAN OF DISTRIBUTION

The Company and/or SCI Finance may sell Securities to or through underwriters,
and also may sell Securities directly to other purchasers or through agents. The
distribution of the Securities may be effected from time to time in one or more
transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.

In connection with the sale of Securities, underwriters may receive compensation
from the Company and/or SCI Finance or from purchasers of Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and/or SCI Finance and any profit on the
resale of Securities by them may be deemed to be underwriting discounts and
commissions, under the Act. Any such underwriter or agent will be identified,
and any such compensation received from the Company and/or SCI Finance will be
described, in the Prospectus Supplement.

Under agreements which may be entered into by the Company and/or SCI Finance,
underwriters and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company and/or SCI Finance against certain
liabilities, including liabilities under the Act.

If so indicated in the Prospectus Supplement, the Company and/or SCI Finance
will authorize underwriters or other persons acting as the Company's and/or SCI
Finance's agents to solicit offers by certain institutions to purchase
Securities from the Company and/or SCI Finance pursuant to contracts providing
for payments and delivery on a future date. Institutions with which such
contracts may be made include commercial and savings banks, insurance companies,
pension funds, investment companies, educational and charitable institutions and

49
<PAGE> 51

others, but in all cases such institutions must be approved by the Company
and/or SCI Finance. The obligations of any purchaser under any such contract
will be subject to the condition that the purchase of the offered Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such other
agents will not have any responsibility in respect of the validity or
performance of such contracts.

LEGAL MATTERS

The validity of the Securities (other than the Common Stock, the Preferred Stock
and the LLC Preferred Securities) offered hereby will be passed upon for the
Company by Wachtell, Lipton, Rosen & Katz, New York, New York, special counsel
for the Company. The validity of the Common Stock and the Preferred Stock and of
the LLC Preferred Securities offered hereby will be passed upon for the Company
and SCI Finance, respectively, by Fulbright & Jaworski L.L.P., Houston, Texas,
special Texas counsel for the Company. Certain tax matters with respect to the
LLC Preferred Securities will be passed upon for the Company and SCI Finance by
Miller & Chevalier, Chartered, Washington, D.C., special tax counsel for the
Company. Certain legal matters in connection with the Securities will be passed
upon for any underwriters by Cahill Gordon & Reindel (a partnership including a
professional corporation), New York, New York.

EXPERTS

The consolidated financial statements of Service Corporation International at
December 31, 1993, and for the year then ended appearing in Service Corporation
International's Annual Report (Form 10-K) for the year ended December 31, 1993,
have been audited by Coopers & Lybrand L.L.P., independent auditors, and at
December 31, 1992, and for each of the two years in the period ended December
31, 1992, by Ernst & Young LLP, independent auditors, as set forth in their
respective reports thereon incorporated herein by reference in reliance upon
such reports given upon the authority of such firms as experts in accounting and
auditing.

50
<PAGE> 52

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Set forth below is an estimate (except for the SEC registration fee) of the fees
and expenses payable by the Company in connection with the distribution of the
Securities:

<TABLE>
<S> <C>
SEC registration fee............................................ $344,828
Printing costs.................................................. 300,000
Legal fees and expenses......................................... *
Accounting fees and expenses.................................... 55,000
Blue Sky fees and expenses...................................... 20,000
Trustee fees and expenses....................................... 8,600
Paying and Conversion Agent fee................................. 9,000
Rating agency fee............................................... 200,000
Miscellaneous................................................... *
--------
Total................................................. $ *
========
</TABLE>

- ---------------

* To be supplied by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company

The Company is a Texas corporation.

Article 2.02-1 of the Texas Business Corporation Act (the "Act") provides that
any director or officer of a Texas corporation may be indemnified against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by him in connection with or in defending any action, suit or
proceeding in which he is or is threatened to be made a named defendant by
reason of his position as director or officer, provided that he conducted
himself in good faith and reasonably believed that, in the case of conduct in
his official capacity as director or officer, such conduct was in the
corporation's best interests, or, in all other cases, that such conduct was not
opposed to the corporation's best interests. In the case of any criminal
proceeding, a director or officer may be indemnified only if he had no
reasonable cause to believe his conduct was unlawful. If a director or officer
is wholly successful, on the merits or otherwise, in connection with such a
proceeding, such indemnification is mandatory.

Under the Company's Restated Articles of Incorporation, as amended (the
"Articles"), no director of the registrant will be liable to the registrant or
any of its shareholders for monetary damages for an act or omission in the
director's capacity as a director, except for liability (i) for any breach of
the director's duty of loyalty to the registrant or its shareholders, (ii) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for any transaction for which the director
received an improper benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office, (iv) for acts or omissions for
which the liability of a director is expressly provided by statute, or (v) for
acts related to an unlawful stock repurchase or dividend payment. The Articles
further provide that, if the statutes of Texas are amended to further limit the
liability of a director, then the liability of the Company's directors will be
limited to the fullest extent permitted by any such provision.

The Company's By-laws provide for indemnification of officers and directors of
the registrant and persons serving at the request of the registrant in such
capacities for other business organizations against certain losses, costs,
liabilities and expenses incurred by reason of their positions with the
registrant or such other business organizations. The Company also has policies
insuring its officers and directors against certain liabilities for actions
taken in such capacities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act").

II-1
<PAGE> 53

SCI Finance

SCI Finance is a Texas limited liability company. The Texas Limited Liability
Company Act provides that a Texas limited liability company shall have power to
indemnify managers, officers, employees, agents and others to the same extent a
corporation may indemnify directors, employees, agents and others under the
Texas Business Corporation Act. See Item 15 above, "The Company". Regulation 25
of SCI Finance's Regulations authorizes SCI Finance to indemnify any officer,
director, employee or other agent of the Manager, in such agent's capacity as
such, to the fullest extent permitted by law; provided that no amendment to or
repeal of the Regulations shall adversely affect any right existing at the time
of the amendment of or repeal of the Regulations. Regulation 25 also permits SCI
Finance to purchase and maintain insurance on behalf of the Manager and certain
other person, whether or not it would have the power under Regulation 25 to
indemnify such persons against the related expense, liability or loss.

Additionally, Article Nine of the LLC Articles eliminates, to the extent
permitted by law, in certain circumstances the monetary liability of any
officer, director, employee or other agent of any manager of SCI Finance (each,
an "Agent") for an act or omission in such Agent's capacity as an Agent. This
provision does not eliminate or limit the liability of any such Agent to the
extent such Agent is found liable for (i) a breach of such Agent's duty of
loyalty to SCI Finance or its members; (ii) an act or omission not in good faith
that constitutes a breach of duty of such Agent to SCI Finance or an act or
omission that involves intentional misconduct or a knowing violation of the law;
(iii) a transaction from which such Agent received an improper benefit, whether
or not the benefit resulted from an action taken within the scope of such
Agent's office; or (iv) an act or omission for which the liability of any such
Agent is expressly provided for by statute. Any repeal or amendment of Article
Nine by the members of SCI Finance is prospective only and will not adversely
affect any limitations on the liability of any Agent existing at the time of
such repeal or amendment.

Reference is made to the Forms of Underwriting Agreements, filed as Exhibits
1.1, 1.2 and 1.3 hereto, which contain provisions for indemnification of each of
the registrants, their directors, officers and any controlling persons, by the
Underwriters against certain liabilities for information furnished by the
Underwriters.

For a statement of the registrants' undertakings with respect to indemnification
of directors and officers, see Item 17 below.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
*1.1 -- Form of Underwriting Agreement between SCI and the Underwriter(s)
with respect to Equity Securities.
*1.2 -- Form of Underwriting Agreement between SCI and the Underwriter(s)
with respect to Debt Securities.
*1.3 -- Form of Underwriting Agreement among SCI Finance, SCI and the
Underwriter(s) with respect to LLC Preferred Securities.
3.1 -- Restated Articles of Incorporation, as amended. (Incorporated by
reference to Exhibit 3.1 to Registration Statement No. 2-50721 on
Form S-1).
3.2 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit (4)(i)1 to Form 10-Q for the
fiscal quarter ended July 31, 1982).
3.3 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 3.1 to Form 10-Q for the fiscal
quarter ended July 31, 1983).
3.4 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 4.7 to Registration Statement
No. 33-8727 on Form S-3).
</TABLE>

II-2
<PAGE> 54

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------- ------------------------------------------------------------------------
<S> <C>
3.5 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 4.1 to Amendment No. 3 to
Registration Statement No. 33-16678 on Form S-4).
3.6 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 3.8 to Registration Statement
No. 33-47097 on Form S-4).
3.7 -- Bylaws, as amended. (Incorporated by reference to Exhibit 3.7 to Form
10-K for the fiscal year ended December 31, 1991).
*3.8 -- SCI Finance Articles of Organization.
*3.9 -- SCI Finance Regulations.
*3.10 -- Form of Amendment to the Regulations of SCI Finance.
4.1 -- Senior Indenture, dated as of February 1, 1993, between SCI and the
Bank of New York, as Trustee. (Incorporated by reference to Exhibit
4.1 to Form 8-K dated January 26, 1993).
*4.2 -- Senior Subordinated Indenture, dated as of , 1994, between
SCI and Texas Commerce Bank National Association, as Trustee.
4.3 -- Subordinated Indenture, dated as of September 1, 1991, between SCI
and Texas Commerce National Bank Association, as Trustee.
(Incorporated by reference to Exhibit 4.1 to Form 8-K dated October
23, 1991).
*4.4 -- Form of Common Stock Warrant Agreement (including Form of Warrant).
*4.5 -- Forms of Additional Documents establishing the LLC Preferred
Securities.
*(a) -- Form of SCI Payment, Guarantee and Conversion Agreement.
*(b) -- Form of Loan Agreement.
*(c) -- Form of Liability Assumption Agreement.
4.6 -- Rights Agreement dated as of July 18, 1988 between the Company and
Texas Commerce Bank National Association. (Incorporated by reference
to Exhibit 1 to Form 8-K dated July 18, 1988).
4.7 -- Amendment, dated as of May 10, 1990, to the Rights Agreement, dated
as of July 18, 1988, between the Company and Texas Commerce Bank
National Association. (Incorporated by reference to Exhibit 1 to Form
8-K dated May 10, 1990).
4.8 -- Agreement Appointing a Successor Rights Agent under Rights Agreement,
dated as of June 1, 1990, by the Company and Ameritrust Company
National Association. (Incorporated by reference to Exhibit 4.1 to
Form 10-Q for the fiscal quarter ended June 30, 1990).
*4.9 -- Undertaking to furnish instruments relating to long-term debt.
**5.1 -- Opinion of Wachtell, Lipton, Rosen & Katz regarding the Securities
(other than the Common Stock, the Preferred Stock and LLC Preferred
Securities).
**5.2 -- Opinion of Fulbright & Jaworski L.L.P. regarding the Common Stock,
the Preferred Stock and LLC Preferred Securities.
**8 -- Opinion of special tax counsel regarding certain tax matters.
</TABLE>

II-3
<PAGE> 55

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------- ------------------------------------------------------------------------
<S> <C>
12.1 -- Ratio of Earnings to Fixed Charges. (Incorporated by reference to
Exhibit 12.1 to Form 10-K for the fiscal year ended December 31,
1993, as amended, and Exhibit 12.1 to Form 10-Q for the fiscal
quarter ended June 30, 1994, as amended).
*12.2 -- Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividend Requirements.
**23.1 -- Consent of Wachtell, Lipton, Rosen & Katz (included in their opinion
filed as Exhibit 5.1).
**23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in their opinion
filed as Exhibit 5.2).
**23.3 -- Consent of special tax counsel (included in their opinion filed as
Exhibit 8).
*23.4 -- Consent of Independent Accountants (Coopers & Lybrand L.L.P.).
*23.5 -- Consent of Independent Accountants (Ernst & Young LLP).
*24 -- Powers of Attorney.
*25.1 -- Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1
with respect to the Senior Debt Securities to be issued pursuant to
the Senior Debt Indenture, dated as of February 1, 1993, between SCI
and The Bank of New York, as Trustee.
*25.2 -- Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1
with respect to the Debt Securities to be issued pursuant to the
Senior Subordinated Debt Indenture, dated as of ,
1994, between SCI and Texas Commerce Bank National Association, as
Trustee.
*25.3 -- Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1
with respect to the Subordinated Debt Securities to be issued
pursuant to the Subordinated Debt Indenture, dated as of September
1991, between SCI and Texas Commerce Bank National Association, as
Trustee.
</TABLE>

- ---------------
* Included herewith.
** To be filed by amendment.

(b) FINANCIAL STATEMENT SCHEDULES.

Financial statement schedules for the three years ended December 31, 1993.

<TABLE>
<CAPTION>
SCHEDULE
- --------
<S> <C>
II Amounts Receivable From Related Parties and Underwriters, Promoters, and
Employees Other than Related Parties
V Property and Equipment
VI Accumulated Depreciation and Amortization of Property and Equipment
VIII Valuation and Qualifying Accounts
IX Short-Term Borrowings
</TABLE>

The Information required by Schedules II, V, VI, VIII and IX for the three years
ended December 31, 1993 is incorporated herein by reference to the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission for
the fiscal year ended December 31, 1993, as amended.

II-4
<PAGE> 56

ITEM 17. UNDERTAKINGS.

(a) The Undersigned hereby undertake:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.

(b) The undersigned hereby undertake that, for purposes of determining any
liability under the Securities Act of 1933, each filing of SCI's annual report
pursuant to Section 13(a) or 15(d) or the Securities Exchange Act of 1934 (and,
where applicable, each filing of any employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
undersigned pursuant to the foregoing provisions, or otherwise, the undersigned
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the undersigned of expenses incurred
or paid by a director, officer or controlling person of the undersigned in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the undersigned will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

(d) The undersigned hereby undertake to provide to the underwriters at the
closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

II-5
<PAGE> 57

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SERVICE CORPORATION
INTERNATIONAL CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THIS 18TH DAY OF
OCTOBER, 1994.

SERVICE CORPORATION INTERNATIONAL

By: /s/ JAMES M. SHELGER
James M. Shelger
Senior Vice President, General
Counsel and Secretary

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
* Chairman of the Board and October 18, 1994
R. L. Waltrip Chief Executive Officer
* Executive Vice President October 18, 1994
Samuel W. Rizzo and Chief Financial
Officer/Treasurer
(Principal Financial
Officer) and Director
* Managing Director -- Financial October 18, 1994
Wesley T. McRae Reporting (Principal
Accounting Officer)
* Director October 18, 1994
Anthony L. Coelho
* Director October 18, 1994
Douglas M. Conway
* Director October 18, 1994
Jack Finkelstein
* Director October 18, 1994
A. J. Foyt, Jr.
* Director October 18, 1994
James J. Gavin, Jr.
* Director October 18, 1994
James H. Greer
* Director October 18, 1994
L. William Heiligbrodt
</TABLE>

II-6
<PAGE> 58

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director October 18, 1994
B. D. Hunter

* Director October 18, 1994
John W. Mecom, Jr.

* Director October 18, 1994
Clifton H. Morris, Jr.

* Director October 18, 1994
E. H. Thornton, Jr.

* Director October 18, 1994
W. Blair Waltrip

* Director October 18, 1994
Edward E. Williams

*By: /s/ JAMES M. SHELGER
James M. Shelger
Attorney-in-Fact
</TABLE>

II-7
<PAGE> 59

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SCI FINANCE LLC
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THIS 18TH DAY OF OCTOBER,
1994.

SCI FINANCE LLC

By: Service Corporation International, as
Manager

By: /s/ JAMES M. SHELGER
Name: James M. Shelger
Title: Senior Vice President, General Counsel
and Secretary

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES WITH THE
MANAGER INDICATED AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ -----------------
<S> <C> <C>
* Chairman of the Board and October 18, 1994
R. L. Waltrip Chief Executive Officer
* Executive Vice President October 18, 1994
Samuel W. Rizzo and Chief Financial
Officer/Treasurer (Principal
Financial Officer) and
Director
* Managing Director -- Financial October 18, 1994
Wesley T. McRae Reporting (Principal
Accounting Officer)
* Director October 18, 1994
Anthony L. Coelho
* Director October 18, 1994
Douglas M. Conway
* Director October 18, 1994
Jack Finkelstein
* Director October 18, 1994
A. J. Foyt, Jr.
* Director October 18, 1994
James J. Gavin, Jr.
* Director October 18, 1994
James H. Greer
* Director October 18, 1994
L. William Heiligbrodt
* Director October 18, 1994
B. D. Hunter
</TABLE>

II-8
<PAGE> 60

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director October 18, 1994
John W. Mecom, Jr.

* Director October 18, 1994
Clifton H. Morris, Jr.

* Director October 18, 1994
E. H. Thornton, Jr.

* Director October 18, 1994
W. Blair Waltrip

* Director October 18, 1994
Edward E. Williams

*By: /s/ JAMES M. SHELGER
James M. Shelger
Attorney-in-Fact
</TABLE>

II-9
<PAGE> 61

REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

------------------------

FORM S-3

REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

------------------------

SERVICE CORPORATION INTERNATIONAL
AND
SCI FINANCE LLC
(EXACT NAME OF EACH REGISTRANT AS SPECIFIED IN ITS CHARTER)

EXHIBITS

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 62

EXHIBIT INDEX

<TABLE>
<CAPTION>
PAGINATION BY
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION SYSTEM
- ---------- ------------------------------------------------------------------------ -------------
<S> <C> <C>
*1.1 -- Form of Underwriting Agreement between SCI and the Underwriter(s) with
respect to Equity Securities.
*1.2 -- Form of Underwriting Agreement between SCI and the Underwriter(s) with
respect to Debt Securities.
*1.3 -- Form of Underwriting Agreement among SCI Finance, SCI and the
Underwriter(s) with respect to LLC Preferred Securities.
3.1 -- Restated Articles of Incorporation, as amended. (Incorporated by
reference to Exhibit 3.1 to Registration Statement No. 2-50721 on Form
S-1).
3.2 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit (4)(i)1 to Form 10-Q for the
fiscal quarter ended July 31, 1982).
3.3 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 3.1 to Form 10-Q for the fiscal
quarter ended July 31, 1983).
3.4 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 4.7 to Registration Statement
No. 33-8727 on Form S-3).
3.5 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 4.1 to Amendment No. 3 to
Registration Statement No. 33-16678 on Form S-4).
3.6 -- Articles of Amendment to Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 3.8 to Registration Statement
No. 33-47097 on Form S-4).
3.7 -- Bylaws, as amended. (Incorporated by reference to Exhibit 3.7 to Form
10-K for the fiscal year ended December 31, 1991).
*3.8 -- SCI Finance Articles of Organization.
*3.9 -- SCI Finance Regulations.
*3.10 -- Form of Amendment to the Regulations of SCI Finance.
4.1 -- Senior Indenture, dated as of February 1, 1993, between SCI and the
Bank of New York, as Trustee. (Incorporated by reference to Exhibit
4.1 to Form 8-K dated January 26, 1993).
*4.2 -- Senior Subordinated Indenture, dated as of , 1994, between
SCI and Texas Commerce Bank National Association, as Trustee.
4.3 -- Subordinated Indenture, dated as of September 1, 1991, between SCI and
Texas Commerce National Bank Association, as Trustee. (Incorporated by
reference to Exhibit 4.1 to Form 8-K dated October 23, 1991).
*4.4 -- Form of Common Stock Warrant Agreement (including Form of Warrant).
</TABLE>
<PAGE> 63

<TABLE>
<CAPTION>
PAGINATION BY
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION SYSTEM
- ---------- ------------------------------------------------------------------------ -------------
<S> <C> <C>
*4.5 -- Forms of Additional Documents establishing the LLC Preferred
Securities.
*(a) -- Form of SCI Payment, Guarantee and Conversion Agreement.
*(b) -- Form of Loan Agreement.
*(c) -- Form of Liability Assumption Agreement.
4.6 -- Rights Agreement dated as of July 18, 1988 between the Company and
Texas Commerce Bank National Association. (Incorporated by reference
to Exhibit 1 to Form 8-K dated July 18, 1988).
4.7 -- Amendment, dated as of May 10, 1990, to the Rights Agreement, dated as
of July 18, 1988, between the Company and Texas Commerce Bank National
Association. (Incorporated by reference to Exhibit 1 to Form 8-K dated
May 10, 1990).
4.8 -- Agreement Appointing a Successor Rights Agent under Rights Agreement,
dated as of June 1, 1990, by the Company and Ameritrust Company
National Association. (Incorporated by reference to Exhibit 4.1 to
Form 10-Q for the fiscal quarter ended June 30, 1990).
*4.9 -- Undertaking to furnish instruments relating to long-term debt.
**5.1 -- Opinion of Wachtell, Lipton, Rosen & Katz regarding the Securities
(other than the Common Stock, the Preferred Stock and LLC Preferred
Securities).
**5.2 -- Opinion of Fulbright & Jaworski L.L.P. regarding the Common Stock, the
Preferred Stock and LLC Preferred Securities.
**8 -- Opinion of special tax counsel regarding certain tax matters.
12.1 -- Ratio of Earnings to Fixed Charges. (Incorporated by reference to
Exhibit 12.1 to Form 10-K for the fiscal year ended December 31, 1993,
as amended, and Exhibit 12.1 to Form 10-Q for the fiscal quarter ended
June 30, 1994, as amended).
*12.2 -- Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividend Requirements.
**23.1 -- Consent of Wachtell, Lipton, Rosen & Katz (included in their opinion
filed as Exhibit 5.1).
**23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in their opinion
filed as Exhibit 5.2).
**23.3 -- Consent of special tax counsel (included in their opinion filed as
Exhibit 8).
*23.4 -- Consent of Independent Accountants (Coopers & Lybrand L.L.P.).
*23.5 -- Consent of Independent Accountants (Ernst & Young LLP).
*24 -- Powers of Attorney.
*25.1 -- Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1
with respect to the Senior Debt Securities to be issued pursuant to
the Senior Debt Indenture, dated as of February 1, 1993, between SCI
and The Bank of New York, as Trustee.
</TABLE>
<PAGE> 64

<TABLE>
<CAPTION>
PAGINATION BY
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION SYSTEM
- ---------- ------------------------------------------------------------------------ -------------
<S> <C> <C>
*25.2 -- Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1
with respect to the Debt Securities to be issued pursuant to the
Senior Subordinated Debt Indenture, dated as of ,
1994, between SCI and Texas Commerce Bank National Association, as
Trustee.
*25.3 -- Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939 of a Corporation Designated to Act as Trustee on Form T-1
with respect to the Subordinated Debt Securities to be issued pursuant
to the Subordinated Debt Indenture, dated as of September 1991,
between SCI and Texas Commerce Bank National Association, as Trustee.
</TABLE>

- ---------------
* Included herewith.
** To be filed by amendment.

<PAGE> 1
EXHIBIT 1.1

UNDERWRITING AGREEMENT

SERVICE CORPORATION INTERNATIONAL

Equity Securities

( ), 199( )

To the Underwriter or
Underwriters named in
the within mentioned
Terms Agreement

Ladies and Gentlemen:

Service Corporation International, a Texas corporation (the
"Company"), may issue and sell from time to time shares of the common stock,
par value $1.00 per share, of the Company (such shares of common stock,
together with the rights (the "Rights") attached thereto to purchase the
Company's Series C Junior Participating Preferred Stock (the "Series C
Preferred Stock") issued pursuant to a Rights Agreement dated as of July 18,
1988 between the Company and Texas Commerce Bank National Association as rights
agent, as amended to date (the "Rights Agreement"), being hereinafter referred
to as the "Common Stock") or shares of the Company's preferred stock, par value
$1.00 per share (the "Preferred Stock" and together with the Common Stock, the
"Equity Securities"). The Equity Securities are registered under the
registration statement referred to in Section 4(i) hereof. The Preferred Stock
may be issued in one or more series, may have varying dividend and liquidation
preferences, voting rights and redemption provisions, and may be convertible,
as described in the resolution or resolutions adopted by the board of directors
of the Company relating to the Offered Securities (the "Resolution"), into
shares of the Common Stock. The basic provisions set forth herein are intended
to be incorporated by reference in a terms agreement of the type referred to
below relating to, among other things, if applicable, the designation and
series of Preferred Stock and the number of shares of Common Stock or Preferred
Stock (the "Underwritten Securities") to be issued and sold by the Company
pursuant thereto and to be purchased, severally, by the underwriter or several
underwriters named therein (the "Underwriters"). The Terms Agreement, which
shall be in the form of Exhibit I hereto (the "Terms Agreement"), relating to
the Underwritten Securities and such additional shares of Equity Securities
that the Underwriters may be granted an option to purchase by the Company to
cover over-allotments in connection with any offering of
<PAGE> 2
-2-

Underwritten Securities (the "Option Securities" and together with the
Underwritten Securities, the "Offered Securities"), together with the
provisions hereof incorporated therein by reference (which provisions shall not
become effective until so incorporated by reference), is herein referred to as
this "Agreement." The Terms Agreement may reflect that a portion of the
Underwritten Securities are to be sold to the several U.S. underwriters named
therein (the "U.S. Underwriters") in connection with the offering and sale of a
portion of the Underwritten Securities in the United States and Canada (the
"U.S. Underwritten Securities") to United States and Canadian persons (as
defined in the instruments governing the coordination of the offering by the
U.S. Underwriters and the International Managers (as defined below) named
therein) and that the balance of the Underwritten Securities (the
"International Underwritten Securities") are to be sold to the several
international managers named therein (the "International Managers") in
connection with the offering and sale of such International Underwritten
Securities outside the United States and Canada to persons other than United
States and Canadian persons. In such event, as used herein, the term
"Underwriters" refers to the U.S. Underwriters and the International Managers,
and the term "Representatives" refers to the U.S. Representatives named therein
of the U.S. Underwriters and the International Representatives named therein of
the International Managers. If the Underwriters consist only of the firm or
firms referred to in the Terms Agreement as the Representative or
Representatives, then the terms "Underwriters" and "Representatives," as used
herein, shall be deemed to refer to such firm or firms.

The obligations of the Underwriters to purchase, and the
Company to sell, the Offered Securities are evidenced by the Terms Agreement
delivered at the time the Company determines to sell the Offered Securities
and, without the execution and delivery of the Terms Agreement, the Company
shall not be obligated to sell, and the Underwriters shall not be obligated to
purchase, any Equity Securities pursuant to this Agreement. The Terms
Agreement specifies the firm or firms which will be Underwriters, the amount of
the Offered Securities to be purchased by each Underwriter, the purchase price
to be paid by the Underwriters for the Offered Securities, the public offering
price, if any, of the Offered Securities and, in the case of Preferred Stock,
any terms of the Offered Securities not otherwise specified in the Resolution
(including, but not limited to, designations, denominations, conversion or
exchange provisions, covenants, dividend rates and payment dates, liquidation
preferences and redemption provisions). The Terms Agreement specifies any
details of the terms of the offering that should be reflected in a
post-effective amendment to
<PAGE> 3
-3-

the applicable Registration Statement or the Prospectus Supplement (each as
hereinafter defined).

The terms which follow, when used in this Agreement, shall
have the meanings indicated. "Registration Statement" shall mean the
registration statement or registration statements relating to the Offered
Securities (and such other securities of the Company as may be included
therein) which shall be the registration statement on Form S-3 filed under the
Securities Act of 1933, as amended (collectively with the rules and regulations
of the Securities and Exchange Commission (the "Commission") thereunder, the
"Securities Act"), referred to in Section 4(i) below, including all documents
incorporated therein by reference and all exhibits thereto, as from time to
time amended or supplemented pursuant to the Securities Act, the Securities
Exchange Act of 1934, as amended (collectively with the rules and regulations
of the Commission thereunder, the "Exchange Act"), or otherwise, including as
supplemented by the Prospectus Supplement, on or prior to the date of execution
and delivery of the Terms Agreement (the "Representation Date") and, in the
event any such amendment or supplement is filed prior to the Closing Date (as
defined in Section 3 hereof), including by the filing of any Prospectus
Supplement or document incorporated by reference, shall also mean such
registration statement as so amended or supplemented. "Prospectus" shall mean
the prospectus (including the related Prospectus Supplement with respect to the
Offered Securities) relating to the Equity Securities (and such other
securities of the Company as may be covered thereby), including all documents
incorporated therein by reference, as from time to time amended or supplemented
pursuant to the Securities Act, the Exchange Act or otherwise; provided,
however, that a Prospectus Supplement shall be deemed to have supplemented the
Prospectus only with respect to the Offered Securities to which it relates.
Any reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the effective date of the Registration Statement,
or the issue date of any preliminary prospectus or the Prospectus, as the case
may be, and on or prior to the completion of the applicable offering and which
is deemed to be incorporated therein by reference.

Company the respective number of Underwritten Securities set forth opposite the
name of such Underwriter on the annex or annexes to Exhibit 1 hereto (or such
number of Underwritten Securities, as the case may be, increased as set forth
in Section 9 hereof, subject to such adjustments to eliminate any fractional
Offered Securities as the Representatives in their sole discretion may make).

If, pursuant to the Terms Agreement, the Company shall have
granted the option to the Underwriters to purchase Option Securities, the
Company agrees to sell to the Underwriters designated in the Terms Agreement to
purchase option Securities (each, an "Option Securities Underwriter" and
collectively, the "Option Securities Underwriters") the Option Securities, and
the Option Securities Underwriters shall have a one-time right to purchase,
severally and not jointly, the Option Securities on the terms set forth in the
Terms Agreement. Option Securities may be purchased as provided below solely
for the purpose of covering over-allotments made in connection with the
offering of the Underwritten Securities. If any Option Securities are to be
purchased, each Option Securities Underwriter agrees, severally and not
jointly, to purchase the number of Option Securities (subject to such
adjustments to eliminate any fractional Offered Securities as the
Representatives designated in the Terms Agreement in their sole discretion may
make) that bears the same proportion to the total number of Option Securities
to be purchased as the number of Underwritten Securities set forth in the annex
or annexes to Exhibit 1 hereto opposite the name of such Option Securities
Underwriter bears to the total number of Underwritten Securities to be
purchased by all Option Securities Underwriters.

The Option Securities Underwriters may exercise the option to
purchase the Option Securities at any time on or before the thirtieth day
following the Representation Date, by written notice from the Representatives
designated in the Terms Agreement to the Company. Such notice shall set forth
the aggregate number of Option Securities as to which the option is being
exercised and the date and time when the Option Securities are to be delivered
and paid for, which may be the same date and time as the Closing Date (as
hereinafter defined) but shall not be earlier than the Closing Date nor later
than the tenth full Business Day (as hereinafter defined) after the date of
such notice (unless such time and date are postponed in accordance with the
provisions of Section 9 hereof). Such notice shall be given at least two
Business Days prior to the date and time of delivery specified therein.

2. Terms of Public Offering. The Company understands
that the Underwriters intend (i) to make a public offering of the
<PAGE> 5
-5-

Offered Securities as soon after the Prospectus Supplement has been filed and
the Terms Agreement has been executed and delivered as in the judgment of the
Representatives is advisable and (ii) initially to offer the Offered Securities
upon the terms set forth in the Prospectus Supplement and the Underwriters will
advise the Company as to any alteration in the terms of such offering that
would require, pursuant to the Securities Act, any amendment or supplement to
the Prospectus Supplement.

3. Delivery of the Offered Securities and Payment
Therefor. Payment for the Offered Securities shall be made to the Company or
to the Company's order by certified or official bank check or checks payable in
New York Clearing House or other next day funds in such location as the
Representatives shall designate in the Terms Agreement at, in the case of the
Underwritten Securities, such time and date as are specified in the Terms
Agreement, or at such other time on the same or such other date, not later than
the fifth Business Day (as hereinafter defined) thereafter, as the
Representatives and the Company may agree upon in writing or, in the case of
the Option Securities, on the date and at the time specified by the
Representatives designated in the Terms Agreement to exercise such option in
the written notice by such Representatives of the election to purchase such
Option Securities by the Option Securities Underwriters. The time and date of
such payment for the Underwritten Securities are referred to herein as the
"Closing Date" and the time and date for such payment for the Option
Securities, if other than the Closing Date, are herein referred to as the
"Additional Closing Date". As used herein, the term "Business Day" means any
day other than a day on which banks are permitted or required to be closed in
New York City.

Payment for the Offered Securities to be purchased on the
Closing Date or the Additional Closing Date, as the case may be, shall be made
against delivery to the Representatives for the respective accounts of the
several Underwriters of the Offered Securities to be purchased on such date
registered in such names and in such denominations as the Representatives shall
request in writing not later than two full Business Days prior to the Closing
Date or the Additional Closing Date, as the case may be, with any transfer
taxes payable in connection with the transfer to the Underwriters of the
Offered Securities duly paid by the Company. The Company hereby agrees to pay
any such transfer taxes. The certificates for the Offered Securities will be
made available for inspection and packaging by the Representatives not later
than 1:00 P.M., New York City time, on the Business Day prior to the Closing
Date or the Additional Closing Date, as the case may be.
<PAGE> 6
-6-

4. Representations and Warranties of the Company. The
Company represents and warrants to each Underwriter as of the Representation
Date and as of the Closing Date that:

(i) A registration statement on Form S-3 (Registration
No. 33-( )), including a prospectus, with respect to the Equity
Securities (and such other securities of the Company as may be covered
thereby), (i) has been prepared by the Company in conformity with the
requirements of the Securities Act, (ii) has been filed with the
Commission and (iii) has become effective. Such Registration
Statement and the related prospectus may have been amended or
supplemented from time to time prior to the Representation Date; any
such amendment to the applicable Registration Statement was so
prepared and filed and any such amendment has become effective. A
prospectus supplement (the "Prospectus Supplement"), including a
prospectus, relating to the Offered Securities has been prepared. The
Prospectus Supplement and, if not previously filed, such prospectus
will be filed pursuant to Rule 424 under the Securities Act. If the
offering of the Offered Securities is to be made by U.S. Underwriters
and International Managers, two such prospectus supplements, one
relating to the Offered Securities to be sold by the U.S. Underwriters
and one relating to the Underwritten Securities to be sold by the
International Managers, and each identical to the other except for the
cover page, have been so prepared and filed. In such event, the term
"Prospectus Supplement" refers to such international and U.S.
prospectus supplements. Copies of such Registration Statement and the
Prospectus relating thereto, any such amendment or supplement, the
Prospectus Supplement and all documents incorporated by reference
therein which were filed with the Commission on or prior to the
Representation Date (including one fully executed copy of the
Registration Statement and of each amendment thereto for counsel for
the Underwriters) have been delivered to each of the Representatives.
The Company has included in the Registration Statement, as amended at
the date the Registration Statement was declared effective (the
"Effective Date"), all information (other than information relating
specifically to the terms of any particular series of Equity
Securities and the offering thereof) required by the Securities Act to
be included in the Prospectus with respect to the Offered Securities
and the offering and sale thereof. Except to the extent that the
Underwriters shall agree in writing to a modification, the
Registration Statement and the Prospectus shall be in all substantive
respects in the form furnished to the Underwriters prior to the
Representation Date or, to the extent not completed at the
Representation Date,
<PAGE> 7
-7-

shall contain only such specific additional information and other
changes as the Company has advised the Underwriters, a reasonable time
prior to the Representation Date, is to be included or made therein
and as to which the Underwriters have not reasonably objected.

(ii) The Registration Statement, at the time it became
effective, any post-effective amendment thereto, at the time it became
effective, the Registration Statement and the Prospectus, as of the
Representation Date and at the Closing Date, and any amendment or
supplement thereto, conformed or will conform in all material respects
to the requirements of the Securities Act; and no such document
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of
the Prospectus, in the light of the circumstances under which they
were made) not misleading; provided, however, that the Company makes
no representation or warranty as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information relating to any
Underwriter furnished to the Company by or on behalf of any
Underwriter expressly for use therein.

(iii) No order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission.

(iv) (A) No stop order suspending the effectiveness of
the Registration Statement is in effect and no proceedings for that
purpose are pending before or threatened by the Commission and (B)
each document, if any, filed or to be filed pursuant to the Exchange
Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act
and did not, or will not when so filed, contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.

notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus, present fairly the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates indicated and the results of their
operations and the changes in their consolidated cash flows for the
periods specified; and said financial statements have been prepared in
conformity with United States generally accepted accounting principles
applied on a consistent basis, except as set forth therein, and the
supporting schedules included or incorporated by reference in the
Registration Statement present fairly the information required to be
stated therein. If pro forma financial information is included in or
incorporated by reference into the Registration Statement and the
Prospectus, such pro forma financial information (including, without
limitation, the notes thereto) as of the date presented (A) presented
fairly in all material respects the information shown therein, (B) was
prepared in accordance with applicable requirements of Regulation S-X
promulgated under the Exchange Act, (C) was prepared in accordance
with the Commission's rules and guidelines with respect to pro forma
financial statements and (D) was properly computed on the bases
described therein. In the opinion of the Company, the assumptions
used in the preparation of any such pro forma financial information
(including, without limitation, the notes thereto) were fair and
reasonable and the adjustments used therein were appropriate to give
effect to the transactions or circumstances referred to therein. No
pro forma financial statements or other pro forma financial
information is required to be included or incorporated by reference in
the Registration Statement and the Prospectus other than those
included or incorporated by reference therein.

(vi) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Texas, has the corporate power and authority to own its property
and to conduct its business as described in the Registration Statement
and the Prospectus and to enter into this Agreement and the Terms
Agreement, and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing could not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and the
<PAGE> 9
-9-

Subsidiaries (as hereinafter defined), taken as a whole (each, a
"Material Adverse Effect").

(vii) Each direct and indirect foreign and domestic
subsidiary of the Company listed on Schedule I hereto, which
constitute all of the significant subsidiaries of the Company within
the meaning of Rule 1-02 of Regulation S-X under the Exchange Act
(each, a "Subsidiary" and collectively, the "Subsidiaries") has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to conduct
its business as described in the Registration Statement and the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so incorporated, be in
existence, have such power and authority, be so qualified or be in
good standing could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect. All of the outstanding
shares of capital stock of each Subsidiary have been duly authorized
and validly issued, are fully paid and non-assessable, and, except as
set forth in the Registration Statement and the Prospectus, are owned
by the Company, directly or indirectly, free and clear of all liens,
encumbrances, security interests, claims and restrictions on
transferability and voting (other than any restrictions on
transferability as may arise under state and federal securities laws).
Except as set forth in the Registration Statement and the Prospectus,
there are no outstanding (i) securities or obligations convertible
into or exchangeable or exercisable for any shares of capital stock
of, or other interest in, the Company or any Subsidiary, (ii) rights,
warrants or options to acquire or purchase any shares of capital stock
of, or other interest in, the Company or any Subsidiary or any such
convertible, exchangeable or exercisable securities or obligations, or
(iii) obligations or understandings to issue or sell any shares of
capital stock of, or other interest in, the Company or any Subsidiary,
any such convertible, exchangeable or exercisable securities or
obligations, or any such warrants, rights or options, except as have
been disclosed to the Underwriters in writing prior to the date hereof
and except for (A) issuances of shares of Common Stock and options to
acquire Common Stock after the date of the most recent information set
forth in the Registration Statement and the Prospectus pursuant to the
Company's employee benefit plans as in effect on the date hereof and
(B) issuances after the date of the most recent
<PAGE> 10
-10-

information set forth in the Registration Statement and the Prospectus
of convertible debentures of the Company and Common Stock pursuant to
the Company's Registration Statement on Form S-4 (Registration No.
33-54996) (the "S-4").

(viii) There are no partnerships in which the Company or
any of the Subsidiaries has any direct or indirect controlling
interest that would constitute a significant subsidiary within the
meaning of Rule 1-02 of Regulation S-X under the Exchange Act. Except
for the capital stock of the Subsidiaries and except as set forth in
the Registration Statement and the Prospectus, the Company does not
own, directly or indirectly, any shares of stock or any other equity
or long-term debt securities or have any equity interest in any firm,
partnership, joint venture or other entity.

(ix) This Agreement and the Terms Agreement have been
duly and validly authorized, executed and delivered by the Company.

(x) Since the date of the latest consolidated
financial statements of the Company and the Subsidiaries included in
the Registration Statement and the Prospectus, except as set forth in
or expressly contemplated by the Registration Statement and the
Prospectus, there has not been (A) any change in the Company's issued
capital stock or options, except (I) pursuant to the exercise of
options or the conversion, exchange or exercise of outstanding
convertible, exchangeable or exercisable securities of the Company,
(II) issuances of shares of Common Stock and options to acquire Common
Stock issued after the date of such financial statements pursuant to
the Company's employee benefit plans as in effect on the date hereof
and (III) issuances after the date of such financial statements of
convertible debentures of the Company and Common Stock pursuant to the
S-4, or (B) any material adverse change in the management, condition
(financial or otherwise), earnings, business affairs or business
prospects of the Company and the Subsidiaries, taken as a whole (each,
a "Material Adverse Change," and any event or state of facts which
could, singly or in the aggregate, reasonably be expected to result in
a Material Adverse Change is herein referred to as a "Prospective
Material Adverse Change"), whether or not arising from transactions or
events occurring in the ordinary course of business.

(xi) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
set forth therein, (A) there have been no
<PAGE> 11
-11-

transactions or contracts (written or oral) entered into or agreed to
be entered into by the Company or any of the Subsidiaries (other than
those in the ordinary course of business) which are material to the
Company and the Subsidiaries, taken as a whole and (B) there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock, other than regularly
scheduled quarterly dividends in accordance with the past practice of
the Company.

(xii) As of the date of the Prospectus Supplement, the
Company has the authorized, issued and outstanding capitalization set
forth in the Prospectus under "Capitalization." The authorized
capital stock of the Company conforms as to legal matters to the
description thereof contained in the Registration Statement and the
Prospectus, and all of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid
and non-assessable and are not subject to any preemptive or similar
rights. The Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights outstanding thereunder and, if
the Offered Securities include, or are convertible into or
exchangeable or exercisable for, shares of Common Stock, to be issued
upon issuance of the Offered Securities or the conversion, exchange or
exercise thereof, have been duly authorized; the Series C Preferred
Stock to be issued upon exercise of the Rights has been duly
authorized; and the description of the Rights Agreement and the Rights
set forth in the Registration Statement and the Prospectus is accurate
in all material respects.

(xiii) All corporate action required to be taken for the
authorization, issuance and sale of the Offered Securities pursuant to
this Agreement and the Terms Agreement has been validly and
sufficiently taken. The Offered Securities have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement
and the Terms Agreement and, when issued and delivered by the Company
pursuant to this Agreement and the Terms Agreement against payment of
the consideration set forth in the Terms Agreement, the Offered
Securities will be validly issued and fully paid and nonassessable; no
holder thereof will be subject to personal liability solely by reason
of being such a holder; the Offered Securities will not be subject to
the preemptive rights of any stockholder of the Company. If the
Offered Securities are convertible into, or exchangeable or
exercisable for, Common Stock, the Offered Securities are convertible
into, or exchangeable or
<PAGE> 12
-12-

exercisable for, Common Stock in accordance with their terms and the
terms of the Resolution.

(xiv) If the Offered Securities are convertible into or
exchangeable or exercisable for Common Stock, the Common Stock
issuable upon conversion, exchange or exercise of the Offered
Securities pursuant to the terms of the Resolution has been duly
authorized and validly reserved for issuance upon such conversion,
exchange or exercise by all necessary corporate action and such Common
Stock, when duly issued upon such conversion, exchange or exercise,
will be validly issued and fully paid and nonassessable; no holder
thereof will be subject to personal liability solely by reason of
being such a holder; and the issuance of such Common Stock upon such
conversion, exchange or exercise will not be subject to preemptive
rights.

(xv) The execution and delivery by the Company of, and
the full and timely performance by the Company of its obligations
under, this Agreement and the Terms Agreement, the filing of the
Resolution with the Secretary of State of the State of Texas, the
consummation of each of the transactions contemplated herein
(including, without limitation, the issuance, sale and delivery of the
Offered Securities and, if applicable, the issuance of the Common
Stock upon conversion, exchange or exercise of the Offered
Securities), therein and, if applicable, in the Resolution, (A) have
been duly authorized by all necessary corporate action on the part of
the Company, (B) do not and will not result in any violation of the
articles of incorporation or by-laws of the Company and (C) do not and
will not conflict with, or result in a breach or violation of, any of
the terms or provisions of, or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default) under, or give rise to any right to accelerate the maturity
or require the prepayment of any indebtedness under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
material property or assets of the Company or of any Subsidiary under
(I) any indenture, mortgage, loan agreement, note, lease, license,
partnership agreement, franchise agreement or other agreement or
instrument to which the Company or any Subsidiary is a party or by
which any of them may be bound or affected or to which any of their
respective properties or assets may be subject (each, a "Contract" and
collectively, the "Contracts"), other than any such conflict, breach,
default, acceleration, prepayment, lien, charge or encumbrance that
could not, individually or in the aggregate, reasonably be expected to
result in any Material Adverse
<PAGE> 13
-13-

Effect, (II) any existing applicable law, rule or regulation (other
than the securities or Blue Sky laws of the various states and other
jurisdictions of the United States of America) or (III) any judgment,
order or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company or
any Subsidiary or any of their respective properties or assets.

(xvi) No authorization, approval, consent or license of,
or filing with, any government, governmental instrumentality or court,
domestic or foreign (other than as have been made and obtained and are
in full force and effect under the Securities Act or as may be
required under the securities or Blue Sky laws of the various states
and other jurisdictions of the United States of America) is required
for the valid authorization, issuance, sale and delivery of the
Offered Securities by the Company, if applicable, the issuance of the
Common Stock upon conversion, exchange or exercise of the Offered
Securities, if applicable, the filing of the Resolution with the
Secretary of State of the State of Texas, the execution and delivery
by the Company of, or the full and timely performance by the Company
of each of its obligations under, this Agreement and the Terms
Agreement.

(xvii) There are no contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed or incorporated by reference as exhibits to
the Registration Statement that are not described, filed or
incorporated as required.

(xviii) No holder of any securities of the Company has any
rights, not effectively satisfied or waived, to require the Company to
register the sale of any securities under the Securities Act in
connection with the filing of the Registration Statement or the
consummation of the transactions contemplated therein or pursuant to
this Agreement or the Terms Agreement.

(xix) The Company and the Subsidiaries are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health or the
environment or imposing liability or standards of conduct concerning
any Hazardous Material (collectively, "Environmental Laws"), except
where such noncompliance with Environmental Laws could not, singly or
in the aggregate, reasonably be expected to have a Material Adverse
Effect. The term "Hazardous Material" means (i) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
<PAGE> 14
-14-

Compensation and Liability Act of 1980, as amended, (ii) any
"hazardous waste" as defined by the Resource Conservation and Recovery
Act, as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl, and (v) any pollutant or contaminant or
hazardous, dangerous, or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.

(xx) Each of the Company and each of the Subsidiaries
owns, possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and
other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof, except in each case where the failure
to obtain licenses, permits, certificates, consents, orders, approvals
and other authorizations, or to make all declarations and filings,
could not, singly or in the aggregate, reasonably be expected to have
a Material Adverse Effect, and neither the Company nor any Subsidiary
has received any notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order,
approval or other authorization, except as described in the
Registration Statement and the Prospectus and except, in each case,
where such revocation or modification could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
and the Company and each Subsidiary are in compliance with all laws
and regulations relating to the conduct of their respective businesses
as conducted as set forth in the Registration Statement and the
Prospectus, except where noncompliance with such laws or regulations
could not, singly or in the aggregate, reasonably be expected to have
a Material Adverse Effect.

(xxi) To the best knowledge of the Company, each of the
Company and the Subsidiaries owns or possesses the patents, patent
licenses, trademarks, service marks, trade names, copyrights and
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) (collectively, the "Intellectual Property") reasonably
necessary to carry on the business conducted by each as conducted on
the date hereof, except to the extent that the failure to own or
possess such Intellectual Property could not, singly or in the
aggregate,
<PAGE> 15
-15-

reasonably be expected to have a Material Adverse Effect, and, except
as set forth in the Registration Statement and the Prospectus, neither
the Company nor any Subsidiary has received any notice of infringement
of or conflict with asserted rights of others with respect to any
Intellectual Property, except for notices the content of which if
accurate could not, singly or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

(xxii) Except as set forth in the Registration Statement
and the Prospectus, no authorization, approval or consent of any
governmental authority or agency is required (other than those which
have already been obtained) under the laws of any jurisdiction in
which the Company or any of the Subsidiaries conduct their respective
businesses in connection with the ownership by the Company of capital
stock of any Subsidiary, any foreign exchange controls or the
repatriation of any amount from or to the Company and the
Subsidiaries, except to the extent such authorizations, approvals or
consents have been obtained and are in full force and effect and
except to the extent that the failure to obtain such authorization,
approval or consent could not, singly or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

(xxiii) The Company has not taken and will not take,
directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or
manipulation of the price of the Offered Securities (or the Common
Stock, if applicable), and the Company has not distributed and will
not distribute any prospectus or other offering material in connection
with the offering and sale of the Offered Securities other than any
preliminary prospectus filed with the Commission or the Prospectus or
other materials permitted under the Securities Act.

(xxiv) Except as set forth in the Registration Statement
and the Prospectus, there is no action, suit or proceeding before or
by any government, governmental or regulatory instrumentality, agency
or body or court, domestic or foreign, or any arbitrator, now pending
or, to the best knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any affiliate of the
Company that, singly or in the aggregate with all such actions, suits
and proceedings (i) could reasonably be expected to have a Material
Adverse Effect or could reasonably be expected to have a material
adverse effect on the consummation of the transactions contemplated in
this Agreement or (ii) is required to be
<PAGE> 16
-16-

described in the Registration Statement or the Prospectus that is not
so described.

(xxv) Neither the Company nor any Subsidiary (i) is in
violation of its articles of incorporation, by-laws or other
organizational documents or (ii) is or with the giving of notice or
lapse of time or both would be in violation of, or in breach of or in
default under or in the performance or observance of, any obligation,
agreement, covenant or condition contained in this Agreement, the
Terms Agreement or any Contract or of any permit, order, decree,
judgment, statute, rule or regulation, foreign or domestic, applicable
to the Company or any Subsidiary, except for such violations, breaches
or defaults that could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

(xxvi) The Company is not an "investment company" or an
entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended or a holding
company or a subsidiary of a holding company under the Public Utility
Holding Company Act of 1935.

(xxvii) The Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida).

(xxviii) The statistical and market-related data included
or incorporated by reference in the Registration Statement and the
Prospectus are based on or derived from sources which the Company
believes to be reliable and accurate or represent the Company's good
faith estimates that are made on the basis of data derived from such
sources.

(xxix) The Company knows of no outstanding claims for
services, either in the nature of a finder's fee or origination fee,
with respect to the transactions contemplated hereby and by the Terms
Agreement, other than the underwriting fees and compensation to be
paid to the Underwriters in accordance with this Agreement.

(xxx) No labor disputes exist with employees of the
Company or of the Subsidiaries that could, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

Any certificate signed by any officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters
<PAGE> 17
-17-

shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.

5. Agreements of the Company. The Company covenants and
agrees with each Underwriter as follows:

(a) To use its reasonable best efforts to cause any
amendment to the Registration Statement to become effective at the
earliest possible time.

(b) To furnish to each of the Representatives, without
charge, as many signed copies of the Registration Statement (as
originally filed) and each amendment thereto and each document
incorporated or deemed incorporated therein, in each case including
exhibits filed therewith or incorporated therein, as the
Representatives may reasonably request, and to each other Underwriter
a conformed copy of the Registration Statement (as originally filed)
and each amendment thereto, in each case without exhibits and, during
the period mentioned in paragraph (e) below, to each of the
Underwriters as many copies of the Prospectus (including all
amendments and supplements thereto and documents incorporated by
reference therein) as the Representatives may reasonably request.

(c) To give the Underwriters prompt notice of the
Company's intention to file or prepare any amendment to the
Registration Statement or any amendment or supplement to the
Prospectus, whether pursuant to the Securities Act, the Exchange Act
or otherwise, to furnish the Underwriters and their counsel with
copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and not to
file any such amendment or supplement or use any such prospectus to
which the Underwriters or counsel for the Underwriters shall object.
Subject to the foregoing sentence, the Company will cause each
Prospectus Supplement relating to the Offered Securities to be filed
with the Commission pursuant to the applicable paragraph of Rule 424
under the Securities Act within the time period prescribed and will
provide evidence satisfactory to the Underwriters of such timely
filing.

Commission or become effective, (iii) of the receipt of any comments
from the Commission or of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any Prospectus or Prospectus Supplement or
the initiation or threatening of any proceeding for that purpose and
(v) of the receipt by the Company of any notification with respect to
any suspension of the qualification of the Offered Securities for
offer and sale in any jurisdiction or the initiation of any
proceeding for such purpose; and to use its reasonable best efforts to
prevent the issuance of any such stop order or notification and, if
issued, to obtain as soon as possible the withdrawal thereof.

(e) If, during such period after the first date of the
public offering of the Offered Securities as in the opinion of the
Underwriters' counsel a prospectus relating to the Offered Securities
is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur, information shall become
known or condition exist as a result of which it is necessary or
advisable to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary or advisable to amend or supplement the Prospectus to comply
with law, forthwith, at the sole expense of the Company, to prepare,
and, subject to Section 5(c) above, file with the Commission and
furnish, without charge, to the Underwriters and to the dealers (whose
names and addresses the Representatives will furnish to the Company)
to which Offered Securities may have been sold by the Representatives
on behalf of the Underwriters and to any other dealers upon request,
such amendments or supplements to the Prospectus as may be necessary
so that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will
comply with law.

(f) To endeavor to qualify the Offered Securities (and
the Common Stock, if applicable) for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the
Representatives shall request and to continue such qualification in
effect so long as required for distribution of the Offered Securities
and to pay all fees and expenses (including fees and disbursements of
counsel to the
<PAGE> 19
-19-

Underwriters) incurred in connection with such qualification;
provided, however, that the Company shall not be required to file a
general consent to service of process in any jurisdiction or subject
itself to general taxation in any jurisdiction.

(g) To make generally available to its security holders
and to the Representatives as soon as practicable, but not later than
15 months, after the date of each Terms Agreement an earnings
statement, covering a period of at least 12 months beginning after the
later of (i) the effective date of the Registration Statement, (ii)
the effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of such
Terms Agreement and (iii) the date of the Company's most recent Annual
Report on Form 10-K filed with the Commission prior to the date of
such Terms Agreement, which will satisfy the provisions of Rule 158
under the Securities Act and Section 11(a) of the Securities Act.

(h) For a period of 120 days after the Representation
Date, without the prior written consent of the Representative
designated in the Terms Agreement, not to, and not cause or permit any
Subsidiary to, directly or indirectly, effect any offer, sale or other
disposition of, or registration of, any shares of Equity Securities of
the same class as the Offered Securities (including, without
limitation, any depository shares representing the same) or any
securities convertible into or exchangeable or exercisable for shares
of Equity Securities of the same class as the Offered Securities,
other than (A) the Offered Securities to be sold pursuant to the Terms
Agreement, (B) shares of capital stock of the Company issued upon
conversion, exchange or exercise of convertible, exchangeable or
exercisable securities of the Company or of any Subsidiary outstanding
on the Representation Date and (C) shares of Common Stock and options
thereunder issued pursuant to employee benefit plans of the Company in
place on the Representation Date as in effect on the Representation
Date, and other than pursuant to such other exceptions, if any, as are
agreed to by the Representatives and set forth in the Terms Agreement.

incurred in connection with the preparation, issuance, execution and
delivery of the Offered Securities (including, if applicable, the
Common Stock issuable upon conversion, exchange or exercise thereof),
(ii) incurred in connection with the preparation, printing and filing
under the Securities Act and the Exchange Act of the Registration
Statement, the Prospectus, any preliminary prospectus and each
Prospectus Supplement (including in each case all exhibits, amendments
and supplements thereto and all documents incorporated therein by
reference), (iii) incurred in connection with the registration or
qualification of the Offered Securities (including, if applicable, the
Common Stock issuable upon conversion, exchange or exercise thereof)
under the laws of such jurisdictions as the Representatives may
request (including filing fees and the fees of counsel for the
Underwriters and their disbursements), (iv) in connection with the
listing of the Offered Securities on the New York Stock Exchange, (v)
relating to any filing with the National Association of Securities
Dealers Inc. (the "NASD") in connection with the offering of the
Offered Securities, (vi) incurred in connection with the engagement of
any qualified independent underwriter as may be required by NASD rules
and regulations, (vii) incurred in connection with the rating of the
Offered Securities, (viii) incurred in connection with advertising
relating to the Offered Securities approved by the Company (which
approval shall not be unreasonably withheld or delayed), (ix) relating
to the fees and expenses of the transfer agent and registrar for the
Offered Securities and (x) relating to or in connection with the
printing (including word processing and duplication costs) and
delivery of this Agreement, the Terms Agreement, the agreement among
underwriters, each other document or instrument relating to the
underwriting arrangements and the coordination of the offering of the
Offered Securities by the U.S. Underwriters and the International
Managers, if applicable, any dealer agreements, the Preliminary and
Supplemental Blue Sky Memoranda and the furnishing to the Underwriters
and dealers of copies of the Registration Statement, the Prospectus
and each Prospectus Supplement, including mailing and shipping, as
herein provided.

(j) To furnish to the Representatives for a period of
five years after the Representation Date copies of all reports or
other communications (financial or other) furnished to holders of the
Company's capital stock, and copies of any reports and financial
statements furnished to or filed with the Commission.
<PAGE> 21
-21-

(k) To use the net proceeds of the offering of the
Offered Securities as set forth in the Prospectus under the caption
"Use of Proceeds."

(l) During the period when the Prospectus is required to
be delivered under the Securities Act or the Exchange Act, to file all
documents required to be filed with the Commission pursuant to Section
13, 14 or 15 of the Exchange Act within the time period required by
the Exchange Act and the Exchange Act Regulations.

(m) To use its best efforts to effect the listing of the
Offered Securities (including, if applicable, the shares of Common
Stock issuable upon the conversion of the Offered Securities) on the
New York Stock Exchange on the Representation Date.

(n) To reserve and keep available at all times, free of
preemptive rights, sufficient shares of Common Stock to satisfy any
obligations to issue shares of Common Stock upon conversion, exchange
or exercise of all of the Offered Securities that are convertible into
or exchangeable or exercisable for the Common Stock.

6. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters hereunder to purchase the Underwritten
Securities are subject to the following conditions:

(a) If any amendment to the Registration Statement filed
prior to the Closing Date has not been declared effective as of the
Representation Date, such amendment shall have become effective not
later than 5:30 P.M. on the Representation Date; and at the Closing
Date no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or
proceedings therefor initiated or threatened by the Commission. The
price of the Offered Securities and any price-related information
previously omitted from the effective Registration Statement and the
Prospectus Supplement shall have been transmitted to the Commission
for filing pursuant to Rule 424 under the Securities Act within the
prescribed time period and prior to the Closing Date the Company shall
have provided evidence satisfactory to the Underwriters of such timely
filing.

(b) The representations and warranties of the Company
contained herein and in the Terms Agreement shall be true and correct
on and as of the Closing Date as if made on and as of the Closing Date
and the Company shall have complied with all
<PAGE> 22
-22-

agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date.

(c) Subsequent to the Representation Date and prior to
the Closing Date, there shall not have occurred any Material Adverse
Change or any development involving a Prospective Material Adverse
Change other than as set forth in the Registration Statement and the
Prospectus, the effect of which in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Underwritten Securities on the terms
and in the manner contemplated in the Registration Statement and the
Prospectus. As used in this Section 6(c), "Prospectus" shall mean the
Prospectus first used to confirm sales of the Offered Securities
exclusive of any amendment or supplement thereto thereafter.

(d) The Representatives shall have received on and as of
the Closing Date a certificate of the Company signed by the Chief
Executive Officer, the Chief Operating Officer or the Chief Financial
Officer of the Company to the effect set forth in subsections (a) and
(b) of this Section 6 and to the further effect that since the most
recent date as of which information is given in the Prospectus there
shall not have occurred any Material Adverse Change, or any
development involving a Prospective Material Adverse Change. As used
in this Section 6(d), "Prospectus" shall mean the Prospectus first
used to confirm sales of the Offered Securities exclusive of any
amendment or supplement thereto thereafter.

(e) The Representatives shall have received on the
Closing Date a signed opinion of Wachtell, Lipton, Rosen & Katz,
special counsel for the Company, addressed to the Underwriters and
dated the Closing Date and satisfactory to counsel for the
Underwriters, to the effect that:

(i) Each of this Agreement and the Terms
Agreement has been duly authorized, executed and delivered by
the Company.

(ii) The number of authorized shares of capital
stock of the Company is as set forth in the Prospectus under
"Capitalization" and the authorized capital stock of the
Company conforms as to legal matters to the description
thereof contained in the Prospectus.
<PAGE> 23
-23-

(iii) The Offered Securities have been duly
authorized for issuance and sale to the Underwriters in
accordance with this Agreement and the Terms Agreement and,
when issued and delivered by the Company to the Underwriters
pursuant to this Agreement and the Terms Agreement against
payment of the consideration set forth in the Terms Agreement,
will be validly issued and fully paid and non-assessable.

(iv) The issuance of the Offered Securities is not
subject to preemptive rights arising by operation of law or
under the charter or by-laws of the Company; and no holder of
the Offered Securities will be subject to personal liability
solely by reason of being such a holder.

(v) If the Offered Securities are convertible
into or exchangeable or exercisable for Common Stock, upon
issuance and delivery of the Offered Securities, the Offered
Securities shall be convertible, exchangeable or exercisable
at the option of the holder thereof into or for Common Stock
in accordance with the terms of the Offered Securities and the
Resolution; the Common Stock issuable upon conversion,
exchange or exercise of the Offered Securities has been duly
authorized and validly reserved for issuance upon such
conversion, exchange or exercise by all necessary corporate
action, and such Common Stock, when issued upon such
conversion, exchange or exercise, will be validly issued,
fully paid and nonassessable; no holder of the Common Stock
will be subject to personal liability solely by reason of
being such a holder; and the issuance of such shares upon such
conversion, exchange or exercise will not be subject to
preemptive rights arising by operation of law or under the
charter or by-laws of the Company.

(vi) At the time the Registration Statement and
each amendment thereto became effective and at the
Representation Date, the Registration Statement and the
Prospectus (other than the financial statements and schedules
and other financial and statistical data included or
incorporated by reference therein, as to which such counsel
need express no opinion) appear on their face to be
appropriately responsive to the applicable requirements of the
Securities Act.

(vii) The statements set forth or incorporated by
reference in the Registration Statement and the
<PAGE> 24
-24-

Prospectus insofar as such statements purport to summarize
certain provisions of the Offered Securities (and the Common
Stock, if applicable) provide a fair summary of such
provisions.

(viii) Such counsel does not know of any legal or
governmental actions, suits or proceedings, pending or
threatened, required to be disclosed in the Registration
Statement which are not disclosed therein as required
(provided that for such purpose such counsel need not regard
any action, suit or proceeding to be "threatened" unless the
potential litigant has manifested to the management of the
Company or to such counsel a present intention to initiate
such suit or proceeding).

(ix) Based upon such counsel's review of
applicable law, no authorization, approval, consent or order
of any court or governmental or regulatory authority, body or
agency or third party is required in connection with (A) the
offering, issuance or sale of the Offered Securities, if
applicable, the filing of the Resolution with the Secretary of
State of the State of Texas, or, if applicable, the valid
authorization, issuance and delivery of the Common Stock
issuable upon conversion, exchange or exercise of the Offered
Securities, or (B) the execution, delivery or full and timely
performance of this Agreement or the Terms Agreement by the
Company, except such as may be required under the Securities
Act or state securities laws or under the Company's listing
agreement with the New York Stock Exchange, Inc.

(x) To the best of such counsel's knowledge and
information, the execution, delivery and the full and timely
performance of this Agreement and the Terms Agreement, the
filing of the Resolution with the Secretary of State of the
State of Texas, the consummation of each of the transactions
contemplated herein (including, without limitation, the
issuance, sale and delivery of the Offered Securities and, if
applicable, the issuance of the Common Stock upon conversion,
exchange or exercise of the Offered Securities), therein and,
if applicable, in the Resolution will not constitute a breach
of, or default under (including, without limitation, any event
which with notice or lapse of time, or both, would constitute
a breach of or a default under), or result in the creation or
imposition of any lien, charge or encumbrance
<PAGE> 25
-25-

upon any property or assets of the Company or any of the
Subsidiaries pursuant to, any contract identified on a
schedule to such opinion, nor will such action result in any
violation of the provisions of the charter or by-laws of the
Company, or any applicable law, rule, regulation or
administrative, regulatory or court judgment, order or decree,
except for any breach, default, lien, charge or encumbrance
under any such contract as could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.

(xi) Each document filed pursuant to the Exchange
Act (other than the financial statements, schedules and other
financial and statistical data included therein, as to which
such counsel need express no opinion) and incorporated or
deemed to be incorporated by reference in the Prospectus
appears on its face to be appropriately responsive to the
applicable requirements of the Exchange Act.

(xii) The Company is not an investment company
under the Investment Company Act of 1940, nor a holding
company or a subsidiary of a holding company under the Public
Utility Holding Company Act of 1935.

Such counsel shall also state that they have been advised by
the Commission that the Registration Statement became effective under
the Securities Act; that any required filings of the Prospectus
pursuant to Rule 424(b) have been made in the manner and within the
time period required by Rule 424(b); and that, based solely on
conversations with the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted, are pending or, to
such counsel's knowledge, are contemplated under the Securities Act.

financial and statistical data included or incorporated by reference
therein, as to which such counsel need not make any statement or
express any opinion) as of its date or at the Representation Date
contained and, as of the date such opinion is delivered, contains any
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.

Such counsel in rendering such opinion may rely as to certain
matters of fact on certificates of officers of the Company and of
public officials; provided, however, that (a) such counsel shall state
that such counsel, the Underwriters and counsel for the Underwriters
are justified in relying upon such certificates and (b) such
certificates shall have been delivered to the Representatives prior to
the Closing Date. In rendering such opinion, such counsel may rely as
to matters involving the application of laws of (1) the State of
Texas, upon the written opinion of James M. Shelger, General Counsel
of the Company, delivered pursuant to clause (f) below of this Section
6 and (2) any jurisdiction other than the State of New York or the
United States or the General Corporation Law of the State of Delaware,
to the extent such counsel deems proper and specifies in such opinion,
upon the opinion of other counsel who are reasonably satisfactory to
counsel for the Underwriters; provided, however, that such counsel
shall state that such counsel, the Underwriters and counsel for the
Underwriters are justified in relying upon such opinion.

(f) The Representatives shall have received on the
Closing Date a signed opinion of James M. Shelger, General Counsel of
the Company, addressed to the Underwriters and dated the Closing Date
and satisfactory to counsel for the Underwriters, to the effect that:

(i) The Company has been duly incorporated, is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus and to the
best of such counsel's knowledge and information is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be
in good
<PAGE> 27
-27-

standing could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

(ii) Each Subsidiary has been duly incorporated,
is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be
in good standing could not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(iii) Each of this Agreement and the Terms
Agreement has been duly authorized, executed and delivered by
the Company.

(iv) The number of authorized shares of capital
stock of the Company is as set forth in the Prospectus under
"Capitalization" and the authorized capital stock of the
Company conforms as to legal matters to the description
thereof contained in the Prospectus.

(v) The Offered Securities have been duly
authorized for issuance and sale to the Underwriters in
accordance with this Agreement and the Terms Agreement and,
when issued and delivered by the Company to the Underwriters
pursuant to this Agreement and the Terms Agreement against
payment of the consideration set forth in the Terms Agreement,
will be validly issued and fully paid and non-assessable.

(vi) The issuance of the Offered Securities is not
subject to preemptive or other similar rights arising by
operation of law or under the charter or by-laws of the
Company; and no holder of the Offered Securities will be
subject to personal liability solely by reason of being such a
holder.

(vii) If the Offered Securities are convertible
into or exchangeable or exercisable for Common Stock, upon
issuance and delivery of the Offered Securities, the Offered
Securities shall be convertible, exchangeable or exercisable
at the option of the holder thereof into or for Common Stock
in accordance with the terms of the
<PAGE> 28
-28-

Offered Securities and the Resolution; the Common Stock
issuable upon conversion, exchange or exercise of the Offered
Securities has been duly authorized and validly reserved for
issuance upon such conversion, exchange or exercise by all
necessary corporate action, and such Common Stock, when issued
upon such conversion, exchange or exercise, will be validly
issued, fully paid and nonassessable; no holder of the Common
Stock will be subject to personal liability solely by reason
of being such a holder; and the issuance of such shares upon
such conversion, exchange or exercise will not be subject to
preemptive rights arising by operation of law or under the
charter or by-laws of the Company.

(viii) All of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and, to the best of
such counsel's knowledge and information, after due inquiry,
except as set forth in the Registration Statement and the
Prospectus, is owned by the Company, directly or indirectly,
free and clear of any perfected security interest, and, to the
best of such counsel's knowledge, after due inquiry, any other
security interests or claims.

(ix) The statements set forth or incorporated by
reference in the Registration Statement and the Prospectus
insofar as such statements purport to summarize certain
provisions of the Offered Securities (and the Common Stock, if
applicable) provide a fair summary of such provisions.

(x) Such counsel does not know of any legal or
governmental actions, suits or proceedings, pending or
threatened, required to be disclosed in the Registration
Statement which are not disclosed therein as required
(provided that for such purpose such counsel need not regard
any action, suit or proceeding to be "threatened" unless the
potential litigant has manifested to the management of the
Company or to such counsel a present intention to initiate
such suit or proceeding).

(xi) To the best of such counsel's knowledge and
information, after due inquiry, there are no Contracts or
other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein
<PAGE> 29
-29-

or filed or incorporated by reference as exhibits thereto.

(xii) Based upon such counsel's review of
applicable law, no authorization, approval, consent or order
of any court or governmental or regulatory authority, body or
agency or third party is required in connection with (A) the
offering, issuance or sale of the Offered Securities, if
applicable, the filing of the Resolution with the Secretary of
State of the State of Texas, or, if applicable, the valid
authorization, issuance and delivery of the Common Stock
issuable upon conversion, exchange or exercise of the Offered
Securities, or (B) the execution, delivery or full and timely
performance of this Agreement or the Terms Agreement by the
Company, except such as may be required under the Securities
Act or state securities laws or under the Company's listing
agreement with the New York Stock Exchange, Inc.

(xiii) To the best of such counsel's knowledge and
information, the execution, delivery and the full and timely
performance of this Agreement and the Terms Agreement, the
filing of the Resolution with the Secretary of State of the
State of Texas, the consummation of each of the transactions
contemplated herein (including, without limitation, the
issuance, sale and delivery of the Offered Securities and, if
applicable, the issuance of the Common Stock upon conversion,
exchange or exercise of the Offered Securities), therein and,
if applicable, in the Resolution, and compliance by the
Company with its obligations hereunder and thereunder will not
conflict with or constitute a breach of, or default under
(including, without limitation, any event which with notice or
lapse of time, or both, would constitute a breach of or a
default under), or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries pursuant to, any contract
identified on a schedule to such opinion, nor will such action
result in any violation of the provisions of the charter or
by-laws of the Company, or any applicable law, rule,
regulation or administrative, regulatory or court judgment,
order or decree, except for any breach, default, lien, charge
or encumbrance under any such contract as could not, singly or
in the aggregate, reasonably be expected to have a Material
Adverse Effect.
<PAGE> 30
-30-

In addition, such counsel shall also include a statement to
the effect that nothing has come to the attention of such counsel
which leads such counsel to believe that (1) the Registration
Statement (other than the financial statements and schedules and other
financial and statistical data included or incorporated by reference
therein, as to which such counsel need not make any statement or
express any opinion), when it became effective, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (2) the Prospectus (other than the
financial statements and schedules and other financial and statistical
data included or incorporated by reference therein, as to which such
counsel need not make any statement or express any opinion) as of its
date or at the Representation Date contained and, as of the date such
opinion is delivered, contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.

Such counsel in rendering such opinion may rely as to certain
matters of fact on certificates of officers of the Company and of
public officials; provided, however, that (a) such counsel shall state
that such counsel, the Underwriters and counsel for the Underwriters
are justified in relying upon such certificates and (b) such
certificates shall have been delivered to the Representatives prior to
the Closing Date. In rendering such opinion, such counsel may rely as
to matters involving the application of laws of (1) the State of New
York or the General Corporation Law of the State of Delaware, upon the
written opinion of Wachtell, Lipton, Rosen & Katz, delivered pursuant
to clause (e) above of this Section 6 and (2) any jurisdiction other
than the State of Texas or the United States, to the extent such
counsel deems proper and specifies in such opinion, upon the opinion
of other counsel who are reasonably satisfactory to counsel for the
Underwriters; provided, however, that such counsel shall state that
such counsel, the Underwriters and counsel for the Underwriters are
justified in relying upon such opinion.

type customarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information included or incorporated by reference in the
Registration Statement and the Prospectus.

(h) The Representatives shall have received on and as of
the Closing Date a favorable opinion of Cahill Gordon & Reindel,
counsel to the Underwriters, with respect to the Registration
Statement, the Prospectus and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters.

(i) On the Representation Date, the Offered Securities
and, if applicable, the Common Stock issuable upon conversion of the
Offered Securities shall have been approved for listing on the New
York Stock Exchange upon notice of issuance.

(j) At the Closing Date, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
require for the purpose of enabling them to pass upon the issuance and
sale of the Offered Securities as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
in connection with the issuance and sale of the Offered Securities
(and, if applicable, the Common Stock) as herein contemplated shall be
satisfactory in form and substance to the Underwriters and counsel for
the Underwriters.

(k) On or prior to the Closing Date the Company shall
have furnished to the Representatives such further certificates and
documents as the Representatives shall reasonably request.

(l) Subsequent to the execution and delivery of the Terms
Agreement and prior to the Closing Date, there shall not have occurred
any downgrading, nor shall any notice have been given of (i) any
intended or potential downgrading or (ii) any review or possible
change that does not indicate an improvement, in the rating accorded
any securities of or guaranteed by the Company by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act.
<PAGE> 32
-32-

(m) The Company shall have delivered to the
Representatives written agreements, in form and substance satisfactory
to the Representative designated in the Terms Agreement, with each of
its executive officers who own capital stock of the Company of a class
which includes the Offered Securities that no offer, sale or other
disposition, or request or demand for registration under the
Securities Act or inclusion in any other registration statement filed
by the Company under the Securities Act, of any capital stock of the
Company of a class which includes the Offered Securities, or warrants,
options, convertible, exercisable or exchangeable securities, or other
rights to purchase or acquire, such capital stock (or any such right
or exchangeable, exercisable or convertible security) owned by such
person, or with respect to which such person has the power of
disposition, will be made for a period of 90 days after the
Representation Date, directly or indirectly, by such executive
officer, otherwise than (i) with the prior written consent of the
Representative designated in the Terms Agreement and (ii) pursuant to
such exceptions, if any, as are agreed to by the Representatives and
set forth in the Terms Agreement.

(n) There shall not have been any amendment or supplement
to the Registration Statement or the Prospectus to which the
Underwriters shall have objected.

The several obligations of the Underwriters designated in the Terms Agreement
to purchase Option Securities hereunder on the Additional Closing Date are,
unless otherwise agreed by the Underwriters designated in the Terms Agreement,
subject to the conditions set forth in paragraph (a) to and including paragraph
(n) above on and as of the Additional Closing Date (references therein to the
Closing Date shall be deemed references to the Additional Closing Date for this
purpose), except that the certificate called for by paragraph (d), the opinions
called for by paragraphs (e), (f) and (h) and the letters called for by
paragraph (g) shall be dated as of, and delivered on, the Additional Closing
Date, and to the delivery to the Representatives on the Additional Closing
Date of such other documents as they may reasonably request.

in the Registration Statement or the Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use
therein; provided, however, that the foregoing indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter (or
the benefit of any person controlling such Underwriter) from whom the person
asserting any such losses, claims, damages or liabilities purchased Offered
Securities if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary prospectus and is eliminated or remedied in
the Prospectus and the Company has provided such Prospectus in accordance with
paragraph 5(ii) hereof (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and if it shall be established
in the related action or proceeding that a copy of the Prospectus, if required
by law (as so amended or supplemented, but exclusive of any documents
incorporated therein by reference), shall not have been furnished to such
person at or prior to the written confirmation of the sale of such Offered
Securities to such person, except to the extent that such Prospectus contains
any other untrue statement or omission or alleged untrue statement or omission
of a material fact that was the subject matter of the related action or
proceeding. For purposes of the proviso to the immediately preceding sentence,
the term "Prospectus" shall not be deemed to include the documents
incorporated therein by reference, and no Underwriter shall be obligated to
send or give any supplement or amendment to any document incorporated by
reference in any preliminary prospectus or the Prospectus to any person.

supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only
with reference to information relating to such Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly
for use in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any preliminary prospectus. For purposes of this
Section 7 and Section 4(ii), the only written information furnished by the
Underwriters to the Company expressly for use in the Registration Statement and
the Prospectus is the information in the last paragraph of the cover page of
the Prospectus Supplement and ( ) and ( ) under the table under the caption
"Underwriting" in the Prospectus Supplement.

If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to any of the
two preceding paragraphs of this Section 7, such person (hereinafter called the
"Indemnified Person") shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the "Indemnifying Person") in
writing, and the Indemnifying Person, upon request of the Indemnified Person,
shall promptly retain counsel satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) there has been a failure by the
Indemnifying Person to retain promptly counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties to any such proceeding (including
any impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for (a)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act and (b) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign the Registration Statement and each person, if
any, who
<PAGE> 35
-35-

controls the Company within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case
of any such separate firm for the Underwriters and such control persons of
Underwriters, such firm shall be designated in writing by the Representatives.
In the case of any such separate firm for the Company, and such directors,
officers and control persons of the Company, such firm shall be designated in
writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the Indemnifying Person agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for fees and expenses of counsel as contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not
have reimbursed the Indemnified Person in accordance with such request prior to
the date of such settlement. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (1) includes an unconditional
written release of such Indemnified Person, in form and substance satisfactory
to such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (2) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of any
Indemnified Person.

applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and of the Underwriters in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and by the Underwriters on the other shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus bear to the
aggregate public offering price of the Offered Securities. The relative fault
of the Company on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall an Underwriter be required to contribute any amount in excess of the
amount by which the total price at which the Offered Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 7 are several
in proportion to the respective number of Offered Securities they have
purchased hereunder, and not joint.
<PAGE> 37
-37-

The indemnity and contribution agreements contained in this
Section 7 are in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.

The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or the
Company, its officers or directors or any other person controlling the Company
and (iii) acceptance of and payment for any of the Offered Securities.

8. Termination of Agreement. Notwithstanding anything
herein contained, this Agreement (or the obligations of the several Option
Securities Underwriters with respect to the Option Securities) may be
terminated in the absolute discretion of the Representatives, by notice given
to the Company, if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the Option Securities, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the National Association of Securities Dealers, Inc., the American
Stock Exchange or the ( ), (ii) trading of any securities of the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York or ( )
shall have been declared by either U.S. Federal, New York State or ( )
authorities or exchange controls shall have been imposed by the United
States, or (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis that,
in the judgment of the Representatives, is material and adverse and which, in
the judgment of the Representatives, makes it impracticable to market the
Offered Securities on the terms and in the manner contemplated in the
Prospectus.

9. Effectiveness of Agreement; Additional Obligations of
the Underwriters. This Agreement shall become effective upon the later of (x)
the Representation Date and (y) release of notification by the Commission of
the effectiveness of the most recent amendment to the Registration Statement
filed prior to the Closing Date.

If, on the Closing Date or the Additional Closing Date, as the
case may be, any one or more of the Underwriters shall fail
<PAGE> 38
-38-

or refuse to purchase Offered Securities which it or they have agreed to
purchase hereunder on such date, and the aggregate number of Offered Securities
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of Offered
Securities to be purchased on such date, the other Underwriters (with respect
to the Option Securities, to the extent such Underwriters are Option Securities
Underwriters) shall be obligated severally in the proportions that (1) with
respect to Underwritten Securities the number of Underwritten Securities set
forth opposite their respective names in the annex or annexes to Exhibit 1
hereto bears to the aggregate number of Underwritten Securities set forth
opposite the names of all such non-defaulting Underwriters and (2) with respect
to Option Securities, the number of Underwritten Securities set forth opposite
their respective names in the annex or annexes to Exhibit 1 hereto bears to the
aggregate number of Underwritten Securities set forth opposite the names of all
such non-defaulting Underwriters who are Option Securities Underwriters, or in
such other proportions as the Representatives may specify, to purchase the
Offered Securities which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided, however, that in no event
shall the number of Offered Securities that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such number of Offered Securities without the
written consent of such Underwriter. If, on the Closing Date or the Additional
Closing Date, as the case may be, any Underwriter or Underwriters shall fail or
refuse to purchase Offered Securities which it or they have agreed to purchase
hereunder on such date, and the number of Offered Securities with respect to
which such default occurs is more than one-tenth of the aggregate number of
Offered Securities to be purchased on such date, and arrangements satisfactory
to the Representatives and the Company for the purchase of such Offered
Securities are not made within 36 hours after such default, this Agreement (or
the obligations of the several Underwriters to purchase the Option Securities,
as the case may be) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either the
Representatives or the Company shall have the right to postpone the Closing
Date (or, in the case of the Option Securities, the Additional Closing Date),
but in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
<PAGE> 39
-39-

10. Reimbursement upon Occurrence of Certain Events. If
this Agreement shall be terminated by the Underwriters, or any of them, because
of any failure or refusal on the part of the Company to comply with the terms
or to fulfill any of the conditions of this Agreement, or if for any reason
the Company shall be unable to perform its obligations under this Agreement,
the Company agrees to reimburse the Underwriters or such Underwriters as have
so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and expenses of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder and pursuant to the Terms Agreement. In no
event, however, shall the Company be responsible to the Underwriters for any
loss of profits for failure to consummate the offering and sale of the Offered
Securities.

11. Miscellaneous. This Agreement shall inure to the
benefit of and be binding upon the Company, the Underwriters, any controlling
persons referred to herein and their respective successors and assigns.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person, firm or corporation any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. No purchaser of Offered Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.

12. Notice. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to
the Underwriters shall be given to the Representatives at the address as set
forth in the Terms Agreement. Notices to the Company shall be given to it at
Service Corporation International, 1929 Allen Parkway, Houston, Texas 77019
(facsimile: (713) ( )); Attention: ( ).

13. Counterparts; Applicable Law. This Agreement may be
signed in counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed wholly therein, without giving
effect to the conflicts of laws provisions thereof.
<PAGE> 40

If the foregoing is in accordance with your understanding,
please sign and return six counterparts hereof.

Very truly yours,

SERVICE CORPORATION
INTERNATIONAL

By:_______________________________________
Name:
Title:

CONFIRMED AND ACCEPTED,
as of the date first above written

(Insert Signature block(s) for the
Representative or Representatives
acting on behalf of the Underwriters,
or for each Underwriter if
no Syndicate)
<PAGE> 41
EXHIBIT I

SERVICE CORPORATION INTERNATIONAL

( ) Shares

(TITLE OF EQUITY SECURITIES)

TERMS AGREEMENT

( ), 199( )

Service Corporation International
1929 Allen Parkway
Houston, Texas 77019

Attention: ( )

Ladies and Gentlemen:

( ) (the "Representative(s)") understand that
Service Corporation International, a Texas corporation (the "Company"),
proposes to issue and sell ( ) shares of its (describe Equity Securities)
(the "Underwritten Securities"). Subject to the terms and conditions set forth
herein or incorporated by reference herein, the (U.S.) Underwriters named in
Annex A attached hereto (and the International Managers named in Annex B
attached hereto) offer to purchase, severally and not jointly, the number of
Underwritten Securities set forth opposite the name of each such Underwriter on
Annex A (and Annex B) hereto at a price of $( ) per share (the "Purchase
Price"). The Closing Date shall be ( ), 199( ), at ( ) A.M. at the
offices of ( ).

international managers named in Annex B hereto (the "International Managers")
in connection with the offering and sale of such International Securities
outside the United States and Canada to persons other than United States and
Canadian Persons. ( ) shall act as representatives
(the "U.S. Representatives") of the several U.S. Underwriters, and ( )
shall act as representatives (the "International Representatives") of the
several International Managers. The U.S. Underwriters and the International
Managers are hereinafter collectively referred to as the "Underwriters", and
the U.S. Representatives and the International Representatives are hereinafter
collectively referred to as the "Representatives.")

(In addition, the Representatives understand that the Company
proposes to issue and sell to the several (U.S.) Underwriters, for the sole
purpose of covering over-allotments in connection with the sale of the
Underwritten Securities, at the option of the (U.S.) Underwriters, up to an
additional ( ) shares of the (describe Equity Securities) (the "Option
Securities"). The Underwritten Securities and the Option Securities are herein
referred to as the "Offered Securities.")

(The offer herein contained is further conditioned upon the
Company agreeing to sell to the (U.S.) Underwriters the Option Securities, and
agreeing that the (U.S.) Underwriters shall have a one-time right to purchase,
severally and not jointly, up to ( ) Option Securities at the Purchase
Price. Option Securities may be purchased as provided below solely for the
purpose of covering over-allotments made in connection with the offering of the
Underwritten Securities. If any Option Securities are to be purchased, each
(U.S.) Underwriter agrees, severally and not jointly, to purchase the number of
Option Securities (subject to such adjustments to eliminate any fractional
Offered Securities as the (U.S.) Representatives in their sole discretion may
make) that bears the same proportion to the total number of Option Securities
to be purchased as the number of (U.S.) Underwritten Securities set forth in
Annex A hereto opposite the name of such (U.S.) Underwriter bears to the total
number of (U.S.) Underwritten Securities.)

(The Company's agreement to sell the Option Securities shall
entitle the (U.S.) Underwriters to exercise the option to purchase the Option
Securities at any time on or before the thirtieth day following the date of
this Terms Agreement, by written notice from the (U.S.) Representatives to the
Company. Such notice shall set forth the aggregate number of Option Securities
as to which the option is being exercised and the date and time when the Option
Securities are to be delivered and paid for which may be the same date and time
as the Closing Date but
<PAGE> 43
-3-

shall not be earlier than the Closing Date nor later than the tenth full
Business Day after the date of such notice (unless such time and date are
postponed in accordance with the provisions of Section 9 of the Underwriting
Agreement referred to below). Such notice shall be given at least two Business
Days prior to the date and time of delivery specified therein.)

The Underwritten Securities shall have the following terms:

Title: ( )
Liquidation preference: ( )
Dividend rate: ( )
Dividend payment dates: ( )
Conversion, exchange or exercise provisions: ( )
Redemption provisions: ( )
Public offering price: $( ) per share
Additional terms: ( )

All the provisions contained in the document entitled
"Underwriting Agreement -- Service Corporation International -- Equity
Securities" (the "Underwriting Agreement") and dated ( ), 199( ) (the
"Basic Provisions"), a copy of which you have previously received, are herein
incorporated by reference in their entirety and shall be deemed to be a part of
this Terms Agreement to the same extent as if the Basic Provisions had been set
forth in full herein. Terms defined in the Basic Provisions are used herein as
therein defined.

The Representative authorized to approve the form of agreement
specified in Section 6(m) of the Underwriting Agreement and to give the consent
specified in Section 5(h) and Section 6(m) of the Underwriting Agreement is
( ). (The additional exceptions to Section 5(h) are ( ).)

Any action by the Representatives hereunder may be taken by
the Representatives jointly or by ( ) alone on behalf of the
Representatives, and any such action taken by ( ) alone shall be
binding upon the Representatives. Notices to the Underwriters shall be given
to the Representatives c/o ( ) (facsimile: (( ))
( )); Attention: ( ).

This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the
same instrument. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly
<PAGE> 44

in such state, without giving effect to the conflicts of laws provisions
thereof.

Please accept this offer no later than ( ) o'clock ( ).M.
on ( ), 199( ), by signing a copy of this Terms Agreement in the
space set forth below and returning the signed copy to us, or by sending us a
written acceptance in the following form:

"We hereby accept your offer, set forth in the Terms
Agreement, dated ( ), 199( ), to purchase the Underwritten Securities
on the terms set forth therein (and hereby grant to the (U.S.) Underwriters the
option to purchase the Option Securities more fully set forth in the Terms
Agreement) and agree to and accept all other terms and provisions of the Terms
Agreement."

Very truly yours,

By:_____________________________________
Name:
Title:

Accepted as of the date
first above written:

SERVICE CORPORATION INTERNATIONAL

By: _______________________________
Name:
Title:
<PAGE> 45
ANNEX A

<TABLE>
<CAPTION>
Number of
(U.S.) Underwritten
Securities
(U.S.) Underwriters To Be Purchased
- ------------------- -------------------
<S> <C>

--------------

Total: ==============
</TABLE>
<PAGE> 46
ANNEX B

<TABLE>
<CAPTION>
Number of
International
Underwritten
International Securities
Managers To Be Purchased
- ------------- ---------------
<S> <C>

--------------

Total: ==============
</TABLE>
<PAGE> 47
SCHEDULE I

Significant Subsidiaries of the Company
Within the Meaning of Rule 1-02 of Regulation S-X
Under the Securities Exchange Act of 1934

<PAGE> 1
EXHIBIT 1.2

UNDERWRITING AGREEMENT

SERVICE CORPORATION INTERNATIONAL

Debt Securities

( ), 199( )

To the Underwriter or
Underwriters named in
the within mentioned
Terms Agreement

Ladies and Gentlemen:

Service Corporation International, a Texas corporation (the
"Company"), may issue and sell from time to time its debt securities,
consisting of (i) unsecured senior debt securities (the "Senior Debt
Securities"), (ii) unsecured senior subordinated debt securities (the "Senior
Subordinated Debt Securities") and (iii) subordinated debt securities (the
"Subordinated Debt Securities" and, together with the Senior Debt Securities
and the Senior Subordinated Debt Securities, the "Debt Securities"). The Debt
Securities are registered under the registration statement referred to in
Section 4(i) hereof. The Debt Securities may be issued in one or more series
and may have varying designations, denominations, interest rates and payment
dates, maturities, redemption provisions, conversion provisions, exchange
provisions and selling prices. The Senior Debt Securities will be issued under
an indenture (the "Senior Indenture") dated February 1, 1993 entered into
between the Company and The Bank of New York, as trustee (the "Senior
Trustee"). The Senior Subordinated Debt Securities will be issued under an
indenture (the "Senior Subordinated Indenture") to be entered into between the
Company and ( ), as trustee (the "Senior Subordinated Trustee"). The
Subordinated Debt Securities will be issued under an indenture (the
"Subordinated Indenture" and, together with the Senior Indenture and the Senior
Subordinated Indenture, the "Indentures") dated September 1, 1991 between the
Company and Texas Commerce Bank National Association, as trustee (the
"Subordinated Trustee" and, together with the Senior Trustee and the Senior
Subordinated Trustee, the "Trustees"). The Senior Subordinated Debt Securities
and the Subordinated Debt Securities may be convertible into shares of common
stock, par value $1.00 per share, of the Company (the "Common Stock"). The
basic provisions set forth herein are intended to be incorporated by reference
in a terms agreement of
<PAGE> 2
-2-

the type referred to below relating to, among other things, the designation and
series of Debt Securities and the aggregate principal amount of Debt Securities
(the "Underwritten Securities") to be issued and sold by the Company pursuant
thereto and to be purchased, severally, by the underwriter or several
underwriters named therein (the "Underwriters"). The Terms Agreement, which
shall be in the form of Exhibit I hereto (the "Terms Agreement"), relating to
the Underwritten Securities and such additional aggregate principal amount of
Debt Securities that the Underwriters may be granted an option to purchase by
the Company to cover over-allotments in connection with any offering of
Underwritten Securities (the "Option Securities" and together with the
Underwritten Securities, the "Offered Securities"), together with the
provisions hereof incorporated therein by reference (which provisions shall not
become effective until so incorporated by reference), is herein referred to as
this "Agreement." The Terms Agreement may reflect that a portion of the
Underwritten Securities are to be sold to the several U.S. underwriters named
therein (the "U.S. Underwriters") in connection with the offering and sale of a
portion of the Underwritten Securities in the United States and Canada (the
"U.S. Underwritten Securities") to United States and Canadian persons (as
defined in the instruments governing the coordination of the offering by the
U.S. Underwriters and the International Managers (as defined below) named
therein) and that the balance of the Underwritten Securities (the
"International Underwritten Securities") are to be sold to the several
international managers named therein (the "International Managers") in
connection with the offering and sale of such International Underwritten
Securities outside the United States and Canada to persons other than United
States and Canadian persons. In such event, as used herein, the term
"Underwriters" refers to the U.S. Underwriters and the International Managers,
and the term "Representatives" refers to the U.S. Representatives named therein
of the U.S. Underwriters and the International Representatives named therein of
the International Managers. If the Underwriters consist only of the firm or
firms referred to in the Terms Agreement as the Representative or
Representatives, then the terms "Underwriters" and "Representatives," as used
herein, shall be deemed to refer to such firm or firms.

Terms Agreement specifies the firm or firms which will be Underwriters, the
aggregate principal amount of the Offered Securities to be purchased by each
Underwriter, the purchase price to be paid by the Underwriters for the Offered
Securities, the public offering price, if any, of the Offered Securities and
any terms of the Offered Securities not otherwise specified in the applicable
Indenture (including, but not limited to, designations, denominations,
conversion or exchange provisions, covenants, interest rates and payment dates,
maturity, redemption provisions and sinking fund requirements). The Terms
Agreement specifies any details of the terms of the offering that should be
reflected in a post-effective amendment to the applicable Registration
Statement or the Prospectus Supplement (each as hereinafter defined).

The terms which follow, when used in this Agreement, shall
have the meanings indicated. "Registration Statement" shall mean the
registration statement or registration statements relating to the Offered
Securities (and such other securities of the Company as may be included
therein) which shall be the registration statement on Form S-3 filed under the
Securities Act of 1933, as amended (collectively with the rules and regulations
of the Securities and Exchange Commission (the "Commission") thereunder, the
"Securities Act"), referred to in Section 4(i) below, including all documents
incorporated therein by reference and all exhibits thereto, as from time to
time amended or supplemented pursuant to the Securities Act, the Securities
Exchange Act of 1934, as amended (collectively with the rules and regulations
of the Commission thereunder, the "Exchange Act"), or otherwise, including as
supplemented by the Prospectus Supplement, on or prior to the date of execution
and delivery of the Terms Agreement (the "Representation Date") and, in the
event any such amendment or supplement is filed prior to the Closing Date (as
defined in Section 3 hereof), including by the filing of any Prospectus
Supplement or document incorporated by reference, shall also mean such
registration statement as so amended or supplemented. "Prospectus" shall mean
the prospectus (including the related Prospectus Supplement with respect to the
Offered Securities) relating to the Debt Securities (and such other securities
of the Company as may be covered thereby), including all documents incorporated
therein by reference, as from time to time amended or supplemented pursuant to
the Securities Act, the Exchange Act or otherwise; provided, however, that a
Prospectus Supplement shall be deemed to have supplemented the Prospectus only
with respect to the Offered Securities to which it relates. Any reference
herein to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer
<PAGE> 4
-4-

to and include the filing of any document under the Exchange Act after the
effective date of the Registration Statement, or the issue date of any
preliminary prospectus or the Prospectus, as the case may be, and on or prior
to the completion of the applicable offering and which is deemed to be
incorporated therein by reference.

1. Agreements to Sell and Purchase. The Company agrees
to issue and sell to each Underwriter as hereinafter provided, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase
at the purchase price set forth in the Terms Agreement, severally and not
jointly, from the Company the respective aggregate principal amount of
Underwritten Securities set forth opposite the name of such Underwriter on the
annex or annexes to Exhibit 1 hereto (or such aggregate principal amount of
Underwritten Securities, as the case may be, increased as set forth in Section
9 hereof, subject to such adjustments to eliminate any fractional Offered
Securities as the Representatives in their sole discretion may make).

If, pursuant to the Terms Agreement, the Company shall have
granted the option to the Underwriters to purchase Option Securities, the
Company agrees to sell to the Underwriters designated in the Terms Agreement to
purchase Option Securities (each an "Option Securities Underwriter" and
collectively, the "Option Securities Underwriters") the Option Securities, and
the Option Securities Underwriters shall have a one-time right to purchase,
severally and not jointly, the Option Securities on the terms set forth in the
Terms Agreement. Option Securities may be purchased as provided below solely
for the purpose of covering over-allotments made in connection with the
offering of the Underwritten Securities. If any Option Securities are to be
purchased, each Option Securities Underwriter agrees, severally and not
jointly, to purchase the number of Option Securities (subject to such
adjustments to eliminate any fractional Offered Securities as the
Representatives designated in the Terms Agreement in their sole discretion may
make) that bears the same proportion to the total number of Option Securities
to be purchased as the number of Underwritten Securities set forth in the annex
or annexes to Exhibit 1 hereto opposite the name of such Option Securities
Underwriter bears to the total number of Underwritten Securities to be
purchased by all Option Securities Underwriters.

The Option Securities Underwriters may exercise the option to
purchase the Option Securities at any time on or before
<PAGE> 5
-5-

the thirtieth day following the Representation Date, by written notice from the
Representatives designated in the Terms Agreement to the Company. Such notice
shall set forth the aggregate number of Option Securities as to which the
option is being exercised and the date and time when the Option Securities are
to be delivered and paid for, which may be the same date and time as the
Closing Date (as hereinafter defined) but shall not be earlier than the Closing
Date nor later than the tenth full Business Day (as hereinafter defined) after
the date of such notice (unless such time and date are postponed in accordance
with the provisions of Section 9 hereof). Such notice shall be given at least
two Business Days prior to the date and time of delivery specified therein.

2. Terms of Public Offering. The Company understands
that the Underwriters intend (i) to make a public offering of the Offered
Securities as soon after the Prospectus Supplement has been filed and the Terms
Agreement has been executed and delivered as in the judgment of the
Representatives is advisable and (ii) initially to offer the Offered Securities
upon the terms set forth in the Prospectus Supplement and the Underwriters will
advise the Company as to any alteration in the terms of such offering that
would require, pursuant to the Securities Act, any amendment or supplement to
the Prospectus Supplement.

4. Representations and Warranties of the Company. The
Company represents and warrants to each Underwriter as of the Representation
Date and as of the Closing Date that:

(i) A registration statement on Form S-3 (Registration
No. 33-( )), including a prospectus, with respect to the Debt
Securities (and such other securities of the Company as may be covered
thereby), (i) has been prepared by the Company in conformity with the
requirements of the Securities Act, (ii) has been filed with the
Commission and (iii) has become effective. Such Registration
Statement and the related prospectus may have been amended or
supplemented from time to time prior to the Representation Date; any
such amendment to the applicable Registration Statement was so
prepared and filed and any such amendment has become effective. A
prospectus supplement (the "Prospectus Supplement"), including a
prospectus, relating to the Offered Securities has been prepared. The
Prospectus Supplement and, if not previously filed, such prospectus
will be filed pursuant to Rule 424 under the Securities Act. If the
offering of the Offered Securities is to be made by U.S. Underwriters
and International Managers, two such prospectus supplements, one
relating to the Offered Securities to be sold by the U.S. Underwriters
and one relating to the Underwritten Securities to be sold by the
International Managers, and each identical to the other except for the
cover page, have been so prepared and filed. In such event, the term
"Prospectus Supplement" refers to such international and U.S.
prospectus supplements. Copies of such Registration Statement and the
Prospectus relating thereto, any such amendment or
<PAGE> 7
-7-

supplement, the Prospectus Supplement and all documents incorporated
by reference therein which were filed with the Commission on or prior
to the Representation Date (including one fully executed copy of the
Registration Statement and of each amendment thereto for counsel for
the Underwriters) have been delivered to each of the Representatives.
The Company has included in the Registration Statement, as amended at
the date the Registration Statement was declared effective (the
"Effective Date"), all information (other than information relating
specifically to the terms of any particular series of Debt Securities
and the offering thereof) required by the Securities Act to be
included in the Prospectus with respect to the Offered Securities (and
the Common Stock, if applicable) and the offering and sale thereof.
Except to the extent that the Underwriters shall agree in writing to a
modification, the Registration Statement and the Prospectus shall be
in all substantive respects in the form furnished to the Underwriters
prior to the Representation Date or, to the extent not completed at
the Representation Date, shall contain only such specific additional
information and other changes as the Company has advised the
Underwriters, a reasonable time prior to the Representation Date, is
to be included or made therein and as to which the Underwriters have
not reasonably objected.

(ii) The Registration Statement, at the time it became
effective, any post-effective amendment thereto, at the time it became
effective, the Registration Statement and the Prospectus, as of the
Representation Date and at the Closing Date, and any amendment or
supplement thereto, conformed or will conform in all material respects
to the requirements of the Securities Act and the Trust Indenture Act
of 1939, as amended, and the Rules and Regulations of the Commission
thereunder (the "Trust Indenture Act"); and no such document included
or will include an untrue statement of a material fact or omitted or
will omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were
made) not misleading; provided, however, that the Company makes no
representation or warranty as to (a) information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information relating to any
Underwriter furnished to the Company by or on behalf of any
Underwriter expressly for use therein and (b) that part of the
Registration Statement that constitutes the Statement of Eligibility
on Form T-1 of any
<PAGE> 8
-8-

of the Trustees under the Trust Indenture Act filed as an exhibit to
the Registration Statement (the "Form T-1").

(iii) No order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission.

(v) Ernst & Young and Coopers & Lybrand, who are
reporting upon the audited financial statements and the supporting
schedules of the Company included or incorporated by reference in the
Registration Statement and the Prospectus, in the case of Ernst &
Young, were, at the time of their report, and, in the case of Coopers
& Lybrand, are, independent public accountants within the meaning of
the Securities Act. The financial statements, and the related notes
thereto, included or incorporated by reference in the Registration
Statement and the Prospectus, present fairly the consolidated
financial position of the Company and its consolidated subsidiaries as
of the dates indicated and the results of their operations and the
changes in their consolidated cash flows for the periods specified;
and said financial statements have been prepared in conformity with
United States generally accepted accounting principles applied on a
consistent basis, except as set forth therein, and the supporting
schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated
therein. If pro forma financial information is included in or
incorporated by reference into the Registration Statement and the
Prospectus, such pro forma financial information (including, without
limitation, the notes thereto) as of the date presented (A) presented
fairly in all material respects the information shown therein, (B) was
prepared in accordance with applicable requirements of Regulation S-X
promulgated under the Exchange Act, (C) was prepared in accordance
with the Commission's rules and guidelines with respect to pro forma
financial statements and (D) was properly computed on
<PAGE> 9
-9-

the bases described therein. In the opinion of the Company, the
assumptions used in the preparation of any such pro forma financial
information (including, without limitation, the notes thereto) were
fair and reasonable and the adjustments used therein were appropriate
to give effect to the transactions or circumstances referred to
therein. No pro forma financial statements or other pro forma
financial information is required to be included or incorporated by
reference in the Registration Statement and the Prospectus other than
those included or incorporated by reference therein.

capital stock of each Subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable, and, except as set forth in
the Registration Statement and the Prospectus, are owned by the
Company, directly or indirectly, free and clear of all liens,
encumbrances, security interests, claims and restrictions on
transferability and voting (other than any restrictions on
transferability as may arise under state and federal securities laws).
Except as set forth in the Registration Statement and the Prospectus,
there are no outstanding (i) securities or obligations convertible
into or exchangeable or exercisable for any shares of capital stock
of, or other interest in, the Company or any Subsidiary, (ii) rights,
warrants or options to acquire or purchase any shares of capital stock
of, or other interest in, the Company or any Subsidiary or any such
convertible, exchangeable or exercisable securities or obligations, or
(iii) obligations or understandings to issue or sell any shares of
capital stock of, or other interest in, the Company or any Subsidiary,
any such convertible, exchangeable or exercisable securities or
obligations, or any such warrants, rights or options, except as have
been disclosed to the Underwriters in writing prior to the date hereof
and except for (A) issuances of shares of Common Stock and options to
acquire Common Stock after the date of the most recent information set
forth in the Registration Statement and the Prospectus pursuant to the
Company's employee benefit plans as in effect on the date hereof and
(B) issuances after the date of the most recent information set forth
in the Registration Statement and the Prospectus of convertible
debentures of the Company and Common Stock pursuant to the Company's
Registration Statement on Form S-4 (Registration No. 33-54996) (the
"S-4").

(ix) This Agreement and the Terms Agreement have been
duly and validly authorized, executed and delivered by the Company.

(x) Since the date of the latest consolidated financial
statements of the Company and the Subsidiaries included in the
Registration Statement and the Prospectus, except as set forth in or
expressly contemplated by the Registration Statement and the
Prospectus, there has not been (A) any change in the Company's issued
capital stock or options, except (I) pursuant to the exercise of
options or the conversion or exchange of outstanding convertible or
exchangeable securities of the Company, (II) issuances of shares of
Common Stock and options to acquire Common Stock issued after the date
of such financial statements pursuant to the Company's employee
benefit plans as in effect on the date hereof and (III) issuances
after the date of such financial statements of convertible debentures
of the Company and Common Stock pursuant to the S-4, or (B) any
material adverse change in the management, condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and the Subsidiaries, taken as a whole (each, a "Material
Adverse Change," and any event or state of facts which could, singly
or in the aggregate, reasonably be expected to result in a Material
Adverse Change is herein referred to as a "Prospective Material
Adverse Change"), whether or not arising from transactions or events
occurring in the ordinary course of business.

(xi) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
set forth therein, (A) there have been no transactions or contracts
(written or oral) entered into or agreed to be entered into by the
Company or any of the Subsidiaries (other than those in the ordinary
course of business) which are material to the Company and the
Subsidiaries, taken as a whole and (B) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock, other than regularly scheduled quarterly
dividends in accordance with the past practice of the Company.

issuable upon conversion or exchange of the Offered Securities, if
applicable) conforms as to legal matters to the description thereof
contained in the Registration Statement and the Prospectus, and all of
the outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and
are not subject to any preemptive or similar rights. The rights
agreement dated as of July 18, 1988 between the Company and Texas
Commerce Bank National Association as rights agent, as amended to date
(the "Rights Agreement"), has been duly authorized, executed and
delivered by the Company; the rights (the "Rights") to purchase the
Company's Series C Junior Participating Preferred Stock (the "Series C
Preferred Stock") outstanding thereunder and, if the Offered
Securities are convertible into shares of Common Stock, to be issued
upon issuance of the Common Stock upon conversion of such Offered
Securities, have been duly authorized; the Series C Preferred Stock to
be issued upon exercise of the Rights has been duly authorized; and
the description of the Rights Agreement and the Rights set forth in
the Registration Statement and the Prospectus is accurate in all
material respects.

(xiii) All corporate action required to be taken for the
authorization, issuance and sale of the Offered Securities pursuant to
this Agreement and the Terms Agreement has been validly and
sufficiently taken. The Offered Securities, when executed by the
Company and authenticated by the applicable Trustee in accordance with
the terms of the applicable Indenture (assuming the due authorization,
execution and delivery of such Indenture by the Trustee thereunder),
and delivered to and paid for by the Underwriters in accordance with
the terms of this Agreement and the Terms Agreement and the applicable
Indenture (assuming the due authorization, execution and delivery
thereof by the Trustee thereunder), will constitute the valid and
binding obligations of the Company entitled to the benefits of the
applicable Indenture and enforceable against the Company in accordance
with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law). The Company has all the requisite corporate power
and authority to execute and deliver the applicable Indenture and any
supplemental indenture to such Indenture relating to the Offered
Securities (the "Supplemental Indenture") and to incur and
<PAGE> 13
-13-

perform its obligations provided for therein. Each of the Indenture
and the Supplemental Indenture relating to the Offered Securities,
when executed by the Company and the Trustee thereunder (assuming the
due authorization, execution and delivery of such Indenture and
Supplemental Indenture by the Trustee thereunder), will constitute the
valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law). If the Offered
Securities are convertible into Common Stock, the Offered Securities
are convertible into Common Stock in accordance with their terms and
the terms of the applicable Supplemental Indenture relating to the
Offered Securities.

(xiv) If the Offered Securities are convertible into
Common Stock, the Common Stock issuable upon conversion of the Offered
Securities pursuant to the terms of the Supplemental Indenture has
been duly authorized and validly reserved for issuance upon such
conversion by all necessary corporate action and such Common Stock,
when duly issued upon such conversion will be validly issued and fully
paid and nonassessable; no holder thereof will be subject to personal
liability solely by reason of being such a holder; and the issuance of
such Common Stock upon such conversion will not be subject to
preemptive rights.

(xv) The Offered Securities and the Indenture and
Supplemental Indenture relating thereto conform in all material
respects to the descriptions thereof in the Prospectus.

(xvi) The execution and delivery by the Company of, and
the full and timely performance by the Company of its obligations
under, this Agreement and the Terms Agreement, the Indenture relating
to the Offered Securities, the Supplemental Indenture relating to the
Offered Securities, the compliance by the Company with the terms
thereof, and the consummation of each of the transactions contemplated
herein and therein, (A) have been duly authorized by all necessary
corporate action on the part of the Company, (B) do not and will not
result in any violation of the articles of incorporation or by-laws of
the Company and (C) do not and will not conflict with, or result in a
breach or violation of, any of the terms or provisions of, or
<PAGE> 14
-14-

constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or give rise to any right
to accelerate the maturity or require the prepayment of any
indebtedness under, or result in the creation or imposition of any
lien, charge or encumbrance upon any material property or assets of
the Company or of any Subsidiary under (I) any indenture, mortgage,
loan agreement, note, lease, license, partnership agreement, franchise
agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them may be bound or affected
or to which any of their respective properties or assets may be
subject (each, a "Contract" and collectively, the "Contracts"), other
than any such conflict, breach, default, acceleration, prepayment,
lien, charge or encumbrance that, could not individually or in the
aggregate, reasonably be expected to result in any Material Adverse
Effect, (II) any existing applicable law, rule or regulation (other
than the securities or Blue Sky laws of the various states and other
jurisdictions of the United States of America) or (III) any judgment,
order or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company or
any Subsidiary or any of their respective properties or assets.

(xvii) No authorization, approval, consent or license of,
or filing with, any government, governmental instrumentality or court,
domestic or foreign (other than as have been made and obtained and are
in full force and effect under the Securities Act and the Trust
Indenture Act or as may be required under the securities or Blue Sky
laws of the various states and other jurisdictions of the United
States of America) is required for the valid authorization, issuance,
sale and delivery of the Offered Securities by the Company, the
execution and delivery by the Company of, or the full and timely
performance by the Company of each of its obligations under, this
Agreement, the Terms Agreement, the Indenture relating to the Offered
Securities, the Supplemental Indenture relating to the Offered
Securities, and the compliance by the Company with its obligations
thereunder.

(xviii) There are no contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed or incorporated by reference as exhibits to
the Registration Statement that are not described, filed or
incorporated as required.
<PAGE> 15
-15-

(xix) No holder of any securities of the Company has any
rights, not effectively satisfied or waived, to require the Company to
register the sale of any securities under the Securities Act in
connection with the filing of the Registration Statement or the
consummation of the transactions contemplated therein or pursuant to
this Agreement or the Terms Agreement.

(xx) The Company and the Subsidiaries are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health, or the
environment or imposing liability or standards of conduct concerning
Hazardous Material (collectively, "Environmental Laws"), except where
such noncompliance with Environmental Laws could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
The term "Hazardous Material" means (i) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (ii) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act, as amended,
(iii) any petroleum or petroleum product, (iv) any polychlorinated
biphenyl, and (v) any pollutant or contaminant or hazardous,
dangerous, or toxic chemical, material, waste or substance regulated
under or within the meaning of any other Environmental Law.

(xxi) Each of the Company and each of the Subsidiaries
owns, possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and
other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof, except in each case where the failure
to obtain licenses, permits, certificates, consents, orders, approvals
and other authorizations, or to make all declarations and filings,
could not, singly or in the aggregate, reasonably be expected to have
a Material Adverse Effect, and neither the Company nor any Subsidiary
has received any notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order,
approval or other authorization, except as described in the
Registration Statement and the Prospectus and except, in each case,
where such revocation or modification could not,
<PAGE> 16
-16-

reasonably be expected to singly or in the aggregate, have a Material
Adverse Effect; and the Company and each Subsidiary are in compliance
with all laws and regulations relating to the conduct of their
respective businesses as conducted as set forth in the Registration
Statement and the Prospectus, except where noncompliance with such
laws or regulations could not, singly or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

(xxii) To the best knowledge of the Company, each of the
Company and the Subsidiaries owns or possesses the patents, patent
licenses, trademarks, service marks, trade names, copyrights and
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) (collectively, the "Intellectual Property") reasonably
necessary to carry on the business conducted by each as conducted on
the date hereof, except to the extent that the failure to own or
possess such Intellectual Property could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
and, except as set forth in the Registration Statement and the
Prospectus, neither the Company nor any Subsidiary has received any
notice of infringement of or conflict with asserted rights of others
with respect to any Intellectual Property, except for notices the
content of which if accurate could not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(xxiii) Except as set forth in the Registration Statement
and the Prospectus, no authorization, approval or consent of any
governmental authority or agency is required (other than those which
have already been obtained) under the laws of any jurisdiction in
which the Company or any of the Subsidiaries conduct their respective
businesses in connection with the ownership by the Company of capital
stock of any Subsidiary, any foreign exchange controls or the
repatriation of any amount from or to the Company and the
Subsidiaries, except to the extent such authorizations, approvals or
consents have been obtained and are in full force and effect and
except to the extent that the failure to obtain such authorization,
approval or consent could not, singly or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

(xxiv) The Company has not taken and will not take,
directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or
manipulation of the price of the Offered
<PAGE> 17
-17-

Securities (or the Common Stock, if applicable), and the Company has
not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the
Offered Securities other than any preliminary prospectus filed with
the Commission or the Prospectus or other materials permitted under
the Securities Act.

(xxv) Except as set forth in the Registration Statement
and the Prospectus, there is no action, suit or proceeding before or
by any government, governmental or regulatory instrumentality, agency
or body or court, domestic or foreign, or any arbitrator, now pending
or, to the best knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any affiliate of the
Company that, singly or in the aggregate with all such actions, suits
and proceedings (i) could reasonably be expected to have a Material
Adverse Effect or could reasonably be expected to have a material
adverse effect on the consummation of the transactions contemplated in
this Agreement or (ii) is required to be described in the Registration
Statement or the Prospectus that is not so described.

(xxvi) Neither the Company nor any Subsidiary (i) is in
violation of its articles of incorporation, by-laws or other
organizational documents or (ii) is or with the giving of notice or
lapse of time or both would be in violation of, or in breach of or in
default under or in the performance or observance of, any obligation,
agreement, covenant or condition contained in this Agreement, the
Terms Agreement or any Contract or of any permit, order, decree,
judgment, statute, rule or regulation, foreign or domestic, applicable
to the Company or any Subsidiary, except for such violations, breaches
or defaults that, could not singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

(xxvii) The Company is not an "investment company" or an
entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended or a holding
company or a subsidiary of a holding company under the Public Utility
Holding Company Act of 1935.

(xxviii) The Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-1933 8, Laws of Florida).
<PAGE> 18
-18-

(xxix) The statistical and market-related data included or
incorporated by reference in the Registration Statement and the
Prospectus are based on or derived from sources which the Company
believes to be reliable and accurate or represent the Company's good
faith estimates that are made on the basis of data derived from such
sources.

(xxx) The Company knows of no outstanding claims for
services, either in the nature of a finder's fee or origination fee,
with respect to the transactions contemplated hereby and by the Terms
Agreement, other than the underwriting fees and compensation to be
paid to the Underwriters in accordance with this Agreement.

(xxxi) No labor disputes exist with employees of the
Company or of the Subsidiaries that could, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

Any certificate signed by any officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.

5. Agreements of the Company. The Company covenants
and agrees with each Underwriter as follows:

(a) To use its reasonable best efforts to cause any
amendment to the Registration Statement to become effective at the
earliest possible time.

(c) To give the Underwriters prompt notice of the
Company's intention to file or prepare any amendment to the
<PAGE> 19
-19-

Registration Statement or any amendment or supplement to the
Prospectus, whether pursuant to the Securities Act, the Exchange Act
or otherwise, to furnish the Underwriters and their counsel with
copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and not to
file any such amendment or supplement or use any such prospectus to
which the Underwriters or counsel for the Underwriters shall object.
Subject to the foregoing sentence, the Company will cause each
Prospectus Supplement relating to the Offered Securities to be filed
with the Commission pursuant to the applicable paragraph of Rule 424
under the Securities Act within the time period prescribed and will
provide evidence satisfactory to the Underwriters of such timely
filing.

(d) To advise the Representatives and their counsel
promptly, and to confirm such advice in writing, (i) when any
Prospectus Supplement relating to the Offered Securities shall have
been filed with the Commission pursuant to Rule 424 under the
Securities Act, (ii) when, prior to the termination of the offering of
the Offered Securities, any amendment to the Registration Statement
shall have been filed with the Commission or become effective, (iii)
of the receipt of any comments from the Commission or of any request
by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any Prospectus or Prospectus
Supplement or the initiation or threatening of any proceeding for that
purpose and (v) of the receipt by the Company of any notification with
respect to any suspension of the qualification of the Offered
Securities for offer and sale in any jurisdiction or the initiation of
any proceeding for such purpose; and to use its reasonable best
efforts to prevent the issuance of any such stop order or notification
and, if issued, to obtain as soon as possible the withdrawal thereof.

advisable to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary or advisable to amend or supplement the Prospectus to comply
with law, forthwith, at the sole expense of the Company, to prepare,
and, subject to Section 5(c) above, file with the Commission and
furnish, without charge, to the Underwriters and to the dealers (whose
names and addresses the Representatives will furnish to the Company)
to which Offered Securities may have been sold by the Representatives
on behalf of the Underwriters and to any other dealers, upon request,
such amendments or supplements to the Prospectus as may be necessary
so that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will
comply with law.

(f) To endeavor to qualify the Offered Securities (and,
if applicable, the Common Stock) for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the
Representatives shall request and to continue such qualification in
effect so long as required for distribution of the Offered Securities
and to pay all fees and expenses (including fees and disbursements of
counsel to the Underwriters) incurred in connection with such
qualification; provided, however, that the Company shall not be
required to file a general consent to service of process in any
jurisdiction or subject itself to general taxation in any
jurisdiction.

(h) For a period of 120 days after the Representation
Date, without the prior written consent of the
<PAGE> 21
-21-

Representative designated in the Terms Agreement, not to, and not
cause or permit any Subsidiary to, directly or indirectly, effect any
offer, sale or other disposition of, or registration of, any Debt
Securities or any securities convertible into or exchangeable or
exercisable for Debt Securities, other than the Offered Securities to
be sold pursuant to the Terms Agreement and other than pursuant to
such other exceptions, if any, as are agreed to by the Representatives
and set forth in the Terms Agreement. If the Offered Securities are
convertible into Common Stock, during a period of 120 days from the
Representation Date, the Company will not, without the prior written
consent of the Representative designated in the Terms Agreement,
directly or indirectly, effect any offer, sale or other disposition
of, or registration of, shares of Common Stock or any right to
purchase or other security convertible into or exchangeable or
exercisable for or any securities of the Company substantially similar
to any such shares, other than (A) the Offered Securities to be sold
pursuant to the Terms Agreement, (B) shares of Common Stock issued
upon conversion, exercise or exchange of convertible, exchangeable or
exercisable securities of the Company or of any Subsidiary outstanding
on the Representation Date and (C) shares of Common Stock and options
thereunder issued pursuant to employee benefit plans of the Company in
place on the Representation Date as in effect on the Representation
Date, and other than pursuant to such other exceptions, if any, as are
agreed to by the Representatives and set forth in the Terms
Agreement.

Stock issuable upon conversion or exchange thereof) under the laws of
such jurisdictions as the Representatives may request (including
filing fees and the fees of counsel for the Underwriters and their
disbursements), (iv) in connection with the listing of the Offered
Securities on the ( ) and, if the Offered Securities are
convertible into Common Stock, the listing of such Common Stock on the
New York Stock Exchange, (v) relating to any filing with the National
Association of Securities Dealers Inc. (the "NASD") in connection with
the offering of the Offered Securities, (vi) incurred in connection
with the engagement of any qualified independent underwriter as may be
required by NASD rules and regulations, (vii) incurred in connection
with the rating of the Offered Securities, (viii) incurred in
connection with advertising relating to the Offered Securities
approved by the Company (which approval shall not be unreasonably
withheld or delayed), (ix) relating to the fees and expenses of the
applicable Trustee, including the fees and expenses of counsel to the
applicable Trustee, and of the transfer agent and registrar for the
Common Stock if the Offered Securities are convertible into the Common
Stock and (x) relating to or in connection with the printing
(including word processing and duplication costs) and delivery of this
Agreement, the Terms Agreement, the Indenture relating to the Offered
Securities, any Supplemental Indenture relating thereto, the agreement
among underwriters, each other document or instrument relating to the
underwriting arrangements and the coordination of the offering of the
Offered Securities by the U.S. Underwriters and the International
Managers, if applicable, any dealer agreements, the Preliminary and
Supplemental Blue Sky Memoranda and the furnishing to the Underwriters
and dealers of copies of the Registration Statement, the Prospectus
and each Prospectus Supplement, including mailing and shipping, as
herein provided.

(k) To use the net proceeds of the offering of the
Offered Securities as set forth in the Prospectus under the caption
"Use of Proceeds."
<PAGE> 23
-23-

(m) (To use its best efforts to effect the listing of
the Offered Securities on the ( ) on the
Representation Date.) If the Offered Securities are convertible into
Common Stock, the Company will use its best efforts to effect the
listing of the shares of Common Stock issuable upon conversion of the
Offered Securities on the New York Stock Exchange on the
Representation Date.

(n) To reserve and keep available at all times, free of
preemptive rights, sufficient shares of Common Stock to satisfy any
obligations to issue shares of Common Stock upon conversion of all of
the Offered Securities that are convertible into the Common Stock.

6. Conditions of Underwriters' Obligations. The
several obligations of the Underwriters hereunder to purchase the Underwritten
Securities are subject to the following conditions:

to be performed or satisfied hereunder at or prior to the Closing Date.

(i) Each of this Agreement and the Terms
Agreement has been duly authorized, executed and delivered by
the Company.

(ii) The Company has the requisite corporate
power and authority to execute, deliver and perform its
obligations under the Indenture relating to the Offered
Securities, and such Indenture has been duly authorized,
executed and delivered by the Company and has been duly
qualified under the Trust Indenture Act and (assuming the due
authorization, execution and
<PAGE> 25
-25-

delivery by the Trustee thereunder) constitutes a valid and
legally binding instrument of the Company, enforceable against
the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies
generally and subject to the effect of general principles of
equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and the discretion of the
court before which any proceeding therefor may be brought.

(iii) The Company has the requisite corporate
power and authority to issue and deliver the Offered
Securities, and the Offered Securities have been duly
authorized by the Company for issuance. The Offered
Securities, when executed by the Company and authenticated by
the Trustee in accordance with the Indenture relating to the
Offered Securities (assuming the due authorization, execution
and delivery of the Indenture by the Trustee thereunder) and
delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement and the Terms Agreement will
constitute valid and legally binding obligations of the
Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their
terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer
and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and the discretion
of the court before which any proceeding therefor may be
brought.

(iv) The Company has the requisite corporate
power and authority to execute, deliver and perform its
obligations under the Supplemental Indenture relating to the
Offered Securities, and the Supplemental Indenture has been
duly authorized, executed and delivered by the Company and
(assuming the due authorization, execution and delivery by the
Trustee under the Indenture relating to the Offered
Securities) constitutes a valid and legally binding instrument
of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer
and similar laws
<PAGE> 26
-26-

affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding
in equity or at law) and the discretion of the court before
which any proceeding therefor may be brought.

(v) The statements set forth or incorporated
by reference in the Registration Statement and the Prospectus
insofar as such statements purport to summarize certain
provisions of the Offered Securities (and the Common Stock, if
applicable), the Indenture and the Supplemental Indenture
provide a fair summary of such provisions.

(vi) The number of authorized shares of capital
stock of the Company is as set forth in the Prospectus under
"Capitalization" and the authorized capital stock of the
Company conforms as to legal matters to the description
thereof contained in the Prospectus.

(vii) If the Offered Securities are convertible
into Common Stock, upon issuance and delivery of the Offered
Securities, the Offered Securities shall be convertible at the
option of the holder thereof into Common Stock in accordance
with the terms of the Offered Securities and the Supplemental
Indenture relating thereto; the Common Stock issuable upon
conversion of the Offered Securities have been duly authorized
and validly reserved for issuance upon such conversion by all
necessary corporate action, and such Common Stock, when issued
upon such conversion, will be validly issued, fully paid and
nonassessable; no holder of the Common Stock will be subject
to personal liability solely by reason of being such a holder;
and the issuance of such shares upon such conversion will not
be subject to preemptive rights arising by operation of law or
under the charter or by-laws of the Company.

(viii) At the time the Registration Statement and
each amendment thereto became effective and at the
Representation Date, the Registration Statement and the
Prospectus (other than the Form T-1 and the financial
statements and schedules and other financial and statistical
data included or incorporated by reference therein, as to
which such counsel need express no opinion) appear on their
face to be appropriately
<PAGE> 27
-27-

responsive to the applicable requirements of the Securities
Act. The applicable Indenture, as amended by the Supplemental
Indenture, complies with the requirements of the Trust
Indenture Act.

(ix) Such counsel does not know of any legal or
governmental actions, suits or proceedings, pending or
threatened, required to be disclosed in the Registration
Statement which are not disclosed therein as required
(provided that for such purpose such counsel need not regard
any action, suit or proceeding to be "threatened" unless the
potential litigant has manifested to the management of the
Company or to such counsel a present intention to initiate
such suit or proceeding).

(x) Based upon such counsel's review of
applicable law, no authorization, approval, consent or order
of any court or governmental or regulatory authority, body or
agency or third party is required in connection with (A) the
offering, issuance or sale of the Offered Securities or, if
applicable, the valid authorization, issuance and delivery of
the Common Stock issuable upon conversion of the Offered
Securities, or (B) the execution, delivery or full and timely
performance of this Agreement, the Terms Agreement, the
Indenture or the Supplemental Indenture by the Company, except
such as may be required under the Securities Act, the Trust
Indenture Act or state securities laws.

(xi) To the best of such counsel's knowledge
and information, the execution, delivery and the full and
timely performance of this Agreement, the Terms Agreement, the
Indenture and the Supplemental Indenture and the consummation
of the transactions contemplated herein (including the
issuance, sale and delivery of the Offered Securities and, if
applicable, the issuance of the Common Stock upon conversion
of the Offered Securities), will not constitute a breach of,
or default under (including, without limitation, any event
which with notice or lapse of time, or both, would constitute
a breach of or a default under), or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries
pursuant to, any contract identified on a schedule to such
opinion, nor will such action result in any violation of the
provisions of the
<PAGE> 28
-28-

charter or by-laws of the Company, or any applicable law,
rule, regulation or administrative, regulatory or court
judgment, order or decree, except for any breach, default,
lien, charge or encumbrance under any such contract as could
not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

(xii) Each document filed pursuant to the
Exchange Act (other than the financial statements, schedules
and other financial and statistical data included therein, as
to which such counsel need express no opinion) and
incorporated or deemed to be incorporated by reference in the
Prospectus appears on its face to be appropriately responsive
to the applicable requirements of the Exchange Act.

(xiii) The Company is not an investment company
under the Investment Company Act of 1940, nor a holding
company or a subsidiary of a holding company under the Public
Utility Holding Company Act of 1935.

Such counsel shall also state that they have been advised by the
Commission that the Indenture has been qualified under the Trust Indenture Act
and that the Registration Statement became effective under the Securities Act;
that any required filings of the Prospectus pursuant to Rule 424(b) have been
made in the manner and within the time period required by Rule 424(b); and
that, based solely on conversations with the Commission, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted, are pending or, to such
counsel's knowledge, are contemplated under the Securities Act.

In addition, such counsel shall also include a statement to the effect
that nothing has come to the attention of such counsel which leads such counsel
to believe that (1) the Registration Statement (other than the financial
statements and schedules and other financial and statistical data included or
incorporated by reference therein, as to which such counsel need not make any
statement or express any opinion), when it became effective contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (2) the Prospectus (other than the financial statements and
schedules and other financial and statistical data included or incorporated by
reference therein, as to which such counsel need not make any statement or
express any opinion) as of its date or at the Repre-
<PAGE> 29
-29-

sentation Date contained and, as of the date such opinion is delivered,
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.

Such counsel in rendering such opinion may rely as to certain matters
of fact on certificates of officers of the Company and of public officials;
provided, however, that (a) such counsel shall state that such counsel, the
Underwriters and counsel for the Underwriters are justified in relying upon
such certificates and (b) such certificates shall have been delivered to the
Representatives prior to the Closing Date. In rendering such opinion, such
counsel may rely as to matters involving the application of laws of (1) the
State of Texas, upon the written opinion of James M. Shelger delivered pursuant
to clause (f) below of this Section 6 and (2) any jurisdiction other than the
State of New York or the United States or the General Corporation Law of the
State of Delaware, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel who are reasonably satisfactory to
counsel for the Underwriters; provided, however, that such counsel shall state
that such counsel, the Underwriters and counsel for the Underwriters are
justified in relying upon such opinion.

(f) The Representatives shall have received on the Closing Date a
signed opinion of James M. Shelger, General Counsel of the Company, addressed
to the Underwriters and dated the Closing Date and satisfactory to counsel for
the Underwriters, to the effect that:

(ii) Each Subsidiary has been duly
incorporated, is validly existing as a corporation in good
standing
<PAGE> 30
-30-

under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be
in good standing could not, singly or in the aggregate,
reasonably be expected to have a Material Adverse
Effect.

(iii) Each of this Agreement and the Terms
Agreement has been duly authorized, executed and delivered by
the Company.

(iv) The Company has the requisite corporate
power and authority to execute, deliver and perform its
obligations under the Indenture relating to the Offered
Securities, and such Indenture has been duly authorized,
executed and delivered by the Company and has been duly
qualified under the Trust Indenture Act and (assuming the due
authorization, execution and delivery by the Trustee
thereunder) constitutes a valid and legally binding instrument
of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject to the
effect of general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and
the discretion of the court before which any proceeding
therefor may be brought.

(v) The Company has the requisite corporate
power and authority to issue and deliver the Offered
Securities, and the Offered Securities have been duly
authorized by the Company for issuance. The Offered
Securities, when executed by the Company and authenticated by
the Trustee in accordance with the Indenture relating to the
Offered Securities (assuming the due authorization, execution
and delivery of the Indenture by the Trustee thereunder) and
delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement and the Terms Agreement will
constitute valid and legally binding obligations of the
Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with
<PAGE> 31
-31-

their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer
and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and the discretion
of the court before which any proceeding therefor may be
brought.

(vi) The Company has the requisite corporate
power and authority to execute, deliver and perform its
obligations under the Supplemental Indenture relating to the
Offered Securities, and the Supplemental Indenture has been
duly authorized, executed and delivered by the Company and
(assuming the due authorization, execution and delivery by the
Trustee under the Indenture relating to the Offered
Securities) constitutes a valid and legally binding instrument
of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer
and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and the discretion
of the court before which any proceeding therefor may be
brought.

(vii) The statements set forth or incorporated
by reference in the Registration Statement and the Prospectus
insofar as such statements purport to summarize certain
provisions of the Offered Securities (and the Common Stock, if
applicable), the Indenture and the Supplemental Indenture
provide a fair summary of such provisions.

(viii) The number of authorized shares of capital
stock of the Company is as set forth in the Prospectus under
"Capitalization" and the authorized capital stock of the
Company conforms as to legal matters to the description
thereof contained in the Prospectus.

(ix) If the Offered Securities are convertible
into Common Stock, upon issuance and delivery of the Offered
Securities, the Offered Securities shall be convertible at the
option of the holder thereof into
<PAGE> 32
-32-

Common Stock in accordance with the terms of the Offered
Securities and the Supplemental Indenture relating thereto;
the Common Stock issuable upon conversion of the Offered
Securities have been duly authorized and validly reserved for
issuance upon such conversion by all necessary corporate
action, and such Common Stock, when issued upon such
conversion, will be validly issued, fully paid and
nonassessable; no holder of the Common Stock will be subject
to personal liability solely by reason of being such a holder;
and the issuance of such shares upon such conversion will not
be subject to preemptive rights arising by operation of law or
under the charter or by-laws of the Company.

(x) All of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly
issued, is fully paid and nonassessable and, to the best of
such counsel's knowledge and information, after due inquiry,
except as set forth in the Registration Statement and the
Prospectus, is owned by the Company, directly or indirectly,
free and clear of any perfected security interest, and, to the
best of such counsel's knowledge, after due inquiry, any other
security interests or claims.

(xi) Such counsel does not know of any legal or
governmental actions, suits or proceedings, pending or
threatened, required to be disclosed in the Registration
Statement which are not disclosed therein as required
(provided that for such purpose such counsel need not regard
any action, suit or proceeding to be "threatened" unless the
potential litigant has manifested to the management of the
Company or to such counsel a present intention to initiate
such suit or proceeding).

(xii) To the best of such counsel's knowledge
and information, after due inquiry, there are no Contracts or
other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto.

(xiii) Based upon such counsel's review of
applicable law, no authorization, approval, consent or order
of any court or governmental or regulatory
<PAGE> 33
-33-

authority, body or agency or third party is required in
connection with (A) the offering, issuance or sale of the
Offered Securities or, if applicable, the valid authorization,
issuance and delivery of the Common Stock issuable upon
conversion of the Offered Securities, or (B) the execution,
delivery or full and timely performance of this Agreement, the
Terms Agreement, the Indenture or the Supplemental Indenture
by the Company, except such as may be required under the
Securities Act, the Trust Indenture Act or state securities
laws.

(xiv) To the best of such counsel's knowledge
and information, the execution, delivery and the full and
timely performance of this Agreement, the Terms Agreement, the
Indenture and the Supplemental Indenture, the consummation of
the transactions contemplated herein (including the issuance,
sale and delivery of the Offered Securities and, if
applicable, the issuance of the Common Stock upon conversion
of the Offered Securities), and compliance by the Company with
its obligations hereunder and thereunder will not conflict
with or constitute a breach of, or default under (including,
without limitation, any event which, with notice or lapse of
time, or both, would constitute a breach of or a default
under), or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries pursuant to, any contract
identified on a schedule for such opinion, nor will such
action result in any violation of the provisions of the
charter or by-laws of the Company, or any applicable law,
rule, regulation or administrative, regulatory or court
judgment, order or decree, except for any breach, default,
lien, charge or encumbrance under any such contract as could
not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

to make the statements therein not misleading and (2) the Prospectus (other
than the financial statements and schedules and other financial and statistical
data included or incorporated by reference therein, as to which such counsel
need not make any statement or express any opinion) as of its date or at the
Representation Date contained and, as of the date such opinion is delivered,
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.

Such counsel in rendering such opinion may rely as to certain matters
of fact on certificates of officers of the Company and of public officials;
provided, however, that (a) such counsel shall state that such counsel, the
Underwriters and counsel for the Underwriters are justified in relying upon
such certificates and (b) such certificates shall have been delivered to the
Representatives prior to the Closing Date. In rendering such opinion, such
counsel may rely as to matters involving the application of laws of (1) the
State of New York or the General Corporation Law of the State of Delaware upon
the written opinion of Wachtell, Lipton, Rosen & Katz delivered pursuant to
clause (e) above of this Section 6 and (2) any jurisdiction other than the
State of Texas or the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel who are reasonably
satisfactory to counsel for the Underwriters; provided, however, that such
counsel shall state that such counsel, the Underwriters and counsel for the
Underwriters are justified in relying upon such opinion.

(g) On the Representation Date and also on the Closing Date, Ernst
& Young and Coopers & Lybrand shall have furnished to the Representatives
signed letters, addressed to the Underwriters and dated the respective dates of
delivery thereof, in form and substance satisfactory to the Representatives,
containing statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information included or incorporated by
reference in the Registration Statement and the Prospectus.

(h) The Representatives shall have received on and as of the
Closing Date a favorable opinion of Cahill Gordon & Reindel, counsel to the
Underwriters, with respect to the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters.
<PAGE> 35
-35-

(i) (On the Representation Date, the Offered Securities shall have
been approved for listing on the ( ) upon notice of issuance.) If the
Offered Securities are convertible into Common Stock, on the Representation
Date, the Common Stock issuable upon conversion of the Offered Securities shall
have been approved for listing on the New York Stock Exchange upon notice of
issuance.

(j) At the Closing Date, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the Offered
Securities as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Offered
Securities (and, if applicable, the Common Stock) as herein contemplated shall
be satisfactory in form and substance to the Underwriters and counsel for the
Underwriters.

(k) On or prior to the Closing Date the Company shall have
furnished to the Representatives such further certificates and documents as the
Representatives shall reasonably request.

(l) Subsequent to the execution and delivery of the Terms
Agreement and prior to the Closing Date, there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any intended or
potential downgrading or (ii) any review or possible change that does not
indicate an improvement, in the rating accorded any securities of or guaranteed
by the Company by any "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) under the Securities
Act.

(m) If the Offered Securities are convertible into Common Stock,
the Company shall have delivered to the Representatives written agreements, in
form and substance satisfactory to the Representative designated in the Terms
Agreement, with each of its executive officers who owns Common Stock that no
offer, sale or other disposition, or request or demand for registration under
the Securities Act or inclusion in any other registration statement filed by
the Company under the Securities Act, of any Common Stock or other capital
stock of the Company, or warrants, options, convertible, exercisable or
exchangeable securities, or other rights to purchase or acquire, Common Stock
or other capital stock (or any such right or exchangeable, exercisable or
convertible security) owned by such person, or
<PAGE> 36
-36-

with respect to which such person has the power of disposition, will be made
for a period of 90 days after the date of this Agreement, directly or
indirectly, by such executive officer, otherwise than (i) with the prior
written consent of the Representative designated in the Terms Agreement and
(ii) pursuant to such exceptions, if any, as are agreed to by the
Representatives and set forth in the Terms Agreement.

(n) There shall not have been any amendment or supplement to the
Registration Statement or the Prospectus to which the Underwriters shall have
objected.

The several obligations of the Underwriters designated in the
Terms Agreement to purchase Option Securities hereunder on the Additional
Closing Date are, unless otherwise agreed by the Underwriters designated in the
Terms Agreement, subject to the conditions set forth in paragraph (a) to and
including paragraph (n) above on and as of the Additional Closing Date
(references therein to the Closing Date shall be deemed references to the
Additional Closing Date for this purpose), except that the certificate called
for by paragraph (d), the opinions called for by paragraphs (e), (f) and (h)
and the letters called for by paragraph (g) shall be dated as of, and delivered
on, the Additional Closing Date, and to the delivery to the Representatives on
the Additional Closing Date of such other documents as they may reasonably
request.

7. Indemnification and Contribution. The Company agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation the
legal fees and other expenses reasonably incurred in connection with defending
or investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use therein; provided,
however, that the foregoing indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter (or the benefit of
any
<PAGE> 37
-37-

person controlling such Underwriter) from whom the person asserting any such
losses, claims, damages or liabilities purchased Offered Securities if such
untrue statement or omission or alleged untrue statement or omission made in
such preliminary prospectus and is eliminated or remedied in the Prospectus and
the Company has provided such Prospectus in accordance with paragraph 5(ii)
hereof (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) and if it shall be established in the
related action or proceeding that a copy of the Prospectus, if required by law
(as so amended or supplemented, but exclusive of any documents incorporated
therein by reference), shall not have been furnished to such person at or prior
to the written confirmation of the sale of such Offered Securities to such
person, except to the extent that such Prospectus contains any other untrue
statement or omission or alleged untrue statement or omission of a material
fact that was the subject matter of the related action or proceeding. For
purposes of the proviso to the immediately preceding sentence, the term
"Prospectus" shall not be deemed to include the documents incorporated therein
by reference, and no Underwriter shall be obligated to send or give any
supplement or amendment to any document incorporated by reference in any
preliminary prospectus or the Prospectus to any person.

Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the directors of the Company, the
officers of the Company who sign the Registration Statement and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through the
Representatives expressly for use in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.
For purposes of this Section 7 and Section 4(ii), the only written information
furnished by the Underwriters to the Company expressly for use in the
Registration Statement and the Prospectus is the information
<PAGE> 38
-38-

in the last paragraph of the cover page of the Prospectus Supplement and ( )
and ( ) under the table under the caption "Underwriting" in the Prospectus
Supplement.

consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested
an Indemnifying Person to reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by the third sentence of this paragraph,
the Indemnifying Person agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of
such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (1) includes an unconditional
written release of such Indemnified Person, in form and substance satisfactory
to such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (2) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of any
Indemnified Person.

If the indemnification provided for in the first or second
paragraph of this Section 7 is unavailable to any extent to an Indemnified
Person under such paragraph in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities as follows: as between the
Company on the one hand and the Underwriters on the other (i) in such
proportion as is appropriate to reflect the aggregate relative benefits
received by the Company and by the Underwriters from the offering of the
Offered Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and of the Underwriters in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and by the
Underwriters on the other shall be deemed to be in the same respective
proportions as the net proceeds from the offering
<PAGE> 40
-40-

(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus bear to the aggregate public
offering price of the Offered Securities. The relative fault of the Company on
the one hand and of the Underwriters on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

The indemnity and contribution agreements contained in this
Section 7 are in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.

The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in
<PAGE> 41
-41-

full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or the Company, its officers or directors or any
other person controlling the Company and (iii) acceptance of and payment for
any of the Offered Securities.

8. Termination of Agreement. Notwithstanding anything
herein contained, this Agreement (or the obligations of the several Option
Securities Underwriters with respect to the Option Securities) may be
terminated in the absolute discretion of the Representatives, by notice given
to the Company, if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the Option Securities, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the National Association of Securities Dealers, Inc., the American
Stock Exchange or the ( ), (ii) trading of any securities of the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York or
( ) shall have been declared by either U.S. Federal, New York State or
( ) authorities or exchange controls shall have been imposed by the
United States, or (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis that,
in the judgment of the Representatives, is material and adverse and which, in
the judgment of the Representatives, makes it impracticable to market the
Offered Securities on the terms and in the manner contemplated in the
Prospectus.

the proportions that (1) with respect to Underwritten Securities, the number of
Underwritten Securities set forth opposite their respective names in the annex
or annexes to Exhibit 1 hereto bears to the aggregate number of Underwritten
Securities set forth opposite the names of all such non-defaulting Underwriters
and (2) with respect to Option Securities, the number of Underwritten
Securities set forth opposite their respective names in the annex or annexes to
Exhibit 1 hereto bears to the aggregate number of Underwritten Securities set
forth opposite the names of all such non-defaulting Underwriters who are Option
Securities Underwriters, or in such other proportions as the Representatives
may specify, to purchase the Offered Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided, however, that in no event shall the number of Offered
Securities that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by an amount in excess of one-ninth of
such number of Offered Securities without the written consent of such
Underwriter. If, on the Closing Date or the Additional Closing Date, as the
case may be, any Underwriter or Underwriters shall fail or refuse to purchase
Offered Securities which it or they have agreed to purchase hereunder on such
date, and the number of Offered Securities with respect to which such default
occurs is more than one-tenth of the aggregate number of Offered Securities to
be purchased on such date, and arrangements satisfactory to the Representatives
and the Company for the purchase of such Offered Securities are not made within
36 hours after such default, this Agreement (or the obligations of the several
Underwriters to purchase the Option Securities, as the case may be) shall
terminate without liability on the part of any non-defaulting Underwriter or
the Company. In any such case either the Representatives or the Company shall
have the right to postpone the Closing Date (or, in the case of the Option
Securities, the Additional Closing Date), but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and in the Prospectus or in any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.

Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and expenses of
their counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder and pursuant to the Terms
Agreement. In no event, however, shall the Company be responsible to the
Underwriters for any loss of profits for failure to consummate the offering and
sale of the Offered Securities.

If the foregoing is in accordance with your understanding,
please sign and return six counterparts hereof.

Very truly yours,

SERVICE CORPORATION
INTERNATIONAL

By:_______________________________________
Name:
Title:

CONFIRMED AND ACCEPTED,
as of the date first above written

(Insert Signature block(s) for the
Representative or Representatives
acting on behalf of the Underwriters,
or for each Underwriter if
no Syndicate)
<PAGE> 45
EXHIBIT I

SERVICE CORPORATION INTERNATIONAL

$( )

(TITLE OF DEBT SECURITIES)

TERMS AGREEMENT

Service Corporation International ( ), 199( )
1929 Allen Parkway
Houston, Texas 77019

Attention: ( )

Ladies and Gentlemen:

( ) (the "Representative(s)") understand that
Service Corporation International, a Texas corporation (the "Company"),
proposes to issue and sell $( ) aggregate principal amount of its (describe
Debt Securities) (the "Underwritten Securities"). Subject to the terms and
conditions set forth herein or incorporated by reference herein, the (U.S.)
Underwriters named in Annex A attached hereto (and the International Managers
named in Annex B attached hereto) offer to purchase, severally and not jointly,
the aggregate principal amount of Underwritten Securities set forth opposite
the name of each such Underwriter on Annex A (and Annex B) hereto at a price of
( )% of the principal amount thereof (the "Purchase Price"). The Closing
Date shall be ( ), 199( ), at ( ) A.M. at the offices of ( ).

(It is understood that, subject to the conditions hereinafter
stated, $( ) aggregate principal amount of Underwritten Securities
(the "U.S. Underwritten Securities") will be sold to the several U.S.
Underwriters named in Annex A hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Underwritten Securities in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement between U.S. and International Underwriting Syndicates
of even date herewith between the U.S. Underwriters and the International
Managers), and $( ) aggregate principal amount of Underwritten
Securities (the "International Securities") will be sold to the several
international managers named in Annex B hereto (the "International Managers")
in connection with the offering and
<PAGE> 46
-2-

sale of such International Securities outside the United States and Canada to
persons other than United States and Canadian Persons. ( )
shall act as representatives (the "U.S. Representatives") of the several U.S.
Underwriters, and ( ) shall act as representatives (the
"International Representatives") of the several International Managers. The
U.S. Underwriters and the International Managers are hereinafter collectively
referred to as the "Underwriters", and the U.S. Representatives and the
International Representatives are hereinafter collectively referred to as the
"Representatives.")

(In addition, the Representatives understand that the Company
proposes to issue and sell to the several (U.S.) Underwriters, for the sole
purpose of covering over-allotments in connection with the sale of the
Underwritten Securities, at the option of the (U.S.) Underwriters, up to an
additional $( ) aggregate principal amount of the (describe Debt
Securities) (the "Option Securities"). The Underwritten Securities and the
Option Securities are herein referred to as the "Offered Securities.")

(The offer herein contained is further conditioned upon the
Company agreeing to sell to the (U.S.) Underwriters the Option Securities, and
agreeing that the (U.S.) Underwriters shall have a one-time right to purchase,
severally and not jointly, up to $( ) aggregate principal amount of Option
Securities at the Purchase Price. Option Securities may be purchased as
provided below solely for the purpose of covering over-allotments made in
connection with the offering of the Underwritten Securities. If any Option
Securities are to be purchased, each (U.S.) Underwriter agrees, severally and
not jointly, to purchase the aggregate principal amount of Option Securities
(subject to such adjustments to eliminate any fractional Offered Securities as
the (U.S.) Representatives in their sole discretion may make) that bears the
same proportion to the total aggregate principal amount of Option Securities to
be purchased as the aggregate principal amount of (U.S.) Underwritten
Securities set forth in Annex A hereto opposite the name of such (U.S.)
Underwriter bears to the total aggregate principal amount of (U.S.)
Underwritten Securities.)

(The Company's agreement to sell the Option Securities shall
entitle the (U.S.) Underwriters to exercise the option to purchase the Option
Securities at any time on or before the thirtieth day following the date of
this Terms Agreement, by written notice from the (U.S.) Representatives to the
Company. Such notice shall set forth the aggregate principal amount of Option
Securities as to which the option is being exercised and
<PAGE> 47
-3-

the date and time when the Option Securities are to be delivered and paid for
which may be the same date and time as the Closing Date but shall not be
earlier than the Closing Date nor later than the tenth full Business Day after
the date of such notice (unless such time and date are postponed in accordance
with the provisions of Section 9 of the Underwriting Agreement referred to
below). Such notice shall be given at least two Business Days prior to the
date and time of delivery specified therein.)

The Underwritten Securities shall have the following terms:

Title: ( )
Maturity: ( )
Interest rate: ( )
Interest payment dates: ( )
Conversion provisions: ( )
Redemption provisions: ( )
Sinking fund provisions: ( )
Public offering price: ( )% of the principal
amount thereof
Additional terms: ( )

All the provisions contained in the document entitled
"Underwriting Agreement -- Service Corporation International -- Debt
Securities" (the "Underwriting Agreement") and dated ( ), 199( ), a
copy of which you have previously received, are herein incorporated by
reference in their entirety and shall be deemed to be a part of this Terms
Agreement to the same extent as if the Underwriting Agreement had been set
forth in full herein. Terms defined in the Underwriting Agreement are used
herein as therein defined.

Very truly yours,

By:_______________________________________
Name:
Title:

Accepted as of the date first
above written:

SERVICE CORPORATION INTERNATIONAL

By: _____________________________
Name:
Title:
<PAGE> 49
ANNEX A

<TABLE>
<CAPTION>
Aggregate
Principal Amount of
(U.S.) Underwritten
Securities
(U.S.) Underwriters To Be Purchased
- ------------------- -------------------
<S> <C>

-----------------

Total: =================
</TABLE>
<PAGE> 50
ANNEX B

<TABLE>
<CAPTION>
Aggregate
Principal Amount
of International
Underwritten
Securities
International Managers To Be Purchased
- ---------------------- ---------------
<S> <C>

---------------

Total: ===============
</TABLE>
<PAGE> 51
SCHEDULE I

Significant Subsidiaries of the Company
within the meaning of Rule 1-02 of
Regulation S-X under the Securities
Exchange Act of 1934.
---------------------------------------

<PAGE> 1
EXHIBIT 1.3

UNDERWRITING AGREEMENT

SCI FINANCE LLC

Preferred Securities

guaranteed to the extent set forth
in certain backup undertakings by

SERVICE CORPORATION INTERNATIONAL

( ), 199( )

To the Underwriter or
Underwriters named in
the within mentioned
Terms Agreement

Ladies and Gentlemen:

SCI Finance LLC, a limited liability company organized under
the laws of the State of Texas (the "Company"), and Service Corporation
International, a Texas corporation, as guarantor and provider of certain backup
undertakings (the "Guarantor"), propose to issue and sell from time to time
shares of the Preferred Securities, par value $1.00 per share, of the Company
(the "Preferred Securities") guaranteed (the "Guarantee") by the Guarantor as
to the payment of dividends, as, if and when legally declared, and as to
payments on liquidation or redemption. The Preferred Securities are
convertible into shares of Common Stock, $1.00 par value, of the Guarantor (the
"Guarantor Common Stock"). The Preferred Securities, together with the related
Guarantee, are collectively referred to herein as the "Securities." The
Securities also are entitled to the benefits of certain backup undertakings
(the "Undertakings") described in the Prospectus (as hereinafter defined)
provided by the Guarantor, in addition to the Guarantee (the Undertakings,
together with the Guarantee, being referred to herein collectively as the
"Backup Undertakings"). The Securities and the Guarantor Common Stock are
registered under the registration statement referred to in Section 4(i) hereof.
The Securities may be issued in one or more series, may have varying dividend
and liquidation preferences, voting rights and redemption provisions as
described in a declaration and amendment (the "Declaration") to the Company's
regulations (as amended to the Closing Date (as defined below), the
"Regulations") adopted by the Guarantor as the manager of the Company. The
basic provisions set
<PAGE> 2
-2-

forth herein are intended to be incorporated by reference in a terms agreement
of the type referred to below relating to, among other things, the designation
and series of Preferred Securities and the number of shares of Preferred
Securities (together with the Guarantee, the "Underwritten Securities") to be
issued and sold by the Company and the Guarantor pursuant thereto and to be
purchased, severally, by the underwriter or several underwriters named therein
(the "Underwriters"). The Terms Agreement, which shall be in the form of
Exhibit I hereto (the "Terms Agreement"), relating to the Underwritten
Securities and such additional shares of Securities that the Underwriters may
be granted an option to purchase by the Company and the Guarantor to cover
over-allotments in connection with any offering of Underwritten Securities (the
"Option Securities" and together with the Underwritten Securities, the "Offered
Securities"), together with the provisions hereof incorporated therein by
reference (which provisions shall not become effective until so incorporated by
reference), is herein referred to as this "Agreement." The Terms Agreement may
reflect that a portion of the Underwritten Securities are to be sold to the
several U.S. underwriters named therein (the "U.S. Underwriters") in connection
with the offering and sale of a portion of the Underwritten Securities in the
United States and Canada (the "U.S. Underwritten Securities") to United States
and Canadian persons (as defined in the instruments governing the coordination
of the offering by the U.S. Underwriters and the International Managers (as
defined below) named therein) and that the balance of the Underwritten
Securities (the "International Underwritten Securities") are to be sold to the
several international managers named therein (the "International Managers") in
connection with the offering and sale of such International Underwritten
Securities outside the United States and Canada to persons other than United
States and Canadian persons. In such event, as used herein, the term
"Underwriters" refers to the U.S. Underwriters and the International Managers,
and the term "Representatives" refers to the U.S. Representatives named therein
of the U.S. Underwriters and the International Representatives named therein of
the International Managers. If the Underwriters consist only of the firm or
firms referred to in the Terms Agreement as the Representative or
Representatives, then the terms "Underwriters" and "Representatives," as used
herein, shall be deemed to refer to such firm or firms.

The obligations of the Underwriters to purchase, and the
Company and the Guarantor to sell, the Offered Securities are evidenced by the
Terms Agreement delivered at the time the Company and the Guarantor determine
to sell the Offered Securities and, without the execution and delivery of the
Terms Agreement, the Company and the Guarantor shall not be obligated to sell,
and the
<PAGE> 3
-3-

Underwriters shall not be obligated to purchase, any Securities pursuant to
this Agreement. The Terms Agreement specifies the firm or firms which will be
Underwriters, the amount of the Offered Securities to be purchased by each
Underwriter, the purchase price to be paid by the Underwriters for the Offered
Securities, the public offering price, if any, of the Offered Securities and
any terms of the Offered Securities not otherwise specified in the applicable
Declaration (including, but not limited to, designations, denominations,
conversion or exchange provisions, covenants, dividend rates and payment dates,
liquidation preferences and redemption provisions). The Terms Agreement
specifies any details of the terms of the offering that should be reflected in
a post-effective amendment to the applicable Registration Statement or the
Prospectus Supplement (each as hereinafter defined).

The terms which follow, when used in this Agreement, shall
have the meanings indicated. "Registration Statement" shall mean the
registration statement or registration statements relating to the Offered
Securities (and such other securities of the Guarantor as may be included
therein) which shall be the registration statement on Form S-3 filed under the
Securities Act of 1933, as amended (collectively with the rules and regulations
of the Securities and Exchange Commission (the "Commission") thereunder, the
"Securities Act"), referred to in Section 4(i) below, including all documents
incorporated therein by reference and all exhibits thereto, as from time to
time amended or supplemented pursuant to the Securities Act, the Securities
Exchange Act of 1934, as amended (collectively with the rules and regulations
of the Commission thereunder, the "Exchange Act"), or otherwise, including as
supplemented by the Prospectus Supplement, on or prior to the date of execution
and delivery of the Terms Agreement (the "Representation Date") and, in the
event any such amendment or supplement is filed prior to the Closing Date (as
defined in Section 3 hereof), including by the filing of any Prospectus
Supplement or document incorporated by reference, shall also mean such
registration statement as so amended or supplemented. "Prospectus" shall mean
the prospectus (including the related Prospectus Supplement with respect to the
Offered Securities) relating to the Securities (and such other securities of
the Guarantor as may be covered thereby), including all documents incorporated
therein by reference, as from time to time amended or supplemented pursuant to
the Securities Act, the Exchange Act or otherwise; provided, however, that a
Prospectus Supplement shall be deemed to have supplemented the Prospectus only
with respect to the Offered Securities to which it relates. Any reference
herein to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, any preliminary
<PAGE> 4
-4-

prospectus or the Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act after the effective date of the
Registration Statement, or the issue date of any preliminary prospectus or the
Prospectus, as the case may be, and on or prior to the completion of the
applicable offering and which is deemed to be incorporated therein by
reference.

1. Agreements to Sell and Purchase. Each of the Company
and the Guarantor agrees to issue and sell to each Underwriter as hereinafter
provided, and each Underwriter, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
agrees to purchase at the price per share set forth in the Terms Agreement,
severally and not jointly, from the Company and the Guarantor the respective
number of Underwritten Securities set forth opposite the name of such
Underwriter on the annex or annexes to Exhibit 1 hereto (or such number of
Underwritten Securities, as the case may be, increased as set forth in Section
9 hereof, subject to such adjustments to eliminate any fractional Offered
Securities as the Representatives in their sole discretion may make). The
Guarantor agrees to issue the Backup Undertakings relating to the Underwritten
Securities concurrently with the issue and sale of the Underwritten Securities
as contemplated hereby.

If, pursuant to the Terms Agreement, the Company and the
Guarantor shall have granted the option to the Underwriters to purchase Option
Securities, each of the Company and the Guarantor agrees to sell to the
Underwriters designated in the Terms Agreement to purchase Option Securities
(each, an "Option Securities Underwriter" and collectively, the "Option
Securities Underwriters") the Option Securities, and the Option Securities
Underwriters shall have a one-time right to purchase, severally and not
jointly, the Option Securities on the terms set forth in the Terms Agreement.
Option Securities may be purchased as provided below solely for the purpose of
covering over-allotments made in connection with the offering of the
Underwritten Securities. If any Option Securities are to be purchased, each
Option Securities Underwriter agrees, severally and not jointly, to purchase
the number of Option Securities (subject to such adjustments to eliminate any
fractional Offered Securities as the Representatives designated in the Terms
Agreement in their sole discretion may make) that bears the same proportion to
the total number of Option Securities to be purchased as the number of
Underwritten Securities set forth in the annex or annexes to Exhibit 1 hereto
opposite the name of such Option Securities Underwriter bears to the total
number of Underwritten Securities to be purchased by all Option Securities
Underwriters. The Guarantor agrees to issue the Backup
<PAGE> 5
-5-

Undertakings relating to the Option Securities concurrently with the issue and
sale of the Option Securities as contemplated hereby.

The Option Securities Underwriters may exercise the option to
purchase the Option Securities at any time on or before the thirtieth day
following the Representation Date, by written notice from the Representatives
designated in the Terms Agreement to the Company and the Guarantor. Such
notice shall set forth the aggregate number of Option Securities as to which
the option is being exercised and the date and time when the Option Securities
are to be delivered and paid for, which may be the same date and time as the
Closing Date (as hereinafter defined) but shall not be earlier than the Closing
Date nor later than the tenth full Business Day (as hereinafter defined) after
the date of such notice (unless such time and date are postponed in accordance
with the provisions of Section 9 hereof). Such notice shall be given at least
two Business Days prior to the date and time of delivery specified therein.

The Guarantor hereby irrevocably and unconditionally
guarantees the timely performance by the Company of the Company's obligations
under this Section 1. As compensation to the Underwriters for their
commitments hereunder, and in view of the fact that proceeds of the sale of the
Offered Securities will be lent by the Company to SCI International Limited, a
Delaware corporation and a wholly-owned subsidiary of the Guarantor ("SCI
Limited"), pursuant to the Loan Agreement (as defined below) the Guarantor
hereby agrees to pay at each of the Closing Date and the Additional Closing
Date to the Underwriters the amount per Offered Security purchased by the
Underwriters set forth in the Terms Agreement.

2. Terms of Public Offering. The Company and the
Guarantor understand that the Underwriters intend (i) to make a public offering
of the Offered Securities as soon after the Prospectus Supplement has been
filed and the Terms Agreement has been executed and delivered as in the
judgment of the Representatives is advisable and (ii) initially to offer the
Offered Securities upon the terms set forth in the Prospectus Supplement, and
the Underwriters will advise the Company as to any alteration in the terms of
such offering that would require, pursuant to the Securities Act, any amendment
or supplement to the Prospectus Supplement.

day funds in such location as the Representatives shall designate in the Terms
Agreement at, in the case of the Underwritten Securities, such time and date as
are specified in the Terms Agreement, or at such other time on the same or such
other date, not later than the fifth Business Day (as hereinafter defined)
thereafter, as the Representatives, the Company and the Guarantor may agree
upon in writing or, in the case of the Option Securities, on the date and at
the time specified by the Representatives designated in the Terms Agreement to
exercise such option in the written notice by such Representatives of the
election to purchase such Option Securities by the Option Securities
Underwriters. The time and date of such payment for the Underwritten
Securities are referred to herein as the "Closing Date" and the time and date
for such payment for the Option Securities, if other than the Closing Date, are
herein referred to as the "Additional Closing Date". As used herein, the term
"Business Day" means any day other than a day on which banks are permitted or
required to be closed in New York City. At the Closing Date or the Additional
Closing Date, as the case may be, the Guarantor will pay the compensation
payable to the Underwriters pursuant to Section 1 in respect of the Offered
Securities being purchased by the Underwriters on such date, such payment to be
made to the Representatives or their order for the account of the several
Underwriters by (wire transfer of immediately available funds) (certified or
official bank check or checks payable in New York Clearing House or other next
day funds).

Payment for the Offered Securities to be purchased on the
Closing Date or the Additional Closing Date, as the case may be, shall be made
against delivery to the Representatives for the respective accounts of the
several Underwriters of the Offered Securities to be purchased on such date
registered in such names and in such denominations as the Representatives shall
request in writing not later than two full Business Days prior to the Closing
Date or the Additional Closing Date, as the case may be, with any transfer
taxes payable in connection with the transfer to the Underwriters of the
Offered Securities duly paid by the Guarantor. The Guarantor hereby agrees to
pay any such transfer taxes. The certificates for the Offered Securities will
be made available for inspection and packaging by the Representatives not later
than 1:00 P.M., New York City time, on the Business Day prior to the Closing
Date or the Additional Closing Date, as the case may be.

4. Representations and Warranties of the Company and the
Guarantor. Each of the Company and the Guarantor jointly and severally
represents and warrants to each Underwriter as of the Representation Date and
as of the Closing Date that:
<PAGE> 7
-7-

(i) A registration statement on Form S-3 (Registration
No. 33-( )), including a prospectus, with respect to the
Securities (and such other securities of the Guarantor as may be
covered thereby), (i) has been prepared by the Company and the
Guarantor in conformity with the requirements of the Securities Act,
(ii) has been filed with the Commission and (iii) has become
effective. Such Registration Statement and the related prospectus may
have been amended or supplemented from time to time prior to the
Representation Date; any such amendment to the applicable Registration
Statement was so prepared and filed and any such amendment has become
effective. A prospectus supplement (the "Prospectus Supplement"),
including a prospectus, relating to the Offered Securities has been
prepared. The Prospectus Supplement and, if not previously filed,
such prospectus will be filed pursuant to Rule 424 under the
Securities Act. If the offering of the Offered Securities is to be
made by U.S. Underwriters and International Managers, two such
prospectus supplements, one relating to the Offered Securities to be
sold by the U.S. Underwriters and one relating to the Underwritten
Securities to be sold by the International Managers, and each
identical to the other except for the cover page, have been so
prepared and filed. In such event, the term "Prospectus Supplement"
refers to such international and U.S. prospectus supplements. Copies
of such Registration Statement and the Prospectus relating thereto,
any such amendment or supplement, the Prospectus Supplement and all
documents incorporated by reference therein which were filed with the
Commission on or prior to the Representation Date (including one fully
executed copy of the Registration Statement and of each amendment
thereto for counsel for the Underwriters) have been delivered to each
of the Representatives. The Company and the Guarantor have included
in the Registration Statement, as amended at the date the Registration
Statement was declared effective (the "Effective Date"), all
information (other than information relating specifically to the terms
of any particular series of Securities and the offering thereof)
required by the Securities Act to be included in the Prospectus with
respect to the Offered Securities (and the Guarantor Common Stock) and
the offering and sale thereof. Except to the extent that the
Underwriters shall agree in writing to a modification, the
Registration Statement and the Prospectus shall be in all substantive
respects in the form furnished to the Underwriters prior to the
Representation Date or, to the extent not completed at the
Representation Date, shall contain only such specific additional
information and other changes as the Company and the Guarantor have
advised the Underwriters, a
<PAGE> 8
-8-

reasonable time prior to the Representation Date, is to be included or
made therein and as to which the Underwriters have not reasonably
objected.

(ii) The Registration Statement, at the time it became
effective, any post-effective amendment thereto, at the time it became
effective, the Registration Statement and the Prospectus, as of the
Representation Date and at the Closing Date, and any amendment or
supplement thereto, conformed or will conform in all material respects
to the requirements of the Securities Act; and no such document
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of
the Prospectus, in the light of the circumstances under which they
were made) not misleading; provided, however, that neither the
Company nor the Guarantor makes any representation or warranty as to
information contained in or omitted from the Registration Statement or
the Prospectus in reliance upon and in conformity with written
information relating to any Underwriter furnished to the Guarantor by
or on behalf of any Underwriter expressly for use therein.

(iii) No order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission.

(v) Ernst & Young and Coopers & Lybrand, who are
reporting upon the audited financial statements and the supporting
schedules of the Guarantor included or incorporated by reference in
the Registration Statement and the Prospectus, in the case of Ernst &
Young, were, at the time of their report, and, in the case of Coopers
& Lybrand, are, independent public accountants within the meaning of
the Securities Act. The financial statements, and the related notes
thereto, included or incorporated by reference in the Registration
Statement and the Prospectus, present fairly the
<PAGE> 9
-9-

consolidated financial position of the Guarantor and its consolidated
subsidiaries as of the dates indicated and the results of their
operations and the changes in their consolidated cash flows for the
periods specified; and said financial statements have been prepared in
conformity with United States generally accepted accounting principles
applied on a consistent basis, except as set forth therein, and the
supporting schedules included or incorporated by reference in the
Registration Statement present fairly the information required to be
stated therein. If pro forma financial information is included in or
incorporated by reference into the Registration Statement and the
Prospectus, such pro forma financial information (including, without
limitation, the notes thereto) as of the date presented (A) presented
fairly in all material respects the information shown therein, (B) was
prepared in accordance with applicable requirements of Regulation S-X
promulgated under the Exchange Act, (C) was prepared in accordance
with the Commission's rules and guidelines with respect to pro forma
financial statements and (D) was properly computed on the bases
described therein. In the opinion of the Company and the Guarantor,
the assumptions used in the preparation of any such pro forma
financial information (including, without limitation, the notes
thereto) were fair and reasonable and the adjustments used therein
were appropriate to give effect to the transactions or circumstances
referred to therein. No pro forma financial statements or other pro
forma financial information is required to be included or incorporated
by reference in the Registration Statement and the Prospectus other
than those included or incorporated by reference therein.

(vi) The Company has been duly organized and is validly
existing as a limited liability company under the laws of the State of
Texas with power and authority (under the Texas Limited Liability
Company Act and otherwise) to own its properties and conduct its
business as described in the Registration Statement and the
Prospectus, and has been duly qualified as a foreign limited liability
company for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified and in
good standing could not, singly or in the aggregate, reasonably be
expected to have a material adverse effect on the condition (financial
or otherwise), earnings, business affairs or business prospects of the
Company (each, a "Company Material Adverse Effect") or a Guarantor
Material Adverse Effect (as defined below); and the Company does not
own,
<PAGE> 10
-10-

directly or indirectly, any shares of stock or any other equity or
short- or long-term debt securities (other than of SCI Limited) or
have any other equity interest in any firm, partnership, joint venture
or other entity.

(vii) The Guarantor has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the State of Texas, has the corporate power and authority to own its
property and to conduct its business as described in the Registration
Statement and the Prospectus and to enter into this Agreement and the
Terms Agreement, and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing could not, singly or in the
aggregate, reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Guarantor and the Subsidiaries (as
hereinafter defined), taken as a whole (each, a "Guarantor Material
Adverse Effect").

(viii) All of the issued common membership interests, par
value $( ) per share, of the Company (the "Common Shares") are
owned by the Guarantor, free and clear of all liens, encumbrances,
security interests, claims and restrictions on transferability and
voting (other than any restrictions on transferability as may arise
under the Company Agreements (as defined below) and state and federal
securities laws).

(ix) Each direct and indirect foreign and domestic
subsidiary of the Guarantor listed on Schedule I hereto, which
constitute all of the significant subsidiaries of the Guarantor within
the meaning of Rule 1-02 of Regulation S-X under the Exchange Act
(each, a "Subsidiary" and collectively, the "Subsidiaries"), has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to conduct
its business as described in the Registration Statement and the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so incorporated, be in
existence, have such power and authority, be so qualified or be in
good standing could not, singly or in the aggregate, reasonably be
expected to have a Guarantor Material Adverse Effect. All of the
outstanding shares of
<PAGE> 11
-11-

capital stock of each Subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable, and, except as set forth in
the Registration Statement and the Prospectus, are owned by the
Guarantor, directly or indirectly, free and clear of all liens,
encumbrances, security interests, claims and restrictions on
transferability and voting (other than any restrictions on
transferability as may arise under state and federal securities laws).
Except as set forth in the Registration Statement and the Prospectus,
there are no outstanding (i) securities or obligations convertible
into or exchangeable or exercisable for any shares of capital stock
of, or other interest in, the Company, the Guarantor or any
Subsidiary, (ii) rights, warrants or options to acquire or purchase
any shares of capital stock of, or other interest in, the Company, the
Guarantor or any Subsidiary or any such convertible, exchangeable or
exercisable securities or obligations, or (iii) obligations or
understandings to issue or sell any shares of capital stock of, or
other interest in, the Company, the Guarantor or any Subsidiary, any
such convertible, exchangeable or exercisable securities or
obligations, or any such warrants, rights or options, except as have
been disclosed to the Underwriters in writing prior to the date hereof
and except for (A) issuances of shares of Guarantor Common Stock and
options to acquire Guarantor Common Stock after the date of the most
recent information set forth in the Registration Statement and the
Prospectus pursuant to the Guarantor's employee benefit plans as in
effect on the date hereof and (B) issuances after the date of the most
recent information set forth in the Registration Statement and the
Prospectus of convertible debentures of the Guarantor and Guarantor
Common Stock pursuant to the Guarantor's Registration Statement on
Form S-4 (Registration No. 33-54996) (the "S-4").

(x) There are no partnerships in which the Guarantor
or any of the Subsidiaries has any direct or indirect controlling
interest that would constitute a significant subsidiary within the
meaning of Rule 1-02 of Regulation S-X under the Exchange Act. Except
for the capital stock of the Subsidiaries and except as set forth in
the Registration Statement and the Prospectus, the Guarantor does not
own, directly or indirectly, any shares of stock or any other equity
or long-term debt securities or have any equity interest in any firm,
partnership, joint venture or other entity.
<PAGE> 12
-12-

(xi) This Agreement and the Terms Agreement have been
duly and validly authorized, executed and delivered by each of the
Company and the Guarantor.

(xii) Since the date of the latest consolidated
financial statements of the Guarantor and the Subsidiaries included in
the Registration Statement and the Prospectus, except as set forth in
or expressly contemplated by the Registration Statement and the
Prospectus, there has not been (A) any change in the Guarantor's or
the Company's issued capital stock or options, except with respect to
the Guarantor (I) pursuant to the exercise of options or the
conversion or exchange of outstanding convertible or exchangeable
securities of the Guarantor or the Company, (II) issuances of shares
of Guarantor Common Stock and options to acquire Guarantor Common
Stock issued after the date of such financial statements pursuant to
the Guarantor's employee benefit plans as in effect or the date hereof
and (III) issuances after the date of such financial statements of
convertible debentures of the Guarantor and Guarantor Common Stock
pursuant to the S-4, (B) any material adverse change in the
management, condition (financial or otherwise), earnings, business
affairs or business prospects of the Company (each, a "Company
Material Adverse Change," and any event or state of facts which could,
singly or in the aggregate, reasonably be expected to result in a
Company Material Adverse Change is herein referred to as a
"Prospective Company Material Adverse Change"), whether or not arising
from transactions or events occurring in the ordinary course of
business, or (C) any material adverse change in the management,
condition (financial or otherwise), earnings, business affairs or
business prospects of the Guarantor and the Subsidiaries, taken as a
whole (each, a "Guarantor Material Adverse Change," and any event or
state of facts which could, singly or in the aggregate, reasonably be
expected to result in a Guarantor Material Adverse Change is herein
referred to as a "Prospective Guarantor Material Adverse Change"),
whether or not arising from transactions or events occurring in the
ordinary course of business.

(xiii) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
set forth therein, (A) there have been no transactions or contracts
(written or oral) entered into or agreed to be entered into by the
Company, the Guarantor or any of the Subsidiaries (other than those in
the ordinary course of business) which are material to the Company, or
the Guarantor and the Subsidiaries considered as a whole and (B) there
has been no dividend or distribution of any kind
<PAGE> 13
-13-

declared, paid or made by the Company or the Guarantor on any class of
its capital stock other than regularly scheduled quarterly dividends
by the Guarantor in accordance with past practice of the Guarantor.

(xiv) As of the date of the Prospectus Supplement, the
Guarantor has the authorized, issued and outstanding capitalization
set forth in the Prospectus under "Capitalization." The authorized
capital stock of each of the Company and the Guarantor conforms as to
legal matters to the description thereof contained in the Registration
Statement and the Prospectus, and all of the outstanding shares of
capital stock of each of the Company and the Guarantor have been duly
authorized and validly issued, are fully paid and non-assessable and
are not subject to any preemptive or similar rights. The rights
agreement dated as of July 18, 1988 between the Guarantor and Texas
Commerce Bank National Association as rights agent, as amended to date
(the "Rights Agreement") has been duly authorized, executed and
delivered by the Guarantor; the rights (the "Rights") to purchase the
Guarantor's Series C Junior Participating Preferred Stock (the "Series
C Preferred Stock") outstanding thereunder and to be issued upon the
conversion of the Offered Securities have been duly authorized; the
Series C Preferred Stock to be issued upon exercise of the Rights has
been duly authorized; and the description of the Rights Agreement and
the Rights set forth in the Registration Statement and the Prospectus
is accurate in all material respects.

(xv) The Declaration establishing the Offered
Securities set forth in the Terms Agreement has been duly adopted by
the Guarantor as manager of the Company pursuant to the Company's
Articles of Organization (the "Articles", and together with the
Regulations and the Declaration, the "Company Agreements") and the
Regulations and is in full force and effect.

(xvi) All corporate action required to be taken for the
authorization, issuance and sale of the Offered Securities pursuant to
this Agreement and the Terms Agreement has been validly and
sufficiently taken by the Company and the Guarantor, including,
without limitation, by the Guarantor in its capacity as manager of the
Company. The Offered Securities have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and
the Terms Agreement and, when issued and delivered by the Company
pursuant to this Agreement and the Terms Agreement against payment of
the consideration set forth in the Terms Agreement,
<PAGE> 14
-14-

the Offered Securities will be validly issued and fully paid and
nonassessable; no holder thereof will be subject to personal liability
solely by reason of being such a holder; the Offered Securities will
not be subject to the preemptive rights of any stockholder of the
Company. The Offered Securities are convertible into Guarantor Common
Stock in accordance with their terms and the terms of the Declaration
and the Payment, Guarantee and Conversion Agreement by and between the
Company and the Guarantor (the "Guarantor Agreement").

(xvii) The Guarantor Common Stock issuable upon
conversion of the Offered Securities pursuant to the terms of the
Declaration and the Guarantor Agreement has been duly authorized by
the Guarantor and validly reserved for issuance by the Guarantor upon
such conversion by all necessary corporate action and such Guarantor
Common Stock, when duly issued upon such conversion, will be validly
issued and fully paid and nonassessable; no holder thereof will be
subject to personal liability solely by reason of being such a holder;
and the issuance of such Guarantor Common Stock upon such conversion
will not be subject to preemptive rights.

(xviii) The Guarantee, the loan agreement (the "Loan
Agreement") among the Company, SCI Limited and the Guarantor relating
to the loan to SCI Limited by the Company of substantially all of the
proceeds of the issuance of the Common Shares and the Offered
Securities and the liability assumption agreement (the "Liability
Agreement;" the Guarantor Agreement, the Loan Agreement and the
Liability Agreement being collectively referred to as the "Guarantor
Agreements") between the Company and the Guarantor have each been duly
and validly authorized, executed and delivered by the Guarantor and,
to the extent each is a party thereto, by the Company and SCI Limited,
and constitute legal, valid and binding obligations of the Guarantor,
the Company and SCI Limited to the extent the Guarantor, the Company
or SCI, as the case may be, is a party thereto, enforceable against
the Guarantor, the Company and SCI Limited, as the case may be, to the
extent any of the Guarantor, the Company or SCI, as the case may be,
is a party thereto in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law); each of
the Guarantor Agreements conform in all material respects to the
descriptions thereof in the Registration Statement and the Prospectus.
<PAGE> 15
-15-

(xix) The execution and delivery by the Company, SCI
Limited or the Guarantor, as the case may be, of, and the full and
timely performance by the Company, SCI Limited or the Guarantor, as
the case may be, of their respective obligations under, this
Agreement, the Terms Agreement, the Company Agreements and the
Guarantor Agreements, the consummation of each of the transactions
contemplated herein and therein, the issuance of the Guarantor Common
Stock upon conversion of the Offered Securities and the full and
timely performance by the Guarantor of the Backup Undertakings, (A)
have been duly authorized by all necessary corporate action on the
part of each of the Company, the Guarantor and SCI Limited, (B) do not
and will not result in any violation of the Articles or Regulations of
the Company or the articles of incorporation or by-laws of the
Guarantor or SCI Limited and (C) do not and will not conflict with, or
result in a breach or violation of, any of the terms or provisions of,
or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or give rise to any
right to accelerate the maturity or require the prepayment of any
indebtedness under, or result in the creation or imposition of any
lien, charge or encumbrance upon any material property or assets of,
the Company, the Guarantor or any Subsidiary under (I) any indenture,
mortgage, loan agreement, note, lease, license, partnership
agreement, franchise agreement or other agreement or instrument to
which the Company, the Guarantor or any Subsidiary is a party or by
which any of them may be bound or affected or to which any of their
respective properties or assets may be subject (each, a "Contract" and
collectively, the "Contracts"), other than any such conflict, breach,
default, acceleration, prepayment, lien, charge or encumbrance that
could not, individually or in the aggregate, reasonably be expected to
result in any Material Adverse Effect, (II) any existing applicable
law, rule or regulation (other than the securities or Blue Sky laws of
the various states and other jurisdictions of the United States of
America) or (III) any judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company, the Guarantor or any Subsidiary or any
of their respective properties or assets.

(xx) No authorization, approval, consent or license of,
or filing with, any government, governmental instrumentality or court,
domestic or foreign (other than as have been made and obtained and are
in full force and effect under the Securities Act or as may be
required under the securities or Blue Sky laws of the various states
and other jurisdictions of the United States of America), is required
for the valid
<PAGE> 16
-16-

authorization, issuance, sale and delivery of the Offered Securities
by the Company or the Guarantee by the Guarantor, the issuance of the
Guarantor Common Stock, the execution and delivery by the Company, the
Guarantor and SCI Limited of, or the full and timely performance by
the Company, the Guarantor and SCI Limited of each of their respective
obligations under, this Agreement, the Terms Agreement, each of the
Company Agreements and each of the Guarantor Agreements.

(xxi) There are no contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed or incorporated by reference as exhibits to
the Registration Statement that are not described, filed or
incorporated as required.

(xxii) No holder of any securities of the Company or of
the Guarantor or any Subsidiary has any rights, not effectively
satisfied or waived, to require the Company or the Guarantor to
register the sale of any securities under the Securities Act in
connection with the filing of the Registration Statement or the
consummation of the transactions contemplated therein or pursuant to
this Agreement or the Terms Agreement.

(xxiii) Each of the Company, the Guarantor and the
Subsidiaries is in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material (collectively,
"Environmental Laws"), except where such noncompliance with
Environmental Laws could not, singly or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect or a Guarantor
Material Adverse Effect. The term "Hazardous Material" means (i) any
"hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, (ii) any
"hazardous waste" as defined by the Resource Conservation and Recovery
Act, as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl and (v) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.

(xxiv) Each of the Company, the Guarantor and each of the
Subsidiaries owns, possesses or has obtained all licenses, permits,
certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings
<PAGE> 17
-17-

with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory
organizations and all courts and other tribunals, domestic or foreign,
necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date
hereof, except in each case where the failure to obtain licenses,
permits, certificates, consents, orders, approvals and other
authorizations, or to make all declarations and filings, could not,
singly or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or a Guarantor Material Adverse Effect, and
none of the Company, the Guarantor or any Subsidiary has received any
notice of any proceeding relating to revocation or modification of any
such license, permit, certificate, consent, order, approval or other
authorization, except as described in the Registration Statement and
the Prospectus and except, in each case, where such revocation or
modification could not, singly or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect or a Guarantor
Material Adverse Effect; and the Company, the Guarantor and each
Subsidiary are in compliance with all laws and regulations relating to
the conduct of their respective businesses as conducted as set forth
in the Registration Statement and the Prospectus, except where
noncompliance with such laws or regulations could not, singly or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect or a Guarantor Material Adverse Effect.

(xxv) To the best knowledge of the Guarantor, each of
the Guarantor and the Subsidiaries owns or possesses the patents,
patent licenses, trademarks, service marks, trade names, copyrights
and know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) (collectively, the "Intellectual Property") reasonably
necessary to carry on the business conducted by each as conducted on
the date hereof, except to the extent that the failure to own or
possess such Intellectual Property could not, singly or in the
aggregate, reasonably be expected to have a Guarantor Material Adverse
Effect, and, except as set forth in the Registration Statement and the
Prospectus, neither the Guarantor nor any Subsidiary has received any
notice of infringement of or conflict with asserted rights of others
with respect to any Intellectual Property, except for notices the
content of which if accurate could not, singly or in the aggregate,
reasonably be expected to have a Guarantor Material Adverse Effect.
<PAGE> 18
-18-

(xxvi) Except as set forth in the Registration Statement
and the Prospectus, no authorization, approval or consent of any
governmental authority or agency is required (other than those which
have already been obtained) under the laws of any jurisdiction in
which the Guarantor or any of the Subsidiaries conduct their
respective businesses in connection with the ownership by the
Guarantor of capital stock of any Subsidiary, any foreign exchange
controls or the repatriation of any amount from or to the Guarantor
and the Subsidiaries, except to the extent such authorizations,
approvals or consents have been obtained and are in full force and
effect and except to the extent that the failure to obtain any such
authorization, approval or consent could not, singly or in the
aggregate, reasonably be expected to have a Guarantor Material Adverse
Effect.

(xxvii) Neither the Company nor the Guarantor has taken or
will take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Offered Securities or the Guarantor
Common Stock, and neither the Company nor the Guarantor has
distributed and neither the Company nor the Guarantor will distribute
any prospectus or other offering material in connection with the
offering and sale of the Offered Securities other than any preliminary
prospectus filed with the Commission or the Prospectus or other
materials permitted under the Securities Act.

(xxviii) Except as set forth in the Registration Statement
and the Prospectus, there is no action, suit or proceeding before or
by any government, governmental or regulatory instrumentality, agency
or body or court, domestic or foreign, or any arbitrator, now pending
or, to the best knowledge of the Company or the Guarantor, threatened
against or affecting the Company, the Guarantor or any Subsidiary or
any affiliate of the Company or the Guarantor that, singly or in the
aggregate with all such actions, suits and proceedings (i) could
reasonably be expected to have a Company Material Adverse Effect or a
Guarantor Material Adverse Effect or could reasonably be expected to
have a material adverse effect on the consummation of the transactions
contemplated in this Agreement, any Company Agreement or any Guarantor
Agreement or (ii) is required to be described in the Registration
Statement or the Prospectus that is not so described.

(xxix) None of the Company, the Guarantor or any of the
Subsidiaries (i) is in violation of, with respect to the Company, the
Articles or Regulations, or, with respect to the
<PAGE> 19
-19-

Guarantor and the Subsidiaries, its articles of incorporation, by-laws
or other organizational documents or (ii) is or with the giving of
notice or lapse of time or both would be in violation of, or in breach
of or in default under or in the performance or observance of, any
obligation, agreement, covenant or condition contained in this
Agreement, the Terms Agreement, any Company Agreement, any Guarantor
Agreement or any Contract or of any permit, order, decree, judgment,
statute, rule or regulation, foreign or domestic, applicable to the
Company, the Guarantor or any Subsidiary, except for such violations,
breaches or defaults that could not, singly or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or a
Guarantor Material Adverse Effect.

(xxx) Neither the Company nor the Guarantor is an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended or a holding company or a subsidiary of a holding
company under the Public Utility Holding Company Act of 1935.

(xxxi) Each of the Company and the Guarantor has complied
with all provisions of Section 517.075, Florida Statutes (Chapter
92-198, Laws of Florida).

(xxxii) The statistical and market-related data included
or incorporated by reference in the Registration Statement and the
Prospectus are based on or derived from sources which the Company and
the Guarantor believe to be reliable and accurate or represent the
Company's and the Guarantor's good faith estimates that are made on
the basis of data derived from such sources.

(xxxiii) Neither the Company nor the Guarantor knows of any
outstanding claims for services, either in the nature of a finder's
fee or origination fee, with respect to the transactions contemplated
hereby and by the Terms Agreement, other than the underwriting fees
and compensation to be paid to the Underwriters in accordance with
this Agreement.

(xxxiv) No labor disputes exist with employees of the
Guarantor or of the Subsidiaries that could, singly or in the
aggregate, reasonably be expected to have a Guarantor Material Adverse
Effect.

Any certificate signed by any officer of the Company or of the
Guarantor and delivered to the Underwriters or to counsel
<PAGE> 20
-20-

for the Underwriters shall be deemed a representation and warranty by the
Company and the Guarantor to each Underwriter as to the matters covered
thereby.

5. Agreements of the Company and the Guarantor. Each of
the Company and the Guarantor jointly and severally covenants and agrees with
each Underwriter as follows (with respect to clauses (l) and (n) below of this
Section 5, solely the Guarantor so agrees):

(a) To use their respective reasonable best efforts to
cause any amendment to the Registration Statement to become effective
at the earliest possible time.

(c) To give the Underwriters prompt notice of their
intention to file or prepare any amendment to the Registration
Statement or any amendment or supplement to the Prospectus, whether
pursuant to the Securities Act, the Exchange Act or otherwise, to
furnish the Underwriters and their counsel with copies of any such
amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and not to file any such
amendment or supplement or use any such prospectus to which the
Underwriters or counsel for the Underwriters shall object. Subject to
the foregoing sentence, the Company and the Guarantor will cause each
Prospectus Supplement relating to the Offered Securities to be filed
with the Commission pursuant to the applicable paragraph of Rule 424
under the Securities Act within the time period prescribed and will
provide evidence satisfactory to the Underwriters of such timely
filing.

(d) To advise the Representatives and their counsel
promptly, and to confirm such advice in writing, (i) when any
Prospectus Supplement relating to the Offered Securities shall
<PAGE> 21
-21-

have been filed with the Commission pursuant to Rule 424 under the
Securities Act, (ii) when, prior to the termination of the offering of
the Offered Securities, any amendment to the Registration Statement
shall have been filed with the Commission or become effective, (iii)
of the receipt of any comments from the Commission or of any request
by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any Prospectus or Prospectus
Supplement or the initiation or threatening of any proceeding for that
purpose and (v) of the receipt by the Company or the Guarantor of any
notification with respect to any suspension of the qualification of
the Offered Securities for offer and sale in any jurisdiction or the
initiation of any proceeding for such purpose; and to use their
respective reasonable best efforts to prevent the issuance of any such
stop order or notification and, if issued, to obtain as soon as
possible the withdrawal thereof.

(e) If, during such period after the first date of the
public offering of the Offered Securities as in the opinion of the
Underwriters' counsel a prospectus relating to the Offered Securities
is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur, information shall become
known or condition exist as a result of which it is necessary or
advisable to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary or advisable to amend or supplement the Prospectus to comply
with law, forthwith, at the sole expense of the Guarantor, to prepare,
and, subject to Section 5(c) above, file with the Commission and
furnish, without charge, to the Underwriters and to the dealers
(whose names and addresses the Representatives will furnish to the
Company or the Guarantor) to which Offered Securities may have been
sold by the Representatives on behalf of the Underwriters and to any
other dealers upon request, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus will comply with law.
<PAGE> 22
-22-

(f) To endeavor to qualify the Offered Securities (and,
if applicable, the Guarantor Common Stock) for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the
Representatives shall request and to continue such qualification in
effect so long as required for distribution of the Offered Securities
and to pay all fees and expenses (including fees and disbursements of
counsel to the Underwriters) incurred in connection with such
qualification; provided, however, that neither the Company nor the
Guarantor shall be required to file a general consent to service of
process in any jurisdiction or subject itself to general taxation in
any jurisdiction.

(h) For a period of 120 days after the Representation
Date, without the prior written consent of the Representative
designated in the Terms Agreement, not to, and not cause or permit any
Subsidiary to, directly or indirectly, effect any offer, sale or other
disposition of, or registration of, any shares of securities of the
Company or of the Guarantor of the same class as the Offered
Securities (including, without limitation, any depositary shares
representing the same) or the Guarantor Common Stock or any securities
convertible into or exchangeable or exercisable for shares of
securities of the Company or of the Guarantor of the same class as the
Offered Securities or the Guarantor Common Stock, other than (A) the
Offered Securities to be sold pursuant to the Terms Agreement, (B)
shares of capital stock of the Guarantor issued upon conversion,
exchange or exercise of convertible, exchangeable or exercisable
securities (including, without limitation, the Offered Securities) of
the Company, of the Guarantor or of any Subsidiary outstanding on the
Representation Date and (C) shares of Guarantor Common Stock and
options thereunder issued pursuant to employee benefit plans of the
Guarantor in place on the Representation Date as in effect on the
Representation
<PAGE> 23
-23-

Date, and other than pursuant to such other exceptions, if any, as are
agreed to by the Representatives and set forth in the Terms Agreement.

(i) Whether or not the transactions contemplated hereby
or by the Terms Agreement are consummated or this Agreement is
terminated or shall not become effective, to pay all costs and
expenses incident or relating to the performance of the Company's and
the Guarantor's obligations hereunder, including, without limiting the
generality of the foregoing, all costs and expenses (i) incurred in
connection with the preparation, issuance, execution and delivery of
the Offered Securities (and the Guarantor Common Stock issuable upon
conversion thereof), (ii) incurred in connection with the preparation,
printing and filing under the Securities Act and the Exchange Act of
the Registration Statement, the Prospectus, any preliminary prospectus
and each Prospectus Supplement (including in each case all exhibits,
amendments and supplements thereto and all documents incorporated
therein by reference), (iii) incurred in connection with the
registration or qualification of the Offered Securities (and the
Guarantor Common Stock issuable upon conversion thereof) under the
laws of such jurisdictions as the Representatives may request
(including filing fees and the fees of counsel for the Underwriters
and their disbursements), (iv) in connection with the listing of the
Offered Securities (and the Guarantor Common Stock issuable upon
conversion thereof) on the New York Stock Exchange, (v) relating to
any filing with the National Association of Securities Dealers Inc.
(the "NASD") in connection with the offering of the Offered
Securities, (vi) incurred in connection with the engagement of any
qualified independent underwriter as may be required by NASD rules and
regulations, (vii) incurred in connection with the rating of the
Offered Securities, (viii) incurred in connection with advertising
relating to the Offered Securities approved by the Guarantor (which
approval shall not be unreasonably withheld or delayed), (ix) relating
to the fees and expenses of the transfer agent and registrar for the
Offered Securities (and the Guarantor Common Stock issuable upon
conversion thereof) and (x) relating to or in connection with the
printing (including word processing and duplication costs) and
delivery of this Agreement, the Terms Agreement, each Company
Agreement, each Guarantor Agreement, the agreement among underwriters,
each other document or instrument relating to the underwriting
arrangements and the coordination of the offering of the Offered
Securities by the U.S. Underwriters and the International Managers, if
applicable, any dealer agreements, the Preliminary and Supplemental
Blue Sky
<PAGE> 24
-24-

Memoranda and the furnishing to the Underwriters and dealers of copies
of the Registration Statement, the Prospectus and each Prospectus
Supplement, including mailing and shipping, as herein provided.

(j) To furnish to the Representatives for a period of
five years after the Representation Date copies of all reports or
other communications (financial or other) furnished to holders of the
Company's or the Guarantor's capital stock, and copies of any reports
and financial statements furnished to or filed with the Commission.

(k) To use, and to cause the Company to use, the proceeds
of the sale of the Offered Securities to make the loans to SCI Limited
contemplated by the Loan Agreement; and to use the net proceeds of the
offering of the Offered Securities as set forth in the Prospectus
under the caption "Use of Proceeds."

(m) To use their respective best efforts to effect the
listing of the Offered Securities (including the shares of Guarantor
Common Stock issuable upon the conversion of the Offered Securities)
on the New York Stock Exchange on the Representation Date.

(n) To reserve and keep available at all times, free of
preemptive rights, sufficient shares of Guarantor Common Stock to
satisfy any obligations to issue shares of Guarantor Common Stock upon
conversion of all of the Offered Securities that are convertible into
the Guarantor Common Stock.

6. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters hereunder to purchase the Underwritten
Securities are subject to the following conditions:

issued under the Securities Act or proceedings therefor initiated or
threatened by the Commission. The price of the Offered Securities and
any price-related information previously omitted from the effective
Registration Statement and the Prospectus Supplement shall have been
transmitted to the Commission for filing pursuant to Rule 424 under
the Securities Act within the prescribed time period and prior to the
Closing Date the Company shall have provided evidence satisfactory to
the Underwriters of such timely filing.

(b) The representations and warranties of each of the
Company and the Guarantor contained herein and in the Terms Agreement
shall be true and correct on and as of the Closing Date as if made on
and as of the Closing Date and each of the Company and the Guarantor
shall have complied with all agreements and satisfied all conditions
on their respective part to be performed or satisfied hereunder at or
prior to the Closing Date.

(c) Subsequent to the Representation Date and prior to
the Closing Date, there shall not have occurred any Company Material
Adverse Change or any Guarantor Material Adverse Change or any
development involving a Prospective Company Material Adverse Change or
any Prospective Guarantor Material Adverse Change other than as set
forth in the Registration Statement and the Prospectus, the effect of
which in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Underwritten Securities on the terms and in the manner contemplated in
the Registration Statement and the Prospectus. As used in this
Section 6(c), "Prospectus" shall mean the Prospectus first used to
confirm sales of the Offered Securities exclusive of any amendment or
supplement thereto thereafter.

(d) The Representatives shall have received on and as of
the Closing Date a certificate of each of the Company and of the
Guarantor signed by the Chief Executive Officer, the Chief Operating
Officer or the Chief Financial Officer of each of the Company and of
the Guarantor to the effect set forth in subsections (a) and (b) of
this Section 6 and to the further effect that since the most recent
date as of which information is given in the Prospectus there shall
not have occurred any Company Material Adverse Change or any Guarantor
Material Adverse Change, or any development involving a Prospective
Company Material Adverse Change or any Prospective Guarantor Material
Adverse Change. As used in this Section 6(d), "Prospectus" shall mean
the Prospectus first used to confirm
<PAGE> 26
-26-

sales of the Offered Securities exclusive of any amendment or
supplement thereto thereafter.

(e) The Representatives shall have received on the
Closing Date a signed opinion of Wachtell, Lipton, Rosen & Katz,
special counsel for the Company and the Guarantor, addressed to the
Underwriters and dated the Closing Date and satisfactory to counsel
for the Underwriters, to the effect that:

(i) Each of the Agreement and the Terms Agreement
has been duly and validly authorized, executed and delivered
by each of the Company and the Guarantor.

(ii) The number of authorized shares of capital
stock of the Company and the Guarantor is as set forth in the
Prospectus under "Capitalization" and the authorized capital
stock of each of the Company and the Guarantor conforms as to
legal matters in all material respects to the description
thereof contained in the Prospectus.

(iv) The issuance of the Offered Securities is not
subject to preemptive rights arising by operation of law or
under the Articles or Regulations; and no holder of the
Offered Securities will be subject to personal liability
solely by reason of being such a holder.

(v) Upon issuance and delivery of the Offered
Securities, the Offered Securities shall be convertible at the
option of the holder thereof into Common Stock in accordance
with the terms of the Offered Securities and the Guarantor
Agreement; the Guarantor Common Stock issuable upon conversion
of the Offered Securities has been duly authorized and validly
reserved for issuance upon such conversion by all necessary
corporate action on the part of the Guarantor, and such
Guarantor Common Stock, when issued upon such conversion, will
be validly issued, fully paid and nonassessable; no holder of
the
<PAGE> 27
-27-

Guarantor Common Stock will be subject to personal liability
solely by reason of being such a holder; and the issuance of
such shares upon such conversion or exchange will not be
subject to preemptive rights arising by operation of law or
under the charter or by-laws of the Guarantor.

(vi) Each of the Guarantor Agreements has been
duly and validly authorized, executed and delivered by the
Guarantor, the Company and SCI Limited to the extent each is a
party thereto and constitutes a legal, valid and binding
obligation of each of them to the extent a party thereto,
enforceable against each of them to the extent a party thereto
in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer and similar laws affecting
creditors' rights and remedies generally and subject to
general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
and each of the Guarantor Agreements conforms in all material
respects to the description thereof in the Registration
Statement and the Prospectus.

(vii) At the time the Registration Statement and
each amendment thereto became effective and at the
Representation Date, the Registration Statement and the
Prospectus (other than the financial statements and schedules
and other financial and statistical data included or
incorporated by reference therein, as to which such counsel
need express no opinion) appear on their face to be
appropriately responsive to the applicable requirements of the
Securities Act.

(viii) The statements set forth or incorporated by
reference in the Registration Statement and the Prospectus
insofar as such statements purport to summarize certain
provisions of the Offered Securities and the Guarantor Common
Stock provide a fair summary of such provisions.

management of the Company or to such counsel a present
intention to initiate such suit or proceeding).

(x) Based upon such counsel's review of
applicable law, no authorization, approval, consent or order
of any court or governmental or regulatory authority, body or
agency or third party is required in connection with (A) the
offering, issuance or sale of the Offered Securities or the
valid authorization, issuance and delivery of the Guarantor
Common Stock issuable upon conversion of the Offered
Securities, or (B) the execution, delivery or full and timely
performance of this Agreement, the Terms Agreement, each of
the Company Agreements and each of the Guarantor Agreements by
the Company, the Guarantor or SCI Limited, except such as may
be required under the Securities Act or state securities laws
or under the Company's and the Guarantor's listing agreement
with the New York Stock Exchange.

(xi) To the best of such counsel's knowledge and
information, the execution, delivery and the full and timely
performance of this Agreement, the Terms Agreement, each of
the Company Agreements and each of the Guarantor Agreements,
the consummation of each of the transactions contemplated
herein and therein (including the issuance, sale and delivery
of the Offered Securities and the issuance of the Guarantor
Common Stock upon conversion of the Offered Securities), the
performance by the Guarantor of the Backup Undertakings and
compliance by each of the Company and the Guarantor with their
respective obligations hereunder and thereunder will not
conflict with or constitute a breach of, or default under
(including, without limitation, any event which, with notice
or lapse of time or both would constitute a breach of or a
default under), or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company, the Guarantor or any of the Subsidiaries pursuant to,
any contract identified on a schedule to such opinion, nor
will such action result in any violation of the provisions of
the Articles, Regulations, charter or by-laws of the Company
or of the Guarantor or SCI Limited, as the case may be, or any
applicable law, rule, regulation or administrative, regulatory
or court judgment, order or decree, except for any breach,
default, lien, charge or encumbrance under any such contract
as could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
<PAGE> 29
-29-

(xii) Each document filed pursuant to the Exchange
Act (other than the financial statements, schedules and other
financial and statistical data included therein, as to which
such counsel need express no opinion) and incorporated or
deemed to be incorporated by reference in the Prospectus
appears on its face to be appropriately responsive to the
applicable requirements of the Exchange Act.

(xiii) Neither the Company nor the Guarantor is an
investment company under the Investment Company Act of 1940,
or a holding company or a subsidiary of a holding company
under the Public Utility Holding Company Act of 1935.

Such counsel shall also state that they have been advised by
the Commission that the Registration Statement has become effective
under the Securities Act; that any required filings of the Prospectus
pursuant to Rule 424(b) have been made in the manner and within the
time period required by Rule 424(b); and that, based solely on
conversations with the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted, are pending or, to
such counsel's knowledge, are contemplated under the Securities Act.

In addition, such counsel shall also include a statement to
the effect that nothing has come to the attention of such counsel
which leads such counsel to believe that (1) the Registration
Statement (other than the financial statements and schedules and other
financial and statistical data included or incorporated by reference
therein, as to which such counsel need not make any statement or
express any opinion), when it became effective contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (2) the Prospectus (other than the
financial statements and schedules and other financial and statistical
data included or incorporated by reference therein, as to which such
counsel need not make any statement or express any opinion) as of its
date or at the Representation Date contained and, as of the date such
opinion is delivered, contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
<PAGE> 30
-30-

Such counsel in rendering such opinion may rely as to certain
matters of fact on certificates of officers of the Company and of the
Guarantor and of public officials; provided, however, that (a) such
counsel shall state that both such counsel, the Underwriters and
counsel for the Underwriters are justified in relying upon such
certificates and (b) such certificates shall have been delivered to
the Representatives prior to the Closing Date. In rendering such
opinion, such counsel may rely as to matters involving the application
of laws of (1) the State of Texas, upon the written opinion of James
M. Shelger, General Counsel of the Guarantor, delivered pursuant to
clause (f) below of this Section 6 and (2) any jurisdiction other than
the State of New York or the United States or the General Corporation
Law of the State of Delaware, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel who are
reasonably satisfactory to counsel for the Underwriters; provided,
however, that such counsel shall state that such counsel, the
Underwriters and counsel for the Underwriters are justified in relying
upon such opinion.

(f) The Representatives shall have received on the
Closing Date a signed opinion of James M. Shelger, General Counsel of
the Guarantor, addressed to the Underwriters and dated the Closing
Date and satisfactory to counsel for the Underwriters, to the effect
that:

(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of the State of Texas, with power and authority (under
the Texas Limited Liability Company Act and otherwise) to own
its properties and conduct its business as described in the
Registration Statement and the Prospectus and to the best of
such counsel's knowledge and information is duly qualified as
a foreign limited liability company for the transaction of
business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing
could not, singly or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect or a Guarantor
Material Adverse Effect.

(ii) The Guarantor has been duly incorporated, is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and
<PAGE> 31
-31-

to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be
in good standing could not, singly or in the aggregate,
reasonably be expected to have a Guarantor Material Adverse
Effect.

(iii) Each Subsidiary has been duly incorporated,
is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be
in good standing could not, singly or in the aggregate,
reasonably be expected to have a Guarantor Material Adverse
Effect.

(iv) Each of this Agreement and the Terms
Agreement has been duly authorized, executed and delivered by
each of the Company and the Guarantor.

(v) All of the outstanding shares of capital
stock of the Company have been duly authorized and validly
issued, are fully paid and non-assessable and are not subject
to any preemptive or similar rights; to the best of such
counsel's knowledge and information, after due inquiry, all of
the issued Common Shares are owned by the Guarantor, free and
clear of all liens, encumbrances, security interests, claims
and restrictions on transferability and voting (other than
such restrictions on transferability as may arise under the
Company Agreements and state and federal securities laws).

(vi) The number of authorized shares of capital
stock of the Company and the Guarantor is as set forth in the
Prospectus under "Capitalization" and the authorized capital
stock of each of the Company and the Guarantor conforms as to
legal matters in all material respects to the description
thereof contained in the Prospectus.

(vii) The Declaration has been duly adopted by the
Guarantor as manager of the Company pursuant to the
<PAGE> 32
-32-

Company's Articles and Regulations and is in full force and
effect.

(viii) The Offered Securities have been duly
authorized for issuance and sale to the Underwriters in
accordance with this Agreement and the Terms Agreement and,
when issued and delivered by the Company to the Underwriters
pursuant to this Agreement and the Terms Agreement against
payment of the consideration set forth in the Terms Agreement,
will be validly issued and fully paid and non-assessable.

(ix) The issuance of the Offered Securities is not
subject to preemptive rights arising by operation of law or
under the Articles or Regulations; and no holder of the
Offered Securities will be subject to personal liability
solely by reason of being such a holder.

(x) Upon issuance and delivery of the Offered
Securities, the Offered Securities shall be convertible at the
option of the holder thereof into Common Stock in accordance
with the terms of the Offered Securities and the Guarantor
Agreement; the Guarantor Common Stock issuable upon conversion
of the Offered Securities has been duly authorized and validly
reserved for issuance upon such conversion by all necessary
corporate action on the part of the Guarantor, and such
Guarantor Common Stock, when issued upon such conversion, will
be validly issued, fully paid and nonassessable; no holder of
the Guarantor Common Stock will be subject to personal
liability solely by reason of being such a holder; and the
issuance of such shares upon such conversion will not be
subject to preemptive rights arising by operation of law or
under the charter or by-laws of the Guarantor.

(xi) All of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and, to the best of
such counsel's knowledge and information, after due inquiry,
except as set forth in the Registration Statement and the
Prospectus, is owned by the Guarantor, directly or indirectly,
free and clear of any perfected security interest, and, to the
best of such counsel's knowledge, after due inquiry, any other
security interests or claims.

(xii) Each of the Guarantor Agreements has been
duly and validly authorized, executed and delivered by the
<PAGE> 33
-33-

Guarantor, the Company and SCI Limited to the extent each is a
party thereto and constitutes a legal, valid and binding
obligation of each of them to the extent a party thereto,
enforceable against each of them to the extent a party thereto
in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer and similar laws affecting
creditors' rights and remedies generally and subject to
general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
and each of the Guarantor Agreements conforms in all material
respects to the descriptions thereof in the Registration
Statement and the Prospectus.

(xiii) The statements set forth or incorporated by
reference in the Registration Statement and the Prospectus
insofar as such statements purport to summarize certain
provisions of the Offered Securities and the Guarantor Common
Stock provide a fair summary of such provisions.

(xiv) Such counsel does not know of any legal or
governmental actions, suits or proceedings, pending or
threatened, required to be disclosed in the Registration
Statement which are not disclosed therein as required
(provided that for such purpose such counsel need not regard
any action, suit or proceeding to be "threatened" unless the
potential litigant has manifested to the management of the
Company or to such counsel a present intention to initiate
such suit or proceeding).

(xv) To the best of such counsel's knowledge and
information, after due inquiry, there are no Contracts or
other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto.

(xvi) Based on such counsel's review of applicable
law, no authorization, approval, consent or order of any court
or governmental or regulatory authority, body or agency or
third party is required in connection with (A) the offering,
issuance or sale of the Offered Securities or the valid
authorization, issuance and delivery of the Guarantor Common
Stock issuable upon conversion of the Offered Securities, or
(B) the execution, delivery or
<PAGE> 34
-34-

full and timely performance of this Agreement, the Terms
Agreement, each of the Company Agreements and each of the
Guarantor Agreements by the Company, the Guarantor or SCI
Limited, except such as may be required under the Securities
Act or state securities laws or under the Company's and the
Guarantor's listing agreement with the New York Stock
Exchange, Inc.

(xvii) To the best of such counsel's knowledge and
information, the execution, delivery and the full and timely
performance of this Agreement, the Terms Agreement, each of
the Company Agreements and each of the Guarantor Agreements,
the consummation of each of the transactions contemplated
herein and therein (including the issuance, sale and delivery
of the Offered Securities and the issuance of the Guarantor
Common Stock upon conversion of the Offered Securities), the
performance by the Guarantor of the Backup Undertakings and
compliance by each of the Company and the Guarantor with their
respective obligations hereunder and thereunder will not
conflict with or constitute a breach of, or default under
(including, without limitation, any event which, with notice
or lapse of time, or both, would constitute a breach of or a
default under), or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company, the Guarantor or any of the Subsidiaries pursuant to,
any contract identified on a schedule to such opinion, nor
will such action result in any violation of the provisions of
the Articles, Regulations, charter or by-laws of the Company
or of the Guarantor or SCI Limited, as the case may be, or any
applicable law, rule, regulation or administrative, regulatory
or court judgment, order or decree, except for any breach,
default, lien, charge or encumbrance under any such contract
as could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

statements therein not misleading and (2) the Prospectus (other than
the financial statements and schedules and other financial or
statistical data included or incorporated by reference therein, as to
which such counsel need not make any statement or express any opinion)
as of its date or at the Representation Date contained and, as of the
date such opinion is delivered, contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

Such counsel in rendering such opinion may rely as to certain
matters of fact on certificates of officers of the Company and of the
Guarantor and of public officials; provided, however, that (a) such
counsel shall state that such counsel, the Underwriters and counsel
for the Underwriters are justified in relying upon such certificates
and (b) such certificates shall have been delivered to the
Representatives prior to the Closing Date. In rendering such opinion,
such counsel may rely as to matters involving the application of laws
of (1) the State of New York or the General Corporation Law of the
State of Delaware upon the written opinion of Wachtell, Lipton, Rosen
& Katz delivered pursuant to clause (e) above of this Section 6 and
(2) any jurisdiction other than the State of Texas or the United
States, to the extent he deems proper and specifies in such opinion,
upon the opinion of other counsel who are reasonably satisfactory to
counsel for the Underwriters; provided, however, that such counsel
shall state that such counsel, the Underwriters and counsel for the
Underwriters are justified in relying upon such opinion.

(g) The Representatives shall have received on the
Closing Date a signed opinion of Miller & Chevalier, special counsel
to the Company and the Guarantor, addressed to the Underwriters and
dated the Closing Date and satisfactory to counsel to the
Underwriters, to the effect that the statements made in the Prospectus
under the caption "Certain Federal Income Tax Considerations Regarding
LLC Preferred Securities," to the extent that they constitute matters
of law or legal conclusions, have been reviewed by such counsel and
fairly and accurately present the information disclosed therein in all
material respects.

(h) On the Representation Date and also on the Closing
Date, Ernst & Young and Coopers & Lybrand shall have furnished to the
Representatives signed letters, addressed to the Underwriters and
dated the respective dates of delivery
<PAGE> 36
-36-

thereof, in form and substance satisfactory to the Representatives,
containing statements and information of the type customarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information included or
incorporated by reference in the Registration Statement and the
Prospectus.

(i) The Representatives shall have received on and as of
the Closing Date a favorable opinion of Cahill Gordon & Reindel,
counsel to the Underwriters, with respect to the Registration
Statement, the Prospectus and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters.

(j) On the Representation Date, the Offered Securities
and the Guarantor Common Stock issuable upon conversion of the Offered
Securities shall have been approved for listing on the New York Stock
Exchange upon notice of issuance.

(k) At the Closing Date, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
require for the purpose of enabling them to pass upon the issuance and
sale of the Offered Securities as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
and the Guarantor in connection with the issuance and sale of the
Offered Securities (and the Guarantor Common Stock) as herein
contemplated shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.

(l) On or prior to the Closing Date the Company and the
Guarantor shall have furnished to the Representatives such further
certificates and documents as the Representatives shall reasonably
request.

(m) Subsequent to the execution and delivery of the Terms
Agreement and prior to the Closing Date, there shall not have occurred
any downgrading, nor shall any notice have been given of (i) any
intended or potential downgrading or (ii) any review or possible
change that does not indicate an improvement, in the rating accorded
any securities of or guaranteed by the Company or the Guarantor by any
"nationally recognized statistical rating organization," as such term
is
<PAGE> 37
-37-

defined for purposes of Rule 436(g)(2) under the Securities Act.

(n) The Guarantor shall have delivered to the
Representatives written agreements, in form and substance satisfactory
to the Representative designated in the Terms Agreement, with each of
its executive officers who own capital stock of the Guarantor of a
class which includes the Guarantor Common Stock that no offer, sale or
other disposition, or request or demand for registration under the
Securities Act or inclusion in any other registration statement filed
by the Company or the Guarantor under the Securities Act, of any
capital stock of the Guarantor of a class which includes the Guarantor
Common Stock, or warrants, options, convertible, exercisable or
exchangeable securities, or other rights to purchase or acquire, such
capital stock (or any such right or exchangeable, exercisable or
convertible security) owned by such person, or with respect to which
such person has the power of disposition, will be made for a period of
90 days after the Representation Date, directly or indirectly, by such
executive officer, otherwise than (i) with the prior written consent
of the Representative designated in the Terms Agreement and (ii)
pursuant to such exceptions, if any, as are agreed to by the
Representatives and set forth in the Terms Agreement.

(o) There shall not have been any amendment or supplement
to the Registration Statement or the Prospectus to which the
Underwriters shall have objected.

The several obligations of the Underwriters designated in the
Terms Agreement to purchase Option Securities hereunder on the Additional
Closing Date are, unless otherwise agreed by the Underwriters designated in the
Terms Agreement, subject to the conditions set forth in paragraph (a) to and
including paragraph (o) above on and as of the Additional Closing Date
(references therein to the Closing Date shall be deemed references to the
Additional Closing Date for this purpose), except that the certificate called
for by paragraph (d), the opinions called for by paragraphs (e), (f), (g) and
(i) and the letters called for by paragraph (h) shall be dated as of, and
delivered on, the Additional Closing Date, and to the delivery to the
Representatives on the Additional Closing Date of such other documents as they
may reasonably request.

7. Indemnification and Contribution. Each of the
Company and the Guarantor, jointly and severally, agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act,
<PAGE> 38
-38-

from and against any and all losses, claims, damages and liabilities
(including, without limitation the legal fees and other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company or the Guarantor shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Guarantor in writing by such Underwriter
through the Representatives expressly for use therein; provided, however, that
the foregoing indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter (or the benefit of any person
controlling such Underwriter) from whom the person asserting any such losses,
claims, damages or liabilities purchased Offered Securities if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the Prospectus and the
Company or the Guarantor has provided such Prospectus in accordance with
paragraph 5(ii) hereof (as amended or supplemented if the Company or the
Guarantor shall have furnished any amendments or supplements thereto) and if it
shall be established in the related action or proceeding that a copy of the
Prospectus, if required by law (as so amended or supplemented, but exclusive of
any documents incorporated therein by reference), shall not have been furnished
to such person at or prior to the written confirmation of the sale of such
Offered Securities to such person, except to the extent that such Prospectus
contains any other untrue statement or omission or alleged untrue statement or
omission of a material fact that was the subject matter of the related action
or proceeding. For purposes of the proviso to the immediately preceding
sentence, the term "Prospectus" shall not be deemed to include the documents
incorporated therein by reference, and no Underwriter shall be obligated to
send or give any supplement or amendment to any document incorporated by
reference in any preliminary prospectus or the Prospectus to any person.

Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantor, the directors of the
Company, the directors of the Guarantor, the officers of the Company and of the
Guarantor who sign the Registration Statement and each person, if any, who
controls the
<PAGE> 39
-39-

Company or the Guarantor within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company or the
Guarantor shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
relating to such Underwriter furnished to the Guarantor in writing by such
Underwriter through the Representatives expressly for use in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any
preliminary prospectus. For purposes of this Section 7 and Section 4(ii), the
only written information furnished by the Underwriters to the Guarantor
expressly for use in the Registration Statement and the Prospectus is the
information in the last paragraph of the cover page of the Prospectus
Supplement and ( ) and ( ) under the table under the caption
"Underwriting" in the Prospectus Supplement.

not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for all Underwriters and all persons,
if any, who control any Underwriter within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act and (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company, the Guarantor, their respective directors, their respective
officers who sign the Registration Statement and each person, if any, who
controls the Company or the Guarantor within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Underwriters and such
control persons of Underwriters, such firm shall be designated in writing by
the Representatives. In the case of any such separate firm for the Company,
the Guarantor, and such directors, officers and control persons of the Company
or the Guarantor, such firm shall be designated in writing by the Guarantor.
The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested
an Indemnifying Person to reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by the third sentence of this paragraph,
the Indemnifying Person agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of
such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (1) includes an unconditional
written release of such Indemnified Person, in form and substance satisfactory
to such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (2) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of any
Indemnified Person.

If the indemnification provided for in the first or second
paragraph of this Section 7 is unavailable to any extent to an Indemnified
Person under such paragraph in respect of any
<PAGE> 41
-41-

losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities as follows: as between the Company and the Guarantor on the one
hand and the Underwriters on the other (i) in such proportion as is appropriate
to reflect the aggregate relative benefits received by the Company and the
Guarantor on the one hand and by the Underwriters on the other from the
offering of the Offered Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Guarantor on the one
hand and of the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Guarantor on the one hand and by the Underwriters on the
other shall be deemed to be in the same respective proportions as the net
proceeds from the offering (before deducting expenses) received by the Company
and the total underwriting compensation received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus bear to the
aggregate public offering price of the Offered Securities. The relative fault
of the Company and the Guarantor on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company, the Guarantor or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

The Company, the Guarantor and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall an Underwriter be required to contribute any amount in
<PAGE> 42
-42-

excess of the amount by which the total price at which the Offered Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay or has paid by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number
of Offered Securities they have purchased hereunder, and not joint.

The indemnity and contribution agreements contained in this
Section 7 are in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.

The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company and of the
Guarantor contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or the Company, the Guarantor, their respective officers or
directors or any other person controlling the Company or the Guarantor and
(iii) acceptance of and payment for any of the Offered Securities.

8. Termination of Agreement. Notwithstanding anything
herein contained, this Agreement (or the obligations of the several Option
Securities Underwriters with respect to the Option Securities) may be
terminated in the absolute discretion of the Representatives, by notice given
to the Company or the Guarantor, if after the execution and delivery of this
Agreement and prior to the Closing Date (or, in the case of the Option
Securities, prior to the Additional Closing Date) (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the National Association of Securities Dealers,
Inc., the American Stock Exchange or the ( ), (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York or ( ) shall have been declared by either U.S.
Federal, New York State or ( ) authorities or exchange controls shall
have been imposed by the United States, or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the
<PAGE> 43
-43-

judgment of the Representatives, is material and adverse and which, in the
judgment of the Representatives, makes it impracticable to market the Offered
Securities on the terms and in the manner contemplated in the Prospectus.

If, on the Closing Date or the Additional Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Offered Securities which it or they have agreed to purchase hereunder
on such date, and the aggregate number of Offered Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of Offered Securities to be
purchased on such date, the other Underwriters (with respect to the Option
Securities, to the extent such Underwriters are Option Securities Underwriters)
shall be obligated severally in the proportions that (1) with respect to
Underwritten Securities the number of Underwritten Securities set forth
opposite their respective names in the annex or annexes to Exhibit 1 hereto
bears to the aggregate number of Underwritten Securities set forth opposite the
names of all such non-defaulting Underwriters and (2) with respect to Option
Securities, the number of Underwritten Securities set forth opposite their
respective names in the annex or annexes to Exhibit 1 hereto bears to the
aggregate number of Underwritten Securities set forth opposite the names of all
such non-defaulting Underwriters who are Option Securities Underwriters, or in
such other proportions as the Representatives may specify, to purchase the
Offered Securities which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided, however, that in no event
shall the number of Offered Securities that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such number of Offered Securities without the
written consent of such Underwriter. If, on the Closing Date or the Additional
Closing Date, as the case may be, any Underwriter or Underwriters shall fail or
refuse to purchase Offered Securities which it or they have agreed to purchase
hereunder on such date, and the number of Offered Securities with respect to
which such default occurs is more than one-tenth of the aggregate number of
Offered Securities to be purchased on such date, and arrangements satisfactory
to the Representatives, the Company and the Guarantor for the purchase of such
Offered
<PAGE> 44
-44-

Securities are not made within 36 hours after such default, this Agreement (or
the obligations of the several Underwriters to purchase the Option Securities,
as the case may be) shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Guarantor. In any such case
either the Representatives or the Company and the Guarantor shall have the
right to postpone the Closing Date (or, in the case of the Option Securities,
the Additional Closing Date), but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.

10. Reimbursement upon Occurrence of Certain Events. If
this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or the Guarantor
to comply with the terms or to fulfill any of the conditions of this Agreement,
or if for any reason the Company or the Guarantor shall be unable to perform
their respective obligations under this Agreement, each of the Company and the
Guarantor jointly and severally agrees to reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and expenses of
their counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder and pursuant to the Terms
Agreement. In no event, however, shall the Company or the Guarantor be
responsible to the Underwriters for any loss of profits for failure to
consummate the offering and sale of the Offered Securities.

11. Miscellaneous. This Agreement shall inure to the
benefit of and be binding upon the Company, the Guarantor, the Underwriters,
any controlling persons referred to herein and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. No purchaser of Offered Securities from any
Underwriter shall be deemed to be a successor by reason merely of such
purchase.

the Representatives at the address as set forth in the Terms Agreement.
Notices to the Company shall be given to it at SCI Finance LLC c/o Service
Corporation International, 1929 Allen Parkway, Houston, Texas 77019 (facsimile:
(713) ( )); Attention: ( ). Notices to the Guarantor shall be
given to it at Service Corporation International, 1929 Allen Parkway, Houston,
Texas 77019 (facsimile: (713) ( )); Attention: ( ).

If the foregoing is in accordance with your understanding,
please sign and return six counterparts hereof.

Very truly yours,

SCI FINANCE LLC

By:______________________________
Name:
Title:

SERVICE CORPORATION
INTERNATIONAL,
as Guarantor

By:______________________________
Name:
Title:

CONFIRMED AND ACCEPTED,
as of the date first above written

(Insert Signature block(s) for the
Representative or Representatives
acting on behalf of the Underwriters,
or for each Underwriter if
no Syndicate)
<PAGE> 47

EXHIBIT I

SCI FINANCE LLC

( ) Shares

(TITLE OF SECURITIES)

(liquidation preference $( ) per share)

guaranteed to the extent set forth
in certain backup undertakings by

SERVICE CORPORATION INTERNATIONAL

TERMS AGREEMENT

( ), 199( )

SCI Finance LLC
Service Corporation International
1929 Allen Parkway
Houston, Texas 77019

Attention: ( )

Ladies and Gentlemen:

( ) (the "Representative(s)") understand that
SCI Finance LCC, a Texas limited liability corporation (the "Company"), and
Service Corporation International, a Texas corporation, as guarantor and
provider of certain backup undertakings (the "Guarantor"), propose to issue and
sell ( ) shares of (describe Preferred Securities) (the "Underwritten
Securities"). Subject to the terms and conditions set forth herein or
incorporated by reference herein, the (U.S.) Underwriters named in Annex A
attached hereto (and the International Managers named in Annex B attached
hereto) offer to purchase, severally and not jointly, the number of
Underwritten Securities set forth opposite the name of each such Underwriter on
Annex A (and Annex B) hereto at a price of $( ) per share (the "Purchase
Price"). The Closing Date shall be ( ), 199( ), at ( ) A.M. at the
offices of ( ).

As compensation to the Underwriters for their commitments
hereunder, and in view of the fact that proceeds of the sale of the Offered
Securities will be lent by the Company to SCI Limited
<PAGE> 48
-2-

pursuant to the Loan Agreement, the Guarantor hereby agrees to pay at (each of)
the Closing Date (and the Additional Closing Date) to the Underwriters $( )
per Offered Security (as defined below) purchased by the Underwriters.

(It is understood that, subject to the conditions hereinafter
stated, ( ) Underwritten Securities (the "U.S. Underwritten
Securities") will be sold to the several U.S. Underwriters named in Annex A
hereto (the "U.S. Underwriters") in connection with the offering and sale of
such U.S. Underwritten Securities in the United States and Canada to United
States and Canadian Persons (as such terms are defined in the Agreement between
U.S. and International Underwriting Syndicates of even date herewith between
the U.S. Underwriters and the International Managers), and ( )
Underwritten Securities (the "International Securities") will be sold to the
several international managers named in Annex B hereto (the "International
Managers") in connection with the offering and sale of such International
Securities outside the United States and Canada to persons other than United
States and Canadian Persons. ( ) shall act as
representatives (the "U.S. Representatives") of the several U.S. Underwriters,
and ( ) shall act as representatives (the "International
Representatives") of the several International Managers. The U.S. Underwriters
and the International Managers are hereinafter collectively referred to as the
"Underwriters", and the U.S. Representatives and the International
Representatives are hereinafter collectively referred to as the
"Representatives.")

(In addition, the Representatives understand that the Company
and the Guarantor propose to issue and sell to the several (U.S.) Underwriters,
for the sole purpose of covering over-allotments in connection with the sale of
the Underwritten Securities, at the option of the (U.S.) Underwriters, up to an
additional ( ) shares of the (describe Preferred Securities) (the
"Option Securities"). The Underwritten Securities and the Option Securities
are herein referred to as the "Offered Securities.")

(The offer herein contained is further conditioned upon the
Company and the Guarantor agreeing to sell to the (U.S.) Underwriters the
Option Securities, and agreeing that the (U.S.) Underwriters shall have a
one-time right to purchase, severally and not jointly, up to ( ) Option
Securities at the Purchase Price. Option Securities may be purchased as
provided below solely for the purpose of covering over-allotments made in
connection with the offering of the Underwritten Securities. If any Option
Securities are to be purchased, each (U.S.) Underwriter agrees, severally and
not jointly, to purchase the number of Option
<PAGE> 49
-3-

Securities (subject to such adjustments to eliminate any fractional Offered
Securities as the (U.S.) Representatives in their sole discretion may make)
that bears the same proportion to the total number of Option Securities to be
purchased as the number of (U.S.) Underwritten Securities set forth in Annex A
hereto opposite the name of such (U.S.) Underwriter bears to the total number
of (U.S.) Underwritten Securities.)

(The Company's and the Guarantor's agreement to sell the
Option Securities shall entitle the (U.S.) Underwriters to exercise the option
to purchase the Option Securities at any time on or before the thirtieth day
following the date of this Terms Agreement, by written notice from the (U.S.)
Representatives to the Company and the Guarantor. Such notice shall set forth
the aggregate number of Option Securities as to which the option is being
exercised and the date and time when the Option Securities are to be delivered
and paid for which may be the same date and time as the Closing Date but shall
not be earlier than the Closing Date nor later than the tenth full Business Day
after the date of such notice (unless such time and date are postponed in
accordance with the provisions of Section 9 of the Underwriting Agreement
referred to below). Such notice shall be given at least two Business Days
prior to the date and time of delivery specified therein.)

The Underwritten Securities shall have the following terms:

Title: ( )
Liquidation preference: ( )
Dividend rate: ( )
Dividend payment dates: ( )
Conversion or exchange provisions: ( )
Redemption provisions: ( )
Public offering price: $( ) per share
Additional terms: ( )

All the provisions contained in the document entitled
"Underwriting Agreement -- SCI Finance LLC -- Preferred Securities -- Service
Corporation International" (the "Underwriting Agreement") and dated ( ),
199( ), a copy of which you have previously received, are herein incorporated
by reference in their entirety and shall be deemed to be a part of this Terms
Agreement to the same extent as if the Underwriting Agreement had been set
forth in full herein. Terms defined in the Underwriting Agreement are used
herein as therein defined.

The Representative authorized to approve the form of agreement
specified in Section 6(m) of the Underwriting Agreement
<PAGE> 50
-4-

and to give the consent specified in Section 5(h) and Section 6(m) of the
Underwriting Agreement is ( ). (The additional exceptions to
Section 5(h) are ( ).)

"We hereby accept your offer, set forth in the Terms
Agreement, dated ( ), 199( ), to purchase the Underwritten Securities
on the terms set forth therein and agree to and accept all other terms and
provisions of the Terms Agreement (and hereby grant the (U.S.) Underwriters the
option to purchase the Option Securities as more fully set forth in the Terms
Agreement)."

Very truly yours,

By:______________________________
Name:
Title:

Accepted as of the date
first above written:

SCI FINANCE LLC

By:______________________________
Name:
Title:

SERVICE CORPORATION INTERNATIONAL,
as Guarantor

By:______________________________
Name:
Title:
<PAGE> 52

ANNEX A

<TABLE>
<CAPTION>
Number of
(U.S.) Underwritten
Securities
(U.S.) Underwriters To Be Purchased
- ------------------- -------------------
<S> <C>
_________

Total: =========
</TABLE>
<PAGE> 53

ANNEX B

<TABLE>
<CAPTION>
Number of
International
Underwritten
International Securities
Managers To be Purchased
- ------------- ---------------
<S> <C>
_________

Total: =========
</TABLE>
<PAGE> 54

SCHEDULE I

Significant Subsidiaries of the Guarantor
Within the Meaning of Rule 1-02 of Regulation
S-X under the Securities Exchange Act of 1934
---------------------------------------------

<PAGE> 1
EXHIBIT 3.8

ARTICLES OF ORGANIZATION

SCI FINANCE LLC

The undersigned, being over the age of 18 years and acting as
the sole organizer of a limited liability company under the Texas Limited
Liability Company Act, as amended, does hereby adopt the following Articles of
Organization for SCI Finance LLC (the "Company"):

ARTICLE ONE

The name of the Company is SCI Finance LLC.

ARTICLE TWO

The period of duration of the Company will commence upon the
issuance of the Certificate of Organization for the Company by the Secretary of
State of Texas and shall continue until the close of Company business on
December 31, 2050, or until the earlier dissolution of the Company in
accordance with the provisions of the Regulations of the Company (the
"Regulations"), or as otherwise required by law.

ARTICLE THREE

3.1 The total authorized membership interests of the
Company shall be 7,001,000 interests. The Company is
authorized to issue two classes of membership
interests to be designated respectively as "Common
Interests" and "Preferred Interests".

3.2 As to the Common Interests, the Company shall have
authority to issue 1,000 Common Interests, $0.01 par.
Subject to any prior rights of the holders of
Preferred Interests, the holders of Common Interests
shall be entitled to receive interim distributions
payable in cash, interests or otherwise, when, as and
if declared by the manager out of funds legally
available therefor. Each holder of Common Interests
shall be entitled to one vote per Common Interest
held of record on the Company's books. Upon any
liquidation, dissolution or winding up of the
<PAGE> 2
Company, any of the Company's net assets available
after distributions to any persons with priority
relative to the holders of the Common Interests,
including holders of the Preferred Interests, shall
be distributed pro rata to the holders of Common
Interests in accordance with their respective rights
and interests. The Regulations shall set forth any
other rights, powers and privileges relating to the
Common Interests.

3.3 As to the Preferred Interests, the Company shall have
authority to issue from time to time in one or more
series up to 7,000,000 Preferred Interests, $0.01
par, each series of Preferred Interests ranking pari
passu as to participation in profits and assets with
each other series of Preferred Interests and with
such other relative rights to interim distributions,
voting rights, distributions upon liquidation, and
other rights, preferences, privileges, limitations,
restrictions and other terms and provisions as shall
be set forth in the Regulations from time to time.

ARTICLE FOUR

The purposes for which the Company is organized are:

4.1 To issue its Common Interests to Service Corporation
International ("Service Corporation") and redeem and
repurchase such Common Interests.

4.2 To issue its Preferred Interests to purchasers,
agents, underwriters or to members of the public, and
(a) to use the proceeds thereof and of the Common
Interests in connection with loans to SCI
International Limited ("SCI Limited") and/or
investments in Eligible Investments (as defined
below); (b) to enforce, amend and administer the
terms of such loan; and (c) to redeem and repurchase
such Preferred Interests and otherwise to perform its
obligations relating to such Preferred Interests and
any agreement incidental thereto.

4.2.1 As used herein, the term "Eligible
Institution" means a depository
institution organized under the laws of

-2-
<PAGE> 3
the United States of America or any one
of the states thereof or the District of
Columbia (or any domestic branch of a
foreign bank), (a) (1) which has either
(i) a long-term unsecured debt rating of
AAA or better by S&P's and Aaa or better
by Moody's or (ii) a short-term
unsecured debt rating or a certificate
of deposit rating of A-1+ or better by
S&P's and P-1 or better by Moody's and
(2) whose deposits are insured by the
FDIC or (b)(1) the parent of which has a
long-term or short-term unsecured debt
rating which signifies investment grade
and (2) whose deposits are insured by
the FDIC.

4.2.2 As used herein, "Eligible Investments"
means book-entry securities, negotiable
instruments, cash or securities
represented by instruments in bearer or
registered form which evidence:

(a) direct obligations of, and
obligations fully guaranteed as
to timely payment by, the
Government of the United States
of America;

(b) demand deposits, time deposits
or certificates of deposit of
any depository institution or
trust company incorporated
under the laws of the United
States of America or any state
thereof and subject to
supervision and examination by
federal or state banking or
depository institution
authorities; provided, however,
that at the time of the
investment or contractual
commitment to invest therein,
the commercial paper or other
short-term unsecured debt
obligations (other than such
obligations the rating of which
is based on the credit of a
Person other than such
depository institution or trust
company) thereof shall have a
credit rating from each of
S&P's, Moody's and (if

-3-
<PAGE> 4
rated by Fitch) Fitch in the
highest investment category
granted thereby;

(c) commercial paper having, at the
time of the investment or
contractual commitment to
invest therein, a rating from
each of S&P's, Moody's and (if
rated by Fitch) Fitch in the
highest investment rating
category granted thereby;

(d) investments in money market
funds having a rating from each
of S&P's and Moody's in the
highest investment rating
category granted thereby;

(e) demand deposits, time deposits
and certificates of deposit
which are fully insured by the
FDIC;

(f) bankers' acceptances issued by
any depository institution or
trust company referred to in
clause (b) above; or

(g) repurchase obligations with
respect to any security that is
a direct obligation of, or
fully guaranteed by, the
Government of the United States
of America or any agency or
instrumentality thereof, the
obligations of which are backed
by the full faith and credit of
the United States of America,
in either case entered into
with (1) a depository
institution or trust company
(acting as principal) described
in clause (b) or (2) a
depository institution or trust
company which is an Eligible
Institution and the deposits of
which are insured by the FDIC.

4.2.3 As used herein, the term "FDIC" means
the Federal Deposit Insurance
Corporation or any successor thereto.

-4-
<PAGE> 5
4.2.4 As used herein, the term "Fitch" means
Fitch Investors Service, Inc. or any
successor thereto.

4.2.5 As used herein, the term "Moody's" means
Moody's Investors Service, Inc. or any
successor thereto.

4.2.6 As used herein, the term "Person" means
any individual, corporation,
association, partnership, trust or other
entity.

4.2.7 As used herein, the term "S&P" means
Standard & Poor's Ratings Group or any
successor thereof.

4.3 To engage in any activity (including, without
limitation, entering into and performing any
agreement) which may be necessary, incidental,
proper, advisable or convenient to accomplish the
foregoing purposes.

The Company shall have no power to incur obligations with
respect to borrowed money from or become liable in respect of any borrowings of
a third party. The foregoing shall not limit the Company's ability to incur
other obligations.

ARTICLE FIVE

The organizer is Curtis G. Briggs and the address of the
organizer is 1929 Allen Parkway, Houston, Texas 77219.

ARTICLE SIX

The name of the initial registered agent of the Company in the
State of Texas is The Prentice-Hall Corporation System, Inc., and the address
of such initial registered agent is 400 North St. Paul Street, Dallas, Texas
75201.

ARTICLE SEVEN

The Company is to be managed by the holder of the Common
Interests. The number of initial managers shall be one. The name and address
of the initial manager shall be as follows:

-5-
<PAGE> 6
Service Corporation International
1929 Allen Parkway
Houston, Texas 77219

ARTICLE EIGHT

No member shall have a preemptive right to acquire any
membership interests or securities of any class that may at any time be issued,
sold or offered for sale by the Company. Without limiting the foregoing, and
without in any way limiting any Regulations, no vote, approval or consent of
any member or class or group of members, in its capacity as such, shall be
required with respect to the creation or issuance of any membership interest
whether at or subsequent to the issuance of interests to the initial members of
the Company, unless the Regulations otherwise specifically provide.

ARTICLE NINE

Except as expressly provided in the Regulations and in the
Liability Assumption Agreement between Service Corporation and the Company (the
"Assumption Agreement"), and to the extent permitted by law, no officer,
director, employee or other agent of any manager of the Company (each, an
"Agent") shall be liable to the Company or its members for monetary damages for
an act or omission in such Agent's capacity as an Agent, provided that this
Article Nine does not eliminate or limit the liability of any such Agent to the
extent such Agent is found liable for (a) a breach of such Agent's duty of
loyalty to the Company or its members; (b) an act or omission not in good faith
that constitutes a breach of duty of such Agent to the Company or an act or
omission that involves intentional misconduct or a knowing violation of the
law; (c) a transaction from which such Agent received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of
such Agent's office; or (d) an act or omission for which the liability of any
such Agent is expressly provided by an applicable statute. Any repeal or
amendment of this Article Nine by the members of the Company shall be
prospective only and shall not adversely affect any limitation on the liability
of any Agent existing at the time of such repeal or amendment. In addition to
the circumstances in which any Agent is not liable as set forth in the
preceding sentences and except as provided in the Regulations and in the
Assumption Agreement, any Agent shall not be liable to the fullest extent
permitted by any provision of the statutes of Texas hereafter enacted that
further limits the liability of any Agent or of a director

-6-
<PAGE> 7
of a corporation. The foregoing shall not affect the liability of a holder of
a Common Interest as provided in Article Ten.

ARTICLE TEN

Each holder of a Common Interest, in its capacity as a holder
of a Common Interest, is fully liable for the Company's debts and liabilities
and each such holder is directly liable to any creditor of the Company for such
debts and liabilities.

ARTICLE ELEVEN

The Transfer of any Common Interests is prohibited absolutely.
Any Transfer of any Common Interests shall be void and shall not be effective
to transfer to any transferee thereof any rights conferred on a member
including but not limited to rights to receive notice of or attend meetings of
the Company, to vote on any matter, to receive interim distributions, or to
receive a share of the net assets of the Company upon its dissolution and
winding up. The preceding sentence shall not affect the transferability of any
Preferred Interests. For purposes of this Article Eleven, "Transfer" means,
with respect to any Common Interest, the transfer, sale, assignment, mortgage,
creation or permission to subsist of pledge, lien, charge or encumbrance over,
grant of any option, interest or other rights in, or other disposition of any
such interests, any part thereof or any interest therein, whether by agreement,
operation of law or otherwise.

ARTICLE TWELVE

The power to adopt, alter, amend or repeal the Regulations
shall be vested in the manager of the Company, subject to any power expressly
vested by the Regulations in the holders of one or more series of Preferred
Interests to adopt, alter, amend or repeal the Regulations.

IN WITNESS WHEREOF, these Articles of Organization have been
executed on October 6, 1994 by the undersigned.

SOLE ORGANIZER

/s/ Curtis G. Briggs

-7-

<PAGE> 1
EXHIBIT 3.9

REGULATIONS

SCI FINANCE LLC

These REGULATIONS of SCI Finance LLC (as amended from time
to time, these "Regulations") dated as of October 17, 1994 are (a) adopted by
the Manager (as defined below) and (b) executed and agreed to by the Common
Interestholders (as defined below). The Company has been organized as a Texas
limited liability company by the filing of the Articles (as defined below)
under and pursuant to the Act (as defined below) and the issuance of the
Certificate of Organization of the Company by the Secretary of State of the
State of Texas.

(1) In these Regulations the following terms shall, where not
inconsistent with the context, have the following meanings:

"Act" means the Texas Limited Liability Company Act and any
successor statute, as amended from time to time;

"Articles" means the Articles of Organization of the Company, as
amended from time to time;

"Common Interests" means common membership interests in the Company
as set forth in and authorized by the Articles and issued pursuant
to these Regulations including Regulation 9;

"Common Interestholder" means a holder of a Common Interest;

"Company" means SCI Finance LLC, a Texas limited liability company;

"Former Member" means a person who was a Common Interestholder but
who has ceased to be a Member by virtue of Regulation 13;

"Interest" means any Common Interest or any Preferred Interest;

"Interestholder" means a holder of a Common Interest or a Preferred
Interest;

"Manager" means Service Corporation International, a company
incorporated under the laws of the state of

<PAGE> 2
Texas and having an office at 1929 Allen Parkway, Houston, Texas
77219 ("Service Corporation");

"Member" means the person, partnership or other entity registered
in the Register of Members as the holder of an Interest;

"Notice" means written notice unless otherwise specifically stated;

"Preferred Interests" means preferred membership interest in the
Company as set forth in and authorized by the Articles and issued
pursuant to Regulation 9;

"Preferred Interestholder" means the holder of a Preferred Interest;

"Register of Members" means the Register of Members kept in
accordance with Regulation 12; and

"Transfer" means with respect to any Common Interests, the
transfer, sale, assignment, mortgage, creation or permission to
subsist of any pledge, lien, charge or encumbrance over, grant of
any option, interest or other rights in, or other disposition of
any such Interests, any part thereof or any interest therein,
whether by agreement, operation of law or otherwise.

(2) Wherever the context requires, references to the plural shall be
deemed to include the singular and any pronoun used herein shall
include the corresponding masculine, feminine or neuter forms.

(3) Expressions referring to writing shall, unless the contrary
intention appears, be construed as including printing, lithography,
photography and other modes of words in a visible form.

(4) Unless the context otherwise requires, words or expressions
contained in these Regulations and not defined herein shall bear
the same meaning as in the Act.

INTERESTS.

(5) Subject to the provisions of the Articles and these Regulations,
the Manager shall have sole and absolute discretion with respect to
the authorized but unissued Interests and may offer, allot, grant
options with respect to, or otherwise dispose of such Interests to
such persons at such times and for such consideration and

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<PAGE> 3

upon such terms and conditions as the Manager may determine
consistent with these Regulations and the Articles.

(6) The initial Member of the Company is the person executing these
Regulations, as of the date hereof, as Member, which is admitted to
the Company as a Member contemporaneously with the execution by
such person of these Regulations. Such Member is a Common
Interestholder. The name and address of every person being the
holder of registered Interests, their class or series and the date
when they became or ceased to be a Member shall be entered in the
Register of Members.

(7) Subject to the terms of any series of Preferred Interests issued
pursuant to Regulation 9, every person whose name is entered as a
Member in the Register of Members being the holder of registered
Interests, may request, and the Company shall issue thereto, a
certificate specifying the Interest or Interests held and the par
value thereof, provided that in respect of a registered Interest,
or Interests, held jointly by several persons, the Company shall
not be bound to issue more than one certificate, and delivery of a
certificate for an Interest to one of several joint holders shall
be sufficient delivery to all. Except as required by law, no
person shall be recognized by the Company as holding any Interest
in trust, and the Company shall not be bound by or be compelled in
any way to recognize (even when having notice thereof) any
equitable, contingent, future or partial interest in any Interest,
or any interest in any fractional part of an Interest, or (except
as otherwise provided by these Regulations, the Articles or as
required by law or court order) any other rights in respect of any
Interest except an absolute right to the entirety thereof in the
registered holder.

(8) If a certificate is worn out or lost, it may be renewed on
production of the worn out certificate, or on satisfactory proof of
its loss together with such in indemnity as the Manager may
require.

INTERESTS AND RIGHTS OF INTERESTHOLDERS.

(9) Subject to the provisions of the Articles and these Regulations,
the Manager may from time to time issue (i) additional Common
Interests and (ii) Preferred Interests with such preferred,
deferred or other special rights or

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<PAGE> 4
such restrictions, whether in regard to interim distributions,
voting, return of capital or otherwise as the Manager may from time
to time determine and set forth in an amendment to these
Regulations. Except as otherwise specifically set forth in these
Regulations, interim distributions and all items of income, gain,
loss, deduction or credit distributable or allocable to the Common
Interestholders as a class shall be distributed or allocated to the
Common Interestholders in proportion to the number of Common
Interests held by each, and all adjustments to the capital accounts
of the Common Interestholders as a group for reasons other than the
allocation of income, gain, loss, deduction or credit by the
Company or distributions by the Company or contributions to the
Company shall be made to the capital account of each Common
Interestholder based on such Common Interestholder's proportionate
share of all Common Interests outstanding at the time of such
adjustment.

(10) Subject to and in accordance with the provisions of the Act,
redeemable Interests may be issued on such terms as the Manager
before the issue of the Interests may determine. The Manager may
but is not obliged to require the passing of a resolution to make
such alterations to these Regulations as may be necessary to
specify the terms on which and the manner in which such Interests
shall be redeemed and the rights and restrictions attaching
thereto.

(10a) Subject to and in accordance with the provisions of the Act and
these Regulations, the Company may purchase Preferred Interests
from time to time outstanding.

(11) The rights conferred upon Preferred Interestholders of any series
shall not, unless otherwise expressly provided by the terms of such
series, be deemed to be varied by the creation or issue of any
further series of Preferred Interests or any other Interests of the
Company ranking pari passu with or junior to the Preferred
Interests with regard to participation in the profits or assets of
the Company. No Interestholder shall have any preemptive right to
purchase or subscribe for any Interests.

REGISTRATION OF MEMBERS.

(12) The Company shall keep in one or more books a Register of its
Members and shall enter therein the following:

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<PAGE> 5

(a) the name and address of each Member, the number and types
of Interests held by such Member and the amount paid or
agreed to be considered to be paid on such Interests;

(b) the date on which each person was entered in the Register
of Members; and

CESSATION OF MEMBERSHIP OF COMMON INTERESTHOLDERS.

(13) A Common Interestholder ceases to be a Member of the Company upon
the happening of any one or more of the following events:

(a) the resignation, withdrawal, expulsion, termination,
cessation or dissolution of such Common Interestholder;

(b) if such Common Interestholder pursuant to or within the
meaning of any Bankruptcy Law (as defined below): (i)
commences a voluntary case; (ii) consents to the entry of
an order for relief against it in an involuntary case;
(iii) consents to the appointment of a Custodian (as
defined below) of it or for all or substantially all of its
property; or (iv) makes a general assignment for the
benefit of its creditors;

(c) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against
such Common Interestholder in an involuntary case; (ii)
appoints a Custodian of such Common Interestholder or for
all or substantially all of its property; or (iii) orders
the liquidation of such Common Interestholder, in each case
if the order or decree remains unstayed and in effect for
60 days; or

(d) if such Common Interestholder takes any action that, in the
absence of Regulation 14, would result in a Transfer (as
defined below) of such interest.

The term "Bankruptcy Law" means Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.

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<PAGE> 6
TRANSFER OF COMMON INTERESTS.

(14) The Transfer of any Common Interests in the Company is prohibited
absolutely. Any Transfer of any Common Interests in the Company
shall be void and shall not be effective to transfer to any
transferee thereof any rights conferred on a Member including but
not limited to rights to receive Notice of or attend meetings of
the Company, to vote on any matter, to receive interim
distributions, or to receive a share of the net assets of the
Company upon its dissolution and winding-up.

(15) Regulation 14 shall not affect the transferability of any Preferred
Interest issued pursuant to the provisions of Regulation 9.

MEETINGS.

(16) Subject to any class voting rights of outstanding Preferred
Interests, neither the Common Interestholders nor the Preferred
Interestholders shall have the right to call or convene a meeting,
to remove a Manager or to vote on any new Manager. The Manager may
convene a meeting of the Common Interestholders for the purpose of
considering and, subject to any class voting rights of outstanding
Preferred Interests, passing a resolution to:

(a) alter the Articles;

(b) require the Company to be dissolved and wound up; or

(c) subject to the limitations in Regulation 46, cause any
merger, consolidation, share or interest exchange, or other
transaction authorized by or subject to the provisions of
Part Ten of the Act.

(16a) Subject to any class voting rights of outstanding Preferred
Interests, neither Common Interestholders nor Preferred
Interestholders shall have any rights to vote on, approve or
consent to:

(a) the issuance of any additional Interests subsequent to the
issuance of Interests to the initial Members of the
Company; or

(b) any amendment or other modification of these Regulations.

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<PAGE> 7

(17) Subject to the terms of any series of Preferred Interest, not less
than 30 nor more than 60 days' Notice of a meeting shall be given
to each of the Members entitled to vote at such meeting and mailed
to each member entitled to vote at his or her address as registered
in the Register of Members by first-class mail, postage prepaid,
and such Notice shall be deemed delivered when deposited in the
mail. Such Notice shall state the time and place and describe any
resolution proposed for adoption and other business to be conducted
at such meeting. Notice of any meeting may be waived if it is so
agreed by all the Members entitled to attend and vote thereat.

PROCEEDINGS AT MEETINGS.

(18) (a) Except as provided pursuant to the terms of any series of
Preferred Interests, the Manager shall preside at any
meeting of Interestholders of the Company.

(b) Except as provided pursuant to the terms of any series of
Preferred Interests, at any meeting of Interestholders of
the Company one or more Members entitled to vote, present
in person or by proxy and representing in number in excess
of 50% of the outstanding Interests entitled to vote
thereat, shall form a quorum for the transaction of
business; if within half an hour from the time appointed
for the meeting a quorum is not present, the meeting shall
stand adjourned to the following day at the same time or at
such other time as the Manager may determine.

(c) The Manager may, with the consent of at least 50% in number
of Interests of the Members entitled to vote at any meeting
at which a quorum is present (and shall if directed by such
members), adjourn the meeting from time to time and from
place to place. At such adjourned meeting at which a
quorum shall be present any business may be transacted
which might have been transacted at the meeting as
originally notified. It shall not be necessary to give any
notice of the adjourned meeting or of the business to be
transacted at the adjourned meeting; except for a meeting
adjourned for which a future time or place was not set,
when Notice of the adjourned meeting shall be given as in
the case of an original meeting.

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<PAGE> 8
(19) (a) Subject to any class voting rights of any series of
Preferred Interests, at any meeting of the Company each
Member entitled to vote shall be entitled to one vote for
each Interest held by it and such vote may be given in
person or by proxy.

(b) Subject to these Regulations and any class voting rights of
any series of Preferred Interests, at any meeting of the
Company any question proposed for the consideration of the
Members entitled to vote thereon shall be decided on a
simple majority in number of Interests of the quorum of
Members entitled to vote thereon and such majority shall be
ascertained in accordance with the provisions of these
Regulations. Notwithstanding Article 2.23.D of the Act,
the actions permitted to be taken under Regulation 16 by
vote of the Common Interestholders will require only the
vote specified above and not a majority of all Members.

(c) Except for any meeting of the Company at which Preferred
Interestholders are entitled to vote, a declaration by the
Manager that a question proposed for consideration at any
meeting of the Company has, on a show of hands, been
carried, or carried unanimously or by a particular majority
or lost, and an entry to that effect in a book containing
the minutes of the proceedings of the Company, shall be
conclusive evidence of that fact without proof of the
number or proportion of the votes recorded in favor of or
against such question.

(20) When a vote is taken by ballot, each member entitled to vote
thereon shall be furnished with a ballot paper with which to vote
in such manner as shall be determined at the meeting at which the
vote is taken; and each ballot paper shall be signed or initialled
or otherwise marked so as to identify the voter. At the conclusion
of the ballot, the ballot paper shall be examined by the Manager,
and the result of the ballot shall be declared by the Manager.

MINUTES.

(21) The Manager shall cause minutes to be duly entered in the Company's
books of all resolutions and proceedings of each meeting of the
Company and of each amendment to these Regulations, provided that
any minutes of such meeting, if signed by the Manager, shall be
sufficient

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<PAGE> 9

evidence of the proceedings without any further proof of the
facts there instated.

WRITTEN CONSENT.

(22) Any act required or permitted to be taken at any meeting of any
Members may be taken without a meeting, without prior notice and
without a vote if a consent or consents in writing, setting forth
the action so taken, are signed by the Members (acting for
themselves or through a proxy) entitled to vote if a meeting were
held, having not fewer than the minimum number of votes that would
be necessary to take the action at a meeting at which all such
Members entitled to vote on the action were present and voted.

MANAGER.

(23) There shall be no directors of the Company. There shall be one
Manager of the Company. The Manager shall be the holder of the
Common Interests. The business of the Company shall be managed and
conducted by the Manager, who shall have the following powers and
duties, subject to the rights of any series of Preferred Interests:

(a) to pay commissions on the sale and allotment of Interests;

(b) to call meetings;

(c) to amend these Regulations, including without limitation to
establish the rights, preferences, privileges, limitations
and restrictions of any Preferred Interests as contemplated
by Regulation 9;

(d) to issue and allot Interests subsequent to the initial
Interests without any approval of any Members and no
Member, in its capacity as such, shall have the right to
cause the issuance of any Interests;

(e) to pay all expenses incurred in forming and registering the
Company;

(f) to manage and supervise the affairs of the Company;

(g) to allocate and distribute assets and make interim
distributions with respect to the Interests;

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<PAGE> 10
(h) to set aside any amount which shall in the discretion of
the Manager be required as a reserve or reserves;

(i) to redeem or repurchase on behalf of the Company Interests
which may be redeemed or repurchased on behalf of the
Company;

(j) to appoint officers, attorneys and agents on behalf of the
Company;

(k) to act as liquidator or appoint a liquidator if the Company
is dissolved pursuant to Regulation 42;

(l) to execute all documents on behalf of and in the name of
the Company;

(m) to institute, bring, prosecute and defend proceedings in
the name of the Company; and

(n) to perform such other duties and to exercise such powers as
are not by Regulation 16 required to be performed or
exercised by the Common Interestholders;

provided that any trustee appointed by any Preferred
Interestholders pursuant to the rights conferred on them by the
terms of any series of Preferred Interests may perform such acts
and exercise such powers as such trustee is authorized to do under
the terms of such series of the Preferred Interests.

(24) A Manager of the Company may hold other office or place of profit
with the Company and may be paid such extra remuneration therefor
whether by way of salary, commission, participation of profits or
otherwise.

(25) The Company will indemnify any officer, director, employee or other
agent of the Manager, in such agent's capacity as such, to the
fullest extent permitted by the Act; provided that no amendment to
or repeal of this Regulation shall adversely affect any right
existing at the time of the amendment or repeal of this Regulation.
The Company may purchase and maintain insurance, at its expense, to
protect itself and any person who is or was serving as Manager, or
an officer, director, employee or other agent of the Company, or
who is or was serving at the request of the Company as a manager,
director, officer, employee or other agent of any other entity,
against any expense, liability or loss, whether or not

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<PAGE> 11

the Company would have the power to indemnify such person against
such expense, liability or loss under this Regulation 25.

(26) A Manager may be party to or otherwise interested in any
transaction or arrangement with the Company or in which the Company
is otherwise interested and shall not by reason of occupying the
office of Manager be accountable to the Company for any benefit
which it derives from any such office or from any such transaction
or arrangement, and no such transaction or arrangement shall be
avoidable on the grounds of such interest or benefit, if such
contract or arrangement is fair as to the Company as of the time it
is authorized, approved or ratified by the Manager.

(27) The Company will be treated as a partnership for federal income tax
purposes, and the Manager will serve as the "Tax Matters Partner"
as that term is defined in the Internal Revenue Code of 1986, as
amended (the "Code"). The Company shall maintain a capital account
for each Member in accordance with Section 704(b) of the Code and
the Treasury regulations thereunder. A person that purchases a
Member's Interests shall succeed to the capital account of such
Member, or to such portion of the capital account of such Member
that is attributable to the purchased Interests.

(28) Service Corporation will at all times retain Common Interests
representing, in its judgment and subject to the preferential right
of Preferred Interestholders to dividends and liquidation
distributions, more than 20% of the total value (measured by
Interestholders' equity determined pursuant to generally accepted
accounting principles) of the Company and more than 20% of all
interests in the capital, income, gain, loss, deduction and credit
of the Company.

(29) The Manager shall not be entitled to any salary or other
compensation for its services as Manager of the Company, but may be
paid for all traveling, hotel and other expenses in connection with
attendance at any meeting of the Company or otherwise in connection
with the discharge of the Manager's duties.

OFFICERS.

(30) The Manager will be entitled to appoint any person as an officer or
other agent of the Company, which person may also be an officer or
agent of the Manager, to take such

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<PAGE> 12
action or perform such rights or duties of the Manager as the
Manager may specify.

(31) The Manager will appoint such officers of the Company as required
pursuant to the rights of Preferred Interestholders under the terms
of any series of Preferred Interests issued by the Company.

CUSTODIAN.

(32) The Manager may appoint a custodian or trustee for the safekeeping
of all moneys, assets and securities of the Company with such
powers and duties in respect thereof as may be specified in such
appointment.

INTERIM DISTRIBUTIONS.

(33) The Manager may declare interim distributions to be paid to the
Members, in accordance with the terms of their Interests, out of
the surplus or profits, including unrealized profits, of the
Company.

(34) The Manager may from time to time before declaring interim
distributions set aside out of the surplus or profits of the
Company such sums as it deems proper as a reserve fund to be used
to meet contingencies or for any other special purpose.

(35) To the extent that there is surplus or profits available for
interim distributions in any accounting period, preferential
interim distributions (including preferential interim distributions
which may have fallen in arrears) shall be paid to the Preferred
Interestholders in accordance with the terms of each series of
Preferred Interests.

(36) The surplus or profits of the Company which the Manager shall from
time to time declare to be distributable in respect of any
accounting period shall be applied first in payment to the
Preferred Interestholders of preferential interim distributions
payable on the Preferred Interests.

(37) For the purpose of determining the amount of surplus or profit
available for distribution, all expenses of the Company shall be
allocated to, and reduce the amounts distributable to, Common
Interestholders. To the extent that such surplus or profits are
available for distribution to Members of the Company, the portion
of such amounts distributable to Preferred Interestholders shall

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<PAGE> 13

be determined without regard to any expenses of the Company.

ACCOUNTS AND FINANCIAL STATEMENTS.

(38) The Manager shall cause true accounts to be kept of all
transactions of the Company in such manner as to show the assets
and liabilities of the Company.

(39) The financial year end of the Company shall be determined by the
Manager and failing such determination, the financial year end
shall be December 31 of each year.

(40) Each Interestholder has such rights as are provided under Article
2.22.D of the Act.

(41) The Manager may appoint an independent accountant to audit the
books and records of the Company and the Manager may remove or
replace such accountant in the Manager's sole and absolute
discretion. The duties and remuneration of any such independent
accountant shall be fixed by the Manager or in such manner as the
Manager may determine. After the end of each fiscal year, the
Manager shall, as promptly as possible and in any event within 90
days of the close of the fiscal year, cause to be prepared and
transmitted to each Member federal income tax form K-1 or any other
forms which the Manager believes are necessary or advisable.

MERGER, DISSOLUTION AND WINDING-UP.

(42) The Company shall be considered to have commenced voluntary
winding-up and dissolution automatically and without the
requirement of any other act:

(a) when the period fixed for the duration of the Company
expires; or

(b) if the Common Interestholders of the Company unanimously
pass a resolution requiring the Company to be wound up and
dissolved; or

(i) any event specified in Regulation 13(a), (b) or
(c) with respect to Service Corporation;

(ii) the Transfer by a Common Interestholder of any
Common Interest;

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<PAGE> 14
(iii) any event which would cause a Common
Interestholder to cease to remain a Common
Interestholder pursuant to Regulation 13; or

(iv) the redemption, repurchase or cancellation of
all Common Interests held by all Common
Interestholders.

(43) On dissolution and winding-up of the Company, the balance of the
assets available for distribution and not subject to any special
rights or restrictions attaching to any class of Interests,
including any series of Preferred Interests, shall be applied in
paying to the Former Members who were Members immediately preceding
the commencement of dissolution and winding-up of the Company the
amounts paid up on the Interests held by them and the surplus shall
belong to such Former Members according to the respective number of
Interests held by them.

(44) As between the Common Interestholders and the Preferred
Interestholders, the expenses incurred in the establishment and
maintenance of the Company, in conducting the Company's business
and in the dissolution or winding-up of the Company shall not be
deducted in determining what assets are available for distribution
to Preferred Interestholders.

(45) No Member may withdraw from the Company. No Member may exercise
any rights under Article 6.01.B of the Act except upon the
unanimous consent of the Common Interestholders (or those persons
who were Common Interestholders immediately prior to an event of
dissolution). Notwithstanding the foregoing, this Regulation 45
shall not affect the transfer, assignment or conversion rights, if
applicable, of any series of Preferred Interests.

(46) The Company may not consolidate or merge with, or convey, transfer
or lease its properties and assets substantially as an entirety to,
any limited liability company, corporation or other body, except as
required by law or as set forth in this Regulation 46. Solely for
the purpose of changing its domicile, the Company may consolidate
or merge with or into a limited liability company or a limited
partnership formed under the laws of any state of the United States
of America without the consent of the Preferred Interestholders;
provided that (i) such successor limited liability company or
limited partnership expressly assumes all of

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<PAGE> 15

the obligations of the Company, (ii) the Company receives a legal
opinion from a nationally recognized legal counsel that the
Preferred Interestholders will not suffer any adverse tax
consequences as a result of such merger or consolidation, (iii) the
Manager reasonably believes (based upon advice from its financial
advisors) that such merger or consolidation will not cause any
Preferred Interests to be downgraded by any "nationally recognized
statistical rating organization", as that term is defined by the
Securities and Exchange Commission for purposes of Rule 436(G)(2)
under the Securities Act of 1933, as amended, (iv) following such
merger or consolidation, neither Service Corporation nor such
successor limited liability company or limited partnership will be
an "investment company" for purposes of the Investment Company Act
of 1940, as amended, and (v) Service Corporation expressly
acknowledges the successor in such merger or consolidation as the
lender under any agreement relating to the loan of the proceeds
from the issuance of any Preferred Interests to SCI International
Limited ("SCI Limited") and reaffirms its obligations to the
holders of Preferred Interests under any related guarantees and
contractual backup undertakings executed by Service Corporation for
the benefit of Preferred Interestholders.

LIQUIDATOR.

(47) Subject to any rights of Preferred Interestholders, when the
Company is in dissolution by virtue of Regulation 42, the Manager
shall serve as liquidator unless and until the majority of the
former Common Interestholders who were Members immediately
preceding the commencement of dissolution and winding-up by
majority vote to appoint a liquidator to replace the Manager.

LIQUIDATION.

(48) Upon a Liquidation (as defined below) of the Company, the proceeds
of such Liquidation shall be distributed in the ratios of the
positive capital account balances of the Members, and upon
Liquidation of any Member's Interest in the Company the proceeds of
such Liquidation shall be distributed in accordance with the
positive capital account balance of such Member, in each case as
determined after taking into account all capital account
adjustments for the Company's taxable year during which such
Liquidation occurs (other than those adjustments made pursuant to
this sentence), by the end of such taxable year (or, if later,
within 90 days after the

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<PAGE> 16
date of such Liquidation), except that in the case of a Liquidation
of the Company the proceeds of such Liquidation shall not be
required to be distributed by the end of such taxable year (or, if
later, within 90 days after the date of such Liquidation) to the
extent such proceeds constitute (i) reserves reasonably required to
provide for liabilities (contingent or otherwise) of the Company or
(ii) installment obligations owed to the Company, so long as such
withheld amounts are distributed as soon as practicable and in the
ratios of the Members' positive capital account balances. For
purposes of this Regulation 48, "Liquidation" means (i) when used
with reference to the Company, the earlier of (a) the date upon
which the Company is terminated under Section 708(b)(1) of the Code
or (b) the date upon which the Company ceases to be a going
concern, and (ii) when used with reference to any Member, the
earlier of (a) the date upon which there is a liquidation of the
Company or (b) the date upon which such Member's entire interest in
the Company is terminated other than by transfer, assignment or
other disposition to a person other than the Company.

(49) In connection with any termination of the Company under Section
708(b)(1) of the Code and after all related adjustments to the
capital accounts of the Members, all property deemed distributed to
the Members by the Company shall be distributed or deemed
distributed to the Members by the Company in accordance with
Regulation 48, and in addition to any adjustments to the capital
accounts of the Members otherwise required, the following rules for
adjustment shall apply:

(a) The capital account of each Member who receives or is deemed
to receive a distributive share of property (other than
cash) from the Company shall be reduced by the fair market
value of such property (net of such Member's share of
liabilities securing such share of property that such Member
is considered to assume, or take subject to, under Section
752 of the Code) at the time of the actual or deemed
distribution by the Company (without taking into account
Section 7701(g) of the Code); and

(b) The capital account of each Member who is deemed to
contribute such property back to the Company (as newly
constituted for federal income tax purposes) shall be
increased by the fair market value of such share of property
(net of such Member's share of liabilities securing such
share of property that the

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<PAGE> 17

Company is considered to assume, or take subject to, under
Section 752 of the Code (without taking into account Section
7701(g) of the Code)) at the time of the deemed contribution
to the Company.

NOTICES.

(50) Unless otherwise herein or by law expressly provided, a Notice may be
served by the Company on any Member either personally or by telex,
cable or facsimile, or by sending it first-class mail, postage
prepaid, in an envelope addressed to such Member, at such Member's
address as registered in the Register of Members.

(51) Any Notice shall be deemed to have been served at the time when the
same would be delivered in the ordinary course of transmission, and
in proving such service it shall be sufficient to prove that the
Notice was properly addressed and prepaid, if posted, and the time
when it was posted or transmitted by telex, cable or facsimile to or
from the Company, as the case may be.

SEAL OF THE COMPANY.

(52) The Seal of the Company may be affixed to any instrument over the
signature of the Manager or of an officer or other agent appointed by
the Manager.

ALTERATION OF REGULATIONS.

(53) The Manager shall have the right to alter or amend these Regulations,
subject to the terms of any series of outstanding Preferred
Interests.

LIABILITY OF COMMON INTERESTHOLDERS.

(54) (a) No Preferred Interestholder shall be obligated personally
for any debt, obligation or liability of the Company solely
by reason of being a Member.

(b) Notwithstanding anything to the contrary contained herein,
in the Articles or in the Act, each Common Interestholder in
its capacity as such, jointly and severally, shall be and
hereby agrees (i) to be fully and directly liable for all of
the debts, liabilities and other obligations of the Company,
including those arising under the Liability Assumption
Agreement between Service Corporation and the Company, the
terms and conditions of which are specifically incorporated
herein by reference, and (ii)

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that any creditor of the Company may proceed directly
against any Common Interestholder without first reducing a
claim against the Company to judgment.

REGISTERED OFFICE AND AGENT; OFFICES.

(55) The registered office of the Company required by the Act to be
maintained in the State of Texas shall be the office of the initial
registered agent named in the Articles or such other office (which
need not be a place of business of the Company) as the Manager may
designate from time to time in the manner provided by law. The
registered agent of the Company in the State of Texas shall be the
initial registered agent named in the Articles or such other person
or persons as the Manager may designate from time to time in the
manner provided by law. The principal office of the Company in the
United States shall be at such place as the Manager may designate
from time to time, which need not be in the State of Texas, and the
Company shall maintain records there as required by Article 2.22 of
the Act and shall keep the street address of such principal office at
the registered office of the Company in the State of Texas. The
Company may have such other offices as the Manager may designate from
time to time.

FOREIGN QUALIFICATION.

(56) Prior to the Company's conducting business in any jurisdiction other
than Texas, the Manager shall cause the Company to comply, to the
extent procedures are available and those matters are reasonably
within the control of the Manager, with all requirements necessary to
qualify the Company as a foreign limited liability company in that
jurisdiction. At the request of the Manager, each Common
Interestholder Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with these
Regulations that are necessary or appropriate to qualify, continue,
and terminate the Company as a foreign limited liability company in
all such jurisdictions in which the Company may conduct business.

NO STATE-LAW PARTNERSHIP.

(57) The Members intend that the Company not be a partnership (including,
without limitation, a limited partnership) or joint venture, and that
no Member or Manager be a partner or joint venturer of any other
Member or Manager, for any

-18-
<PAGE> 19

purposes other than federal income tax purposes and for state income
tax purposes in the case of states whose characterization of the
Company follows the characterization of the Company for federal
income tax purposes, and these Regulations may not be construed to
suggest otherwise.

-19-
<PAGE> 20
The person whose name is listed below, desires to form a Texas limited
liability company pursuant to these Regulations and the Articles, and agrees to
take the number of Common Interests in the Company set forth opposite its name:

Common Interests
----------------
SERVICE CORPORATION INTERNATIONAL,
a Texas corporation

By: /s/ James M. Shelger 100
Name: James M. Shelger
Title: Senior Vice President,
General Counsel and
Secretary

IN WITNESS WHEREOF, the Manager adopts these Regulations as of
the date first written above.

SERVICE CORPORATION INTERNATIONAL,
as Manager

By: /s/ James M. Shelger
Name: James M. Shelger
Title: Senior Vice President,
General Counsel and
Secretary

-20-

<PAGE> 1

Exhibit 3.10

================================================================================

AMENDMENT TO THE REGULATIONS

SCI FINANCE LLC

SETTING FORTH THE TERMS OF UP TO

( ) PREFERRED SHARES DESIGNATED AS

$( ) TERM CONVERTIBLE SHARES, SERIES A

( ), 1994

================================================================================

<PAGE> 2
AMENDMENT TO THE REGULATIONS
OF
SCI FINANCE LLC

INDEX OF DEFINED TERMS

DEFINED TERM SECTION
- ------------ -----------------------
<S> <C>
Applicable Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(i)
Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certification Section 1
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(a)
Capital Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 10(b)(i)
Certificated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(b)
Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(ii)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 10(a)(ii)
Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2
Common Stock Fundamental Change . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(iii)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Company Dividend Junior Shares . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(c)(ii)
Company Dividend Parity Shares . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(c)(i)
Company Liquidation Parity Shares . . . . . . . . . . . . . . . . . . . . . . . Section 6(a)
Conditional Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(b)
Conversion Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(b)
Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(a)
Current Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vii)
Current Market Price Per Share . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vii)
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(b)
Expiration Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vi)
Fundamental Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(iv)
Global Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(b)
Liability Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . Section 7(a)
Liquidation Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6(a)
Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(a)
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(a)
Nasdaq NM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(b)
Non-Stock Fundamental Change . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(v)
Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(a)
Optional Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(b)
Other Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vii)
Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(iv)
Paying and Conversion Agent . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(b)
Per-Share Excess Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 10(b)(ii)
Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certification Section 1
Purchased Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(vi)
Purchaser Stock Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(vi)
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(c)
Reference Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(g)(iv)
</TABLE>

-i-
<PAGE> 3
<TABLE>
<CAPTION>
DEFINED TERM SECTION
- ------------ ------------------------
<S> <C>
Reference Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(vii)
Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certification Section 2
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(a)
SCI Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(e)
SCI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(c)
SCI Common Stock
(for purposes of Section 8 only) . . . . . . . . . . . . . . . . . . . . . Section 8(g)(xi)
SCI Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(a)
SCI/Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Series 305 Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 10(a)(iv)
Series A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1
Tax Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(c)
Tax Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4(c)
Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8(l)(viii)
</TABLE>

-ii-
<PAGE> 4
AMENDMENT TO THE REGULATIONS
OF
SCI FINANCE LLC
SETTING FORTH THE TERMS OF UP TO
( ) PREFERRED SHARES DESIGNATED AS
$( ) TERM CONVERTIBLE SHARES, SERIES A

The undersigned officers of Service Corporation International,
a Texas corporation, and the manager ("SCI" or the "Manager") of SCI Finance
LLC, a Texas limited liability company (the "Company"), HEREBY CERTIFY:

1. That the Articles of Organization of the Company (the
"Articles") authorize the issuance of up to 7,000,000 preferred interests
(liquidation preference $50 per share) in the Company (the "Preferred Shares");

2. That the Regulations of the Company (the
"Regulations") authorize the Manager from time to time to issue Preferred
Shares in one or more series or classes, with such dividend rights, liquidation
preferences per share, redemption provisions, voting rights, conversion or
exchange rights and other rights, preferences, privileges, limitations and
restrictions as set forth in an amendment to the Regulations adopted by the
Manager; and

3. That the Manager, pursuant to the aforesaid authority
granted in the Regulations, hereby intends to create, and authorize the sale
and issuance of, a series of Preferred Shares consisting of up to ( )
Preferred Shares having such dividend rights, liquidation preferences per
share, redemption provisions, voting rights, conversion or exchange rights and
other rights, preferences, privileges, limitations, restrictions and other
terms and provisions as the Manager has authorized and approved as set forth
below:

THEREFORE, pursuant to the Regulations, the Manager hereby
amends the Regulations to create, and authorizes the issuance and sale of, a
series of Preferred Shares, liquidation preference $50 per Preferred Share, of
the Company and hereby fixes the number, dividend rights, liquidation
preferences per share, redemption provisions, voting rights, conversion or
exchange rights and other rights, preferences, privileges, limitations,
restrictions or other special rights and the qualifications, limitations or
restrictions of, and other matters relating to, said series as follows:

1. Designation of $( ) Term Convertible Shares, Series
A. Up to ( ) Preferred Shares of the Company, liquidation preference $50
per Preferred Share, are hereby
<PAGE> 5
-2-

constituted as a series of Preferred Shares and designated as "$( ) Term
Convertible Shares, Series A" (hereinafter called the "Series A Shares").

2. Ranking. The Series A Shares shall, with respect to
dividend rights and rights on liquidation, dissolution or winding-up, rank (i)
pari passu with any other series of Preferred Shares issued by the Company and
(ii) prior to any other equity interests in the Company, including the common
interests, $1.00 par value, in the Company (the "Common Shares"). So long as
any Series A Shares are outstanding, the Company will not issue any interests
in the Company ranking, as to participation in the profits or assets of the
Company, senior to the Series A Shares. The issuance of any interests in the
Company ranking senior to the Series A Shares shall constitute a variation or
abrogation of the rights attached to the Series A Shares under the Regulations.

3. Dividends. (a) The holders of the Series A Shares
shall be entitled to receive, when and as declared by the Company by action of
the Manager out of funds held by the Company and legally available therefor,
cumulative cash dividends at the annual rate of $( ) per Series A Share, and
no more. The amount of dividends on the Series A Shares is calculated on the
basis of a 360-day year consisting of 12 months of 30 days each and, for any
period shorter than a full monthly dividend period, dividends will be computed
on the basis of the actual number of days elapsed in such period. Dividends on
the Series A Shares are payable in United States dollars monthly in arrears on
the last day of each calendar month of each year, commencing ( ), 1994.
Such dividends will accrue and be cumulative whether or not they have been
declared and whether or not there are profits, surplus or other funds of the
Company legally available for the payment of dividends. Dividends on the
Series A Shares shall be cumulative from the date of the first issuance of any
Series A Shares. In the event that any date on which dividends are payable on
the Series A Shares is not a Business Day, then payment of the dividend payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. A "Business Day" shall
mean any day other than a day on which banking institutions in The City of New
York are authorized or required by law to close. Interest shall accrue on and
be payable in respect of any dividend payment on the Series A Shares which is
in arrears at
<PAGE> 6
-3-

the rate specified in the Loan Agreement dated ( ), 1994 (the "Loan
Agreement") among the Company, SCI International Limited, a Delaware
corporation ("SCI Limited") and SCI, a copy of which is attached hereto as
Exhibit A, to the extent permitted by applicable law.

(b) Dividends on the Series A Shares must be declared by
the Company by action of the Manager in any calendar year or portion thereof to
the extent that the Manager reasonably anticipates that at the time of payment
the Company will have, and must be paid by the Company to the extent that at
the time of proposed payment it has, (x) funds legally available for the
payment of such dividends and (y) cash on hand sufficient to permit such
payments. Dividends declared on the Series A Shares will be payable to the
record holders thereof as they appear on the register for the Series A Shares
on the relevant record dates, which will be one Business Day prior to the
relevant payment dates. If dividends can be paid only in part on the Series A
Shares in any calendar year or portion thereof as a result of the lack of
sufficient funds legally available for the payment of dividends, then such
partial dividends shall be paid on the respective dividend payment dates on a
pro rata basis to holders of such Series A Shares. If at any time dividends on
Preferred Shares are in arrears for any monthly dividend period, any dividend
payments in respect thereof must be applied in respect of all dividend periods
in arrears, pro rata in accordance with the respective amounts in arrears for
each such period in equal amounts for each such period.

(i) pay, or declare and set aside for payment,
any dividends on any other Preferred Shares ranking pari passu with
the Series A Shares as regards participation in profits of the Company
("Company Dividend Parity Shares"), unless the amount of any dividends
declared on any Company Dividend Parity Shares is paid on the Company
Dividend Parity Shares and the Series A Shares on a pro rata basis on
the date such dividends are paid on such Company Dividend Parity
Shares so that

(x) (A) the aggregate amount of
dividends paid on the Series A Shares bears the same ratio
to (B) the aggregate amount of dividends paid on such
Company Dividend Parity Shares as
<PAGE> 7
-4-

(y) (A) the aggregate amount of all
accumulated and unpaid dividends in respect of the Series A
Shares bears to (B) the aggregate of all accumulated and
unpaid dividends in respect of such Company Dividend Parity
Shares;

(ii) pay, or declare and set aside for payment,
any dividends on any interests of the Company ranking junior to the
Series A Shares as to dividends ("Company Dividend Junior Shares"); or

(iii) call for redemption or redeem, purchase or
otherwise acquire any Company Dividend Parity Shares or Company
Dividend Junior Shares or any Series A Shares other than (x) the
redemption of all outstanding Series A Shares at the applicable
Redemption Price (as defined below), (y) pursuant to a pro rata
redemption of the Series A Shares at the applicable Redemption Price
or (z) pursuant to a purchase or exchange offer made on the same terms
to all holders of the Series A Shares; provided, however, that this
clause (iii) shall not limit the rights of holders of Series A Shares
to exercise their conversion rights provided in Section 8 hereof;

until, in each case, such time as all accumulated and unpaid dividends (whether
or not declared) on the Series A Shares shall have been paid in full for all
dividend periods terminating on or prior to, in the case of clauses (i) and
(ii), such payment, and in the case of clause (iii), the date of such call,
redemption, purchase or acquisition.

4. Redemption. (a) Subject to the provisions of
Section 4(b) and 4(c) hereof, upon any repayment or prepayment of principal on
the loans to SCI Limited of the proceeds from the issuance and sale of the
Series A Shares and the Common Shares (the "Loans"), the proceeds from such
repayment or prepayment of principal on the Loans shall be applied to redeem
the Series A Shares at (A) the applicable Conditional Redemption Price, if such
redemption is effected on or after ( ), 1997 and prior to ( ), 1999,
(B) the applicable Optional Redemption Price if such redemption is effected on
or after ( ), 1999 and (C) the applicable Tax Redemption Price if such
redemption is effected upon the occurrence of a Tax Event (as defined below)
pursuant to Section 4(c) below, in each case upon not less than 30 nor more
than 60 days' notice in writing by the Company to the holders of Series A
Shares, except at final maturity of the Loans, in which case the Company shall
redeem the Series A Shares as soon as practicable thereafter.
<PAGE> 8
-5-

(b) Subject to Section 4(c) below, the Series A Shares may
not be redeemed by the Company prior to ( ), 1997. On and after
( ), 1997 and prior to ( ), 1999, the Series A Shares will be
redeemable at the option of the Company, in whole or in part from time to time,
at the redemption price per share equal to: $( ), if such redemption is
effected on or after ( ), 1997 and prior to ( ), 1997; $( ) if
such redemption is effected on or after ( ), 1997 and prior to ( ),
1998; and $( ) if such redemption is effected on or after ( ),
1998 and prior to ( ), 1999, in each case plus accrued and unpaid
dividends (whether or not declared) to the date fixed for redemption (each such
redemption price set forth in this sentence a "Conditional Redemption Price").
The Company may exercise the option set forth in the foregoing sentence only if
(A) for 20 Trading Days (as defined in Section 8(l) below) within any period of
30 consecutive Trading Days (including the last Trading Day of such period)
ending on the Trading Day immediately prior to the date of the giving of the
Notice of Redemption (as defined in Section 5(a) below) in accordance with
Section 5(a) hereof, the Closing Price (as defined in Section 8(l) below) of
the SCI Common Stock exceeds ( )% of the Conversion Price (as defined in
Section 8(a) below), (B) all dividends on the Series A Shares for all dividend
periods ending on or prior to the date of the giving of the Notice of
Redemption have been paid in full or declared and set aside for payment in full
and (C) the Company shall have issued prior to 9:00 A.M. New York City time on
the second Trading Day after such 30 Trading Day period a press release
announcing the redemption and specifying the date on which such redemption will
be effective.

On and after ( ), 1999, the Series A Shares are
redeemable, at the option of the Company, in whole or in part from time to
time, out of proceeds received by the Company from the prepayment or repayment
by SCI Limited of the Loans, upon not less than 30 nor more than 60 days'
notice in writing by the Company to the holders of Series A Shares, at the
respective prices per share set forth below, if redeemed during the 12-month
period beginning ( ) of the years indicated below, in each case plus
accrued and unpaid dividends (whether or not declared) to the date fixed for
redemption (the "Optional Redemption Price"):
<PAGE> 9
-6-

<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
- ---- ---------- ---- ----------
<S> <C> <C> <C>
1999. . . . . . . . . . . . $ 2002. . . . . . . . . . . . $
2000. . . . . . . . . . . . 2003. . . . . . . . . . . .
2001. . . . . . . . . . . . 2004 and
thereafter. . . . . . . . . 50.00
</TABLE>

; provided, however, that if the Series A Shares are listed on any national
securities exchange or quoted on the Nasdaq National Market (the "Nasdaq NM"),
then the Company shall redeem the Series A Shares in whole if a partial
redemption thereof would result in a delisting of the Series A Shares from such
national securities exchange or suspension from the Nasdaq NM.

(c) If a Tax Event shall occur and be continuing, the Series A
Shares will be subject to redemption, at the option of the Company, in whole
but not in part, such notice to be given within 90 days following the
occurrence of such Tax Event at a redemption price equal to: $( ) if such
redemption is effected after the date of issuance of the Series A Shares and
prior to ( ), 1995; $( ) if such redemption is effected
on or after ( ), 1995 and prior to ( ), 1996; $( ) if
such redemption is effected on or after ( ), 1996 and prior to ( ),
1997, plus in each case accrued and unpaid dividends (whether or not declared)
to the date fixed for redemption; and if such redemption is effected at any
time on or after ( ), 1997, the applicable Conditional Redemption Price
(whether or not the Company could otherwise then redeem the Series A Shares
pursuant to the first paragraph of Section 4(b) above) or the applicable
Optional Redemption Price, as the case may be (any such redemption price paid
in accordance with this paragraph, the "Tax Redemption Price," and together
with the Conditional Redemption Price and the Optional Redemption Price, the
"Redemption Price").

"Tax Event" means, with respect to the Series A Shares, that
SCI shall have obtained an opinion of nationally recognized independent tax
counsel experienced in such matters to the effect that, on or after
( ), 1994, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or application
of any such laws or regulations by any legislative body, court, governmental
agency or regulatory authority (including the enactment of any legislation and
the
<PAGE> 10
-7-

publication of any judicial decision or regulatory determination), (c) any
official interpretation or pronouncement that provides for a position with
respect to such laws or regulations that differs from the generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
effective or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after ( ), 1994, there is
more than an insubstantial risk that (i) the Company is subject to federal
income tax with respect to interest accrued or received on the Loans or (ii)
the Company is subject to liability for more than a de minimis amount of taxes,
duties or other governmental charges.

5. Redemption Procedure. (a) Notice of any redemption
(a "Notice of Redemption") of the Series A Shares will be given by the Company
by mail to each record holder of Series A Shares to be redeemed not fewer than
30 nor more than 60 days prior to the date fixed for redemption thereof. For
purposes of the calculation of the date of redemption and the dates on which
notices are given pursuant to this Section 5(a), a Notice of Redemption shall
be deemed to be given on the day such notice is first mailed by first class
mail, postage prepaid, to holders of record of the Series A Shares. Each
Notice of Redemption shall be addressed to the holder of record at the address
of such holder appearing in the register of the Company for the Series A Shares
on the relevant record date, which shall be selected by the Manager and shall
not be fewer than 30 nor more than 60 days prior to the date fixed for
redemption. No defect in the Notice of Redemption or in the mailing thereof or
publication of its contents shall affect the validity of the redemption
proceedings.

(b) In the event that fewer than all the outstanding
Series A Shares are to be redeemed, the Series A Shares to be redeemed will be
selected as follows: the total number of Series A Shares to be redeemed first
shall be allocated, on a pro rata basis, to the shares represented by one or
more global certificates (a "Global Certificate") issued in accordance with
Section 9 hereof and to the shares issued in certificated form ("Certificated
Shares"). The shares so allocated to the shares represented by a Global
Certificate for redemption shall be selected by The Depository Trust Company,
or its successor ("DTC"), in accordance with its then-current practices and
procedures. The shares so allocated to Certificated Shares for redemption
shall be selected by lot or by such other method as the paying and conversion
agent for the Series A Shares (the "Paying and Conversion Agent") may determine
to be fair and appropriate.
<PAGE> 11
-8-

(c) In the event that any Series A Shares shall be
converted into shares of common stock of SCI, $1.00 par value (the "SCI Common
Stock"), or other property pursuant to Section 8 hereof, then (i) the Company
shall not have the right to redeem such shares and (ii) any funds which shall
have been deposited for the payment of the Redemption Price for such shares
shall be returned to the Company immediately after such conversion (subject to
declared dividends payable to holders of Series A Shares on the record date for
such dividend payment, to the extent set forth in Section 8 hereof).

(d) Subject to Section 3 hereof and to the following
paragraph, SCI, the Company or any subsidiary of SCI shall have the right to
purchase Series A Shares in the public or private market at such prices as may
from time to time be available in the public or private market for such shares
and shall have the right at any time to acquire any Series A Shares from the
owner of such shares on such terms as may be agreeable to such owner. Series A
Shares may be acquired by SCI, the Company or any subsidiary of SCI from any
holder pursuant to this subparagraph (d) without offering any other holder an
equal opportunity to sell its Series A Shares to SCI, the Company or any such
subsidiary, and no purchase by SCI, the Company or any such subsidiary from any
holder pursuant to this subparagraph (d) shall be deemed to create any right on
the part of any other holder to sell any Series A Shares to SCI, the Company or
any such subsidiary.

(e) If the Company gives a Notice of Redemption in
respect of Series A Shares represented by a Global Certificate, then, by 12:00
noon, New York time, on the redemption date, the Company will irrevocably
deposit with DTC funds sufficient to pay the applicable Redemption Price and
will give DTC irrevocable instructions and authority to pay the Redemption
Price to the holders thereof. If Notice of Redemption shall have been given
and funds deposited as required, then immediately prior to the close of
business on the date of such deposit, all rights of holders of such Series A
Shares so called for redemption will cease, except the right of the holders of
such Series A Shares to receive the Redemption Price but without interest, and
such shares shall thereupon cease to be outstanding.

If the Company gives a Notice of Redemption in respect of
Certificated Shares, then, by 12:00 noon, New York time, on the redemption
date, the Company will irrevocably deposit with the Paying and Conversion Agent
funds sufficient to pay the applicable Redemption Price and will give the
Paying and Conversion Agent irrevocable instructions and authority to pay the
Redemption Price to the holders thereof. If the Company
<PAGE> 12
-9-

gives a Notice of Redemption in respect of Certificated Shares, then on or
after the redemption date, each holder of Series A Shares so called for
redemption shall surrender the certificate or certificates evidencing such
shares to the Company at the place designated in the Notice of Redemption and
shall thereupon be entitled to receive payment of the Redemption Price. If
less than all of the Series A Shares evidenced by any such surrendered
certificate are redeemed, a new certificate shall be issued evidencing the
unredeemed shares. If, on or before the redemption date, the Company will have
irrevocably deposited with the Paying and Conversion Agent or other bank or
trust company designated in the Notice of Redemption funds sufficient to pay
the applicable Redemption Price, and will have given such Paying and Conversion
Agent or bank or trust company irrevocable instructions and authority to pay
the Redemption Price to the holders of Series A Shares to be redeemed, then,
notwithstanding that the certificates evidencing any Series A Shares so called
for redemption shall not have been surrendered, immediately prior to the close
of business on the date of such deposit all rights of holders of such Series A
Shares so called for redemption will cease, except the right of the holders of
such shares to receive the Redemption Price, but without interest and the right
of the holders of such shares to convert such shares into SCI Common Stock and
other property in accordance with Section 8 hereof. If funds legally available
for such purpose are not sufficient for redemption of the Certificated Shares
which were to be redeemed, then such funds which are deposited shall be applied
to redeem such Certificated Shares as the Company may designate by lot, and
the certificates evidencing shares not redeemed shall be deemed not to be
surrendered, such shares shall remain outstanding and the rights of each holder
of such shares shall continue to be those of a holder of Series A Shares until
such time as such holder receives the Redemption Price with respect to such
shares.

In the event that any date fixed for redemption of Series A
Shares is not a Business Day, then payment of the Redemption Price payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such redemption date.

In the event that payment of the Redemption Price in respect
of Series A Shares is improperly withheld or refused and not paid either by the
Company or by SCI pursuant to the Payment,
<PAGE> 13
-10-

Guarantee and Conversion Agreement dated ( ), 1994 (the "SCI
Agreement") entered into by SCI for the benefit of each holder of Series A
Shares, a copy of which is attached hereto as Exhibit B, dividends on such
shares will continue to accrue, at the then-applicable rate, from the original
redemption date to the date such Redemption Price is actually paid, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price.

(f) No fractional Series A Shares shall be issued upon
redemption of less than all Series A Shares.

(g) All Series A Shares purchased or redeemed by the
Company shall be retired and shall be restored to the status of authorized but
unissued Preferred Shares, without designation as to series.

6. Liquidation Distribution. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the holders of the Series A Shares at the time outstanding will be entitled to
receive out of the assets of the Company available for distribution to its
members, before any distribution of assets is made to holders of Common Shares
or any other interests in the Company ranking junior to the Series A Shares as
regards participation in assets of the Company, but together with the holders
of every other series of Preferred Shares outstanding, if any, ranking pari
passu with the Series A Shares as regards participation in the assets of the
Company ("Company Liquidation Parity Shares"), an amount equal, in the case of
the holders of the Series A Shares, to the aggregate of the liquidation
preference of $50 per Series A Share and all accumulated and unpaid dividends
(whether or not declared) to the date of payment (the "Liquidation
Distribution"). If, upon any such liquidation, the Liquidation Distribution
can be paid only in part because the Company has insufficient assets available
to pay in full the aggregate Liquidation Distribution and the aggregate maximum
liquidation distributions on the Company Liquidation Parity Shares, then the
amounts payable by the Company on the Series A Shares and on such Company
Liquidation Parity Shares shall be paid on a pro rata basis, so that

(i) (x) the aggregate amount paid in respect of the
Liquidation Distribution bears the same ratio to (y) the
aggregate amount paid as liquidation distributions (including
accrued and unpaid dividends) on the Company Liquidation
Parity Shares as
<PAGE> 14
-11-

(ii) (x) the aggregate Liquidation Distribution bears
to (y) the aggregate liquidation preference (including accrued
and unpaid dividends) on the Company Liquidation Parity
Shares.

(b) As set forth in greater detail in the Regulations,
the Company shall be considered to have commenced voluntary winding-up and
dissolution automatically and without the requirement of any other act:

(i) when the period fixed for the
duration of the Company expires;

(ii) if the holders of the Common Shares
pass a resolution requiring the Company to be wound-up and
dissolved;

(iii) upon the bankruptcy, resignation,
withdrawal, expulsion, termination, cessation or
dissolution of the Manager under any applicable law;

(iv) upon the happening of any event that
would cause a Common Interestholder to cease to be a Common
Interestholder pursuant to Regulation 13; or

(v) if SCI transfers any Common Shares
or if all of the Common Shares are redeemed, repurchased or
cancelled by the Company.

7. Voting Rights. (a) The Series A Shares shall not
have general voting rights but shall have the rights set forth in this Section
7. If (i) the Company fails to pay dividends in full on the Series A Shares
for more than 60 consecutive monthly dividend periods (whether or not there are
funds legally available therefor); (ii) an Event of Default (as defined in the
Loan Agreement) occurs and is continuing on the Loans; or (iii) SCI is in
default on any of its payment or other obligations under the SCI Agreement,
then the holders of the outstanding Series A Shares, together with the holders
of any other shares of a series of Preferred Shares having the right to vote
for the appointment of a trustee in such event, acting as a single class, will
be entitled, by resolution passed by the holders of a majority in liquidation
preference (plus all accrued and unpaid dividends per share) of such shares
present in person or represented by proxy at a meeting of such holders convened
for such purpose (or by written consent), to appoint and authorize a trustee to
enforce the Company's rights as a creditor under the Loans against SCI Limited
and SCI (including the acceleration of
<PAGE> 15
-12-

principal and accrued interest on the Loans), to enforce the obligations
undertaken by SCI under the SCI Agreement and the Liability Assumption
Agreement dated ( ), 1994 (the "Liability Assumption Agreement")
between SCI (including in its capacity as the Manager of the Company) and the
Company, a copy of which is attached hereto as Exhibit C, pursuant to which SCI
has agreed to guarantee payment of any liabilities incurred by the Company
(other than obligations to holders of Series A Shares in their capacities as
holders) and to declare and pay dividends on the Series A Shares. For purposes
of determining whether the Company has failed to pay dividends in full for more
than 60 consecutive monthly dividend periods, dividends shall be deemed to
remain in arrears, notwithstanding any payments in respect thereof, until full
cumulative dividends have been or contemporaneously are declared and paid with
respect to all monthly dividend periods terminating on or prior to the date of
payment of such full cumulative dividends. Not later than 45 days after such
right to appoint a trustee arises, the Manager will convene a meeting for the
above purposes. If the Manager fails to convene such meeting within such
45-day period, the holders of 10% in liquidation preference (plus all accrued
and unpaid dividends per share) of the outstanding Series A Shares and such
other Preferred Shares will be entitled to convene such meeting. The
provisions of the Regulations relating to the convening and conduct of meetings
of members will apply with respect to any such meeting. Any trustee so
appointed shall vacate office immediately with respect to the Series A Shares
if the Company (or SCI pursuant to the SCI Agreement) shall have paid in full
all accrued and unpaid dividends on the Series A Shares (if the event that gave
rise to such appointment was clause (i) above) or such default or breach by
SCI, as the case may be, shall have been cured (if the event that gave rise to
such appointment was clause (ii) or (iii) above).

(b) If any resolution is presented to the members of the
Company providing for, or the Manager otherwise proposes to effect (it being
understood, that the events described in clauses (iii), (iv) and (v) of Section
6(b) hereof shall not be deemed to be a proposal by the Manager and are not
subject to the approval procedures described in this Section 7(b)), (x) any
amendment of the Articles, the Regulations, the Declaration or other action
that adversely varies or abrogates the rights, preferences or privileges of the
Series A Shares (including, without limitation, the authorization or issuance
of any interests in the Company ranking, as to participation in the profits or
assets of the Company, senior to the Series A Shares, or the issuance of any
debt by the Company), (y) the liquidation, dissolution or winding-up of the
Company or (z) the modification
<PAGE> 16
-13-

of the provisions of the Articles and the Regulations that absolutely prohibit
transfers of the Common Shares, then the holders of outstanding Preferred
Shares of all series (and, in the case of a resolution described in clause (x)
above which would equally adversely affect the rights, preferences or
privileges of any Company Dividend Parity Shares or any Company Liquidation
Parity Shares, such Company Dividend Parity Shares or such Company Liquidation
Parity Shares, as the case may be, or, in the case of any resolution described
in clause (y) or (z) above, all Company Liquidation Parity Shares) will be
entitled to vote together as a class on such resolution or action of the
Manager (but not on any other resolution or action), and such resolution or
other action shall not be effective except with the approval of the holders of
66-2/3% in liquidation preference (plus all accrued and unpaid dividends) of
such outstanding shares; provided, however, that no such approval or
ratification shall be required if the liquidation, dissolution and winding-up
of the Company is proposed or initiated upon the initiation of proceedings, or
after proceedings have been initiated, for the liquidation, dissolution, or
winding-up of the Manager.

(c) No vote or consent of the holders of the Series A
Shares will be required for the Company to redeem and cancel Series A Shares in
accordance with the Regulations and this Declaration.

(d) The rights attached to the Series A Shares will be
deemed not to be varied by the creation or issue of, and no vote will be
required for the creation of, any further series of Preferred Shares or any
other interests of the Company ranking pari passu with or junior to the Series
A Shares with regard to participation in the profits or assets of the Company.
The rights attached to the Series A Shares will be deemed to be varied by the
issuance of any debt for borrowed money by the Company, and a vote pursuant to
Section 7(b) hereof will be required for the issuance of any debt for borrowed
money by the Company. Holders of Series A Shares have no preemptive rights.

(e) Any act required or permitted to be taken at a
meeting of shareholders of the Company may be taken without a meeting, without
prior notice and without a vote if a consent or consents in writing, setting
forth the action so taken, is signed by the shareholders of the Company (acting
for themselves or through a proxy) entitled to vote if a meeting were held
having not fewer than the minimum number of votes that would be necessary to
take the action at a meeting at which all such shareholders entitled to vote on
the action were present and voted.
<PAGE> 17
-14-

The Company will cause a notice of any meeting at which
holders of the Series A Shares are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be mailed to
each holder of record of Series A Shares. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or written consents.

(f) Notwithstanding that holders of Series A Shares are
entitled to vote or consent under any of the circumstances described above, any
of the Series A Shares and any Preferred Shares entitled to vote or consent
with such Series A Shares as a single class outstanding at such time that are
owned by SCI or any entity owned 50% or more by SCI, either directly or
indirectly, shall not be entitled to vote or consent and shall, for the
purposes of such vote or consent, be treated as if they were not outstanding.

8. Conversion Rights. (a) Subject to and upon
compliance with the provisions of this Section 8, the holder of a Series A
Share shall have the right, at such holder's option (but if such share is
called for redemption, then in respect of such share only to and including but
not after the close of business on the second Business Day preceding the date
fixed for such redemption, provided that no default by the Company in the
payment of the applicable Redemption Price (including any accrued and unpaid
dividends) and no default by SCI in delivering SCI Common Stock in exchange for
Series A Shares previously surrendered for conversion shall have occurred and
be continuing on the date fixed for such redemption) to convert such share into
that whole number of fully paid and nonassessable shares of SCI Common Stock
equal to a fraction, the numerator of which is the liquidation preference of
$50 of such Series A Share surrendered for conversion, and the denominator of
which is the then current conversion price per share of SCI Common Stock (the
"Conversion Price"). The Conversion Price shall initially be $( ) per share
of SCI Common Stock and shall be subject to adjustment as set forth below.
Each share of SCI Common Stock issuable upon conversion as contemplated by this
Section 8 shall be issued with the rights to purchase Series C Junior
Participating Preferred Stock of SCI (or such other securities in lieu thereof
as specified in the Rights Agreement) pursuant to the Rights Agreement dated as
of July 18, 1988 between SCI and Texas Commerce Bank National Association as
rights agent, as amended to
<PAGE> 18
-15-

date, as are then issuable in respect of one share of SCI Common Stock, or any
similar rights issued to holders of SCI Common Stock in addition thereto or in
replacement therefor (such rights, together with any additional or replacement
rights, being collectively referred to as the "Rights"), whether or not such
Rights shall be exercisable at such time, but only if such Rights are issued
and outstanding and held by other holders of SCI Common Stock (or are evidenced
by outstanding share certificates representing SCI Common Stock) at such time
and have not been retired or redeemed.

(b) In order to exercise the conversion right provided in
subparagraph (a) above, the holder of each Series A Share to be converted shall
notify each of SCI and the Paying and Conversion Agent in writing (a
"Conversion Notice") that the holder elects to convert its Series A Shares or a
specified portion thereof, and, if the shares to be converted are Certificated
Shares, such holder shall contemporaneously surrender the certificate or
certificates evidencing such shares at the office of the Paying and Conversion
Agent, duly endorsed to SCI or in blank. If the shares to be converted are
represented by a Global Certificate, the holder thereof shall also deliver the
Conversion Notice to DTC. Unless the shares of SCI Common Stock issuable upon
conversion are to be issued in the same name or names as the name or names in
which the Series A Shares to be converted are registered, a Conversion Notice
shall be accompanied by instruments of transfer, in form satisfactory to the
Conversion and Paying Agent, duly executed by the holder or such holder's duly
authorized attorney and an amount sufficient to pay any transfer or similar tax
payable by such holder (or evidence reasonably satisfactory to the Conversion
and Paying Agent demonstrating that such taxes have been paid).

(c) As promptly as practicable after (i) in the case of
shares to be converted which are represented by a Global Certificate, the
Conversion Notice is received by the Manager, or (ii) in the case of
Certificated Shares to be converted, the surrender of certificates evidencing
such shares, and, in each case, the compliance by the converting holder with
any other conditions set forth in subparagraph (b) above or this subparagraph
(c), pursuant to the SCI Agreement, SCI shall issue and shall deliver or shall
cause the Company to deliver to such holder, or otherwise in accordance with
its written order, a certificate or certificates for the number of full shares
of SCI Common Stock issuable upon the conversion of such shares in accordance
with the provisions of this Section 8, and any fractional interest in respect
of a share of SCI Common Stock
<PAGE> 19
-16-

arising upon such conversion shall be settled as provided in Section 11 hereof.

(d) Each conversion of Series A Shares represented by a
Global Certificate shall be deemed to have been effected immediately prior to
the close of business on the date on which the Conversion Notice is received by
the Manager. Each conversion of Certificated Shares shall be deemed to have
been effected immediately prior to the close of business on the date on which
such shares are surrendered for conversion. The person or persons in whose
name or names any certificate or certificates for shares of SCI Common Stock
issuable upon any conversion of Series A Shares shall be deemed to have become
the holder or holders of record of the shares represented thereby at the time
and on the date determined in accordance with the first two sentences of this
subparagraph (d), and such conversion shall be at the Conversion Price in
effect at such time on such date.

(e) A holder of any Series A Share at the close of
business on a record date with respect to the payment of a dividend on a Series
A Share shall be entitled to receive such dividend payment on the corresponding
dividend payment date notwithstanding the subsequent conversion thereof
following such record date and on or prior to such dividend payment date or the
Company's default in payment of such dividend on such dividend payment date.
Except as provided in this subparagraph (e), no payment or adjustment shall be
made upon any conversion on account of any dividends accrued on Series A Shares
surrendered for conversion or on account of any dividends on the SCI Common
Stock issued upon conversion. Except as provided in this subparagraph (e), SCI
Common Stock issued upon conversion shall be deemed to be issued in exchange
for the Series A Shares so converted and any right to accrued and unpaid
dividends.

(f) If more than one Series A Share shall be specified
for conversion at one time by the same holder, the number of full shares of SCI
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of Series A Shares so specified.

(g) The Conversion Price shall be adjusted from time to
time as follows:

(i) In case SCI shall pay or make a
dividend or other distribution on SCI Common Stock in
shares of SCI Common Stock, then the Conversion Price in
effect at the opening of business on the day following the
date fixed for the determination of
<PAGE> 20
-17-

shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall
be the number of shares of SCI Common Stock outstanding at
the close of business on the date fixed for such
determination and the denominator shall be the sum of such
number of shares and the total number of shares
constituting such dividend or other distribution, such
reduction to become effective immediately after the opening
of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (i),
the number of shares of SCI Common Stock at any time
outstanding shall not include shares held in the treasury
of SCI (except to the extent such dividend or distribution
is being made with respect to such shares) but shall
include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of SCI Common Stock.

(ii) In case the outstanding shares of
SCI Common Stock shall be subdivided into a greater number
of shares of SCI Common Stock, then the Conversion Price in
effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case the
outstanding shares of SCI Common Stock shall be combined
into a smaller amount of shares of SCI Common Stock, then
the Conversion Price in effect at the opening of business
on the day following the day upon which such combination
becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become
effective immediately after the opening of business on the
day following the day upon which such subdivision or
combination becomes effective.

(iii) In case SCI shall issue rights or
warrants to all holders of SCI Common Stock entitling them
(for a period expiring within 45 days after the record date
fixed for a distribution of such rights or warrants) to
subscribe for or purchase shares of SCI Common Stock at a
price per share less than the current market price per
share (determined as provided in subparagraph (vii) below)
of SCI Common Stock on the date fixed for the determination
of shareholders entitled to receive such rights or
<PAGE> 21
-18-

warrants (other than pursuant to a dividend reinvestment
plan), then the Conversion Price in effect at the opening
of business on the day following the date fixed for such
determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall
be the number of shares of SCI Common Stock outstanding at
the close of business on the date fixed for such
determination plus the number of shares of SCI Common Stock
which the aggregate of the offering price of the total
number of shares of SCI Common Stock so offered for
subscription or purchase would purchase at such current
market price and the denominator shall be the number of
shares of SCI Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of SCI Common Stock so offered for
subscription or purchase, such reduction to become
effective immediately after the opening of business on the
day following the date fixed for such determination. For
the purposes of this subparagraph (iii), the number of
shares of SCI Common Stock at any time outstanding shall
not include shares held in the treasury of SCI but shall
include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of SCI Common Stock.
SCI agrees not to issue any rights or warrants in respect
of shares of SCI Common Stock held in the treasury of SCI.
To the extent that shares of SCI Common Stock are not
delivered after the expiration of such rights or warrants,
the Conversion Price shall be readjusted to the Conversion
Price which would then be in effect had the adjustments
made in respect of the issuance of such rights or warrants
been made on the basis of delivery of only the number of
shares of SCI Common Stock actually delivered.

(iv) Subject to the second paragraph of
subparagraph (iv), in case SCI shall, by dividend or
otherwise, distribute to all holders of SCI Common Stock
(A) shares of capital stock of SCI (other than SCI Common
Stock), (B) evidences of indebtedness of SCI and/or (C)
other assets (including securities, but excluding any
rights or warrants referred to in subparagraph (iii) above,
dividends or distributions in connection with the
liquidation, dissolution or winding-up of SCI, dividends
payable solely in cash
<PAGE> 22
-19-

that may from time to time be fixed by the Board of
Directors of SCI and dividends or distributions referred to
in subparagraph (i) above), then in each case (unless SCI
makes the election referred to in the next sentence) the
Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business
on such record date by a fraction the numerator of which
shall be the current market price per share (determined as
provided in subparagraph (vii) below) of the SCI Common
Stock on such record date (the "Reference Date") less the
then fair market value on the Reference Date (as determined
in good faith by the Board of Directors of SCI, whose
determination shall be conclusive and shall be described in
a statement filed with DTC and the Paying and Conversion
Agent) of the portion of the shares of capital stock of
SCI, evidences of indebtedness or other assets so
distributed (and for which an adjustment to the Conversion
Price has not been made previously pursuant to the terms of
this Section 8) applicable to one share of SCI Common Stock
and the denominator shall be such current market price per
share of the SCI Common Stock, such adjustment to become
effective immediately prior to the opening of business on
the day following the Reference Date. However, SCI may
elect, in its sole discretion, in lieu of the foregoing
adjustment, to make adequate provision so that each holder
of Series A Shares shall have the right to receive upon
conversion thereof the amount and kind of shares of capital
stock, evidences of indebtedness or other assets such
holder would have received had such holder converted such
shares on such record date. If the Board of Directors of
SCI determines the fair market value of any distribution
for purposes of this subparagraph (iv) by reference to the
actual or when issued trading market for any securities
(including shares of capital stock or evidences of
indebtedness of SCI) comprising a distribution of
securities, it must in doing so consider the price in such
market over the period used in computing the current market
price of the SCI Common Stock.

For purposes of this subparagraph (iv), any
dividend or distribution that includes both (x) any of the
items described in clauses (A), (B) or (C) of
<PAGE> 23
-20-

the first paragraph of this subparagraph (iv) and (y) SCI
Common Stock or rights or warrants to subscribe for or
purchase SCI Common Stock of the type referred to in
subparagraph (iii) shall be deemed to be (1) a dividend or
distribution of shares of capital stock of SCI (other than
SCI Common Stock), evidences of indebtedness of SCI or
other assets of the type referred to in clause (c) of the
first paragraph of this subparagraph (iv) (making any
Conversion Price reduction required by this subparagraph
(iv)) immediately followed by (2) a dividend or
distribution of such SCI Common Stock or rights or warrants
to purchase SCI Common Stock of the type referred to in
subparagraph (iii) (making any further Conversion Price
reduction required by subparagraph (i) or (iii) of this
Section 8(g)), except (A) the Reference Date of such
dividend or distribution as defined in this subparagraph
(iv) shall be substituted as "the date fixed for the
determination of shareholders entitled to receive such
dividend or other distribution," "the date fixed for the
determination of shareholders entitled to receive such
rights or warrants" and "the date fixed for such
determination" within the meaning of subparagraphs (i) and
(iii) of this Section 8(g) and (B) any shares of SCI Common
Stock included in such dividend or distribution shall not
be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of
subparagraph (i) of this Section 8(g).

The occurrence of a distribution or the
occurrence of any other event as a result of which holders
of Series A Shares converting such shares into SCI Common
Stock hereunder will not be entitled to receive rights
issued pursuant to any shareholder protective rights
agreement now or hereafter in effect (the "Other Rights")
in the same amount and manner as if such holders had
converted such shares immediately prior to the occurrence
of such distribution or other event shall be deemed a
distribution of Other Rights for the purposes of conversion
adjustments pursuant to this subparagraph (iv). In lieu of
making any adjustment to the Conversion Price under this
subparagraph (iv) as a result of such a distribution of
Other Rights, SCI may elect, in its sole discretion, to
provide that Other Rights shall be issuable in the same
amount and
<PAGE> 24
-21-

manner upon conversion of the Series A Shares without
regard to whether the shares of SCI Common Stock issuable
upon conversion of the Series A Shares were issued before
or after such distribution or other event.

(v) In case SCI shall, by dividend or
otherwise, at any time distribute cash to all holders of
SCI Common Stock, excluding (A) any cash dividends on SCI
Common Stock to the extent that the aggregate cash
dividends per share of SCI Common Stock in any consecutive
12-month period do not exceed the greater of (x) the amount
per share of SCI Common Stock of the cash dividends paid on
the SCI Common Stock in the immediately preceding 12-month
period, to the extent that such dividends for the
immediately preceding 12-month period did not require an
adjustment to the Conversion Price pursuant to this
subparagraph (v) (as adjusted to reflect subdivisions or
combinations of the SCI Common Stock) and (y) 15% of the
average of the daily Closing Prices (as hereinafter
defined) of the SCI Common Stock for the ten consecutive
Trading Days (as hereinafter defined) immediately prior to
the date of declaration of such dividend, (B) any dividend
or distribution in connection with the liquidation,
dissolution or winding-up of SCI, whether voluntary or
involuntary, or any redemption of the Rights or any Other
Rights; provided, however, that no adjustment shall be made
pursuant to this subparagraph (v) if such distribution
would otherwise constitute a Fundamental Change (as
hereinafter defined) and be reflected in a resulting
adjustment to the Conversion Price as provided in this
Section 8) then, in each such case (unless SCI makes the
election referred to in the proviso following this clause),
the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the
Conversion Price in effect at the close of business on such
record date by a fraction the numerator of which shall be
the last reported sale price of a share of SCI Common Stock
on such record date less the amount of cash so distributed
(to the extent not excluded as provided above) applicable
to one share of SCI Common Stock, and the denominator shall
be such last reported sale price of a share of SCI Common
Stock, such reduction to become effective immediately prior
to the opening of business on the day following such record
date;
<PAGE> 25
-22-

provided, however, that SCI may elect, in its sole
discretion, in lieu of the foregoing adjustment, to make
adequate provision so that each holder of Series A Shares
shall thereafter have the right to receive upon conversion
the amount of cash such holder would have received had such
holder converted each Series A Share on such record date.
If any adjustment is required to be made as set forth in
this subparagraph (v) as a result of a distribution which
is a dividend described in clause (A) of this subparagraph
(v), such adjustment will be based upon the amount by which
such distribution exceeds the amount of the dividend
permitted to be excluded pursuant to such clause (A) of
this subparagraph (v). If an adjustment is required to be
made pursuant to this subparagraph (v) as a result of a
distribution which is not such a dividend, such adjustment
would be based upon the full amount of such distribution.

(vi) In case of the consummation of a
tender or exchange offer (other than an odd-lot tender
offer) made by SCI or any subsidiary of SCI for all or any
portion of the outstanding shares of SCI Common Stock to
the extent that the cash and fair market value (as
determined in good faith by the Board of Directors of SCI,
whose determination shall be conclusive and shall be
described in a resolution of such Board) of any other
consideration included in such payment per share of SCI
Common Stock at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or
exchange offer (as amended) exceed by more than 10%, with
any smaller excess being disregarded in computing the
adjustment to the Conversion Price provided in this
subparagraph (vi), the first reported sale price per share
of SCI Common Stock on the Trading Day next succeeding the
Expiration Time, then the Conversion Price shall be reduced
so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately
prior to the Expiration Time by a fraction the numerator of
which shall be the number of shares of SCI Common Stock
outstanding (including any tendered or exchanged shares) on
the Expiration Time multiplied by the first reported sale
price of the SCI Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator shall be
the sum of (x) the fair market value
<PAGE> 26
-23-

(determined as aforesaid) of the aggregate consideration
payable to shareholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not
withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of
shares of SCI Common Stock outstanding (less any Purchased
Shares) on the Expiration Time and the first reported sale
price of the SCI Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on
the day following the Expiration Time.

(vii) For the purpose of any computation
under this Section 8, the "current market price per share"
of SCI Common Stock on any day shall be deemed to be the
average of the daily Closing Prices (as hereinafter
defined) per share of SCI Common Stock for the ten
consecutive Trading Days prior to and including the date in
question; provided, however, that (1) if the "ex" date (as
hereinafter defined) for any event (other than the
issuance, distribution or Fundamental Change requiring such
computation) that requires an adjustment to the Conversion
Price pursuant to this Section 8 (the "Other Event") occurs
during such ten consecutive Trading Days and prior to the
"ex" date for the issuance, distribution or Fundamental
Change requiring such computation (the "Current Event"),
the Closing Price for each Trading Day prior to the "ex"
date for such Other Event shall be adjusted by multiplying
such Closing Price by the same fraction by which the
Conversion Price is so required to be adjusted as a result
of such Other Event, (2) if the "ex" date for any Other
Event occurs on or after the "ex" date for the Current
Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for
such Other Event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which
the Conversion Price is so required to be adjusted as a
result of such Other Event (provided that in the event that
such fraction is required to be determined at a date
subsequent to the date in question and with reference to
events taking place subsequent to the date in question, the
<PAGE> 27
-24-

Board of Directors of SCI or, to the extent permitted by
applicable law, a duly authorized committee thereof, whose
determination shall be conclusive and described in a
resolution of the Board of Directors of SCI or such duly
authorized committee thereof, as the case may be, shall in
good faith estimate such fraction based on assumptions it
deems reasonable regarding such events taking place
subsequent to the date in question, and such estimated
fraction shall be used for purposes of such adjustment
until such time as the actual fraction by which the
Conversion Price is so required to be adjusted as a result
of such Other Event is determined), and (3) if the "ex"
date for the Current Event is on or prior to the date in
question, after taking into account any adjustment required
pursuant to clause (1) or (2) of this proviso, the Closing
Price for each Trading Day on or after such "ex" date shall
be adjusted by adding thereto the amount of any cash and
the fair market value (as determined in good faith by the
Board of Directors of SCI or, to the extent permitted by
applicable law, a duly authorized committee thereof in a
manner consistent with any determination of such value for
purposes of the subparagraphs of this Section 8, whose
determination shall be conclusive and described in a
resolution of the Board of Directors of SCI or such duly
authorized committee thereof, as the case may be) of the
shares of capital stock, evidences of indebtedness or other
assets being distributed applicable to one share of SCI
Common Stock as of the close of business on the day before
such "ex" date. For purposes of this subparagraph (vii),
the term "ex" date, (1) when used with respect to any
issuance, distribution or Fundamental Change, means the
first date on which the SCI Common Stock trades regular way
on the relevant exchange or in the relevant market from
which the Closing Price was obtained without the right to
receive such issuance, such distribution or the cash,
securities, property or other assets distributable in such
Fundamental Change to holders of the SCI Common Stock, (2)
when used with respect to any subdivision or combination of
shares of SCI Common Stock, means the first date on which
the SCI Common Stock trades regular way on such exchange
or in such market after the time at which such subdivision
or combination becomes effective and (3) when used with
respect to any tender or exchange offer means the first
date on
<PAGE> 28
-25-

which the SCI Common Stock trades regular way on such
exchange or in such market after the Expiration Time of
such offer.

(viii) No adjustment in the Conversion
Price shall be required pursuant to this Section 8(g)
unless the adjustment would require a change of at least 1%
of such price; provided, however, that any adjustments
which by reason of this subparagraph (viii) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations
shall be made to the nearest cent (with .005 being rounded
upward) or to the nearest 1/100th of a share (with .005 of
a share being rounded upward), as the case may be.
Notwithstanding anything to the contrary in this Section 8,
the Company from time to time may, to the extent permitted
by law and with the consent of the Manager, reduce the
Conversion Price by any amount for any period of at least
20 Business Days, in which case the Company shall give at
least 15 days' notice of such reduction to the holders of
Series A Shares. In addition, the Company may, at its
option and with the consent of the Manager, make such
reductions in the Conversion Price in addition to those set
forth in this Section 8, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of
shares of SCI Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock or from any event treated
as such for income tax purposes or for any other reasons.

(ix) Whenever the Conversion Price is
adjusted as herein provided, (A) the Company shall promptly
file with DTC and the Paying and Conversion Agent a
certificate of a duly authorized officer of the Manager or
of a firm of independent public accountants setting forth
the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such
adjustment, and the manner of computing the same, which
certificate shall be conclusive evidence of the correctness
of such adjustment, and (B) a notice stating that the
Conversion Price has been adjusted and setting forth the
adjusted Conversion Price shall forthwith be given by the
Company to DTC and the Paying and Conversion Agent and
mailed by the Company to each
<PAGE> 29
-26-

holder of Series A Shares at such holder's last address as
the same appears on the register of the Series A Shares.

(x) In any case in which this Section 8
provides that an adjustment shall become effective
immediately after a record date for an event, the Company
may defer until the occurrence of such event (A) issuing to
the holder of any Series A Share converted after such
record date and before the occurrence of such event the
additional shares of SCI Common Stock issuable upon such
conversion by reason of the adjustment required by such
event over and above the SCI Common Stock issuable upon
such conversion before giving effect to such adjustment and
(B) paying to such holder any amount in cash in lieu of any
fractional shares pursuant to this Section 8.

(xi) For purposes of this Section 8, "SCI
Common Stock" includes any stock of any class of SCI which
has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of SCI and which is
not subject to redemption by SCI. However, subject to the
provisions of this Section 8, shares issuable on conversion
of Series A Shares shall include only shares of the class
designated as SCI Common Stock on the date of the initial
issuance of Series A Shares by the Company or shares of any
class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or
winding-up of SCI and which are not subject to redemption
by SCI; provided, however, that if at any time there shall
be more than one such resulting class, the shares of each
such class then so issuable shall be substantially in the
proportion which the total number of shares of such class
resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from
all such reclassifications.

(h) In case:

(i) SCI shall declare a dividend (or any
other distribution) on SCI Common Stock that would
<PAGE> 30
-27-

cause an adjustment to the Conversion Price of the Series A
Shares pursuant to the terms of any of the subparagraphs
above (including such an adjustment that would occur but
for the terms of the first sentence of Section 8(g)(viii)
above); or

(ii) the outstanding shares of SCI Common
Stock shall be subdivided into a greater number of shares
of SCI Common Stock or combined into a smaller number of
shares of SCI Common Stock; or

(iii) SCI shall authorize the granting to
the holders of SCI Common Stock generally of rights or
warrants (for a period expiring within 45 days after the
record date fixed for a distribution of such rights and
warrants) to subscribe for or purchase any shares of
capital stock of any class or of any other rights; or

(iv) of any reclassification of SCI
Common Stock (other than a subdivision or combination of
the outstanding shares of SCI Common Stock), or of any
consolidation, merger or share exchange to which SCI is a
party and for which approval of any shareholders of SCI is
required, or of the sale or transfer of all or
substantially all of the assets of SCI or a compulsory
share exchange; or

(v) of the voluntary or involuntary
dissolution, liquidation or winding-up of the Manager;

then the Company shall cause to be filed with the
Conversion and Paying Agent, and shall cause to be mailed
to all holders of Series A Shares at each such holder's
last address as the same appears on the register for the
Series A Shares, at least 20 days prior to the applicable
record or effective date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as
of which the holders of SCI Common Stock of record to be
entitled to such dividend, distribution, rights or warrants
are to be determined, or (B) the date on which such
reclassification, consolidation, merger, share exchange,
sale, transfer, dissolution, liquidation or winding-up is
expected to become
<PAGE> 31
-28-

effective, and the date as of which it is expected that
holders of SCI Common Stock of record shall be entitled to
exchange their shares of SCI Common Stock for securities,
cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange,
sale, transfer, dissolution, liquidation or winding- up.
Neither the failure to give such notice nor any defect
therein shall affect the legality or validity of the
proceedings described in clauses (i) through (v) above.

(i) In the event that SCI shall be a party to any
transaction or series of transactions constituting a Fundamental Change,
including, without limitation, (i) any recapitalization or reclassification of
shares of SCI Common Stock (other than a change in par value as a result of a
subdivision or combination of the SCI Common Stock), (ii) any consolidation of
SCI with, or merger of SCI into, any other corporation or any merger of another
corporation into SCI as a result of which holders of SCI Common Stock shall be
entitled to receive securities or other property or assets (including cash)
with respect to or in exchange for SCI Common Stock (other than a merger which
does not result in a reclassification, conversion, exchange or cancellation of
outstanding shares of SCI Common Stock), (iii) any sale or transfer of all or
substantially all of the assets of SCI, or (iv) any compulsory share exchange,
pursuant to any of which the holders of SCI Common Stock shall be entitled to
receive other securities, cash or other property, then appropriate provision
shall be made as part of the terms of such transaction or series of
transactions so that the holder of each Series A Share then outstanding shall
have the right thereafter to convert such share only into (A) in the case of a
Non-Stock Fundamental Change (as hereinafter defined), the kind and amount of
the securities, cash and other property that would have been receivable upon
such recapitalization, reclassification, consolidation, merger, sale, transfer
or share exchange by a holder of the number of shares of SCI Common Stock into
which such Series A Share might have been converted immediately prior to such
recapitalization, reclassification, consolidation, merger, sale, transfer or
share exchange, after giving effect to any adjustment in the Conversion Price
required by the provisions which follow in Section 8(k), and (B) in the case of
a Common Stock Fundamental Change (as hereinafter defined), common stock of the
kind received by holders of SCI Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the provisions which
follow in Section 8(k). The company formed by such consolidation or resulting
from such merger or which acquires such assets or which acquires the SCI
<PAGE> 32
-29-

Common Stock, as the case may be, shall make provisions in its certificate or
articles of incorporation or other constituent document to establish such
right. Such certificate or articles of incorporation or other constituent
document shall provide for adjustments which, for events subsequent to the
effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 8. The above provisions shall
similarly apply to successive recapitalizations, reclassifications,
consolidations, mergers, sales, transfer or share exchanges.

(j) Notwithstanding any other provisions in this Section
8 to the contrary, if any Fundamental Change (as hereinafter defined) occurs,
then the Conversion Price in effect will be adjusted immediately following such
Fundamental Change as described below in Section 8(k). In addition, in the
event of a Common Stock Fundamental Change, each Series A Share shall be
convertible solely into common stock of the kind received by holders of SCI
Common Stock as the result of such Common Stock Fundamental Change as more
specifically provided below in Section 8(k).

(k) For purposes of calculating any adjustment to be made
pursuant to this Section 8 in the event of a Fundamental Change, immediately
following such Fundamental Change (and for such purposes a Fundamental Change
shall be deemed to occur on the earlier of (a) the occurrence of such
Fundamental Change and (b) the date, if any, fixed for determination of
shareholders entitled to receive the cash, securities, property or other assets
distributable in such Fundamental Change to holders of the SCI Common Stock);

(i) in the case of a Non-Stock Fundamental
Change, the Conversion Price per share of SCI Common Stock
shall be the lower of (A) the Conversion Price in effect
immediately prior to such Non-Stock Fundamental Change, but
after giving effect to any other adjustments effected pursuant
to this Section 8, and (B) the product of (1) the greater of
the Applicable Price (as hereinafter defined) and the
applicable Reference Market Price (as hereinafter defined) and
(2) a fraction the numerator of which shall be $50 and the
denominator of which shall be the amount at which one Series A
Share would be redeemed by the Company if the redemption date
were the date of such Non-Stock Fundamental Change (such
denominator being the sum of (1) (A) the Conditional
Redemption Price set forth in
<PAGE> 33
-30-

Section 4(b) hereof (exclusive of any accrued and unpaid
dividends) if such Non-Stock Fundamental Change occurs on or
after ( ), 1997 and prior to ( ), 1999, (B)
the Optional Redemption Price set forth in the table contained
in Section 4(b) above (exclusive of any accrued and unpaid
dividends) if the Non-Stock Fundamental Change occurs on or
after ( ), 1999, or (C) if the Non-Stock Fundamental
Change occurs during (i) the period commencing on the date of
original issue of the Series A Shares and ending ( ),
1995, (ii) the 12-month period commencing ( ), 1995 and
(iii) the period commencing ( ), 1996 and ending (
), 1997, $( ), $( ) and $( ), respectively,
and (2) any accrued and unpaid dividends on the Series A
Shares, whether or not declared, to but excluding the date of
such Non-Stock Fundamental Change); and

(ii) in case of a Common Stock Fundamental
Change, the Conversion Price per share of SCI Common Stock
shall be the Conversion Price in effect immediately prior to
such Common Stock Fundamental Change, but after giving effect
to any other adjustments effected pursuant to this Section 8,
multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as hereinafter defined) and the
denominator of which is the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental
Change in which (A) 100% of the value of the consideration
received by a holder of SCI Common Stock is common stock of
the successor, acquiror or other third party (and cash, if
any, paid with respect to any fractional interests in such
common stock resulting from such Common Stock Fundamental
Change) and (B) all of the SCI Common Stock shall have been
exchanged for, converted into or acquired for common stock
(and cash, if any, with respect to fractional interests) of
the successor, acquiror or other third party, the Conversion
Price per share of SCI Common Stock immediately following such
Common Stock Fundamental Change shall be the Conversion Price
in effect immediately prior to such Common Stock Fundamental
Change multiplied by a fraction, the numerator of which is one
(1) and the denominator of which is the number of shares of
common stock of the successor, acquiror, or other third party
received by a
<PAGE> 34
-31-

holder of one share of SCI Common Stock as a result of such
Common Stock Fundamental Change.

(l) The following definitions shall apply to terms used
in this Section 8:

(i) "Applicable Price" shall mean (A) in the event of
a Non-Stock Fundamental Change in which the holders of SCI Common
Stock receive only cash, the amount of cash receivable by a holder of
one share of SCI Common Stock and (B) in the event of any other
Non-Stock Fundamental Change or any Common Stock Fundamental Change,
the average of the Closing Prices for one share of SCI Common Stock
during the ten Trading Days immediately prior to the record date for
the determination of the holders of SCI Common Stock entitled to
receive cash, securities, property or other assets in connection with
such Non-Stock Fundamental Change or Common Stock Fundamental Change
or, if there is no such record date, prior to the date upon which the
holders of SCI Common Stock shall have the right to receive such cash,
securities, property or other assets.

(ii) "Closing Price" with respect to any securities on
any day shall mean the closing sale price, regular way, on such day
or, in case no such sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, in each case on
the New York Stock Exchange or, if such security is not listed or
admitted to trading on such Exchange, on the principal national
securities exchange or quotation system on which such security is
quoted or listed or admitted to trading or, if not quoted or listed or
admitted to trading on any national securities exchange or quotation
system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the date in question as
reported by the National Quotation Bureau Incorporated, or a similarly
generally accepted reporting service or, if not so available, in such
manner as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors of SCI for that
purpose or a price determined in good faith by the Board of Directors
of SCI. The Closing Price on any Trading Day may be subject to
adjustment as provided in this Section 8.

(iii) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50% of the value (as determined
in good faith by the Board of Directors of SCI) of the consideration
received by the holders of SCI Common
<PAGE> 35
-32-

Stock pursuant to such transaction consists of common stock that, for
the ten consecutive Trading Days immediately prior to such Fundamental
Change, has been admitted for listing or admitted for listing subject
to notice of issuance on a national securities exchange or quoted on
the Nasdaq NM; provided, however, that a Fundamental Change shall not
be a Common Stock Fundamental Change unless either (A) SCI continues
to exist after the occurrence of such Fundamental Change and the
outstanding Series A Shares continue to exist as outstanding Series A
Shares, or (B) the outstanding Series A Shares continue to exist as
Series A Shares and are convertible into common stock of the successor
to SCI.

(iv) "Fundamental Change" shall mean the occurrence of
any transaction or event or series of transactions or events pursuant
to which all or substantially all of the SCI Common Stock shall be
exchanged for, converted into, acquired for or constitutes solely the
right to receive cash, securities, property or other assets (whether
by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization
or otherwise); provided, however, in the case of a plan involving more
than one such transaction or event, for purposes of adjustment of the
Conversion Price, such Fundamental Change shall be deemed to have
occurred when substantially all of the SCI Common Stock has been
exchanged for, converted into, or acquired for or constitutes solely
the right to receive cash, securities, property or other assets, but
the adjustment shall be based upon the consideration which the holders
of SCI Common Stock received in such transaction or event as a result
of which more than 50% of the SCI Common Stock shall have been
exchanged for, converted into, or acquired for or shall constitute
solely the right to receive cash, securities, property or other
assets; provided, further, that such term does not include (A) any
transaction or event in which SCI and/or any of its subsidiaries are
the issuers of all the cash, securities, property or other assets
exchanged, acquired or otherwise issued in such transaction or event,
or (B) any transaction or event in which the holders of SCI Common
Stock receive securities of an issuer other than SCI if, immediately
following such transaction or event, those holders hold a majority of
the securities having the power to vote normally in the election of
directors of such other issuer outstanding immediately following such
transaction or other event.
<PAGE> 36
-33-

(v) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock Fundamental Change.

(vi) "Purchaser Stock Price" shall mean, with respect
to any Common Stock Fundamental Change, the average of the Closing
Prices for one share of the common stock received by holders of SCI
Common Stock in such Common Stock Fundamental Change during the ten
Trading Days immediately prior to the record date for the
determination of the holders of SCI Common Stock entitled to receive
such common stock or, if there is no such record date, prior to the
date upon which the holders of SCI Common Stock shall have the right
to receive such common stock.

(vii) "Reference Market Price" shall initially mean $(
) (which is an amount equal to 66-2/3% of the last reported sale price
for the SCI Common Stock on the New York Stock Exchange on (
), 1994) and, in the event of any adjustment to the Conversion Price
other than as a result of a Fundamental Change, the Reference Market
Price shall also be adjusted so that the ratio of the Reference Market
Price to the Conversion Price after giving effect to any such
adjustment shall always be the same as the ratio of $( ) to the
initial Conversion Price set forth in this Section 8.

(viii) "Trading Day" shall mean (A) if the applicable
security is listed or admitted for trading on the New York Stock
Exchange or another national securities exchange, a day on which the
New York Stock Exchange or such other national securities exchange is
open for business or (B) if the applicable security is quoted on the
Nasdaq NM, a day on which trades may be made on the Nasdaq NM or (C)
if the applicable security is not otherwise listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or on a day
on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.

(m) The Manager will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of SCI Common Stock on conversions of Series A Shares pursuant hereto;
provided, however, that the Manager shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issue or delivery of
shares of SCI Common Stock in a name other than that of the holder of the
Series A Shares to be converted and no such issue
<PAGE> 37
-34-

or delivery shall be made unless and until the person requesting such issue or
delivery has paid the Manager the amount of any such tax or has established, to
the satisfaction of the Manager, that such tax has been paid.

(n) SCI covenants that all shares of SCI Common Stock
which may be delivered upon conversions of Series A Shares will upon delivery
be duly and validly issued and fully paid and nonassessable, free of all liens
and charges and not subject to any preemptive rights.

(o) SCI covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of authorized
but unissued shares and treasury shares of SCI Common Stock, a sufficient
number of shares of SCI Common Stock for the purpose of effecting conversions
of Series A Shares not theretofore converted. For purposes of this reservation
of SCI Common Stock, the number of shares of SCI Common Stock which shall be
deliverable upon the conversion of all outstanding Series A Shares shall be
computed as if at the time of computation all outstanding Series A Shares were
held by a single holder. SCI covenants that from time to time, in accordance
with the laws of the State of Texas, to take such steps as are necessary to
submit to shareholders of SCI a resolution to increase the authorized number of
shares of SCI Common Stock if at any time the number of authorized and unissued
shares and treasury shares of SCI Common Stock shall not be sufficient to
permit the conversion of all then- outstanding Series A Shares. SCI has
authorized in all respects the issuance of shares of SCI Common Stock upon
conversion of Series A Shares.

(p) If any shares of SCI Common Stock required to be
reserved for purposes of conversion of the Series A Shares hereunder require
registration with or approval of any governmental authority under any Federal
or state law before such shares may be issued upon conversion, SCI agrees to
use all reasonable efforts to expeditiously cause such shares to be duly
registered or approved, as the case may be; provided, that, SCI shall not be
required to subject itself to general service of process in any jurisdiction
where it is not then so subject. If the SCI Common Stock is listed on the New
York Stock Exchange, quoted on the Nasdaq NM or listed on any other national
securities exchange, SCI agrees to use all reasonable efforts to list and keep
listed on such exchange or system, upon official notice of issuance, all shares
of SCI Common Stock issuable upon conversion of the Series A Shares.
<PAGE> 38
-35-

(q) Notwithstanding the provisions in this Section 8, the
issuance of any shares of SCI Common Stock pursuant to any plan providing for
the reinvestment of dividends or interest payable on securities of SCI and the
investment of additional optional amounts in shares of SCI Common Stock under
any such plan (whether any such plan is now or hereafter authorized), or the
issuance of any shares of SCI Common Stock or options or rights to purchase
such shares pursuant to any employee benefit plan or program of SCI or any
subsidiary thereof (whether any such plan or program is now or hereafter
authorized), or pursuant to any option, warrant, right or exercisable,
exchangeable or convertible security outstanding as of the date hereof, shall
not be deemed to constitute an issuance of SCI Common Stock or exercisable,
exchangeable or convertible securities by SCI to which any of the adjustment
provisions described in this Section 8 applies. There shall be no adjustment
of the Conversion Price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of SCI except as described in this
Section 8. Except as expressly set forth in this Section 8, if any action
would require adjustment of the Conversion Price pursuant to more than one of
the provisions described above, only one adjustment shall be made and such
adjustment shall be the amount of adjustment which has the highest absolute
value.

9. Book-Entry Issuance; The Depository Trust Company;
Certificated Shares. (a) DTC will act as securities depository for the Series
A Shares.

The Series A Shares (other than such Certificated Shares) will
be issued in the form of one or more fully-registered global certificates
representing in the aggregate the total number of Series A Shares and
registered in the name of Cede & Co. (DTC's nominee).

(b) DTC may discontinue providing its services as
securities depository with respect to the Series A Shares at any time by giving
notice to the Company as provided in the agreement between the Company and DTC.
Under such circumstances, in the event that a successor securities depository
is not obtained, Certificated Shares shall be printed and delivered upon
surrender of the Global Certificate or Certificates.

(c) The Paying and Conversion Agent shall maintain a
book-entry system, as defined in Treas. Reg. Section 5f.103-1(c)(2), with
respect to all Certificated Shares. All rights to payments with respect to
any Certificated Share shall be transferred only through such book-entry
system and shall not be effective until
<PAGE> 39
-36-

the Paying and Conversion Agent has been notified of such transfer and provided
with the identity of the transferee.

10. Tax Matters. (a) For each calendar month of the
Company, gross income or gain, as determined for Federal income tax purposes,
shall be allocated to each holder of Series A Shares as set forth in this
Section 10(a). No items of deduction, loss or credit shall be allocated with
respect to the Series A Shares. Income, gain, loss, deduction or credit not
allocated to holders of Series A Shares shall be allocated to the holders of
all other classes of Interests (including the Common Interestholders).

(i) Subject to the provisions of subparagraph (iv)
below, for any calendar month during which SCI Limited has not
exercised its right to extend the interest payment period on the Loans
pursuant to Section 2.02 of the Loan Agreement, an amount of gross
income or gain of the Company shall be allocated to each holder of
record of Series A Shares as of the record date for the dividend
payable with respect to the Series A Shares for such month, in an
amount equal to the per-share amount of such dividend, multiplied by
the number of Series A Shares held of record by such holder as of such
record date.

(ii) Subject to the provisions of subparagraph (iv)
below, for any calendar month during which SCI Limited has exercised
its right to extend the interest payment period on the Loans pursuant
to Section 2.02 of the Loan Agreement (including the month in which
all accrued and unpaid interest on the Loans is paid pursuant to such
Section 2.02), an amount of gross income or gain of the Company shall
be allocated to each holder of record of Series A Shares as of the
last day of such calendar month equal to the sum of the daily portions
of the aggregate original issue discount accrued during each day of
such month on the Loans (as determined pursuant to Sections 1272-1275
of the Internal Revenue Code of 1986, as amended (the "Code"))
multiplied by a fraction, the numerator of which is the product of (x)
$50 multiplied by (y) the number of Series A Shares held of record by
such holder as of the last day of such month, and the denominator of
which is the aggregate principal amount of the Loans outstanding as of
the last day of such month (but not including any accrued interest,
including all interest accrued as a result of the exercise by SCI
Limited of its right to extend the interest payment period on the
Loans).
<PAGE> 40
-37-

(iii) Subject to the provisions of subparagraph (iv)
below, if a Series A Share is redeemed pursuant to Section 4 hereof or
converted pursuant to Section 8 hereof during a calendar month, an
amount of gross income of the Company shall be allocated to the holder
of record of such Series A Share as of the date of such conversion or
redemption equal to the amount of original issue discount that accrued
during such calendar month (as determined pursuant to Sections
1272-1275 of the Code) with respect to that portion of the Loans that
was prepaid pursuant to the Loan Agreement as a result of the
redemption or conversion of such Series A Share.

(iv) Notwithstanding the provisions of subparagraphs
(i), (ii) and (iii) above, if, to the best knowledge of the Manager,
the holder of record of a Series A Share is not the beneficial owner
of such Series A Share as determined for Federal income tax purposes,
amounts of income or gain allocable pursuant to such subparagraphs
(i), (ii) or (iii) shall be allocated to the beneficial owner of such
Series A Share, as determined by the Manager, rather than to the
record holder of such Series A Share, and if the Manager is advised by
counsel that the method of allocating gross income and gain among the
holders of Series A Shares as set forth in this Section 10(a) is
impermissible under the Code or if the Internal Revenue Service
disallows such method, the Manager shall adopt a permissible method
that as nearly as possible achieves the results of the method set
forth in this Section 10(a).

(v) Notwithstanding anything to the contrary in this
Section 10(a), in the event of a Liquidation of the Company or of a
Preferred Interestholder's Interest, income, gain, loss or deduction
of the Company shall be allocated so that each Preferred
Interestholder has a positive balance in its capital account equal to
the sum of the amount of cash and the fair market value of property
other than cash (if any) to be received by such Preferred
Interestholder in such Liquidation.

(vi) All amounts of income of the Company allocable to
holders of the Series A Shares shall be interest income, to the extent
thereof, and if the Company has insufficient interest income, other
items of gross income or gain shall be allocated to holders of the
Series A Shares.

(vii) The Manager shall allocate income, gain, loss and
deduction and items thereof among the Members in the
<PAGE> 41
-38-

manner required by Section 704(c) of the Code, as determined by it in
its judgment.

(b) (i) For the purpose of adjusting the capital accounts of
the holders of Series A Shares, any dividend declared by the Company pursuant
to Section 3(a) hereof shall be treated as distributed on the record date for
such dividend.

(ii) The Manager shall make such other adjustments to
the capital accounts of the Members as are, in its judgment, required
to comply with the requirements of Section 704 of the Code and the
regulations promulgated thereunder and the purposes of the Regulations
and this Amendment.

11. Fractional Shares. In the event the holder of Series
A Shares shall be entitled to receive a fractional interest in a Series A Share
or a fractional interest in a share of SCI Common Stock, except as otherwise
provided herein, SCI shall either, in its sole discretion, (i) round such
fractional interest up to the next whole Series A Share or share of SCI Common
Stock, as the case may be, or (ii) deliver cash in the amount of the current
market price per share (determined as provided in Section 8(g)(vii)) of such
fractional interest.

12. Guarantee of Liabilities. It shall be a condition
precedent to the issuance of the Series A Shares that SCI execute the Liability
Assumption Agreement, pursuant to which SCI shall guarantee payment of all
liabilities of the Company to the extent not paid by the Company (other than
obligations to holders of Series A Shares, which will be separately guaranteed
by SCI to the extent set forth in the SCI Agreement). The Liability Assumption
Agreement shall be for the benefit of, and be enforceable by, third parties to
whom the Company owes such obligations.

13. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating or otherwise adversely
affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid
under applicable law.
<PAGE> 42
-39-

14. Defined Terms. All capitalized terms not defined in
this Amendment shall have the meanings ascribed thereto in the Regulations.
<PAGE> 43
-40-

IN WITNESS WHEREOF, SCI FINANCE LLC has caused this Amendment
to its Regulations to be signed by two of the officers of its Manager, and to
be attested as set forth below, as of the ( ) day of ( )
1994.

SCI FINANCE LLC

By: Service Corporation
International, as Manager

By: __________________________
Name:
Title:

Attest: ___________________
Name:

By: __________________________
Name:
Title

Attest: ___________________
Name:
<PAGE> 44
-41-

SERVICE CORPORATION INTERNATIONAL hereby covenants to perform
its obligations set forth in this Amendment to the Regulations of SCI Finance
LLC, and, IN WITNESS WHEREOF, has caused this Amendment to be signed by two of
its officers and to be attested as set forth below, as of the ( ) day of
( ) 1994.

SERVICE CORPORATION
INTERNATIONAL

By: ______________________________
Name:
Title:

Attest: _______________________
Name:

By: ______________________________
Name:
Title:

Attest: _______________________
Name:
<PAGE> 45
Exhibit A

(Loan Agreement) - See Exhibit 4.5(b)
<PAGE> 46
Exhibit B

(SCI Agreement) - See Exhibit 4.5(a)
<PAGE> 47
Exhibit C

(Liability Assumption Agreement) - See Exhibit 4.5(c)

<PAGE> 1
EXHIBIT 4.2

================================================================================

SERVICE CORPORATION INTERNATIONAL

AND

TEXAS COMMERCE BANK NATIONAL ASSOCIATION

_____________________

Senior Subordinated Indenture

Dated as of __________, 1994

================================================================================
<PAGE> 2
CROSS REFERENCE SHEET*
__________________

Provisions of Trust Indenture Act of 1939 and Senior Subordinated
Indenture to be dated as of _________, 1994 between SERVICE CORPORATION
INTERNATIONAL and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Trustee:

<TABLE>
<CAPTION>
SECTION OF THE ACT SECTION OF INDENTURE
- ------------------ --------------------
<S> <C>
310(a)(1), (2) and (5) . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
310(a)(3) and (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 and 6.10(a), (b) and (d)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13(a) and (c)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13(b) and (c)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 and 4.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(a) and (b)(i) and (ii)
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(c)
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(a)(i), (ii), (iii), (iv),
(v), (vi) and (vii)
313(a)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
313(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
313(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(b)
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(c)
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(d)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c)(1) and (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
314(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a), (c) and (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9
316(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
316(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not required
316(a) (last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(a)
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7
</TABLE>
___________________

* This Cross Reference Sheet is not part of the Indenture.
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS*
_________________

PAGE
----
<S> <C> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE

DEFINITIONS

Section 1.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Associated Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Conversion Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . 3
Date of Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Securityholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Issuer Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Last Sale Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
original issue date . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
original issue discount . . . . . . . . . . . . . . . . . . . . . . . . . 6
Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . 6
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Periodic Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

___________

* This Table of Contents is not part of the Indenture.

-i-
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
principal amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
record date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . 9
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . 9
vice president . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Yield to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE TWO

SECURITIES

Section 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.2 Form of Trustee's Certificate
of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.3 Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . 11
Section 2.4 Authentication and Delivery of Securities . . . . . . . . . . . . . . . . 14
Section 2.5 Execution of Securities . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.6 Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.7 Denomination and Date of Securities;
Payments of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.8 Registration, Transfer and Exchange . . . . . . . . . . . . . . . . . . . 20
Section 2.9 Mutilated, Defaced, Destroyed, Lost
and Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.10 Cancellation of Securities;
Disposition Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.11 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.12 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 25

ARTICLE THREE

COVENANTS OF THE ISSUER

Section 3.1 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . 25
Section 3.2 Office for Notices and Payments, etc. . . . . . . . . . . . . . . . . . . 25
Section 3.3 No Interest Extension . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.4 Appointments to Fill Vacancies
in Trustee's Office . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.5 Provision as to Paying Agent . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.6 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

___________

* This Table of Contents is not part of the Indenture.

-ii-
</TABLE>
<PAGE> 5

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 3.7 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.8 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . 28
Section 3.9 Prohibition on Incurrence of
Senior Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE FOUR

SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE

Section 4.1 Issuer to Furnish Trustee Information
as to Names and Addresses of
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.2 Preservation and Disclosure of
Securityholders Lists . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.3 Reports by the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.4 Reports by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE FIVE

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT

Section 5.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.2 Payment of Securities on Default;
Suit Therefor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.3 Application of Moneys Collected
by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.4 Proceedings by Securityholders . . . . . . . . . . . . . . . . . . . . . 40
Section 5.5 Proceedings by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.6 Remedies Cumulative and Continuing . . . . . . . . . . . . . . . . . . . 41
Section 5.7 Direction of Proceedings; Waiver of
Defaults by Majority of Securityholders . . . . . . . . . . . . . . . . 41
Section 5.8 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.9 Undertaking to Pay Costs . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.10 Trustee May Enforce Claim Without Possession
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.11 Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . 43

ARTICLE SIX

CONCERNING THE TRUSTEE

Section 6.1 Duties and Responsibilities of the Trustee;
During Default; Prior to Default . . . . . . . . . . . . . . . . . . . 44
Section 6.2 Certain Rights of the Trustee . . . . . . . . . . . . . . . . . . . . . . 45

___________

* This Table of Contents is not part of the Indenture.

-iii-
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 6.3 Trustee Not Responsible for Recitals,
Disposition of Securities or
Application of Proceeds Thereof . . . . . . . . . . . . . . . . . . . . 47
Section 6.4 Trustee and Agents May Hold
Securities; Collections, etc. . . . . . . . . . . . . . . . . . . . . . 47
Section 6.5 Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.6 Compensation and Indemnification
of Trustee and Its Prior Claim . . . . . . . . . . . . . . . . . . . . 47
Section 6.7 Right of Trustee to Rely on Officer's
Certificate, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.8 Qualification of Trustee;
Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.9 Persons Eligible for Appointment
as Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.10 Resignation and Removal; Appointment
of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.11 Acceptance of Appointment by
Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.12 Merger, Conversion, Consolidation
or Succession to Business of Trustee . . . . . . . . . . . . . . . . . 60
Section 6.13 Preferential Collection of Claims
Against the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.14 Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . 65

ARTICLE SEVEN

CONCERNING THE SECURITYHOLDERS

Section 7.1 Evidence of Action Taken by
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.2 Proof of Execution of Instruments
and of Holding of Securities . . . . . . . . . . . . . . . . . . . . . 67
Section 7.3 Holders to be Treated as Owners . . . . . . . . . . . . . . . . . . . . . 67
Section 7.4 Securities Owned by Issuer
Deemed Not Outstanding . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.5 Right of Revocation of Action Taken . . . . . . . . . . . . . . . . . . . 68
Section 7.6 Record Date for Consents and Waivers . . . . . . . . . . . . . . . . . . 69

ARTICLE EIGHT

SUPPLEMENTAL INDENTURES

Section 8.1 Supplemental Indentures Without Consent of
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.2 Supplemental Indentures With Consent
of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.3 Effect of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . 73

___________

* This Table of Contents is not part of the Indenture.

-iv-
</TABLE>
<PAGE> 7

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 8.4 Documents to be Given to Trustee . . . . . . . . . . . . . . . . . . . . 73
Section 8.5 Notation on Securities in Respect
of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.6 Subordination Unimpaired . . . . . . . . . . . . . . . . . . . . . . . . 74

ARTICLE NINE

CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER DISPOSITION

Section 9.1 Issuer May Consolidate, etc.,
on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.2 Successor Corporation to be Substituted . . . . . . . . . . . . . . . . . 75
Section 9.3 Opinion of Counsel to be Given Trustee . . . . . . . . . . . . . . . . . 75

ARTICLE TEN

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

Section 10.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . 76
Section 10.2 Application by Trustee of Funds Deposited
for Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.3 Repayment of Moneys Held by Paying Agent . . . . . . . . . . . . . . . . 79
Section 10.4 Return of Moneys Held by Trustee and
Paying Agent Unclaimed for Two Years . . . . . . . . . . . . . . . . . 80
Section 10.5 Indemnity for U.S. Government Obligations . . . . . . . . . . . . . . . . 80

ARTICLE ELEVEN

MISCELLANEOUS PROVISIONS

Section 11.1 Partners, Incorporators, Stockholders,
Officers and Directors of Issuer
Exempt from Individual Liability . . . . . . . . . . . . . . . . . . . 80
Section 11.2 Provisions of Indenture for the Sole
Benefit of Parties and Holders of
Senior Indebtedness and of Securities . . . . . . . . . . . . . . . . . 81
Section 11.3 Successors and Assigns of Issuer
Bound by Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.4 Notices and Demands on Issuer,
Trustee and Holders of Securities . . . . . . . . . . . . . . . . . . . 81
Section 11.5 Officer's Certificates and Opinions
of Counsel; Statements to be
Contained Therein . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 11.6 Payments Due on Saturdays,
Sundays and Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 83

___________

* This Table of Contents is not part of the Indenture.

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Section 11.7 Conflict of Any Provision of Indenture
with Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . 83
Section 11.8 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.10 Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.11 Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

ARTICLE TWELVE

REDEMPTION OF SECURITIES AND SINKING FUNDS

Section 12.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 12.2 Notice of Redemption; Partial Redemptions . . . . . . . . . . . . . . . . 84
Section 12.3 Payment of Securities Called for Redemption . . . . . . . . . . . . . . . 86
Section 12.4 Exclusion of Certain Securities
from Eligibility for
Selection for Redemption . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.5 Mandatory and Optional Sinking Funds . . . . . . . . . . . . . . . . . . 88

ARTICLE THIRTEEN

CONVERSION OF SECURITIES

Section 13.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 13.2 Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . 91
Section 13.3 Fractional Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 13.4 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . 93
Section 13.5 Continuation of Conversion Privilege
in Case of Merger, Consolidation or
Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 13.6 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 13.7 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 13.8 Issuer to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 13.9 Disclaimer of Responsibility for
Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 13.10 Return of Funds Deposited for
Redemption of Converted Securities . . . . . . . . . . . . . . . . . . 100

ARTICLE FOURTEEN

SUBORDINATION

Section 14.1 Securities Subordinated to Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

___________

* This Table of Contents is not part of the Indenture.

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Section 14.2 Reliance on Certificate of Liquidating
Agent; Further Evidence as to
Ownership of Senior Indebtedness . . . . . . . . . . . . . . . . . . . 104
Section 14.3 Payment Permitted If No Default . . . . . . . . . . . . . . . . . . . . . 104
Section 14.4 Disputes with Holders of Certain
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 14.5 Trustee Not Charged with Knowledge
of Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 14.6 Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . 106
Section 14.7 Rights of Trustee as Holder of
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 14.8 Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . 106
Section 14.9 Subordination Rights Not Impaired
by Acts or Omissions of the Issuer
or Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . 106
Section 14.10 Trustee Not Fiduciary for Holders
of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 107

TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

___________

* This Table of Contents is not part of the Indenture.

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<PAGE> 10

THIS SENIOR SUBORDINATED INDENTURE, dated as of __________,
1994 between SERVICE CORPORATION INTERNATIONAL, a Texas corporation (the
"Issuer"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as trustee (the
"Trustee"),

W I T N E S S E T H:

WHEREAS, the Issuer has duly authorized the issue from time to
time of its unsecured senior subordinated debentures, notes or other evidences
of indebtedness to be issued in one or more series (the "Securities") up to
such principal amount or amounts as may from time to time be authorized in
accordance with the terms of this Indenture;

WHEREAS, the Issuer has duly authorized the execution and
delivery of this Indenture to provide, among other things, for the
authentication, delivery and administration of the Securities; and

WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been undertaken and
completed;

NOW, THEREFORE:

In consideration of the premises and the purchases of the
Securities by the Holders thereof, the Issuer and the Trustee mutually covenant
and agree for the equal and proportionate benefit of the respective Holders
from time to time of the Securities as follows:

ARTICLE ONE

DEFINITIONS

Section 1.1 For all purposes of this Indenture and of any
indenture supplemental hereto, the following terms shall have the respective
meanings specified in this Section 1.1 (except as otherwise expressly provided
or unless the context otherwise clearly requires). All other terms used in
this Indenture that are defined in the Trust Indenture Act of 1939, including
terms defined therein by reference to the Securities Act of 1933, shall have
the meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture (except as herein
otherwise expressly provided or unless the context otherwise clearly requires).

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<PAGE> 11
All accounting terms used herein and not expressly defined
shall have the meanings assigned to such terms in accordance with generally
accepted accounting principles, and the term "generally accepted accounting
principles" means such accounting principles as are generally accepted at the
date of execution and delivery of this Indenture.

The words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The expressions "date of this
Indenture", "date hereof", "date as of which this Indenture is dated" and "date
of execution and delivery of this Indenture" and other expressions of similar
import refer to the effective date of the original execution and delivery of
this Indenture, viz. ___________, 1994.

The terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular.

"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 the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.

"Associated Rights" means any rights to purchase shares of the
Issuer's capital stock or other securities that are associated with any class
of stock constituting Common Stock for purposes hereof if at the time of the
issuance thereof such rights are not separable from any class of stock except
upon the occurrence of a contingency, whether such rights exist at the date of
the execution hereof or are thereafter issued by the Company as a dividend on
any such class of stock or otherwise.

"Authenticating Agent" shall have the meaning set forth in
Section 6.14.

"Bankruptcy Code" means the United States Bankruptcy Code, 11
United States Code Sec. 101 et seq., or any successor statute thereto.

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<PAGE> 12

"Board of Directors" means either the Board of Directors of
the Issuer or any committee of such Board duly authorized to act on its behalf.

"Board Resolution" means one or more resolutions, certified by
the secretary or an assistant secretary of the Issuer to have been duly adopted
or consented to by the Board of Directors and to be in full force and effect.

"Business Day" means, with respect to any Security, a day that
(a) in the Place of Payment (or in any of the Places of Payment, if more than
one) in which amounts are payable, as specified in the form of such Security,
and (b) in the city in which the Corporate Trust Office is located, is not a
day on which banking institutions are authorized or required by law or
regulation to close.

"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution and delivery of this Indenture
such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act of 1939, then the body performing such duties on
such date.

"Common Stock" means the common stock, par value $1.00 per
share, of the Issuer as the same exists at the date of execution and delivery
of this Indenture or other capital stock of the Issuer into which such common
stock is reclassified or changed from time to time.

"Conversion Agent" shall have the meaning set forth in Section
3.2.

"Conversion Price" shall have the meaning set forth in Section
13.4.

"Corporate Trust Office" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular
time, be principally administered, which office is, at the date as of which
this Indenture is dated, located in Houston, Texas, except that with respect to
the presentation of Securities for payment, for conversion or for registration
of transfer and exchange, such term shall also mean the office of the Trustee's
agent in the Borough of Manhattan, the City and State of New York, at which at
any particular time its corporate agency business shall be conducted.

"Date of Conversion" shall have the meaning set forth in
Section 13.2.

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<PAGE> 13
"Depositary" means, with respect to the Securities of any
series issuable or issued in the form of one or more Global Securities, the
Person designated as Depositary by the Issuer pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and, thereafter "Depositary" shall mean or
include each Person who is then a Depositary hereunder, and, if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Global Securities of such series.

"Event of Default" means any event or condition specified as
such in Section 5.1.

"Global Security" means a Security evidencing all or a part of
a series of Securities issued to the Depositary for such series in accordance
with Section 2.3 and bearing the legend prescribed in Section 2.4.

"Holder", "Holder of Securities", "Securityholder" or other
similar terms mean, in the case of any Security, the Person in whose name such
Security is registered in the security register kept by the Issuer for that
purpose in accordance with the terms hereof.

"Indebtedness" means, with respect to any Person,

(a) (i) the principal of and interest and premium,
if any, on indebtedness for money borrowed of such Person
evidenced by bonds, notes, debentures or similar obligations,
including any guaranty by such Person of any indebtedness for
money borrowed of any other Person, whether any such
indebtedness or guaranty is outstanding on the date of this
Indenture or is thereafter created, assumed or incurred, (ii)
the principal of and interest and premium, if any, on
indebtedness for money borrowed, incurred, assumed or
guaranteed by such Person in connection with the acquisition
by it or any of its subsidiaries of any other businesses,
properties or other assets and (iii) lease obligations which
such Person capitalizes in accordance with Statement of
Financial Accounting Standards No. 13 promulgated by the
Financial Accounting Standards Board or such other generally
accepted accounting principles as may be from time to time in
effect;

(b) any other indebtedness of such Person, including
any indebtedness representing the deferred

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<PAGE> 14

and unpaid balance of the purchase price of any property or
interest therein, including any such balance that constitutes
a trade account payable, and any guaranty, endorsement or
other contingent obligation of such Person in respect of any
indebtedness of another, which is outstanding on the date of
this Indenture or is thereafter created, assumed or incurred
by such Person; and

(c) any amendments, modifications, refundings,
renewals or extensions of any indebtedness or obligation
described as Indebtedness in clause (a) or (b) above.

"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, including, for all purposes of this instrument and any
such supplement, the provisions of the Trust Indenture Act of 1939 that are
deemed to be a part of and govern this instrument and any such supplement,
respectively, and shall include the forms and terms of particular series of
Securities established as contemplated hereunder.

The term "interest" means, when used with respect to
non-interest bearing Securities (including, without limitation, any Original
Issue Discount Security which by its terms bears interest only after maturity
or upon default in any other payment due on such Security), interest payable
after maturity (whether at stated maturity, upon acceleration or redemption or
otherwise) or after the date, if any, on which the Issuer becomes obligated to
acquire a Security, whether upon conversion, by purchase or otherwise.

"Issuer" means (except as otherwise provided in Section 6.8)
Service Corporation International, a Texas corporation, and, subject to Article
Nine, its successors and assigns.

"Issuer Order" means a written statement, request or order of
the Issuer which is signed in its name by the chairman of the Board of
Directors, the president, any vice president or the treasurer of the Issuer.

"Last Sale Price" shall have the meaning set forth in Section
13.3.

"Officer's Certificate", when used with respect to the Issuer,
means a certificate signed by the chairman of the Board of Directors, the
president, or any vice president and by the treasurer, any assistant treasurer,
the controller, any

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<PAGE> 15
assistant controller, the secretary or any assistant secretary of the Issuer.
Each such certificate shall include the statements provided for in Section
11.5, if and to the extent required by the provisions of such Section 11.5.
One of the officers signing any Officer's Certificate given pursuant to Section
4.3 shall be the principal executive, financial or accounting officer of the
Issuer.

"Opinion of Counsel" means an opinion in writing signed by the
general counsel of the Issuer or by such other legal counsel who may be an
employee of or counsel to the Issuer and who shall be satisfactory to the
Trustee. Each such opinion shall include the statements provided for in
Section 11.5, if and to the extent required by the provisions of such Section
11.5.

The term "original issue date" of any Security (or portion
thereof) means the earlier of (a) the date of such Security or (b) the date of
any Security (or portion thereof) for which such Security was issued (directly
or indirectly) on registration of transfer, exchange or substitution.

The term "original issue discount" of any debt security,
including any Original Issue Discount Security, means the difference between
the principal amount of such debt security and the initial issue price of such
debt security (as set forth in the case of an Original Issue Discount Security
on the face of such Security).

"Original Issue Discount Security" means any Security that
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof pursuant to
Section 5.1.

"Outstanding" (except as otherwise provided in Section 6.8),
when used with reference to Securities, shall, subject to the provisions of
Section 7.4, mean, as of any particular time, all Securities authenticated and
delivered by the Trustee under this Indenture, except:

(a) Securities theretofore cancelled by the Trustee
or delivered to the Trustee for cancellation;

(b) Securities (other than Securities of any series
as to which the provisions of Article Ten hereof shall not be
applicable), or portions thereof, for the payment or
redemption of which moneys or U.S. Government Obligations (as
provided for in Section 10.1) in the necessary amount shall
have been deposited in trust with the Trustee or with any
Paying

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<PAGE> 16

Agent (other than the Issuer) or shall have been set aside,
segregated and held in trust by the Issuer for the Holders of
such Securities (if the Issuer shall act as its own Paying
Agent), provided that, if such Securities, or portions
thereof, are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as herein
provided, or provision satisfactory to the Trustee shall have
been made for giving such notice;

(c) Securities which shall have been paid or in
substitution for which other Securities shall have been
authenticated and delivered pursuant to the terms of Section
2.9 (except with respect to any such Security as to which
proof satisfactory to the Trustee is presented that such
Security is held by a Person in whose hands such Security is a
legal, valid and binding obligation of the Issuer); and

(d) Securities converted into Common Stock pursuant
hereto and, for purposes of selection for redemption,
Securities not deemed Outstanding pursuant to Section 12.2.

In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
the principal amount of an Original Issue Discount Security that shall be
deemed to be Outstanding for such purposes shall be the portion of the
principal amount thereof that would be due and payable as of the date of such
determination (as certified by the Issuer to the Trustee) upon a declaration of
acceleration of the maturity thereof pursuant to Section 5.1.

"Paying Agent" shall have the meaning set forth in Section 3.2.

"Periodic Offering" means an offering of Securities of a
series from time to time, the specific terms of which Securities, including,
without limitation, the rate or rates of interest, if any, thereon, the stated
maturity or maturities thereof and the redemption and conversion provisions, if
any, with respect thereto, are to be determined by the Issuer or its agents
upon the issuance of such Securities.

"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.

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<PAGE> 17
"Place of Payment", when used with respect to the Securities
of any series, means the place or places where the principal of and interest,
if any, on the Securities of such series are payable as determined in
accordance with Section 2.3.

The term "principal" of a debt security, including any
Security, means the amount (including, without limitation, if and to the extent
applicable, any premium and, in the case of an Original Issue Discount
Security, any accrued original issue discount, but excluding interest) that is
payable with respect to such debt security as of any date and for any purpose
(including, without limitation, in connection with any sinking fund, upon any
redemption at the option of the Issuer, upon any purchase or exchange at the
option of the Issuer or the holder of such debt security and upon any
acceleration of the maturity of such debt security).

The term "principal amount" of a debt security, including any
Security, means the principal amount as set forth on the face of such debt
security.

The term "record date" shall have the meaning set forth in
Section 2.7.

"Registrar" shall have the meaning set forth in Section 3.2.

"Responsible Officer", when used with respect to the Trustee,
means any officer assigned by the Trustee to administer its corporate trust
matters.

"Security" or "Securities" (except as otherwise provided in
Section 6.8) has the meaning stated in the first recital of this Indenture or,
as the case may be, securities that have been authenticated and delivered
pursuant to this Indenture.

"Senior Indebtedness" means Indebtedness of the Issuer
outstanding at any time except (a) any Indebtedness of the Issuer that pursuant
to its terms or the terms of any agreement relating thereto or by operation of
law is subordinate or junior in right of payment to any other Indebtedness of
the Issuer, provided that no Indebtedness of the Issuer shall be deemed to be
subordinate to any other Indebtedness of the Issuer solely by virtue of any
such other Indebtedness being secured or otherwise having the benefit of any
lien or security interest, (b) any Indebtedness as to which, by the terms of
the instrument creating or evidencing the same, it is provided that such
Indebtedness is not senior in right of payment to the

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<PAGE> 18

Securities, (c) the Securities, (d) the Issuer's subordinated indebtedness, (e)
any Indebtedness of the Issuer to a wholly owned Subsidiary of the Issuer, (f)
interest accruing after the filing of a petition initiating certain bankruptcy
or insolvency proceedings unless such interest is an allowed claim enforceable
against the Issuer in a proceeding under federal or state bankruptcy laws and
(g) trade accounts payable.

"Subsidiary" means any corporation of which the Issuer, or the
Issuer and one or more Subsidiaries, or any one or more Subsidiaries, directly
or indirectly own voting securities entitling any one or more of the Issuer and
its Subsidiaries to elect a majority of the directors of such corporation,
either at all times or so long as there is no default or contingency which
permits the holders of any other class or classes of securities to vote for the
election of one or more directors.

"Trading Day" shall have the meaning set forth in Section 13.3.

"Trust Indenture Act of 1939" (except as otherwise provided in
Sections 8.1, 8.2 and 13.5) means the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990, as in force at the date as of which
this Indenture is originally executed.

"Trustee" means the Person identified as "Trustee" in the
first paragraph hereof and, subject to the provisions of Article Six, shall
also include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and, if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any series
shall mean the trustee with respect to the Securities of such series.

"U.S. Government Obligations" shall have the meaning set forth
in Section 10.1(B).

The term "vice president", when used with respect to the
Issuer or the Trustee, means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".

"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with generally accepted financial practice or as
otherwise provided in the terms of such series of Securities.

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<PAGE> 19
ARTICLE TWO

SECURITIES

Section 2.1 Forms Generally. The Securities of each series
shall be substantially in such form (not inconsistent with this Indenture) as
shall be established by or pursuant to one or more Board Resolutions (as set
forth in a Board Resolution or, to the extent established pursuant to rather
than set forth in a Board Resolution, an Officer's Certificate detailing such
establishment) or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have imprinted or
otherwise reproduced thereon such legend or legends or endorsements, not
inconsistent with the provisions of this Indenture, as may be required to
comply with any law or with any rules or regulations pursuant thereto, or with
any rules of any securities exchange or to conform to general usage, all as may
be determined by the officers executing such Securities, as evidenced by their
execution of such Securities.

The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Securities may
be listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.

Section 2.2 Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication on all Securities shall be
substantially as follows:

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

TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee

By___________________________
Authorized Signatory

If at any time there shall be an Authenticating Agent
appointed with respect to any series of Securities, then the Securities of such
series shall bear, in addition to the Trustee's certificate of authentication,
an alternate certificate of authentication which shall be substantially as
follows:

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<PAGE> 20

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

TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee

By_____________________________
as Authenticating Agent

By_____________________________
Authorized Signatory

Section 2.3 Amount Unlimited; Issuable in Series. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.

The Securities may be issued in one or more series and the
Securities of each such series shall rank equally and pari passu with the
Securities of each other series, but all Securities issued hereunder shall be
subordinate and junior in right of payment, to the extent and in the manner set
forth in Article Fourteen, to all Senior Indebtedness. There shall be
established in or pursuant to one or more Board Resolutions (and, to the extent
established pursuant to rather than set forth in a Board Resolution, in an
Officer's Certificate detailing such establishment) or established in one or
more indentures supplemental hereto, prior to the initial issuance of
Securities of any series:

(1) the designation of the Securities of the
series, which shall distinguish the Securities of the series
from the Securities of all other series;

(2) whether the Securities will be convertible
into Common Stock (or cash in lieu thereof) and, if so, the
terms and conditions upon which such conversion will be
effected including the initial Conversion Price and any
adjustments thereto in addition to or different from those set
forth in Section 13.4, the conversion period and other
provisions in addition to or in lieu of those set forth
herein;

(3) any limit upon the aggregate principal amount
of the Securities of the series that may be authenticated and
delivered under this Indenture

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<PAGE> 21
(except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu
of, other Securities of the series pursuant to Section 2.8,
2.9, 2.11, 8.5, 12.3 or 13.2);

(4) the date or dates on which the principal of
the Securities of the series is payable;

(5) the rate or rates at which the Securities of
the series shall bear interest, if any, the date or dates from
which any such interest shall accrue, on which any such
interest shall be payable and on which a record shall be taken
for the determination of Holders to whom any such interest is
payable or the method by which such rate or rates or date or
dates shall be determined or both;

(6) the place or places where and the manner in
which the principal of and any interest on Securities of the
series shall be payable and the office or agency for the
Securities of the series maintained by the Issuer pursuant to
Section 3.2 (if other than as provided in Section 3.2);

(7) any provisions relating to the issuance of
Securities of such series at an original issue discount
(including, without limitation, the issue price thereof, the
rate or rates at which such original issue discount shall
accrue, if any, and the date or dates from or to which or
period or periods during which such original issue discount
shall accrue at such rate or rates);

(8) the right, if any, of the Issuer to redeem,
purchase or repay Securities of the series, in whole or in
part, at its option and the period or periods within which,
the price or prices (or the method by which such price or
prices shall be determined or both) at which, the form or
method of payment therefor if other than in cash and any terms
and conditions upon which and the manner in which (if
different from the provisions of Article Twelve) Securities of
the series may be so redeemed, purchased or repaid, in whole
or in part, pursuant to any sinking fund or otherwise;

(9) the obligation, if any, of the Issuer to
redeem, purchase or repay Securities of the series, in whole
or in part, pursuant to any mandatory redemption, sinking fund
or analogous provisions or at

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<PAGE> 22

the option of a Holder thereof and the period or periods
within which, the price or prices (or the method by which such
price or prices shall be determined or both) at which, the
form or method of payment therefor if other than in cash and
any terms and conditions upon which and the manner in which
(if different from the provisions of Article Twelve)
Securities of the series shall be redeemed, purchased or
repaid, in whole or in part, pursuant to such obligation;

(10) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which
Securities of the series shall be issuable;

(11) if other than the principal amount thereof, the
portion of the principal amount of Securities of the series
which shall be payable upon acceleration of the maturity
thereof;

(12) whether the Securities of the series will be
issuable as Global Securities;

(13) if the Securities of such series are to be
issuable in definitive form (whether upon original issue or
upon exchange of a temporary Security of such series) only
upon receipt of certain certificates or other documents or
satisfaction of other conditions, the form and terms of such
certificates, documents or conditions;

(14) any trustees, depositaries, authenticating or
paying agents, transfer agents or registrars, conversion
agents or any other agents with respect to the Securities of
such series;

(15) any deleted, modified or additional events of
default or remedies or any additional covenants with respect
to the Securities of such series;

(16) whether the provisions of Section 10.1(C) will
be applicable to Securities of such series;

(17) if the amounts of payments of principal of and
interest on the Securities of such series are to be determined
with reference to an index, the manner in which such amounts
shall be determined; and

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<PAGE> 23
(18) any other terms of the series (which terms
shall not be inconsistent with the provisions of this
Indenture).

All Securities of any one series shall be substantially
identical, except as to denomination and except as may otherwise be provided by
or pursuant to the Board Resolution or Officer's Certificate referred to above
or as set forth in any such indenture supplemental hereto. All Securities of
any one series need not be issued at the same time and may be issued from time
to time, consistent with the terms of this Indenture, if so provided by or
pursuant to such Board Resolution, such Officer's Certificate or in any such
indenture supplemental hereto.

Any such Board Resolution or Officer's Certificate referred to
above with respect to Securities of any series filed with the Trustee on or
before the initial issuance of the Securities of such series shall be
incorporated herein by reference with respect to Securities of such series and
shall thereafter be deemed to be a part of this Indenture for all purposes
relating to Securities of such series as fully as if such Board Resolution or
Officer's Certificate were set forth herein in full.

Section 2.4 Authentication and Delivery of Securities. The
Issuer may deliver Securities of any series executed by the Issuer to the
Trustee for authentication together with the applicable documents referred to
below in this Section 2.4, and the Trustee shall thereupon authenticate and
deliver such Securities to, or upon the order of, the Issuer (contained in the
Issuer Order referred to below in this Section 2.4) or pursuant to such
procedures acceptable to the Trustee and to such recipients as may be specified
from time to time by an Issuer Order. The maturity date, original issue date,
interest rate, if any, and any other terms of the Securities of such series
shall be determined by or pursuant to such Issuer Order and procedures. If
provided for in such procedures, such Issuer Order may authorize authentication
and delivery pursuant to oral instructions from the Issuer or its duly
authorized agent, which instructions shall be promptly confirmed in writing.
In authenticating the Securities of such series and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive (in the case of subparagraphs (2), (3) and
(4) below only at or before the time of the first request of the Issuer to the
Trustee to authenticate Securities of such series) and (subject to Section 6.1)
shall be fully protected in relying upon, unless and until such documents have
been superseded or revoked:

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<PAGE> 24

(1) an Issuer Order requesting such authentication
and setting forth delivery instructions if the Securities of
such series are not to be delivered to the Issuer, provided
that, with respect to Securities of a series subject to a
Periodic Offering, (a) such Issuer Order may be delivered by
the Issuer to the Trustee prior to the delivery to the Trustee
of such Securities for authentication and delivery, (b) the
Trustee shall authenticate and deliver Securities of such
series for original issue from time to time, in an aggregate
principal amount not exceeding the aggregate principal amount
established for such series, pursuant to an Issuer Order or
pursuant to procedures acceptable to the Trustee as may be
specified from time to time by an Issuer Order, (c) the
maturity date or dates, original issue date or dates, interest
rate or rates, if any, and any other terms of Securities of
such series shall be determined by an Issuer Order or pursuant
to such procedures, (d) if provided for in such procedures,
such Issuer Order may authorize authentication and delivery
pursuant to telecommunication or electronic instructions from
the Issuer or its duly authorized agent or agents, and (e)
after the original issuance of the first Security of such
series to be issued, any separate request by the Issuer that
the Trustee authenticate Securities of such series for
original issuance will be deemed to be a certification by the
Issuer that it is in compliance with all conditions precedent
provided for in this Indenture relating to the authentication
and delivery of such Securities;

(2) the Board Resolution, Officer's Certificate or
executed supplemental indenture referred to in Sections 2.1
and 2.3 by or pursuant to which the form or forms and terms of
the Securities of such series were established;

(3) an Officer's Certificate setting forth the form
or forms and terms of the Securities stating that the form or
forms and terms of the Securities have been established
pursuant to Sections 2.1 and 2.3 and comply with this
Indenture and covering such other matters as the Trustee may
reasonably request; and

(4) at the option of the Issuer, either an Opinion
of Counsel, or a letter from legal counsel addressed to the
Trustee permitting it to rely on an Opinion of Counsel,
substantially to the effect that:

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<PAGE> 25
(A) in the case of an underwritten offering,
the Securities of such series are in the form or
forms contemplated by this Indenture and have been
duly and validly authorized as contemplated by this
Indenture;

(B) in the case of an offering that is not
underwritten, the Securities of such series are in
the form or forms contemplated by this Indenture,
certain terms of the Securities of such series have
been established pursuant to a Board Resolution, an
Officer's Certificate or a supplemental indenture in
accordance with this Indenture, and when such other
terms as are to be established pursuant to procedures
set forth in an Issuer Order shall have been
established, all such terms will have been duly
authorized by the Issuer and will have been
established in conformity with the provisions of this
Indenture;

(C) when the Securities of such series have
been executed by the Issuer and authenticated by the
Trustee in accordance with the provisions of this
Indenture and delivered against payment therefor by
the purchasers thereof, they will be valid and
legally binding obligations of the Issuer,
enforceable in accordance with their respective
terms, and will be entitled to the benefits of this
Indenture; and

(D) to such counsel's knowledge after the
inquiry indicated therein, the execution and delivery
by the Issuer of, and the performance by the Issuer
of its obligations under, the Securities of such
series will not contravene any provision of
applicable law or the articles of incorporation or
by-laws of the Issuer or any agreement or other
instrument binding upon the Issuer or any of its
Subsidiaries that is material to the Issuer and its
Subsidiaries, considered as one enterprise, or any
judgment, order or decree of any governmental agency
or any court having jurisdiction over the Issuer or
any Subsidiary, and no consent, approval or
authorization of any governmental body or agency is
required for the performance by the Issuer of its
obligations under the Securities, except such as are
specified and have been obtained and such as may be
required by the securities or

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<PAGE> 26

blue sky laws of the various states in connection
with the offer and sale of the Securities.

In rendering such opinions, such counsel may qualify any
opinions as to enforceability by stating that such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium and
other similar laws affecting the rights and remedies of creditors and is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the State of Texas and the federal law of the United States, upon opinions
of other counsel (copies of which shall be delivered to the Trustee), who shall
be counsel reasonably satisfactory to the Trustee, in which case the opinion
shall state that such counsel believes that both such counsel and the Trustee
are entitled so to rely. Such counsel may also state that, insofar as such
opinion involves factual matters, such counsel has relied, to the extent such
counsel deems proper, upon certificates of officers of the Issuer and its
Subsidiaries and certificates of public officials.

The Trustee shall have the right to decline to authenticate
and deliver any Securities of any series under this Section 2.4 if the Trustee,
being advised by counsel, determines that such action may not lawfully be taken
by the Issuer or if the Trustee in good faith by its board of directors or
board of trustees, executive committee or a trust committee of directors or
trustees or Responsible Officers shall determine that such action would expose
the Trustee to personal liability to existing Holders or would adversely affect
the Trustee's own rights, duties or immunities under the Securities, this
Indenture or otherwise.

If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Issuer shall execute and the Trustee shall, in accordance
with this Section 2.4 and the Issuer Order with respect to such series,
authenticate and deliver one or more Global Securities that (i) shall represent
and shall be denominated in an amount equal to the aggregate principal amount
of all of the Securities of such series to be issued in the form of Global
Securities and not yet cancelled, (ii) shall be registered in the name of the
Depositary for such Global Security or Securities or the nominee of such
Depositary, (iii) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instructions, and (iv) shall bear a legend
substantially to the following effect:

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<PAGE> 27
"Unless and until it is exchanged in whole or in part for Securities in
definitive registered form, this Security may not be transferred except as a
whole by the Depositary to the nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary."

Each Depositary designated pursuant to Section 2.3 must, at
the time of its designation and at all times while it serves as Depositary, be
a clearing agency registered under the Securities Exchange Act of 1934 and any
other applicable statute or regulation.

Section 2.5 Execution of Securities. The Securities shall be
signed on behalf of the Issuer by the chairman of the Board of Directors, the
president, any vice president or the treasurer of the Issuer, under its
corporate seal which may, but need not, be attested by its secretary or one of
its assistant secretaries. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of the seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.

In case any officer of the Issuer who shall have signed any of
the Securities shall cease to be such officer before the Security so signed
shall be authenticated and delivered by the Trustee or disposed of by the
Issuer, such Security nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Security had not ceased to be
such officer of the Issuer; and any Security may be signed on behalf of the
Issuer by such persons as, at the actual date of the execution of such
Security, shall be the proper officers of the Issuer, although at the date of
the execution and delivery of this Indenture any such person was not such an
officer.

Section 2.6 Certificate of Authentication. Only such
Securities as shall bear thereon a certificate of authentication substantially
in the form hereinbefore recited, executed by the Trustee by the manual
signature of one of its authorized signatories, or its Authenticating Agent,
shall be entitled to the benefits of this Indenture or be valid or obligatory
for any purpose. The execution of such certificate by the Trustee, or its
Authenticating Agent, upon any Security

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<PAGE> 28

executed by the Issuer shall be conclusive evidence that the Security so
authenticated has been duly authenticated and delivered hereunder and that the
Holder is entitled to the benefits of this Indenture. Each reference in this
Indenture to authentication by the Trustee includes authentication by an agent
appointed pursuant to Section 6.14.

Section 2.7 Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable in registered form
in denominations established as contemplated by Section 2.3 or, with respect to
the Securities of any series, if not so established, in denominations of $1,000
and any integral multiple thereof. The Securities of each series shall be
numbered, lettered or other distinguished in such manner or in accordance with
such plan as the officers of the Issuer executing the same may determine with
the approval of the Trustee, as evidenced by the execution and authentication
thereof.

Each Security shall be dated the date of its authentication.
The Securities of each series shall bear interest, if any, from the date, and
such interest, if any, shall be payable on the dates, established as
contemplated by Section 2.3.

The Person in whose name any Security of any series is
registered at the close of business on any record date applicable to a
particular series with respect to any interest payment date for such series
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Security
subsequent to the record date and prior to such interest payment date, except
if and to the extent the Issuer shall default in the payment of the interest
due on such interest payment date for such series, in which case such defaulted
interest shall be paid to the Persons in whose names Outstanding Securities for
such series are registered (a) at the close of business on a subsequent record
date (which shall be not less than five Business Days prior to the date of
payment of such defaulted interest) established by notice given by mail by or
on behalf of the Issuer to the Holders of Securities not less than 15 days
preceding such subsequent record date or (b) as determined by such other
procedure as is mutually acceptable to the Issuer and the Trustee. The term
"record date" as used with respect to any interest payment date (except a date
for payment of defaulted interest) for the Securities of any series shall mean
the date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.3, or, if no such date is so
established, if such interest payment date is the first day of a calendar
month, the fifteenth day of the

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next preceding calendar month or, if such interest payment date is the
fifteenth day of a calendar month, the first day of such calendar month,
whether or not such record date is a Business Day.

Section 2.8 Registration, Transfer and Exchange. The Issuer
will keep at the office of each Registrar for each series of Securities a
register or registers in which, subject to such reasonable regulations as it
may prescribe, it will provide for the registration of Securities of each
series and the registration of transfer of Securities of such series. Each
such register shall be in written form in the English language or in any other
form capable of being converted into such form within a reasonable time. At
all reasonable times such register or registers shall be open for inspection
and available for copying by the Trustee.

Upon due presentation for registration of transfer of any
Security of any series at the office of any Registrar, the Issuer shall execute
and the Trustee shall authenticate and deliver in the name of the transferee or
transferees a new Security or Securities of the same series, maturity date,
interest rate, if any, and original issue date in authorized denominations for
a like aggregate principal amount.

All Securities presented for registration of transfer shall
(if so required by the Issuer or the Trustee) be duly endorsed by, or be
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Issuer and the Trustee duly executed by, the Holder or his
attorney duly authorized in writing.

At the option of the Holder thereof, Securities of any series
(other than a Global Security, except as set forth below) may be exchanged for
a Security or Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Securities to be
exchanged at the office of the Registrar.

The Issuer may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer of Securities. No service charge shall be made for
any such transaction or for any exchange of Securities of any series as
contemplated by the immediately preceding paragraph.

The Issuer shall not be required to exchange or register a
transfer of (a) any Securities of any series for a period of 15 days next
preceding the first mailing or publication of notice of redemption of
Securities of such series to be

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redeemed, (b) any Securities selected, called or being called for redemption,
in whole or in part, except, in the case of any Security to be redeemed in
part, the portion thereof not so to be redeemed or (c) any Security if the
Holder thereof has exercised his right, if any, to require the Issuer to
repurchase such Security in whole or in part, except the portion of such
Security not required to be repurchased.

Notwithstanding any other provision of this Section 2.8,
unless and until it is exchanged in whole or in part for Securities in
definitive registered form, a Global Security representing all or a part of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary.

If at any time the Depositary for any Securities of a series
represented by one or more Global Securities notifies the Issuer that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary for such Securities shall no longer be eligible under
Section 2.4, the Issuer shall appoint a successor Depositary with respect to
such Securities. If a successor Depositary for such Securities is not
appointed by the Issuer within 90 days after the Issuer receives such notice or
becomes aware of such ineligibility, the Issuer's election pursuant to Section
2.3 that such Securities be represented by one or more Global Securities shall
no longer be effective and the Issuer shall execute, and the Trustee, upon
receipt of an Issuer Order for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver Securities of such
series in definitive registered form, in any authorized denominations, in an
aggregate principal amount equal to the principal amount of the Global Security
or Securities representing such Securities in exchange for such Global Security
or Securities.

The Issuer may at any time and in its sole discretion
determine that the Securities of any series issued in the form of one or more
Global Securities shall no longer be represented by a Global Security or
Securities. In such event the Issuer shall execute, and the Trustee, upon
receipt of an Officer's Certificate for the authentication and delivery of
definitive Securities of such series, shall authenticate and deliver,
Securities of such series in definitive registered form, in any authorized
denominations, in an aggregate principal amount

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equal to the principal amount of the Global Security or Securities representing
such Securities, in exchange for such Global Security or Securities.

If specified by the Issuer pursuant to Section 2.3 with
respect to Securities represented by a Global Security, the Depositary for such
Global Security may surrender such Global Security in exchange in whole or in
part for Securities of the same series in definitive registered form on such
terms as are acceptable to the Issuer and such Depositary. Thereupon, the
Issuer shall execute, and the Trustee shall authenticate and deliver, without
service charge,

(i) to the Person specified by such Depositary, a
new Security or Securities of the same series, of any
authorized denominations as requested by such Person, in an
aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Global Security; and

(ii) to such Depositary a new Global Security in a
denomination equal to the difference, if any, between the
principal amount of the surrendered Global Security and the
aggregate principal amount of Securities authenticated and
delivered pursuant to clause (i) above.

Upon the exchange of a Global Security for Securities in
definitive registered form in authorized denominations, such Global Security
shall be cancelled by the Trustee or an agent of the Issuer or the Trustee.
Securities in definitive registered form issued in exchange for a Global
Security pursuant to this Section 2.8 shall be registered in such names and in
such authorized denominations as the Depositary for such Global Security,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee or an agent of the Issuer or the Trustee. The
Trustee or such agent shall deliver at its office such Securities to or as
directed by the Persons in whose names such Securities are so registered.

All Securities issued upon any transfer or exchange of
Securities shall be valid and legally binding obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such transfer or exchange.

Section 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become
mutilated, defaced or be destroyed, lost or

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stolen, the Issuer in its discretion may execute, and upon the written request
of any officer of the Issuer, the Trustee, in the absence of notice to the
Trustee that such Security has been acquired by a bona fide purchaser, shall
authenticate and deliver a new Security of the same series, maturity date,
interest rate, if any, and original issue date, bearing a number or other
distinguishing symbol not contemporaneously outstanding, in exchange and
substitution for the mutilated or defaced Security, or in lieu of and in
substitution for the Security so destroyed, lost or stolen. In every case the
applicant for a substitute Security shall furnish to the Issuer and to the
Trustee and any agent of the Issuer or the Trustee such security or indemnity
as may be required by the Trustee to indemnity and defend and to save each of
the Trustee and the Issuer harmless and, in every case of destruction, loss or
theft, evidence to their satisfaction of the destruction, loss or theft of such
Security and of the ownership thereof and in the case of mutilation or
defacement, shall surrender the Security to the Trustee or such agent.

Upon the issuance of any substitute Security, the Issuer may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee or its agent) connected
therewith. In case any Security which has matured or is about to mature or has
been called for redemption in full or is being surrendered for conversion in
full shall become mutilated or defaced or be destroyed, lost or stolen, the
Issuer may instead of issuing a substitute Security, pay or authorize the
payment of the same or the conversion of such Security (without surrender
thereof except in the case of a mutilated or defaced Security), if the
applicant for such payment or conversion shall furnish to the Issuer and to the
Trustee and any agent of the Issuer or the Trustee such security or indemnity
as any of them may require to hold each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Issuer and
the Trustee and any agent of the Issuer or the Trustee evidence to the
Trustee's satisfaction of the destruction, loss or theft of such Security and
of the ownership thereof.

Every substitute Security of any series issued pursuant to the
provisions of this Section 2.9 by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual obligation
of the Issuer, whether or not the destroyed, lost or stolen Security shall be
at any time enforceable by anyone and shall be entitled to all the benefits of
(but shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately

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with any and all other Securities of such series duly authenticated and
delivered hereunder. All Securities shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement, payment or conversion of mutilated,
defaced, destroyed, lost or stolen Securities and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement, payment or
conversion of negotiable instruments or other securities without their
surrender.

Section 2.10 Cancellation of Securities; Disposition Thereof.
All Securities surrendered for payment, purchase, redemption, registration of
transfer, exchange or conversion, or for credit against any payment in respect
of a sinking or analogous fund, if surrendered to the Issuer or any agent of
the Issuer or the Trustee or any agent of the Trustee, shall be delivered to
the Trustee or its agent for cancellation or, if surrendered to the Trustee,
shall be cancelled by it; and no Securities shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. The
Trustee or its agent shall dispose of cancelled Securities held by it, or hold
such Securities in accordance with its standard retention policy, and deliver a
certificate of disposition or retention to the Issuer. If the Issuer or its
agent shall acquire any of the Securities, such acquisition shall not operate
as a redemption or satisfaction of the indebtedness represented by such
Securities unless and until the same are delivered to the Trustee or its agent
for cancellation.

Section 2.11 Temporary Securities. Pending the preparation
of definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable in any authorized denomination, and substantially in the form of the
definitive Securities of such series but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by
the execution and authentication thereof. Temporary Securities may contain
such references to any provisions of this Indenture as may be appropriate.
Every temporary Security shall be executed by the Issuer and be authenticated
by the Trustee upon the same conditions and in substantially the same manner,
and with like effect, as the definitive Securities. Without unreasonable delay
the Issuer shall execute and

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shall furnish definitive Securities of such series and thereupon temporary
Securities of such series may be surrendered in exchange therefor without
charge at each office or agency to be maintained by the Issuer for that purpose
pursuant to Section 3.2 and the Trustee shall authenticate and deliver in
exchange for such temporary Securities of such series an equal aggregate
principal amount of definitive Securities of the same series having authorized
denominations. Until so exchanged, the temporary Securities of any series
shall be entitled to the same benefits under this Indenture as definitive
Securities of such series, unless otherwise established pursuant to Section
2.3.

Section 2.12 Computation of Interest. Except as otherwise
specified as contemplated by Section 2.1 for Securities of any series, interest
on the Securities of each series shall be computed on the basis of a 360-day
year of 12 30-day months.

ARTICLE THREE

COVENANTS OF THE ISSUER

Section 3.1 Payment of Principal and Interest. The Issuer
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and interest, if any, on each of the Securities at the place,
at the respective times and in the manner provided in the Securities.

Section 3.2 Office for Notices and Payments, etc. So long as
any of the Securities are Outstanding, the Issuer will maintain in each Place
of Payment, an office or agency where the Securities may be presented for
payment ("Paying Agent"), an office or agency where the Securities may be
presented for registration of transfer and for exchange ("Registrar") and, if
applicable, an office or agency where the Securities may be presented for
conversion ("Conversion Agent") as in this Indenture provided, and an office or
agency where notices and demands to or upon the Issuer in respect of the
Securities or of this Indenture may be served. In case the Issuer shall at any
time fail to maintain any such office or agency, or shall fail to give notice
to the Trustee of any change in the location thereof, presentation may be made
and notice and demand may be served in respect of the Securities or of this
Indenture at the Corporate Trust Office. The Issuer hereby initially
designates the Corporate Trust Office for each such purpose and appoints the
Trustee as Registrar, Paying Agent, Conversion Agent and as the agent upon whom
notices and demands may be served with respect to the Securities.

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Section 3.3 No Interest Extension. In order to prevent any
accumulation of claims for interest after maturity thereof, the Issuer will not
directly or indirectly extend or consent to the extension of the time for the
payment of any claim for interest on any of the Securities and will not
directly or indirectly be a party to or approve any such arrangement by the
purchase or funding of said claims or in any other manner; provided, however,
that this Section 3.3 shall not apply in any case where an extension shall be
made pursuant to a plan proposed by the Issuer to the Holders of all Securities
of any series then Outstanding.

Section 3.4 Appointments to Fill Vacancies in Trustee's
Office. The Issuer, whenever necessary to avoid or fill a vacancy in the
office of the Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.

Section 3.5 Provision as to Paying Agent. (a) If the Issuer
shall appoint a Paying Agent other than the Trustee, it will cause such Paying
Agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 3.5,

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

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

(3) that it will, at any time during the continuance
of any such failure, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by such
Paying Agent.

(b) If the Issuer shall act as its own Paying Agent, it will,
on or before each due date of the principal of or interest, if any, on the
Securities, set aside, segregate and hold in trust for the benefit of the
Holders of the Securities a sum sufficient to pay such principal or interest,
if any, so becoming due and will notify the Trustee of any failure to take such
action and of any failure by the Issuer (or by any other

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obligor under the Securities) to make any payment of the principal of or
interest, if any, on the Securities when the same shall become due and payable.

(c) Anything in this Section 3.5 to the contrary
notwithstanding, the Issuer 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 Trustee all sums held in trust by it, or any Paying
Agent hereunder, as required by this Section 3.5, such sums to be held by the
Trustee upon the trusts herein contained.

(d) Anything in this Section 3.5 to the contrary
notwithstanding, any agreement of the Trustee or any Paying Agent to hold sums
in trust as provided in this Section 3.5 is subject to Sections 10.3 and 10.4.

(e) Whenever the Issuer shall have one or more Paying Agents,
it will, on or before each due date of the principal of or interest, if any, on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal or interest, if any, so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal or interest, if any,
and (unless such Paying Agent is the Trustee) the Issuer will promptly notify
the Trustee of its action or failure so to act.

Section 3.6 Corporate Existence. Subject to, and except as
otherwise provided in, Article Nine, the Issuer will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, and franchise to be a corporation, and will remain qualified as a
foreign corporation in good standing in each jurisdiction wherein the ownership
of its assets or the conduct of its business requires it to he so qualified,
except where the failure to so qualify would not have a material adverse effect
on the Issuer and its Subsidiaries taken as a whole.

Section 3.7 Maintenance of Properties. The Issuer will cause
all properties used or useful in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Issuer may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Issuer from discontinuing the operation or maintenance of

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any of such properties if such discontinuance is, in the judgment of the
Issuer, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Holders.

Section 3.8 Payment of Taxes and Other Claims. The Issuer
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (1) all taxes, assessments and governmental charges levied
or imposed upon the Issuer or any Subsidiary or upon the income, profits or
property of the Issuer or any Subsidiary, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Issuer or any Subsidiary; provided, however, that the Issuer
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity
is being contested in good faith by appropriate proceedings.

Section 3.9 Prohibition on Incurrence of Senior Subordinated
Debt. The Issuer will not incur or suffer to exist Indebtedness that is or
purports to be, pursuant to its terms or the terms of any agreement relating
thereto, senior in right of payment to the Securities and subordinate or junior
in right of payment to any other Indebtedness of the Issuer; provided that no
Indebtedness of the Issuer shall be deemed to be subordinate to any other
Indebtedness of the Issuer solely by virtue of any such other Indebtedness
being secured or otherwise having the benefit of any lien or security interest.

ARTICLE FOUR

SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE

Section 4.1 Issuer to Furnish Trustee Information as to
Names and Addresses of Securityholders. The Issuer and any other obligor on
the Securities covenant and agree that they will furnish or cause to be
furnished to the Trustee a list in such form as the Trustee may reasonably
require of the names and addresses of the Holders of the Securities of each
series as of a date not more than 15 days prior to the time such information is
furnished:

(a) semiannually and not more than 15 days after each
March 1 and September 1; and

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(b) at such other times as the Trustee may request
in writing, within 30 days after receipt by the Issuer of any
such request;

provided that if and so long as the Trustee shall be the Registrar for such
series, such List shall not be required to be furnished.

Section 4.2 Preservation and Disclosure of Securityholders
Lists. (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to it
as provided in Section 4.1, and (ii) received by it in the capacity of
Registrar or Paying Agent for such series, if so acting. The Trustee may
destroy any list furnished to it as provided in Section 4.1 upon receipt of a
new list so furnished.

(b) In case three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to the
Trustee reasonable proof that each such applicant has owned a Security for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
of Securities of a particular series (in which case the applicants must all
hold Securities of such series) or with Holders of all Securities with respect
to their rights under this Indenture or under such Securities, and such
application is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either

(i) afford to such applicants access to the
information preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section 4.2, or

(ii) inform such applicants as to the approximate
number of Holders of Securities of such series or of all
Securities, as the case may be, whose names and addresses
appear in the information preserved at the time by the
Trustee, in accordance with the provisions of subsection (a)
of this Section 4.2, and as to the approximate cost of mailing
to such Securityholders the form of proxy or other
communication, if any, specified in such application.

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If the Trustee shall elect not to afford to such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Securities, as the case may be, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2, a copy of the form of proxy
or other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders of
Securities of such series or of all Securities, as the case may be, or would be
in violation of applicable law. Such written statement shall specify the basis
of such opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met, and shall enter an order so declaring, the Trustee shall mail copies
of such material to all such Securityholders with reasonable promptness after
the entry of such order and the renewal of such tender; otherwise the Trustee
shall be relieved of any obligation or duty to such applicants respecting their
application.

(c) Each and every Holder of Securities, by receiving and
holding the same, agrees with the Issuer and the Trustee that neither the
Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders of Securities in accordance with the provisions of
subsection (b) of this Section 4.2, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under such subsection
(b).

Section 4.3 Reports by the Issuer. The Issuer covenants:

(a) to file with the Trustee, within 15 days after
the Issuer is required to file the same with the Commission,
copies of the annual reports and of

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the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which
the Issuer may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or, if the Issuer is not required to
file information, documents or reports pursuant to either of
such Sections, then to file with the Trustee and the
Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports
which may be required pursuant to Section 13 of the Securities
Exchange Act of 1934 in respect of a debt security listed and
registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;

(b) to file with the Trustee and the Commission, in
accordance with rules and regulations presented from time to
time by the Commission, such additional information, documents
and reports with respect to compliance by the Issuer with the
conditions and covenants provided for in this Indenture as may
be required from time to time by such rules and regulations;

(c) to transmit by mail to the Holders of Securities
within 30 days after the filing thereof with the Trustee, in
the manner and to the extent provided in Section 4.4(c), such
summaries of any information, documents and reports required
to be filed by the Issuer pursuant to subsections (a) and (b)
of this Section 4.3 as may be required to be transmitted to
such Holders by rules and regulations prescribed from time to
time by the Commission; and

(d) furnish to the Trustee, not less than annually, a
brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as
to his knowledge of the Issuer's compliance with all
conditions and covenants under this Indenture. For purposes
of this subsection (d), such compliance shall be determined
without regard to any period of grace or requirement of notice
provided under this Indenture.

Section 4.4 Reports by the Trustee. (a) Within 60 days
after September 15 of each year commencing with the year

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1995, the Trustee shall transmit by mail to the Holders of Securities, as
provided in subsection (c) of this Section 4.4, a brief report dated as of such
September 15 with respect to any of the following events which may have
occurred within the last 12 months (but if no such event has occurred within
such period, no report need be transmitted):

(i) any change to its eligibility under Section
6.9 and its qualification under Section 6.8;

(ii) the creation of, or any material change to, a
relationship specified in paragraph (i) through (x) of Section
6.8(c);

(iii) the character and amount of any advances (and
if the Trustee elects so to state, the circumstances
surrounding the making thereof) made by the Trustee (as such)
which remain unpaid on the date of such report and for the
reimbursement of which it claims or may claim a lien or
charge, prior to that of the Securities of any series, on any
property or funds held or collected by it as Trustee, except
that the Trustee shall not be required (but may elect) to
report such advances if such advances so remaining unpaid
aggregate not more than 1/2 of 1% of the principal amount of
all Securities Outstanding on the date of such report;

(iv) the amount, interest rate, if any, and
maturity date of all other indebtedness owing by the Issuer
(or by any other obligor on the Securities) to the Trustee in
its individual capacity on the date of such report, with a
brief description of any property held as collateral security
therefor, except any indebtedness based upon a creditor
relationship arising in any manner described in Section
6.13(b)(2), (3), (4) or (6);

(v) any change to the property and funds, if any,
physically in the possession of the Trustee (as such) on the
date of such report;

(vi) any additional issue of Securities which the
Trustee has not previously reported; and

(vii) any action taken by the Trustee in the
performance of its duties under this Indenture which it has
not previously reported and which in its opinion materially
affects the Securities, except action in respect of a default,
notice of which has

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been or is to be withheld by it in accordance with the
provisions of Section 5.8.

(b) The Trustee shall transmit to the Securityholders of each
series, as provided in subsection (c) of this Section 4.4, a brief report with
respect to the character and amount of any advances (and if the Trustee elects
so to state, the circumstances surrounding the making thereof) made by the
Trustee, as such, since the date of the last report transmitted pursuant to the
provisions of subsection (a) of this Section 4.4 (or if no such report has yet
been so transmitted, since the date of this Indenture) for the reimbursement of
which it claims or may claim a lien or charge prior to that of the Securities
of such series on property or funds held or collected by it as Trustee and
which it has not previously reported pursuant to this subsection (b), except
that the Trustee shall not be required (but may elect) to report such advances
if such advances remaining unpaid at any time aggregate 10% or less of the
principal amount of all Securities Outstanding at such time, such report to be
transmitted within 90 days after such time.

(i) to all Holders of Securities, as the names
and addresses of such Holders appear upon the registry books
of the Issuer; and

(ii) to all other Persons to whom such reports are
required to be transmitted pursuant to Section 313(c) of the
Trust Indenture Act of 1939.

(d) A copy of each such report shall, at the time of such
transmission to Securityholders, be furnished to the Issuer and be filed by the
Trustee with each stock exchange upon which the Securities of any applicable
series are listed and also with the Commission. The Issuer agrees to notify
the Trustee with respect to any series when and as the Securities of such
series become admitted to trading on any national securities exchange.

ARTICLE FIVE

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON
EVENT OF DEFAULT

Section 5.1 Events of Default. "Event of Default",
wherever used herein with respect to Securities of any series,

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means any one or more of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of
Article Fourteen or otherwise), unless it is either inapplicable to a
particular series or is specifically deleted or modified in or pursuant to the
Board Resolutions or supplemental indenture establishing such series of
Securities or in the form of Security for such series:

(a) default in the payment of any installment of
interest upon any of the Securities of such series as and when
the same shall become due and payable, and continuance of such
default for a period of 30 days; or

(b) default in the payment of the principal of any
of the Securities of such series as and when the same shall
become due and payable either at maturity, upon redemption, by
declaration or otherwise; or

(c) default in the payment or satisfaction of any
sinking fund or other purchase obligation with respect to
Securities of such series, as and when such obligation shall
become due and payable; or

(d) failure on the part of the Issuer duly to
observe or perform any other of the covenants or agreements on
the part of the Issuer in the Securities of such series or in
this Indenture continued for a period of 60 days after the
date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Issuer by
the Trustee by registered mail, or to the Issuer and the
Trustee by the Holders of at least 25 percent in aggregate
principal amount of the Securities of such series then
Outstanding; or

(e) without the consent of the Issuer a court having
jurisdiction shall enter an order for relief with respect to
the Issuer under the Bankruptcy Code or without the consent of
the Issuer a court having jurisdiction shall enter a judgment,
order or decree adjudging the Issuer a bankrupt or insolvent,
or enter an order for relief for reorganization, arrangement,
adjustment or composition of or in respect of the Issuer under
the Bankruptcy Code or applicable state insolvency law and the
continuance of any such judgment, order or decree is unstayed
and in effect for a period of 60 consecutive days; or

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(f) the Issuer shall institute proceedings for entry
of an order for relief with respect to the Issuer under the
Bankruptcy Code or for an adjudication of insolvency, or shall
consent to the institution of bankruptcy or insolvency
proceedings against it, or shall file a petition seeking, or
seek or consent to reorganization, arrangement, composition or
relief under the Bankruptcy Code or any applicable state law,
or shall consent to filing of such petition or to the
appointment of a receiver, custodian, liquidator, assignee,
trustee, sequestrator or similar official of the Issuer or of
substantially all of its property, or the Issuer shall make a
general assignment for the benefit of creditors as recognized
under the Bankruptcy Code; or

(g) default under any bond, debenture, note or other
evidence of Indebtedness for money borrowed by the Issuer or
under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Issuer, whether
such Indebtedness exists on the date hereof or shall hereafter
be created, which default shall have resulted in such
Indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise have become due and
payable, or any default in payment of such Indebtedness (after
the expiration of any applicable grace periods and the
presentation of any debt instruments, if required), if the
aggregate amount of all such Indebtedness which has been so
accelerated and with respect to which there has been such a
default in payment shall exceed $5,000,000, without each such
default and acceleration having been rescinded or annulled
within a period of 30 days after there shall have been given
to the Issuer by the Trustee by registered mail, or to the
Issuer and the Trustee by the Holders of at least 25 percent
in aggregate principal amount of the Securities of such series
then Outstanding, a written notice specifying each such
default and requiring the Issuer to cause each such default
and acceleration to be rescinded or annulled and stating that
such notice is a "Notice of Default" hereunder; or

(h) any other Event of Default provided with respect
to the Securities of such series.

If an Event of Default with respect to Securities of any
series then Outstanding occurs and is continuing, then and

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in each and every such case, unless the principal of all of the Securities of
such series shall have already become due and payable, either the Trustee or
the Holders of not less than 25 percent in aggregate principal amount of the
Securities of such series then Outstanding, by notice in writing to the Issuer
(and to the Trustee if given by Securityholders), may declare the unpaid
principal amount (or, if the Securities of such series are Original Issue
Discount Securities, such portion of the principal amount as may be specified
in the terms of such series) of all the Securities of such series and the
interest, if any, accrued thereon to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and
payable, anything in this Indenture or in the Securities of such series
contained to the contrary notwithstanding. This provision, however, is subject
to the condition that, if at any time after the unpaid principal amount (or
such specified amount) of the Securities of such series shall have been so
declared due and payable and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest, if any, upon all of the Securities of such
series and the principal of any and all Securities of such series which shall
have become due otherwise than by acceleration (with interest on overdue
installments of interest, if any, to the extent that payment of such interest
is enforceable under applicable law and on such principal at the rate borne by
the Securities of such series to the date of such payment or deposit) and the
reasonable compensation, disbursements, expenses and advances of the Trustee,
its agents, attorneys and counsel, and any and all defaults under this
Indenture, other than the nonpayment of such portion of the principal amount of
and accrued interest, if any, on Securities of such series which shall have
become due by acceleration, shall have been cured or shall have been waived in
accordance with Section 5.7 or provision deemed by the Trustee to be adequate
shall have been made therefor -- then and in every such case the Holders of a
majority in aggregate principal amount of the Securities of such series then
Outstanding, by written notice to the Issuer and to the Trustee, may rescind
and annul such declaration and its consequences; but no such rescission and
annulment shall extend to or shall affect any subsequent default, or shall
impair any right consequent thereon. If any Event of Default with respect to
the Issuer specified in Section 5.1(e) or 5.1(f) occurs, the unpaid principal
amount (or, if the Securities of any series then Outstanding are Original Issue
Discount Securities, such portion of the principal amount as may be specified
in the terms of each such series) and accrued interest on all Securities of
each series then Outstanding shall ipso facto become and be immediately due and
payable

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without any declaration or other act by the Trustee or any Securityholder.

If the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Issuer, the Trustee and the Securityholders shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Issuer, the Trustee and the Securityholders shall continue as
though no such proceeding had been taken.

Except with respect to an Event of Default pursuant to Section
5.1(a), (b) or (c), the Trustee shall not be charged with knowledge of any
Event of Default unless written notice thereof shall have been given to a
Responsible Officer by the Issuer, a Paying Agent or any Securityholder.

Section 5.2 Payment of Securities on Default; Suit Therefor.
The Issuer covenants that (a) if default shall be made in the payment of any
installment of interest upon any of the Securities of any series then
Outstanding as and when the same shall become due and payable, and such default
shall have continued for a period of 30 days, or (b) if default shall be made
in the payment of the principal of any of the Securities of such series as and
when the same shall have become due and payable, whether at maturity of the
Securities of such series or upon redemption or by declaration or otherwise --
then, upon demand of the Trustee, the Issuer will pay to the Trustee, for the
benefit of the Holders of the Securities, the whole amount that then shall have
become due and payable on all such Securities of such series for principal or
interest, if any, or both, as the case may be, with interest upon the overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) upon the overdue installments of interest, if any, at the rate
borne by the Securities of such series; and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents, attorneys and counsel, and any expenses or liabilities
incurred by the Trustee hereunder other than through its negligence or bad
faith.

If the Issuer shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any actions or proceedings at law
or in equity for

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the collection of the sums so due and unpaid, and may prosecute any such action
or proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Issuer or any other obligor on the Securities of such
series and collect in the manner provided by law out of the property of the
Issuer or any other obligor on the Securities of such series, wherever
situated, the moneys adjudged or decreed to be payable.

If there shall be pending proceedings for the bankruptcy or
for the reorganization of the Issuer or any other obligor on the Securities of
any series then Outstanding under any bankruptcy, insolvency or other similar
law now or hereafter in effect, or if a receiver or trustee or similar official
shall have been appointed for the property of the Issuer or such other obligor,
or in the case of any other similar judicial proceedings relative to the Issuer
or other obligor upon the Securities of such series, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of the Securities of such series shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.2, shall be entitled and empowered by intervention in such
proceedings or otherwise to file and prove a claim or claims for the whole
amount of principal and interest, if any, owing and unpaid in respect of the
Securities of such series, and, in case of any judicial proceedings, to 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 of the Securityholders
allowed in such judicial proceedings relative to the Issuer or any other
obligor on the Securities of such series, its or their creditors, or its or
their property, and to collect and receive any moneys or other property payable
or deliverable on any such claims, and to distribute the same after the
deduction of its charges and expenses, and any receiver, assignee or trustee or
similar official in bankruptcy or reorganization is hereby authorized by each
of the Securityholders to make such payments to the Trustee, and, if the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due it for compensation and
expenses, including counsel fees incurred by it up to the date of such
distribution. To the extent that such payment of reasonable compensation,
expenses and counsel fees out of the estate in any such proceedings shall be
denied for any reason, payment of the same shall be secured by a lien on, and
shall be paid out of, any and all distributions, dividends, moneys, securities
and other property which the Holders of the Securities of such series may be
entitled to receive in such proceedings, whether in liquidation

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or under any plan of reorganization or arrangement or otherwise.

All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities, or the production thereof at
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the Holders of the Securities of the series in respect of which such judgment
has been recovered.

Section 5.3 Application of Moneys Collected by Trustee. Any
moneys collected by the Trustee pursuant to Section 5.2 with respect to
Securities of any series then Outstanding shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys, upon presentation of the several Securities of such series, and
stamping thereon the payment, if only partially paid, and upon surrender
thereof, if fully paid:

FIRST: To the payment of costs and expenses of collection and
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
of all other expenses and liabilities incurred, and all advances made, by the
Trustee pursuant to Section 6.6 except as a result of its negligence or bad
faith;

SECOND: If the principal of the Outstanding Securities of
such series shall not have become due and be unpaid, to the payment of
interest, if any, on the Securities of such series, in the order of the
maturity of the installments of such interest, if any, with interest (to the
extent that such interest has been collected by the Trustee) upon the overdue
installments of interest, if any, at the rate borne by the Securities of such
series, such payment to be made ratably to the Persons entitled thereto;

THIRD: If the principal of the Outstanding Securities of such
series shall have become due, by declaration or otherwise, to the payment of
the whole amount then owing and unpaid upon the Securities of such series for
principal and interest, if any, with interest on the overdue principal and (to
the extent that such interest has been collected by the Trustee) upon overdue
installments of interest, if any, at the rate borne by the Securities of such
series; and in case such moneys shall be insufficient to pay in full the whole
amounts so due and unpaid upon the Securities of such series, then to the
payment of such principal and interest, if any, without

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preference or priority of principal over interest, or of interest over
principal, or of any installment of interest, or of any other installment of
interest, or of any Security over any other Security, ratably to the aggregate
of such principal and accrued and unpaid interest; and

FOURTH: To the payment of any surplus then remaining to the
Issuer, its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same.

No claim for interest which in any manner at or after maturity
shall have been transferred or pledged separate or apart from the Securities to
which it relates, or which in any manner shall have been kept alive after
maturity by an extension (otherwise than pursuant to an extension made pursuant
to a plan proposed by the Issuer to the Holders of all Securities of any series
then Outstanding), purchase, funding or otherwise by or on behalf or with the
consent or approval of the Issuer shall be entitled, in case of a default
hereunder, to any benefit of this Indenture, except after prior payment in full
of the principal of all Securities of any series then Outstanding and of all
claims for interest not so transferred, pledged, kept alive, extended,
purchased or funded.

Section 5.4 Proceedings by Securityholders. No Holder of any
Securities of any series then Outstanding shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or the Securities or for the appointment of a receiver or trustee or similar
official, or for any other remedy hereunder or thereunder, unless such Holder
previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless the Holders of not
less than 25 percent in aggregate principal amount of the Securities of such
series then Outstanding shall have made written request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by the Holder of every Security of such series with every
other taker and Holder and the Trustee, that no one or more Holders of
Securities of such series shall have any right in any manner whatever by virtue
of or by availing of any provision of this Indenture or of the Securities to
affect, disturb or prejudice the rights of any other Holder of such

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Securities of such series, or to obtain or seek to obtain priority over or
preference as to any other such Holder, or to enforce any right under this
Indenture or the Securities, except in the manner herein provided and for the
equal, ratable and common benefit of all Holders of Securities of such series.

Notwithstanding any other provisions in this Indenture, but
subject to Article Fourteen, the right of any Holder of any Security to receive
payment of the principal of and interest, if any, on such Security, on or after
the respective due dates expressed in such Security, or, if applicable, to
convert such Security as provided in Article Thirteen, or to institute suit for
the enforcement of any such payment on or after such respective dates or for
the enforcement of any such right to convert shall not be impaired or affected
without the consent of such Holder.

Section 5.5 Proceedings by Trustee. In case of an Event of
Default hereunder, the Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either by suit in equity or by action at law or by proceedings
in bankruptcy or otherwise, whether for the specific enforcement of any
covenant or agreement contained in this Indenture or in aid of the exercise of
any power granted in this Indenture, or to enforce any other legal or equitable
right vested in the Trustee by this Indenture or by law.

Section 5.6 Remedies Cumulative and Continuing. All powers
and remedies given by this Article Five to the Trustee or to the
Securityholders shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any thereof or of any other powers and remedies available to
the Trustee or the Securityholders, by judicial proceedings or otherwise, to
enforce the performance or observance of the covenants and agreements contained
in this Indenture, and no delay or omission of the Trustee or of any
Securityholder to exercise any right or power accruing upon any default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 5.4, every power and remedy
given by this Article Five or by law to the Trustee or to the Securityholders
may be exercised from time to time, and as often as shall be deemed expedient,
by the Trustee or by the Securityholders.

Section 5.7 Direction of Proceedings; Waiver of Defaults by
Majority of Securityholders. The Holders of a majority in aggregate principal
amount of the Securities of any

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series then Outstanding shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee with respect to
Securities of such series; provided, however, that (subject to the provisions
of Section 6.1) the Trustee shall have the right to decline to follow any such
direction if the Trustee shall determine upon advice of counsel that the action
or proceeding so directed may not lawfully be taken or if the Trustee in good
faith by its board of directors, its executive committee, or a trust committee
of directors or Responsible Officers or both shall determine that the action or
proceeding so directed would involve the Trustee in personal liability. The
Holders of a majority in aggregate principal amount of the Securities of any
series then Outstanding may on behalf of the Holders of all of the Securities
of such series waive any past default or Event of Default hereunder and its
consequences except a default in the payment of interest, if any, on, or the
principal of, the Securities of such series. The provisions of Section
316(a)(1)(B) of the Trust Indenture Act of 1939 are expressly excluded
herefrom. Upon any such waiver the Issuer, the Trustee and the Holders of the
Securities of such series shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section 5.7, said default or Event of Default shall
for all purposes of the Securities and this Indenture be deemed to have been
cured and to be not continuing.

Section 5.8 Notice of Defaults. The Trustee shall, within 90
days after the occurrence of a default, with respect to Securities of any
series then Outstanding, mail to all Holders of Securities of such series, as
the names and the addresses of such Holders appear upon the Security register,
notice of all defaults known to the Trustee with respect to such series, unless
such defaults shall have been cured before the giving of such notice (the term
"defaults" for the purpose of this Section 5.8 being hereby defined to be the
events specified in clauses (a), (b), (c), (d), (e), (f), (g) and (h) of
Section 5.1, not including periods of grace, if any, provided for therein and
irrespective of the giving of the written notice specified in said clause (d)
or (g) but in the case of any default of the character specified in said clause
(d) or (g) no such notice to Securityholders shall be given until at least 60
days after the giving of written notice thereof to the Issuer pursuant to said
clause (d) or (g), as the case may be); provided, however, that, except in the
case of default in the payment of the principal of or interest, if any, on any
of the

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Securities, or in the payment or satisfaction of any sinking fund or other
purchase obligation, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee, or a trust
committee of directors or Responsible Officers or both of the Trustee in good
faith determine that the withholding of such notice is in the best interests of
the Securityholders.

Section 5.9 Undertaking to Pay Costs. All parties to this
Indenture agree, and each Holder of any Security by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
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, the filing by any party litigant in such suit of an undertaking to pay
the cost of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder or group of Securityholders, holding in the
aggregate more than ten percent in principal amount of the Securities of any
series then Outstanding, or to any suit instituted by any Securityholders for
the enforcement of the payment of the principal of, or interest, if any, on any
Security against the Issuer on or after the due date expressed in such Security
or for the enforcement of the right to convert any Security in accordance with
Article Thirteen. The provisions of Section 315(e) of the Trust Indenture Act
of 1939 are expressly excluded herefrom.

Section 5.10 Trustee May Enforce Claim Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceedings relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.

Section 5.11 Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of,

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any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Issuer (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 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
had been enacted.

ARTICLE SIX

CONCERNING THE TRUSTEE

Section 6.1 Duties and Responsibilities of the Trustee;
During Default; Prior to Default. With respect to the Holders of any series of
Securities issued hereunder, the Trustee, prior to the occurrence of an Event
of Default with respect to the Securities of a particular series and after the
curing or waiving of all Events of Default which may have occurred with respect
to such series, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default with
respect to the Securities of a series has occurred (which has not been cured or
waived) the Trustee shall exercise with respect to such series of Securities
such of 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 man would exercise or
use under the circumstances in the conduct of his own affairs.

No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own wilful misconduct, except that

(a) prior to the occurrence of an Event of Default
with respect to the Securities of any series and after the
curing or waiving of all such Events of Default with respect
to such series which may have occurred:

(i) the duties and obligations of the
Trustee with respect to the Securities of any series
shall be determined solely by the express provisions
of this Indenture, and the Trustee shall not be
liable except for the performance

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of such duties and obligations 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 the
part of the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
any statements, certificates or opinions furnished to
the Trustee and conforming to the requirements of
this Indenture; but in the case of any such
statements, certificates or opinions which by any
provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or
not they conform to the requirements of this
Indenture;

(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent
facts; and

(c) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders pursuant to
Section 5.7 relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture.

None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there shall be reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.

Section 6.2 Certain Rights of the Trustee. Subject to
Section 6.1:

(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any other
certificate, statement, instrument,

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opinion, report, notice, request, consent, order, bond, debenture, note,
coupon, security or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;

(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officer's Certificate or
Issuer Order (unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be evidenced to
the Trustee by a copy thereof certified by the secretary or an assistant
secretary of the Issuer;

(c) the Trustee may consult with counsel and any written
advice or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken by
it hereunder in good faith and in reliance thereon in accordance with such
advice or Opinion of Counsel;

(d) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture (including, without limitation, pursuant to Section 5.1), unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
therein or thereby;

(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;

(f) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default, the Trustee shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing so to do by
the Holders of not less than a majority in aggregate principal amount of the
Securities of all series affected then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expenses or liabilities as a

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condition to proceeding; the reasonable expenses of every such investigation
shall be paid by the Issuer or, if paid by the Trustee or any predecessor
Trustee, shall be repaid by the Issuer upon demand; and

(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent or
attorney appointed with due care by it hereunder.

Section 6.3 Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof. The recitals contained
herein and in the Securities, except the Trustee's certificates of
authentication, shall be taken as the statements of the Issuer, and the Trustee
assumes no responsibility for the correctness of the same. The Trustee makes
no representation as to the validity or sufficiency of this Indenture, of the
Securities or of any prospectus used to sell the Securities. The Trustee shall
not be accountable for the use or application by the Issuer of any of the
Securities or of the proceeds thereof.

Section 6.4 Trustee and Agents May Hold Securities;
Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in
its individual or any other capacity, may become the owner or pledgee of
Securities with the same rights it would have if it were not the Trustee or
such agent and, subject to Sections 6.8 and 6.13, may otherwise deal with the
Issuer and receive, collect, hold and retain collections from the Issuer with
the same rights it would have if it were not the Trustee or such agent.

Section 6.5 Moneys Held by Trustee. Subject to the
provisions of Section 10.4 hereof, all moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by mandatory provisions of law. Neither the Trustee nor
any agent of the Issuer or the Trustee shall be under any liability for
interest on any moneys received by it hereunder.

Section 6.6 Compensation and Indemnification of Trustee and
Its Prior Claim. The Issuer covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) and the Issuer covenants and

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agrees to pay or reimburse the Trustee and each predecessor Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ) except any such expense, disbursement or advance as may arise
from its negligence or bad faith. The Issuer also covenants to indemnify the
Trustee and each predecessor Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim or
liability in the premises. The obligations of the Issuer under this Section
6.6 to compensate and indemnify the Trustee and each predecessor Trustee and to
pay or reimburse the Trustee and each predecessor Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder,
shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee and shall not be subordinate to the
payment of the Senior Indebtedness pursuant to Article Fourteen. Such
additional indebtedness shall be a senior claim to that of the Securities upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the benefit of the Holders of particular Securities, and the
Securities are hereby subordinated to such senior claim. When the Trustee
incurs expenses or renders services in connection with an Event of Default
specified in Section 5.1 or in connection with Article Five hereof, the
expenses (including the reasonable fees and expenses of its counsel) and the
compensation for the services in connection therewith are intended to
constitute expenses of administration under any bankruptcy law.

Section 6.7 Right of Trustee to Rely on Officer's
Certificate, etc. Subject to Sections 6.1 and 6.2, whenever in the
administration of the trusts of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officer's Certificate delivered to
the Trustee, and such certificate, in the absence of negligence or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken, suffered or omitted by it under the provisions of this Indenture upon
the faith thereof.

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Section 6.8 Qualification of Trustee; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest (as defined
in subsection (c)), then within 90 days after ascertaining that it has such
conflicting interest, and if the default (as defined in subsection (c)) to
which such conflicting interest relates has not been cured or duly waived or
otherwise eliminated before the end of such 90-day period, the Trustee shall
either eliminate such conflicting interest or, except as otherwise provided
below, resign, and the Issuer shall take prompt steps to have a successor
appointed in the manner provided in Section 6.10.

(b) If the Trustee shall fail to comply with the provisions
of subsection (a), the Trustee shall, within 10 days after the expiration of
such 90-day period, transmit notice of such failure to the Securityholders in
the manner and to the extent provided in Section 4.4 and, subject to the
provisions of Section 5.9, unless the Trustee's duty to resign is stayed as
provided below, any Securityholder who has been a bona fide holder of
Securities for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee, and the appointment of a successor, if the Trustee
fails, after written request thereof by such Securityholder, to comply with the
provisions of subsection (a).

Except in the case of a default in the payment of the
principal of or interest on any Security, or in the payment of any sinking or
purchase fund installment, the Trustee shall not be required to resign as
provided by this Section 6.8 if the Trustee shall have sustained the burden of
proving, on application to the Commission and after opportunity for hearing
thereon, that

(i) the default under this Indenture may be cured or
waived during a reasonable period and under the procedures
described in such application, and

(ii) a stay of the Trustee's duty to resign will not be
inconsistent with the interests of Holders of the Securities.

The filing of such an application shall automatically stay the
performance of the duty to resign until the Commission orders otherwise. Any
resignation of the Trustee shall become effective only upon the appointment of
a successor trustee in accordance with the provisions of Section 6.10 and such
successor's acceptance of such an appointment.

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(c) For the purposes of this Section 6.8, the
Trustee shall be deemed to have a conflicting interest with respect to
Securities of any series if the Securities of such series are in
default (as determined in accordance with the provisions of Section
5.1, but exclusive of any period of grace or requirement of notice)
and

(i) the Trustee is trustee under this Indenture
with respect to the Outstanding Securities of any other series
or is a trustee under another indenture under which any other
securities, or certificates of interest or participation in
any other securities, of the Issuer are outstanding, unless
such other indenture is a collateral trust indenture under
which the only collateral consists of Securities issued under
this Indenture; provided that there shall be excluded from the
operation of this paragraph, this Indenture with respect to
the Securities of any other series and there shall also be so
excluded any other indenture or indentures under which other
securities, or certificates of interest or participation in
other securities, of the Issuer are outstanding if (x) this
Indenture is and, if applicable, this Indenture and any series
issued pursuant to this Indenture and such other indenture or
indentures are wholly unsecured and rank equally, and such
other indenture or indentures are hereafter qualified under
the Trust Indenture Act of 1939, unless the Commission shall
have found and declared by order pursuant to Section 305(b) or
Section 307(c) of the Trust Indenture Act of 1939, that
differences exist between the provisions of this Indenture
with respect to Securities of such series and one or more
other series, or the provisions of this Indenture and the
provisions of such other indenture or indentures which are so
likely to involve a material conflict of interest as to make
it necessary in the public interest or for the protection of
investors to disqualify the Trustee from acting as such under
this Indenture with respect to Securities of such series and
such other series, or under this Indenture or such other
indenture or indentures, or (y) the Issuer shall have
sustained the burden of proving, on application to the
Commission and after opportunity for hearing thereon, that
trusteeship under this Indenture with respect to Securities of
such series and such other series, or under this Indenture and
such other indenture or indentures is not so likely to involve
a material conflict of interest as to make it necessary in the
public interest or for the protection of investors to

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disqualify the Trustee from acting as such under this
Indenture with respect to Securities of such series and such
other series, or under this Indenture and such other
indentures;

(ii) the Trustee or any of its directors or
executive officers is an underwriter for the Issuer;

(iii) the Trustee directly or indirectly controls
or is directly or indirectly controlled by or is under direct
or indirect common control with an underwriter for the Issuer;

(iv) the Trustee or any of its directors or
executive officers is a director, officer, partner, employee,
appointee, or representative of the Issuer, or of an
underwriter (other than the Trustee itself) for the Issuer who
is currently engaged in the business of underwriting, except
that (x) one individual may be a director or an executive
officer, or both, of the Trustee and a director or an
executive officer, or both, of the Issuer, but may not be at
the same time an executive officer of both the Trustee and the
Issuer; (y) if and so long as the number of directors of the
Trustee in office is more than nine, one additional individual
may be a director or an executive officer, or both, of the
Trustee and a director of the Issuer, and (z) the Trustee may
be designated by the Issuer or by any underwriter for the
Issuer to act in the capacity of transfer agent, registrar,
custodian, paying agent, fiscal agent, escrow agent, or
depositary, or in any other similar capacity, or, subject to
the provisions of subsection (c)(i) of this Section, to act as
trustee, whether under an indenture or otherwise;

(v) 10% or more of the voting securities of the
Trustee is beneficially owned either by the Issuer or by any
director, partner or executive officer thereof, or 20% or more
of such voting securities is beneficially owned, collectively,
by any two or more of such persons; or 10% or more of the
voting securities of the Trustee is beneficially owned either
by an underwriter for the Issuer or by any director, partner,
or executive officer thereof, or is beneficially owned,
collectively, by any two or more such persons;

(vi) the Trustee is the beneficial owner of, or
holds as collateral security for an obligation which

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is in default, (x) 5% or more of the voting securities or 10%
or more of any other class of security of the Issuer, not
including the Securities issued under this Indenture and
securities issued under any other indenture under which the
Trustee is also trustee, or (y) 10% or more of any class of
security of an underwriter for the Issuer;

(vii) the Trustee is the beneficial owner of, or
holds as collateral security for an obligation which is in
default, 5% or more of the voting securities of any person
who, to the knowledge of the Trustee, owns 10% or more of the
voting securities of, or controls directly or indirectly or is
under direct or indirect common control with, the Issuer;

(viii) the Trustee is the beneficial owner of, or
holds as collateral security for an obligation which is in
default, 10% or more of any class of security of any person
who, to the knowledge of the Trustee, owns 50% or more of the
voting securities of the Issuer;

(ix) the Trustee owns on the date of default (as
determined in accordance with the provisions of Section 5.1,
but exclusive of any period of grace or requirement of notice)
or on any anniversary of such default while such default
remains outstanding, in the capacity of executor,
administrator, testamentary or inter vivos trustee, guardian,
committee or conservator, or in any other similar capacity, an
aggregate of 25% or more of the voting securities, or of any
class of security, of any person, the beneficial ownership of
a specified percentage of which would have constituted a
conflicting interest under paragraphs (vi), (vii) or (viii) of
this subsection. As to any such securities of which the
Trustee acquired ownership through becoming executor,
administrator, or testamentary trustee of an estate which
included them, the provisions of the preceding sentence shall
not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in
such estate do not exceed 25% of such voting securities or 25%
of any such class of security. Promptly after the dates of
any such default and annually in each succeeding year that the
Securities remain in default, the Trustee shall make a check
of its holdings of such securities in any of the
above-mentioned capacities as of such dates. If the Issuer
fails to make payment in full of principal

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of or interest on any of the Securities when and as the same
becomes due and payable, and such failure continues for 30
days thereafter, the Trustee shall make a prompt check of its
holdings of such Securities in any of the above-mentioned
capacities as of the date of the expiration of such 30-day
period, and after such date, notwithstanding the foregoing
provisions of this paragraph, all such Securities so held by
the Trustee, with sole or joint control over such Securities
vested in it, shall, but only so long as such failure shall
continue, be considered as though beneficially owned by the
Trustee for the purposes of paragraphs (vi), (vii) and (viii)
of this subsection; or

(x) except under the circumstances described in
paragraphs (1), (3), (4), (5) or (6) of Section 6.13(b), the
Trustee shall be or shall become a creditor of the Issuer.

For purposes of subsection (c)(i), the term "series of
securities" or "series" means a series, class or group of securities issuable
under an indenture pursuant to whose terms holders of one such series may vote
to direct the Trustee, or otherwise take action pursuant to a vote of such
holders, separately from holders of another such series: provided, that
"series of securities" or "series" shall not include any series of securities
issuable under an indenture if all such series rank equally and are wholly
unsecured.

The specification of percentages in subsections (c)(v) to
(ix), inclusive, of this Section 6.8 shall not be construed as indicating that
the ownership of such percentages of the securities of a person is or is not
necessary or sufficient to constitute direct or indirect control for the
purposes of subsections (c)(iii) or (vii) of this Section 6.8.

For the purposes of subsections (c)(vi), (vii), (viii) and
(ix) of this Section 6.8, only,

(i) the terms "security" and "securities" shall
include only such securities as are generally known as
corporate securities, but shall not include any note or other
evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust
companies, or banking firms, or any certificate of interest or
participation in any such note or evidence of indebtedness;

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(ii) an obligation shall be deemed to be in default when
a default in payment of principal shall have continued for 30
days or more and shall not have been cured; and

(iii) the Trustee shall not be deemed to be the owner or
holder of (x) any security which it holds as collateral
security, as trustee or otherwise, for an obligation which is
not in default as defined in clause (ii) above, or (y) any
security which it holds as collateral security under this
Indenture, irrespective of any default hereunder, or (z) any
security which it holds as agent for collection, or as
custodian, escrow agent, or depositary, or in any similar
representative capacity.

Except as provided above, the word "security" or "securities"
as used in this Section 6.8 shall mean any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation
in any profit-sharing agreement, collateral trust certificate, preorganization
certificate or subscription, transferable share, investment contract, voting
trust certificate, certificate of deposit for a security, fractional undivided
interest in oil, gas or other mineral rights, or, in general, any interest or
instrument commonly known as a "security", or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any of the foregoing.

(d) For purposes of this Section 6.8:

(i) the term "underwriter" when used with
reference to the Issuer shall mean every person who, within a
one year period prior to the time as of which the
determination is made, was an underwriter of any security of
the Issuer outstanding at the time of the determination;

(ii) the term "director" shall mean any director
of a corporation or any individual performing similar
functions with respect to any organization whether
incorporated or unincorporated;

(iii) the term "person" shall mean an individual, a
corporation, a partnership, an association, a joint-stock
company, a trust, an unincorporated organization, or a
government or political subdivision thereof; as used in this
paragraph, the term "trust"

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shall include only a trust where the interest or interests of
the beneficiary or beneficiaries are evidenced by a security;

(iv) the term "voting security" shall mean any
security presently entitling the owner or holder thereof to
vote in the direction or management of the affairs of a
person, or any security issued under or pursuant to any trust,
agreement or arrangement whereby a trustee or trustees or
agent or agents for the owner or holder of such security are
presently entitled to vote in the direction or management of
the affairs of a person;

(v) the term "Issuer" shall mean any obligor upon the Securities; and

(vi) the term "executive officer" shall mean the
president, every vice president, every trust officer, the
cashier, the secretary, and the treasurer of a corporation,
and any individual customarily performing similar functions
with respect to any organization whether incorporated or
unincorporated, but shall not include the chairman of the
board of directors.

(e) The percentage of voting securities and other securities
specified in this Section 6.8 shall be calculated in accordance with the
following provisions:

(i) a specified percentage of the voting
securities of the Trustee, the Issuer or any other person
referred to in this Section 6.8 (each of whom is referred to
as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the
holder or holders thereof to cast such specified percentage of
the aggregate votes which the holders of all the outstanding
voting securities of such person are entitled to cast in the
direction or management of the affairs of such person;

(ii) a specified percentage of a class of securities of a
person means such percentage of the aggregate amount of
securities of the class outstanding;

(iii) the term "amount", when used in regard to
securities, means the principal amount if relating to
evidences of indebtedness, the number of shares if

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relating to capital shares, and the number of units if
relating to any other kind of security;

(iv) the term "outstanding" means issued and not held by
or for the account for the Issuer; the following securities
shall not be deemed outstanding within the meaning of this
definition:

(A) securities of an issuer held in a
sinking fund relating to securities of the Issuer of
the same class;

(B) securities of an issuer held in a
sinking fund relating to another class of securities
of the Issuer, if the obligation evidenced by such
other class of securities is not in default as to
principal or interest or otherwise;

(C) securities pledged by the Issuer
thereof as security for an obligation of the issuer
not in default as to principal or interest or
otherwise; and

(D) securities held in escrow if placed
in escrow by the issuer thereof;

provided, that any voting securities of an issuer shall be deemed outstanding
if any person other than the Issuer is entitled to exercise the voting rights
thereof; and

(v) a security shall be deemed to be of the same
class as another security if both securities confer upon the
holder or holders thereof substantially the same rights and
privileges; provided that, in the case of secured evidences of
indebtedness, all of which are issued under a single
indenture, differences in the interest rates or maturity dates
of various series thereof shall not be deemed sufficient to
constitute such series different classes and provided,
further, that, in the case of unsecured evidences of
indebtedness, differences in the interest rates or maturity
dates thereof shall not be deemed sufficient to constitute
them securities of different classes, whether or not they are
issued under a single indenture.

Section 6.9 Persons Eligible for Appointment as Trustee. The
Trustee for each series of Securities hereunder

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shall at all times be a corporation organized and doing business under the laws
of the United States of America or of any state or the District of Columbia
having a combined capital and surplus of at least $50,000,000 and which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal, state or District of Columbia authority,
or a corporation or other Person permitted to act as trustee by the Commission.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 6.9, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. No
obligor upon the Securities or any Affiliate of such obligor shall serve as
Trustee upon the Securities. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.9, the Trustee
shall resign immediately in the manner and with the effect specified in Section
6.10.

Section 6.10 Resignation and Removal; Appointment of
Successor Trustee. (a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign with respect to one or more or all series of
Securities by giving written notice of resignation to the Issuer and by mailing
notice of such resignation to the Holders of then Outstanding Securities of
each series affected at their addresses as they shall appear on the registry
books. Upon receiving such notice of resignation, the Issuer shall promptly
appoint a successor trustee or trustees with respect to the applicable series
by written instrument in duplicate, executed by authority of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee or trustees. If no successor
trustee shall have been so appointed with respect to any series and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Securityholder
who has been a bona fide Holder of a Security or Securities of the applicable
series for at least six months may, subject to the provisions of Section 5.9,
on behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.

(b) In case at any time any of the following shall occur:

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(i) the Trustee shall fail to comply with the
provisions of Section 6.8 with respect to any series of
Securities after written request therefor by the Issuer or by
any Securityholder who has been a bona fide Holder of a
Security or Securities of such series for at least six months;
or

(ii) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.9 and shall fail
to resign after written request therefor by the Issuer or by
any such Securityholder; or

(iii) the Trustee shall become incapable of acting
with respect to any series of Securities, or shall be adjudged
a bankrupt or insolvent, or a receiver or liquidator of the
Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation;

then, in any such case, the Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such series
by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or, subject to the provisions of
Section 5.9, any Securityholder who has been a bona fide Holder of a Security
or Securities of such series for at least six months may on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor trustee with
respect to such series. Such court may thereupon, after such notice, if any,
as it may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.

(c) The Holders of a majority in aggregate principal
amount of the Securities of each series then Outstanding may at any time remove
the Trustee with respect to Securities of such series and appoint a successor
trustee with respect to the Securities of such series by delivering to the
Trustee so removed, to the successor trustee so appointed and to the Issuer the
evidence provided for in Section 7.1 of the action in that regard taken by the
Securityholders.

(d) Any resignation or removal of the Trustee with
respect to any series and any appointment of a successor trustee with respect
to such series pursuant to any of the provisions of this Section 6.10 shall
become effective upon

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acceptance of appointment by the successor trustee as provided in Section 6.11.

Section 6.11 Acceptance of Appointment by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and obligations
with respect to such series of its predecessor hereunder, with like effect as
if originally named as trustee for such series hereunder; but, nevertheless, on
the written request of the Issuer or of the successor trustee, upon payment of
its charges then unpaid, the trustee ceasing to act shall, subject to Section
10.4, pay over to the successor trustee all moneys at the time held by it
hereunder and shall execute and deliver an instrument transferring to such
successor trustee all such rights, powers, duties and obligations. Upon
request of any such successor trustee, the Issuer shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming
to such successor trustee all such rights and powers. Any trustee ceasing to
act shall, nevertheless, retain a prior claim upon all property or funds held
or collected by such trustee to secure any amounts then due it pursuant to the
provisions of Section 6.6.

If a successor trustee is appointed with respect to the
Securities of one or more (but not all) series, the Issuer, the predecessor
trustee and each successor trustee with respect to the Securities of any
applicable series shall execute and deliver an indenture supplemental hereto
which shall contain such provisions as shall be deemed necessary or desirable
to confirm that all the rights, powers, trusts and duties of the predecessor
trustee with respect to the Securities of any series as to which the
predecessor trustee is not retiring shall continue to be vested in the
predecessor trustee, and shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such trustees
co-trustees of the same trust and that each such trustee shall be trustee of a
trust or trusts under separate indentures.

No successor trustee with respect to any series of Securities
shall accept appointment as provided in this Section 6.11 unless at the time of
such acceptance such successor

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trustee shall be qualified under the provisions of Section 6.8 and eligible
under the provisions of Section 6.9.

Upon acceptance of appointment by any successor trustee as
provided in this Section 6.11, the Issuer shall give notice thereof to the
Holders of Securities of each series affected, by mailing such notice to such
Holders at their addresses as they shall appear on the registry books. If the
acceptance of appointment is substantially contemporaneous with the
resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 6.10. If the Issuer fails to
give such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be given at
the expense of the Issuer.

Section 6.12 Merger, Conversion, Consolidation or Succession
to Business of Trustee. Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be qualified under the provisions of Section 6.8 and eligible
under the provisions of Section 6.9, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.

In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities of any
series 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, in case at that time
any of the Securities of any series 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 Trustee; and in all
such cases such certificate shall have the full force which it is anywhere in
the Securities of such series or in this Indenture provided that the
certificate of the Trustee shall have; provided that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Securities of any series in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.

Section 6.13 Preferential Collection of Claims Against the
Issuer. (a) Subject to the provisions of this Section, if the Trustee shall
be or shall become a creditor,

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directly or indirectly, secured or unsecured, of the Issuer within three months
prior to a default, as defined in subsection (c) of this Section 6.13, or
subsequent to such a default, then, unless and until such default shall be
cured, the Trustee shall set apart and hold in a special account for the
benefit of the Trustee individually, the Holders of the Securities and the
holders of other indenture securities (as defined in this Section 6.13):

(1) an amount equal to any and all reductions in
the amount due and owing upon any claim as such creditor in
respect of principal or interest, effected after the beginning
of such three month period and valid as against the Issuer and
its other creditors, except any such reduction resulting from
the receipt or disposition of any property described in
subsection (a)(2) of this Section, or from the exercise of any
right of set-off which the Trustee could have exercised if a
petition in bankruptcy had been filed by or against the Issuer
upon the date of such default; and

(2) all property received by the Trustee in
respect of any claim as such creditor, either as security
therefor, or in satisfaction or composition thereof, or
otherwise, after the beginning of such three month period, or
an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of the
Issuer and its other creditors in such property or such
proceeds.

Nothing herein contained, however, shall affect the right of
the Trustee:

(A) to retain for its own account (i) payments
made on account of any such claim by any Person (other than
the Issuer) who is liable thereon, (ii) the proceeds of the
bona fide sale of any such claim by the Trustee to a third
Person, and (iii) distributions made in cash, securities or
other property in respect of claims filed against the Issuer
in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Bankruptcy Code or applicable
state law;

(B) to realize, for its own account, upon any
property held by it as security for any such claim, if such
property was so held prior to the beginning of such three
month period;

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(C) to realize, for its own account, but only to
the extent of the claim hereinafter mentioned, upon any
property held by it as security for any such claim, if such
claim was created after the beginning of such three month
period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee
shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause
to believe that a default as defined in subsection (c) of this
Section would occur within three months; or

(D) to receive payment on any claim referred to
in paragraph (B) or (C), against the release of any property
held as security for such claim as provided in such paragraph
(B) or (C), as the case may be, to the extent of the fair
value of such property.

For the purposes of paragraphs (B), (C) and (D), property
substituted after the beginning of such three month period for property held as
security at the time of such substitution shall, to the extent of the fair
value of the property released, have the same status as the property released,
and, to the extent that any claim referred to in any of such paragraphs is
created in renewal of or in substitution for or for the purpose of repaying or
refunding any pre-existing claim of the Trustee as such creditor, such claim
shall have the same status as such pre-existing claim.

If the Trustee shall be required to account, the funds and
property held in such special account and the proceeds thereof shall be
apportioned between the Trustee, the Securityholders and the holders of other
indenture securities in such manner that the Trustee, such Securityholders and
the holders of other indenture securities realize, as a result of payments from
such special account and payments of dividends on claims filed against the
Issuer in bankruptcy or receivership or in proceedings for reorganization
pursuant to the Bankruptcy Code or applicable state law, the same percentage of
their respective claims, figured before crediting to the claim of the Trustee
anything on account of the receipt by it from the Issuer of the funds and
property in such special account and before crediting to the respective claims
of the Trustee, such Securityholders and the holders of other indenture
securities dividends on claims filed against the Issuer in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Bankruptcy
Code or applicable state law, but after crediting thereon receipts on account
of the indebtedness represented by their respective claims from all sources
other than from

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such dividends and from the funds and property so held in such special account.
As used in this paragraph, with respect to any claim, the term "dividends"
shall include any distribution with respect to such claim, in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Bankruptcy
Code or applicable state law, whether such distribution is made in cash,
securities or other property, but shall not include any such distribution with
respect to the secured portion, if any, of such claim. The court in which such
bankruptcy, receivership or proceeding for reorganization is pending shall have
jurisdiction (i) to apportion between the Trustee, such Securityholders and the
holders of other indenture securities, in accordance with the provisions of
this paragraph, the funds and property held in such special account and the
proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part,
to give to the provisions of this paragraph due consideration in determining
the fairness of the distributions to be made to the Trustee, such
Securityholders and the holders of other indenture securities with respect to
their respective claims, in which event it shall not be necessary to liquidate
or to appraise the value of any securities or other property held in such
special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.

Any Trustee who has resigned or been removed after the
beginning of such three month period shall be subject to the provisions of this
subsection (a) as though such resignation or removal had not occurred. If any
Trustee has resigned or been removed prior to the beginning of such three month
period, it shall be subject to the provisions of this subsection (a) if and
only if the following conditions exist:

(i) the receipt of property or reduction of claim
which would have given rise to the obligation to account, if
such Trustee had continued as trustee, occurred after the
beginning of such three month period; and

(ii) such receipt of property or reduction of
claim occurred within three months after such resignation or
removal.

(b) There shall be excluded from the operation of this
Section 6.13 a creditor relationship arising from:

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(1) the ownership or acquisition of securities
issued under any indenture or any security or securities
having a maturity of one year or more at the time of
acquisition by the Trustee;

(2) advances authorized by a receivership or
bankruptcy court of competent jurisdiction, or by this
Indenture, for the purpose of preserving any property which
shall at any time be subject to the lien of this Indenture or
of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advance and of the circumstances
surrounding the making thereof is given to the Securityholders
at the time and in the manner provided in this Indenture;

(3) disbursements made in the ordinary course of
business in the capacity of trustee under an indenture,
transfer agent, registrar, custodian, paying agent, fiscal
agent or depositary, or other similar capacity;

(4) an indebtedness created as a result of
services rendered or premises rented or an indebtedness
created as a result of goods or securities sold in a cash
transaction as defined in subsection (c)(2) of this Section
6.13;

(5) the ownership of stock or of other securities
of a corporation organized under the provisions of Section
25(a) of the Federal Reserve Act, as amended, which is
directly or indirectly a creditor of the Issuer; or

(6) the acquisition, ownership, acceptance or
negotiation of any drafts, bills of exchange, acceptances or
obligations which fall within the classification of
self-liquidating paper as defined in subsection (c)(3) of this
Section 6.13.

(1) the term "default" shall mean any failure to
make payment in full of the principal of or interest on any of
the Securities when and as such principal or interest becomes
due and payable;

(2) the term "cash transaction" shall mean any
transaction in which full payment for goods or securities sold
is made within seven days after delivery

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of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;

(3) the term "self-liquidating paper" shall mean
any draft, bill of exchange, acceptance or obligation which is
made, drawn, negotiated or incurred by the Issuer for the
purpose of financing the purchase, processing, manufacture,
shipment, storage or sale of goods, wares or merchandise and
which is secured by documents evidencing title to, possession
of, or a lien upon the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods,
wares or merchandise previously constituting the security,
provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship
with the Issuer arising from the making, drawing, negotiating
or incurring of the draft, bill of exchange, acceptance or
obligation; and

(4) the term "Issuer" shall mean any obligor upon the Securities.

Section 6.14 Appointment of Authenticating Agent. As long as
any Securities of a series remain Outstanding, the Trustee may, by an
instrument in writing, appoint with the approval of the Issuer an
authenticating agent (the "Authenticating Agent") which shall be authorized to
act on behalf of the Trustee to authenticate Securities, including Securities
issued upon exchange, registration of transfer, partial redemption or pursuant
to Section 2.9. Securities of each such series authenticated by such
Authenticating Agent shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee. Whenever reference is made in this Indenture to the authentication
and delivery of Securities of any series by the Trustee or to the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
for such series and a certificate of authentication executed on behalf of the
Trustee by such Authenticating Agent. Such Authenticating Agent shall at all
times be a corporation organized and doing business under the laws of the
United States of America or of any state or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 (determined as provided in
Section 6.9 with respect to the Trustee) and subject to supervision or
examination by federal or state authority.

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Any corporation into which any Authenticating Agent may be
merged or converted, or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent with respect to all series of Securities for which it
served as Authenticating Agent without the execution or filing of any paper or
any further act on the part of the Trustee or such Authenticating Agent. Any
Authenticating Agent may at any time, and if it shall cease to be eligible
shall, resign by giving written notice of resignation to the Trustee and to the
Issuer. The Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent and to the
Issuer.

Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14 with respect to
one or more series of Securities, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and the Issuer
shall provide notice of such appointment to all Holders of Securities of such
series in the manner and to the extent provided in Section 11.4. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent.
The Issuer agrees to pay to the Authenticating Agent for such series from time
to time reasonable compensation. The Authenticating Agent for the Securities
of any series shall have no responsibility or liability for any action taken by
it as such at the direction of the Trustee.

Sections 6.2, 6.3, 6.4 and 7.3 shall be applicable to any Authenticating Agent.

ARTICLE SEVEN

CONCERNING THE SECURITYHOLDERS

Section 7.1 Evidence of Action Taken by Securityholders.
Any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such specified percentage of

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Securityholders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee. Proof of
execution of any instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Sections 6.1 and
6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Article Seven.

Section 7.2 Proof of Execution of Instruments and of Holding
of Securities. Subject to Sections 6.1 and 6.2, the execution of any
instrument by a Securityholder or his agent or proxy may be proved in the
following manner:

(a) The fact and date of the execution by any Holder of
any instrument may be proved by the certificate of any notary public
or other officer of any jurisdiction authorized to take
acknowledgments of deeds or administer oaths that the person executing
such instruments acknowledged to him the execution thereof, or by an
affidavit of a witness to such execution sworn to before any such
notary or other such officer. Where such execution is by or on behalf
of any legal entity other than an individual, such certificate or
affidavit shall also constitute sufficient proof of the authority of
the person executing the same.

(b) The ownership of Securities shall be proved by the
Security register or by a certificate of the Security registrar.

Section 7.3 Holders to be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or not
such Security shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or on account of
the principal of and, subject to the provisions of this Indenture, interest, if
any, on such Security and for all other purposes; and neither the Issuer nor
the Trustee nor any agent of the Issuer or the Trustee shall be affected by any
notice to the contrary.

Section 7.4 Securities Owned by Issuer Deemed Not
Outstanding. In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have concurred
in any direction, consent or waiver under this Indenture, Securities which are
owned by the Issuer or any other obligor on the Securities with respect to

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which such determination is being made or by any Affiliate of the Issuer or any
other obligor on the Securities with respect to which such determination is
being made shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination, except that for the purpose of determining
whether the Trustee shall be protected in relying on any such direction,
consent or waiver only Securities which the Trustee knows are so owned shall be
so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Issuer or any other obligor upon the Securities or
any Affiliate of the Issuer or any other obligor on the Securities. In case of
a dispute as to such right, the advice of counsel shall be full protection in
respect of any decision made by the Trustee in accordance with such advice.
Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly
an Officer's Certificate listing and identifying all Securities, if any, known
by the Issuer to be owned or held by or for the account of any of the
above-described Persons; and, subject to Sections 6.1 and 6.2, the Trustee
shall be entitled to accept such Officer's Certificate as conclusive evidence
of the facts therein set forth and of the fact that all Securities not listed
therein are Outstanding for the purpose of any such determination.

Section 7.5 Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
7.1, of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article Seven, revoke such action so
far as concerns such Security, provided that such revocation shall not become
effective until three business days after such filing. Except as aforesaid any
such action taken by the Holder of any Security shall be conclusive and binding
upon such Holder and upon all future Holders and owners of such Security and of
any Securities issued in exchange or substitution therefor or on registration
of transfer thereof, irrespective of whether or not any notation in regard
thereto is made upon any such Security. Any action taken by the Holders of the
percentage in aggregate principal amount of the Securities of any or all
series, as the case may be, specified in

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this Indenture in connection with such action shall be conclusively binding
upon the Issuer, the Trustee and the Holders of all the Securities affected by
such action.

Section 7.6 Record Date for Consents and Waivers. The Issuer
may, but shall not be obligated to, direct the Trustee to establish a record
date for the purpose of determining the Persons entitled to (i) waive any past
default with respect to the Securities of such series in accordance with
Section 5.7 of this Indenture, (ii) consent to any supplemental indenture in
accordance with Section 8.2 of this Indenture, or (iii) waive compliance with
any term, condition or provision of any covenant hereunder. If a record date
is fixed, the Holders on such record date, or their duly designated proxies,
and any such Persons, shall be entitled to waive any such past default, consent
to any such supplemental indenture or waive compliance with any such term,
condition or provision, whether or not such Holder remains a Holder after such
record date; provided, however, that unless such waiver or consent is obtained
from the Holders, or duly designated proxies, of the requisite principal amount
of Outstanding Securities of such series prior to the date which is the 180th
day after such record date, any such waiver or consent previously given shall
automatically and without further action by any Holder be cancelled and of no
further effect.

ARTICLE EIGHT

SUPPLEMENTAL INDENTURES

Section 8.1 Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a resolution of the Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Issuer Order), and the Trustee may from
time to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of
1939 as in force at the date of the execution thereof) for one or more of the
following purposes:

(a) to evidence the succession of another
corporation to the Issuer, or successive successions, and the
assumption by the successor corporation of the covenants,
agreements and obligations of the Issuer pursuant to Article
Nine;

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(b) to add to the covenants of the Issuer such
further covenants, restrictions, conditions or provisions as
the Issuer and the Trustee shall consider to be for the
protection of the Holders of all or any series of Securities
(and if such covenants, restrictions, conditions or provisions
are to be for the protection of less than all series of
Securities, stating that the same are expressly being included
solely for the protection of such series), and to make the
occurrence, or the occurrence and continuance, of a default in
any such additional covenants, restrictions, conditions or
provisions an Event of Default permitting the enforcement of
all or any of the several remedies provided, in this Indenture
as herein set forth; provided, that in respect of any such
additional covenant, restriction, condition or provision such
supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may
provide for an immediate enforcement upon such an Event of
Default or may limit the remedies available to the Trustee
upon such an Event of Default or may limit the right of the
Holders of a majority in aggregate principal amount of the
Securities of such series to waive such an Event of Default;

(c) to cure any ambiguity or to correct or
supplement any provision contained herein or in any
supplemental indenture which may be defective or inconsistent
with any other provision contained herein or in any
supplemental indenture, or to make any other provisions as the
Issuer may deem necessary or desirable, provided that no such
action shall adversely affect the interests of the Holders of
the Securities;

(d) to establish the form or terms of Securities
of any series as permitted by Sections 2.1 and 2.3 and to
provide for adjustment of conversion rights pursuant to
Section 13.5; and

(e) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with respect to
the Securities of one or more series and to add to or change
any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the
requirements of Section 6.11.

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The Trustee is hereby authorized to join with the Issuer in
the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of
this Section 8.1 may be executed without the consent of the Holders of any of
the Securities then Outstanding, notwithstanding any of the provisions of
Section 8.2.

Section 8.2 Supplemental Indentures With Consent of
Securityholders. With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate principal amount of the
Securities then Outstanding of any series affected by such supplemental
indenture, the Issuer, when authorized by a resolution of the Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Issuer Order), and the Trustee may, from
time to time and at any time, enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act of 1939 as in force at the date of execution thereof) for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Securities of such
series; provided, that no such supplemental indenture shall (a) extend the
final maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest, if any, thereon (or,
in the case of an Original Issue Discount Security, reduce the rate of accrual
of original issue discount thereon), or reduce or alter the method of
computation of any amount payable on redemption, repayment or purchase by the
Company thereof (or the time at which any such redemption, repayment or
purchase may be made), or make the principal thereof (including any amount in
respect of original issue discount), or interest, if any, thereon payable in
any coin or currency other than that provided in the Securities or in
accordance with the terms of the Securities, or reduce the portion of the
principal amount of an Original Issue Discount Security that would be due and
payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or
the amount thereof provable in bankruptcy pursuant to Section 5.2, or impair or
affect the right of any Securityholder to

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institute suit for the payment or conversion thereof or materially and
adversely affect the right to convert the Securities in accordance herewith or,
if the Securities provide therefor, any right of repayment or purchase at the
option of the Securityholder, in each case without the consent of the Holder of
each Security so affected, or change, amend or modify the subordination
provisions of Article Fourteen of this Indenture or Section 3.9 of this
Indenture or any of the definitions used in such Article Fourteen or Section
3.9 or consent to the departure from any of the terms of such Article Fourteen
or Section 3.9, in each case in any manner that would adversely affect the
Holders of any Securities of any series issued under this Indenture or (b)
reduce the aforesaid percentage of Securities of any series, the consent of the
Holders of which is required for any such supplemental indenture, without the
consent of the Holders of each Security so affected. No consent of any Holder
of any Security shall be necessary under this Section 8.2 to permit the Trustee
and the Issuer to execute supplemental indentures pursuant to Sections 8.1, 9.2
and 13.5.

A supplemental indenture which changes or eliminates any
covenant, Event of Default or other provision of this Indenture which has
expressly been included solely for the benefit of one or more particular series
of Securities, or which modifies the rights of Holders of Securities of such
series, with respect to such covenant or provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.

Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors (which resolution may provide general
terms or parameters for such action and may provide that the specific terms of
such action may be determined in accordance with or pursuant to an Issuer
Order) certified by the secretary or an assistant secretary of the Issuer
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Holders of the
Securities as aforesaid and other documents, if any, required by Section 7.1,
the Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.

It shall not be necessary for the consent of the
Securityholders under this Section 8.2 to approve the particular form of any
proposed supplemental indenture, but it shall

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be sufficient if such consent shall approve the substance thereof.

Promptly after the execution by the Issuer and the Trustee of
any supplemental indenture pursuant to the provisions of this Section 8.2, the
Trustee shall give notice thereof to the Holders of then Outstanding Securities
of each series affected thereby, by mailing a notice thereof by first-class
mail to such Holders at their addresses as they shall appear on the Security
register. Any failure of the Issuer to give such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.

Section 8.3 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Issuer and the Holders
of Securities of each series affected thereby shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes and every Holder of Securities of each
series affected thereby theretofor or thereafter authenticated and delivered
hereunder shall be bound thereby.

Section 8.4 Documents to be Given to Trustee. The Trustee,
subject to the provisions of Sections 6.1 and 6.2, shall be entitled to receive
an Officer's Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant to this Article Eight complies
with the applicable provisions of this Indenture.

Section 8.5 Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article Eight may bear a notation in form approved by the Trustee for such
series as to any matter provided for by such supplemental indenture or as to
any action taken by Securityholders. If the Issuer or the Trustee shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Issuer, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Issuer,
authenticated by the Trustee and delivered in exchange for the Securities of
such series then Outstanding.

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Section 8.6 Subordination Unimpaired. This Indenture may not
be amended to alter the subordination of any Outstanding Securities without the
written consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby.

ARTICLE NINE

CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE
OR OTHER DISPOSITION

Section 9.1 Issuer May Consolidate, etc., on Certain Terms.
Subject to the provisions of Section 9.2, nothing contained in this Indenture
or in any of the Securities shall prevent any consolidation or merger of the
Issuer with or into any other corporation or corporations (whether or not
affiliated with the Issuer), or successive consolidations or mergers in which
the Issuer or its successor or successors shall be a party or parties, or shall
prevent any sale, lease, exchange or other disposition of all or substantially
all the property and assets of the Issuer to any other corporation (whether or
not affiliated with the Issuer) authorized to acquire and operate the same;
provided, however, and the Issuer hereby covenants and agrees, that any such
consolidation, merger, sale, lease, exchange or other disposition shall be upon
the conditions that (a) immediately after such consolidation, merger, sale,
lease, exchange or other disposition the corporation (whether the Issuer or
such other corporation) formed by or surviving any such consolidation or
merger, or to which such sale, lease, exchange or other disposition shall have
been made, shall not be in default in the performance or observance of any of
the terms, covenants and conditions of this Indenture to be kept or performed
by the Issuer; (b) the corporation (if other than the Issuer) formed by or
surviving any such consolidation or merger, or to which such sale, lease,
exchange or other disposition shall have been made, shall be a corporation
organized under the laws of the United States of America, any state thereof or
the District of Columbia; and (c) the due and punctual payment of the principal
of and interest, if any, on all the Securities, according to their tenor, and
the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed by the Issuer, shall be expressly
assumed and the conversion rights, if any, shall be provided for in accordance
with this Indenture, by supplemental indenture satisfactory in form to the
Trustee executed and delivered to the Trustee, by the corporation (if other
than the Issuer) formed by such consolidation, or into which the Issuer shall
have been merged, or by the corporation which shall have acquired or leased
such property.

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Section 9.2 Successor Corporation to be Substituted. In case
of any such consolidation, merger, sale, lease, exchange or other disposition
and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to
the Trustee, of the due and punctual payment of the principal of and interest,
if any, on all of the Securities and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Issuer,
such successor corporation shall succeed to and be substituted for the Issuer,
with the same effect as if it had been named herein as the party of the first
part, and the Issuer (including any intervening successor to the Issuer which
shall have become the obligor hereunder) shall be relieved of any further
obligation under this Indenture and the Securities; provided, however, that in
the case of a lease of the property and assets of the Issuer (including any
such intervening successor), the Issuer (including any such intervening
successor) shall continue to be liable on its obligations under this Indenture
and the Securities to the extent, but only to the extent, of liability to pay
the principal of and interest, if any, on the Securities at the time, places
and rate prescribed in this Indenture and the Securities. Such successor
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of the Issuer, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Issuer and
delivered to the Trustee; and, upon the order of such successor corporation
instead of the Issuer and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver
any Securities which previously shall have been signed and delivered by the
officers of the Issuer to the Trustee for authentication, and any Securities
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as
the Securities theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Securities had been issued at the date of
the execution hereof.

In case of any such consolidation, merger, sale, lease,
exchange or other disposition such changes in phraseology and form (but not in
substance) may be made in the Securities, thereafter to be issued, as may be
appropriate.

Section 9.3 Opinion of Counsel to be Given Trustee. The
Trustee, subject to Sections 6.1 and 6.2, may receive an Officer's Certificate
and Opinion of Counsel as conclusive evidence that any such consolidation,
merger, sale, lease, exchange or other disposition and any such assumption and
any

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such provision for conversion rights comply with the provisions of this Article
Nine.

ARTICLE TEN

SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS

Section 10.1 Satisfaction and Discharge of Indenture. (A)
If at any time (a) the Issuer shall have paid or caused to be paid the
principal of and interest, if any, on all the Securities Outstanding (other
than Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9) as and when the same shall have
become due and payable, or (b) the Issuer shall have delivered to the Trustee
for cancellation all Securities theretofore authenticated (other than
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9); and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer, then this Indenture shall cease to be of further effect, and the
Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating to the
satisfaction and discharge contemplated by this provision have been complied
with, and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction and discharging this Indenture.
The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred, and to compensate the Trustee for any
services thereafter reasonably and properly rendered, by the Trustee in
connection with this Indenture or the Securities.

(B) If at any time (a) the Issuer shall have paid or
caused to be paid the principal of and interest, if any, on all the Securities
of any series Outstanding (other than Securities of such series which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 2.9) as and when the same shall have become due and payable, or (b) the
Issuer shall have delivered to the Trustee for cancellation all Securities of
any series theretofore authenticated (other than any Securities of such series
which have been destroyed, lost or stolen and which have been replaced or paid
as provided in Section 2.9), or (c) in the case of any series of Securities
with respect to which the exact amount described in clause (ii) below can be
determined at the time of making the deposit referred to in such clause (ii),
(i) all the Securities of such

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series not theretofore delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and (ii)
the Issuer shall have irrevocably deposited or caused to be deposited with the
Trustee as funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of Securities of such series, cash in an
amount (other than moneys repaid by the Trustee or any Paying Agent to the
Issuer in accordance with Section 10.4) or direct obligations of the United
States of America, backed by its full faith and credit ("U.S. Government
Obligations"), maturing as to principal and interest, if any, at such times and
in such amounts as will insure the availability of cash, or a combination
thereof, sufficient in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (A) the principal of and interest, if any, on
all Securities of such series on each date that such principal or interest, if
any, is due and payable, and (B) any mandatory sinking fund payments on the
dates on which such payments are due and payable in accordance with the terms
of this Indenture and the Securities of such series; then the Issuer shall be
deemed to have paid and discharged the entire indebtedness on all the
Securities of such series on the date of the deposit referred to in clause (ii)
above and the provisions of this Indenture with respect to the Securities of
such series shall no longer be in effect (except, in the case of clause (c) of
this Section 10.1(B), as to (i) rights of registration of transfer and exchange
of Securities of such series, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities of such series, (iii) rights of Holders of
Securities of such series to receive payments of principal thereof and
interest, if any, thereon upon the original stated due dates therefor (but not
upon acceleration), and remaining rights of the Holders of Securities of such
series to receive mandatory sinking fund payments, if any, (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, (v) the rights of
the Holders of Securities of such series as beneficiaries hereof with respect
to the property so deposited with the Trustee payable to all or any of them,
(vi) the obligations of the Issuer under Section 3.2 with respect to Securities
of such series and (vii) the obligations of the Issuer under Article Thirteen)
and the Trustee, on demand of the Issuer accompanied by an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent contemplated by this provision have been complied with, and at the
cost and expense of the Issuer, shall execute proper instruments acknowledging
the same.

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(C) The following provisions shall apply to the
Securities of each series (other than Securities that are convertible into
Common Stock) unless specifically otherwise provided in a Board Resolution,
Officer's Certificate or indenture supplemental hereto provided pursuant to
Section 2.3. In addition to discharge of this Indenture pursuant to the next
preceding paragraph, in the case of any series of Securities with respect to
which the exact amount described in subparagraph (a) below can be determined at
the time of making the deposit referred to in such subparagraph (a), the Issuer
shall be deemed to have paid and discharged the entire indebtedness on all the
Securities of such a series on the 91st day after the date of the deposit
referred to in subparagraph (a) below, and the provisions of this Indenture
with respect to the Securities of such series shall no longer be in effect
(except as to (i) rights of registration of transfer and exchange of Securities
of such series, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Securities of such series, (iii) rights of Holders of Securities of such
series to receive payments of principal thereof and interest, if any, thereon
upon the original stated due dates therefor (but not upon acceleration), and
remaining rights of the Holders of Securities of such series to receive
mandatory sinking fund payments, if any, (iv) the rights, obligations, duties
and immunities of the Trustee hereunder, (v) the rights of the Holders of
Securities of such series as beneficiaries hereof with respect to the property
so deposited with the Trustee payable to all or any of them, (vi) the
obligations of the Issuer under Section 3.2 with respect to Securities of such
series and (vii) the obligations of the Issuer under Article Thirteen) and the
Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an
Opinion of Counsel, each stating that all conditions precedent contemplated by
this provision have been complied with, and at the cost and expense of the
Issuer, shall execute proper instruments acknowledging the same, if

(a) with reference to this provision the Issuer has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of Securities of such
series (i) cash in an amount, or (ii) U.S. Government Obligations,
maturing as to principal and interest, if any, at such times and in
such amounts as will insure the availability of cash, or (iii) a
combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay (A) the
principal of and interest, if any, on all Securities of such series on
each date that such principal or interest, if any, is

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due and payable, and (B) any mandatory sinking fund payments on the
dates on which such payments are due and payable in accordance with
the terms of this Indenture and the Securities of such series;

(b) such deposit will not result in a breach or violation of,
or constitute a default under, any agreement or instrument to which
the Issuer is a party or by which it is bound; and

(c) the Issuer has delivered to the Trustee an Opinion of
Counsel based on the fact that (x) the Issuer has received from, or
there has been published by, the Internal Revenue Service a ruling or
(y), since the date hereof, there has been a change in the applicable
United States federal income tax law, in either case to the effect
that, and such opinion shall confirm that, the Holders of the
Securities of such series will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance
and discharge and will be subject to federal income tax on the same
amount and in the same manner and at the same times, as would have
been the case if such deposit, defeasance and discharge had not
occurred.

Section 10.2 Application by Trustee of Funds Deposited for
Payment of Securities. Subject to Section 10.4, all moneys and U.S.
Government Obligations deposited with the Trustee pursuant to Section 10.1
shall be held in trust, and such moneys and all moneys from such U.S.
Government Obligations shall be applied by it to the payment, either directly
or through any Paying Agent (including the Issuer acting as its own paying
agent), to the Holders of the particular Securities of such series for the
payment or redemption of which such moneys and U.S. Government Obligations have
been deposited with the Trustee, of all sums due and to become due thereon for
principal and interest, if any, but such moneys need not be segregated from
other funds except to the extent required by law. The Trustee and any Paying
Agent shall promptly pay to the Issuer, upon the written request of the Issuer,
any excess moneys or U.S. Government Obligations held by them at any time,
including all moneys deposited with the Trustee pursuant to Section 10.1(B) and
held by it or any Paying Agent for the payment of Securities subsequently
converted.

Section 10.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect
to Securities of any series, all moneys then held by any Paying Agent under the
provisions of this Indenture with respect to such series of Securities shall,

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upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.

Section 10.4 Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Two Years. Any moneys deposited with or paid to the
Trustee or any Paying Agent for the payment of the principal of or interest, if
any, on any Security of any series and not applied but remaining unclaimed for
two years after the date upon which such principal or interest, if any, shall
have become due and payable, shall, upon the written request of the Issuer and
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for
such series or such Paying Agent, and the Holder of the Securities of such
series shall, unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property laws, thereafter look only to the
Issuer for any payment which such Holder may be entitled to collect, and all
liability of the Trustee or any Paying Agent with respect to such moneys shall
thereupon cease.

Section 10.5 Indemnity for U.S. Government Obligations. The
Issuer shall pay and indemnity the Trustee against any tax, fee or other charge
imposed on or assessed against the U.S. Government Obligations deposited
pursuant to Section 10.1 or the principal or interest received in respect of
such obligations.

ARTICLE ELEVEN

MISCELLANEOUS PROVISIONS

Section 11.1 Partners, Incorporators, Stockholders,
Officers and Directors of Issuer Exempt from Individual Liability. No recourse
under or upon any obligation, covenant or agreement contained in this
Indenture, or in any Security, or because of any indebtedness evidenced
thereby, shall be had against any incorporator, as such or against any past,
present or future stockholder, officer or director, as such, of the Issuer, or
any partner of the Issuer or of any successor, either directly or through the
Issuer or any successor, under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise, all such liability being expressly waived and released
by the acceptance of the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.

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Section 11.2 Provisions of Indenture for the Sole Benefit of
Parties and Holders of Senior Indebtedness and of Securities. Nothing in this
Indenture or in the Securities, expressed or implied, shall give or be
construed to give to any Person, other than the parties hereto and their
successors and the holders of Senior Indebtedness and the Holders of the
Securities, any legal or equitable right, remedy or claim under this Indenture
or under any covenant or provision herein contained, all such covenants and
provisions being for the sole benefit of the parties hereto and their
successors, the holders of the Senior Indebtedness and the Holders of the
Securities.

Section 11.3 Successors and Assigns of Issuer Bound by
Indenture. All the covenants, stipulations, promises and agreements in this
Indenture contained by or on behalf of the Issuer shall bind its successors and
assigns, whether so expressed or not.

Section 11.4 Notices and Demands on Issuer, Trustee and
Holders of Securities. Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the Holders of Securities to or on the Issuer, or as required pursuant to the
Trust Indenture Act of 1939, may be given or served by being deposited postage
prepaid, first-class mail (except as otherwise specifically provided herein)
addressed (until another address of the Issuer is filed by the Issuer with the
Trustee) to Service Corporation International, 1929 Allen Parkway, P.O. Box
130548, Houston, Texas 77019, Attention: Secretary. Any notice, direction,
request or demand by the Issuer or any Holder of Securities to or upon the
Trustee shall be deemed to have been sufficiently given or served by being
deposited postage prepaid, first-class mail (except as otherwise specifically
provided herein) addressed (until another address of the Trustee is filed by
the Trustee with the Issuer) to Texas Commerce Bank National Association, 600
Travis Street, 8th Floor, Houston, Texas 77002, Attention: Vice President,
Corporate Trust Department.

Where this Indenture provides for notice to Holders of
Securities, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder entitled thereto, at his last address as it appears in the Security
register. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such

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waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.

In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail any notice when such
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to
the Trustee shall be deemed to be sufficient notice.

Section 11.5 Officer's Certificates and Opinions of Counsel;
Statements to be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, or as required pursuant to the Trust Indenture Act of 1939, the
Issuer shall furnish to the Trustee an Officer's Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.

Each certificate or opinion provided for in this Indenture
(other than a certificate provided pursuant to Section 4.3(d)) and delivered to
the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) 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, (c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
opinion as to whether or not such covenant or condition has been complied with,
and (d) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.

Any certificate, statement or opinion of an officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as

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aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous. Any certificate, statement or opinion of counsel may
be based, insofar as it relates to factual matters, information with respect to
which is in the possession of the Issuer, upon the certificate, statement or
opinion of or representations by an officer or officers of the Issuer, unless
such counsel knows that the certificate, statement or opinion or
representations with respect to the matters upon which his certificate,
statement or opinion may be based as aforesaid are erroneous, or in the
exercise of reasonable care should know that the same are erroneous.

Any certificate, statement or opinion of an officer of the
Issuer or of counsel may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.

Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.

Section 11.6 Payments Due on Saturdays, Sundays and Holidays.
If the date of maturity of principal of or interest, if any, on the Securities
of any series or the date fixed for redemption, purchase or repayment of any
such Security or the last date for conversion of any Security shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or
the Securities) payment of interest, if any, or principal need not be made on
such date and such conversion need not be made by such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date of maturity or the date fixed for redemption, purchase or repayment or
the last date of such conversion, and, in the case of payment, no interest
shall accrue for the period after such date.

Section 11.7 Conflict of Any Provision of Indenture with
Trust Indenture Act of 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in
this Indenture which is required to be included herein by any of Sections 310
to 317, inclusive, or is deemed applicable to this Indenture by virtue

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of the provisions, of the Trust Indenture Act of 1939, such required provision
shall control.

Section 11.8 GOVERNING LAW. THIS INDENTURE AND EACH SECURITY
SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF TEXAS, AND FOR
ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SUCH STATE OR APPLICABLE FEDERAL LAW.

Section 11.9 Counterparts. This Indenture may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.

Section 11.10 Effect of Headings. The Article and Section
headings herein and in the Table of Contents are for convenience only and shall
not affect the construction hereof.

Section 11.11 Separability Clause. In case any provision of
this Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

ARTICLE TWELVE

REDEMPTION OF SECURITIES AND SINKING FUNDS

Section 12.1 Applicability of Article. The provisions of
this Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series except as otherwise specified, as contemplated by
Section 2.3 for Securities of such series.

Section 12.2 Notice of Redemption; Partial Redemptions.
Notice of redemption to the Holders of Securities of any series to be redeemed
as a whole or in part at the option of the Issuer shall be given by mailing
notice of such redemption by first-class mail, postage prepaid, at least 30
days and not more than 60 days prior to the date fixed for redemption to such
Holders of Securities of such series at their last addresses as they shall
appear upon the registry books. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part

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shall not affect the validity of the proceedings for the redemption of any
other Security of such series.

The notice of redemption to each such Holder shall specify the
principal amount of each Security of such series held by such Holder to be
redeemed, the date fixed for redemption, the redemption price, the place or
places of payment, that payment will be made upon presentation and surrender of
such Securities, that such redemption is pursuant to the mandatory or optional
sinking fund, or both, if such be the case, that interest, if any, (or, in the
case of Original Issue Discount Securities, original issue discount) accrued to
the date fixed for redemption will be paid as specified in such notice and that
on and after said date interest, if any, thereon or on the portions thereof to
be redeemed (or, in the case of Original Issue Discount Securities, original
issue discount) will cease to accrue and, if applicable, shall also specify the
Conversion Price then in effect and the date on which the right to convert such
Securities or the portions thereof to be redeemed will expire. In case any
Security of a series is to be redeemed in part only, the notice of redemption
shall state the portion of the principal amount thereof to be redeemed and
shall state that on and after the date fixed for redemption, upon surrender of
such Security, a new Security or Securities of such series in principal amount
equal to the unredeemed portion thereof will be issued.

The notice of redemption of Securities of any series to be
redeemed at the option of the Issuer shall be given by the Issuer or, at the
Issuer's request, by the Trustee in the name and at the expense of the Issuer.

On or before the redemption date specified in the notice of
redemption given as provided in this Section 12.2, the Issuer will deposit with
the Trustee or with one or more Paying Agents (or, if the Issuer is acting as
its own paying agent, set aside, segregate and hold in trust as provided in
Section 3.5) an amount of money sufficient to redeem on the redemption date all
the Securities of such series so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued interest, if any, to the date fixed for
redemption. If any Security called for redemption is converted pursuant
hereto, any moneys deposited with the Trustee or any Paying Agent or so
segregated and held in trust for the redemption of such Security shall be paid
to the Issuer upon the Issuer's request, or, if then held by the Issuer, shall
be discharged from such trust. The Issuer will deliver to the Trustee at least
30 days prior to the date fixed for redemption (unless a shorter notice shall
be satisfactory to the Trustee)

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an Officer's Certificate stating the aggregate principal amount of Securities
to be redeemed. In case of a redemption at the election of the Issuer prior to
the expiration of any restriction on such redemption, the Issuer shall deliver
to the Trustee, prior to the giving of any notice of redemption to Holders
pursuant to this Section 12.2, an Officer's Certificate stating that such
restriction has been complied with.

If less than all the Securities of a series are to be
redeemed, the Trustee shall select, in such manner as it shall deem appropriate
and fair, Securities of such series to be redeemed. Securities may be redeemed
in part in multiples equal to the minimum authorized denomination for
Securities of such series or any multiple thereof. The Trustee shall promptly
notify the Issuer in writing of the Securities of such series selected for
redemption and, in the case of any Securities of such series selected for
partial redemption, the principal amount thereof to be redeemed. For all
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities of any series shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed. If any Security selected for partial redemption is surrendered for
conversion after such selection, the converted portion of such Security shall
be deemed (so far as may be) to be the portion selected for redemption. Upon
any redemption of less than all the Securities of a series, for purposes of
selection for redemption the Issuer and the Trustee may treat as Outstanding
Securities surrendered for conversion during the period of 15 days next
preceding the mailing of a notice of redemption, and need not treat as
Outstanding any Security authenticated and delivered during such period in
exchange for the unconverted portion of any Security converted in part during
such period.

Section 12.3 Payment of Securities Called for Redemption. If
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place or places stated in such notice at the applicable
redemption price, together with interest, if any, accrued to the date fixed for
redemption, and on and after said date (unless the Issuer shall default in the
payment of such Securities at the redemption price, together with interest, if
any, accrued to said date) interest (or, in the case of Original Issue Discount
Securities, original issue discount) on the Securities or portions of
Securities so called for redemption shall cease to accrue, and such Securities
shall cease from and after the date fixed for redemption (unless an earlier
date shall be

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specified in a Board Resolution, Officer's Certificate or executed supplemental
indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the form
and terms of the Securities of such series were established) to be convertible
into Common Stock and, except as provided in Sections 6.5 and 10.4, to be
entitled to any other benefit or security under this Indenture, and the Holders
thereof shall have no right in respect of such Securities except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption. On presentation and surrender of such Securities at a place of
payment specified in said notice, said Securities or the specified portions
thereof shall be paid and redeemed by the Issuer at the applicable redemption
price, together with interest, if any, accrued thereon to the date fixed for
redemption; provided that payment of interest, if any, becoming due on or prior
to the date fixed for redemption shall be payable to the Holders of Securities
registered as such on the relevant record date subject to the terms and
provisions of Sections 2.3 and 2.7 hereof.

If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the redemption price shall, until paid
or duly provided for, bear interest from the date fixed for redemption at the
rate of interest or Yield to Maturity (in the case of an Original Issue
Discount Security) borne by such Security, and such Security shall remain
convertible into Common Stock until the redemption price of such Security
(together with such interest thereon) shall have been paid or duly provided
for.

Upon presentation of any Security redeemed in part only, the
Issuer shall execute and the Trustee shall authenticate and deliver to or on
the order of the Holder thereof, at the expense of the Issuer, a new Security
or Securities of such series and of like tenor, of authorized denominations, in
principal amount equal to the unredeemed portion of the Security so presented.

Section 12.4 Exclusion of Certain Securities from Eligibility
for Selection for Redemption. Securities shall be excluded from eligibility
for selection for redemption if they are identified by registration and
certificate number in an Officer's Certificate delivered to the Trustee at
least 45 days prior to the last date on which notice of redemption may be given
as being owned of record and beneficially by, and not pledged or hypothecated
by, either (a) the Issuer or (b) a Person specifically identified in such
written statement as an Affiliate of the Issuer.

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Section 12.5 Mandatory and Optional Sinking Funds. The
minimum amount of any sinking fund payment provided for by the terms of the
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of the Securities of any series is herein referred to as an "optional
sinking fund payment". The date on which a sinking fund payment is to be made
is herein referred to as the "sinking fund payment date".

In lieu of making all or any part of any mandatory sinking
fund payment with respect to any series of Securities in cash, the Issuer may
at its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise acquired
(except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for Securities (not
previously so credited) converted into Common Stock and so delivered to the
Trustee for cancellation, (c) receive credit for optional sinking fund payments
(not previously so credited) made pursuant to this Section 12.5, or (d) receive
credit for Securities of such series (not previously so credited) redeemed by
the Issuer through any optional redemption provision contained in the terms of
such series. Securities so delivered or credited shall be received or credited
by the Trustee at the sinking fund redemption price specified in such
Securities.

On or before the 60th day next preceding each sinking fund
payment date for any series, the Issuer will deliver to the Trustee an
Officer's Certificate (a) specifying the portion of the mandatory sinking fund
payment to be satisfied by payment of cash and the portion to be satisfied by
credit of Securities of such series and the basis for such credit, (b) stating
that none of the Securities of such series to be so credited has theretofore
been so credited, (c) stating that no defaults in the payment of interest or
Events of Default with respect to such series have occurred (which have not
been waived or cured or otherwise ceased to exist) and are continuing, and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to the
Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered for
cancellation

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pursuant to Section 2.10 to the Trustee with such Officer's Certificate (or
reasonably promptly thereafter if acceptable to the Trustee). Such Officer's
Certificate shall be irrevocable and upon its receipt by the Trustee the Issuer
shall become unconditionally obligated to make all the cash payments or
payments therein referred to, if any, on or before the next succeeding sinking
fund payment date. Failure of the Issuer, on or before any such 60th day, to
deliver such Officer's Certificate and Securities (subject to the parenthetical
clause in the second preceding sentence) specified in this paragraph, if any,
shall not constitute a default but shall constitute, on and as of such date,
the irrevocable election of the Issuer (i) that the mandatory sinking fund
payment for such series due on the next succeeding sinking fund payment date
shall be paid entirely in cash without the option to deliver or credit
Securities of such series in respect thereof, and (ii) that the Issuer will
make no optional sinking fund payment with respect to such series as provided
in this Section 12.5.

If the sinking fund payment or payments (mandatory or optional
or both) to be made in cash on the next succeeding sinking fund payment date
plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $50,000 or a lesser sum if the Issuer shall so request with
respect to the Securities of any particular series, such cash shall be applied
on the next succeeding sinking fund payment date to the redemption of
Securities of such series at the sinking fund redemption price together with
accrued interest, if any, to the date fixed for redemption. If such amount
shall be $50,000 or less and the Issuer makes no such request, then it shall be
carried over until a sum in excess of $50,000 is available. The Trustee shall
select, in the manner provided in Section 12.2, for redemption on such sinking
fund payment date a sufficient principal amount of Securities of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by
the Issuer) inform the Issuer of the serial numbers of the Securities of such
series (or portions thereof) so selected. The Trustee, in the name and at the
expense of the Issuer (or the Issuer, if it shall so request the Trustee in
writing) shall cause notice of redemption of the Securities of such series to
be given in substantially the manner provided in Section 12.2 (and with the
effect provided in Section 12.3) for the redemption of Securities of such
series in part at the option of the Issuer. The amount of any sinking fund
payments not so applied or allocated to the redemption of Securities of such
series shall be added to the next cash sinking fund payment for such series
and, together with such payment, shall be applied in accordance with the
provisions of this Section 12.5. Any and all sinking fund moneys held on the
stated maturity date of the Securities of any particular series (or earlier, if

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such maturity is accelerated), which are not held for the payment or redemption
of particular Securities of such series shall be applied, together with other
moneys, if necessary, sufficient for the purpose, to the payment of the
principal of and interest, if any, on, the Securities of such series at
maturity.

On or before each sinking fund payment date, the Issuer shall
pay to the Trustee in cash or shall otherwise provide for the payment of all
interest, if any, accrued to the date fixed for redemption of Securities to be
redeemed on such sinking fund payment date.

The Trustee shall not redeem or cause to be redeemed any
Securities of a series with sinking fund moneys or give any notice of
redemption of Securities for such series by operation of the sinking fund
during the continuance of a default in payment of interest on such Securities
or of any Event of Default with respect to such series except that, where the
giving of notice of redemption of any Securities shall theretofore have been
made, the Trustee shall redeem or cause to be redeemed such Securities,
provided that it shall have received from the Issuer a sum sufficient for such
redemption. Except as aforesaid, any moneys in the sinking fund for such
series at the time when any such default or Event of Default shall occur, and
any moneys thereafter paid into the sinking fund, shall, during the continuance
of such default or Event of Default, be deemed to have been collected under
Article Five and held for the payment of all such Securities. In case such
Event of Default shall have been waived as provided in Section 5.7 or the
default cured on or before the 60th day preceding the sinking fund payment date
in any year, such moneys shall thereafter be applied on the next succeeding
sinking fund payment date in accordance with this Section 12.5 to the
redemption of such Securities.

ARTICLE THIRTEEN

CONVERSION OF SECURITIES

Section 13.1 Applicability of Article. The provisions of
this Article shall be applicable to the Securities of any series which are
convertible into Common Stock or, if so provided in a Board Resolution,
Officer's Certificate or executed supplemental indenture referred to in
Sections 2.1 and 2.3 by or pursuant to which the form and terms of the
Securities of such series were established, cash in lieu thereof, as and to the
extent provided by the terms of the Securities of such series.

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Section 13.2 Exercise of Conversion Privilege. In order to
exercise the conversion privilege, the Holder of any Security to be converted
shall surrender such Security to the Conversion Agent at any time during usual
business hours at its office or agency maintained for the purpose as provided
in this Indenture, accompanied by a fully executed written notice, in
substantially the form set forth on the reverse of the Security, that the
Holder elects to convert such Security or a stated portion thereof constituting
a multiple of $1,000 in principal amount, and, if such Security is surrendered
for conversion during the period between the close of business on any record
date for such Security and the opening of business on the related interest
payment date and has not been called for redemption on a redemption date within
such period (or on such interest payment date), accompanied also by payment of
an amount equal to the interest payable on such interest payment date on the
portion of the principal amount of the Security being surrendered for
conversion. Such notice shall also state the name or names (and address) in
which the certificate or certificates for shares of Common Stock shall be
issued (or to whom payment in cash in lieu of Common Stock shall be made).
Securities surrendered for conversion shall (if so required by the Issuer or
the Conversion Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Issuer and
the Conversion Agent duly executed by, the Holder or his attorney duly
authorized in writing. As promptly as practicable after the receipt of such
notice and the surrender of such Security as aforesaid, the Issuer shall,
subject to the provisions of Section 13.7, issue and deliver at such office or
agency to such Holder, or on his written order, a certificate or certificates
for the number of full shares of Common Stock issuable on conversion of such
Security in accordance with the provisions of such Security and cash, as
provided in Section 13.3, in respect of any fraction of a share of Common Stock
otherwise issuable upon such conversion or, if so provided in a Board
Resolution, Officer's Certificate or executed supplemental indenture referred
to in Sections 2.1 and 2.3 by or pursuant to which the form and terms of the
Securities of such series were established, cash in lieu of shares of Common
Stock. Such conversion shall be at the Conversion Price in effect, and shall
be deemed to have been effected, immediately prior to the close of business on
the date (herein called the "Date of Conversion") on which such notice in
proper form shall have been received by the Conversion Agent and such Security
shall have been surrendered as aforesaid, and the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable, if any, upon such conversion shall be deemed to have become on the
Date of Conversion the holder or holders of record of the shares represented
thereby; provided, however,

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that any such surrender on any date when the stock transfer books of the Issuer
shall be closed shall constitute the Person or Persons in whose name or names
the certificate or certificates for such shares are to be issued, if any, as
the record holder or holders thereof for all purposes at the opening of
business on the next succeeding day on which such stock transfer books are open
but such conversion shall nevertheless be at the Conversion Price in effect at
the close of business on the date when such Security shall have been so
surrendered with the conversion notice in proper form. In the case of
conversion of a portion, but less than all, of a Security, the Issuer shall
execute, and the Trustee shall authenticate and deliver to the Holder thereof,
at the expense of the Issuer, a Security or Securities in the aggregate
principal amount of the unconverted portion of the Security surrendered.
Except as otherwise expressly provided in this Indenture, no payment or
adjustment shall be made for interest accrued on any Security (or portion
thereof) converted or for dividends or distributions on any Common Stock issued
upon conversion of any Security. The right, if any, of a Holder of any
Security to cause the Issuer to redeem, purchase or repay such Security shall
terminate upon receipt by the Issuer of any notice of conversion of such
Security.

Section 13.3 Fractional Interests. No fractions of shares or
scrip representing fractions of shares shall be issued upon conversion of
Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities so surrendered. If any fraction of a share
of Common Stock would, except for the provisions of this Section 13.3, be
issuable on the conversion of any Security or Securities, the Issuer shall make
payment in lieu thereof in cash equal to the value of such fraction computed on
the basis of the Last Sale Price of one share of Common Stock on the most
recent Trading Day prior to the Date of Conversion. "Last Sale Price" on any
Trading Day shall mean (i) the closing price regular way (or, if no closing
price is reported the average of the bid and asked prices) as reported on the
New York Stock Exchange Composite Tape, or (ii) if on such Trading Day the
Common Stock is not listed or admitted to trading on such exchange, the closing
price regular way (or, if no closing price is reported the average of the bid
and asked prices) on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or (iii) if not listed or
admitted to trading on any national securities exchange on such Trading Day,
then the average of the closing bid and asked prices as reported through the
National Association of Securities Dealers, Inc. on its NASDAQ National Market

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System or NASDAQ System or a similar organization if NASDAQ is no longer
reporting information, or (iv) if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on such National Market
System or NASDAQ System on such Trading Day, then the average of the closing
bid and asked prices in the over-the-counter market as furnished by any New
York Stock Exchange member firm selected from time to time by the Issuer for
that purpose or (v) if not quoted by any such organization on such Trading Day,
the fair value of such Common Stock on such Trading Day, as determined by the
Board of Directors. The term "Trading Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday, other than any day on which securities are not
traded on any of the above-mentioned exchanges or in such markets.

Section 13.4 Adjustment of Conversion Price. The conversion
price or rate (herein called the "Conversion Price") for a series of Securities
shall be as set forth in a Board Resolution, Officer's Certificate or executed
supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to
which the form and terms of the Securities of such series were established,
and, except as otherwise provided therein, shall be subject to adjustment from
time to time as follows:

(a) In case the Issuer shall (1) pay a dividend
or make a distribution in shares of Common Stock on the Common
Stock, (2) subdivide its outstanding shares of Common Stock
into a greater number of shares, (3) combine its outstanding
shares of Common Stock into a smaller number of shares, (4)
issue by reclassification of its Common Stock any shares of
capital stock of the Issuer or (5) redeem any Associated
Rights, the Conversion Price in effect immediately prior to
such action shall be adjusted so that the Holder of any
Security thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock or
other capital stock of the Issuer which he would have owned
immediately following such action had such Security been
converted immediately prior thereto. An adjustment made
pursuant to this subsection (a) shall become effective
immediately, except as provided in subsection (e) below, after
the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.
If as a result of an adjustment made pursuant to this
subsection (a), the Holder of any Security thereafter
surrendered for conversion shall become entitled to receive
shares of two or more classes of

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capital stock (including shares of Common Stock and other
capital stock) of the Issuer, the Board of Directors (whose
determination shall be conclusive and shall be described in a
statement filed with the Trustee) shall determine the
allocation of the adjusted Conversion Price between or among
shares of such classes of capital stock or shares of Common
Stock and other capital stock.

(b) In case the Issuer shall issue rights or
warrants to all holders of Common Stock entitling them (for a
period not exceeding 45 days from the date of such issuance)
to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share (as
determined pursuant to subsection (d) below) of the Common
Stock on the record date mentioned below, the Conversion Price
shall be adjusted to a price, computed to the nearest cent, so
that the same shall equal the price determined by multiplying:

(1) the Conversion Price in effect
immediately prior to the date of issuance of such
rights or warrants by a fraction, of which

(2) the numerator shall be (A) the
number of shares of Common Stock outstanding on the
date of issuance of such rights or warrants,
immediately prior to such issuance, plus (B) the
number of shares which the aggregate offering price
of the total number of shares so offered for
subscription or purchase would purchase at such
current market price (determined by multiplying such
total number of shares by the exercise price of such
rights or warrants and dividing the product so
obtained by such current market price), and of which

(3) the denominator shall be (A) the
number of shares of Common Stock outstanding on the
date of issuance of such rights or warrants,
immediately prior to such issuance, plus (B) the
number of additional shares of Common Stock which are
so offered for subscription or purchase.

Such adjustment shall become effective immediately, except as
provided in subsection (e) below, after the record date for
the determination of holders entitled to receive such rights
or warrants

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(c) In case the Issuer shall distribute to
substantially all holders of Common Stock, evidences of
indebtedness, equity securities (including equity interests in
the Issuer's Subsidiaries) other than Common Stock, or other
assets (other than cash dividends paid out of surplus of the
Issuer), or shall distribute to substantially all holders of
Common Stock rights or warrants to subscribe for securities
(other than those referred to in subsection (b) above) then in
each such case the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of
such distribution by a fraction of which the numerator shall
be the current market price per share (determined as provided
in subsection (d) below) of the Common Stock on the record
date mentioned below less the then fair market value (as
determined by the Board of Directors, whose determination
shall, if made in good faith, be conclusive evidence of such
fair market value) of the portion of the assets so distributed
or of such subscription rights or warrants applicable to one
share of Common Stock, and of which the denominator shall be
such current market price per share of the Common Stock. Such
adjustment shall become effective immediately, except as
provided in subsection (e) below, after the record date for
the determination of stockholders entitled to receive such
distribution.

(d) For the purpose of any computation under
subsections (b) and (c) above, the current market price per
share of Common Stock on any date shall be deemed to be the
average of the Last Sale Prices for the 30 consecutive Trading
Days commencing 45 Trading Days before the date in question.

(e) In any case in which this Section 13.4 shall
require that an adjustment be made immediately following a
record date, the Issuer may elect to defer the effectiveness
of such adjustment (but in no event until a date later than
the effective time of the event giving rise to such
adjustment), in which case the Issuer shall, with respect to
any Security converted after such record date and before such
adjustment shall have become effective, (i) defer paying any
cash payment pursuant to Section 13.3 or issuing to the Holder
of such Security the number of shares of Common Stock and
other capital stock of the Issuer issuable upon such
conversion in excess of the

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number of shares of Common Stock and other capital stock of
the Issuer issuable thereupon only on the basis of the
Conversion Price prior to adjustment, and (ii) not later than
five Business Days after such adjustment shall have become
effective, pay to such Holder the appropriate cash payment
pursuant to Section 13.3 and issue to such Holder the
additional shares of Common Stock and other capital stock of
the Issuer issuable on such conversion.

(f) No adjustment in the Conversion Price shall
be required unless such adjustment would require an increase
or decrease of at least 1% of the Conversion Price; provided,
that any adjustments which by reason of this subsection (f)
are not required to be made shall be carried forward and taken
into account in any subsequent adjustment and, provided
further, that adjustment shall be required and made in
accordance with the provisions of this Article Thirteen (other
than this subsection (f)) not later than such time as may be
required in order to preserve the tax-free nature of a
distribution to the Holders of Securities or Common Stock.
All calculations under this Article Thirteen shall be made to
the nearest cent or to the nearest one-hundredth of a share,
as the case may be.

(g) Whenever the Conversion Price is adjusted as
herein provided, the Issuer shall promptly (i) file with the
Trustee and each Conversion Agent an Officer's Certificate
setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment, which certificate shall be conclusive evidence of
the correctness of such adjustment, and (ii) mail or cause to
be mailed a notice of such adjustment to each Holder of
Securities in the manner provided in Section 11.4.

Anything in this Section 13.4 to the contrary notwithstanding, the Issuer shall
be entitled to make such reductions in the Conversion Price, in addition to
those required by this Section 13.4, as it in its discretion shall determine to
be advisable in order that any stock dividend, subdivision of shares,
distribution of rights or warrants to purchase stock or securities, or
distribution of other assets (other than cash dividends) hereafter made by the
Issuer to its stockholders shall not be taxable.

Section 13.5 Continuation of Conversion Privilege in Case of
Merger, Consolidation or Sale of Assets. If any of the

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following shall occur, namely: (a) any consolidation or merger of the
Issuer as a result of which the holders of Common Stock shall be
entitled to receive stock, other securities or other assets (including
cash) with respect to or in exchange for Common Stock; or (b) sale,
lease, exchange or other disposition of all or substantially all of
the property and assets of the Issuer as an entirety, then the Issuer,
or such successor or purchasing corporation, as the case may be,
shall, as a condition precedent to such consolidation, merger, sale,
lease, exchange or other disposition, execute and deliver to the
Trustee a supplemental indenture (which shall conform to the Trust
Indenture Act of 1939 as in force at the date of the execution
thereof) providing that the Holder of each convertible Security then
Outstanding shall have the right to convert such Security into the
kind and amount of shares of stock and other securities and property
(including cash) receivable upon or in connection with such
consolidation, merger, sale, lease, exchange or other disposition by a
holder of the number of shares of Common Stock issuable upon
conversion of such Security immediately prior to such consolidation,
merger, sale, lease, exchange or other disposition. Such supplemental
indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in
this Article Thirteen. If, in the case of any such consolidation,
merger, sale, lease, exchange or other disposition, the stock or other
securities and property (including cash) receivable thereupon or in
connection therewith by a holder of shares of Common Stock includes
shares of stock or other securities and property (including cash) of a
corporation other than the successor or purchasing corporation, as the
case may be, in such consolidation, merger, sale, lease, exchange or
other disposition, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional
provisions to protect the interests of the Holders of the Securities
as the Board of Directors shall reasonably consider necessary by
reason of the foregoing. The provisions of this Section 13.5 shall
similarly apply to successive consolidations, mergers, sales, leases,
exchanges or other dispositions.

Notice of the execution of each such supplemental indenture
shall be mailed to each Holder of Securities in the manner provided in Section
11.4.

Neither the Trustee nor any Conversion Agent shall be under
any responsibility to determine the correctness of any provisions contained in
any such supplemental indenture relating either to the kind or amount of shares
of stock or securities or property (including cash) receivable by Holders of
Securities upon the conversion of their Securities after any such

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consolidation, merger, sale, lease, exchange or other disposition or to any
adjustment to be made with respect thereto, but, subject to the provisions of
Sections 6.1 and 6.2, may accept as conclusive evidence of the correctness of
any such provisions, and shall be protected in relying upon, the Officer's
Certificate (which the Issuer shall be obligated to file with the Trustee prior
to the execution of any such supplemental indenture) with respect thereto.

Section 13.6 Notice of Certain Events. If:

(a) the Issuer shall declare a dividend (or any
other distribution) payable to the holders of Common Stock
otherwise than in cash; or

(b) the Issuer shall authorize the granting to
all holders of Common Stock of rights to subscribe for or
purchase any shares of stock of any class or of any other
rights; or

(c) the Issuer shall authorize any
reclassification or change of the Common Stock (other than a
subdivision or combination of its outstanding shares of Common
Stock), or any consolidation or merger to which the Issuer is
a party and for which approval of any stockholders of the
Issuer is required, or the sale, lease, exchange or other
disposition of all or substantially all the property and
assets of the Issuer; or

(d) there shall be authorized or ordered any
voluntary or involuntary dissolution, liquidation or
winding-up of the Issuer;

then, the Issuer shall cause to be filed at the office or agency maintained for
the purpose of conversion of the Securities as provided in Section 3.2, and
shall cause to be mailed to each Holder of Securities, in the manner provided
in Section 11.4, at least 20 days before the date hereinafter specified (or the
earlier of the dates hereinafter specified, in the event that more than one
date is specified), a notice stating the date on which (1) a record is expected
to be taken for the purpose of such dividend, distribution or rights, or if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights are to be
determined, or (2) such reclassification, change, consolidation, merger, sale,
lease, exchange or other disposition, dissolution, liquidation or winding-up is
expected to become effective and the date, if any is to be fixed, as of which
it is expected that holders of

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Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reclassification,
change, consolidation, merger, sale, lease, exchange or other disposition,
dissolution, liquidation or winding-up.

Section 13.7 Taxes on Conversion. The Issuer will pay any
and all documentary, stamp or similar taxes payable to the United States of
America or any political subdivision or taxing authority thereof or therein in
respect of the issue or delivery of shares of Common Stock on conversion of
Securities pursuant thereto; provided, however, that the Issuer shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock in a name other
than that of the Holder of the Securities to be converted (or payment of cash
in lieu thereof to a Person other than such Holder) and no such issue or
delivery (or payment) shall be made unless and until the Person requesting such
issue or delivery (or payment) has paid to the Issuer the amount of any such
tax or has established, to the satisfaction of the Issuer, that such tax has
been paid. The Issuer extends no protection with respect to any other taxes
imposed in connection with conversion of Securities.

Section 13.8 Issuer to Provide Stock. The Issuer shall
reserve, free from preemptive rights, out of its authorized but unissued
shares, sufficient shares to provide for the conversion of convertible
Securities from time to time as such Securities are presented for conversion;
provided, however, that nothing contained herein shall be construed to preclude
the Issuer from satisfying its obligations in respect of the conversion of
Securities by delivery of repurchased shares of Common Stock which are held in
the treasury of the Issuer.

If any shares of Common Stock to be reserved for the purpose
of conversion of Securities hereunder require registration with or approval of
any governmental authority under any federal or state law before such shares
may be validly issued or delivered upon conversion, then the Issuer covenants
that it will in good faith and as expeditiously as possible endeavor to secure
such registration or approval, as the case may be; provided, however, that
nothing in this Section 13.8 shall be deemed to affect in any way the
obligations of the Issuer to convert Securities into Common Stock as provided
in this Article Thirteen.

Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value, if any, of the Common
Stock, the Issuer will take all corporate action which may, in the opinion of
counsel, be

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necessary in order that the Issuer may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.

The Issuer covenants that all shares of Common Stock which may
be issued upon conversion of Securities will upon issue be fully paid and
non-assessable by the Issuer and free of preemptive rights.

Section 13.9 Disclaimer of Responsibility for Certain
Matters. Neither the Trustee, any Conversion Agent nor any agent of either
shall at any time be under any duty or responsibility to any Holder of
Securities to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the Officer's
Certificate referred to in Section 13.4(g), or with respect to the nature or
extent of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed,
in making the same. Neither the Trustee, any Conversion Agent nor any agent of
either shall be accountable with respect to the validity or value (or the kind
or amount) of any shares of Common Stock, or of any securities or property
(including cash), which may at any time be issued or delivered upon the
conversion of any Security; and neither the Trustee, any Conversion Agent nor
any agent of either makes any representation with respect thereto. Neither the
Trustee, any Conversion Agent nor any agent of either shall be responsible for
any failure of the Issuer to issue, register the transfer of or deliver any
shares of Common Stock or stock certificates or other securities or property
(including cash) upon the surrender of any Security for the purpose of
conversion or, subject to Sections 6.1 and 6.2, to comply with any of the
covenants of the Issuer contained in this Article Thirteen.

Section 13.10 Return of Funds Deposited for Redemption of
Converted Securities. Any funds which at any time shall have been deposited by
the Issuer or on its behalf with the Trustee or any Paying Agent for the
purpose of paying the principal of and interest, if any, on any of the
Securities and which shall not be required for such purposes because of the
conversion of such Securities, as provided in this Indenture, shall forthwith
after such conversion be repaid to the Issuer by the Trustee or such Paying
Agent.

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ARTICLE FOURTEEN

SUBORDINATION

Section 14.1 Securities Subordinated to Senior Indebtedness.
The Issuer covenants and agrees that anything in this Indenture or the
Securities of any series to the contrary notwithstanding, the indebtedness
evidenced by the Securities of each series is subordinate and junior in right of
payment to all Senior Indebtedness to the extent provided herein, and each
Holder of Securities of each series, by his acceptance thereof, likewise
covenants and agrees to the subordination herein provided and shall be bound by
the provisions hereof.

Subject to Section 14.4, if the Issuer shall default in the
payment of any principal of or interest on any Senior Indebtedness when the
same becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration of acceleration or otherwise, then, upon written
notice of such default to the Issuer by the holders of such Senior Indebtedness
or any trustee therefor, unless and until such default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of the principal of or interest on any of the Securities, or in
respect of any redemption, retirement, purchase or other acquisition of any of
the Securities other than those made in capital stock of the Issuer (or cash in
lieu of fractional shares thereof, pursuant to Article Thirteen or otherwise
made in capital stock of the Issuer (or cash in lieu of fractional shares
thereof).

If (a) without the consent of the Issuer a court having
jurisdiction shall enter an order for relief with respect to the Issuer under
the Bankruptcy Code or without the consent of the Issuer a court having
jurisdiction shall enter a judgement, order or decree adjudging the Issuer as
bankrupt or insolvent, or enter an order for relief for reorganization,
arrangement, adjustment or composition of or in respect of the Issuer under the
Bankruptcy Code or applicable state insolvency law, or (b) the Issuer shall
institute proceedings for entry of an order for relief with respect to the
Issuer under the Bankruptcy Code or for an adjudication of insolvency, or shall
consent to the institution of bankruptcy or insolvency proceedings against it,
or shall file a petition seeking, or seek or consent to reorganization,
arrangement, composition or relief under the Bankruptcy Code or any applicable
state law, or shall consent to the filing of such petition or to the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator or similar official of the Issuer or of

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substantially all of its property, or the Issuer shall make a general
assignment for the benefit of creditors as recognized under the Bankruptcy
Code, then all Senior Indebtedness (including any interest thereon accruing
after the commencement of any such proceedings) shall first be paid in full
before any payment or distribution, whether in cash, securities or other
property, shall be made to any Holder of any Securities on account thereof.
Any payment or distribution, whether in cash, securities or other property
(other than securities of the Issuer or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in these subordination provisions with respect to
the indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment), which would otherwise
(but for these subordination provisions) be payable or deliverable in respect
of the Securities of any series shall be paid or delivered directly to the
holders of Senior Indebtedness in accordance with the priorities then existing
among such holders until all Senior Indebtedness (including any interest
thereon accruing after the commencement of any such proceedings) shall have
been paid in full. In the event of any such proceeding, after payment in full
of all sums owing with respect to Senior Indebtedness, the Holders of the
Securities, together with the holders of any obligations of the Issuer ranking
on a parity with the Securities, shall be entitled to be paid from the
remaining assets of the Issuer the amounts at the time due and owing on account
of unpaid principal of and interest, if any, on the Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Issuer ranking junior to the Securities and such other obligations.

If, notwithstanding the foregoing, any payment or distribution
of any character, whether in cash, securities or other property (other than
securities of the Issuer or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in the subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof, such
payment or distribution shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness then outstanding in accordance with the priorities then existing

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among such holders for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all such Senior Indebtedness
in full. In the event of the failure of the Trustee or any Holder to endorse
or assign any such payment, distribution or security, each holder of Senior
Indebtedness is hereby irrevocably authorized to endorse or assign the same.

No present or future holder of any Senior Indebtedness shall
be prejudiced in the right to enforce subordination of the indebtedness
evidenced by the Securities by any act or failure to act on the part of the
Issuer. Nothing contained herein shall impair, as between the Issuer and the
Holders of Securities of each series, the obligation of the Issuer to pay to
such Holders the principal of and interest, if any, on such Securities or
prevent the Trustee or the Holder from exercising all rights, powers and
remedies otherwise permitted by applicable law or hereunder upon a default or
Event of Default hereunder, all subject to the rights of the holders of the
Senior Indebtedness to receive cash, securities or other property otherwise
payable or deliverable to the Holders.

Senior Indebtedness shall not be deemed to have been paid in
full unless the holders thereof shall have received cash, securities or other
property equal to the amount of such Senior Indebtedness then outstanding. Upon
the payment in full of all Senior Indebtedness, the Holders of Securities of
each series shall be subrogated to all rights of any holders of Senior
Indebtedness to receive any further payments or distributions applicable to the
Senior Indebtedness until the indebtedness evidenced by the Securities of such
series shall have been paid in full, and such payments or distributions
received by such Holders, by reason of such subrogation, of cash, securities or
other property which otherwise would be paid or distributed to the holders of
Senior Indebtedness, shall, as between the Issuer and its creditors other than
the holders of Senior Indebtedness, on the one hand, and such Holders, on the
other hand, be deemed to be a payment by the Issuer on account of Senior
Indebtedness, and not on account of the Securities of such series.

The provisions of this Section 14.1 shall not impair any
rights, interests, remedies or powers of any secured creditor of the Issuer in
respect of any security interest the creation of which is not prohibited by the
provisions of this Indenture.

The securing of any obligations of the Issuer, otherwise
ranking on a parity with the Securities or ranking junior to the Securities,
shall not be deemed to prevent such

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obligations from constituting, respectively, obligations ranking on a parity
with the Securities or ranking junior to the Securities.

Section 14.2 Reliance on Certificate of Liquidating Agent;
Further Evidence as to Ownership of Senior Indebtedness. Upon any payment or
distribution of assets of the Issuer, the Trustee and the Holders shall be
entitled to rely upon an order or decree issued by any court of competent
jurisdiction in which such dissolution or winding up or liquidation or
reorganization or arrangement proceedings are pending or upon a certificate of
the trustee in bankruptcy, receiver, assignee for the benefit of creditors or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders, for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Issuer, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Fourteen. In the absence of any such bankruptcy
trustee, receiver, assignee or other Person, the Trustee shall be entitled to
rely upon a written notice by a Person representing himself to be a holder of
Senior Indebtedness (or a trustee or representative on behalf of such holder)
as evidence that such Person is a holder of Senior Indebtedness (or is such a
trustee or representative). If the Trustee determines, in good faith, that
further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distributions
pursuant to this Article Fourteen, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, as to the extent to which such
Person is entitled to participate in such payment or distribution, and as to
other facts pertinent to the rights of such Person under this Article Fourteen,
and if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.

Section 14.3 Payment Permitted If No Default. Nothing
contained in this Article Fourteen or elsewhere in this Indenture, or in any of
the Securities, shall prevent (a) the Issuer at any time, except during the
pendency of any default in the payment of any principal of or interest on any
Senior Indebtedness as described in Section 14.1 or of any of the events
described in clauses (a) and (b) of Section 14.1, from making payments of the
principal of or interest, if any, on the Securities, or (b) the application by
the Trustee or any Paying Agent of any moneys deposited with it hereunder to
payments of the principal of or interest, if any, on the Securities, unless

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and until the Trustee or such Paying Agent, as the case may be, shall have
timely received the Officer's Certificate or written notice provided for in
Section 14.5.

Section 14.4 Disputes with Holders of Certain Senior
Indebtedness. Any failure by the Issuer to make any payment on or under any
Senior Indebtedness, other than any Senior Indebtedness as to which the
provisions of this Section 14.4 shall have been waived by the Issuer in the
instrument or instruments by which the Issuer incurred, assumed, guaranteed or
otherwise created such Senior Indebtedness, shall not be deemed a default under
Section 14.1 if (i) the Issuer shall be disputing its obligation to make such
payment or perform such obligation, and (ii) either (A) no final judgment
relating to such dispute shall have been issued against the Issuer which is in
full force and effect and is not subject to further review, including a
judgment that has become final by reason of the expiration of the time within
which a party may seek further appeal or review, or (B) in the event of a
judgment that is subject to further review or appeal has been issued, the
Issuer shall in good faith be prosecuting an appeal or other proceeding for
review, and a stay of execution shall have been obtained pending such appeal or
review.

Section 14.5 Trustee Not Charged with Knowledge of
Prohibition. Anything in this Article Fourteen or elsewhere in this Indenture
contained to the contrary notwithstanding, the Trustee shall not at any time be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment of moneys to or by the Trustee and shall be entitled to
assume conclusively that no such facts exist and that no event specified in
clauses (a) and (b) of Section 14.1 has happened, unless and until the Trustee
shall have received an Officer's Certificate to that effect or notice in
writing to that effect signed by or on behalf of the holder or holders, or
their representatives, of Senior Indebtedness who shall have been certified by
the Issuer or otherwise established to the reasonable satisfaction of the
Trustee to be such holder or holders or representatives or from any trustee
under any indenture pursuant to which such Senior Indebtedness shall be
outstanding; provided, however, that, if the Trustee shall not have received
the Officer's Certificate or notice provided for in this Section 14.5 at least
three Business Days preceding the date upon which by the terms hereof any such
moneys may become payable for any purpose (including, without limitation, the
payment of either the principal of or interest, if any, on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such moneys and apply the same to the
purpose for which they were received and shall not be affected by any notice to
the

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contrary which may be received by it within three Business Days preceding such
date. The Issuer shall give prompt written notice to the Trustee and to each
Paying Agent of any facts which would prohibit any payment of moneys to or by
the Trustee or any Paying Agent, and the Trustee shall not be charged with
knowledge of the curing of any default or the elimination of any other fact or
condition preventing such payment or distribution unless and until the Trustee
shall have received an Officer's Certificate to such effect.

Section 14.6 Trustee to Effectuate Subordination. Each
Holder of Securities by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination as between such Holder and holders of Senior
Indebtedness as provided in this Article Fourteen and appoints the Trustee its
attorney- in-fact for any and all such purposes.

Section 14.7 Rights of Trustee as Holder of Senior
Indebtedness. The Trustee shall be entitled to all the rights set forth in
this Article Fourteen with respect to any Senior Indebtedness which may at the
time be held by it, to the same extent as any other holder of Senior
Indebtedness and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article Fourteen shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 6.6.

Section 14.8 Article Applicable to Paying Agents. In case at
any time any Paying Agent other than the Trustee shall have been appointed by
the Issuer and be then acting hereunder, the term "Trustee" as used in this
Article Fourteen shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if the Paying Agent were
named in this Article Fourteen in addition to or in place of the Trustee;
provided, however, that Sections 14.5 and 14.7 shall not apply to the Issuer if
it acts as Paying Agent.

Section 14.9 Subordination Rights Not Impaired by Acts or
Omissions of the Issuer or Holders of Senior Indebtedness. No right of any
present or future holders of any Senior Indebtedness to enforce subordination
as herein provided shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Issuer or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Issuer
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof which any such holder may have or be otherwise charged

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<PAGE> 116

with. The holders of Senior Indebtedness may, at any time or from time to time
and in their absolute discretion, change the manner, place or terms of payment,
change or extend the time of payment of, or renew or alter, any such Senior
Indebtedness, or amend or supplement any instrument pursuant to which any such
Senior Indebtedness is issued or by which it may be secured, or release any
security therefor, or exercise or refrain from exercising any other of their
rights under the Senior Indebtedness, including, without limitation, the waiver
of default thereunder, all without notice to or assent from the Holders of the
Securities or the Trustee and without affecting the obligations of the Issuer,
the Trustee or the Holders of Securities under this Article Fourteen.

Section 14.10 Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of the Senior Indebtedness, and shall not be liable to any such holders
if it shall mistakenly pay over or distribute money or assets to
Securityholders or the Issuer.

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<PAGE> 117
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, effective as of __________, 1994.

SERVICE CORPORATION INTERNATIONAL

By _________________________________________
Name:
Title:

TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee

By _________________________________________
Name:
Title:

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<PAGE> 1
EXHIBIT 4.4

________________________________________________________________________________

SERVICE CORPORATION INTERNATIONAL

AND

___________________________
___________________________

Warrant Agent

_____________

COMMON STOCK WARRANT AGREEMENT

Dated as of ________, 19__

_____________

________________________________________________________________________________
<PAGE> 2

TABLE OF CONTENTS*

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1. Appointment of Warrant Agent . . . . . . . . . . . . . . . . . . . . 1

Section 2. Form of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 3. Countersignature and Registration . . . . . . . . . . . . . . . . . . 2

Section 4. Transfers and Exchanges . . . . . . . . . . . . . . . . . . . . . . . 2

Section 5. Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 3

Section 6. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 7. Mutilated or Missing Warrants . . . . . . . . . . . . . . . . . . . . 4

Section 8. Reservation of Shares, etc. . . . . . . . . . . . . . . . . . . . . . 4

Section 9. Warrant Price; Adjustments . . . . . . . . . . . . . . . . . . . . . . 5

Section 10. Notice to Warrantholders . . . . . . . . . . . . . . . . . . . . . . . 12

Section 11. Certain Covenants of the Company . . . . . . . . . . . . . . . . . . . 12

Section 12. Disposition of Proceeds, etc. . . . . . . . . . . . . . . . . . . . . 13

Section 13. Merger or Consolidation or Change of Name of
Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 14. Duties of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . 14

Section 15. Change of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . 16

Section 16. Identity of Transfer Agent . . . . . . . . . . . . . . . . . . . . . . 17

Section 17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Section 18. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>

____________________

* This Table of Contents does not constitute a part of this Agreement or
have any bearing upon the interpretation of any of its terms and
provisions.

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<PAGE> 3
<TABLE>
<S> <C> <C>
Section 19. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 20. {Texas} Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 21. Benefits of This Agreement . . . . . . . . . . . . . . . . . . . . . . 18

Section 22. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>

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<PAGE> 4

COMMON STOCK WARRANT AGREEMENT dated as of _________ __, 19__,
between Service Corporation International, a Texas corporation (hereinafter
called the "Company"), and ___________ having a corporate trust office in
____________________, as warrant agent (hereinafter called the "Warrant
Agent").

WHEREAS, the Company proposes to issue {Class _} Purchase
Warrants entitling the holders thereof to purchase an aggregate of ____________
shares of Common Stock of the Company (par value $1.00 per share) ("Shares") at
an initial cash purchase price of $_________ per Share at any time {after
________ and} prior to 1:00 P.M. Houston, Texas time on ________________, 19__
(herein called the "expiration date") (unless extended as provided in Section
9A hereof); and

WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in
connection with the issuance, registration, transfer, exchange and exercise of
Warrants to be issued from time to time by the Company,

NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:

Section 1. Appointment of Warrant Agent. The Company
hereby appoints the Warrant Agent to act as agent for the Company in accordance
with the instructions hereinafter in this Agreement set forth, and the Warrant
Agent hereby accepts such appointment.

Section 2. Form of Warrant. The text of the Warrants
and the form of election to purchase Shares to be set forth on the reverse
thereof shall be substantially as set forth in Exhibit A attached hereto. Each
Warrant shall, subject to the terms of this Warrant Agreement, entitle the
registered holder thereof to initially purchase the number of Shares specified
therein at an initial exercise price of $______ per Share; provided, however,
that the warrant exercise price and the number of Shares issuable upon exercise
of Warrants are subject to adjustment upon the occurrence of certain events,
all as hereinafter provided. The Warrants shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any future
Chairman of the Board, Chairman of the Executive Committee of the Board, Vice
Chairman of the Board, Chief Executive Officer, President, Chief Operating
Officer, Vice Chairman, or Vice President of the Company, under its seal,
affixed or in facsimile, and by the manual or facsimile signature of the
present or any future Secretary of Assistant Secretary of the Company.

<PAGE> 5
The Company shall promptly notify the Warrant Agent from time
to time in writing of the number of Warrants to be issued and furnish written
instructions in connection therewith signed by an executive officer of the
Company; such notification and instructions may, but need not be, in the form
of a general or continuing authorization to the Warrant Agent.

The Warrants shall be dated by the Warrant Agent as of the
date of each initial issuance, and as of the date of issuance thereof upon any
transfer or exchange thereof.

Section 3. Countersignature and Registration. The
Warrant Agent shall maintain books for the transfer and registration of the
Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall
issue and register the Warrants in the names of the respective registered
holders thereof. The Warrants shall be countersigned by the Warrant Agent (or
by any successor to the Warrant Agent then acting as warrant agent under this
Agreement) and shall not be valid for any purpose unless so countersigned.
Such Warrants may be so countersigned, however, by the Warrant Agent (or by its
successor as warrant agent) and be delivered by the Warrant Agent,
notwithstanding that the persons whose manual or facsimile signatures appear
thereon as proper officers of the Company shall have caused to be such officers
at the time of such countersignature or delivery. Upon issuance of any
Warrant, the Company will present the same, or cause the same to be presented,
to the Warrant Agent for countersignature of such Warrant.

Section 4. Transfers and Exchanges. The Warrant Agent
shall transfer from time to time, any outstanding Warrants upon the books to be
maintained by the Warrant Agent for that purpose, upon the surrender thereof
for transfer properly endorsed or accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant of like tenor shall be issued
to the transferee and the surrendered Warrant shall be cancelled by the Warrant
Agent. All such Warrants so cancelled shall be delivered by the Warrant Agent
to the Company from time to time. The Warrants may be exchanged at the option
of the holder thereof, when surrendered at the office in ________________, of
the Warrant Agent, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Shares. The Warrant Agent is hereby irrevocably
authorized to countersign and deliver, in accordance with the provisions of
this Section and Section 3 of this Agreement, such new Warrants required
pursuant to the provisions of this Section, and the Company, whenever required
by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed
on behalf of the Company for such purpose.

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<PAGE> 6

Section 5. Exercise of Warrants. The registered holder
of each Warrant shall have the right, which may be exercised as in such Warrant
expressed, to purchase from the Company (and the Company shall issue and sell
to such registered holder) the number of Shares specified in such Warrants,
upon surrender to the Company at the office in _________________, of the
Warrant Agent of such Warrant, with the form of election to purchase on the
reverse thereof duly filled in and signed, and upon payment to the Warrant
Agent for the account of the Company of the warrant exercise price, determined
in accordance with the provisions of Section 9 of this Agreement, for the
number of Shares in respect of which such Warrant is then exercised. Payment
of such warrant exercise price may be made in case, or by certified check or
bank draft or postal or express money order, payable in United States dollars,
to the order of the Warrant Agent. No adjustment shall be made for any
dividends on any Shares issuable upon exercise of any Warrant. Subject to
Section 6, upon such surrender of Warrants, and payment of the warrant
exercise price as aforesaid, the Company shall issue and cause to be delivered
with all reasonable dispatch to or upon the written order of the registered
holder of such Warrants and in such name or names as such registered holder may
designate, a certificate or certificates for the number of full Shares so
purchased upon the exercise of such Warrants, together with cash, as provided
in Section 9 of this Agreement, in respect of any fraction of a Share
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Shares as of the date
of the surrender of such Warrants and payment of the warrant exercise price as
aforesaid; provided, however, that if, at the date of surrender of such
Warrants and payment of such warrant exercise price, the transfer books for the
Shares purchasable upon the exercise of such Warrants shall be closed, no such
surrender of such Warrants and no such payment of such warrant exercise price
shall be effective to constitute the person so designated to be named therein
as the holder of record of such Shares on such date, but shall be effective to
constitute such person as the holder of record of such Shares for all purposes
at the opening of business on the next succeeding day on which the transfer
books for the Shares purchasable upon the exercise of such Warrants shall be
opened, and the certificates for the Shares in respect of which such Warrants
are then exercised shall be issuable as of the date on which such books shall
next be opened, and until such date the Company shall be under no duty to
deliver any certificate for such Shares. The rights of purchase represented by
the Warrants shall be exercisable, at the election of the registered holders
thereof, either as an entirety or from time to time for part only of the Shares
specified therein and, in the event

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<PAGE> 7
that any Warrant is exercised in respect of less than all of the Shares
specified therein at any time prior to the date of expiration of the Warrants,
a new Warrant or Warrants of like tenor will be issued for the remaining number
of Shares specified in the Warrant so surrendered, and the Warrant Agent is
hereby irrevocably authorized to countersign and to deliver the required new
Warrants pursuant to the provisions of this Section and of Section 3 of this
Agreement, and the Company, whenever required by the Warrant Agent, will supply
the Warrant Agent with Warrants duly executed on behalf of the Company for such
purpose.

Section 6. Payment of Taxes. The Company will pay any
documentary stamp taxes attributable to the initial issuance of Shares issuable
upon the exercise of Warrants; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any certificates for Shares in a
name other than that of the registered holder of Warrants in respect of which
such Shares are issued and the Company shall not be required to issue and
deliver the certificates for such Shares unless and until the holder has paid
to the Company the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of
the Company that such tax has been paid.

Section 7. Mutilated or Missing Warrants. In case any
of the Warrants shall be mutilated, lost, stolen or destroyed, the Company will
issue and the Warrant Agent will countersign and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
a substitution for the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest, but only upon receipt
of evidence satisfactory to the Company and the Warrant Agent of such loss,
theft or destruction of such Warrants and indemnity, if requested, also
satisfactory to them. Applicants for such substitute Warrants shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company or the Warrant Agent may prescribe. Any such new
Warrant shall constitute an original contractual obligation of the Company
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by anyone.

Section 8. Reservation of Shares, etc. Prior to the
issuance of any Warrants there shall have been reserved, and the Company shall
at all times through the expiration date keep reserved, out of its authorized
and unissued Common Stock, a number of Shares sufficient to provide for the
exercise of the

-4-
<PAGE> 8

rights of purchase represented by the Warrants, and the Transfer Agent for the
Shares and every subsequent Transfer Agent for the Shares issuable upon the
exercise of any of the rights of purchase aforesaid are hereby irrevocably
authorized and directed at all times to reserve such number of authorized and
unissued Shares as shall be requisite for such purpose. The Company will keep
a copy of this Agreement on file with the Transfer Agent for the Shares
issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition
from time to time from such Transfer Agent certificates required to honor
outstanding Warrants that have been exercised. The Company will supply such
Transfer Agent with duly executed certificates for such purpose and with duly
executed certificates for such purpose and will itself provide or otherwise
make available any cash which may be issuable as provided in Section 9 of this
Agreement. All Warrants surrendered in the exercise of the rights thereby
evidenced or surrendered for transfer, exchange or partial exercise shall be
cancelled by the Warrant Agent and shall thereafter be delivered to the
Company.

Section 9. Warrant Price; Adjustments. A. The warrant
price per share at which Shares shall be purchasable upon exercise of Warrants
(herein called the "warrant exercise price") to and including the expiration
date (unless the expiration date is extended as provided below in this Section
9A) shall be $_______ per share, or, if adjusted as provided in this Section,
shall be such price as so adjusted. The Warrants will not be exercisable prior
to {the close of business on the date of any initial issuance thereof}
{________________} and will expire at 1:00 P.M. Houston, Texas time on the
expiration date; provided that the Company reserves the right to, and may, in
its sole discretion, at any time and from time to time, at such time or times
at the Company so determines, extend the expiration date of the Warrants for
such periods of time as it chooses; further provided that in no case may the
expiration date of the Warrants (as extended) be extended beyond five years
from the expiration date set forth above. Whenever the expiration date of the
Warrants is so extended, the Company shall at least 20 days prior to the then
expiration date cause to be mailed to the Warrant Agent and the registered
holders of the Warrants in accordance with the provisions of Section 17 hereof
a notice stating that the expiration date has been extended and setting forth
the new expiration date.

B. The above provision is, however, subject to the
following:

(1) The warrant exercise price, the number of Shares
purchasable upon exercise of each Warrant and the number

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<PAGE> 9
of Warrants outstanding shall be subject to adjustment as follows:

(a) In case the Company shall at any
time after the date of this Agreement (i) pay a dividend, or make a
distribution on, the Common Stock which is payable in shares of its Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of securities (including shares of Common Stock), or (iii)
combine or reclassify its outstanding shares of Common Stock into a smaller
number of shares (including shares of Common Stock), the number of Shares
purchasable upon exercise of each Warrant immediately prior to the occurrence
of such event shall be adjusted so that the holder of each Warrant shall be
entitled to receive upon payment of the warrant exercise price the aggregate
number of shares of the Company which, if such Warrant had been exercised
immediately prior to the occurrence of such event, such holder would have owned
or have been entitled to receive immediately after the occurrence of such
event. An adjustment made pursuant to this subparagraph (a) shall become
effective immediately after the record date in the case of a dividend and shall
become effective immediately after the effective date in the case of a
subdivision or combination. If, as a result of an adjustment made pursuant to
this subparagraph (a), the holder of any Warrant thereafter exercised shall
become entitled to receive shares of two or more classes of capital stock of
the Company, the Board of Directors of the Company (whose determination shall
be conclusive) shall determine the allocation between or among shares of such
classes of capital stock.

In the event that at any time, as a result of
an adjustment made pursuant to this subparagraph (a), the holder of any Warrant
thereafter exercised shall become entitled to receive any shares or other
securities of the Company other than shares of Common Stock, thereafter the
number of such other shares so received upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of
Common Stock contained in this paragraph, and other provisions of this
paragraph 9B(1) with respect to the shares of Common Stock shall apply on like
terms to any such other shares or other securities.

(b) In case the Company shall fix a
record date for the issuance of rights or warrants to all holders of its Common
Stock entitling them (for a period expiring within 45 days after such record
date) to subscribe for or purchase Common Stock at a price per share less than
the current market price per share of Common Stock (as defined in subparagraph
(e)

-6-
<PAGE> 10

below) at such record date, the warrant exercise price shall be determined by
multiplying the warrant exercise price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of Shares
of Common Stock outstanding on such record date plus the number of Shares of
Common Stock which the aggregate offering price of the total number of Shares
so offered would purchase at such current market price, and the denominator of
which shall be the number of Shares of Common Stock outstanding on such record
date plus the number of additional Shares of Common Stock offered for
subscription or purchase. Such adjustment shall be made successively whenever
such a record date is fixed, and shall become effective immediately after such
record date. In determining whether any rights or warrants entitle the holders
to subscribe for or purchase shares of common stock at less than such current
market price, and in determining the aggregate offering price of such shares,
there shall be taken into account any consideration received by the Company for
such rights or warrants, the value of such consideration, if other than cash,
to be determined by the Board of Directors of the Company. Common stock owned
by or held for the account of the Company or any majority owned subsidiary
shall not be deemed outstanding for the purpose of any adjustment required
under this subparagraph (b). To the extent that Shares of Common Stock are not
delivered after the expiration of such rights or warrants, the warrant exercise
price shall be readjusted to the warrant exercise price which would then be in
effect had the adjustments made in respect of the issuance of such rights or
warrants been made on the basis of delivery of only the number of Shares of
Common Stock actually delivered.

(c) In case the Company shall fix a
record date for making a distribution to all holders of its Common Stock of
evidences of its indebtedness or assets (excluding regular quarterly or other
periodic or recurring cash dividends or distributions and cash dividends or
distributions paid from retained earnings or referred to in subparagraph (a)
above) or rights or warrants to subscribe or warrants to purchase such
evidences of indebtedness or assets (excluding those referred to in
subparagraph (b) above), then in each such case the warrant exercise price
shall be determined by multiplying the warrant exercise price in effect
immediately prior to such record date by a fraction (x) the numerator of which
shall be such current market price (as defined in subparagraph (e) below) per
Share of Common Stock on such record date, less the then fair market value (as
determined in good faith by the Board of Directors, whose determination shall
be conclusive) of the portion of the assets or evidences of indebtedness so

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<PAGE> 11
distributed or of such subscription rights or warrants applicable to one share
of the Common Stock and (y) the denominator of which shall be the current
market price per share of the Common Stock on such record date. Such
adjustment shall be made successively whenever such a record date is fixed and
shall become effective immediately after such record date. Notwithstanding the
foregoing, in the event that the Company shall distribute any rights or
warrants to acquire capital stock ("Rights") pursuant to this subparagraph (c),
the distribution of separate certificates representing such rights subsequent
to their initial distribution (whether or not such distribution shall have
occurred prior to the date of the issuance of such Warrants) shall be deemed to
be the distribution of such Rights for purposes of this subparagraph (c),
provided that the Company may, in lieu of making any adjustment pursuant to
this subparagraph (c) upon a distribution of separate certificates representing
such Rights, make proper provision so that each holder of such Warrants who
exercises such Warrants (or any portion thereof) (A) before the record date for
such distribution of separate certificates shall be entitled to receive upon
such conversion shares of Common Stock issued with Rights and (B) after such
record date and prior to the expiration, redemption or termination of such
Rights shall be entitled to receive upon such exercise, in addition to the
shares of Common Stock issuable upon such exercise, the same number of such
Rights as would a holder of the number of shares of Common Stock that such
Warrants so exercised would have entitled the holder thereof to purchase in
accordance with the terms and provisions of and applicable to the Rights if
such Warrants were exercised immediately prior to the record date for such
distribution. Common Stock owned by or held for the account of the Company or
any majority owned subsidiary shall not be deemed outstanding for the purpose
of any adjustment required under this subparagraph (c).

(d) After each adjustment of the number
of shares purchasable upon exercise of each Warrant pursuant to subparagraph
9B(1)(a), the warrant exercise price shall be adjusted by multiplying such
warrant exercise price immediately prior to such adjustment by a fraction of
which the numerator shall be the number of Shares purchasable upon exercise of
each Warrant immediately prior to such adjustment, and the denominator of which
shall be the number of Shares so purchasable immediately thereafter. After
each adjustment of the warrant exercise price pursuant to subparagraph 9B(1)(b)
or (c), the total number of Shares or fractional part thereof purchasable upon
the exercise of each Warrant shall be proportionately adjusted to such number
of shares or fractional parts thereof as the aggregate warrant exercise price
of the number of shares or

-8-
<PAGE> 12

fractional part thereof purchasable immediately prior to such adjustment will
buy at the adjusted warrant exercise price.

(e) For the purpose of any computation
under subparagraphs 9B(1)(b) and (c) above, the current market price per Share
of Common Stock at any date shall be deemed to be the average of the daily
closing prices for the 30 consecutive business days commencing 45 business days
before the day in question. The closing price for each day shall be (i) if the
Common Stock is listed or admitted for trading on any national securities
exchange, the last sale price (regular way), or the average of the closing bid
and ask prices, if no sale occurred, of Common Stock on the principal
securities exchange on which the Common Stock is listed, (ii) if not listed as
described in (i), the mean between the closing high bid and low asked
quotations of Common Stock in the National Association of Securities Dealers,
Inc., Automated Quotation System, or any similar system or automated
dissemination of quotations or securities prices then in common use, if so
quoted, or (iii) if not quoted as described in clause (ii), the mean between
the high bid and low asked quotations for Common Stock as reported the National
Quotation Bureau Incorporated if at least two securities dealers have inserted
both bid and asked quotations for Common Stock on at least 5 of the 10
preceding days. If none of the conditions set forth above is met, the Closing
Price of Common Stock on any day or the average of such Closing Prices for any
period shall be the fair market value of Common Stock as determined by a member
firm of the New York Stock Exchange, Inc. selected by the Company.

(f) (A) Nothing contained herein shall be
construed to require an adjustment as a result of the issuance of Common Stock
pursuant to, or the granting or exercise of any rights under, the Company's
Shareholder Investment Plan or any successor plans providing for the purchase
of shares of Common Stock by the Company's shareholders or employees at a price
not less than 90% of the "average market price" during the "pricing period" as
such terms, or equivalent terms, are defined in, and as calculated pursuant to,
such plans from time to time.

(B) In addition, no adjustment in the
warrant exercise price shall be required unless and until the earlier of the
following shall have occurred: (x) such adjustment would require an increase
or decrease of at least 1% in the warrant exercise price or (y) a period of 3
years shall have elapsed from the date of the occurrence of any event requiring
any such adjustment pursuant to subparagraphs 9B(1)(a), (b) or (c) above. All
adjustments shall be made to the nearest one hundredth of a Share and the
nearest cent, and any adjustments which by reason of this subparagraph (f) are
not

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<PAGE> 13
required to be made shall be carried forward cumulatively and taken into
account in any subsequent adjustment which (including such carry-forward) is
required to be made under this subparagraph (f).

(g) In any case in which this
subparagraph 9B(1) shall require than an adjustment be made retroactively
immediately following a record date, the Company may elect to defer (but only
until five business days following the mailing of the notice described in
subparagraph 9B(5) below) issuing to the holder of any Warrant exercised after
such record date the Shares of the Company issuable upon such exercise over and
above the Shares issuable upon such exercise only on the basis of the warrant
exercise price prior to adjustment.

(h) The Company may, at its option, at
any time until the expiration date, reduce the then current warrant exercise
price to any amount deemed appropriate by the Board of Directors of the Company
for any period not exceeding twenty (20) consecutive days (as evidenced in a
resolution adopted by such Board of Directors), but only upon giving the
notices required by subparagraph 9(B)(5) twenty (20) days prior to taking such
action.

(i) Except as herein otherwise expressly
provided, no adjustment in the warrant exercise price shall be made by reason
of the issuance of Shares, or securities convertible into or exchangeable for
Shares, or securities carrying the right to purchase any of the foregoing or
for any other reason whatsoever.

(j) Irrespective of any of the
adjustments in the warrant exercise price or the number of Shares, Warrant
Certificates theretofore issued may continue to express the same prices and
number of shares as are stated in a similar Warrant Certificate issuable
initially, or at some subsequent time, pursuant to this Agreement and such
number of Shares specified therein shall be deemed to have been so adjusted.

(2) No fractional Shares of Common Stock shall be
issued upon the exercise of Warrants. If more than one Warrant shall be
exercised at one time by the same holder, the number of full Shares which shall
be issuable upon such exercise shall be computed on the basis of the aggregate
number of Shares purchased pursuant to the Warrants so exercised. Instead of
any fractional Share of Common Stock which would otherwise be issuable upon
exercise of any Warrant, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the last sales price
(or bid price if there were no sales) per Share of Common Stock in

-10-
<PAGE> 14

either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange on the business day which next precedes the day of exercise or,
if the Common Stock is not then listed or admitted to trading on the New York
Stock Exchange, an amount equal to the same fraction of the market price per
share of Common Stock (as determined in a manner described by the board of
Directors of the Corporation) at the close of business on the business day
which next precedes the day of exercise.

(3) In case any of the following shall occur
while any Warrants are outstanding: (a) any reclassification or change of the
outstanding Shares of Common Stock (other than a change in par value), or from
par value to no par value, or from no par value to par value; or (b) any
consolidation or merger to which the Company is a party (other than a
consolidation or a merger in which the Company is the continuing corporation
and which does not result in any reclassification of, or change in, the
outstanding shares of Common Stock issuable upon exercise of the Warrants); or
(c) any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety; then the Company, or
such successor or purchasing corporation, as the case may be, shall make
appropriate provision by amendment of this Agreement or otherwise so that the
holders of the Warrants then outstanding shall have the right at any time
thereafter, upon exercise of such Warrants, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance as would be
received by a holder of the number of shares of Common Stock issuable upon
exercise of such Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such provision shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9. The above provisions of this
paragraph 9B(3) shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales or conveyances.

(4) Before taking any action which would cause an
adjustment decreasing the warrant exercise price so that the warrant exercise
price is below the then par value of the shares of Common Stock, the Company
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Shares of Common Stock at the warrant exercise price as so
adjusted.

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<PAGE> 15
(5) Whenever the warrant exercise price then in
effect is adjusted as herein provided, the Company shall mail to each holder of
the Warrants at such holder's address as it shall appear on the books of the
Company a statement setting forth the adjusted warrant exercise price, then and
thereafter effective under the provisions hereof together with the facts, in
reasonable detail, upon which such adjustment is based.

(6) In case (i) the Company shall declare a
dividend (or any distribution) on its Common Stock payable otherwise than in
cash out of its current or retained earnings, or (ii) the Company shall
authorize the granting to the holders of its Common Stock of rights to
subscribe for or purchase any shares of capital stock of any class or of any
other rights, or (iii) there is to be any reclassification of the Common Stock
of the Company (other than a subdivision or combination of its outstanding
shares of Common Stock), or any consolidation of merger to which the Company is
a party and for which approval of any stockholders of the Company is required,
or (iv) any distribution is to be made on or in respect of the Common Stock in
connection with the dissolution, liquidation or winding up of the Company, then
the Company shall mail to each holder of Warrants at such holder's address as
it shall appear on the books of the Company, at least twenty days (or ten days
in the case specified in clause (i) or (ii) above) prior to the applicable
record date hereinafter specified, a notice stating (x) the record date for
such dividend, distribution or rights, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to such
divided, distribution or rights are to be determined, or (y) the date on which
such reclassification, consolidation, merger, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, dissolution, liquidation or
winding up. No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect any such transaction or any adjustment in the
warrant exercise price required by this Section 9.

Section 10. Notice to Warrantholders. Nothing contained in
this Agreement or in any of the Warrants shall be construed as conferring upon
the holders thereof the right to vote or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or the election of
directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company.

-12-
<PAGE> 16

Section 11. Certain Covenants of the Company. A. So long as
any unexpired Warrants remain outstanding and if required in order to comply
with the Securities Act of 1933, as amended (the "Act"), the Company covenants
and agrees that it will file such post-effective amendments to the registration
statement filed pursuant to the Act with respect to the Warrants (File No.
33-________) (or such other registration statements or post-effective
amendments or supplements) as may be necessary to permit the Company to deliver
to each person exercising a Warrant a prospectus meeting the requirements of
Section 10(a)(3) of the Act and otherwise complying therewith, and will deliver
such a prospectus to each such person. The Company further covenants and
agrees that it will obtain and keep effective all permits, consents and
approvals of governmental agencies and authorities, and will use its best
efforts to take all action which may be necessary to qualify the Shares for
sale under the securities laws of such of the United States, as may be
necessary to permit the free exercise of the Warrants, and the issuance, sale,
transfer and delivery of the Shares issued upon exercise of the Warrants, and
to maintain such qualifications during the entire period in which the Warrants
are exercisable.

B. The Company covenants and agrees that it shall
take all such action as may be necessary to ensure that all Shares will at the
time of delivery of certificates for such Shares (subject to payment of the
warrant exercise price) be duly and validly authorized and issued and fully
paid and nonassessable Shares, free from any preemptive rights and taxes,
liens, charges and securities interests created by or imposed upon the Company.

C. The Company covenants and agrees that it will
take all action which may be necessary to cause the Shares to be duly listed on
the New York Stock Exchange or the National Association of Securities Dealers
Automated Quotations System ("NASDAQ") or any securities exchange on which the
other shares of Common Stock of the Company are listed at the dates of exercise
of the Warrants.

Section 12. Disposition of Proceeds, etc. A. The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the Company all moneys received by the Warrant Agent
for the purchase of Shares through the exercise of such Warrants.

B. The Warrant Agent shall keep copies of this
Agreement available for inspection by holders of Warrants during normal
business hours at its principal office in the City of _________, _________.

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<PAGE> 17
Section 13. Merger or Consolidation or Change of Name of
Warrant Agent. Any corporation into which the Warrant Agent may be merged or
with which it may be consolidate, or any corporation resulting from any merger
or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Warrant Agent under the provisions of Section 16 of this Agreement.
In case at the time such successor to the Warrant Agent shall succeed to the
agency created by this Agreement, any of the Warrants shall have been
countersigned but not delivered, any such successor to the Warrant Agent may
adopt the countersignature of the original Warrant Agent and deliver such
Warrants so countersigned; and in case at that time any of the Warrants shall
not have been countersigned, any successor to the Warrant Agent may countersign
such Warrants either in the name of the predecessor Warrant Agent or in the
name of the successor Warrant Agent; and in all such cases such Warrant shall
have the full force provided in the Warrants and in this Agreement.

In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrants shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrants so countersigned; and in case at that time any of the
Warrants shall not have been countersigned, the Warrant Agent may countersign
such Warrants either in its prior name or in its changed name; and in all such
cases such Warrants shall have the full force provided in the Warrants and in
this Agreement.

Section 14. Duties of Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Warrants, by their acceptance thereof, shall be bound:

A. The statements contained herein and in the
Warrants shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the
Warrants except as herein otherwise provided.

-14-
<PAGE> 18

B. The Warrant Agent shall not be responsible for
any failure of the Company to comply with any of the covenants contained in
this Agreement or in the Warrants to be complied with by the Company.

C. The Warrant Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents or employees, and the Warrant
Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys, agents or employees or for any loss to the
Company resulting from such neglect or misconduct, provided reasonable care
shall have been exercised in the selection and continued employment thereof.

D. The Warrant Agent may consult at any time with
counsel satisfactory to it (who may be counsel for the Company), and the
Warrant Agent shall incur no liability or responsibility to the Company or to
any holder of any Warrant in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the opinion or the advice
of such counsel.

E. The Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant for any action
taken in reliance on any notice, resolution, waiver, consent, order,
certificate, or other paper, document or instrument believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties.

F. The Company agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent in the
execution of this Agreement, to reimburse the Warrant Agent for all expenses,
taxes and governmental charges and other charges of any kind and nature
incurred by the Warrant Agent in the execution of this Agreement and to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments costs and counsel fees, for anything done or
omitted by the Warrant Agent in the execution of this Agreement except as a
result of the Warrant Agent's gross negligence or bad faith.

G. The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more registered holders
of Warrants shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred, but this provision
shall not affect the power of the Warrant Agent to take such action as the
Warrant Agent may consider proper,

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<PAGE> 19
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrants or the production
thereof at any trial or other proceedings relative thereto, and any such
action, suit or proceeding instituted by the Warrant Agent shall be brought in
its name as Warrant Agent, and any recovery of judgment shall be for the
ratable benefit of the registered holders of the Warrants, as their respective
rights or interests may appear.

H. The Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or
lend money to or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.

I. The Warrant Agent shall act hereunder solely as
agent and not in a ministerial capacity, and its duties shall be determined
solely by the provisions hereof. The Warrant Agent shall not be liable for
anything which it may do or refrain from doing in connection with this
Agreement except for its own gross negligence or bad faith.

Section 15. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement by giving to the
Company notice in writing, and to the holders of the Warrants notice by
publication, of such resignation, specifying a date when such resignation shall
take effect, which notice shall be published at the expense of the Company at
least once a week for two consecutive weeks in a newspaper of general
circulation in the City of Houston, Texas, and the City of New York, New York,
prior to the date so specified. The Warrant Agent may be removed by the
Company by like notice from the Company to the Warrant Agent and the holders of
Warrants at the expense of the Company. If the Warrant Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Warrant Agent. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by the registered holder of a Warrant (who
shall, with such notice, submit his Warrant for inspection by the Company),
then at the expense of the Company, the Warrant Agent or the registered holder
of any Warrant may apply to any court of competent

-16-
<PAGE> 20

jurisdiction for the appointment of a successor to the Warrant Agent. Any
successor Warrant Agent, whether appointed by the Company or by such a court,
shall be a bank or trust company, in good standing, incorporated under the laws
of any State or of the United States of America, having at the time of its
appointment as Warrant Agent a combined capital and surplus of at least
$100,000,000. After appointment the successor Warrant Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent shall deliver and transfer to the successor Warrant Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Failure to file
or publish any notice provided for in this Section, however, or any defect
therein, shall not affect the legality or validity of the resignation or
removal of the Warrant Agent or the appointment of the successor Warrant Agent,
as the case may be.

Section 16. Identity of Transfer Agent. Forthwith upon the
appointment of any Transfer Agent for the Shares or of any subsequent Transfer
Agent for Shares issuable upon the exercise of the rights of purchase
represented by the Warrants, the Company will file with the Warrant Agent a
statement setting forth the name and address of such Transfer Agent.

Section 17. Notices. Any notice pursuant to this Agreement
to be given or made by the Warrant Agent or by the registered holder of any
Warrant to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:

Service Corporation International
1929 Allen Parkway
Houston, Texas 77219
Attn:___________________________

Any notice pursuant to this Agreement to be given or made by the Company or by
the registered holder of any Warrant to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company) as follows:

________________________________
________________________________
________________________________
Attn:___________________________

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<PAGE> 21
Any notice pursuant to this Agreement to be given or made by
the Company or the Warrant Agent to the registered holder of any Warrant shall
be sufficiently given or made (unless otherwise specifically provided for
herein) if sent by first-class mail, postage prepaid, addressed to said
registered holder at his address appearing on the Warrant register.

Section 18. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any holders of Warrants in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which will not materially
adversely affect the interest of the registered holders of the Warrants.

Section 19. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.

Section 20. {Texas} Contract. This Agreement and each
Warrant issued hereunder shall be deemed to be a contract made under the laws
of the State of {Texas} and for all purposes shall be construed in accordance
with the laws of said State.

Section 21. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or entity other than the
Company and the Warrant Agent and the holders of Warrants any legal or
equitable right, remedy or claim under this Agreement, but this Agreement shall
be for the sole and exclusive benefit of the Company and the Warrant Agent and
the holders of Warrants.

Section 22. Counterparts. This Agreement may be executed in
any number of counterparts, and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.

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<PAGE> 22

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.

SERVICE CORPORATION INTERNATIONAL

By:_____________________________

Attest:

___________________________

________________________________
Warrant Agent

By:_____________________________

Attest:

___________________________

-19-
<PAGE> 23
EXHIBIT A

(Form of Warrant)

Unless extended, Void After 1:00 P.M.,
Houston, Texas time, ____(A) ____, 19__

No. WA
Warrant to Purchase _______
Shares of Common Stock

CLASS __ WARRANT

SERVICE CORPORATION INTERNATIONAL

FOR VALUE RECEIVED, Service Corporation International (the
"Company"), upon the surrender {after __________} and prior to 1:00 P.M.,
Houston, Texas time, ____(A) ____, 19__ (unless extended) of this Warrant for
exercise, with the exercise form on the reverse side hereof duly executed, at
the office of ___________________________________, will sell and deliver or
cause to be sold and delivered to _______________ or assigns (the "Warrant
Holder") a certificate or certificates for the number of whole shares
purchasable, as indicated above, of fully paid and non-assessable shares of
Common Stock ($1.00 par value) of the Company (the "Shares"), for which the
Warrant is exercised, at a price of $_______ per Share (the "Warrant Price"),
subject to all the terms, provisions and conditions of a Common Stock Warrant
Agreement dated as of _____________, 19__ (the "Warrant Agreement"), executed
by the Company and _________________________________ (the "Warrant Agent"),
which Warrant Agreement is hereby incorporated herein by reference and made a
part hereof.

1. The Warrant Price shall be payable in cash, certified
check, bank draft or postal or express money order, payable in United States
dollars, to the order of the Warrant Agent. In certain events, the Warrant
Price and the number of Shares deliverable on exercise of this Warrant are
subject to adjustments, as provided in the Warrant Agreement. No certificates
for a fractional Share will be issued. As to any fraction of a Share which
would otherwise be purchasable on the exercise of a Warrant, the Company shall
pay the cash value thereof determined as provided in the Warrant Agreement.

2. This Warrant is issued in accordance with the Warrant
Agreement in which the rights of the Warrant Holders and the terms, provisions
and conditions upon which this Warrant has been executed and delivered and may
be exercised are more fully set forth. Every Warrant Holder, by acceptance
hereof, assents to all the terms, provisions and conditions of the Warrant
Agreement. A counterpart of the Warrant Agreement

____________________

(A) The expiration date; see page 1 of Warrant Agreement

A-1
<PAGE> 24
is on file at the office of the Company in Houston, Texas, and at the office of
the Warrant Agent in __________, ________.

3. In the event this Warrant shall not be exercised on
or before _____ (B) ____, 19__ , unless said date is extended as provided for in
Section 9A of the Warrant Agreement, this Warrant shall become void and all
rights hereunder shall cease.

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

This Warrant shall not be valid for any purpose until it shall
have been countersigned by the Warrant Agent.

IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed in its name and on its behalf by the facsimile signatures of its duly
authorized officers and a facsimile of its seal.

Dated: _____________, 19__

SERVICE CORPORATION
INTERNATIONAL

By ________________________

Attest:

/s/ _______________________

Countersigned:

____________________________
____________________________
Warrant Agent

By: _______________________
Authorized Signature

(REVERSE OF WARRANT)

4. Subject to the provisions of paragraph 3 contained on
the face of this Warrant, (a) this Warrant, with or without other Warrants,
upon surrender at the office of the Warrant Agent, may be exchanged for another
Warrant or Warrants of like tenor in denominations entitling the Warrant Holder
to purchase a like aggregate number of Shares, but only to the

____________________

(B) The expiration date; see page 1 of Warrant Agreement

A-2
<PAGE> 25

extent provided in the Warrant Agreement, or (b) this Warrant may be
transferred at the office of the Warrant Agent by the Warrant Holder or his
assigns, in person or by attorney duly authorized in writing, but only in the
manner provided in the Warrant Agreement and upon surrender of this Warrant.
If this Warrant shall be exercised in part, the Warrant Holder shall be
entitled to receive, upon surrender hereof, another Warrant or Warrants of like
tenor for the number of whole Shares not purchased upon such exercise.

5. No Warrant Holder shall be entitled to vote or
receive dividends or be deemed the holder of Shares of the Company for any
purpose, nor shall anything contained in the Warrant Agreement or herein be
construed to confer upon the Warrant Holder, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
of the Company, or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any action (whether upon any
recapitalization, issue of securities, reclassification of securities,
consolidation, merger, conveyance or otherwise) or to receive notice of
meetings or other action affecting shareholders (except for notices as provided
for in the Warrant Agreement), or to receive dividends or subscription rights
or otherwise, until this Warrant shall have been exercised and the Shares
purchasable on the exercise thereof shall have become deliverable as provided
in the Warrant Agreement.

6. Every holder of a Warrant, by accepting this Warrant,
consents and agrees with the Company, the Warrant Agent and with every
subsequent holder of this Warrant that until this Warrant is transferred on the
books of the Warrant Agent, the Company and the Warrant Agent may treat the
registered holder hereof as the absolute owner hereof for all purposes
notwithstanding any notice to the contrary.

7. The Company represents and warrants that the Shares
to be issued by it as provided in the Warrant Agreement have been duly
authorized and, when so issued in accordance with the Warrant Agreement, will
be validly issued, fully-paid and non-assessable. The Company represents and
warrants that it has authority to execute and deliver the Warrant Agreement and
the Warrants thereunder, but the Warrant Agent makes no representation with
respect thereto, or with respect to the validity or sufficiency of the
Warrants, the Warrant Agreement or the Shares.

A-3
<PAGE> 26
FORM OF EXERCISE

(Form of exercise to be executed by the Warrant Holder
at the time of exercise)

To _________________________
_____________________ Warrant
Agent:

The undersigned, holder of the within Warrant, (1) exercises
his right to purchase _____ of the Shares of Common Stock ($1.00 par value) of
Service Corporation International, which the undersigned is entitled to
purchase under the terms of the within Warrant, and (2) makes payment in full
for the number of Shares of Common Stock so purchased by payment of $________
in cash.

Please issue the certificate for Shares of Common Stock (and
any new Warrants in the case of a partial exercise) as follows:

________________________________________________________________________________
Print or Type Name

________________________________________________________________________________
Social Security or other Identifying Number

________________________________________________________________________________
Street Address

________________________________________________________________________________
City State Zip Code

A-4

<PAGE> 27

and deliver it (together with any new Warrants in the case of a partial
exercise) to the above address unless a different address is indicated below.

Dated: __________________

___________________________
Signature

(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant)

To be used only for special instructions for delivery.

Deliver to:

________________________________________________________________________________
Print or Type Name

________________________________________________________________________________
Street Address

________________________________________________________________________________
City State Zip Code

A-5
<PAGE> 28
ASSIGNMENT

(Form of assignment to be executed if
Warrant Holder desires to transfer Warrant)

FOR VALUE RECEIVED, _______________ hereby sells, assigns and
transfers unto ____________________

________________________________________________________________________________
Print or Type Name

________________________________________________________________________________
Street Address

________________________________________________________________________________
City State Zip Code

________________________________________________________________________________
Social Security or other Identifying Number

the right represented by the within Warrant to purchase ____ Shares of Common
Stock ($1.00 par value) of Service Corporation International to which the
within Warrant relates and appoints ____________ attorney to transfer such
right on the books of the Warrant Agent with full power of substitution in the
premises.

Dated: ____________________

___________________________
Signature

(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant)

Signature Guaranteed

___________________________

A-6

<PAGE> 1

EXHIBIT 4.5(a)

PAYMENT, GUARANTEE AND CONVERSION AGREEMENT

THIS PAYMENT, GUARANTEE AND CONVERSION AGREEMENT (the
``Agreement''), dated as of ( ), 1994 is executed and delivered by
Service Corporation International, a Texas corporation (``SCI''), for the
benefit of each of the Holders (as defined below) from time to time of the
Preferred Shares (as defined below) of SCI Finance LLC, a limited liability
company organized under the laws of the State of Texas (the ``Company'').

WHEREAS, the Company may issue from time to time, in one
or more series, up to 7,000,000 of its preferred interests (the ``Preferred
Shares'');

WHEREAS, the Company intends to issue up to ( )
Preferred Shares designated as $( ) Term Convertible Shares, Series A (the
``Series A Shares''), and SCI desires to enter into this Agreement for the
benefit of each of the Holders, as provided herein;

WHEREAS, the Company pursuant to the Loan Agreement (as
defined below) will loan to SCI International Limited, a Delaware corporation
and a wholly-owned subsidiary of SCI (``SCI Limited''), substantially all of
the proceeds from the issuance and sale of the Series A Shares and from the
issuance and sale of its common interests (the ``Common Shares''); and

WHEREAS, SCI desires to agree to the extent set forth
herein to pay to each of the Holders the Guarantee Payments (as defined below);
and

WHEREAS, SCI desires to agree to provide for the
conversion of the Preferred Shares into SCI Common Stock (as herein defined)
pursuant to the terms hereof and to make the delivery of such SCI Common Stock
and any other property then deliverable in respect of the Preferred Shares upon
conversion thereof in accordance with the terms hereof.

NOW, THEREFORE, in consideration of the purchase by each
Holder of the Series A Shares, which purchase SCI hereby agrees shall benefit
SCI, SCI executes and delivers this Agreement for the benefit of each of the
Holders.

<PAGE> 2
-2-

ARTICLE I

DEFINITIONS

As used in this Agreement, the terms set forth below
shall, unless the context otherwise requires, have the following meanings.

``Guarantee Payments'' shall mean the following payments,
without duplication, to the extent not paid by the Company: (i) any
accumulated and unpaid dividends which have been theretofore declared on the
Preferred Shares of any series out of moneys legally available therefor, (ii)
the redemption price (including all accumulated and unpaid dividends) to the
date of payment payable with respect to any Preferred Shares of any series
called for redemption by the Company out of funds legally available therefor,
and (iii) upon a liquidation of the Company, the lesser of (a) the aggregate
liquidation preference per Preferred Share and all accumulated and unpaid
dividends (whether or not declared) to the date of payment and (b) the amount
of remaining assets of the Company after satisfaction of other parties having
claims which, as a matter of law, are prior to those of the Holders.

``Holder'' shall mean any holder from time to time of any
Preferred Shares of any series; provided, however, that in determining whether
the Holders of the requisite percentage of Preferred Shares have given any
request, notice, consent or waiver hereunder, ``Holder'' shall not include SCI
or any entity owned 50% or more by SCI, either directly or indirectly.

``Liability Assumption Agreement'' shall mean the
Liability Assumption Agreement entered into between the Company and SCI
(including in its capacity as Manager of the Company) pursuant to which SCI has
agreed to guarantee the payment of any indebtedness or liabilities incurred by
the Company (other than obligations to Holders of Preferred Shares in such
Holders' capacities as Holders of such Preferred Shares).

``Loan Agreement'' shall mean the agreement, dated the
date hereof, by and among the Company, SCI Limited and SCI, pursuant to which
the Company will loan to SCI Limited substantially all of the proceeds received
by the Company from the issuance and sale of the Series A Shares and the Common
Shares.

``Loans'' shall mean the loans from the Company to SCI
Limited pursuant to the Loan Agreement.

``Payment Agent'' shall mean Society National Bank, as
registrar, transfer agent and paying and conversion agent, or its duly
appointed successor.

<PAGE> 3
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ARTICLE II

PAYMENT AND CONVERSION OBLIGATIONS

SECTION 2.01. Guarantee Payments; Conversion. (a)
SCI irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments, as and when due (except to the extent paid by the Company),
regardless of any defense, right of set-off or counterclaim which the Company
may have or assert. SCI's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amount by SCI to the Holders or by
causing the Company to pay such amounts to the Holders.

(b) (i) SCI also irrevocably and unconditionally
agrees to deliver to each Holder, upon conversion in accordance
with the Articles of Organization or Regulations of the Company
(as such may have been at any time heretofore, and may at any
time hereafter be, amended including, without limitation, any
amendment setting forth the terms of a series of Preferred
Shares including the Series A Shares, being referred to herein
as the ``Articles'') of any Preferred Shares held by such
Holder, all shares of common stock, $1.00 par value, of SCI (the
``SCI Common Stock'') or other property into which such
Preferred Shares are convertible pursuant to the Articles, as
and when so required upon compliance by the Holder with the
procedures set forth in such Articles, regardless of any
defense, right of set-off or counterclaim which the Company may
have or assert. SCI covenants and agrees that it shall duly and
punctually perform each and every term and provision of the
Articles in respect of the right of the Holders to convert the
Preferred Shares into SCI Common Stock or such other property as
set forth therein, and all such terms and provisions in respect
of such conversion are incorporated herein by reference mutatis
mutandis as if set forth herein, and SCI ratifies, confirms and
adopts, without reservation, each covenant and obligation
therein so contained in respect of any such conversion. SCI's
obligation to make any such delivery may be satisfied by direct
delivery of such SCI Common Stock or other property to such
Holder or by causing the Company to make such delivery to such
Holder.

(ii) SCI covenants that all shares of SCI
Common Stock which may be delivered upon conversion of Preferred
Shares will upon delivery be duly and validly issued and fully
paid and nonassessable, free of all liens and charges and not
subject to any preemptive rights.

(iii) SCI covenants that it will at all times
reserve and keep available, free from preemptive rights, out of
the aggregate of authorized but unissued shares and treasury
shares of SCI Common Stock, a sufficient number of shares of
SCI Common Stock for the purpose of effecting conversions of
Preferred Shares not theretofore converted. For purposes of
this reservation of SCI Common Stock, the

<PAGE> 4
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number of shares of SCI Common Stock which shall be deliverable
upon the conversion of all outstanding Preferred Shares shall
be computed as if at the time of computation all outstanding
Preferred Shares were held by a single holder. SCI covenants
that from time to time, in accordance with the laws of the
State of Texas, it will take such steps as are necessary to
submit to shareholders of SCI a resolution to increase the
authorized number of shares of SCI Common Stock if at any time
the number of authorized and unissued shares and treasury
shares of SCI Common Stock shall not be sufficient to permit the
conversion of all then-outstanding Preferred Shares. Prior to
the issuance of any Preferred Shares of a series, SCI will
authorize in all respects the issuance of shares of SCI Common
Stock upon conversion of Preferred Shares of such series.

(iv) If any shares of SCI Common Stock
required to be reserved for purposes of conversion of the
Preferred Shares hereunder require registration with or
approval of any governmental authority under any Federal or
state law before such shares may be issued upon conversion, SCI
agrees to use all reasonable efforts to expeditiously cause
such shares to be duly registered or approved, as the case may
be; provided, that, SCI shall not be required to subject itself
to general service of process in any jurisdiction where it is
not then so subject. If the SCI Common Stock is listed on the
New York Stock Exchange, quoted on the Nasdaq National Market
or listed on any other national securities exchange, SCI agrees
to use all reasonable efforts to list and keep listed on such
exchange or system, upon official notice of issuance, all
shares of SCI Common Stock issuable upon conversion of the
Preferred Shares.

SECTION 2.02. Waiver of Notice. SCI hereby waives
notice of acceptance of this Agreement and of any liability to which it applies
or may apply, presentment, demand for payment, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.

SECTION 2.03. Obligations Unconditional. The
obligations, covenants, agreements and duties of SCI under this Agreement shall
in no way be affected or impaired by reason of the happening from time to time
of any of the following:

(a) the release or waiver, by operation of
law or otherwise, of the performance or observance by the
Company of any express or implied agreement, covenant, term or
condition relating to the Preferred Shares to be performed or
observed by the Company;

(b) the extension of time for the payment or
delivery by the Company of all or any portion of the dividends
(other than in connection with a valid extension of the interest
payment periods by SCI Limited under the Loan Agreement),
redemption price, liquidation distributions, SCI Common Stock
or other property upon

<PAGE> 5
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conversion or any other sums or other property payable or
deliverable under the terms of the Preferred Shares or the
extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred
Shares;

(c) any failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert or
exercise any right, privilege, power or remedy conferred on the
Holders pursuant to the terms of the Preferred Shares, or any
action on the part of the Company granting indulgence or
extension of any kind;

(d) the voluntary or involuntary
liquidation, dissolution, sale of any collateral, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Company or any
of the assets of the Company;

(e) any invalidity of, or defect or
deficiency in, any of the Preferred Shares; or

(f) the settlement or compromise of any
obligation guaranteed hereby or hereby incurred.

There shall be no obligation of the Holders to give notice to, or obtain the
consent of, SCI with respect to the happening of any of the foregoing.

SECTION 2.04. Enforcement. This is a guarantee of
payment and performance and not of collection. A Holder may enforce this
Agreement directly against SCI, and SCI will waive any right or remedy to
require that any action be brought against the Company or any person or entity
before proceeding against SCI. Subject to Section 2.05, all waivers herein
contained shall be without prejudice to the Holders' rights at the Holders'
option to proceed against the Company, whether by separate action or by
joinder. SCI agrees that, with respect to the Guarantee Payments, this
Agreement shall not be discharged except by payment of the Guarantee Payments
in full (to the extent not paid by the Company), and by complete performance of
all other obligations of SCI contained in this Agreement and that all
obligations of SCI under Section 2.01(b) hereof shall not be satisfied
otherwise than upon delivery of the SCI Common Stock and other property then
deliverable upon conversion of the Preferred Shares in accordance with the
Articles.

SECTION 2.05. Subrogation. SCI shall be subrogated to
all rights (if any) of the Holders against the Company in respect of any
amounts or property paid or delivered to the Holders by SCI under this
Agreement and shall have the right to waive payment or delivery of any amount
or property in respect of which payment or delivery has been made to the
Holders by SCI pursuant to Section 2.01; provided, however, that SCI shall not
(except

<PAGE> 6
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to the extent required by mandatory provisions of law) exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of a payment or delivery under this
Agreement, if at the time of any such payment or delivery, any amounts or
deliveries are due and unpaid or unmade under this Agreement. If any amount or
property shall be paid or delivered to SCI in violation of the preceding
sentence, SCI agrees to pay over or deliver such amount or property to the
Holders.

SECTION 2.06. Independent Obligations. SCI acknowledges
that its obligations hereunder are independent of the obligations of the
Company with respect to the Preferred Shares and that SCI shall be liable as
principal and sole debtor hereunder to make Guarantee Payments and make
deliveries pursuant to Section 2.01(b) pursuant to the terms of this Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (f), inclusive, of Section 2.03.

ARTICLE III

COVENANTS AND RANKING

SECTION 3.01. Limitations on Payments on, or in respect
of, SCI Capital Stock. So long as any Preferred Shares of any series remain
outstanding, SCI shall not declare or pay any dividend on, and SCI shall not,
and shall not permit any of its majority-owned subsidiaries to, redeem,
purchase, acquire or make a liquidation payment with respect to, any of SCI's
capital stock (other than (1) any redemption of rights to purchase Series C
Junior Participating Preferred Stock of SCI (or such other securities in lieu
thereof as specified in the Rights Agreement) pursuant to the Rights Agreement
dated as of July 18, 1988 between SCI and Texas Commerce Bank National
Association as rights agent, as amended or supplemented from time to time and
(2) any reacquisition by SCI of any of its stock issued in connection with any
acquisition by SCI or any of its subsidiaries of a business (including any
assets, leases or liabilities (contingent or otherwise) related thereto (as a
result of a purchase price adjustment or settlement of breach of warranties in
connection with such acquisition) or make any guarantee payments with respect
to the foregoing (other than payments under this Agreement) and will otherwise
comply with Section 3(c) of the Amendment to the Company's Regulations
establishing the Series A Shares as if such provisions were applicable to them,
if at such time (i) SCI shall be in default with respect to its payment or
other obligations hereunder or under the Liability Assumption Agreement, (ii)
there shall have occurred any event that constitutes an Event of Default (as
defined in the Loan Agreement) under the Loan Agreement or (iii) there shall
exist any nonpayment of interest under the Loans (including, without
limitation, during any valid extension of the interest payment periods in
accordance with the terms of the Loan Agreement). SCI shall take all actions
necessary to ensure the compliance of its subsidiaries with this Section 3.01.

<PAGE> 7
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SECTION 3.02. Additional Covenants. SCI covenants, so
long as any Preferred Shares of any series remain outstanding: (i) to maintain
direct 100% ownership of the Common Shares and any other interests in the
Company (other than the Preferred Shares); (ii) to cause more than 20% of the
total value (initially measured by shareholders' equity determined in
accordance with generally accepted accounting principles) of the Company and,
subject to the preferential rights of the Holders of Preferred Shares as to
dividends and liquidation distributions, more than 20% of all interests in the
capital, income, gain, loss, deduction and credit of the Company to be
represented by Common Shares; (iii) not to voluntarily dissolve, wind-up or
liquidate the Company; (iv) to remain the Manager of the Company and to timely
perform all of its duties as Manager of the Company (including the duty to
declare and pay dividends on the Preferred Shares to the extent set forth in
the Articles); and (v) to use reasonable efforts to cause the Company to remain
a limited liability company under the laws of the State of Texas (provided
however that the Company may reorganize under the laws of another jurisdiction
provided that the Company has received an opinion of counsel from nationally
recognized legal counsel that such reorganization will not have an adverse
effect, including, without limitation, an adverse tax effect, on the Holders of
the Series A Shares) and use reasonable efforts to cause the Company to
continue to be treated as a partnership for United States federal income tax
purposes.

SECTION 3.03. Ranking. The obligations of SCI under
this Agreement in respect of the Guarantee Payments will constitute an
unsecured obligation of SCI and will rank (i) junior in right of payment to all
other liabilities of SCI and will be subordinated in right of payment to all
such liabilities in the same manner and to the same extent as SCI's guarantee
of obligations under the Loan Agreement is subordinated to Senior Indebtedness
(as defined in the Loan Agreement), (ii) senior to the preferred stock of any
series now or hereafter issued by SCI and (iii) pari passu with any guarantee
now or hereafter entered into by SCI in respect of any preferred or preference
stock of any affiliate of SCI.

ARTICLE IV

TERMINATION

This Agreement shall terminate and be of no further force
and effect as to a series of Preferred Shares upon full payment of the
redemption price (including all accumulated and unpaid dividends) or the
retirement or cancellation of all of such series of Preferred Shares, or
delivery of all shares of SCI Common Stock or other property required to be
delivered upon conversion, with respect to all outstanding Preferred Shares of
that series or shall terminate completely upon full payment and delivery of the
amounts payable or deliverable to the Holders upon liquidation of the Company
including the delivery of all shares of SCI Common Stock or other property
required to be delivered upon conversion of

<PAGE> 8
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the Preferred Shares of all such series; provided, however, that this Agreement
shall continue to be effective or shall be reinstated, as the case may be, with
respect to any such series if at any time any Holder of Preferred Shares of
such series must restore payment of any sums or property paid or delivered
under the Preferred Shares of such series or under this Agreement for any
reason whatsoever.

ARTICLE V

MISCELLANEOUS

SECTION 5.01. Binding Effect. All guarantees and
agreements contained in this Agreement shall bind the successors, assigns,
receivers, trustees and representatives of SCI and shall inure to the benefit
of the Holders. SCI shall not assign its obligations hereunder without the
prior approval of the Holders of not less than 66-2/3% in liquidation
preference (plus all accrued and unpaid dividends per share) of each series of
Preferred Shares then outstanding. No approval of the Holders shall be
required in connection with a merger of SCI with or into any entity if: (i) at
such time no Event of Default under the Loan Agreement has occurred and is
continuing, or would occur as a result of such merger, and (ii) either (I) SCI
is the survivor of such merger or (II) the survivor is a corporation organized
under the laws of the United States or any state thereof and expressly assumes
all of the obligations of SCI under this Agreement and the Loan Agreement, and
SCI receives an opinion of counsel from nationally recognized counsel that the
merger will not result in the recognition of taxable gain or loss by the
Holders of the Preferred Shares.

SECTION 5.02. Amendment. Except with respect to any
changes which do not adversely affect the rights of Holders (in which case no
vote will be required), this Agreement may only be amended by an instrument in
writing signed by SCI with the prior approval of the Holders of not less than
66-2/3% in liquidation preference (plus all accrued and unpaid dividends per
share) of each series of Preferred Shares then outstanding and affected
thereby.

<PAGE> 9
-9-

SECTION 5.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder to SCI shall be given
in writing by delivering the same against receipt therefor by facsimile
transmission (confirmed by mail) or telex, addressed to SCI, as follows (and if
so given, shall be deemed given when mailed or upon receipt of an answer-back,
if sent by telex), to it:

Service Corporation International
1929 Allen Parkway
Houston, Texas 77019
Fax No: (713) 525-5475
Attention: ( )

Any notice, request or other communication required or
permitted to be given hereunder to the Holders shall be given by SCI in the
same manner as notices sent by the Company to the Holders.

SECTION 5.04. Beneficiaries of this Agreement. This
Agreement is solely for the benefit of the Holders and is not separately
transferable from the Preferred Shares.

SECTION 5.05. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY
THEREIN AND WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

THIS PAYMENT, GUARANTEE AND CONVERSION AGREEMENT is
executed as of the day and year first above written.

SERVICE CORPORATION INTERNATIONAL

By:______________________________
Name:
Title:

<PAGE> 1

EXHIBIT 4.5(b)

LOAN AGREEMENT

LOAN AGREEMENT, dated as of ( ), 1994, among SCI
International Limited, a Delaware corporation (``SCI Limited''), Service
Corporation International, a Texas corporation (``SCI''), and SCI Finance LLC,
a limited liability company organized under the laws of the State of Texas (the
``Company'').

WHEREAS, the Company intends to issue its common interests
(the ``Common Shares'') to SCI, and receive related capital contributions, in
an aggregate amount of at least $( ) (the ``Common Share Payments'') and to
issue and sell its preferred interests (the ``Preferred Shares''), and to issue
and sell at least ( ) Preferred Shares designated as $( ) Term Convertible
Shares, Series A (the ``Series A Shares''), with a liquidation preference equal
to $50 per Series A Share (the ``Liquidation Preference''); and

WHEREAS, SCI (i) is guaranteeing (A) the payment on
liquidation or redemption of the Series A Shares and (B) the payment of
dividends on the Series A Shares if and when declared to the extent that there
are sufficient funds legally available therefor, and (ii) is irrevocably and
unconditionally covenanting and agreeing to deliver shares of its Common Stock,
$1.00 par value (``SCI Common Stock''), upon conversion of the Series A Shares,
all to the extent set forth in the Payment, Guarantee and Conversion Agreement,
dated as of ( ), 1994 by SCI for the benefit of each holder of Preferred
Shares (the ``SCI Agreement''); and

WHEREAS, the primary purpose for which the Company was formed
is to refinance indebtedness incurred in connection with acquisitions of stock
of non-United States entities by one or more indirect subsidiaries of SCI, and
consistent therewith, SCI has asked the Company to make a loan to SCI Limited
in an aggregate principal amount approximately equal to the sum of the
aggregate Common Share Payments and the aggregate Liquidation Preference of the
Series A Shares issued and sold by the Company less 1% of such sum; and

WHEREAS, the Company intends to make the aforementioned loans
to SCI Limited on the terms and conditions hereinafter stated; and

WHEREAS, SCI desires to guarantee the payment obligations of
SCI Limited hereunder as and when due to the extent herein set forth; and

WHEREAS, it is a condition precedent to the making of the
Loans (as defined below) that SCI Limited secure its obligations in respect of
the Loans with the pledge of 50% of the outstanding capital stock of Service
Corporation International plc pursuant to the terms

<PAGE> 2
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of the Stock Pledge Agreement in the form attached hereto as Exhibit A (the
``Pledge Agreement'').

NOW THEREFORE, SCI Limited, SCI and the Company hereby agree
as follows:

ARTICLE I

THE LOANS

Section 1.01. The Loans. Subject to the terms and conditions
herein, the Company agrees to make loans to SCI Limited on the date hereof in
an aggregate principal amount of $( ) in next day funds, such loans to
approximately equal the sum of the aggregate stated Liquidation Preference of
the Series A Shares issued and sold on the date hereof plus the related Common
Share Payments less 1% of such sum. All such loans shall be referred to herein
as the ``Loans.''

Section 1.02. Term of the Loans; Mandatory Prepayment. (a)
If the Company redeems Series A Shares in accordance with the terms thereof,
the Loans shall become due and payable in a principal amount equal to the
aggregate stated Liquidation Preference of the Series A Shares so redeemed,
together with any and all accrued but unpaid interest thereon and any premium
in excess of such principal amount in accordance with Section 1.03 hereof. Any
payment pursuant to this Section 1.02(a) shall be made in immediately available
funds prior to 12:00 noon, New York City time, on the date fixed for such
redemption or at such other time on such earlier date as the Company, SCI
Limited and SCI shall agree.

(b) The entire principal amount of the Loans shall become due
and payable, together with any accrued and unpaid interest thereon, on the
earliest of ( ), 2024 or the date upon which SCI Limited, SCI or the
Company is dissolved, wound- up or liquidated; provided, that, if SCI Limited
is dissolved, wound-up or liquidated and (i) SCI remains obligated under the
SCI Agreement and (ii) SCI Limited's obligations hereunder are assumed by
either SCI or another entity, the principal amount of the Loans will not become
due and payable.

Section 1.03. Optional Prepayment. SCI Limited shall have
the right to prepay the Loans, in whole or in part (together with any accrued
but unpaid interest on the portion being prepaid), at any time (A) that the
Company shall have given a notice of redemption of the Series A Shares in
connection with a Tax Event as contemplated by Section 3(c) of the Amendment to
the Regulations of the Company setting forth the terms of the

<PAGE> 3
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Series A Shares (the ``Amendment'') and, if the redemption date is prior to
( ), 1995, at ( )% of the principal amount thereof; if the redemption date
is on or after ( ), 1995 and prior to ( ), 1996, at ( )% of the
principal amount thereof; if the redemption date is on or after ( ), 1996
and prior to ( ), 1997, at ( )% of the principal amount thereof; and
thereafter at the applicable percentage of the principal amount thereof set
forth in clauses (B) and (C) of this sentence, (B) on or after ( ), 1997
and prior to ( ), 1998, at ( )% of the principal amount thereof; and on
or after ( ), 1998 and prior to ( ), 1999, at ( )% of the
principal amount thereof and (C) on or after ( ), 1999, during the
twelve-month periods beginning on ( ) in each of the following years at
the following prepayment prices (expressed as a percentage of the principal
amount of the Loans being prepaid):

<TABLE>
<CAPTION>
Prepayment
Price as a %
of Principal
Year Amount
- ------------------- ------------
<S> <C>
%
</TABLE>

; provided, however, that SCI Limited may not prepay all or any portion of the
Loans under Section 1.03 hereof prior to ( ), 1999 unless the Company has
the right concurrently therewith to redeem, under Section 4(b) or 4(c) of the
Amendment, the number of Series A Shares with an aggregate redemtion price
equal to such prepayment. For purposes hereof, (A) SCI Limited shall not be
deemed to have the right to redeem the Series A Shares under the Amendment
unless and until SCI Limited shall have satisfied all conditions precedent to
effecting such redemption set forth in the Amendment and the satisfaction of
each thereof is continuing and in full force and effect and (B) if at any time
the Company is only permitted to redeem all but not less than all of the
Series A Shares pursuant to the Amendment, then SCI Limited shall not be
permitted to prepay less than all of the Loans in connection with any such
redemption of the Series A Shares.

SCI Limited shall have the right to prepay the Loans at any
time by transfer to the Company of Series A Shares and the aggregate amount
of the Loans then outstanding shall be reduced in an amount equal to the
Liquidation Preference per Series A Share (valued at 100% of the amount
thereof) transferred to the Company. Upon any such prepayment, SCI Limited
shall be deemed to represent and warrant to the Company that (i) the transfer
of such shares has been duly authorized by all necessary corporate action on
the part of SCI Limited, (ii) SCI Limited has good and marketable title to such
shares, (iii) such shares are not subject to any lien, charge or other
encumbrance or defect in title and (iv) such transfer will not conflict with or
result in a breach or default under any contract or other instrument binding
upon SCI Limited or violate any law, rule or regulation, or order or decree of
any court of competent jurisdiction, binding upon SCI Limited.

<PAGE> 4
-4-

ARTICLE II

INTEREST

Section 2.01. Interest on the Loans. The Loans shall
bear interest at an annual rate equal to ( )% from the date they are made
until maturity. Such interest shall be payable on the last day of each
calendar month of each year, commencing ( ), 1994. In the event that any
date on which interest is payable on the Loans is not a Business Day (as
defined below), then payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date, subject to certain rights of extension described under
Section 2.02 below. Interest shall be calculated on the basis of a 360-day
year consisting of 12 months of 30 days each and, for any period shorter than a
full monthly interest period, interest shall be computed on the basis of the
actual number of days elapsed in such period. A ``Business Day'' shall mean
any day other than a day on which banking institutions in The City of New York
are authorized or required by law to close.

Section 2.02. Extension of Interest Payment Period.
Notwithstanding the provisions of Section 2.01 hereof, SCI Limited shall have
the right at any time or from time to time during the term of the Loans, so
long as SCI Limited is not in default in the payment of interest on the Loans,
to extend interest payments under the Loans for up to an aggregate of 60
monthly interest payment periods during the term of the Loans whether or not
such deferrals occur in consecutive months, and at the end of any such extended
payment period SCI Limited shall pay all interest then accrued and unpaid
(together with interest on such accrued and unpaid interest at the rate
specified for the Loans to the extent permitted by applicable law); provided,
however, that, during any such extended interest payment period, or at any time
during which there is an Event of Default under the Loans, SCI shall not
declare or pay any dividend on, and SCI shall not, and shall not permit any of
its majority-owned subsidiaries to, redeem, purchase, acquire or make a
liquidation payment with respect to, any of SCI's capital stock (other than (1)
any redemption of rights (the "Rights") to purchase Series C Junior
Participating Preferred Stock of SCI (or such other securities in lieu thereof
as specified in the Rights Agreement) pursuant to the Rights Agreement (the
"Rights Agreement") dated as of July 18, 1988 between SCI and Texas Commerce
Bank National Association as rights agent, as amended or supplemented from time
to time and (2) any reacquisition by SCI of any of its stock issued in
connection with any acquisition by SCI or any of its subsidiaries of a business
(including any assets, leases or liabilities (contingent or otherwise) related
thereto) as a result of a purchase price adjustment or settlement of breach of
warranties in connection with such acquisition), or make any guarantee payments
with respect to the foregoing (other than payments under the SCI Agreement).
Prior to the

<PAGE> 5
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termination of any such extended interest payment period, SCI Limited may
further extend the interest payment period; provided, that such extended
interest payment period together with all such further extensions thereof may
not exceed 60 monthly interest payments in the aggregate over the term of the
Loans. SCI Limited shall give the Company notice of its selection of an
extended interest payment period at least one Business Day prior to the earlier
of (i) the date the Company declares, or would be scheduled to declare, the
related dividend or (ii) the date the Company is required to give notice of the
record or payment date of such related dividend to the New York Stock Exchange
or other applicable stock exchange or self-regulatory organization or to
holders of the Series A Shares, but in any event not less than two Business
Days prior to such record date. SCI shall cause the Company to give such
notice of SCI Limited's selection of such extended interest payment period to
the holders of the Series A Shares concurrently therewith.

Section 2.03. Additional Interest. If at any time the
Company is or will be required to pay any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States, or any other taxing authority, then, in any such case,
SCI Limited also will pay as additional interest on the Loans such amounts as
shall be required so that the net amounts received and retained by the Company
after paying any such taxes, duties, assessments or governmental charges will
not be less than the amounts the Company would have received had no such taxes,
duties, assessments or governmental charges been imposed.

ARTICLE III

PAYMENTS

Section 3.01. Method and Date of Payment. Each payment
by SCI Limited of principal of, premium, if any, and interest on the Loans
shall be made to the Company in lawful money of the United States, in
immediately available funds, at such place and to such account as may be
designated by the Company.

ARTICLE IV

GUARANTEE OF SCI; SUBORDINATION OF GUARANTEE

Section 4.01. Guarantee of SCI. Subject to the
provisions of this Article IV, SCI hereby irrevocably and unconditionally
guarantees to the Company, irrespective of the validity and enforceability of
this Loan Agreement, the Loans or the obligations of SCI

<PAGE> 6
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Limited to the Company, that: (a) the principal of, premium, if any, and
interest on the Loans will be duly and punctually paid in full when due,
whether at maturity, by acceleration, on prepayment or otherwise, and all other
obligations of SCI Limited to the Company hereunder will be promptly paid in
full or performed, all in accordance with the terms hereof; and (b) in the case
of any extension of time of payment or renewal of any Loans, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration, on
prepayment or otherwise. Failing payment when due of any amount so guaranteed,
or failing performance of any other obligation of SCI Limited to the Company,
for whatever reason, SCI irrevocably and unconditionally agrees to pay in full
to the Company the payment of principal of, premium, if any, and interest on
the Loans, as and when due (except to the extent paid by SCI Limited),
regardless of any defense, right of set-off or counterclaim which SCI Limited
may have or assert.

Section 4.02. Waiver of Notice. SCI hereby waives
notice of acceptance of its guarantee obligations under this Loan Agreement and
of any liability to which it applies or may apply, presentment, demand for
payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands,

Section 4.03. Guarantee Obligations Unconditional. The
obligations, covenants, agreements and duties of SCI pursuant to its guarantee
obligations under this Loan Agreement shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:

(a) the release or waiver, by operation of law
or otherwise, of the performance or observance by SCI Limited
of any express or implied agreement, covenant, term or
condition relating to this Loan Agreement or the Loans to be
performed or observed by SCI Limited;

(b) the extension of time for the payment or
delivery by SCI Limited of all or any portion of the interest
on the Loans (other than in connection with a valid extension
of the interest payment periods by SCI Limited under this
Loan Agreement), principal of and premium, if any, on the
Loans or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the
Loan Agreement and the Loans;

(c) any failure, omission, delay or lack of
diligence on the part of the Company to enforce, assert or
exercise any right, privilege, power or remedy conferred on
the Company pursuant to the terms of this Loan Agreement, or
any action on the part of the Company granting indulgence or
extension of any kind;

(d) the voluntary or involuntary liquidation,
dissolution, sale of any

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collateral, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar
proceedings affecting, SCI Limited or any of the assets of SCI
Limited;

(e) any invalidity of, or defect or deficiency
in, any of this Loan Agreement or the Loans; or

(f) the settlement or compromise of any
obligation guaranteed hereby or hereby incurred.

There shall be no obligation of the Company to give notice to, or obtain the
consent of, SCI with respect to the happening of any of the foregoing.

Section 4.04. Enforcement by Holders. This is a
guarantee of payment and performance and not of collection. The Company or its
duly authorized representative (including, in certain circumstances, a trustee
on behalf of holders of Series A Shares) may enforce the guarantee obligations
of SCI under this Loan Agreement directly against SCI, and SCI will waive any
right or remedy to require that any action be brought against SCI Limited or
any person or entity before proceeding against SCI. Subject to Section 4.05,
all waivers herein contained shall be without prejudice to the rights of the
Company or the holders of Series A Shares (acting through a trustee as provided
in Section 7.01 hereof) at their respective option to proceed against SCI
Limited, whether by separate action or by joinder. SCI agrees that the
guarantee obligations of SCI under this Loan Agreement shall not be discharged
except by payment in full of all principal, premium, if any, and interest then
owing on the Loans (to the extent not paid by SCI Limited), and by complete
performance of all other guarantee obligations of SCI under this Loan Agreement.

Section 4.05. Subrogation. SCI shall be subrogated to
all rights (if any) of the Company against SCI Limited in respect of any
amounts or property paid or delivered to the Company by SCI pursuant to SCI's
guarantee obligations under this Loan Agreement and shall have the right to
waive payment or delivery of any amount or property in respect of which payment
or delivery has been made to the Company by SCI pursuant to Section 4.01;
provided, however, that SCI shall not (except to the extent required by
mandatory provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of a payment or delivery pursuant to SCI's guarantee obligations under
this Loan Agreement, if at the time of any such payment or delivery, any
amounts or deliveries are due and unpaid or unmade pursuant to SCI's guarantee
obligations under this Loan Agreement. If any amount or property shall be paid
or delivered to SCI in violation of the preceding sentence, SCI agrees to pay
over or deliver such amount or property to the Company.

Section 4.06. Obligations of SCI Independent. SCI
acknowledges that its

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obligations hereunder are independent of the obligations of SCI Limited with
respect to this Loan Agreement and the Loans and that SCI shall be liable as
principal and sole debtor hereunder to make payment of the obligations to pay
principal of, premium, if any, and interest on the Loans pursuant to the terms
of this Loan Agreement notwithstanding the occurrence of any event referred to
in subsections (a) through (f), inclusive, of Section 4.03.

Section 4.07. Subordination. (a) SCI and the Company
covenant and agree, and the holders of the Series A Shares (and any trustee
appointed by such holders) by their acceptance of such Series A Shares likewise
agree, that the obligations of SCI in respect of its guarantee obligations
under this Loan Agreement and the Loans are subordinate and junior in right of
payment to all Senior Indebtedness as provided herein. The term ``Senior
Indebtedness'' means the principal of, premium, if any, and interest on (i) all
indebtedness of SCI, other than ordinary trade credit and other accounts
payable arising in the ordinary course of business, whether outstanding on the
date hereof or hereafter created, incurred or assumed, which is for money
borrowed, or evidenced by a note or similar instrument given in connection with
the acquisition of any business, properties or assets, including securities,
(ii) any indebtedness of others of the kinds described in the preceding clause
(i) for which SCI is responsible or liable as guarantor and (iii) amendments,
renewals, extensions and refundings of any such indebtedness, unless in any
instrument or instruments evidencing or securing such indebtedness or pursuant
to which the same is outstanding, or in any such amendment, renewal, extension
or refunding, it is expressly provided that such indebtedness is not superior
in right of payment to SCI's guarantee of the Loans. Except as aforesaid,
Senior Indebtedness shall continue to be Senior Indebtedness and entitled to
the benefits of these subordination provisions irrespective of any amendment,
modification or waiver of any term of the Senior Indebtedness or extension or
renewal of the Senior Indebtedness.

(b) In the event that (i) SCI shall default in the
payment of any principal of, premium, if any, or interest on any Senior
Indebtedness when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or declaration or otherwise or (ii) an event of
default occurs with respect to any Senior Indebtedness permitting the holders
thereof to accelerate the maturity thereof and written notice of such event of
default is given to SCI by the holders of such Senior Indebtedness, then unless
and until such default in payment or event of default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of SCI's guarantee obligations under this Loan Agreement or the
Loans or in respect of any repayment, redemption, retirement, purchase or other
acquisition of the Loans.

(c) In the event of (i) any insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition or other
similar proceeding relating to SCI or its property or for the benefit of its
creditors, (ii) any proceeding for the liquidation, dissolution or other
winding up of SCI, voluntary or involuntary, whether or not involving
insolvency

<PAGE> 9
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or bankruptcy proceedings, (iii) any assignment by SCI for the benefit of
creditors, or (iv) any other marshalling of the assets of SCI, all Senior
Indebtedness (including, without limitation, interest accruing thereon after
the commencement of any such proceeding, assignment or marshalling of assets)
shall first be paid in full before any payment or distribution, whether in
cash, securities or other property, may be made on account of SCI's guarantee
obligations under this Loan Agreement or the Loans. In any such event, any
payment or distribution, whether in cash, securities or other property (other
than securities of SCI or any other corporation provided for by a plan of
reorganization or a readjustment, the payment of which is subordinate, at least
to the extent provided in these subordination provisions with respect to the
indebtedness evidenced by SCI's guarantee obligations under this Loan Agreement
and the Loans, to the payment of all Senior Indebtedness at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), which would otherwise (but for these
subordination provisions) be payable or deliverable in respect of SCI's
guarantee obligations under this Loan Agreement and the Loans (including any
such payment or distribution which may be payable or deliverable by reason of
the payment of any other indebtedness of SCI being subordinated to the payment
of SCI's guarantee obligations under this Loan Agreement and the Loans) shall
be paid or delivered directly to the holders of Senior Indebtedness or to their
representative, or to the trustee under the indenture or agreement (if any)
pursuant to which such Senior Indebtedness may have been issued, in accordance
with the priorities then existing among such holders until all Senior
Indebtedness shall have been paid in full. No present or future holder of any
Senior Indebtedness shall be prejudiced in the right to enforce subordination
of SCI's guarantee obligations under this Loan Agreement and the Loans by any
act or failure to act on the part of SCI.

(d) Senior Indebtedness shall not be deemed to have been
paid in full unless the holders thereof shall have received cash, securities or
property in full payment of such Senior Indebtedness then outstanding. Upon
the payment in full of all Senior Indebtedness, the Company shall be subrogated
to all the rights of any holders of Senior Indebtedness to receive any further
payments or distributions applicable to the Senior Indebtedness until the Loans
shall have been paid in full, and such payments or distributions of cash,
securities or other property received by the Company, by reason of such
subrogation, which otherwise would be paid or distributed to the holders of
Senior Indebtedness, shall, as between SCI and its creditors other than the
holders of Senior Indebtedness on the one hand, and the Company, on the other,
be deemed to be a payment by SCI on account of Senior Indebtedness, and not on
account of SCI's guarantee obligations under this Loan Agreement and the Loans.

<PAGE> 10
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ARTICLE V

REPRESENTATIONS AND WARRANTIES

Section 5.01. Representations and Warranties. Each of
SCI Limited and SCI jointly and severally represents and warrants to the
Company that:

(a) Good Standing. Each of SCI Limited and SCI is a
corporation duly incorporated and validly existing under the laws of the State
of Delaware, in the case of SCI Limited, and Texas, in the case of SCI, with
power and authority (corporate and other) to own its properties and conduct its
business as now being conducted.

(b) Power and Authority. Each of SCI Limited and SCI
has full power and authority to enter into this Agreement and the Pledge
Agreement (to the extent a party thereto) and to incur and perform the
obligations provided for herein and therein (to the extent a party thereto),
all of which have been duly authorized by all proper and necessary action.

(c) No Conflict. The execution and delivery of this
Agreement and the Pledge Agreement and the performance by each of SCI Limited
and SCI of all their respective obligations hereunder and thereunder will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which either SCI
Limited or SCI is a party or by which either SCI Limited or SCI is bound or
subject, nor will this Agreement or the Pledge Agreement result in a violation
of the provisions of SCI Limited's or SCI's certificate of incorporation or
by-laws.

(d) Binding Agreement. This Agreement and the Pledge
Agreement constitutes the valid and legally binding obligation of each of SCI
Limited and SCI (to the extent a party thereto), enforceable against them (to
the extent a party thereto) in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.

ARTICLE VI

COVENANTS

Section 6.01. Covenants. (a) SCI covenants and agrees
(i) that it will not

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declare or pay any dividend on, and SCI will not, and will not permit any of
its majority-owned subsidiaries to, redeem, purchase, acquire or make a
liquidation payment with respect to, any of SCI's capital stock (other than (1)
any redemption of the Rights (or such other securities in lieu thereof as
specified in the Rights Agreement) pursuant to the Rights Agreement and (2) any
reacquisition by SCI of any of its stock issued in connection with any
acquisition by SCI or any of its subsidiaries of a business (including any
assets, leases or liabilities (contingent or otherwise) related thereto) as a
result of a purchase price adjustment or settlement of breach of warranties in
connection with such acquisition), or make any guarantee payments with respect
to the foregoing (other than payments under the SCI Agreement) and will
otherwise comply with Section 3(c) of the Amendment to the Company's
Regulations establishing the Series A Shares as if such provisions were
applicable to them, if at such time (x) there shall have occurred any event
that constitutes an Event of Default hereunder or (y) SCI shall be in default
with respect to its payment or other obligations under the SCI Agreement or in
default in its payment or other obligations under the Liability Assumption
Agreement, dated as of ( ), 1994, between SCI (including in its capacity
as the Manager of the Company) and the Company (the ``Liability Assumption
Agreement''), or (z) there shall exist any nonpayment of interest under the
Loans, including during any valid extension of the interest payment periods.
In addition, SCI agrees (i) to maintain direct 100% ownership of the Common
Shares and any other interests in the Company (other than the Preferred
Shares), (ii) to cause more than 20% of the total value (initially measured by
shareholders' equity determined in accordance with generally accepted
accounting principles) of the Company and, subject to the preferential rights
of the holders of Preferred Shares as to dividends and liquidation
distributions, more than 20% of all interests in the capital, income, gain,
loss, deduction and credit of the Company to be represented by Common Shares,
(iii) not to dissolve, wind-up or liquidate the Company voluntarily, (iv) to
remain the Manager of the Company and to timely perform all of its duties as
Manager of the Company (including the duty to declare and pay dividends on the
Preferred Shares), and (v) to use reasonable efforts to cause the Company to
remain a limited liability company under the laws of the State of Texas
(provided however that the Company may reorganize under the laws of another
jurisdiction provided that the Company has received an opinion of counsel from
nationally recognized legal counsel that such reorganization will not have an
adverse effect, including, without limitation, an adverse tax effect, on the
holders of the Series A Shares) and use reasonable efforts to cause the Company
to continue to be treated as a partnership for United States federal income tax
purposes. SCI covenants and agrees to comply with Section 2.01(b) of the SCI
Agreement.

(b) Each of SCI Limited and SCI agrees that its
obligations under this Agreement will also be for the benefit of the holders
from time to time of Series A Shares, and each of SCI Limited and SCI
acknowledges and agrees that such holders, acting through a trustee as provided
in Section 7.01 hereof, will be entitled to enforce this Agreement directly
against each of SCI Limited and SCI.

<PAGE> 12
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(c) Each of SCI and SCI Limited agrees not to permit
another entity to merge with or into it unless: (i) at such time no Event of
Default hereunder has occurred and is continuing, or would occur as a result of
such merger, and (ii) either (I) SCI or SCI Limited, as the case may be, is the
survivor of such merger or (II) the survivor is a corporation organized under
the laws of the United States or any state thereof and expressly assumes all of
the obligations of SCI or SCI Limited, as the case may be, under this Agreement
and the Loans, and SCI Limited receives an opinion of counsel from nationally
recognized legal counsel that the merger will not result in the recognition of
taxable gain or loss by the holders of the Series A Shares.

ARTICLE VII

EVENTS OF DEFAULT

Section 7.01. Events of Default. If one or more of the
following events (each an ``Event of Default'') shall occur and be continuing:

(a) default in the payment of any interest on
the Loans when due for 10 Business Days; provided,
however, that a valid extension of the interest payment
period by SCI Limited pursuant to Section 2.02 hereof
shall not constitute a default in the payment of interest
for this purpose; or

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

(d) the dissolution, winding up or liquidation
of the Company; or

(e) the bankruptcy, insolvency or liquidation
of SCI Limited or SCI; or

(f) breach by SCI Limited or SCI of any
covenants contained herein continued for 30 days after
notice to SCI Limited and SCI from the holders of not
less than 25% in liquidation preference of the Series A
Shares then outstanding;

then, in every such Event of Default, and at any time thereafter during the
continuance of such Event of Default, the Company will have the right to
declare the principal of and the

<PAGE> 13
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interest on the Loans (including any interest subject to an extension of the
interest payment period) and all other amounts payable under this Agreement to
be forthwith due and payable whereupon the same shall become and be forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, anything in this Agreement to
the contrary notwithstanding. Each of SCI Limited and SCI expressly
acknowledges that under the terms of the Series A Shares, the holders of the
outstanding Series A Shares shall have the right to appoint a trustee, which
trustee shall be authorized to exercise the Company's right to accelerate the
principal amount of the Loans and to enforce the Company's creditor rights
under the Loans and this Agreement, including rights of collection, and each of
SCI Limited and SCI agrees to cooperate with such trustee.

ARTICLE VIII

SECURITY

Section 8.01. Security. In order to secure the due and
punctual payment of principal of, premium, if any, and interest on the Loans
when and as the same shall be due and payable, whether on an interest payment
date, at maturity, by acceleration, optional repayment or otherwise, and
performance of all other obligations of SCI Limited to the Company under this
Loan Agreement, SCI Limited has simultaneously with the execution of this Loan
Agreement entered into the Pledge Agreement, pursuant to which SCI Limited has
granted to the Company a first priority lien (to the extent and subject to
certain exceptions expressly permitted by the Pledge Agreement) on and security
interest in the collateral described therein. The execution and delivery of
the Pledge Agreement is a condition precedent to the making of the Loans
hereunder by the Company.

ARTICLE IX

MISCELLANEOUS

Section 9.01. Maintenance of Book-Entry System. SCI
Limited shall maintain a book-entry system, as defined in Treas. Reg. Section
5f.103-1(c)(2), with respect to the Loans. All rights to payments under the
Loans shall be transferred only through the book-entry system and shall not be
effective until SCI Limited has been notified of such transfer and provided
with the identity of the transferee.

Section 9.02. Notices. All notices hereunder shall be
deemed given by a party

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hereto if in writing and delivered personally or by telegram or facsimile
transmission or by registered or certified mail (return receipt requested) to
the other party at the following address for such party (or at such other
address as shall be specified by like notice):

If to the Company, to:

SCI Finance LLC
c/o Service Corporation International,
as Manager
1929 Allen Parkway
Houston, Texas 77019
Fax No.: (713) 525-5475
Attention: ( )

If to SCI Limited, to:

SCI International Limited
c/o Service Corporation International
1929 Allen Parkway
Houston, Texas 77019
Fax No.: (713) 525-5475
Attention: ( )

If to SCI, to:

Service Corporation International
1929 Allen Parkway
Houston, Texas 77019
Fax No.: (713) 525-5475
Attention: ( )

Any notice given by mail or telegram or facsimile
transmission shall be effective when received.

Section 9.03. Binding Effect. SCI Limited shall have
the right at all times to assign any of its rights or obligations under this
Loan Agreement to a direct or indirect wholly-owned subsidiary of SCI;
provided, however, that, in the event of any such assignment, SCI Limited shall
remain jointly and severally liable with such assignee for all such
obligations; and provided, further, that SCI Limited shall receive an opinion
of legal counsel to the effect that any such assignment does not cause the
Company to be considered an ``investment company'' as defined under the United
States Investment Company Act of 1940, as amended. The Company may not assign
any of its rights hereunder without the

<PAGE> 15
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prior written consent of SCI Limited and SCI. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of SCI Limited, SCI
and the Company and their respective successors and assigns. This Agreement
may not otherwise be assigned by SCI Limited, SCI or the Company.

Section 9.04. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN AND WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

Section 9.05. Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.

Section 9.06. Amendments. This Agreement may be amended
by mutual consent of the parties in the manner the parties shall agree;
provided, however, that, so long as any of the Series A Shares remain
outstanding, no such amendment shall be made that adversely affects the holders
of the Series A Shares, no termination of this Agreement shall occur, and no
Event of Default or compliance with any covenant under this Agreement may be
waived by the Company, without the prior approval of the holders of at least
66-2/3% in liquidation preference of the outstanding Series A Shares (other
than Series A Shares that are owned by SCI Limited, SCI or any entity owned 50%
or more by SCI, either directly or indirectly), in writing or at a duly
constituted meeting of such holders.

<PAGE> 16

IN WITNESS WHEREOF, the parties hereto have caused THIS
LOAN AGREEMENT to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.

SCI INTERNATIONAL LIMITED

By:__________________________________
Name:
Title:

SERVICE CORPORATION INTERNATIONAL

By:__________________________________
Name:
Title:

SCI FINANCE LLC

By: Service Corporation
International, as Manager

By:_____________________________
Name:
Title:

<PAGE> 17
EXHIBIT A

STOCK PLEDGE AGREEMENT

STOCK PLEDGE AGREEMENT (the "Agreement"), dated as of
( ), 1994, made by SCI International Limited, a Delaware corporation
("Pledgor"), in favor of SCI Finance LLC, a Texas corporation, as pledgee
("Pledgee") pursuant to the Loan Agreement (as hereinafter defined).

R E C I T A L S :

1. Pledgor is the legal and beneficial owner of the
shares of common stock of Service Corporation International plc, a United
Kingdom corporation and a wholly-owned subsidiary of the Pledgor, set forth on
Schedule A attached hereto (the "Pledged Shares").

2. Pledgor is the obligor under a loan agreement (as at
any time amended, modified or supplemented after the date hereof, the "Loan
Agreement") dated as of the date hereof, by and among Pledgee, as lender,
Service Corporation International, a Texas corporation ("SCI"), as guarantor,
and Pledgor, as borrower.

3. This Agreement is made and delivered by Pledgor to
secure the Secured Obligations (as hereinafter defined).

A G R E E M E N T :

Pledgor warrants, represents and covenants as follows:

Section 1. Definitions. Capitalized terms used herein but
not otherwise defined herein shall have the meanings assigned to such terms in
the Loan Agreement. The following terms shall have the following meanings.
Such definitions shall be equally applicable to the singular and plural forms
of the terms defined.

"Additional Shares" shall mean fifty percent (50%) of any
additional shares of stock of the issuer set forth on Schedule A attached
hereto from time to time acquired by Pledgor in any manner.

"Certificates" shall mean any and all certificates
representing shares of stock held by Pledgor as set forth on Schedule A
attached hereto and any interest of Pledgor in the entries on the books of any
financial intermediary pertaining to such shares of stock, and shall include
any certificates representing Additional Shares.

"Dividends" shall mean, subject to Section 8 hereof, all
dividends, cash or

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proceeds, options, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the Pledged Collateral (as defined below).

"Lien" shall mean any mortgage, charge, pledge, lien,
privilege, security interest or other encumbrance upon or with respect to any
property of any kind of any person or any of its subsidiaries, real or
personal, moveable or immovable, now owned or hereafter acquired.

"Secured Obligations" shall have the meaning set forth in
Section 4 hereof.

Section 2. Pledge. Pledgor hereby pledges to Pledgee and
grants a security interest in and pledge of all of Pledgor's right, title and
interest in, to and under the following property, whether now existing or
hereafter acquired (collectively, "Pledged Collateral"), to secure the Secured
Obligations:

(i) all Pledged Shares;

(ii) all Additional Shares;

(iii) all Certificates relating to all and any of
the foregoing; and

(iv) all Dividends relating to all and any of the
foregoing.

Section 3. Delivery of Pledged Collateral. All certificates
or instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of Pledgee pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to Pledgee. Pledgee shall have the right, if an Event
of Default shall have occurred and be continuing and without notice to Pledgor,
to transfer to or to register in the name of Pledgee or any of its nominees any
or all of the Pledged Collateral. In addition, Pledgee shall have the right
at any time to exchange certificates representing or evidencing Pledged
Collateral for certificates of smaller or larger denominations.

Section 4. Secured Obligations. This Agreement secures, and
the Pledged Collateral is collateral security for, the payment and performance
in full when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy or
the operation of the automatic stay under Section 362(a) of Title 11, United
States Code), of (i) all obligations of Pledgor now existing or hereafter
arising under or in respect of the Loan Agreement; and (ii) without duplication
of the amounts described

<PAGE> 19
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in clause (i) all obligations of Pledgor now existing or hereafter arising
under or in respect of this Agreement (the obligations described in clauses (i)
and (ii), collectively, the "Secured Obligations").

Section 5. No Release. Nothing set forth in this Agreement
shall relieve Pledgor from the performance of any term, covenant, condition or
agreement on Pledgor's part to be performed or observed under or in respect of
any Pledged Collateral or from any liability to any person under or in respect
of any Pledged Collateral or impose any obligation on Pledgee to perform or
observe any such term, covenant, condition or agreement on Pledgor's part to be
so performed or observed or impose any liability on Pledgee for any act or
omission on the part of Pledgor relating thereto or for any breach of any
representation or warranty on the part of Pledgor contained in this Agreement,
or in respect of the Pledged Collateral or made in connection herewith or
therewith. The obligations of Pledgor contained in this paragraph shall
survive the termination of this Agreement and the discharge of Pledgor's other
obligations hereunder.

Section 6. Representations, Warranties and Covenants.
Pledgor represents, warrants and covenants as follows:

(i) Ownership. Pledgor is, and at the time of delivery
of the Pledged Collateral to Pledgee pursuant to Section 3 of this
Agreement will be, the legal and beneficial owner of the Pledged
Collateral free and clear from any Lien or other right, title or
interest of any person other than the Liens and security interests
granted by Pledgor to Pledgee pursuant to this Agreement. The pledge
and security interest created by this Agreement shall not at any time
be subject to any Lien (other than any Lien incurred or created by or
on behalf of Pledgee). Except as otherwise permitted by the Loan
Agreement, Pledgor at all times will be the sole beneficial owner of
the Pledged Collateral. Pledgor has not performed any acts which
might prevent Pledgee from enforcing any of the terms of this
Agreement or that would limit Pledgee in any such enforcement and
Pledgor shall defend the Pledged Collateral against all claims and
demands of all persons at any time claiming any interest therein
adverse to Pledgee.

(ii) Shares Validly Issued. All of the Pledged Shares
have been duly authorized and validly issued and are fully paid and
non-assessable.

(iii) Delivery of Shares. Upon the delivery of the
Pledged Shares to Pledgee in accordance with Section 3 hereof, Pledgee
will have a valid and perfected first priority security interest in
the Pledged Shares securing the payment of the Secured Obligations
subject to no prior Liens.

(iv) Government Regulations. The pledge of the Pledged
Collateral

<PAGE> 20
-4-

pursuant to this Agreement does not violate Regulation G, T, U or X of
the Federal Reserve Board.

(v) Authorization; Enforceability. Pledgor has full
power, authority and legal right to pledge and grant a security
interest in and to all the Pledged Collateral pursuant to this
Agreement. This Agreement constitutes the legal, valid and binding
obligation of Pledgor, enforceable against Pledgor in accordance with
its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and similar laws
affecting creditors' rights generally and to general equitable
principles.

(vi) No Consents. Except as otherwise obtained and in
full force and effect, no consent of any other party (including,
without limitation, stockholders or creditors of Pledgor) and no
consent, authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body is
required either (x) for the execution, delivery or performance of
this Agreement by Pledgor or (y) for the exercise at any time by
Pledgee of each and every of the voting or other rights provided for
in this Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except as may be required in connection
with any disposition of the Pledged Collateral by laws affecting the
offering and sale of securities generally.

(vii) No Conflicts. The execution, delivery and
performance by Pledgor of this Agreement do not (or with notice or
lapse of time or both, will not) violate, conflict with or constitute
a breach of or a default under, or result in the termination of, or
accelerate the performance required by, or result in there being
declared void, voidable or without further binding effect any
provision of, any other agreement, instrument or document to which
Pledgor is a party or by which it or its property or assets are bound
or affected or any statute, law or rule or any judgment or decree of
any court of competent jurisdiction.

Section 7. Supplements, Further Assurances. Pledgor agrees
that at any time and from time to time, at the sole expense of Pledgor, Pledgor
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or that Pledgee may reasonably
request in order to perfect and protect the Lien granted or purported to be
granted hereby or to enable Pledgee to exercise fully and enforce its rights
and remedies hereunder with respect to any Pledged Collateral.

Section 8. Special Provisions Concerning Pledged Collateral.

(i) Voting Rights, Dividends, Etc. Prior to Event of
Default. As long as no Event of Default shall have occurred and be continuing:

<PAGE> 21
-5-

(a) Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or
any part thereof for any purpose not inconsistent with the terms or
intent of this Agreement or of the Loan Agreement; provided, however,
that Pledgor shall give Pledgee at least five days' prior written
notice of the manner in which it intends to exercise any such right.
It is understood, however, that neither (I) the voting by Pledgor of
any Pledged Shares for or Pledgor's consent to the election of
directors at a regularly scheduled annual or other meeting of
stockholders or with respect to incidental matters at any such meeting
nor (II) Pledgor's consent to or approval of any action otherwise
permitted under this Agreement and the Loan Agreement shall be deemed
inconsistent with the terms or intent of this Agreement or of the Loan
Agreement within the meaning of this Section 8(i)(a), and no notice of
any such voting or consent need be given to Pledgee.

(b) Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the Lien of this Agreement, any and all
dividends and distributions in respect of the Pledged Collateral;
provided, however, that any and all (A) stock dividends and other
distributions in equity securities in respect of the Pledged
Collateral, (B) dividends paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral and (C) dividends or other distributions paid or payable in
cash or otherwise in respect of any Pledged Collateral in connection
with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus shall
be, and shall be delivered forthwith to Pledgee to hold as, Pledged
Collateral and shall, if received by Pledgor, be received in trust for
the benefit of Pledgee, be segregated from the other property or funds
of Pledgor, and be delivered forthwith to Pledgee as Pledged
Collateral in the same form as so received (with any necessary
endorsement).

(c) In order to permit Pledgor to exercise the voting and
other rights which it is entitled to exercise pursuant to Section
8(i)(a) above and to receive the dividends and distributions which it
is authorized to receive and retain pursuant to Section 8(i)(b) above,
Pledgee shall, if necessary, upon written request of Pledgor and at
the sole expense of Pledgor, from time to time execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies,
dividend payment orders and other instruments as Pledgor may
reasonably request.

(ii) Voting Rights and Dividends After Event of Default.
Upon the occurrence and during the continuance of an Event of Default:

(a) Upon written notice from Pledgee to Pledgor, all rights
of Pledgor to

<PAGE> 22
-6-

exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 8(i)(a) above
shall cease, and all such rights shall thereupon become vested in
Pledgee, which shall thereupon have the sole right to exercise such
voting and other consensual rights during the continuance of such
Event of Default.

(b) Upon written notice from Pledgee to Pledgor, all rights
of Pledgor to receive the dividends and distributions which it would
otherwise be authorized to receive and retain pursuant to Section
8(i)(b) above shall cease and all such rights shall thereupon become
vested in Pledgee, which shall thereupon have the sole right to
receive and hold as Pledged Collateral such dividends and
distributions during the continuance of such Event of Default.

(iii) Further Assurances for Voting Rights and Dividends.
In order to permit Pledgee to receive all dividends and other distributions to
which it may be entitled under Section 8(i)(b) above, to exercise the voting
and other consensual rights which it may be entitled to exercise pursuant to
Section 8(ii)(a) above, and to receive all dividends and distributions which it
may be entitled to receive under Section 8(ii)(b) above, Pledgor shall, if
necessary, upon written notice from Pledgee and at the sole expense of Pledgor,
from time to time execute and deliver to Pledgee appropriate proxies, dividend
payment orders and other instruments as Pledgee may reasonably request.

(iv) Dividends Received in Trust. All dividends and
distributions which are received by Pledgor contrary to the provisions of
Section 8(ii)(b) above shall be received in trust for the benefit of Pledgee,
shall be segregated from other funds of Pledgor and shall be forthwith paid
over to Pledgee as Pledged Collateral in the same form as so received (with any
necessary endorsement).

Section 9. Transfers and Other Liens; Additional Shares.

(i) Transfers and Other Liens. Pledgor shall not (a)
pledge, encumber, hypothecate, sell, convey, assign or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged Collateral or
suffer any of the foregoing to occur by operation of law or otherwise except
for the Liens and security interests granted by Pledgor to the Pledgee pursuant
to this Agreement or (b) cause or permit any issuer of Pledged Collateral
consisting of capital stock to merge or consolidate unless fifty percent (50%)
of the outstanding capital stock of the surviving or resulting corporation is,
upon such merger or consolidation, pledged hereunder and no cash, securities or
other property is distributed in respect of the outstanding shares of any other
constituent corporation.

(ii) Additional Shares. Pledgor agrees that it will cause
each issuer of Pledged Collateral consisting of capital stock not to issue any
stock or other securities in addition to

<PAGE> 23
-7-

or in substitution for such Pledged Collateral issued by such issuer, except to
Pledgor.

Section 10. Reasonable Care. Pledgee shall be deemed to have
exercised reasonable care in the custody and preservation of such Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equivalent to that which Pledgee, in its individual capacity,
accords its own property consisting of negotiable securities, it being
understood that Pledgee shall not have responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Collateral, whether or not
Pledgee has or is deemed to have knowledge of such matters, or (ii) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Pledged Shares) to preserve
rights against any person with respect to any Pledged Collateral.

Section 11. Events of Default; Remedies.

(i) Event of Default. It shall be an Event of Default
hereunder if there shall occur an Event of Default under the Loan
Agreement.

(ii) Dispositions of Pledged Collateral. If any Event of
Default shall have occurred and be continuing, Pledgee may exercise
in respect of the Pledged Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of New York at that time. The
Pledgee may also in its sole discretion, without notice except as
specified below, sell the Pledged Collateral or any part thereof in
one or more parcels at public or private sale or at any exchange or
broker's board for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Pledgee may deem
commercially reasonable, irrespective of the impact of any such sales
on the market price of the Pledged Collateral. Pledgee may be the
purchaser of any or all of the Pledged Collateral at any such sale but
shall not be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of
the Pledged Collateral sold at such sale, to use and apply any of the
Secured Obligations owed to Pledgee as a credit on account of the
purchase price of any Pledged Collateral payable by Pledgee at such
sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and
Pledgor hereby waives (to the extent permitted by law) all rights of
redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or
hereafter enacted. Pledgee shall give Pledgor not less than ten days'
prior written notice of the time and place of any sale or other
intended disposition of any of the Pledged Collateral, except any
Pledged Collateral which is of a type customarily sold on a recognized
market. The notice of such sale shall (1) in the case of a public
sale, state the time and place fixed for such sale, and

<PAGE> 24
-8-

(2) in the case of a private sale, state the day after which such sale
may be consummated. Pledgor agrees that such notice constitutes
reasonable notice. Pledgee shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given.
Pledgee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned. Pledgor hereby waives any claims against Pledgee
arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if
Pledgee accepts the first offer received and does not offer such
Pledged Collateral to more than one offeree.

(iii) Securities Laws Limitations. Pledgor
recognizes that, by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws, Pledgee may be compelled, with
respect to any sale of all or any part of the Pledged Collateral, to
limit purchasers to those who will agree, among other things, to
acquire the Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. Pledgor
acknowledges that any such private sales may be at prices and on terms
less favorable to Pledgee than those obtainable through a public sale
without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the
Securities Act), and, notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have been made in a
commercially reasonable manner and that Pledgee shall have no
obligation to engage in public sales and no obligation to delay the
sale of any Pledged Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public sale
requiring registration under the Securities Act or under applicable
state securities laws, even if Pledgor would agree to do so.

(iv) Additional Information. If Pledgee
determines to exercise its right to sell any or all of the Pledged
Collateral, upon written request, Pledgor shall, and shall cause each
issuer of any Pledged Collateral to be sold hereunder from time to
time to, furnish to Pledgee all such information as Pledgee may
request in order to determine the number of shares and other
instruments included in the Pledged Collateral which may be sold by
Pledgee as exempt transactions under the Securities Act and the rules
of the Securities and Exchange Commission thereunder, as the same are
from time to time in effect.

(v) Waivers. Pledgor hereby waives, to the
extent permitted by applicable law, notice or judicial hearing in
connection with Pledgee's taking possession or Pledgee's disposition
of any Pledged Collateral, including, without limitation, any and all
prior notice and hearing for any prejudgment remedy or remedies and
any such

<PAGE> 25
-9-

right which Pledgor would otherwise have under law, and Pledgor
hereby further waives: (a) all damages occasioned by such taking of
possession; (b) all other requirements as to the time, place and terms
of sale or other requirements with respect to the enforcement of
Pledgee's rights hereunder; and (c) all rights of redemption,
appraisal, valuation, stay, extension or moratorium now or hereafter
in force under any applicable law. Any sale of, or the grant of
options to purchase, or any other realization upon, any Pledged
Collateral pursuant to the terms of this Agreement shall operate to
divest all right, title, interest, claim and demand, either at law or
in equity, of Pledgor therein and thereto, and shall be a perpetual
bar both at law and in equity against Pledgor and against any and all
persons claiming or attempting to claim the Pledged Collateral so
sold, optioned or realized upon, or any part thereof, from, through
and under Pledgor.

(vi) Deficiency. Notwithstanding any other
provision of this Agreement to the contrary, if, after giving effect
to any sale, transfer or other disposition of any or all of the
Pledged Collateral pursuant hereto and after the application of the
proceeds hereunder to the Secured Obligations, any Secured Obligations
remain unpaid or unsatisfied, Pledgor shall remain liable for the
unpaid and unsatisfied amount of such Secured Obligations.

Section 12. Expenses. Pledgor will upon demand pay to
Pledgee the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and the allocated reasonable fees and expenses
of staff counsel and the reasonable fees and expenses of any experts and agents
which Pledgee may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (iii) the
exercise or enforcement of any of the rights or remedies of Pledgee hereunder
or under applicable law or (iv) the failure by Pledgor to fully and timely
perform or observe any of the provisions hereof. All amounts payable by
Pledgor under this Section 12 shall be due upon demand and shall be part of the
Secured Obligations. Pledgor's obligations under this Section 12 shall survive
the termination of this Agreement and the discharge of Pledgor's other
obligations hereunder.

<PAGE> 26
-10-

Section 13. No Waiver; Discontinuance of Proceeding.

(i) No Waiver. No failure on the part of Pledgee
to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by Pledgee of
any right, power or remedy hereunder or under applicable law preclude
any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein provided are to the
fullest extent permitted by the law cumulative and are not exclusive
of any remedies provided by law.

(ii) Discontinuance of Proceeding. In the event
Pledgee shall have instituted any proceeding to enforce any right,
power or remedy under this instrument by foreclosure, sale, entry or
otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to
Pledgee, then and in every such case Pledgor and Pledgee shall be
restored to their respective former positions and rights hereunder
with respect to the Pledged Collateral, and all rights, remedies and
powers of Pledgee shall continue as if no such proceeding had been
instituted.

Section 14. Indemnification. Pledgor hereby agrees to
indemnify Pledgee for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against Pledgee in any way relating to or arising out of this Agreement or the
Loan Agreement or the pledge and security interest contemplated hereby or the
enforcement of any of the terms hereof or otherwise arising or relating in any
manner to the pledges contemplated hereunder.

Section 15. Amendments, Etc. This Agreement may be amended
by mutual consent of the parties in the manner the parties shall agree;
provided, however, that so long as any of the $( ) Term Convertible Shares,
Series A of Pledgee (the "Series A Shares"), remain outstanding, no such
amendment shall be made that adversely affects the holders of the Series A
Shares, no termination of this Agreement shall occur, and no Event of Default
or compliance with any covenant under this Agreement may be waived by the
Pledgee, without the prior approval of the holders of at least 66-2/3% in
liquidation preference (plus all accrued and unpaid dividends) of the
outstanding Series A Shares (other than Series A Shares that are owned by
Pledgor, SCI or any entity owned 50% or more by SCI, either directly or
indirectly), in writing or at a duly constituted meeting of such holders.

Section 16. Termination and Release. When all of the Secured
Obligations have been indefeasibly paid or otherwise satisfied in full, this
Agreement shall terminate. Upon termination of this Agreement or any release
of Pledged Collateral in accordance with the provisions of the Loan Agreement,
Pledgee shall, upon the request and at the sole expense

<PAGE> 27
-11-

of Pledgor, forthwith assign, transfer and deliver, against receipt and without
recourse to Pledgee, such of the Pledged Collateral to be released (in the case
of a release) as may be in the possession of Pledgee and Pledgee shall execute
such document and take such other action, all at the sole expense of Pledgor,
as may be reasonably requested by Pledgor to reflect the termination of this
Agreement and the release of the Pledged Collateral.

Section 17. Addresses for Notices. All notices and other
communications required or permitted to be given or made under this Agreement
shall be in writing and shall be deemed to have been duly given and received,
regardless of when and whether received, either (a) on the day of hand
delivery; (b) five business days after being deposited in the mail, when sent
by United States certified mail, postage and certification fee prepaid, return
receipt requested; (c) one business day after being timely delivered to a
next-day air courier; or (d) when receipt is acknowledged by the addressee, if
telecopied, addressed as follows:

To Pledgor:

SCI International Limited
c/o Service Corporation International
1929 Allen Parkway
Houston, Texas 77019
Attention: ( )
Telecopy No. (713) 525-5475

To the Pledgee:

SCI Finance LLC
c/o Service Corporation International,
as Manager
1929 Allen Parkway
Houston, Texas 77019
Attention: ( )
Telecopy No. (713) 525-5475

Section 18. Successors and Assigns. This Agreement shall be
binding upon Pledgor, its successors and assigns and shall inure, together with
the rights and remedies of Pledgee hereunder, to the benefit of Pledgee and its
successors, transferees and assigns.

Section 19. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF.

<PAGE> 28
-12-

Section 20. Severability of Provisions. Any provision of
this Agreement which is prohibited or enforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

Section 21. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute one and the same Agreement.

Section 22. Headings. The Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.

Section 23. Obligations Absolute. All obligations of Pledgor
hereunder shall be absolute and unconditional irrespective of:

(i) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar event
of Pledgor (except that the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or similar event of Pledgor);

(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from any
other agreement or instrument relating hereto or thereto;

(iii) any exchange, release or non-perfection of any other
collateral or the pledge of any additional collateral or the failure
to recover in respect thereof pursuant to any remedy or right of
Pledgee contained in this Agreement, or any release or amendment or
waiver of or consent to any departure from any guarantee, for all or
any of the Secured Obligations;

(iv) any exercise or non-exercise, or any waiver of any
right, remedy, power or privilege under or in respect of this
Agreement except as specifically set forth in a waiver granted
pursuant to the provisions of Section 15 hereof; or

(v) any other circumstances which might otherwise
constitute a defense available to, or a discharge of, Pledgor.

Section 24. Rights of Holders of Series A Shares. Each of
Pledgor and Pledgee agrees that its obligations under this Agreement will also
be for the benefit of the

<PAGE> 29
-13-

holders from time to time of Series A Shares, and each of Pledgor and Pledgee
acknowledges and agrees that such holders, acting through a trustee (and only
through such a trustee as provided therein) as provided in Section 7.01 of the
Loan Agreement, will be entitled to enforce this Agreement directly against
each of Pledgor and Pledgee.

<PAGE> 30

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their officer thereunto duly
authorized as of the date first above written.

SCI INTERNATIONAL LIMITED, Pledgor

By:___________________________________
Name:
Title:

SCI FINANCE LLC, Pledgee

By:___________________________________
Name:
Title:

<PAGE> 31

SCHEDULE A

PLEDGED SHARES

<TABLE>
<CAPTION>
Percentage of
All Capital or
Other Equity
Class of Par Certificate Number Interests of
Issuer Stock Value Numbers of Shares Issuer
- ------ -------- ----- ----------- --------- -------------
<S> <C>
Service
Corporation 50%
Inter-
national
plc
</TABLE>

<PAGE> 1

EXHIBIT 4.5(c)

LIABILITY ASSUMPTION AGREEMENT

THIS LIABILITY ASSUMPTION AGREEMENT (the "Agreement")
dated as of ( ), 1994, between Service Corporation International, a
Texas corporation ("SCI") and SCI Finance LLC, a limited liability company
organized under the laws of the State of Texas (the "Company").

WHEREAS, the Company may issue from time to time, in one
or more series, up to 7,000,000 of its preferred interests (the "Preferred
Shares") and intends to issue and sell up to ( ) Preferred Shares
designated as $( ) Term Convertible Shares, Series A, with a liquidation
preference of $50 per share (the "Liquidation Preference");

WHEREAS, the Company will loan substantially all of the
proceeds from the issuance and sale of the Preferred Shares and the proceeds
from the issuance and sale of its common interests (the "Common Shares") to SCI
International Limited, a Delaware corporation and a wholly-owned subsidiary of
SCI; and

WHEREAS, SCI is the manager of the Company (the
"Manager").

NOW THEREFORE, SCI and the Company hereby agree as
follows:

ARTICLE I

Section 1.01. Guarantee by SCI. Subject to the
terms and conditions hereof, SCI (including in its capacity as the Manager)
hereby irrevocably and unconditionally guarantees to each person or entity to
which the Company is now or hereafter becomes indebted or liable (the
"Beneficiaries") (other than obligations to holders of the Preferred Shares in
such holders' capacities as holders of such shares, such obligations being
separately guaranteed to the extent set forth in the Payment, Guarantee and
Conversion Agreement dated the date hereof by SCI for the benefit of each such
holder), the full payment, when and as due, regardless of any defense, right of
set-off or counterclaim which the Company may have or assert, of any and all
such indebtedness and liabilities of the Company to such Beneficiaries
(collectively, the "Obligations"). This Agreement is intended to be for the
benefit of, and to be enforceable by, all such Beneficiaries, whether or not
such Beneficiaries have received notice hereof.

Section 1.02. Term of Agreement. This Agreement
will remain in effect until the later of such time as (a) all of the Preferred
Shares shall have been redeemed or
<PAGE> 2
-2-

converted into shares of Common Stock, $1.00 par value, of SCI, or other
property, in accordance with their terms or shall have been purchased and
canceled by the Company or SCI or (b) there are no Beneficiaries remaining.
Except as provided in the preceding sentence, this Agreement is continuing,
irrevocable, unconditional and absolute.

Section 1.03. Waiver of Notice. SCI hereby waives
notice of acceptance of this Agreement and of any Obligation to which it
applies or may apply, and SCI hereby waives presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of redemption or
conversion and all other notices and demands.

Section 1.04. Obligations Unconditional. The
obligations, covenants, agreements and duties of SCI under this Agreement shall
in no way be affected or impaired by reason of the happening from time to time
of any of the following:

(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by
the Company of any express or implied agreement,
covenant, term or condition relating to the
Obligations to be performed or observed by the
Company;

(b) the extension of the time for the payment by the
Company of all or any portion of the Obligations
or for the performance of any other obligation
under, arising out of, or in connection with,
the Obligations;

(c) any failure, omission, delay or lack of
diligence on the part of the Beneficiaries to
enforce, assert or exercise any right,
privilege, power or remedy conferred on the
Beneficiaries with respect to the Obligations or
any action on the part of the Company granting
indulgence or extension of any kind;

(d) the voluntary or involuntary liquidation,
dissolution, sale or any collateral,
receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the
Company or any of the assets of the Company; or

(e) the settlement or compromise of any Obligation
guaranteed hereby or any obligation hereby
incurred.

There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, SCI with respect to the happening of any of the foregoing.
<PAGE> 3
-3-

Section 1.05. Enforcement. A Beneficiary may
enforce this Agreement directly against SCI and SCI waives any right or remedy
to require that any action be brought against the Company or any other person
or entity before proceeding against SCI.

ARTICLE II

Section 2.01. Binding Effect. All guarantees and
agreements contained in this Agreement shall bind the successors, assigns,
receivers, trustees and representatives of SCI (including any successors,
assigns, receivers, trustees and representatives of SCI in its capacity as the
Manager) and shall inure to the benefit of the Beneficiaries.

Section 2.02. Amendment. So long as there remains
any Beneficiary, or any Preferred Shares are outstanding, this Agreement shall
not be modified or amended in any manner adverse to such Beneficiaries or the
holders of Preferred Shares.

Section 2.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder to SCI or the Company
shall be given in writing by delivering the same against receipt therefor by
facsimile transmission (confirmed by mail) or telex, addressed to SCI or the
Company, as the case may be, as follows (and if so given, shall be deemed given
when mailed or upon receipt of an answer-back, if sent by telex), to it:

If to the Company, to:

SCI Finance LLC
c/o Service Corporation International, as Manager
1929 Allen Parkway
Houston, Texas 77019
Facsimile: (713) 525-5475
Attention: ( )

If to SCI, to:

Service Corporation International
1929 Allen Parkway
Houston, Texas 77019
Facsimile: (713) 525-5475
Attention: ( )
<PAGE> 4
-4-

Section 2.04. Governing Law. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY
THEREIN AND WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
<PAGE> 5
-5-

THIS LIABILITY ASSUMPTION AGREEMENT is executed as of the
day and year first above written.

SERVICE CORPORATION INTERNATIONAL

By:____________________________________
Name:
Title:

SCI FINANCE LLC

By: Service Corporation
International, as Manager

By:____________________________________
Name:
Title:

<PAGE> 1

EXHIBIT 4.9

AGREEMENT TO FURNISH INSTRUMENTS

WITH RESPECT TO LONG-TERM DEBT

Pursuant to Item 601(b)(4) of Regulation S-K, there is not
filed with this Registration Statement certain instruments with respect to
long-term debt under which the total amount of securities authorized thereunder
does not exceed 10 per cent of the total assets of Registrant and its
subsidiaries on a consolidated basis. Registrant agrees to furnish a copy of
any such instrument to the Commission upon request.

SERVICE CORPORATION INTERNATIONAL

By: /s/ James M. Shelger
Name: James M. Shelger
Title: Senior Vice President,
General Counsel and
Secretary

Date: October 17, 1994

<PAGE> 1
EXHIBIT 12.2

SERVICE CORPORATION INTERNATIONAL
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Thousands, except ratio amounts)

<TABLE>
<CAPTION>
Six Months Ended June 30, Years Ended December 31,
------------------------- ---------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Pretax income . . . . . . . . . . . . $113,642 $ 88,281 $173,492 $139,336 $108,872 $ 99,432 $ 84,618

Undistributed income of less than
50% owned equity investees . . . . . (456) (259) (325) (718) (252) (146) --
Minority interest in income of
majority owned subsidiaries
with fixed charges . . . . . . . . . 1,041 1,002 1,938 1,798 1,752 1,334 886
Add fixed charges as adjusted
(from below) . . . . . . . . . . . . 42,577 37,662 78,841 68,584 59,508 52,845 42,437
-------- -------- -------- -------- -------- -------- --------
$156,804 $126,686 $253,946 $209,000 $169,880 $153,465 $127,941
-------- -------- -------- -------- -------- -------- --------
Fixed charges:
Interest expense:
Corporate . . . . . . . . . . . . . $ 32,456 $ 28,888 $ 59,631 $ 53,902 $ 42,429 $ 36,095 $ 32,514
Financial services . . . . . . . . . 4,577 3,598 7,725 5,826 9,453 10,171 3,982
Capitalized. . . . . . . . . . . . . 355 73 705 481 701 467 445
Amortization of debt costs . . . . . 140 141 288 328 116 126 138
1/3 of rental expense. . . . . . . . 5,404 5,035 11,197 8,528 7,510 6,453 5,803
Preferred dividends (pretax) . . . . -- -- -- -- -- 5,186 10,879
-------- -------- -------- -------- -------- -------- --------
Fixed charges. . . . . . . . . . . . . 42,932 37,735 79,546 69,065 60,209 58,498 53,761

Fixed charges as adjusted:
Less: Capitalized interest . . . . . (355) (73) (705) (481) (701) (467) (445)
Preferred dividend (pretax). . -- -- -- -- -- (5,186) (10,879)
-------- -------- -------- -------- -------- -------- --------
Fixed charges as adjusted. . . . . . $ 42,577 $ 37,662 $ 78,841 $ 68,584 $ 59,508 $ 52,845 $ 42,437
-------- -------- -------- -------- -------- -------- --------
Ratio (earnings divided by fixed
charges) . . . . . . . . . . . . . . 3.65 3.36 3.19 3.03 2.82 2.62 2.38
======== ======== ======== ======== ======== ======== ========
</TABLE>

<PAGE> 1
EXHIBIT 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration
statement on Form S-3 of our report, which includes an explanatory paragraph
pertaining to accounting changes, dated February 8, 1994, on our audit of the
consolidated financial statements and financial statement schedules of Service
Corporation International as of December 31, 1993, and for the year then ended,
which report is included in the Annual Report on Form 10-K for the year ended
December 31, 1993. We also consent to the reference to our firm under the
caption "Experts."

/s/ COOPERS & LYBRAND L.L.P.

Houston, Texas
October 18, 1994

<PAGE> 1
EXHIBIT 23.5

CONSENT OF INDEPENDENT AUDITOR

We consent to the reference of our firm under the caption "Experts"
in the Registration Statement (Form S-3) and related Prospectus of Service
Corporation International and SCI Finance LLC for the registration of up to
$1,000,000,000 of Service Corporation International debt securities, common
stock, preferred stock, and common stock warrants or SCI Finance LLC LLC
preferred securities, and to the incorporation by reference therein of our
report dated February 8, 1993, with respect to the consolidated financial
statements and schedules of Service Corporation International for the years
ended December 31, 1992 and 1991 included in the Annual Report (Form 10-K) of
Service Corporation International for the year ended December 31, 1993.

/s/ ERNST & YOUNG LLP

Houston, Texas
October 18, 1994

<PAGE> 1
EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or director, or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), to do any and all acts and things and to execute any
and all instruments which said attorneys and agents deem necessary or
advisable: (i) to enable the Company to comply with the Securities Act of 1933,
as amended, and any rules, regulations, and requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of the offering, sale and delivery of certain
securities of said corporation as set forth below (the "Securities"), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign for and on behalf of the undersigned the name of the
undersigned as officer or director, or both, of the Company to Registration
Statements or to any amendments (including post-effective amendments) thereto
filed with the Securities and Exchange Commission in respect of said
Securities, and to any instrument or document filed as part of, as an exhibit
to or in connection with said Registration Statements or amendments; and (ii)
to register or qualify said Securities for sale and to register or license the
Company as a broker or dealer in said Securities under the securities or Blue
Sky laws of all such States as may be necessary or appropriate to permit
therein the offering and sale of said Securities as contemplated by said
Registration Statements, including specifically, without limitation, the power
and authority to sign for and on behalf of the undersigned the name of the
undersigned as officer or director, or both, of the Company to any application,
statement, petition, prospectus, notice or other instrument or document, or to
any amendment thereto, or to any exhibit filed as a part thereof or in
connection therewith, which is required to be signed by the undersigned and to
be filed with the public authority or authorities administering said Securities
or Blue Sky laws for the purpose of so registering or qualifying said
Securities or registering or licensing the Company, and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(ii) Common Stock, par value $1.00 per share
("Common Stock"), of the Company and the related Series C Junior Participating
Preferred Stock Rights ("Rights"), including without limitation Common Stock of
the Company which may be issued upon conversion of any securities of the
Company or any of its subsidiaries;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 2
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ R. L. Waltrip
<PAGE> 3
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 4
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ Samuel W. Rizzo
<PAGE> 5

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer or employee, or both, of Service Corporation International, a Texas
corporation (the "Company"), does hereby constitute and appoint Samuel W. Rizzo
and James M. Shelger their true and lawful attorneys and agents (each with
authority to act alone), to do any and all acts and things and to execute any
and all instruments which said attorneys and agents deem necessary or
advisable: (i) to enable the Company to comply with the Securities Act of 1933,
as amended, and any rules, regulations, and requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of the offering, sale and delivery of certain
securities of said corporation as set forth below (the "Securities"), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign for and on behalf of the undersigned the name of the
undersigned as officer or employee, or both, of the Company to Registration
Statements or to any amendments (including post-effective amendments) thereto
filed with the Securities and Exchange Commission in respect of said
Securities, and to any instrument or document filed as part of, as an exhibit
to or in connection with said Registration Statements or amendments; and (ii)
to register or qualify said Securities for sale and to register or license the
Company as a broker or dealer in said Securities under the securities or Blue
Sky laws of all such States as may be necessary or appropriate to permit
therein the offering and sale of said Securities as contemplated by said
Registration Statements, including specifically, without limitation, the power
and authority to sign for and on behalf of the undersigned the name of the
undersigned as officer or employee, or both, of the Company to any application,
statement, petition, prospectus, notice or other instrument or document, or to
any amendment thereto, or to any exhibit filed as a part thereof or in
connection therewith, which is required to be signed by the undersigned and to
be filed with the public authority or authorities administering said Securities
or Blue Sky laws for the purpose of so registering or qualifying said
Securities or registering or licensing the Company, and the undersigned does
hereby ratify and confirm as his own act and deed all that said attorney and
agent shall do or cause to be done by virtue hereof.

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 6
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 7th day of October, 1994.

/s/ Wesley T. McRae
<PAGE> 7
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 8
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ Anthony L. Coelho
<PAGE> 9
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 10
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 6th day of October, 1994.

/s/ Douglas M. Conway
<PAGE> 11
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 12
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ Jack Finkelstein
<PAGE> 13
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 14
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ A. J. Foyt, Jr.
<PAGE> 15
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 16
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 13th day of October, 1994.

/s/ James J. Gavin, Jr.
<PAGE> 17
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 18
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ James H. Greer
<PAGE> 19
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 20
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ L. William Heiligbrodt
<PAGE> 21
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 22
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ B. D. Hunter
<PAGE> 23
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 24
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ John W. Mecom, Jr.
<PAGE> 25
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 26
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ Clifton H. Morris, Jr.
<PAGE> 27
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 28
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ E. H. Thornton, Jr.
<PAGE> 29
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 30
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ W. Blair Waltrip
<PAGE> 31
POWER OF ATTORNEY

The Securities of the Company covered by this power of
attorney are:

(i) Debt securities of the Company consisting of
debentures (whether senior, senior subordinated or subordinated), notes and/or
other unsecured evidences of indebtedness;

(iii) Preferred stock, par value $1.00 per share,
of the Company;
<PAGE> 32
(iv) Warrants to acquire Common Stock (including
any associated Rights) of the Company;

(v) Debt or equity securities of any subsidiary
of the Company, including securities convertible into Common Stock (including
any associated Rights) of the Company; and

(vi) Guarantees by the Company of any debt or
equity securities of any subsidiary of the Company.

IN WITNESS WHEREOF, the undersigned has subscribed these
presents this 27th day of September, 1994.

/s/ Edward E. Williams

<PAGE> 1
EXHIBIT 25.1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------------

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) __________

--------------------

THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)

New York 13-5160382
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)

48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip Code)

SERVICE CORPORATION INTERNATIONAL
(Exact name of obligor as specified in its charter)

Texas 74-1488375
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)

1929 Allen Parkway
Houston, TX 77019
(Address of principal executive offices) (Zip Code)

--------------------

Senior Debt Securities*
(Title of the indenture securities)
*Specific title(s) to be determined in connection with sale(s)
of Senior Debt Securities

<PAGE> 2

GENERAL

ITEM 1. General Information.

Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising authority to
which it is subject.

Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. 10006,
New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20549
New York Clearing House Association New York, N.Y.

(b) Whether it is authorized to exercise corporate trust powers:

Yes.

ITEM 2. Affiliations with Obligor

If the obligor is an affiliate of the trustee, describe each
such affiliation.

None. (See Note on page 2.)

--------------------

ITEM 16. List of Exhibits:

Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.

1. - A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (See Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to
Form T-1 filed with Registration Statement No. 33-29637.)

4. - A copy of the existing By-laws of the Trustee. (See Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)

6. - The consent of the Trustee required by Section 321(b) of the Act. (See
Exhibit 6 to Form T-1, Registration Statement No. 33-44051.)

7. - A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority. (See Exhibit 7 to Form T-1, Registration Statement No.
33-55379.)

1
<PAGE> 3
NOTE

Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base responsive answer to Item 2, the answer
to said Item is based on incomplete information.

Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.

--------------------

SIGNATURE

Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 13th day of October, 1994.

The Bank of New York

By: /s/ Robert F. McIntyre

Robert F. McIntyre
Assistant Vice President

<PAGE> 1
EXHIBIT 25.2

********************************************************************************
FORM T-1

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE
ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ________ (Not applicable.)

TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)

Not applicable
(Jurisdiction of incorporation or organization
if not a U.S. national bank)

74-0800980
(I.R.S. Employer Identification No.)

712 Main Street, Houston, Texas 77002
(Address of principal executive offices) (Zip code)

Carol Kirkland, 712 Main Street, 26th Floor,
Houston, Texas 77002, (713) 546-2449
(Name, address and telephone number of agent for service)

Service Corporation International
(Exact name of obligor as specified in its charter)

Texas 74-1488375
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1929 Allen Parkway, Houston, Texas 77219
(Address of principal executive offices) (Zip Code)

Senior Subordinated Debt Securities
(Title of the indenture securities)

*******************************************************************************
<PAGE> 2

ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee--

(a) Name and address of each examining or supervising authority to which
it is subject.

Comptroller of the Currency, Washington, D. C.

Federal Deposit Insurance Corporation,
Washington, D. C.

The Board of Governors of the Federal Reserve System, Washington,
D.C.

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each such
affiliation.

As of October 11, 1994

No such affiliation exists.

ITEM 3. VOTING SECURITIES OF THE TRUSTEE.

Furnish the following information as to each class of voting securities of
the trustee.

Not applicable.

ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.

If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:

(a) Title of the securities outstanding under each such other indenture.

Not applicable.

2
<PAGE> 3

(b) A brief statement of the facts relied upon as a basis for the claim
that no conflicting interest within the meaning of Section 310(b)(1)
of the Act arises as a result of the trusteeship under any such other
indenture, including a statement as to how the indenture securities
will rank as compared with the securities issued under such other
indenture.

Not applicable.

ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH OBLIGOR OR
UNDERWRITERS.

If the trustee or any of the directors or executive officers of the trustee
is a director, officer, partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify each such person having
any such connection and state the nature of each such connection.

Not applicable.

ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.

Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner and
executive officer of the obligor.

Not applicable.

ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.

Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter.

Not applicable.

ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.

Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by the
trustee.

Not applicable.

3
<PAGE> 4

ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.

If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor, furnish
the following information as to each class of securities of such underwriter any
of which are so owned or held by the trustee.

Not applicable.

ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.

If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10% or more of the voting securities of the obligor or (2)
is an affiliate, other than a subsidiary, of the obligor, furnish the following
information as to the voting securities of such person.

Not applicable.

ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.

If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50% or more of the voting securities of the obligor, furnish the
following information as to each class of securities of such person any of which
are so owned or held by the trustee.

Not applicable.

ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.

Except as noted in the instructions to the Form T-1, if the obligor is
indebted to the trustee, furnish the following information: nature of
indebtedness, amount outstanding and date due.

Not applicable.

4
<PAGE> 5

ITEM 13. DEFAULTS BY THE OBLIGOR.

(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such
default.

As of October 11, 1994

No such default exists or has existed.

(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, or is trustee for
more than one outstanding series of securities under the indenture,
state whether there has been a default under any such indenture or
series, identify the indenture or series affected, and explain the
nature of any such default.

As of October 11, 1994

No such default exists or has existed.

ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.

If any underwriter is an affiliate of the trustee, describe each such
affiliation.

Not applicable.

ITEM 15. FOREIGN TRUSTEE.

Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be qualified
under the Act.

Not applicable.

ITEM 16. LIST OF EXHIBITS.

List below all exhibits filed as part of this statement of eligibility.

/*/ 1. A copy of the articles of association of the trustee as now
in effect.

/**/ 2. A copy of the certificate of authority of the trustee to
commence business.

5
<PAGE> 6

/**/ 3. A copy of the certificate of authorization of
the trustee to exercise corporate trust powers issued by
the Board of Governors of the Federal Reserve System
under date of January 21, 1948.

/***/ 4. A copy of the existing bylaws of the trustee.

5. A copy of each indenture referred to in Item 4, if the
obligor is in default. Not Applicable.

6. The consent of the United States institutional trustees
required by Section 321(b) of the Act.

7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or
examining authority.

8. A copy of any order pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act. Not applicable.

9. Foreign trustees are required to file a consent to service of
process on Form F-X. Not applicable.

- -----------------------------

/ */ Incorporated by reference to Exhibit bearing the same Exhibit
number submitted with the Form T-1 of Texas Commerce Bank National
Association with respect to File No. 33-51417.

/ **/ Incorporated by reference to Exhibit bearing the same Exhibit
number submitted with the Form T-1 of Texas National Bank of Commerce
of Houston with respect to File No. 2-24599.

/***/ Incorporated by reference to Exhibit bearing the same Exhibit
number submitted with the Form T-1 of Texas Commerce Bank National
Association with respect to File No. 33-53077.

(Remainder of Page Intentionally Left Blank)

6
<PAGE> 7

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939 the
trustee, Texas Commerce Bank National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Houston, and State of Texas, on the 11th day of October, 1994.

TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(Trustee)

By: /s/ WAYNE MENTZ
Wayne Mentz
Assistant Vice President
and Trust Officer

7
<PAGE> 8

Exhibit 6

Securities & Exchange Commission
Washington, D.C. 20549

Gentlemen:

The undersigned is trustee under an Indenture dated as of September 1, 1991,
as supplemented from time to time by supplemental indentures thereto, between
Service Corporation International and Texas Commerce Bank National Association,
as Trustee, entered into in connection with the issuance of its Senior
Subordinated Debt Securities.

In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned hereby consents that reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities & Exchange Commission upon
its request therefor.

Very truly yours,

TEXAS COMMERCE BANK
NATIONAL ASSOCIATION

By: /s/ WAYNE MENTZ
Wayne Mentz
Assistant Vice President
and Trust Officer

<PAGE> 9
<TABLE>
<S> <C>
Board of Governors of
the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0082
Office of the Comptroller of the Currency
OMB Number: 1357-0081
Federal Financial Institutions Examination Council Expires July 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
(1)
Please refer to page i,
Table of Contents, for
(Logo) the required disclosure
of estimated burden.

- ------------------------------------------------------------------------------------------------------------------------------------

Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices--FFIEC 031

(940630)
Report at the close of business June 30, 1994 ----------
(RCR 0000)

This report is required by law: 12 U.S.C. Section 324 (State This report form is to be filed by banks with branches and con-
member banks); 12 U.S.C. Section 1817 (State nonmember banks); solidated subsidiaries in U.S. territories and possessions, Edge
and 12 U.S.C. Section 161 (National banks). or Agreement subsidiaries, foreign branches, consolidated
foreign subsidiaries, or International Banking Facilities.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must be accordance with Federal regulatory authority instructions.
attested to by not less than two directors (trustees) for State NOTE: These instructions may in some cases differ from
nonmember banks and three directors for State member and generally accepted accounting principles.
National banks.

I, Kenneth L. Tilton, EVP & Controller
--------------------------------------------------------- We, the undersigned directors (trustees), attest to the correct-
Name and Title of Officer Authorized to Sign Report ness of this Report of Condition (including the supporting
schedules) and declare that it has been examined by us and to
of the named bank do hereby declare that these Reports of the best of our knowledge and belief has been prepared in
Condition and Income (including the supporting schedules) conformance with the instructions issued by the appropriate
have been prepared in conformance with the instructions Federal regulatory authority and is true and correct.
issued by the appropriate Federal regulatory authority and
are true to the best of my knowledge and belief. Marc J. Shapiro /s/ Marc J. Shapiro
----------------------------------------------------------------
Director (Trustee)

/s/ Kenneth L. Tilton Alan R. Buckwalter, III /s/ Alan R. Buckwalter, III
- -------------------------------------------------------------- ----------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)

July 28, 1994 Robert C. Hunter /s/ Robert C. Hunter
- -------------------------------------------------------------- ----------------------------------------------------------------
Date of Signature Director (Trustee)

- ------------------------------------------------------------------------------------------------------------------------------------

For Banks Submitting Hard Copy Report Forms:

State Member Banks: Return the original and one copy to the National Banks: Return the original only in the special return
appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of the
special return address envelope, return the original only to
State Nonmember Banks: Return the original only in the the FDIC, c/o Quality Data Systems, 2139 Espey Court,
special return address envelope provided. If express mail is Crofton, MD 21114.
used in lieu of the special return address envelope, return the
original only to the FDIC, c/o Quality Data Systems, 2139
Espey Court, Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------

FDIC Certificate Number 0 3 2 6 3
----------
(RCR 0000) CALL NO. 188 31 06-30-94

CERT: 03263 00373 STBK 48-3926

TEXAS COMMERCE BANK NATIONAL ASSOCIA
712 MAIN STREET
HOUSTON, TX 77001

Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency

</TABLE>

<PAGE> 10
<TABLE>
(2)

Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Table of Contents

Signature Page Cover Report of Condition
Schedule RC--Balance Sheet........................... RC-1, 2
Report of Income Schedule RC-A--Cash and Balance Due
Schedule RI--Income Statement................ RI-1, 2, 3 From Depository Institutions.......................... RC-3
Schedule RI-A--Changes in Equity Capital........... RI-3 Schedule RC-B--Securities............................ RC-4, 5
Schedule RI-B--Charge-offs and Recoveries and Schedule RC-C--Loans and lease Financing
Changes in Allowance for Loan and Lease Receivables:
Losses........................................ RI-4, 5 Part I. Loans and Leases......................... RC-6, 7
Schedule RI-C--Applicable Income Taxes by Part II. Loans to Small Businesses and
Taxing Authority................................. RI-5 Small Farms (included in the forms for
Schedule RI-D--Income from June 30 only)................................ RC-7a, 7b
International Operations......................... RI-6 Schedule RC-D--Trading Assets and Liabilities
Schedule RI-E--Explanations..................... RI-7, 8 (to be completed only by selected banks).............. RC-8
Schedule RC-E--Deposit Liabilities.................. RC-9, 10
Schedule RC-F--Other Assets............................ RC-11
Schedule RC-G--Other Liabilities....................... RC-11
Schedule RC-H--Selected Balance Sheet Items for
Domestic Offices..................................... RC-12
Schedule RC-I--Selected Assets and Liabilities
of IBFs.............................................. RC-13
Disclosure of Estimated Burden Schedule RC-K--Quarterly Averages...................... RC-13
Schedule RC-L--Off-Balance Sheet Items............. RC-14, 15
The estimated average burden associated with this information Schedule RC-M--Memoranda........................... RC-16, 17
collection is 30.7 hours per respondent and is estimated to Schedule RC-N--Past Due and Nonaccrual Loans,
vary from 15 to 200 hours per response, depending on individual Leases, and Other Assets......................... RC-18, 19
circumstances. Burden estimates include the time for reviewing Schedule RC-O--Other Data for Deposit
instructions, gathering and maintaining data in the required Insurance Assessments............................ RC-20, 21
form, and completing the information collection, but exclude Schedule RC-R--Risk-Based Capital.................. RC-22, 23
the time for compiling and maintaining business records in the Optional Narrative Statement Concerning the
normal course of a respondent's activities. Comments concerning Amounts Reported in the Reports of
the accuracy of this burden estimate and suggestions for Condition and Income................................. RC-24
reducing this burden should be directed to the Office of Special Report (to be completed by all banks)
Information and Regulatory Affairs, Office of Management and Schedule RC-J--Repricing Opportunities (sent only to
Budget, Washington, D.C. 20503, and to one of the following: and to be completed only by savings banks)

Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551

Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219

Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429

For information or assistance, national and state nonmember banks should contact the FDIC's Call Reports Analysis Unit, 550 17th
Street, NW, Washington, D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through Friday between 8:00 a.m. and 5:00 p.m.,
Eastern time. State member banks should contact their Federal Reserve District Bank.

</TABLE>

<PAGE> 11

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RI-1
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Consolidated Report of Income
for the period January 1, 1994-June 30, 1994

All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars.

Schedule RI--Income Statement
<S> <C> <C> <C>
__________
| I480 | (-
____________ ________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_______________________________________________________________________________________________ ____________________
1. Interest income: | ////////////////// |
a. Interest and fee income on loans: | ////////////////// |
(1) In domestic offices: | ////////////////// |
(a) Loans secured by real estate ................................................... | 4011 88,779 | 1.a.(1)(a)
(b) Loans to depository institutions ............................................... | 4019 962 | 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers ............ | 4024 2,591 | 1.a.(1)(c)
(d) Commercial and industrial loans ................................................ | 4012 118,060 | 1.a.(1)(d)
(e) Acceptances of other banks ..................................................... | 4026 0 | 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// |
(1) Credit cards and related plans ............................................. | 4054 6,291 | 1.a.(1)(f)(1)
(2) Other ...................................................................... | 4055 46,035 | 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions ......................... | 4056 7,561 | 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political | ////////////////// |
subdivisions in the U.S.: | ////////////////// |
(1) Taxable obligations ........................................................ | 4503 109 | 1.a.(1)(h)(1)
(2) Tax-exempt obligations ..................................................... | 4504 1,557 | 1.a.(1)(h)(2)
(i) All other loans in domestic offices ............................................ | 4058 40,417 | 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4059 5,622 | 1.a.(2)
b. Income from lease financing receivables: | ////////////////// |
(1) Taxable leases ..................................................................... | 4505 7,961 | 1.b.(1)
(2) Tax-exempt leases .................................................................. | 4307 0 | 1.b.(2)
c. Interest income on balances due from depository institutions:(1) | ////////////////// |
(1) In domestic offices ................................................................ | 4105 93 | 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4106 0 | 1.c.(2)
d. Interest and dividend income on securities: | ////////////////// |
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations .... | 4027 93,097 | 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// |
(a) Taxable securities ............................................................. | 4506 35 | 1.d.(2)(a)
(b) Tax-exempt securities .......................................................... | 4507 99 | 1.d.(2)(b)
(3) Other domestic debt securities ..................................................... | 3657 8,368 | 1.d.(3)
(4) Foreign debt securities ............................................................ | 3658 41 | 1.d.(4)
(5) Equity securities (including investments in mutual funds) .......................... | 3659 1,394 | 1.d.(5)
e. Interest income from assets held in trading accounts ................................... | 4069 619 | 1.e.
______________________
____________
(1) Includes interest income on time certificates of deposit not held in trading accounts.
</TABLE>

<PAGE> 12

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RI-2
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RI--Continued

<S> <C> <C> <C> <C> <C>
________________
Dollar Amounts in Thousands | Year-to-date |
___________________________________________________________________________________ ______________
1. Interest income (continued) | RIAD Bil Mil Thou |
f. Interest income on federal funds sold and securities purchased | ////////////////// |
under agreements to resell in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4020 79,166 | 1.f.
g. Total interest income (sum of items 1.a through 1.f) ................ | 4107 508,857 | 1.g.
2. Interest expense: | ////////////////// |
a. Interest on deposits: | ////////////////// |
(1) Interest on deposits in domestic offices: | ////////////////// |
(a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// |
telephone and preauthorized transfer accounts) .............. | 4508 13,934 | 2.a.(1)(a)
(b) Nontransaction accounts: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................... | 4509 13,159 | 2.a.(1)(b)(1)
(2) Other savings deposits .................................. | 4511 35,932 | 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ........ | 4174 11,361 | 2.a.(1)(b)(3)
(4) All other time deposits ................................. | 4512 45,223 | 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// |
subsidiaries, and IBFs .......................................... | 4172 6,490 | 2.a.(2)
b. Expense of federal funds purchased and securities sold under | ////////////////// |
agreements to repurchase in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4180 13,565 | 2.b.
c. Interest on demand notes issued to the U.S. Treasury and on | ////////////////// |
other borrowed money ................................................ | 4185 13,410 | 2.c.
d. Interest on mortgage indebtedness and obligations under | ////////////////// |
capitalized leases .................................................. | 4072 1,014 | 2.d.
e. Interest on subordinated notes and debentures ....................... | 4200 13,122 | 2.e.
f. Total interest expense (sum of items 2.a through 2.e) ............... | 4073 167,210 | 2.f.
___________________________
3. Net interest income (item 1.g minus 2.f) ............................... | ////////////////// | RIAD 4074 | 341,647 | 3.
___________________________
4. Provisions: | ////////////////// |
___________________________
a. Provision for loan and lease losses ................................. | ////////////////// | RIAD 4230 | (16,960)| 4.a.
b. Provision for allocated transfer risk ............................... | ////////////////// | RIAD 4243 | (2,290)| 4.b.
___________________________
5. Noninterest income: | ////////////////// |
a. Income from fiduciary activities .................................... | 4070 64,207 | 5.a.
b. Service charges on deposit accounts in domestic offices ............. | 4080 74,167 | 5.b.
c. Trading gains (losses) and fees from foreign exchange transactions .. | 4075 6,372 | 5.c.
d. Other foreign transaction gains (losses) ............................ | 4076 137 | 5.d.
e. Gains (losses) and fees from assets held in trading accounts ........ | 4077 5,825 | 5.e.
f. Other noninterest income: | ////////////////// |
(1) Other fee income ................................................ | 5407 45,405 | 5.f.(1)
(2) All other noninterest income* ................................... | 5408 17,507 | 5.f.(2)
___________________________
g. Total noninterest income (sum of items 5.a through 5.f) ............. | ////////////////// | RIAD 4079 | 213,620 | 5.g.
6. a. Realized gains (losses) on held-to-maturity securities .............. | ////////////////// | RIAD 3521 | 43 | 6.a.
b. Realized gains (losses) on available-for-sale securities ............ | ////////////////// | RIAD 3196 | 0 | 6.b.
___________________________
7. Noninterest expense: | ////////////////// |
a. Salaries and employee benefits ...................................... | 4135 197,684 | 7.a.
b. Expenses of premises and fixed assets (net of rental income) | ////////////////// |
(excluding salaries and employee benefits and mortgage interest) .... | 4217 57,793 | 7.b.
c. Other noninterest expense* .......................................... | 4092 149,246 | 7.c.
___________________________
d. Total noninterest expense (sum of items 7.a through 7.c) ............ | ////////////////// | RIAD 4093 | 404,723 | 7.d.
___________________________
8. Income (loss) before income taxes and extraordinary items and other | ////////////////// |
___________________________
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)| ////////////////// | RIAD 4301 | 169,837 | 8.
9. Applicable income taxes (on item 8) .................................... | ////////////////// | RIAD 4302 | 65,051 | 9.
___________________________
10. Income (loss) before extraordinary items and other adjustments | ////////////////// |
___________________________
(item 8 minus 9) ....................................................... | ////////////////// | RIAD 4300 | 104,786 | 10.
_________________________________________________
____________
*Describe on Schedule RI-E--Explanations.
</TABLE>

<PAGE> 13

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RI-3
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RI--Continued

<S> <C> <C> <C>
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________ ____________________
11. Extraordinary items and other adjustments: | ////////////////// |
a. Extraordinary items and other adjustments, gross of income taxes* . | 4310 0 | 11.a.
b. Applicable income taxes (on item 11.a)* ........................... | 4315 0 | 11.b.
c. Extraordinary items and other adjustments, net of income taxes | ////////////////// |
___________________________
(item 11.a minus 11.b) ............................................ | ////////////////// | RIAD 4320 | 0 | 11.c.
12. Net income (loss) (sum of items 10 and 11.c) ......................... | ////////////////// | RIAD 4340 | 104,786 | 12.
_________________________________________________

________________
Memoranda | Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________ ____________________
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// |
August 7, 1986, that is not deductible for federal income tax purposes .......................... | 4513 300 | M.1.
2. Fee income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// |
(included in Schedule RI, item 5.g) ............................................................. | 8431 6,797 | M.2.
3. Estimated foreign tax credit included in applicable income taxes, items 9 and 11.b above ........ | 4309 0 | M.3.
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Taxable equivalent adjustment to "Income (loss) before income taxes and extraordinary | ////////////////// |
items and other adjustments" (item 8 above) ..................................................... | 1244 0 | M.4.
5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number |
nearest whole number) ........................................................................... | 4150 9,424 | M.5.
______________________

Schedule RI-A--Changes in Equity Capital

Indicate decreases and losses in parentheses. __________
| I483 | (-
____________ ________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________ ____________________
1. Total equity capital originally reported in the December 31, 1993, Reports of Condition | ////////////////// |
and Income ...................................................................................... | 3215 1,694,783 | 1.
2. Equity capital adjustments from amended Reports of Income, net* ................................. | 3216 0 | 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) ............................ | 3217 1,694,783 | 3.
4. Net income (loss) (must equal Schedule RI, item 12) ............................................. | 4340 104,786 | 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net .............................. | 4346 0 | 5.
6. Changes incident to business combinations, net .................................................. | 4356 181,120 | 6.
7. LESS: Cash dividends declared on preferred stock ................................................ | 4470 0 | 7.
8. LESS: Cash dividends declared on common stock ................................................... | 4460 130,000 | 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// |
for this schedule) .............................................................................. | 4411 0 | 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities ................ | 8433 (34,404)| 11.
12. Foreign currency translation adjustments ........................................................ | 4414 0 | 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ........ | 4415 20,978 | 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// |
item 28) ........................................................................................ | 3210 1,837,263 | 14.
______________________
____________
*Describe on Schedule RI-E--Explanations.
</TABLE>

<PAGE> 14

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RI-4
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses

Part I. Charge-offs and Recoveries on Loans and Leases

Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.

<S> <C> <C> <C> <C>
__________
| I486 | (-
_________________________________ ________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
1. Loans secured by real estate: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4651 1,879 | 4661 5,825 | 1.a.
b. To non-U.S. addressees (domicile) ..................................... | 4652 0 | 4662 0 | 1.b.
2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository institutions .................. | 4653 0 | 4663 0 | 2.a.
b. To foreign banks ...................................................... | 4654 0 | 4664 0 | 2.b.
3. Loans to finance agricultural production and other loans to farmers ...... | 4655 0 | 4665 0 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4645 3,771 | 4617 5,843 | 4.a.
b. To non-U.S. addressees (domicile) ..................................... | 4646 0 | 4618 0 | 4.b.
5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures: | ////////////////// | ////////////////// |
a. Credit cards and related plans ........................................ | 4656 1,101 | 4666 168 | 5.a.
b. Other (includes single payment, installment, and all student loans) ... | 4657 4,948 | 4667 2,447 | 5.b.
6. Loans to foreign governments and official institutions ................... | 4643 0 | 4627 545 | 6.
7. All other loans .......................................................... | 4644 467 | 4628 27 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ......................................... | 4658 0 | 4668 0 | 8.a.
b. Of non-U.S. addressees (domicile) ..................................... | 4659 0 | 4669 2,001 | 8.b.
9. Total (sum of items 1 through 8) ......................................... | 4635 12,166 | 4605 16,856 | 9.
___________________________________________

___________________________________________
| Cumulative | Cumulative |
| Charge-offs | Recoveries |
| Jan. 1, 1986 | Jan. 1, 1986 |
Memoranda | through | through |
Dollar Amounts in Thousands | Dec. 31, 1989 | Report Date |
______________________________________________________________________________ ____________________ ____________________
To be completed by national banks only. | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
____________________ ____________________
1. Charge-offs and recoveries of Special-Category Loans, as defined for this | ////////////////// | ////////////////// |
Call Report by the Comptroller of the Currency ........................... | ////////////////// | 4784 13,632 | M.1.
___________________________________________
___________________________________________
| (Column A) | (Column B) |
Memorandum items 2 and 3 are to be completed by all banks. | Charge-offs | Recoveries |
____________________ ____________________
2. Loans to finance commercial real estate, construction, and land | calendar year-to-date |
_________________________________________
development activities (not secured by real estate) included in | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
____________________ ____________________
Schedule RI-B, part I, items 4 and 7, above .............................. | 5409 6 | 5410 275 | M.2.
3. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, item 1, above): | ////////////////// | ////////////////// |
a. Construction and land development ..................................... | 3582 0 | 3583 0 | M.3.a.
b. Secured by farmland ................................................... | 3584 0 | 3585 0 | M.3.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ..................... | 5411 0 | 5412 0 | M.3.c.(1)
(2) All other loans secured by 1-4 family residential properties ...... | 5413 912 | 5414 339 | M.3.c.(2)
d. Secured by multifamily (5 or more) residential properties ............. | 3588 0 | 3589 0 | M.3.d.
e. Secured by nonfarm nonresidential properties .......................... | 3590 967 | 3591 4,731 | M.3.e.
___________________________________________
</TABLE>

<PAGE> 15

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RI-5
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RI-B--Continued

Part II. Changes in Allowance for Loan and
Lease Losses and in Allocated

Transfer Risk Reserve

<S> <C> <C> <C> <C> <C>
___________________________________________
| (Column A) | (Column B) |
| Allowance for | Allocated |
| Loan and Lease | Transfer Risk |
| Losses | Reserve |
____________________ ____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
1. Balance originally reported in the December 31, 1993, Reports of | ////////////////// | ////////////////// |
Condition and Income ..................................................... | 3124 324,608 | 3131 2,290 | 1.
2. Recoveries (column A must equal part I, item 9, column B above) .......... | 4605 16,856 | 3132 0 | 2.
3. LESS: Charge-offs (column A must equal part I, item 9, column A above) ... | 4635 12,166 | 3133 0 | 3.
4. Provision (column A must equal Schedule RI, item 4.a; column B must | ////////////////// | ////////////////// |
equal Schedule RI, item 4.b) ............................................. | 4230 (16,960)| 4243 (2,290)| 4.
5. Adjustments* (see instructions for this schedule) ........................ | 4815 2,684 | 3134 0 | 5.
6. Balance end of current period (sum of items 1 through 5) (column A must | ////////////////// | ////////////////// |
equal Schedule RC, item 4.b; column B must equal Schedule RC, | ////////////////// | ////////////////// |
item 4.c) ................................................................ | 3123 315,022 | 3128 0 | 6.
___________________________________________
____________
*Describe on Schedule RI-E--Explanations.

Schedule RI-C--Applicable Income Taxes by Taxing Authority

Schedule RI-C is to be reported with the December Report of Income.

__________
| I489 | (-
____________ ________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
1. Federal ....................................................................................... | 4780 N/A | 1.
2. State and local................................................................................ | 4790 N/A | 2.
3. Foreign ....................................................................................... | 4795 N/A | 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............ | 4770 N/A | 4.
____________________________
5. Deferred portion of item 4 ........................................ | RIAD 4772 | N/A | ////////////////// | 5.
__________________________________________________

</TABLE>
7

<PAGE> 16

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RI-6
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RI-D--Income from International Operations

For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations
account for more than 10 percent of total revenues, total assets, or net income.

Part I. Estimated Income from International Operations

<S> <C> <C> <C>
__________
| I492 | (-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// |
and IBFs: | ////////////////// |
a. Interest income booked ................................................................... | 4837 N/A | 1.a.
b. Interest expense booked .................................................................. | 4838 N/A | 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// |
(item 1.a minus 1.b) ..................................................................... | 4839 N/A | 1.c.
2. Adjustments for booking location of international operations: | ////////////////// |
a. Net interest income attributable to international operations booked at domestic offices .. | 4840 N/A | 2.a.
b. Net interest income attributable to domestic business booked at foreign offices .......... | 4841 N/A | 2.b.
c. Net booking location adjustment (item 2.a minus 2.b) ..................................... | 4842 N/A | 2.c.
3. Noninterest income and expense attributable to international operations: | ////////////////// |
a. Noninterest income attributable to international operations .............................. | 4097 N/A | 3.a.
b. Provision for loan and lease losses attributable to international operations ............. | 4235 N/A | 3.b.
c. Other noninterest expense attributable to international operations ....................... | 4239 N/A | 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// |
minus 3.b and 3.c) ....................................................................... | 4843 N/A | 3.d.
4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// |
adjustment (sum of items 1.c, 2.c, and 3.d) ................................................. | 4844 N/A | 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// |
the effects of equity capital on overall bank funding costs ................................. | 4845 N/A | 5.
6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// |
adjustment (sum of items 4 and 5) ........................................................... | 4846 N/A | 6.
7. Income taxes attributable to income from international operations as estimated in item 6 .... | 4797 N/A | 7.
8. Estimated net income attributable to international operations (item 6 minus 7) .............. | 4341 N/A | 8.
______________________

Memoranda ______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
1. Intracompany interest income included in item 1.a above ..................................... | 4847 N/A | M.1.
2. Intracompany interest expense included in item 1.b above .................................... | 4848 N/A | M.2.
______________________

Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts

________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1.
2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2.
3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs): | ////////////////// |
a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a.
b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b.
4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// |
domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4.
5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs) ............................................................................ | 4853 N/A | 5.
--------------------
</TABLE>

<PAGE> 17
<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RI-7
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RI-E--Explanations

Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.

Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)

<S> <C> <C> <C>
__________
| I495 | (-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// |
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// |
a. Net gains on other real estate owned ..................................................... | 5415 9,157 | 1.a.
b. Net gains on sales of loans .............................................................. | 5416 0 | 1.b.
c. Net gains on sales of premises and fixed assets .......................................... | 5417 0 | 1.c.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 5.f.(2): | ////////////////// |
_____________
d. | TEXT 4461 |______________________________________________________________________________| 4461 | 1.d.
___________
e. | TEXT 4462 |______________________________________________________________________________| 4462 | 1.e.
___________
f. | TEXT 4463 |______________________________________________________________________________| 4463 | 1.f.
_____________
2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// |
a. Amortization expense of intangible assets ................................................ | 4531 33,268 | 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// |
b. Net losses on other real estate owned .................................................... | 5418 0 | 2.b.
c. Net losses on sales of loans ............................................................. | 5419 0 | 2.c.
d. Net losses on sales of premises and fixed assets ......................................... | 5420 0 | 2.d.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 7.c: | ////////////////// |
| ////////////////// |
_____________ FDIC Assessment | ////////////////// |
e. | TEXT 4464 |______________________________________________________________________________| 4464 17,938 | 2.e.
___________
f. | TEXT 4467 |______________________________________________________________________________| 4467 | 2.f.
___________
g. | TEXT 4468 |______________________________________________________________________________| 4468 | 2.g.
_____________
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// |
applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// |
all extraordinary items and other adjustments): | ////////////////// |
_____________
a. (1) | TEXT 4469 |__________________________________________________________________________| 4469 | 3.a.(1)
_____________
(2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2)
_____________ ____________________________
b. (1) | TEXT 4487 |__________________________________________________________________________| 4487 | 3.b.(1)
_____________
(2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2)
_____________ ____________________________
c. (1) | TEXT 4489 |__________________________________________________________________________| 4489 | 3.c.(1)
_____________
(2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2)
____________________________
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// |
item 2) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4492 |______________________________________________________________________________| 4492 | 4.a.
___________
b. | TEXT 4493 |______________________________________________________________________________| 4493 | 4.b.
_____________
5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// |
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// |
_____________
a. | TEXT 4494 |______________________________________________________________________________| 4494 | 5.a.
___________
b. | TEXT 4495 |______________________________________________________________________________| 4495 | 5.b.
_____________
6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// |
item 10) (itemize and describe all corrections): | ////////////////// |
_____________
a. | TEXT 4496 |______________________________________________________________________________| 4496 | 6.a.
___________
b. | TEXT 4497 |______________________________________________________________________________| 4497 | 6.b.
_____________
</TABLE>

9
<PAGE> 18

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RI-8
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RI-E--Continued
<S> <C> <C> <C>
________________
| Year-to-date |
----------------------
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// |
(itemize and describe all such transactions): | ////////////////// |
| ////////////////// |
_____________ | ////////////////// |
a. | TEXT 4498 |_Capital Injection from Parent Company________________________________________| 4498 20,978 | 7.a.
___________
b. | TEXT 4499 |______________________________________________________________________________| 4499 | 7.b.
_____________
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// |
item 5) (itemize and describe all adjustments): | ////////////////// |
| ////////////////// |
_____________ | ////////////////// |
a. | TEXT 4521 |_Bank Acquisition_____________________________________________________________| 4521 2,684 | 8.a.
___________
b. | TEXT 4522 |______________________________________________________________________________| 4522 | 8.b.
_____________ ---------------------
9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | (-
______________________
at its option, any other significant items affecting the Report of Income):
___
No comment | | (RIAD 4769)
___
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>

<PAGE> 19

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-1
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1994

All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
Schedule RC--Balance Sheet
__________
| C400 | (-
____________ ________

Dollar Amounts in Thousands | RCFD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C> <C>
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin(1) ................................... | 0081 1,952,721 | 1.a.
b. Interest-bearing balances(2) ............................................................ | 0071 5,011 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. | 1754 1,363,948 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ............................ | 1773 1,611,902 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold ...................................................................... | 0276 4,622,525 | 3.a.
b. Securities purchased under agreements to resell ......................................... | 0277 47,547 | 3.b.
4. Loans and lease financing receivables: ____________________________| ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 9,706,261 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 315,022 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c.
____________________________

d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... | 2125 9,391,239 | 4.d.
5. Assets held in trading accounts ............................................................ | 3545 34,188 | 5.
6. Premises and fixed assets (including capitalized leases) ................................... | 2145 534,581 | 6.
7. Other real estate owned (from Schedule RC-M) ............................................... | 2150 106,753 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... | 2130 0 | 8.
9. Customers' liability to this bank on acceptances outstanding ............................... | 2155 8,678 | 9.
10. Intangible assets (from Schedule RC-M) ..................................................... | 2143 589,826 | 10.
11. Other assets (from Schedule RC-F) .......................................................... | 2160 459,182 | 11.
12. Total assets (sum of items 1 through 11) ................................................... | 2170 20,728,101 | 12.
______________________
____________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
</TABLE>
11

<PAGE> 20

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-2
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC--Continued
<S> <C> <C> <C> <C> <C>
___________________________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
LIABILITIES | /////////////////////// |
13. Deposits: | /////////////////////// |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) ..... | RCON 2200 15,468,673 | 13.a.
____________________________
(1) Noninterest-bearing(1) ................................ | RCON 6631 5,776,281 | /////////////////////// | 13.a.(1)
(2) Interest-bearing ...................................... | RCON 6636 9,692,392 | /////////////////////// | 13.a.(2)
____________________________
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// |
part II) .............................................................................. | RCFN 2200 515,926 | 13.b.
____________________________
(1) Noninterest-bearing ................................... | RCFN 6631 0 | /////////////////////// | 13.b.(1)
(2) Interest-bearing ...................................... | RCFN 6636 515,926 | /////////////////////// | 13.b.(2)
____________________________
14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// |
a. Federal funds purchased ............................................................... | RCFD 0278 436,360 | 14.a.
b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 245,637 | 14.b.
15. a. Demand notes issued to the U.S. Treasury .............................................. | RCON 2840 1,504,602 | 15.a.
b. Trading liabilities ................................................................... | RCFD 3548 18,589 | 15.b.
16. Other borrowed money: | /////////////////////// |
a. With original maturity of one year or less ............................................ | RCFD 2332 85,293 | 16.a.
b. With original maturity of more than one year .......................................... | RCFD 2333 20,349 | 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 30,128 | 17.
18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 8,678 | 18.
19. Subordinated notes and debentures ........................................................ | RCFD 3200 345,000 | 19.
20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 211,603 | 20.
21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 18,890,838 | 21.
| /////////////////////// |
22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22.
EQUITY CAPITAL | /////////////////////// |
23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 0 | 23.
24. Common stock ............................................................................. | RCFD 3230 612,893 | 24.
25. Surplus (exclude all surplus related to preferred stock).................................. | RCFD 3839 1,014,464 | 25.
26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 197,320 | 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ................ | RCFD 8434 12,586 | 26.b.
27. Cumulative foreign currency translation adjustments ...................................... | RCFD 3284 0 | 27.
28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 1,837,263 | 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// |
and 28) .................................................................................. | RCFD 3300 20,728,101 | 29.
___________________________

Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external __________________
auditors as of any date during 1993 .............................................................. | RCFD 6724 N/A | M.1.
__________________

1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
____________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>
12

<PAGE> 21

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-3
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-A--Cash and Balances Due From Depository Institutions
Exclude assets held in trading accounts.

<S> <C> <C> <C>
-----------
| C405 | (-
_________________________________ ________
| (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
-------------------------------------------
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// |
coin .................................................................... | 0022 1,509,753 | ////////////////// | 1.
a. Cash items in process of collection and unposted debits .............. | ////////////////// | 0020 1,204,067 | 1.a.
b. Currency and coin .................................................... | ////////////////// | 0080 305,686 | 1.b.
2. Balances due from depository institutions in the U.S. ................... | ////////////////// | 0082 83,133 | 2.
a. U.S. branches and agencies of foreign banks (including their IBFs) ... | 0083 5,060 | ////////////////// | 2.a.
b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// |
in the U.S. (including their IBFs) ................................... | 0085 78,073 | ////////////////// | 2.b.
3. Balances due from banks in foreign countries and foreign central banks .. | ////////////////// | 0070 5,866 | 3.
a. Foreign branches of other U.S. banks ................................. | 0073 565 | ////////////////// | 3.a.
b. Other banks in foreign countries and foreign central banks ........... | 0074 5,330 | ////////////////// | 3.b.
4. Balances due from Federal Reserve Banks ................................. | 0090 358,951 | 0090 358,951 | 4.
5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// |
Schedule RC, sum of items 1.a and 1.b) .................................. | 0010 1,957,732 | 0010 1,957,703 | 5.
___________________________________________

______________________
Memorandum Dollar Amounts in Thousands RCOW Bil Mil Thou
__________________________________________________________________________________________________ ____________________
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// |
column B above) .............................................................................. | 0050 78,122 | M.1.
______________________
</TABLE>
13

<PAGE> 22

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-4
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-B--Securities

Exclude assets held in trading accounts.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
__________
| C410 | (-
___________________________________________________________________________ ________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________ ____________________ ____________________ ____________________ ____________________
1. U.S. Treasury securities ......... | 0211 0 | 0213 0 | 1286 651,724 | 1287 643,271 | 1.
2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
ment agencies(2) .............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a.
b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
agencies(3) ................... | 1294 0 | 1295 0 | 1297 0 | 1298 0 | 2.b.
3. Securities issued by states | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and political subdivisions | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
in the U.S.: | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. General obligations ........... | 1676 440 | 1677 437 | 1678 0 | 1679 0 | 3.a.
b. Revenue obligations ........... | 1681 150 | 1686 236 | 1690 0 | 1691 0 | 3.b.
c. Industrial development | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and similar obligations ....... | 1694 0 | 1695 0 | 1696 0 | 1697 0 | 3.c.
4. Mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities (MBS): | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Pass-through securities: | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Guaranteed by | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
GNMA ...................... | 1698 0 | 1699 0 | 1701 632,586 | 1702 666,581 | 4.a.(1)
(2) Issued by FNMA | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and FHLMC ................. | 1703 593,847 | 1705 579,295 | 1706 255,804 | 1707 248,531 | 4.a.(2)
(3) Privately-issued .......... | 1709 0 | 1710 0 | 1711 0 | 1713 0 | 4.a.(3)
b. CMOs and REMICs: | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Issued by FNMA | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and FHLMC ................. | 1714 474,517 | 1715 443,500 | 1716 0 | 1717 0 | 4.b.(1)
(2) Privately-issued | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and collateralized | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
by MBS issued or | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
guaranteed by | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
FNMA, FHLMC, or | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
GNMA ...................... | 1718 4,980 | 1719 4,995 | 1731 10,295 | 1732 10,132 | 4.b.(2)
(3) All other privately- | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
issued .................... | 1733 0 | 1734 0 | 1735 0 | 1736 0 | 4.b.(3)
5. Other debt securities: | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Other domestic debt | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities .................... | 1737 288,779 | 1738 286,358 | 1739 0 | 1741 0 | 5.a.
b. Foreign debt | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities .................... | 1742 1,235 | 1743 1,086 | 1744 0 | 1746 0 | 5.b.
_____________________________________________________________________________________

_____________
(1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime Administration obligations, and
Export-Import Bank participation certificates.
(3) Includes obligations (other than pass-through securities, CMOs, and REMICs) issued by the Farm Credit System, the Federal Home
Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing
Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority.
</TABLE>
14

<PAGE> 23

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-5
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-B--Continued
<S> <C> <C> <C> <C> <C>
_____________________________________________________________________________________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________________________ ____________________ ____________________ ____________________ ____________________
6. Equity securities: | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Investments in mutual | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
funds ....................... | ////////////////// | ////////////////// | 1747 0 | 1748 0 | 6.a.
b. Other equity securities | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
with readily determin- | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
able fair values ............ | ////////////////// | ////////////////// | 1749 0 | 1751 0 | 6.b.
c. All other equity | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities(1) ............... | ////////////////// | ////////////////// | 1752 43,387 | 1753 43,387 | 6.c.
7. Total (sum of items 1 | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
through 6) (total of | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
column A must equal | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
Schedule RC, item 2.a) | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(total of column D must | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
item 2.b) ...................... | 1754 1,363,948 | 1771 1,315,907 | 1772 1,593,796 | 1773 1,611,902 | 7.
_____________________________________________________________________________________

___________
Memoranda | C412 | (-
___________ _________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
1. Pledged securities(2) ......................................................................... | 0416 2,520,189 | M.1.
2. Maturity and repricing data for debt securities(2)(3)(4) (excluding those in nonaccrual status):| ////////////////// |
a. Fixed rate debt securities with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | 0343 429 | M.2.a.(1)
(2) Over three months through 12 months .................................................... | 0344 129,783 | M.2.a.(2)
(3) Over one year through five years ....................................................... | 0345 1,165,573 | M.2.a.(3)
(4) Over five years ........................................................................ | 0346 1,621,403 | M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 2,917,188 | M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | 4544 14,040 | M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 1,235 | M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3)
(4) Less frequently than every five years .................................................. | 4552 0 | M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 15,275 | M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// |
securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// |
debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 2,932,463 | M.2.c.
3. Not applicable | ////////////////// |
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// |
in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4.
5. Not applicable | ////////////////// |
6. Floating rate debt securities with a remaining maturity of one year or less(2) (included in | ////////////////// |
Memorandum item 2.b.(5) above) ................................................................ | 5519 0 | M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// |
trading securities during the calendar year-to-date ........................................... | 1778 0 | M.7.
______________________

_____________
(1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.
(2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock.
(4) Memorandum item 2 is not applicable to savings banks that must complete supplemental Schedule RC-J.
</TABLE>

<PAGE> 24

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-6
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________
Schedule RC-C--Loans and Lease Financing Receivables

Part I. Loans and Leases
<S> <C> <C> <C> <C> <C>

Do not deduct the allowance for loan and lease losses from amounts __________
reported in this schedule. Report total loans and leases, net of unearned | C415 | (-
_________________________________ ________
income. Exclude assets held in trading accounts. | (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
1. Loans secured by real estate ........................................... | 1410 2,109,126 | ////////////////// | 1.
a. Construction and land development ................................... | ////////////////// | 1415 323,162 | 1.a.
b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// |
improvements) ....................................................... | ////////////////// | 1420 18,761 | 1.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ................... | ////////////////// | 1797 0 | 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(a) Secured by first liens ...................................... | ////////////////// | 5367 511,475 | 1.c.(2)(a)
(b) Secured by junior liens ..................................... | ////////////////// | 5368 180,688 | 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties ........... | ////////////////// | 1460 124,510 | 1.d.
e. Secured by nonfarm nonresidential properties ........................ | ////////////////// | 1480 950,530 | 1.e.
2. Loans to depository institutions: | ////////////////// | ////////////////// |
a. To commercial banks in the U.S. ..................................... | ////////////////// | 1505 10,899 | 2.a.
(1) To U.S. branches and agencies of foreign banks .................. | 1506 7,152 | ////////////////// | 2.a.(1)
(2) To other commercial banks in the U.S. ........................... | 1507 8,747 | ////////////////// | 2.a.(2)
b. To other depository institutions in the U.S. ........................ | 1517 727 | 1517 727 | 2.b.
c. To banks in foreign countries ....................................... | ////////////////// | 1510 62,648 | 2.c.
(1) To foreign branches of other U.S. banks ......................... | 1513 0 | ////////////////// | 2.c.(1)
(2) To other banks in foreign countries ............................. | 1516 68,896 | ////////////////// | 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers .... | 1590 91,793 | 1590 91,793 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ....................................... | 1763 4,163,635 | 1763 4,116,601 | 4.a.
b. To non-U.S. addressees (domicile) ................................... | 1764 134,573 | 1764 33,085 | 4.b.
5. Acceptances of other banks: | ////////////////// | ////////////////// |
a. Of U.S. banks ....................................................... | 1756 0 | 1756 0 | 5.a.
b. Of foreign banks .................................................... | 1757 0 | 1757 0 | 5.b.
6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures (i.e., consumer loans) (includes purchased paper) ......... | ////////////////// | 1975 1,394,929 | 6.
a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// |
revolving credit plans) ............................................. | 2008 108,360 | ////////////////// | 6.a.
b. Other (includes single payment, installment, and all student loans) . | 2011 1,286,569 | ////////////////// | 6.b.
7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// |
foreign central banks) ................................................. | 2081 228,729 | 2081 222,342 | 7.
8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// |
subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// |
obligations) ........................................................... | 2107 55,025 | 2107 55,025 | 8.
9. Other loans ............................................................ | 1563 1,233,907 | ////////////////// | 9.
a. Loans for purchasing or carrying securities (secured and unsecured) . | ////////////////// | 1545 151,026 | 9.a.
b. All other loans (exclude consumer loans) ............................ | ////////////////// | 1564 1,082,881 | 9.b.
10. Lease financing receivables (net of unearned income) ................... | ////////////////// | 2165 209,022 | 10.
a. Of U.S. addressees (domicile) ....................................... | 2182 164,729 | ////////////////// | 10.a.
b. Of non-U.S. addressees (domicile) ................................... | 2183 44,293 | ////////////////// | 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above ........ | 2123 0 | 2123 0 | 11.
12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// |
10 minus item 11) (total of column A must equal Schedule RC, item 4.a) . | 2122 9,706,261 | 2122 9,540,104 | 12.
___________________________________________
</TABLE>

<PAGE> 25

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-7
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-C--Continued

Part I. Continued
<S> <C> <C> <C>
___________________________________________
| (Column A) | (Column B) |
| Consolidated | Domestic |
Memoranda | Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
1. Commercial paper included in Schedule RC-C, part I, above .............. | 1496 0 | 1496 0 | M.1.
2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// |
(included in Schedule RC-C, part I, above): | ////////////////// | ////////////////// |
a. Loans secured by real estate: | ////////////////// | ////////////////// |
_____________________
(1) To U.S. addressees (domicile) ................................... | 1687 0 | M.2.a.(1)
(2) To non-U.S. addressees (domicile) ............................... | 1689 0 | M.2.a.(2)
b. Loans to finance agricultural production and other loans to farmers . | 1613 0 | M.2.b.
c. Commercial and industrial loans: | ////////////////// |
(1) To U.S. addressees (domicile) ................................... | 1758 0 | M.2.c.(1)
(2) To non-U.S. addressees (domicile)................................ | 1759 0 | M.2.c.(2)
d. All other loans (exclude loans to individuals for household, | ////////////////// |
family, and other personal expenditures) ............................ | 1615 219,755 | M.2.d.
e. Lease financing receivables: | ////////////////// |
(1) Of U.S. addressees (domicile) ................................... | 1789 0 | M.2.e.(1)
(2) Of non-U.S. addressees (domicile) ............................... | 1790 0 | M.2.e.(2)
f. Total (sum of Memorandum items 2.a through 2.e) ..................... | 1616 219,755 | M.2.f.
3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// |
in nonaccrual status): | ////////////////// |
a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// |
(1) Three months or less ............................................ | 0348 301,672 | M.3.a.(1)
(2) Over three months through 12 months ............................. | 0349 298,972 | M.3.a.(2)
(3) Over one year through five years ................................ | 0356 1,464,897 | M.3.a.(3)
(4) Over five years ................................................. | 0357 1,026,545 | M.3.a.(4)
(5) Total fixed rate loans and leases (sum of | ////////////////// |
Memorandum items 3.a.(1) through 3.a.(4)) ....................... | 0358 3,092,086 | M.3.a.(5)
b. Floating rate loans with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently .................................... | 4554 4,317,823 | M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly . | 4555 1,704,771 | M.3.b.(2)
(3) Every five years or more frequently, but less frequently than | ////////////////// |
annually ........................................................ | 4561 370,925 | M.3.b.(3)
(4) Less frequently than every five years ........................... | 4564 71,508 | M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// |
through 3.b.(4)) ................................................ | 4567 6,465,027 | M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// |
(must equal the sum of total loans and leases, net, from | ////////////////// |
Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// |
Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// |
leases from Schedule RC-N, sum of items 1 through 8, column C) ...... | 1479 9,557,113 | M.3.c.
4. Loans to finance commercial real estate, construction, and land | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// |
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ........... | 2746 277,878 | M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, above)| 5369 198,043 | M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// |_____________________
residential properties (included in Schedule RC-C, part I, item | ////////////////// | RCON Bil Mil Thou |
____________________
1.c.(2)(a), column B, page RC-6) ....................................... | ////////////////// | 5370 51,087 | M.6.
___________________________________________

_____________
(1) Memorandum item 3 is not applicable to savings banks that must complete supplemental Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A.
</TABLE>

<PAGE> 26

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-7a
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-C--Continued

Part II. Loans to Small Businesses and Small Farms

Schedule RC-C, Part II is to be reported only with the June Report of Condition.

Report the number and amount currently outstanding as of June 30 of business loans with "original amounts" of $1,000,000 or less and
farm loans with "original amounts" of $500,000 or less. The following guidelines should be used to determine the "original amount"
of a loan: (1) for loans drawn down under lines of credit or loan commitments, the "original amount" of the loan is the size of the
line of credit or loan commitment when the line of credit or loan commitment was most recently approved, extended, or renewed prior
to the report date. However, if the amount currently outstanding as of the report date exceeds this size, the "original amount" is
the amount currently outstanding on the report date. (2) For loan participations and syndications, the "original amount" of the loan
participation or syndication is the entire amount of the credit originated by the lead lender. (3) For all other loans, the
"original amount" is the total amount of the loan at origination or the amount currently outstanding as of the report date,
whichever is larger.

Loans to Small Businesses ____________
1. Indicate in the appropriate box at the right whether all or substantially all of the bank's | C418 | (-
"Loans secured by nonfarm nonresidential properties" in domestic offices reported in Schedule _____ __________
RC-C, part I, item 1.e, column B, and all or substantially all of the bank's "Commercial | YES NO |
and industrial loans to U.S. addressees" in domestic offices reported in Schedule RC-C, _______ _______________
part I, item 4.a, column B, have original amounts of $100,000 or less (see instructions)..... | 6999 | |////| X | 1.
________________________

If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5.
If NO, skip items 2.a and 2.b, complete items 3 and 4 below, and go to item 5.

3. Number and amount currently outstanding of "Loans secured by nonfarm | ////////////////// | ////////////////// |
nonresidential properties" in domestic offices reported in Schedule RC-C, | ////////////////// | ////////////////// |
part I, item 1.e, column B (sum of items 3.a through 3.c must be less | ////////////////// | ////////////////// |
than or equal to Schedule RC-C, part I, item 1.e, column B): | ////////////////// | ////////////////// |
a. With original amounts of $100,000 or less ............................. | 5564 968 | 5565 37,560 | 3.a.
b. With original amounts of more than $100,000 through $250,000 .......... | 5566 803 | 5567 87,396 | 3.b.
c. With original amounts of more than $250,000 through $1,000,000 ........ | 5568 849 | 5569 281,525 | 3.c.
4. Number and amount currently outstanding of "Commercial and industrial | ////////////////// | ////////////////// |
loans to U.S. addressees" in domestic offices reported in Schedule RC-C, | ////////////////// | ////////////////// |
part I, item 4.a, column B (sum of items 4.a through 4.c must be less than | ////////////////// | ////////////////// |
or equal to Schedule RC-C, part I, item 4.a, column B): | ////////////////// | ////////////////// |
a. With original amounts of $100,000 or less ............................. | 5570 10,516 | 5571 191,365 | 4.a.
b. With original amounts of more than $100,000 through $250,000 .......... | 5572 1,422 | 5573 133,351 | 4.b.
c. With original amounts of more than $250,000 through $1,000,000 ........ | 5574 1,409 | 5575 400,042 | 4.c.
___________________________________________

</TABLE>
17a

<PAGE> 27

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-7b
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-C--Continued

Part II. Continued

Agricultural Loans to Small Farms
5. Indicate in the appropriate box at the right whether all or substantially all of the bank's
"Loans secured by farmland (including farm residential and other improvements)" in domestic
offices reported in Schedule RC-C, part I, item 1.b, column B, and all or substantially
all of the bank's "Loans to finance agricultural production and other loans to farmers" YES NO
in domestic offices reported in Schedule RC-C, part I, item 3, column B, have original _______ _______________
amounts of $100,000 or less (see instructions)............................................... | 6860 | |////| X | 5.
_______ _______________
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8.
If NO, skip items 6.a and 6.b and complete items 7 and 8 below.

<S> <C> <C>
_____________________
6. Report the total number of loans currently outstanding for each of the | Number of Loans |
following Schedule RC-C, part I, loan categories: |__________________ |
a. "Loans secured by farmland (including farm residential and other |RCON |//////////// |
improvements)" in domestic offices reported in Schedule RC-C, part ______ |
I, item 1.b, column B .............................................. |5576 N/A | 6.a.
b. "Loans to finance agricultural production and other loans to farmers" | ///////////////// |
in domestic offices reported in Schedule RC-C, part I, item 3, | ///////////////// |
column 8 ........................................................... |5577 N/A | 6.b.
____________________

___________________________________________
| (Column A) | (Column B) |
| | Amount |
| | Currently |
| Number of Loans | Outstanding |
____________________ ____________________
Dollar Amounts in Thousands | RCON | /////////// | RCON Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
7. Number and amount currently outstanding of "Loans secured by farmland | ////////////////// | ////////////////// |
(including farm residential and other improvements)" in domestic offices | ////////////////// | ////////////////// |
reported in Schedule RC-C, part I, item 1.b, column B (sum of items 7.a | ////////////////// | ////////////////// |
through 7.c must be less than or equal to Schedule RC-C, part I, item 1.b, | ////////////////// | ////////////////// |
column B) | ////////////////// | ////////////////// |
a. With original amounts of $100,000 or less ............................. | 5578 35 | 5579 1,081 | 7.a.
b. With original amounts of more than $100,000 through $250,000 .......... | 5580 14 | 5581 1,459 | 7.b.
c. With original amounts of more than $250,000 through $500,000 .......... | 5582 10 | 5583 1,926 | 7.c.
8. Number and amount currently outstanding of "Loans to finance agricultural | ////////////////// | ////////////////// |
production and other loans to farmers" in domestic offices reported in | ////////////////// | ////////////////// |
Schedule RC-C, part I, item 3, column B (sum of items 8.a through 8.c | ////////////////// | ////////////////// |
must be less than or equal to Schedule RC-C, part I, item 3, column B): | ////////////////// | ////////////////// |
a. With original amounts of $100,000 or less ............................. | 5584 209 | 5585 4,463 | 8.a.
b. With original amounts of more than $100,000 through $250,000 .......... | 5586 45 | 5587 4,368 | 8.b.
c. With original amounts of more than $250,000 through $500,000 .......... | 5588 25 | 5589 5,085 | 8.c.
___________________________________________

</TABLE>
17b

<PAGE> 28

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-8
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-D--Trading Assets and Liabilities

Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional
amount of interest rate, foreign exchange rate, and other commodity and equity contracts (as reported in Schedule RC-L, items 11,
12, and 13).

<S> <C> <C> <C>
------------------------------------------------
| C420 | (-
_________________ ________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
ASSETS | /////////////////////// |
1. U.S. Treasury securities in domestic offices ................................................ | RCON 3531 1,366 | 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// |
backed securities) .......................................................................... | RCON 3532 973 | 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... | RCON 3533 9,047 | 3.
4. Mortgage-backed securities in domestic offices: | /////////////////////// |
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA ..................... | RCON 3534 0 | 4.a.
b. CMOs and REMICs issued by FNMA or FHLMC .................................................. | RCON 3535 0 | 4.b.
c. All other ................................................................................ | RCON 3536 0 | 4.c.
5. Other debt securities in domestic offices ................................................... | RCON 3537 0 | 5.
6. Certificates of deposit in domestic offices ................................................. | RCON 3538 107 | 6.
7. Commercial paper in domestic offices ........................................................ | RCON 3539 0 | 7.
8. Bankers acceptances in domestic offices ..................................................... | RCON 3540 0 | 8.
9. Other trading assets in domestic offices .................................................... | RCON 3541 0 | 9.
10. Trading assets in foreign offices ........................................................... | RCFN 3542 0 | 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts: | /////////////////////// |
a. In domestic offices ...................................................................... | RCON 3543 22,459 | 11.a.
b. In foreign offices ....................................................................... | RCFN 3544 236 | 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ........... | RCFD 3545 34,188 | 12.
___________________________

___________________________
| ///////// Bil Mil Thou |
LIABILITIES _________________________
13. Liability for short positions ............................................................... | RCFD 3546 0 | 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts ................................................................................... | RCFD 3547 18,589 | 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ...... | RCFD 3548 18,589 | 15.
___________________________
</TABLE>

<PAGE> 29

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-9
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-E--Deposit Liabilities

Part I. Deposits in Domestic Offices
<S> <C> <C> <C>
__________
| C425 | (-
______________________________________________________ ________
| | Nontransaction |
| Transaction Accounts | Accounts |
_________________________________________ ____________________
| (Column A) | (Column B) | (Column C) |
| Total transaction | Memo: Total | Total |
| accounts (including| demand deposits | nontransaction |
| total demand | (included in | accounts |
| deposits) | column A) | (including MMDAs) |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
__________________________________________________________ ____________________ ____________________ ____________________
Deposits of: | ////////////////// | ////////////////// | ////////////////// |
1. Individuals, partnerships, and corporations .......... | 2201 6,935,403 | 2240 5,088,642 | 2346 7,814,725 | 1.
2. U.S. Government ...................................... | 2202 36,983 | 2280 36,876 | 2520 306 | 2.
3. States and political subdivisions in the U.S. ........ | 2203 170,925 | 2290 41,851 | 2530 66,482 | 3.
4. Commercial banks in the U.S. ......................... | 2206 260,794 | 2310 260,794 | ////////////////// | 4.
a. U.S. branches and agencies of foreign banks ....... | ////////////////// | ////////////////// | 2347 0 | 4.a.
b. Other commercial banks in the U.S. ................ | ////////////////// | ////////////////// | 2348 239 | 4.b.
5. Other depository institutions in the U.S. ............ | 2207 17,649 | 2312 17,649 | 2349 0 | 5.
6. Banks in foreign countries ........................... | 2213 31,336 | 2320 31,336 | ////////////////// | 6.
a. Foreign branches of other U.S. banks .............. | ////////////////// | ////////////////// | 2367 0 | 6.a.
b. Other banks in foreign countries .................. | ////////////////// | ////////////////// | 2373 0 | 6.b.
7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// |
(including foreign central banks) .................... | 2216 2,491 | 2300 2,491 | 2377 0 | 7.
8. Certified and official checks ........................ | 2330 131,340 | 2330 131,340 | ////////////////// | 8.
9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// |
columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// |
item 13.a) ........................................... | 2215 7,586,921 | 2210 5,610,979 | 2385 7,881,752 | 9.
________________________________________________________________

______________________
Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// |
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ......................... | 6835 869,189 | M.1.a.
b. Total brokered deposits ..................................................................... | 2365 0 | M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// |
(1) Issued in denominations of less than $100,000 ........................................... | 2343 0 | M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denominations greater than $100,000 | ////////////////// |
and participated out by the broker in shares of $100,000 or less ........................ | 2344 0 | M.1.c.(2)
d. Total deposits denominated in foreign currencies ............................................ | 3776 3,148 | M.1.d.
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// |
reported in item 3 above which are secured or collateralized as required under state law) ... | 5590 210,049 | M.1.e.
2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// |
equal item 9, column C above): | ////////////////// |
a. Savings deposits: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................................................... | 6810 1,321,748 | M.2.a.(1)
(2) Other savings deposits (excludes MMDAs) ................................................. | 0352 3,015,257 | M.2.a.(2)
b. Total time deposits of less than $100,000 ................................................... | 6648 2,635,577 | M.2.b.
c. Time certificates of deposit of $100,000 or more ............................................ | 6645 876,781 | M.2.c.
d. Open-account time deposits of $100,000 or more .............................................. | 6646 32,389 | M.2.d.
3. All NOW accounts (included in column A above) .................................................. | 2398 1,975,942 | M.3.
______________________
</TABLE>

<PAGE> 30

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-10
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-E--Continued

Part I. Continued
<S> <C> <C> <C>
Memoranda (continued)
_________________________________________________________________________________________________________________________________
| Deposit Totals for FDIC Insurance Assessments(1) ______________________ |
| Dollar Amounts in Thousands | RCON Bil Mil Thou | |
__________________________________________________________________________________________________ ____________________
| 4. Total deposits in domestic offices (sum of item 9, column A and item 9, column C) |/////////////////// | |
| (must equal Schedule RC, item 13.a) ......................................................... | 2200 15,468,673 | M.4. |
| | ////////////////// | |
| a. Total demand deposits (must equal item 9, column B) ...................................... | 2210 5,610,979 | M.4.a.|
| b. Total time and savings deposits(2) (must equal item 9, column A plus item 9, column C | ////////////////// | |
| minus item 9, column B) .................................................................. | 2350 9,857,694 | M.4.b.|
______________________
| ____________ |
| (1) An amended Certified Statement should be submitted to the FDIC if the deposit totals reported in this item are amended |
| after the semiannual Certified Statement originally covering this report date has been filed with the FDIC. |
| (2) For FDIC insurance assessment purposes, "total time and savings deposits" consists of nontransaction accounts and all |
| transaction accounts other than demand deposits. |
| |
_________________________________________________________________________________________________________________________________

______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
5. Time deposits of less than $100,000 and open-account time deposits of $100,000 or more | ////////////////// |
(included in Memorandum items 2.b and 2.d above) with a remaining maturity or repricing | ////////////////// |
frequency of:(1) | ////////////////// |
a. Three months or less ....................................................................... | 0359 201,040 | M.5.a.
b. Over three months through 12 months (but not over 12 months) ............................... | 3644 1,436,073 | M.5.b.
6. Maturity and repricing data for time certificates of deposit of $100,000 or more:(1) | ////////////////// |
a. Fixed rate time certificates of deposit of $100,000 or more with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | 2761 544,364 | M.6.a.(1)
(2) Over three months through 12 months .................................................... | 2762 245,662 | M.6.a.(2)
(3) Over one year through five years ....................................................... | 2763 73,549 | M.6.a.(3)
(4) Over five years ........................................................................ | 2765 0 | M.6.a.(4)
(5) Total fixed rate time certificates of deposit of $100,000 or more (sum of | ////////////////// |
Memorandum items 6.a.(1) through 6.a.(4)) .............................................. | 2767 863,575 | M.6.a.(5)
b. Floating rate time certificates of deposit of $100,000 or more with a repricing frequency of:| ////////////////// |
(1) Quarterly or more frequently ........................................................... | 4568 13,206 | M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | 4569 0 | M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | 4571 0 | M.6.b.(3)
(4) Less frequently than every five years .................................................. | 4572 0 | M.6.b.(4)
(5) Total floating rate time certificates of deposit of $100,000 or more (sum of | ////////////////// |
Memorandum items 6.b.(1) through 6.b.(4)) .............................................. | 4573 13,206 | M.6.b.(5)
c. Total time certificates of deposit of $100,000 or more (sum of Memorandum items 6.a.(5) | ////////////////// |
and 6.b.(5)) (must equal Memorandum item 2.c. above) ....................................... | 6645 876,781 | M.6.c.
______________________

_____________
(1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J.
</TABLE>
20

<PAGE> 31

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-11
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-E--Continued

Part II. Deposits in Foreign Offices (including Edge and
Agreement subsidiaries and IBFs)
<S> <C> <C> <C>
____________________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
Deposits of: | ////////////////// |
1. Individuals, partnerships, and corporations ................................................... | 2621 515,926 | 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 0 | 2.
3. Foreign banks (including U.S. branches and | ////////////////// |
agencies of foreign banks, including their IBFs) .............................................. | 2625 0 | 3.
4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4.
5. Certified and official checks ................................................................. | 2330 0 | 5.
6. All other deposits ............................................................................ | 2668 0 | 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 515,926 | 7.
______________________

Schedule RC-F--Other Assets

Memorandum ___________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 0 | M.1.
___________________________

Schedule RC-G--Other Liabilities
__________
| C435 | (-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
1. a. Interest accrued and unpaid on deposits in domestic offices(2) ............................ | RCON 3645 22,071 | 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................. | RCFD 3646 174,094 | 1.b.
2. Net deferred tax liabilities(1) .............................................................. | RCFD 3049 298 | 2.
3. Minority interest in consolidated subsidiaries ............................................... | RCFD 3000 0 | 3.
4. Other (itemize amounts that exceed 25% of this item) ......................................... | RCFD 2938 15,140 | 4.
_____________ ___________________________
a. | TEXT 3552 |_Trading Security Purchase Fails____________________| RCFD 3552 | 4,578 | /////////////////////// | 4.a.
___________
b. | TEXT 3553 |____________________________________________________| RCFD 3553 | | /////////////////////// | 4.b.
___________
c. | TEXT 3554 |____________________________________________________| RCFD 3554 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) ........................... | RCFD 2930 211,603 | 5.
___________________________
____________
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
</TABLE>
21

<PAGE> 32

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-12
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
<S> <C> <C> <C>
________
| C440 | (-
____________ ________
| Domestic Offices |
____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 8,678 | 1.
2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 8,678 | 2.
3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 4,670,072 | 3.
4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 681,997 | 4.
5. Other borrowed money ............................................................................ | 2850 105,642 | 5.
EITHER | ////////////////// |
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6.
OR | ////////////////// |
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 350,155 | 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 20,559,970 | 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)| 3129 18,372,552 | 9.
______________________

Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. ______________________
| RCON Bil Mil Thou |
____________________
10. U.S. Treasury securities ....................................................................... | 1779 643,271 | 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// |
securities) .................................................................................... | 1785 0 | 11.
12. Securities issued by states and political subdivisions in the U.S. ............................. | 1786 590 | 12.
13. Mortgage-backed securities: | ////////////////// |
a. Pass-through securities: | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1787 1,508,959 | 13.a.(1)
(2) Privately-issued ........................................................................ | 1869 0 | 13.a.(2)
b. CMOs and REMICs: | ////////////////// |
(1) Issued by FNMA and FHLMC ................................................................ | 1877 474,517 | 13.b.(1)
(2) Privately-issued ........................................................................ | 2253 15,112 | 13.b.(2)
14. Other domestic debt securities ................................................................. | 3159 288,779 | 14.
15. Foreign debt securities ........................................................................ | 3160 1,235 | 15.
16. Equity securities: | ////////////////// |
a. Investments in mutual funds ................................................................. | 3161 0 | 16.a.
b. Other equity securities with readily determinable fair values ............................... | 3162 0 | 16.b.
c. All other equity securities ................................................................. | 3169 43,387 | 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) .......... | 3170 2,975,850 | 17.
______________________

Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
EITHER | ////////////////// |
1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 N/A | M.1.
OR | ////////////////// |
2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2.
______________________
</TABLE>
22

<PAGE> 33

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-13
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-I--Selected Assets and Liabilities of IBFs

To be completed only by banks with IBFs and other "foreign" offices.
<S> <C> <C> <C>
__________
| C445 | (-
____________ ________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) .................. | 2133 N/A | 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// |
column A) ...................................................................................... | 2076 N/A | 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) ..... | 2077 N/A | 3.
4. Total IBF liabilities (component of Schedule RC, item 21) ...................................... | 2898 N/A | 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// |
part II, items 2 and 3) ........................................................................ | 2379 N/A | 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ...... | 2381 N/A | 6.

Schedule RC-K--Quarterly Averages (1)
__________
| C455 | (-
_________________ ________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
ASSETS | /////////////////////// |
1. Interest-bearing balances due from depository institutions ............................... | RCFD 3381 5,011 | 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ....... | RCFD 3382 2,547,917 | 2.
3. Securities issued by states and political subdivisions in the U.S.(2) .................... | RCFD 3383 618 | 3.
4. a. Other debt securities(2) .............................................................. | RCFD 3647 291,657 | 4.a.
b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock) . | RCFD 3648 43,187 | 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic offices | /////////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs ...................... | RCFD 3365 4,112,124 | 5.
6. Loans: | /////////////////////// |
a. Loans in domestic offices: | /////////////////////// |
(1) Total loans ....................................................................... | RCON 3360 9,142,738 | 6.a.(1)
(2) Loans secured by real estate ...................................................... | RCON 3385 2,114,330 | 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers ............... | RCON 3386 89,121 | 6.a.(3)
(4) Commercial and industrial loans ................................................... | RCON 3387 3,920,930 | 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures ....... | RCON 3388 1,401,685 | 6.a.(5)
(6) Obligations (other than securities and leases) of states and political subdivisions | /////////////////////// |
in the U.S. ....................................................................... | RCON 3389 73,657 | 6.a.(6)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............. | RCFN 3360 173,596 | 6.b.
7. Assets held in trading accounts .......................................................... | RCFD 3401 70,539 | 7.
8. Lease financing receivables (net of unearned income) ..................................... | RCFD 3484 211,267 | 8.
9. Total assets ............................................................................. | RCFD 3368 19,856,739 | 9.
LIABILITIES | /////////////////////// |
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// |
and telephone and preauthorized transfer accounts) (exclude demand deposits) ............. | RCON 3485 2,043,067 | 10.
11. Nontransaction accounts in domestic offices: | /////////////////////// |
a. Money market deposit accounts (MMDAs) ................................................. | RCON 3486 1,482,065 | 11.a.
b. Other savings deposits ................................................................ | RCON 3487 3,017,373 | 11.b.
c. Time certificates of deposit of $100,000 or more ...................................... | RCON 3345 873,340 | 11.c.
d. All other time deposits ............................................................... | RCON 3469 2,682,293 | 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs .. | RCFN 3404 398,354 | 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs .............. | RCFD 3353 715,846 | 13.
14. Other borrowed money ..................................................................... | RCFD 3355 76,692 | 14.
___________________________

_____________
(1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or
(2) an average of weekly figures (i.e., the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized cost.
(3) Quarterly averages for all equity securities should be based on historical cost.
</TABLE>
23

<PAGE> 34

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-14
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-L--Off-Balance Sheet Items

Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts
reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk.

<S> <C> <C> <C>
__________
| C460 | (-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
1. Unused commitments: | ////////////////// |
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// |
equity lines ............................................................................... | 3814 0 | 1.a.
b. Credit card lines .......................................................................... | 3815 0 | 1.b.
c. Commercial real estate, construction, and land development: | ////////////////// |
(1) Commitments to fund loans secured by real estate ....................................... | 3816 175,141 | 1.c.(1)
(2) Commitments to fund loans not secured by real estate ................................... | 6550 86,736 | 1.c.(2)
d. Securities underwriting .................................................................... | 3817 0 | 1.d.
e. Other unused commitments ................................................................... | 3818 6,243,833 | 1.e.
2. Financial standby letters of credit and foreign office guarantees ............................. | 3819 1,104,325 | 2.
___________________________
a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 71,651 | ////////////////// | 2.a.
___________________________
3. Performance standby letters of credit and foreign office guarantees ........................... | 3821 91,318 | 3.
a. Amount of performance standby letters of credit conveyed to | ////////////////// |
___________________________
others .......................................................... | RCFD 3822 | 5,389 | ////////////////// | 3.a.
___________________________
4. Commercial and similar letters of credit ...................................................... | 3411 228,326 | 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// |
the reporting bank ............................................................................ | 3428 0 | 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// |
(nonaccepting) bank ........................................................................... | 3429 0 | 6.
7. Securities borrowed ........................................................................... | 3432 0 | 7.
8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// |
against loss by the reporting bank) ........................................................... | 3433 6,473 | 8.
9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated as sold | ////////////////// |
for Call Report purposes: | ////////////////// |
a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3650 0 | 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3651 0 | 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3652 0 | 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3653 0 | 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3654 0 | 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3655 0 | 9.c.(2)
10. When-issued securities: | ////////////////// |
a. Gross commitments to purchase .............................................................. | 3434 17,339 | 10.a.
b. Gross commitments to sell .................................................................. | 3435 20,995 | 10.b.
11. Interest rate contracts (exclude when-issued securities): | ////////////////// |
a. Notional value of interest rate swaps ...................................................... | 3450 5,228,389 | 11.a.
b. Futures and forward contracts .............................................................. | 3823 1,036,450 | 11.b.
c. Option contracts (e.g., options on Treasuries): | ////////////////// |
(1) Written option contracts ............................................................... | 3824 330,476 | 11.c.(1)
(2) Purchased option contracts ............................................................. | 3825 1,330,476 | 11.c.(2)
12. Foreign exchange rate contracts: | ////////////////// |
a. Notional value of exchange swaps (e.g., cross-currency swaps) .............................. | 3826 0 | 12.a.
b. Commitments to purchase foreign currencies and U.S. dollar exchange (spot, forward, | ////////////////// |
and futures) ............................................................................... | 3415 1,037,599 | 12.b.
c. Option contracts (e.g., options on foreign currency): | ////////////////// |
(1) Written option contracts ............................................................... | 3827 21,110 | 12.c.(1)
(2) Purchased option contracts ............................................................. | 3828 21,110 | 12.c.(2)
______________________
</TABLE>

<PAGE> 35

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-15
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-L--Continued
<S> <C> <C> <C>
__________
| C461 | (-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
13. Contracts on other commodities and equities: | ////////////////// |
a. Notional value of other swaps (e.g., oil swaps) ............................................ | 3829 34,242 | 13.a.
b. Futures and forward contracts (e.g., stock index and commodity--precious metals, | ////////////////// |
wheat, cotton, livestock--contracts) ....................................................... | 3830 0 | 13.b.
c. Option contracts (e.g., options on commodities, individual stocks and stock indexes): | ////////////////// |
(1) Written option contracts ............................................................... | 3831 0 | 13.c.(1)
(2) Purchased option contracts ............................................................. | 3832 0 | 13.c.(2)
14. All other off-balance sheet liabilities (itemize and describe each component of this item | ////////////////// |
over 25% of Schedule RC, item 28, "Total equity capital") ..................................... | 3430 0 | 14.
| ////////////////// |
_____________ __________________________
a. | TEXT 3555 |______________________________________________________| RCFD 3555 | | ////////////////// | 14.a.
___________
b. | TEXT 3556 |______________________________________________________| RCFD 3556 | | ////////////////// | 14.b.
___________
c. | TEXT 3557 |______________________________________________________| RCFD 3557 | | ////////////////// | 14.c.
_____________
d. | TEXT 3558 |______________________________________________________| RCFD 3558 | | ////////////////// | 14.d.
_____________ __________________________
15. All other off-balance sheet assets (itemize and describe each component of this item | ////////////////// |
over 25% of Schedule RC, item 28, "Total equity capital") ..................................... | 5591 0 | 15.
| ////////////////// |
_____________ __________________________
a. | TEXT 5592 |______________________________________________________| RCFD 5592 | | ////////////////// | 15.a.
___________
b. | TEXT 5593 |______________________________________________________| RCFD 5593 | | ////////////////// | 15.b.
___________
c. | TEXT 5594 |______________________________________________________| RCFD 5594 | | ////////////////// | 15.c.
_____________
d. | TEXT 5595 |______________________________________________________| RCFD 5595 | | ////////////////// | 15.d.
_____________ ________________________________________________

Memoranda
______________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
1. Not applicable | ////////////////// |
2. Not applicable | ////////////////// |
3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// |
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// |
that are fee paid or otherwise legally binding) ............................................... | 3833 3,790,294 | M.3.
a. Participations in commitments with an original maturity | ////////////////// |
___________________________
exceeding one year conveyed to others ........................... | RCFD 3834 | 117,051 | ////////////////// | M.3.a.
___________________________
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// |
to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above ............. | 3377 37,344 | M.4.
5. To be completed for the September report only: | ////////////////// |
Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// |
have been securitized and sold without recourse (with servicing retained), amounts | ////////////////// |
outstanding by type of loan: | ////////////////// |
a. Loans to purchase private passenger automobiles ............................................ | 2741 N/A | M.5.a.
b. Credit cards and related plans ............................................................. | 2742 N/A | M.5.b.
c. All other consumer installment credit (including mobile home loans) ........................ | 2743 N/A | M.5.c.
______________________

</TABLE>
25

<PAGE> 36

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-16
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-M--Memoranda

__________
| C465 | (-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
______________________________________________________________________________________________________ ____________________
<S> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ////////////////// |
shareholders, and their related interests as of the report date: | ////////////////// |
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal | ////////////////// |
shareholders, and their related interests ..................................................... | 6164 61,242 | 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ////////////////// |
extensions of credit by the reporting bank (including extensions of credit to | ////////////////// |
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ////////////////// |
____________________________
of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 7 | ////////////////// | 1.b.
____________________________
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ////////////////// |
and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) .................... | 3405 0 | 2.
3. Not applicable. | ////////////////// |
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ////////////////// |
(include both retained servicing and purchased servicing): | ////////////////// |
a. Mortgages serviced under a GNMA contract ...................................................... | 5500 0 | 4.a.
b. Mortgages serviced under a FHLMC contract: | ////////////////// |
(1) Serviced with recourse to servicer ........................................................ | 5501 0 | 4.b.(1)
(2) Serviced without recourse to servicer ..................................................... | 5502 0 | 4.b.(2)
c. Mortgages serviced under a FNMA contract: | ////////////////// |
(1) Serviced under a regular option contract .................................................. | 5503 0 | 4.c.(1)
(2) Serviced under a special option contract .................................................. | 5504 0 | 4.c.(2)
d. Mortgages serviced under other servicing contracts ............................................ | 5505 0 | 4.d.
5. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ////////////////// |
equal Schedule RC, item 9): | ////////////////// |
a. U.S. addressees (domicile) .................................................................... | 2103 6,186 | 5.a.
b. Non-U.S. addressees (domicile) ................................................................ | 2104 2,492 | 5.b.
6. Intangible assets: | ////////////////// |
a. Mortgage servicing rights ..................................................................... | 3164 4,049 | 6.a.
b. Other identifiable intangible assets: | ////////////////// |
(1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1)
(2) All other identifiable intangible assets .................................................. | 5507 167,998 | 6.b.(2)
c. Goodwill ...................................................................................... | 3163 417,779 | 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ........................ | 2143 589,826 | 6.d.
e. Intangible assets that have been grandfathered for regulatory capital purposes ................ | 6442 0 | 6.e.
______________________

YES NO
______________________
7. Does your bank have any mandatory convertible debt that is part of your Tier 2 capital? .......... | 6167 |///| X | 7.
____________________
If yes, complete items 7.a through 7.e: | RCFD Bil Mil Thou |
____________________
a. Total equity contract notes, gross ............................................................ | 3290 N/A | 7.a.
b. Common or perpetual preferred stock dedicated to redeem the above notes ....................... | 3291 N/A | 7.b.
c. Total equity commitment notes, gross .......................................................... | 3293 N/A | 7.c.
d. Common or perpetual preferred stock dedicated to redeem the above notes ....................... | 3294 N/A | 7.d.
e. Total (item 7.a minus 7.b plus 7.c minus 7.d) ................................................. | 3295 N/A | 7.e.
______________________
_____________
(1) Do not report federal funds sold and securities purchased under agreements to resell with other
commercial banks in the U.S. in this item.

</TABLE>

<PAGE> 37

Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-17
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-M--Continued

___________________________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_____________________________________________________________________________________________ _________________________
<S> <C> <C> <C>
8. a. Other real estate owned: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5372 0 | 8.a.(1)
(2) All other real estate owned: | /////////////////////// |
(a) Construction and land development in domestic offices ....................... | RCON 5508 43,398 | 8.a.(2)(a)
(b) Farmland in domestic offices ................................................ | RCON 5509 2,961 | 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices ....................... | RCON 5510 557 | 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices .......... | RCON 5511 504 | 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices ....................... | RCON 5512 59,333 | 8.a.(2)(e)
(f) In foreign offices .......................................................... | RCFN 5513 0 | 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ....... | RCFD 2150 106,753 | 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5374 0 | 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies ... | RCFD 5375 0 | 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ....... | RCFD 2130 0 | 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies ................ | RCFD 5376 0 | 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// |
item 23, "Perpetual preferred stock and related surplus" ............................... | RCFD 3778 0 | 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// |
proprietary, private label, and third party mutual funds): | /////////////////////// |
a. Money market funds .................................................................. | RCON 6441 5,766,274 | 10.a.
b. Equity securities funds ............................................................. | RCON 8427 0 | 10.b.
c. Debt securities funds ............................................................... | RCON 8428 0 | 10.c.
d. Other mutual funds .................................................................. | RCON 8429 0 | 10.d.
e. Annuities ........................................................................... | RCON 8430 0 | 10.e.
___________________________
_________________________________________________________________________________________________________________________________
| |
______________________
|Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | |
_________________________________________________________________________________________________ ____________________
|1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | |
| a. Reciprocal holdings of banking organizations' capital instruments ........................ | 3836 N/A | M.1.a. |
| b. Nonreciprocal holdings of banking organizations' capital instruments ..................... | 3837 N/A | M.1.b. |
______________________
| |
_________________________________________________________________________________________________________________________________
</TABLE>

<PAGE> 38

Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-18
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets

The FFIEC regards the information reported in
all of Memorandum item 1, in items 1 through 10,
column A, and in Memorandum items 2 through 4, __________
column A, as confidential. | C470 | (-
__________________________________________________________________
| (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
| accruing | accruing | |
__________________________________________________________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
_______________________________________________________________________________________________________________________
<S> <C> <C> <C>
1. Loans secured by real estate: | //////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | | 1246 41,543 | 1247 91,683 | 1.a.
b. To non-U.S. addressees (domicile) ............ | | 1249 0 | 1250 0 | 1.b.
2. Loans to depository institutions and | //////////////////// | ////////////////// | ////////////////// |
acceptances of other banks: | //////////////////// | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository | //////////////////// | ////////////////// | ////////////////// |
institutions ................................. | | 5378 0 | 5379 0 | 2.a.
b. To foreign banks ............................. | | 5381 0 | 5382 0 | 2.b.
3. Loans to finance agricultural production and | //////////////////// | ////////////////// | ////////////////// |
other loans to farmers .......................... | | 1597 1,544 | 1583 7,059 | 3.
4. Commercial and industrial loans: | //////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | | 1252 6,782 | 1253 42,620 | 4.a.
b. To non-U.S. addressees (domicile) ............ | | 1255 203 | 1256 1,494 | 4.b.
5. Loans to individuals for household, family, and | //////////////////// | ////////////////// | ////////////////// |
other personal expenditures: | //////////////////// | ////////////////// | ///////////////// |
a. Credit cards and related plans ............... | | 5384 250 | 5385 0 | 5.a.
b. Other (includes single payment, installment, | //////////////////// | ////////////////// | ////////////////// |
and all student loans) ....................... | | 5387 17,464 | 5388 967 | 5.b.
6. Loans to foreign governments and official | //////////////////// | ////////////////// | ////////////////// |
institutions .................................... | | 5390 0 | 5391 0 | 6.
7. All other loans ................................. | | 5460 2,234 | 5461 4,825 | 7.
8. Lease financing receivables: | //////////////////// | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ................ | | 1258 0 | 1259 500 | 8.a.
b. Of non-U.S. addressees (domicile) ............ | | 1272 0 | 1791 0 | 8.b.
9. Debt securities and other assets (exclude other | //////////////////// | ////////////////// | ////////////////// |
real estate owned and other repossessed assets) . | | 3506 0 | 3507 29 | 9.
__________________________________________________________________

====================================================================================================================================
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.

_________________________________________________________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
10. Loans and leases reported in items 1 |____________________ _____________________ ____________________|
through 8 above which are wholly or partially | /////////////////// | ////////////////// | ////////////////// |
guaranteed by the U.S. Government ............... | | 5613 52,698 | 5614 87,483 | 10.
a. Guaranteed portion of loans and leases | /////////////////// | ////////////////// | ////////////////// |
included in item 10 above .................... | | 5616 50,447 | 5617 80,986 | 10.a.
_________________________________________________________________

</TABLE>
28

<PAGE> 39

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-19
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-N--Continued

_________
| C473 | (-
______________________________________________________ _________
| (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
Memoranda | accruing | accruing | |
____________________ _____________________ _____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ _____________________
<S> <C> <C> <C>
1. Restructured loans and leases included in | ////////////////// | ////////////////// | ////////////////// |
Schedule RC-N, items 1 through 8, above ......... | | | | M.1.
2. Loans to finance commercial real estate, | ////////////////// | ////////////////// | ////////////////// |
construction, and land development activities | ////////////////// | ////////////////// | ////////////////// |
(not secured by real estate) included in | ////////////////// | ////////////////// | ////////////////// |
Schedule RC-N, items 4 and 7, above ............. | | 6559 0 | 6560 523 | M.2.
____________________ ____________________ ____________________
3. Loans secured by real estate in domestic offices | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
____________________ ____________________ ____________________
(included in Schedule RC-N, item 1, above): | ////////////////// | ////////////////// | ////////////////// |
a. Construction and land development ............ | | 2769 3,663 | 3492 22,831 | M.3.a.
b. Secured by farmland .......................... | | 3494 0 | 3495 624 | M.3.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by | ////////////////// | ////////////////// | ////////////////// |
1-4 family residential properties and | ////////////////// | ////////////////// | ////////////////// |
extended under lines of credit ........... | | 5399 0 | 5400 0 | M.3.c.(1)
(2) All other loans secured by 1-4 family | ////////////////// | ////////////////// | ////////////////// |
residential properties ................... | | 5402 4,401 | 5403 8,879 | M.3.c.(2)
d. Secured by multifamily (5 or more) | ////////////////// | ////////////////// | ////////////////// |
residential properties ....................... | | 3500 406 | 3501 6,041 | M.3.d.
e. Secured by nonfarm nonresidential properties . | | 3503 33,073 | 3504 53,308 | M.3.e.
________________________________________________________________

___________________________________________
| (Column A) | (Column B) |
| Past due 30 | Past due 90 |
| through 89 days | days or more |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
4. Interest rate, foreign exchange rate, and other | ////////////////// | ////////////////// |
commodity and equity contracts: | ////////////////// | ////////////////// |
a. Book value of amounts carried as assets ...... | | 3528 0 | M.4.a.
b. Replacement cost of contracts with a | ////////////////// | ////////////////// |
positive replacement cost .................... | | 3530 0 | M.4.b.
___________________________________________

</TABLE>
29

<PAGE> 40

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-20
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-O--Other Data for Deposit Insurance Assessments

An amended Certified Statement should be submitted to the FDIC if the amounts reported in items 1
through 10 of this schedule are amended after the semiannual Certified Statement originally covering __________
this report date has been filed with the FDIC. | C475 | (-
____________ ________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unposted debits (see instructions): | ////////////////// |
a. Actual amount of all unposted debits ...................................................... | 0030 N/A | 1.a.
OR | ////////////////// |
b. Separate amount of unposted debits: | ////////////////// |
(1) Actual amount of unposted debits to demand deposits ................................... | 0031 0 | 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1) ...................... | 0032 0 | 1.b.(2)
2. Unposted credits (see instructions): | ////////////////// |
a. Actual amount of all unposted credits ..................................................... | 3510 N/A | 2.a.
OR | ////////////////// |
b. Separate amount of unposted credits: | ////////////////// |
(1) Actual amount of unposted credits to demand deposits .................................. | 3512 0 | 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1) ..................... | 3514 0 | 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 3520 0 | 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// |
Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// |
a. Demand deposits of consolidated subsidiaries .............................................. | 2211 3,039 | 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries ................................. | 2351 16 | 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries ...................... | 5514 0 | 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// |
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) .................. | 2229 0 | 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) ..... | 2383 0 | 5.b.
c. Interest accrued and unpaid on deposits in insured branches | ////////////////// |
(included in Schedule RC-G, item 1.b) ..................................................... | 5515 0 | 5.c.
______________________
______________________
Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// |
Federal Reserve to act as pass-through correspondents. | ////////////////// |
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// |
behalf of its respondent depository institutions that are also reflected as deposit liabilities| ////////////////// |
of the reporting bank: | ////////////////// |
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, | ////////////////// |
Memorandum item 4.a) ...................................................................... | 2314 1,974 | 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | ////////////////// |
Memorandum item 4.b) ...................................................................... | 2315 0 | 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// |
a. Unamortized premiums ...................................................................... | 5516 12,476 | 7.a.
b. Unamortized discounts ..................................................................... | 5517 0 | 7.b.
______________________

_______________________________________________________________________________________________________________________________
| |
|8. To be completed by banks with "Oakar deposits." |
______________________
| Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of | ////////////////// | |
| the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)) .... | 5518 N/A | 8. |
______________________
| |
_______________________________________________________________________________________________________________________________
______________________
9. Deposits in lifeline accounts ................................................................ | 5596 ///////////// | 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 8432 0 | 10.
______________________
______________
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.

</TABLE>
30

<PAGE> 41

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-21
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-O--Continued

Memoranda (to be completed each quarter except as noted)

______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C>
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and 1.b.(1) | ////////////////// |
must equal Schedule RC, item 13.a): | ////////////////// |
a. Deposit accounts of $100,000 or less: | ////////////////// |
(1) Amount of deposit accounts of $100,000 or less ........................................ | 2702 8,952,562 | M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// |
___________________________
completed for the June report only) ........................ | RCON 3779 | 1,253,217 | ////////////////// | M.1.a.(2)
___________________________
b. Deposit accounts of more than $100,000: | ////////////////// |
(1) Amount of deposit accounts of more than $100,000 ........... Number | 2710 6,516,111 | M.1.b.(1)
___________________________
(2) Number of deposit accounts of more than $100,000 ........... | RCON 2722 | 16,476 | ////////////////// | M.1.b.(2)
_________________________________________________
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying the number of
deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2) above by
$100,000 and subtracting the result from the amount of deposit accounts of more than
$100,000 reported in Memorandum item 1.b.(1) above.

Indicate in the appropriate box at the right whether your bank has a method or procedure for YES NO
______________________
determining a better estimate of uninsured deposits than the estimate described above ..... | 6861| |///| X | M.2.a.
____________________
X
b. If the box marked YES has been checked, report the estimate of uninsured deposits | RCON Bil Mil Thou |
____________________
determined by using your bank's method or procedure ....................................... | 5597 N/A | M.2.b.
______________________
_____________________________________________________________________________________________________________________________
| C477 | (-
Person to whom questions about the Reports of Condition and Income should be directed: __________
Karen Gatenby, Vice President (713) 216-5263
___________________________________________________________________________________ ______________________________________
Name and Title (TEXT 8901) Area code and phone number (TEXT 8902)

</TABLE>

<PAGE> 42

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-22
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-R--Risk-Based Capital

This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1993, must complete items 2 through 9 and Memorandum item 1. Banks with assets of less than
$1 billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below.

____________
| C480 | (-
1. Test for determining the extent to which Schedule RC-R must be completed. To be completed _____ __________
only by banks with total assets of less than $1 billion. Indicate in the appropriate | YES NO |
box at the right whether the bank has total capital greater than or equal to eight percent __________ _______________
of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1.
_____________________________
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government
agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan
and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked
NO has been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight
percent or that the bank is not in compliance with the risk-based capital guidelines.

___________________________________________
| (Column A) | (Column B) |
|Subordinated Debt(1)| Other |
| and Intermediate | Limited- |
Items 2 and 3 are to be completed by all banks. | Term Preferred | Life Capital |
| Stock | Instruments |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C>
2. Subordinated debt(1) and other limited-life capital instruments (original | ////////////////// | ////////////////// |
weighted average maturity of at least five years) with a remaining | ////////////////// | ////////////////// |
maturity of: | ////////////////// | ////////////////// |
a. One year or less ...................................................... | 3780 0 | 3786 0 | 2.a.
b. Over one year through two years ....................................... | 3781 0 | 3787 0 | 2.b.
c. Over two years through three years .................................... | 3782 0 | 3788 0 | 2.c.
d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d.
e. Over four years through five years .................................... | 3784 7,000 | 3790 0 | 2.e.
f. Over five years ....................................................... | 3785 338,000 | 3791 0 | 2.f.
___________________________________________
______________________
3. Total qualifying capital (i.e., Tier 1 and Tier 2 capital) allowable under the risk-based | RCFD Bil Mil Thou |
____________________
capital guidelines ............................................................................ | 3792 1,759,720 | 3.
______________________
___________________________________________
| (Column A) | (Column B) |
Items 4-9 and Memorandum item 1 are to be completed | Assets | Credit Equiv- |
by banks that answered NO to item 1 above and | Recorded | alent Amount |
by banks with total assets of $1 billion or more. | on the | of Off-Balance |
| Balance Sheet | Sheet Items(2) |
____________________ ____________________
4. Assets and credit equivalent amounts of off-balance sheet items assigned | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
to the Zero percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// |
guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// |
OECD central governments .......................................... | 3794 1,296,824 | ////////////////// | 4.a.(1)
(2) All other ......................................................... | 3795 708,024 | ////////////////// | 4.a.(2)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 0 | 4.b.
___________________________________________
______________
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.e, "Total."
(2) Do not report in column B the risk-weighted amount of assets reported in column A.

</TABLE>

<PAGE> 43

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-23
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Schedule RC-R--Continued
___________________________________________
| (Column A) | (Column B) |
| Assets | Credit Equiv- |
| Recorded | alent Amount |
| on the | of Off-Balance |
| Balance Sheet | Sheet Items(1) |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 20 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// |
agencies and other OECD central governments ........................| 3798 828,077 | ////////////////// | 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// |
ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// |
securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// |
by cash on deposit .................................................| 3799 158,164 | ////////////////// | 5.a.(2)
(3) All other ..........................................................| 3800 7,501,299 | ////////////////// | 5.a.(3)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3801 434,717 | 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 50 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3802 511,492 | ////////////////// | 6.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3803 32,045 | 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 100 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3804 9,930,242 | ////////////////// | 7.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3805 2,809,610 | 7.b.
8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// |
risk-based capital ratio(2) .............................................. | 3806 109,001 | ////////////////// | 8.
9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// |
items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// |
item 12 plus items 4.b and 4.c) .......................................... | 3807 21,043,123 | ////////////////// | 9.
___________________________________________
___________________________________________
| (Column A) | (Column B) |
| Notional | Replacement |
| Principal | Cost |
Memorandum | Value | (Market Value) |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
1. Notional principal value and replacement cost of interest rate and | ////////////////// | ////////////////// |
foreign exchange rate contracts (in column B, report only those | ////////////////// | ////////////////// |
contracts with a positive replacement cost): | ////////////////// | ////////////////// |
a. Interest rate contracts (exclude futures contracts) ................... | ////////////////// | 3808 130,423 | M.1.a.
(1) With a remaining maturity of one year or less ..................... | 3809 1,901,817 | ////////////////// | M.1.a.(1)
(2) With a remaining maturity of over one year ........................ | 3810 5,710,837 | ////////////////// | M.1.a.(2)
b. Foreign exchange rate contracts (exclude contracts with an original | ////////////////// | ////////////////// |
maturity of 14 days or less and futures contracts) .................... | ////////////////// | 3811 14,817 | M.1.b.
(1) With a remaining maturity of one year or less ..................... | 3812 324,170 | ////////////////// | M.1.b.(1)
(2) With a remaining maturity of over one year ........................ | 3813 41,311 | ////////////////// | M.1.b.(2)
___________________________________________
______________
(1) Do not report in column B the risk-weighted amount of assets reported in column A.
(2) Until a final rule on the regulatory capital treatment of net unrealized holding gains (losses) on available-for-sale
securities that is applicable to the reporting bank has taken effect, a bank that has adopted FASB Statement No. 115 should
include the difference between the fair value and the amortized cost of its available-for-sale securities in item 8 and report
the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or
portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g.,
futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables as well as
any portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital.

</TABLE>
33

<PAGE> 44

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926 FFIEC 031
Address: P.O. Box 2558 Page RC-24
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on June 30, 1994
<S> <C> <C>

Texas Commerce Bank National Association Houston Texas
_______________________________________________________________ __________________________________, ___________________________
Legal Title of Bank City State

The management of the reporting bank may, if it wishes, sub- the truncated statement will appear as the bank's statement
mit a brief narrative statement on the amounts reported in both on agency computerized records and in computer-file
the Reports of Condition and Income. This optional statement releases to the public.
will be made available to the public, along with the publicly
available data in the Reports of Condition and Income, in re- All information furnished by the bank in the narrative state-
sponse to any request for individual bank report data. How- ment must be accurate and not misleading. Appropriate ef-
ever, the information reported in column A and in all of forts shall be taken by the submitting bank to ensure the
Memorandum item 1 of Schedule RC-N is regarded as confidential statement's accuracy. The statement must be signed, in the
and will not be released to the public. BANKS CHOOSING TO space provided below, by a senior officer of the bank who
SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE thereby attests to its accuracy.
STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER
IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS, REFERENCES If, subsequent to the original submission, material changes
TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN are submitted for the data reported in the Reports of Condi-
SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE tion and Income, the existing narrative statement will be
NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD deleted from the files, and from disclosure; the bank, at its
COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing option, may replace it with a statement, under signature, ap-
not to make a statement may check the "No comment" box below propriate to the amended data.
and should make no entries of any kind in the space provided
for the narrative statement; i.e., DO NOT enter in this space The optional narrative statement will appear in agency
such phrases as "No statement," "Not applicable," "N/A," records and in release to the public exactly as submitted (or
"No comment," and "None." amended as described in the preceding paragraph) by the
management of the bank (except for the truncation of state-
ments exceeding the 750-character limit described above).
THE STATEMENT WILL NOT BE EDITED OR SCREENED IN ANY
The optional statement must be entered on this sheet. The WAY BY THE SUPERVISORY AGENCIES FOR ACCURACY OR
statement should not exceed 100 words. Further, regardless RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT
of the number of words, the statement must not exceed 750 SIGNIFY THAT ANY FEDERAL SUPERVISORY AGENCY HAS
characters, including punctuation, indentation, and standard VERIFIED OR CONFIRMED THE ACCURACY OF THE INFORMATION
spacing between words and sentences. If any submission CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL
should exceed 750 characters, as defined, it will be truncated APPEAR ON ANY PUBLIC RELEASE OF THE OPTIONAL STATEMENT
at 750 characters with no notice to the submitting bank and SUBMITTED BY THE MANAGEMENT OF THE REPORTING BANK.
_________________________________________________________________________________________________________________________________
No comment | | (RCON 6979) | C471 | C472 |(-
___ ___________________

BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)

Signature of Kenneth L. Tilton appears here July 28, 1994
_____________________________________________ ________________________________
Signature of Executive Officer of Bank Date of Signature
</TABLE>

<PAGE> 45

<TABLE>
<CAPTION>
Legal Title of Bank: Texas Commerce Bank National Association Call Date: 6/30/94 ST-BK: 48-3926
Address: P.O. Box 2558
City, State Zip: Houston, TX 77252-2558
FDIC Certificate No.: |0|3|2|6|3|
___________

<S> <C>
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
- ----------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF BANK | OMB No. For OCC: 1557-0081
| OMB No. For FDIC: 3064-0052
| OMB No. For Federal Reserve: 7100-0036
| Expiration Date: 2/28/95
|
PLACE LABEL HERE | SPECIAL REPORT
| (Dollar Amounts in Thousands)
|
__________________________________________________________________
| CLOSE OF BUSINESS | FDIC Certificate Number | |
| DATE | | C-700 | (-
| 6/30/94 | |0|3|2|6|3| | |
__________________________________________________________________________________________________________________________________
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- ----------------------------------------------------------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does not constitute a part of the Report of Condition.
With each Report of Condition, these Laws require all banks to furnish a report of all loans or other extensions of credit to their
executive officers made since the date of the previous Report of Condition. Data regarding individual loans or other extensions of
credit are not required. If no such loans or other extensions of credit were made during the period, insert "none" against subitem
(a). (Exclude the first $15,000 of indebtedness of each executive officer under bank credit card plan.) See Sections 215.2 and
215.3 of Title 12 of the Code of Federal Regulations (Federal Reserve Board Regulation O) for the definitions of "executive officer"
and "extension of credit," respectively. Exclude loans and other extensions of credit to directors and principal shareholders who
are not executive officers.
- ----------------------------------------------------------------------------------------------------------------------------------
_____________________________
a. Number of loans made to executive officers since the previous Call Report date .............. | RCFD 3561 | 0 a.
____________________________
b. Total dollar amount of above loans (in thousands of dollars) ................................ | RCFD 3562 | 0 b.
_____________________________
c. Range of interest charged on above loans _______________________________________________________
(example: 9 3/4% = 9.75) .......................................... | RCFD 7701 | 0.00 | % to | RCFD 7702 | 0.00 | % c.
_______________________________________________________
__________________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________________________
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT | DATE (Month, Day, Year)
|
|
|
Signature of Kenneth L. Tilton appears here |
__________________________________________________________________________________________________________________________________
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED (TEXT 8903) | AREA CODE/PHONE NUMBER (TEXT 8904)
|
Karen Gatenby, Vice President | (713) 216-5263
|
__________________________________________________________________________________________________________________________________
FDIC 8040/53 (12-92)
</TABLE>

<PAGE> 1
-20-

which the SCI Common Stock trades regular way on such
exchange or in such market after the Expiration Time of
such offer.

holder of Series A Shares at such holder's last address as
the same appears on the register of the Series A Shares.

(h) In case:

(i) SCI shall declare a dividend (or any
other distribution) on SCI Common Stock that would
<PAGE> 8
-27-

(ii) the outstanding shares of SCI Common
Stock shall be subdivided into a greater number of shares
of SCI Common Stock or combined into a smaller number of
shares of SCI Common Stock; or

(v) of the voluntary or involuntary
dissolution, liquidation or winding-up of the Manager;

holder of one share of SCI Common Stock as a result of such
Common Stock Fundamental Change.

(l) The following definitions shall apply to terms used
in this Section 8:

(v) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock Fundamental Change.

9. Book-Entry Issuance; The Depository Trust Company;
Certificated Shares. (a) DTC will act as securities depository for the Series
A Shares.

the Paying and Conversion Agent has been notified of such transfer and provided
with the identity of the transferee.

(vii) The Manager shall allocate income, gain, loss and
deduction and items thereof among the Members in the
<PAGE> 19
-38-

manner required by Section 704(c) of the Code, as determined by it in
its judgment.

14. Defined Terms. All capitalized terms not defined in
this Amendment shall have the meanings ascribed thereto in the Regulations.
<PAGE> 21
-40-

SCI FINANCE LLC

By: Service Corporation
International, as Manager

By: __________________________
Name:
Title:

Attest: ___________________
Name:

By: __________________________
Name:
Title

Attest: ___________________
Name:
<PAGE> 22
-41-

SERVICE CORPORATION
INTERNATIONAL

By: ______________________________
Name:
Title:

Attest: _______________________
Name:

By: ______________________________
Name:
Title:

Attest: _______________________
Name:
<PAGE> 23
Exhibit A

(Loan Agreement) - See Exhibit 4.5(b)
<PAGE> 24
Exhibit B

(SCI Agreement) - See Exhibit 4.5(a)
<PAGE> 25
Exhibit C

(Liability Assumption Agreement) - See Exhibit 4.5(c)
<PAGE> 26
EXHIBIT 4.4

________________________________________________________________________________

SERVICE CORPORATION INTERNATIONAL

AND

___________________________
___________________________

Warrant Agent

_____________

COMMON STOCK WARRANT AGREEMENT

Dated as of ________, 19__

_____________

________________________________________________________________________________
<PAGE> 27