S-4

   1

AS FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14,
                                     2001.

                                                 REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ---------------------
                                    FORM S-4
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------
                           STEWART ENTERPRISES, INC.
          (Exact name of each registrant as specified in its charter)

                                                            
           LOUISIANA                           7200                          72-0693290
(State or other jurisdiction of    (Primary Standard Industrial           (I.R.S. Employer
 incorporation or organization)    Classification Code Number)         Identification Number)



                        110 VETERANS MEMORIAL BOULEVARD
                           METAIRIE, LOUISIANA 70005
                                 (504) 837-5880
              (Address, including zip code, and telephone number,
       including area code, of registrant's principal executive offices)
                             ---------------------

                                              
                                                                     COPY TO:
                KENNETH C. BUDDE                                DIONNE M. ROUSSEAU
            CHIEF FINANCIAL OFFICER                          JONES, WALKER, WAECHTER,
           STEWART ENTERPRISES, INC.                   POITEVENT, CARRERE & DENEGRE, L.L.P.
        110 VETERANS MEMORIAL BOULEVARD                 201 ST. CHARLES AVENUE, 51ST FLOOR
           METAIRIE, LOUISIANA 70005                       NEW ORLEANS, LOUISIANA 70170
                 (504) 837-5880                                   (504) 582-8000
    (Name, address, including zip code, and
                   telephone
   number, including area code, of agent for
                    service)



        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
  As soon as practicable after this registration statement becomes effective.
                             ---------------------
     If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.  [ ]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]

     If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

                        CALCULATION OF REGISTRATION FEE



- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
           TITLE OF EACH                                   PROPOSED MAXIMUM     PROPOSED MAXIMUM
        CLASS OF SECURITIES             AMOUNT TO BE      OFFERING PRICE PER   AGGREGATE OFFERING        AMOUNT OF
         TO BE REGISTERED                REGISTERED              UNIT               PRICE(1)         REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------
                                                                                        
10 3/4% Senior Subordinated Notes
  due 2008.........................     $300,000,000             100%             $300,000,000            $75,000
Guarantees of 10 3/4% Senior
  Subordinated Notes due 2008......     $300,000,000             100%             $300,000,000              (2)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------


(1) Determined solely for the purpose of calculating the registration fee in
    accordance with Rule 457(f) of the Securities Act of 1933.

(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee
    for the guarantees is payable.
                             ---------------------
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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, AS AMENDED OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
                             ---------------------
   2

                        TABLE OF ADDITIONAL REGISTRANTS

     Each of the following subsidiaries of Stewart Enterprises, Inc., and each
other subsidiary that is or becomes a guarantor of the securities registered
hereby, is hereby deemed to be a registrant.



                                                             STATE OF       I.R.S. EMPLOYER
                                                         INCORPORATION OR   IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                       FORMATION           NUMBER
                                                                      
S.E. OF TUCSON, ARIZONA, INC.                            ARIZONA              86-0905540
GRIFFIN-LEGGETT, INC.                                    ARKANSAS             71-0078620
FOREST HILLS CEMETERY, INC.                              ARKANSAS             71-0249636
GRIFFIN LEGGETT HEALEY & ROTH, INC.                      ARKANSAS             71-0455597
GRIFFIN-LEGGETT INSURANCE AGENCY, INC.                   ARKANSAS             72-1420663
GROSS FUNERAL HOME, INC.                                 ARKANSAS             71-0311354
REST HILLS MEMORIAL PARK, INC.                           ARKANSAS             71-0350100
GRIFFIN LEGGETT - CONWAY, INC.                           ARKANSAS             71-0675698
DILDAY BROTHERS HUNTINGTON VALLEY MORTUARY               CALIFORNIA           95-2556142
HOPSON MORTUARY, INC.                                    CALIFORNIA           95-2803488
LASSILA FUNERAL CHAPELS, INC.                            CALIFORNIA           94-2756152
SANTA BARBARA FUNERAL SERVICES, INC.                     CALIFORNIA           95-2485442
S.E. ACQUISITION OF CALIFORNIA, INC.                     CALIFORNIA           72-1307437
ALL SOULS MORTUARY, INC.                                 CALIFORNIA           94-3274423
ASHES TO ASHES, INC.                                     CALIFORNIA           95-3983428
ASSUMPTION MORTUARY, INC.                                CALIFORNIA           77-0498846
BARSTOW FUNERAL HOMES, INC.                              CALIFORNIA           33-0638122
BUCHHEIM FAMILY, INC.                                    CALIFORNIA           94-2746770
CALVARY MORTUARY OF LOS ANGELES, CALIFORNIA, INC.        CALIFORNIA           94-3281559
CATHOLIC MORTUARY SERVICES, INC.                         CALIFORNIA           68-6186018
DeYOUNG MEMORIAL CHAPEL, INC.                            CALIFORNIA           94-2564101
HOLY CROSS MORTUARY OF CULVER CITY, CALIFORNIA, INC.     CALIFORNIA           94-3281560
HOLY CROSS MORTUARY OF POMONA, CALIFORNIA, INC.          CALIFORNIA           94-3281562
LOMBARD & CO.                                            CALIFORNIA           94-1495254
N.D. DAVIS & ASSOCIATES, INC.                            CALIFORNIA           94-2303150
QUEEN OF HEAVEN MORTUARY, INC.                           CALIFORNIA           94-3281558
RESURRECTION MORTUARY, INC.                              CALIFORNIA           94-3281561
RICHARD PIERCE FUNERAL SERVICE                           CALIFORNIA           94-1726912
RIVER CITIES FUNERAL CHAPEL, INC.                        CALIFORNIA           68-0361610
S.E. ACQUISITION OF DELANO, CALIFORNIA, INC.             CALIFORNIA           94-3289240
S.E. ACQUISITION OF GLENDALE, CALIFORNIA, INC.           CALIFORNIA           72-1318639
S.E. ACQUISITION OF LANCASTER, CALIFORNIA, INC.          CALIFORNIA           72-1313799
S.E. ACQUISITION OF LOS OSOS MORTUARY AND MEMORIAL
  PARK, INC.                                             CALIFORNIA           72-1312297
S.E. ACQUISITION OF OAKHURST, CALIFORNIA, INC.           CALIFORNIA           94-3269965
S.E. ACQUISITION OF OROVILLE, CALIFORNIA, INC.           CALIFORNIA           91-1751841
S.E. ACQUISITION OF SAN DIEGO, CALIFORNIA, INC.          CALIFORNIA           94-3293688
SAN FERNANDO MISSION MORTUARY, INC.                      CALIFORNIA           94-3281557
SANTA CLARA MORTUARY, INC.                               CALIFORNIA           77-0498848
SCOVERN MORTUARY, A CALIFORNIA CORPORATION               CALIFORNIA           95-3780939
SDCA HOLDINGS, INC.                                      CALIFORNIA           95-6062503
SAN DIEGO CEMETERY ASSOCIATION                           CALIFORNIA           95-2131281
SIMPLICITY PLAN OF CALIFORNIA, INC.                      CALIFORNIA           68-0404445
STEWART PRE-NEED SERVICES, INC.                          CALIFORNIA           68-0404446
STRICKLIN/SNIVELY MORTUARY                               CALIFORNIA           95-2426875
CATALINA CHANNEL CREMATION SOCIETY                       CALIFORNIA           33-0422532
WALLACE E. WHITE & HOWARD J. CALLANAN, INC.              CALIFORNIA           95-1370180

   3



                                                             STATE OF       I.R.S. EMPLOYER
                                                         INCORPORATION OR   IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                       FORMATION           NUMBER
                                                                      
WOODSIDE CHAPEL OF CRIPPEN & FLYNN                       CALIFORNIA           94-1494933
SENTINEL CREMATION SOCIETIES, INC.                       DELAWARE             94-3085260
S.E. ACQUISITION OF MURIETTA, CALIFORNIA, INC.           CALIFORNIA           68-0420934
S.E. ACQUISITION OF SANTA MARIA, CALIFORNIA, INC.        CALIFORNIA           68-0420935
VICTOR V. DESROSIER, INC.                                CALIFORNIA           95-1535997
CEMETERY MANAGEMENT, INC.                                FLORIDA              59-2200905
ARLINGTON MEMORIAL PARK CEMETERY AND FUNERAL HOME,
  INC.                                                   FLORIDA              59-1008713
BALDWIN-FAIRCHILD FUNERAL HOMES, INC.                    FLORIDA              59-2050710
ALL FAITHS MEMORIAL PARK, INC.                           FLORIDA              59-1825207
ORLANDO FUNERAL HOME, INCORPORATED                       FLORIDA              59-0385477
THE SIMPLICITY PLAN, INC.                                FLORIDA              59-3506520
BAY AREA CREMATORY, INC.                                 FLORIDA              59-1706261
BRUCE OCALA FUNERAL HOME, INC.                           FLORIDA              59-2256460
BETH DAVID FUNERAL CHAPEL TAMPA, INC.                    FLORIDA              59-3278592
BETH DAVID MEMORIAL CHAPEL, INC.                         FLORIDA              59-3054190
CHAPEL HILL CEMETERY, INC.                               FLORIDA              59-1036850
GLEN HAVEN MEMORIAL PARK, INC.                           FLORIDA              59-1280092
HIGHLAND MEMORY GARDENS, INC. (FL)                       FLORIDA              59-1311244
SEMORAN FUNERAL HOME, INC.                               FLORIDA              59-2174496
FLORIDA HILLS MEMORIAL GARDENS, INC.                     FLORIDA              59-1472326
GARDEN OF MEMORIES, INC.                                 FLORIDA              59-0259432
A.P. BOZA FUNERAL HOME, INC.                             FLORIDA              59-1237218
CURRY & SON FUNERAL HOME, INC.                           FLORIDA              59-2232961
WOODLAWN MEMORY GARDENS, INC. (ST. PETE)                 FLORIDA              59-0586203
GOOD SHEPHERD MEMORIAL GARDENS, INC.                     FLORIDA              59-1157844
DAVID C. GROSS FUNERAL HOME, INC.                        FLORIDA              59-3061484
HUBBELL FUNERAL HOME AND CREMATORY, INC.                 FLORIDA              59-2031206
KENT R. PALMER, INC.                                     FLORIDA              59-2786934
KICLITER FUNERAL HOME, INC.                              FLORIDA              65-0327962
MADCEM OF FLORIDA, INC.                                  FLORIDA              59-2815682
MEMORIAL PARK CEMETERY, INC.                             FLORIDA              59-2977889
OAKLAWN PARK CEMETERY AND FUNERAL HOME, INC.             FLORIDA              59-2872325
ROBERTS FUNERAL HOME, INC.                               FLORIDA              59-3483106
ROYAL PALM MEMORIAL GARDENS, INC.                        FLORIDA              59-2741049
SYLVAN ABBEY MEMORIAL PARK, INC.                         FLORIDA              59-0600575
TRINITY MEMORIAL GARDENS OF LAKELAND, INC.               FLORIDA              59-3325358
TURNER CREMATORY, INC.                                   FLORIDA              59-2992267
TURNER FUNERAL HOMES, INC.                               FLORIDA              59-2109540
WALSH & WOOD FUNERAL HOME, INC.                          FLORIDA              59-0614284
WOODLAWN PARK CEMETERY COMPANY (MIAMI)                   FLORIDA              59-0516280
MEMORIAL SUNSET PARK, INC.                               FLORIDA              65-0103104
NATIONAL MONUMENT CO., INC.                              FLORIDA              59-0941038
SOUTH DADE-PALMS MEMORIAL PARK, INC.                     FLORIDA              59-0778117
SIMPLE TRIBUTE OF FLORIDA, INC.                          FLORIDA              62-1856388
CHEATHAM HILL MEMORIAL PARK, INC.                        GEORGIA              58-1354650
EMPRESAS STEWART - CEMENTERIOS, INC.                     LOUISIANA            72-1244353
EMPRESAS STEWART - FUNERARIAS, INC.                      LOUISIANA            72-1246744
SIMPLE TRIBUTE, INC.                                     LOUISIANA            72-1505419
EASTLAWN CORPORATION                                     GEORGIA              58-6017469
HOLLY HILL MEMORIAL PARK, INC.                           GEORGIA              58-1392485
ROSE HAVEN FUNERAL HOME & CEMETERY, INC.                 GEORGIA              59-3295367
ACME MAUSOLEUM CORPORATION                               LOUISIANA            72-1149943
INTERNATIONAL STONE & ERECTORS, INC.                     LOUISIANA            72-0699525
LAKE LAWN METAIRIE FUNERAL HOME, INC.                    LOUISIANA            72-1114514

   4



                                                             STATE OF       I.R.S. EMPLOYER
                                                         INCORPORATION OR   IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                       FORMATION           NUMBER
                                                                      
LAKE LAWN METAIRIE FUNERAL HOME (JOINT VENTURE)          LOUISIANA            72-0851803
LAKE LAWN PARK, INC.                                     LOUISIANA            72-0398541
METAIRIE CEMETERY ASSOCIATION                            LOUISIANA            72-0684451
PINE CREST CEMETERY, INC.                                ALABAMA              72-1206115
ALL FAITHS FUNERAL HOME, INC.                            LOUISIANA            72-1240228
MOUNT OLIVET CEMETERY, INC.                              LOUISIANA            72-0266567
S.E. AUSTRALIA, INC.                                     LOUISIANA            72-1283266
S.E. SOUTH-CENTRAL, INC.                                 LOUISIANA            72-1239618
ELLISON FUNERAL HOME, INC.                               ALABAMA              63-1061611
KILGORE-GREEN FUNERAL HOME, INC.                         ALABAMA              63-0569262
LATHAN FUNERAL HOME, INC.                                ALABAMA              63-0591928
PINE CREST FUNERAL HOME, INC.                            ALABAMA              63-1168352
FAITH MEMORIAL PARK & MAUSOLEUM COMPANY, INC.            ALABAMA              63-0742168
VALHALLA MEMORY GARDENS AND FUNERAL HOME, INC.           ALABAMA              63-0568093
ROCKCO AND SON FUNERAL HOME, INC.                        ALABAMA              63-0515943
ROCKCO'S FUNERAL HOMES, INC.                             ALABAMA              63-0944886
S.E. ACQUISITION OF LITHONIA, GEORGIA, INC.              GEORGIA              58-2212760
ANDREW J. McGANN & SON FUNERAL HOME, INC.                ILLINOIS             36-3199562
S.E. ACQUISITION OF BLUE ISLAND, ILLINOIS, INC.          ILLINOIS             36-4234016
S.E. ACQUISITION OF OAK LAWN AND ORLAND PARK, ILLINOIS,
  INC.                                                   ILLINOIS             36-4262912
S.E. CEMETERY MANAGEMENT OF ILLINOIS, INC.               ILLINOIS             36-4287051
THEIS-GORSKI FUNERAL HOME, INC.                          ILLINOIS             36-2377875
KNUTSON FUNERAL HOMES, INC.                              IOWA                 42-0951378
PAULEY FUNERAL HOME, INC.                                IOWA                 42-1029161
RUNYAN MANGOLD, INC.                                     KANSAS               48-0922874
PROFESSIONAL FUNERAL SERVICES, INC.                      LOUISIANA            72-0969989
D.W. NEWCOMER'S SONS, INC.                               MISSOURI             43-1843891
DWN PROPERTIES, INC.                                     MISSOURI             43-1450708
FUNERAL SECURITY PLANS, INC.                             MISSOURI             44-0664950
S.E. ACQUISITION OF BOONVILLE, MISSOURI, INC.            MISSOURI             43-1840692
WYUKA FUNERAL HOME, INC.                                 NEBRASKA             47-0814740
WYUKA SIMPLICITY PLAN, INC.                              NEBRASKA             47-0814533
S.E. ACQUISITION OF ALBUQUERQUE, NEW MEXICO, INC.        NEW MEXICO           62-1669343
S.E. ACQUISITION OF SANTA FE, NEW MEXICO, INC.           NEW MEXICO           62-1688895
S.E. ACQUISITION OF MUSKOGEE, OKLAHOMA, INC.             OKLAHOMA             74-2807790
MT. JULIET FUNERAL HOME, INC.                            TENNESSEE            62-0946762
MT. JULIET MEMORIAL GARDENS, INC.                        TENNESSEE            62-0816875
NAVE FUNERAL HOME OF LEBANON, INC.                       TENNESSEE            72-1411524
SIMPLE TRIBUTE OF TENNESSEE, INC.                        TENNESSEE            62-1857416
CEMETERY SERVICES, INC.                                  WISCONSIN            39-1147526
S.E. CEMETERY MANAGEMENT OF WISCONSIN, INC.              WISCONSIN            39-1940681
WISCONSIN MEMORIAL PARK COMPANY, INC.                    WISCONSIN            39-1260321
TIME-LOCK INSURANCE AGENCY, INC.                         WISCONSIN            39-1639947
ST. BERNARD MEMORIAL GARDENS, INC.                       LOUISIANA            72-0604551
ST. BERNARD MEMORIAL FUNERAL HOME, INC.                  LOUISIANA            72-0938467
ST. VINCENT de PAUL CEMETERY ASSOCIATION                 LOUISIANA            72-0308250
STEWART ENTERPRISES (EUROPE), INC.                       LOUISIANA            72-1358384
STEWART RESOURCE CENTER, INC.                            LOUISIANA            72-0114030
STEWART SERVICES, INC.                                   LOUISIANA            72-1346587
S.E. MID-ATLANTIC, INC.                                  MARYLAND             52-1602273

   5



                                                             STATE OF       I.R.S. EMPLOYER
                                                         INCORPORATION OR   IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                       FORMATION           NUMBER
                                                                      
GARNER FAMILY FUNERAL HOME, INC.                         GEORGIA              58-2064086
HAISTEN FUNERAL HOMES, INC.                              GEORGIA              58-1421290
HAISTEN FUNERAL HOME OF HENRY COUNTY, INC.               GEORGIA              58-2022340
HIGGINS AND SON FUNERAL HOME, INC.                       GEORGIA              58-2425644
S.E. ACQUISITION OF PIKEVILLE, KENTUCKY, INC.            KENTUCKY             72-1403502
BOUNDS FUNERAL HOME, INC.                                MARYLAND             52-1630262
CEDAR HILL CEMETERY COMPANY, INC.                        MARYLAND             52-1602271
CREST LAWN MEMORIAL GARDENS, INC.                        MARYLAND             52-1602272
FORT LINCOLN CEMETERY, INC.                              MARYLAND             52-1376288
FORT LINCOLN FUNERAL HOME, INC.                          MARYLAND             52-0703419
GALLERY GRANITE CORPORATION                              MARYLAND             52-1988923
HILLCREST MEMORIAL CEMETERY, INC.                        MARYLAND             52-0625906
HINES-RINALDI FUNERAL HOME, INC.                         MARYLAND             52-0959564
JOHN M. TAYLOR FUNERAL HOME, INC.                        MARYLAND             52-0744522
LOUDON PARK CEMETERY COMPANY                             MARYLAND             52-0395020
DRUID RIDGE CEMETERY COMPANY                             MARYLAND             52-0297170
LOUDON PARK FUNERAL HOME, INC.                           MARYLAND             52-0559766
NALLEY'S FUNERAL HOME, INC.                              MARYLAND             52-0581481
NATIONAL HARMONY MEMORIAL PARK, INC.                     MARYLAND             53-0260676
PARKLAWN, INC.                                           MARYLAND             52-0702108
THE PARKWOOD CEMETERY COMPANY                            MARYLAND             52-0439130
PARKWOOD MANAGEMENT COMPANY                              MARYLAND             52-1512350
WILLIAM W. CHAMBERS, INC.                                MARYLAND             53-0239999
SIMPLE TRIBUTE OF MARYLAND, INC.                         MARYLAND             52-2323145
GORNY & GORNY PATERSON-CLIFTON MORTUARY                  NEW JERSEY           22-1851465
S.E. ACQUISITION OF CLIFTON, NEW JERSEY, INC.            NEW JERSEY           22-3620444
C.J. APPLEGATE AND SONS, INC.                            NEW YORK             15-0611808
GARDINIER COLLETTI MEMORIAL HOME, INC.                   NEW YORK             16-1083308
MATTLE GRAY NULTON FUNERAL HOME, INC.                    NEW YORK             16-1188100
MURPHY FUNERAL SERVICE, INC.                             NEW YORK             16-1154577
NULTON FUNERAL HOME, INC.                                NEW YORK             16-1380326
OTTO REDANZ FUNERAL HOME, INC.                           NEW YORK             16-0843505
CORNELL & DAGGETT, INC.                                  NEW YORK             16-0393170
S.E. ACQUISITION OF FREDONIA, NEW YORK, INC.             NEW YORK             52-2073694
BROWN MEMORIALS, INC.                                    NORTH CAROLINA       56-1401127
CATAWBA MEMORIAL PARK, INC.                              NORTH CAROLINA       56-1186602
CENTRAL STONE WORKS, INCORPORATED                        NORTH CAROLINA       56-0172230
HAROLD C. DAVIS, INC.                                    NORTH CAROLINA       56-0558688
EVANS FUNERAL HOME, INC.                                 NORTH CAROLINA       56-1766627
EVERGREEN MEMORIAL GARDENS, INC.                         NORTH CAROLINA       56-0564225
GARRETT - HILLCREST, INC.                                NORTH CAROLINA       56-0497389
HIGHLAND MEMORY GARDENS OF FRANKLIN COUNTY, INC.         NORTH CAROLINA       56-0766494
JOHNSON FUNERAL HOME, INC.                               NORTH CAROLINA       56-1415185
LANCASTER FUNERAL HOMES, INC.                            NORTH CAROLINA       56-0790520
MCLAURIN'S FUNERAL HOME, INC.                            NORTH CAROLINA       56-0774793
MILLER-LEE, INC.                                         NORTH CAROLINA       56-1666506
PARKLAWN MEMORIAL GARDENS, INC.                          NORTH CAROLINA       56-1002833
POLLOCK WELLS FUNERAL SERVICE, INC.                      NORTH CAROLINA       56-1076994
STEPHENS SERVICES, INC.                                  NORTH CAROLINA       56-1782322
THOMAS-YELVERTON COMPANY                                 NORTH CAROLINA       56-0428110
1730 INVESTMENT CO., INC.                                NORTH CAROLINA       56-1220783
MEMORIAL PARKS, INCORPORATED                             NORTH CAROLINA       56-0320583
BENJAMIN FRANKLIN P. M., INC.                            PENNSYLVANIA         36-3410961
GEORGE WASHINGTON MEMORIAL PARK, INC.                    PENNSYLVANIA         23-1196097

   6



                                                             STATE OF       I.R.S. EMPLOYER
                                                         INCORPORATION OR   IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                       FORMATION           NUMBER
                                                                      
KIRK & NICE SUBURBAN CHAPEL, INC.                        PENNSYLVANIA         23-1322135
KIRK & NICE, INC.                                        PENNSYLVANIA         23-1543090
S.E. ACQUISITION OF PENNSYLVANIA, INC.                   PENNSYLVANIA         23-2774157
S.E. CEMETERY MANAGEMENT OF PENNSYLVANIA, INC.           PENNSYLVANIA         23-2999841
SUNSET MEMORIAL PARK COMPANY                             PENNSYLVANIA         23-1137620
PET HAVEN, INC.                                          PENNSYLVANIA         23-1954580
DUNBAR FUNERAL HOME, INC.                                SOUTH CAROLINA       57-0283484
THE MACKEY MORTUARY, INC.                                SOUTH CAROLINA       57-0509513
CANNON FUNERAL HOME, INC.                                SOUTH CAROLINA       57-0446751
OCONEE MEMORIAL FUNERAL HOME, INC.                       SOUTH CAROLINA       57-1025046
PINEVIEW, INC.                                           SOUTH CAROLINA       57-1015766
S.E. ACQUISITION OF NORTH AUGUSTA, SOUTH CAROLINA,
  INC.                                                   SOUTH CAROLINA       57-0966654
S.E. ACQUISITION OF CHARLESTON, INC.                     SOUTH CAROLINA       57-0994297
S.E. ACQUISITION OF LIBERTY, SOUTH CAROLINA, INC.        SOUTH CAROLINA       58-2448833
S.E. ACQUISITION OF SOUTH CAROLINA, INC.                 SOUTH CAROLINA       57-0982608
MONTE VISTA BURIAL PARK, INC.                            TENNESSEE            62-0298090
BLUE RIDGE MEMORIAL GARDENS, INC. (VA)                   VIRGINIA             54-0627484
CLINCH VALLEY MEMORIAL CEMETERY, INC.                    VIRGINIA             54-1406409
EVERLY COMMUNITY FUNERAL CARE, INC.                      VIRGINIA             54-1917599
EVERLY FUNERAL HOMES, INCORPORATED                       VIRGINIA             54-0611646
EVERLY PFP, INC.                                         VIRGINIA             54-1425591
SIMPLICITY PLANS OF ALABAMA, INC.                        ALABAMA              72-1492844
FAIRFAX FUNERAL HOME, INC.                               VIRGINIA             54-0718777
JOSEPH W. TEAGUE FUNERAL HOME, INC.                      VIRGINIA             54-0787590
RICHMOND MEMORIAL PARKS, INC.                            VIRGINIA             54-0801902
WASHINGTON MEMORIAL CEMETERY, INCORPORATED               VIRGINIA             54-0490257
WISE CORPORATION                                         VIRGINIA             54-0832763
BARTLETT-BURDETTE-COX FUNERAL HOME, INC.                 WEST VIRGINIA        55-0568150
CALFEE FUNERAL SERVICE OF PINEVILLE, INC.                WEST VIRGINIA        55-0266450
CASDORPH & CURRY FUNERAL HOME, INC.                      WEST VIRGINIA        55-0721178
DODD-PAYNE-HESS FUNERAL HOME, INC.                       WEST VIRGINIA        55-0523311
EVANS FUNERAL HOME, INC. (WEST VIRGINIA)                 WEST VIRGINIA        55-0526285
GRACELAND MAUSOLEUM, INC.                                WEST VIRGINIA        55-0645205
KIMES FUNERAL HOME, INC.                                 WEST VIRGINIA        55-0485749
KLINGEL-CARPENTER MORTUARY, INC.                         WEST VIRGINIA        55-0460584
S.E. ACQUISITION OF MALDEN, WEST VIRGINIA, INC.          WEST VIRGINIA        55-0764400
WILSON FUNERAL HOME, INC.                                WEST VIRGINIA        55-0329572
LAKEWOOD MEMORIAL PARK, INC.                             MISSISSIPPI          64-0188145
MEMORIAL SERVICES OF COLUMBIA, INC.                      MISSOURI             43-1171239
MEMORIAL FUNERAL HOME, INC.                              MISSOURI             43-0683654
LINCOLN MEMORIAL MORTUARY, INC.                          NEBRASKA             47-0637566
S.E. ACQUISITION OF NEVADA, INC.                         NEVADA               88-0397289
DESERT MEMORIAL, INC.                                    NEVADA               88-0360543
NEPTUNE SOCIETY OF NEVADA, INC.                          NEVADA               88-0285085
RENO MEMORIAL, INC.                                      NEVADA               88-0405570
S.E. ACQUISITION OF RENO, NEVADA, INC.                   NEVADA               88-0405123
STRONG & BURNS FUNERAL HOME, INC.                        NEW YORK             16-1449371
MONTLAWN MEMORIAL PARK, INC.                             NORTH CAROLINA       56-1338130
ROCKY MOUNT MEMORIAL PARK, INC.                          NORTH CAROLINA       56-1014862
S.E. ACQUISITION OF OREGON, INC.                         OREGON               93-1187545
AMLING/SCHROEDER FUNERAL SERVICE, INC.                   OREGON               93-1181655
CASCADE CREMATORY, INC.                                  OREGON               93-1179976
CHAPEL OF THE ROSES, INC.                                OREGON               93-0474022
CHAPEL OF THE VALLEY FUNERAL HOME, INC.                  OREGON               93-1162684

   7



                                                             STATE OF       I.R.S. EMPLOYER
                                                         INCORPORATION OR   IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                       FORMATION           NUMBER
                                                                      
DUTTON, INC.                                             OREGON               93-1064740
J.P. FINLEY AND SON MORTUARY, INC.                       OREGON               93-1066620
SUNSET HILLS MEMORIAL PARK                               OREGON               93-0395535
GREENWOOD CEMETERY, INC.                                 OREGON               93-0179035
NISWONGER & REYNOLDS, INC.                               OREGON               93-0497426
S.E. ACQUISITION OF MYRTLE CREEK, OREGON, INC.           OREGON               93-1204595
S.E. ACQUISITION OF REEDSPORT, OREGON, INC.              OREGON               91-1852408
TABOR'S DESERT HILLS MORTUARY, INC.                      OREGON               93-1136418
CAROLINA FINANCIAL CORPORATION OF PICKENS                SOUTH CAROLINA       57-0792449
HILL-CREST MEMORIAL PARK                                 SOUTH CAROLINA       57-0310741
OCONEE MEMORIAL GARDENS, INC.                            SOUTH CAROLINA       57-1019419
DILLARD MEMORIAL, INC.                                   SOUTH CAROLINA       57-0142493
COLE & GARRETT FUNERAL HOMES, INC.                       TENNESSEE            62-1269993
HIGHLAND MEMORIAL CEMETERY, INC.                         TENNESSEE            62-1515308
HOLLY HILLS, INC.                                        TENNESSEE            62-1516351
KINGSPORT CEMETERY CORPORATION                           TENNESSEE            62-0453134
THE NASHVILLE HISTORIC CEMETERY ASSOCIATION, INC.        TENNESSEE            62-1455239
PASADENA FUNERAL HOME, INC.                              TEXAS                75-2640884
RESTLAND FUNERAL HOME, INC.                              TEXAS                75-0948243
ANDERSON-CLAYTON BROS. FUNERAL HOMES, INC.               TEXAS                75-0113340
LITTLE BETHEL MEMORIAL PARK, INC.                        TEXAS                75-2047789
ROSELAWN MEMORIAL GARDENS, INC.                          TEXAS                75-1853478
BELEW FUNERAL HOME, INC.                                 TEXAS                75-2579187
BEXAR COUNTY MORTUARY SERVICES, INC.                     TEXAS                74-2174694
BLUEBONNET HILLS MEMORIAL PARK, INC.                     TEXAS                75-0940778
BLUEBONNET HILLS FUNERAL HOME, INC.                      TEXAS                75-1887053
BRIGHT-HOLLAND FUNERAL HOME, INC.                        TEXAS                75-2555413
CRESPO & SONS, INCORPORATED                              TEXAS                74-1663926
DALTON & SON FUNERAL HOME, INC.                          TEXAS                75-1420288
EMERALD HILLS FUNERAL CORPORATION                        TEXAS                75-2153941
J. E. FOUST & SON FUNERAL DIRECTORS, INC.                TEXAS                75-2546901
GUARDIAN CREMATION SOCIETY, INC.                         TEXAS                75-2783157
GUARDIAN FUNERAL HOME, INC.                              TEXAS                75-0308465
HILLTOP MEMORIAL PARK                                    TEXAS                75-0845982
LAUREL LAND MEMORIAL PARK, INC.                          TEXAS                75-0387310
LAUREL LAND FUNERAL HOME, INC.                           TEXAS                75-1179873
SINGING HILLS FUNERAL HOME, INC.                         TEXAS                75-1452354
LAUREL LAND OF FORT WORTH, INC.                          TEXAS                75-2163741
LAUREL LAND FUNERAL HOME OF FORT WORTH, INC.             TEXAS                75-2163737
LYONS FUNERAL HOME, INC.                                 TEXAS                75-2552395
METROCREST FUNERAL HOME, INC.                            TEXAS                75-2186675
RESTLAND OF DALLAS, INC.                                 TEXAS                75-1506921
ABBEY PLAN OF TEXAS, INC.                                TEXAS                74-2869205
HIGHLAND MEMORIAL GARDENS, INC.                          TEXAS                75-1641443
SIMPLICITY PLAN OF TEXAS, INC.                           TEXAS                75-2317933
SOUTHPARK FUNERAL HOME, INC.                             TEXAS                74-1457971
SOUTH MEMORIAL PARK, INC.                                TEXAS                74-1404087
S.E. ACQUISITION OF WASHINGTON, INC.                     WASHINGTON           91-1869762
E.R. BUTTERWORTH & SONS                                  WASHINGTON           91-0161720
CREMATION SOCIETY NORTHWEST, INC.                        WASHINGTON           91-1689873
EVERGREEN STAPLES FUNERAL CHAPEL, INC.                   WASHINGTON           91-1435155
CUNNINGHAM MEMORIAL PARK, INC.                           WEST VIRGINIA        55-0675890
LEGACY ONE, INC.                                         WEST VIRGINIA        55-0451101
FINDLAY CEMETERY, INC.                                   OHIO                 55-0600689

   8



                                                             STATE OF       I.R.S. EMPLOYER
                                                         INCORPORATION OR   IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                       FORMATION           NUMBER
                                                                      
EASTLAWN MEMORIAL GARDENS, INCORPORATED                  VIRGINIA             54-0630640
GRANDVIEW MEMORY GARDENS, INCORPORATED                   VIRGINIA             55-0418106
GREENHILLS MEMORY GARDENS, INC.                          VIRGINIA             55-0453246
HIGHLAND MEMORY GARDENS, INCORPORATED (VA)               VIRGINIA             55-0398489
HOLLY MEMORIAL GARDENS, INC.                             VIRGINIA             54-0679281
MONTICELLO MEMORY GARDENS, INC.                          VIRGINIA             55-0590890
SUNSET MEMORY GARDENS, INC.                              VIRGINIA             55-0588991
BLUE RIDGE FUNERAL HOME, INC.                            WEST VIRGINIA        55-0479644
BLUE RIDGE MEMORIAL GARDENS, INC. (WVA)                  WEST VIRGINIA        55-0385960
C.G.R., INC.                                             WEST VIRGINIA        55-0542566
EASTERN CEMETERY ASSOCIATES, INC.                        WEST VIRGINIA        55-0548764
ETERNAL LIGHT FUNERALS, INC.                             WEST VIRGINIA        55-0493366
KANAWHA PLAZA PARTNERSHIP                                WEST VIRGINIA        55-0540511
LEGACY ONE SERVICE CORPORATION                           WEST VIRGINIA        55-0658005
LOI CHARLESTON, INC.                                     WEST VIRGINIA        55-0722745
MOUNTAIN VIEW MEMORY GARDENS, INC.                       WEST VIRGINIA        55-0416346
NATIONAL EXCHANGE TRUST, LTD                             WEST VIRGINIA        55-0579178
NATIONAL FUNERAL SERVICES, INCORPORATED                  WEST VIRGINIA        55-0604593
PLEASANT VIEW MEMORY GARDENS, INC.                       WEST VIRGINIA        55-0418939
WILLIAMS-BLUE RIDGE FUNERAL HOME, INC.                   WEST VIRGINIA        55-0534313


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

*  The address for each of the additional Registrants is 110 Veterans Memorial
   Boulevard, Metairie, LA 70005, telephone (504) 837-5880. The primary standard
   industrial classification code number for each of the additional Registrants
   is 7200.
   9

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

                  SUBJECT TO COMPLETION, DATED AUGUST 14, 2001

PROSPECTUS

                                 (STEWART LOGO)

                           STEWART ENTERPRISES, INC.

                               OFFER TO EXCHANGE
    UP TO $300,000,000 REGISTERED 10 3/4% SENIOR SUBORDINATED NOTES DUE 2008
                                      FOR
ANY AND ALL OUTSTANDING UNREGISTERED 10 3/4% SENIOR SUBORDINATED NOTES DUE 2008
                             ---------------------

     We are offering to exchange 10 3/4% senior subordinated notes due 2008 that
we have registered under the Securities Act of 1933 (the exchange notes) for all
outstanding 10 3/4% senior subordinated notes due 2008 (the outstanding notes).
In this prospectus we refer to the exchange notes and the outstanding notes
collectively as the notes.

                               THE EXCHANGE OFFER

     - We hereby offer to exchange all outstanding notes that are validly
       tendered and not withdrawn for an equal principal amount of exchange
       notes which are registered under the Securities Act of 1933.

     - The exchange offer will expire at 5:00 p.m. New York City time, on
                 , 2001, unless extended.

     - You may withdraw tenders of your outstanding notes at any time before the
       exchange offer expires.

     - The exchange notes are substantially identical to the outstanding notes,
       except that the transfer restrictions and registration rights relating to
       the outstanding notes will not apply to the exchange notes.

     - We believe that the exchange of outstanding notes will not be a taxable
       event for federal income tax purposes, but you should read "Certain U.S.
       Federal Income Tax Considerations" beginning on page 113 for more
       information.

     - We will not receive any proceeds from the exchange offer.

     - No public market currently exists for the exchange notes. We do not
       intend to apply for listing of the exchange notes on any securities
       exchange or to arrange for them to be quoted on any quotation system.

     INVESTING IN THE EXCHANGE NOTES INVOLVES RISKS THAT WE DESCRIBE IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 20.

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

      Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act of 1933. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for outstanding notes where
such outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. We have agreed that, for a
period of 180 days after the date of this prospectus, we will make this
prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
                             ---------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE EXCHANGE NOTES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS AND ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

                THE DATE OF THIS PROSPECTUS IS AUGUST 14, 2001.
   10

     WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR REPRESENT ANYTHING
TO YOU OTHER THAN THE INFORMATION IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY
UNAUTHORIZED INFORMATION OR REPRESENTATIONS. WE ARE NOT MAKING AN OFFER TO SELL
THE EXCHANGE NOTES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

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

                               TABLE OF CONTENTS



                                                              PAGE
                                                              ----
                                                           
Forward-Looking Statements..................................  iii
Prospectus Summary..........................................    1
Risk Factors................................................   20
Exchange Offer..............................................   28
Use of Proceeds.............................................   35
Capitalization..............................................   36
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   37
Business....................................................   57
Management..................................................   66
Principal Stockholders......................................   68
Certain Relationships and Related Transactions..............   70
Description of Certain Indebtedness and the Tender Offer....   71
Description of Notes........................................   76
Certain United States Federal Tax Considerations............  113
Plan of Distribution........................................  117
Legal Matters...............................................  117
Experts.....................................................  118
Available Information and Incorporation by Reference........  118
Index to Historical Consolidated Financial Statements.......  F-1
Unaudited Pro Forma Financial Information...................  P-1


THIS DOCUMENT INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT US
THAT IS NOT PRINTED IN THIS DOCUMENT BUT IS CONTAINED IN DOCUMENTS FILED WITH
THE SEC. THIS INFORMATION IS AVAILABLE AT THE INTERNET WEB SITE THE SEC
MAINTAINS AT HTTP://WWW.SEC.GOV, AS WELL AS FROM OTHER SOURCES. SEE "AVAILABLE
INFORMATION AND INCORPORATION BY REFERENCE" ON PAGE 118.

     YOU ALSO MAY REQUEST COPIES OF THESE DOCUMENTS FROM US, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST BY CONTACTING US AT: STEWART ENTERPRISES, INC., 110
VETERANS MEMORIAL BOULEVARD, METAIRIE, LOUISIANA 70005, ATTN: MARTIN R. DE
LAUREAL, (504) 837-5880. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE AT LEAST FIVE BUSINESS DAYS PRIOR TO THE DATE ON
WHICH AN INVESTMENT DECISION IS TO BE MADE WITH RESPECT TO THE EXCHANGE NOTES
OFFERED HEREBY AND IN ANY EVENT NO LATER THAN           , 2001, WHICH IS FIVE
BUSINESS DAYS PRIOR TO THE INITIAL EXPIRATION DATE OF THE EXCHANGE OFFER.

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

                                        ii
   11

                         TERMS USED IN THIS PROSPECTUS

     "SAB 101" refers to the Securities and Exchange Commission's Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements,"
which we implemented in the first quarter of fiscal year 2001.

     In this prospectus, "Stewart," the "Company," "we," "our" and "us" refer to
Stewart Enterprises, Inc. and its subsidiaries.

     The term "EBITDA" used in this prospectus means earnings before the
cumulative effect of changes in accounting principles and before net interest
expense, taxes, depreciation and amortization.

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

                           FORWARD-LOOKING STATEMENTS

     This prospectus contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both as amended. All statements other than statements of
historical fact are "forward-looking statements" for purposes of federal and
state securities laws, including any projections of earnings, revenues or other
financial items; any statements of the plans, strategies and objectives of
management for future operations; any statements concerning proposed new
products, services or developments; any statements regarding future economic
conditions or performance; any statements of belief; and any statements of
assumptions underlying any of the foregoing. Forward-looking statements may
include the words "may," "will," "estimate," "intend," "continue," "believe,"
"expect," "plan" or "anticipate" and other similar words. Such forward-looking
statements may be contained in the sections "Prospectus Summary," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," among other places.

     Although we believe that the expectations reflected in our forward-looking
statements are reasonable, actual results could differ materially from those
projected or assumed in our forward-looking statements. Our future financial
condition and results of operations, as well as any forward-looking statements,
are subject to change and are subject to inherent risks and uncertainties, such
as those disclosed in this prospectus. We do not intend, and we undertake no
obligation, to update any forward-looking statement. Currently known risk
factors include, but are not limited to, the factors described in this
prospectus in the section "Risk Factors." We urge you to review carefully the
section "Risk Factors" in this prospectus for a more complete discussion of the
risks of an investment in the notes.

                                       iii
   12

                               PROSPECTUS SUMMARY

     This summary highlights the information contained elsewhere in this
prospectus. Because this is only a summary, it does not contain all of the
information that may be important to you. For a more complete understanding of
the exchange offer, we encourage you to read this entire prospectus and the
documents to which we refer you. You should read the following summary together
with the more detailed information and consolidated financial statements and the
notes to those statements included elsewhere in this prospectus. We report our
financial results on a fiscal year rather than a calendar year basis. When we
refer to a particular fiscal year in this prospectus, we mean the twelve months
ended October 31 of that year.

                                COMPANY OVERVIEW

     Founded in 1910, we are the third largest provider of funeral and cemetery
products and services in the death care industry in the United States. Through
our subsidiaries, we provide a complete range of funeral merchandise and
services, along with cemetery property, merchandise and services, both at-need
and prior to the time of need. As of April 30, 2001, our domestic operations
included 321 funeral homes and 151 cemeteries in 30 states within the United
States and in Puerto Rico, and our foreign operations included 291 funeral homes
and 10 cemeteries in 10 foreign countries. For the twelve months ended April 30,
2001 (pro forma for SAB 101), we had revenues of $690.3 million and EBITDA of
$219.6 million. We are currently pursuing the sale of our foreign operations,
which for fiscal year 2000 (pro forma for SAB 101) contributed approximately
$139.8 million, or 20 percent, of total revenues and approximately $36.4
million, or 16 percent, of total EBITDA.

     For fiscal year 2000 (pro forma for SAB 101), funeral operations accounted
for approximately 60 percent of our total revenues and cemetery operations
accounted for the remaining 40 percent. Our funeral homes offer a wide range of
services and products including funeral services, cremation, transportation
services, removal and preparation of remains, caskets and flowers. Our cemetery
operations sell cemetery property, merchandise and services. Cemetery property
includes lots, lawn crypts and family and community mausoleums. Cemetery
merchandise includes vaults, monuments and markers. Cemetery services include
burial site openings and closings and inscriptions.

     We believe that we operate one or more of the premier death care facilities
in each of our principal markets. Our funeral homes and cemeteries in the United
States are located primarily in the Southern, Western, Mid-Atlantic, and
Mid-Western states, generally in large metropolitan areas such as Miami,
Orlando, Tampa and St. Petersburg, Florida; Dallas, Fort Worth and Houston,
Texas; Los Angeles, San Diego and San Francisco, California; New Orleans,
Louisiana; Baltimore, Maryland and the District of Columbia. According to the
United States Bureau of the Census, many of these areas have a large population
over age 65, which represents a principal target market for our preneed sales
program as well as at-need sales. We believe that we are an industry leader in
marketing preneed cemetery property and preneed funeral and cemetery merchandise
and services, and we consider preneed sales to be an integral part of our
long-term business strategy.

     Cemetery operations account for a significantly larger percentage of our
total revenues than those of our three largest competitors. We emphasize
cemetery operations because we believe cemeteries provide the best foundation
for securing long-term market share in our industry. The sale of cemetery
property to a family creates a relationship that builds heritage over time, as
family members are buried in the plot or mausoleum and as other family members
purchase additional cemetery property in order to be buried in the same
cemetery. Our relationships with our cemetery property customers allow us to
more easily offer related products and services, such as cemetery merchandise or
a funeral service at one of our funeral homes located on the cemetery grounds or
nearby.

     We have been focused on creating combination operations by building new
funeral homes on existing cemetery property and operating the facilities
together. Combination operations help to increase market share by allowing us to
offer families the convenience of complete funeral home and cemetery planning
and services from a single location at a competitive price at the time of need
or on a preneed basis.

                                        1
   13

Approximately 47 percent of our cemeteries have a funeral home onsite that we
operate in conjunction with the cemetery. In addition to our combination
operations, another approximately 39 percent of our cemeteries are located
within the same market as, and operated in conjunction with, one of our funeral
homes. We frequently organize our operating units in "clusters," which are
integrated groups of funeral homes and cemeteries that allow us to
cost-effectively pool assets, personnel and services and to generate higher
margins.

                               INDUSTRY OVERVIEW

     Highly fragmented industry.  Death care businesses in the United States
have traditionally been relatively small, family-owned enterprises that have
passed through successive generations within the family. The last decade
witnessed a trend of family-owned firms consolidating with larger organizations
such as ours. However, this trend slowed in 1999, and the industry continues to
be characterized by a large number of locally-owned, independent operations.
More than 85 percent of the approximately 22,000 funeral homes and 10,500
cemeteries in the United States are independently owned.

     Continuing need for products and services; increasing number of
deaths.  There is an inevitable need for the products and services our industry
offers. In addition, the number of deaths in the United States is expected to
increase at a steady, moderate pace. According to the United States Bureau of
the Census, the number of deaths in the United States is expected to increase by
approximately 1 percent per year, from 2.4 million in 2000 to 2.6 million in
2010. Furthermore, the average age of the population in the United States is
increasing. According to the United States Bureau of the Census, the United
States population over 50 years of age is expected to increase by approximately
2 percent per year, from 76.1 million in 2000 to 97.1 million in 2010. We
believe the aging of the population is particularly important because it expands
our target market for preneed sales, as older persons, especially those over 50,
are most likely to make preneed funeral and cemetery arrangements.

     Importance of tradition; barriers to entry.  We believe it is difficult for
new competitors to enter existing markets successfully by opening new cemeteries
and funeral homes. Entry into the cemetery market can be difficult due to
several factors. Families tend to return to the same cemetery for generations to
bury their family members, making it difficult for new cemeteries to attract
families. Additionally, mature markets, including many of the metropolitan areas
where our cemeteries are located, are often already served by an adequate number
of cemeteries, and land for new cemetery development is scarce. Regulatory
complexities and zoning restrictions also make entry into the cemetery market
difficult. Finally, development of a new cemetery requires a significant capital
investment that usually takes several years to produce a return. Entry into the
funeral home market can be difficult for many of the same reasons. Families tend
to choose a funeral home because it previously served their family, and because
of the funeral home's reputation, which must be developed over time, although
they are often willing to move from a stand-alone funeral home to a newer one
developed on the grounds of their preferred cemetery.

     Growing demand for cremation.  Consumer preferences in our industry tend to
change slowly. One significant trend in the United States is an increase in the
preference for cremation. Industry research indicates that the percentage of
cremations has steadily increased and that cremation will represent
approximately 36 percent of the United States market by the year 2010, compared
to 25 percent in 1999. Although the percentage represented by cremations is
expected to grow, we believe this growth will come primarily from the expected
growth in the number of deaths over time, and that the number of traditional
funerals performed each year should remain relatively constant. Because
cremations have typically included few, if any, additional products or services
for the family beyond the cremation itself, the trend towards cremation has been
a concern to traditional funeral home and cemetery operators. However, industry
research has shown that the consumer chooses cremation frequently for reasons
other than cost, and we believe this increasing consumer interest in cremation
will provide us an opportunity to better serve families by offering an array of
additional products and services.

                                        2
   14

                             COMPETITIVE STRENGTHS

     Leading market positions.  We are the third largest provider of funeral and
cemetery products and services in the United States and have been in business
for more than 90 years. In addition, we believe that we operate one or more of
the premier death care facilities in each of our principal markets, which are
primarily in larger metropolitan areas in the Southern, Western, Mid-Atlantic
and Mid-Western states. In our view, a "premier" facility is one that is among
the most highly regarded facilities in its market area in terms of a variety of
factors such as tradition, heritage, reputation, physical size, volume of
business, available inventory, name recognition, aesthetics and/or potential for
development or expansion. For example, while funeral homes and cemeteries in the
United States perform an average of approximately 100 funerals and 165 burials
per year, ours perform an average of approximately 250 funerals and 375 burials
per year. In addition, more than 40 percent of our domestic properties are
located in California, Florida and Texas, which are three of the four states
with the highest population over age 65, an age group that represents a large
portion of our target market.

     Strong cemetery operations.  Our cemetery operations account for
approximately 40 percent of our total revenues, which is a significantly larger
percentage than any of our three largest competitors. We believe this is a
competitive advantage because families generally return to the same cemetery for
generations to bury their family members. Cemetery property often becomes an
important part of a family's heritage, and family members who move away will
often return to their home cemetery to be buried. We build on our relationships
with our cemetery customers by offering additional cemetery property to related
family members and by offering related products and services such as cemetery
merchandise or a funeral service at one of our funeral homes located on the
cemetery grounds or nearby. Approximately 42 percent of our total cemetery
acreage is available for future development.

     Emphasis on combination operations.  Approximately 47 percent of our
cemeteries have a funeral home onsite that is operated in conjunction with the
cemetery, which we refer to as a combination operation. This is a significantly
higher percentage of combination operations than any of our three largest
competitors. We believe combination operations are a competitive advantage
because they offer families the convenience of complete death care services at a
single location. Our experience demonstrates that a family planning a burial in
our cemetery often views our onsite funeral home as a more desirable location
for a funeral service than an unaffiliated offsite funeral home. Thus, the
funeral home's call volume benefits from the heritage of the cemetery, and, over
time, the cemetery's activity increases as well. In addition, combination
operations enhance our purchasing power, enable us to employ more sophisticated
management systems and allow us to share facilities, equipment, personnel and a
preneed sales force, resulting in lower average operating costs and expanded
marketing and sales opportunities. As a result, our combination operations
usually generate higher operating margins for us compared to our stand-alone
funeral homes and cemeteries. In addition to our combination operations,
approximately 39 percent of our cemeteries are located within the same market
as, and operated in conjunction with, one or more of our funeral homes.

     Expertise in preneed sales; strong backlog.  We believe that we are
distinguished from our competitors by our strong emphasis on, and more than
60-year history of experience with, preneed sales. Preneed plans enable families
to specify in advance and prepay for cemetery property and funeral and cemetery
services and products. We market these properties, services and products
domestically through our full-time staff of approximately 1,200 sales
counselors. Our expertise in preneed sales has historically developed out of,
and now complements, our strong cemetery operations. This is because cemetery
property, such as a burial plot, is usually the first purchase a family will
make when considering preneed arrangements. We build on our relationships with
our preneed cemetery property customers by offering them additional preneed
products and services such as cemetery merchandise or funeral services. Our
focus on preneed cemetery property sales is also important because these sales
generate current revenues and higher current cash flow than other types of
preneed sales. We estimate that as of April 30, 2001, the future value of our
preneed backlog (including earnings on funds held in trust and build-up in the
face value of third-party insurance contracts, in each case at assumed rates)
represented approximately $2.5 billion of revenue to be recognized in the future
as these prepaid products and services are delivered.

                                        3
   15

     Experienced management.  We have an experienced management team, many of
whom owned and operated their own funeral homes and cemeteries and joined our
company when we acquired their businesses. Our 11 top executives have an average
of 29 years of experience in the death care industry and have been with our
company for an average of 16 years.

                               BUSINESS STRATEGY

     Our business strategy is to improve and expand our operations internally
and to strengthen our financial performance by improving cash flow and
profitability and deleveraging our balance sheet. Key elements of our business
strategy are as follows:

     Maintain backlog through preneed marketing.  We consider maintaining our
backlog through preneed marketing to be an integral part of our long-term
business strategy. Our primary objective is to moderate preneed sales levels to
balance our cash investment while maintaining a sustainable and predictable
level of growth in our backlog. The aging of the population represents a
significant opportunity for us to expand our customer base through preneed
marketing, as older customers, especially those over 50 years old, are most
likely to make these purchases.

     Develop additional combination operations.  We create combination
operations by (1) building funeral homes on cemetery properties that we own, and
(2) entering into operating partnerships with third parties in which we
construct, own and operate a funeral home and/or mausoleum on the grounds of a
cemetery owned by the third party. Partnerships allow us to enjoy the benefits
of operating a funeral home in a combination operation, without the capital
investment of purchasing the cemetery. Our partner benefits from being better
able to compete with other cemeteries or combination operations in its market,
increase cemetery revenues, and provide a better service to its parishioners or
other constituencies. In 1997, we entered into an operating partnership with the
Archdiocese of Los Angeles to construct and operate funeral homes at the site of
nine cemeteries owned and operated by the Archdiocese. Four of these funeral
homes have been completed, and the fifth is under construction. Over the last 50
years, through our mausoleum construction business, we have developed
relationships with the Catholic Church in approximately 70 dioceses in 39
states. We plan to pursue more of these partnerships with the Catholic Church,
other faith-based organizations and non-profit entities.

     Increase enhanced cremation products and services.  The cremation rate in
the United States has been increasing and by the year 2010 cremations are
expected to represent 36 percent of the United States burial market, according
to industry estimates. We have been addressing this trend by providing enhanced
cremation products and services at all of our funeral homes. An enhanced
cremation may include a memorial service, an urn and a niche in a mausoleum or
columbarium in which to place the remains. We are also responding to the growing
preference for cremations with our alternative service firm strategy. We
currently operate 25 alternative service locations, which primarily offer
value-priced cremation services and are located principally in California and
Nevada, states with among the highest cremation rates in the United States.
Although these locations do not offer the lowest-cost basic cremations in their
markets, the costs to the family for death care arrangements at these locations
are typically less than at a traditional funeral home. These locations are
generally leased, have lower overhead than traditional funeral homes and
generate higher operating margins than traditional funeral homes, although the
average revenue per service is lower. Additionally, we have found that families
value personalized services and products such as a personalized memorial service
designed to reflect the special interests or hobbies of the consumer. We are
training our funeral arrangers to offer and arrange these new personalized
options.

     Reduce debt through asset sales.  As of April 30, 2001, we operated a total
of 291 funeral homes and 10 cemeteries in Argentina, Australia, Belgium, Canada,
France, Mexico, the Netherlands, New Zealand, Portugal and Spain. In order to
reduce debt and focus on core domestic operations, we are currently pursuing the
sale of our foreign operations. We have engaged an investment banking firm to
assist in evaluating and executing these sales. For fiscal year 2000 (pro forma
for SAB 101), our revenues from foreign operations were $139.8 million, or 20
percent of our total revenues, and our EBITDA from foreign operations was $36.4
million, or 16 percent of our total EBITDA. If consummated, these sales will
enable us to reduce debt
                                        4
   16

significantly. Additionally, we are evaluating opportunities to rezone and sell
excess cemetery property and certain other assets. See "Recent Developments."

     Focus on improving cash flow.  We plan to continue to improve our cash flow
through a number of revenue enhancements and cost controls, and continued
moderation in our preneed sales activities. In fiscal year 2000, we restructured
our preneed sales program to focus on increasing cash flow. For example, we
increased finance charges, required larger down payments and shortened
installment payment terms, and we decreased the overall level of preneed sales
activities. We are also increasing cash flow and reducing our credit risk by
encouraging families purchasing at-need merchandise and services to pay at the
time of delivery or to use a third-party financing program we developed. In the
past, we typically financed credit sales internally on a short-term basis. We
also plan to continue our suspension of acquisition activity and of our
dividend, and to limit capital expenditures. We plan to continue to seek to
reduce our costs by, among other things, obtaining volume discounts from
suppliers, leveraging our operating costs through clustering and combination
operations, and identifying facilities with overlapping market share and
consolidating them as appropriate. As part of these efforts, we are
incentivizing local managers to decrease costs by tying their compensation more
closely to the profitability of the locations they manage. This strategy
contributed to our increased cemetery margins for the first six months of fiscal
year 2001.

                              RECENT DEVELOPMENTS

SAB 101

     We implemented the Securities and Exchange Commission's Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101") in
the first quarter of fiscal year 2001, which resulted in changes to our methods
of accounting for some of our preneed sales activities. SAB 101 has the effect
of standardizing accounting for preneed sales for the death care industry and,
we believe, better matches revenue recognition and cash receipts. See the
section "Management's Discussion and Analysis of Financial Condition and Results
of Operations" under the heading "Implementation of SAB 101" for a detailed
description of the effects of our implementation of SAB 101 on our methods of
accounting for preneed sales activities.

Foreign asset sales and related noncash charge

     We are currently pursuing the sale of our foreign operations. Our financial
advisors have completed their evaluation of those operations, and, except for
Argentina, have submitted financial and other information to prospective buyers
and have received one or more indications of interest and/or formal proposals
for the purchase of each of these foreign operations. We are now in various
stages of negotiations with prospective buyers and believe that we will be able
to dispose of those operations at acceptable prices.

     As a result of our decision to proceed with the sale of our foreign
operations, we will be writing down the assets associated with our foreign
operations, with an aggregate carrying value of approximately $580.0 million, to
their estimated fair value. As a result, we estimate that we will incur an
aggregate pre-tax noncash charge to earnings of $230.0 million to $250.0 million
($175.0 million to $195.0 million, after tax) in the quarter ending July 31,
2001. We estimate that the total charge to our shareholders' equity will be
$115.0 million to $135.0 million after tax in the quarter ending July 31, 2001,
because we have already reduced equity for the cumulative foreign translation
adjustment incurred in each period we have owned these businesses.

Definitive agreement to sell Mexican operations

     On June 4, 2001, we announced that we entered into a definitive agreement
with Jardines del Tiempo, S.A. de C.V. and Jardine de la Esperanza, S.A. de C.V.
for the sale of our Mexican operations, which include five funeral homes. The
agreement, which resulted from arms-length negotiations, provides that the
purchase price shall be 461,561,801 Mexican pesos, less (i) an amount the buyers
shall advance to us to pay in full promissory notes in the original principal
amounts of US$30,150,000 and US$5,200,000,
                                        5
   17

respectively, provided that this amount shall not be greater than 461,561,801
Mexican pesos, plus (ii) a net liquid asset amount to be calculated in
accordance with the terms of the purchase agreement. The net proceeds from the
sale will be approximately US$70 million, before taxes. The net proceeds of
approximately US$70 million, before taxes will be used to repay debt in
accordance with our deleveraging strategy. We expect to recognize a small gain
or loss on the sale, although the exact amount will depend on the exchange rate
of the Mexican peso and the U.S. dollar at the time of closing. The transaction
is scheduled to close in August 2001 and is subject to customary closing
conditions. For pro forma financial information giving effect to the sale of our
Mexican operations, see "Unaudited Pro Forma Financial Information" beginning on
page P-1 of this prospectus.

Other noncash charges

     We have identified certain assets, primarily excess cemetery property and
funeral home real estate, that we expect to sell, which have an aggregate net
asset value of approximately $20.0 million. In addition, we have reviewed
noncompetition agreements that we entered into with sellers, key employees and
others in connection with our previous acquisitions. We are considering
relieving some of these individuals from the obligation not to compete, although
we would continue to make the payments in accordance with the contract terms.
This obligation, which we previously recorded, will be classified as "Other
long-term liabilities" on the balance sheet. As a result of the foregoing, we
estimate that we would incur an aggregate pre-tax noncash charge to earnings of
$15.0 million to $30.0 million ($9.0 million to $18.0 million, after tax) in the
third quarter of fiscal year 2001.

Accounting for goodwill

     On June 29, 2001, the Financial Accounting Standards Board approved its
proposed Statement of Financial Accounting Standards ("SFAS") 142, "Goodwill and
Other Intangible Assets." SFAS 142 will require that goodwill no longer be
amortized, but does require that goodwill be tested for impairment using a fair
value approach on an annual basis and between annual tests in certain
circumstances. Companies will be allowed six months from the date of adoption to
complete a transitional goodwill impairment test. The provisions of SFAS 142
will be effective for fiscal years beginning after December 15, 2001. However,
early adoption of SFAS 142 will be permitted for companies with a fiscal year
beginning after March 15, 2001, provided their first quarter financial
statements have not been previously issued. In all cases, SFAS 142 must be
adopted at the beginning of a fiscal year. Therefore, we can elect to early
adopt the provisions of SFAS 142 in the first quarter of fiscal year 2002 or
adopt the provisions in the first quarter of fiscal year 2003. We have not
completed our review and analysis; however, based upon our initial
interpretation of SFAS 142 and if it were effective as of April 30, 2001, our
preliminary estimate is that we would incur a pre-tax noncash impairment charge
of between $100.0 million and $300.0 million for our domestic operations. Our
foreign operations will not be affected as they will have been previously marked
to fair value. However, we will no longer be required to amortize goodwill,
which amounted to $19.6 million ($14.4 million related to domestic operations)
in fiscal year 2000. Changes in the fair value of our relevant businesses could
change our estimated impairment charge materially. See the section "Management's
Discussion and Analysis of Financial Condition and Results of Operations" under
the heading "Recent Accounting Standards."

                            REFINANCING TRANSACTIONS

     Concurrently with the sale of the outstanding notes on June 29, 2001, we
entered into a credit agreement that provides up to a maximum of $550.0 million
of senior secured credit facilities. The new senior secured credit facilities
consist of:

     - $175.0 million four-year revolving credit facility,

     - $75.0 million 18-month asset sale term loan, and

     - $300.0 million five-year term loan B.

                                        6
   18

     We used the funds from the sale of the outstanding notes and the senior
secured credit facilities, along with a portion of our cash and cash
equivalents, to:

     - refinance our revolving credit facility,

     - retire our privately held senior notes,

     - complete an offer to purchase approximately $200.0 million in principal
       amount of our $300.0 million publicly held senior notes, and

     - pay related tender premiums, prepayment penalties, fees and expenses.

     The table below summarizes our sources and uses of funds from these
transactions, which we refer to in this prospectus as the "refinancing
transactions," as of June 29, 2001:



                                                                   AMOUNT
                                                               --------------
                                                               (IN THOUSANDS)
                                                            
SOURCES OF FUNDS
Cash and cash equivalents...................................      $ 12,162
New senior secured credit facilities:
  Revolving credit facility.................................        50,000
  Asset sale term loan......................................        75,000
  Term loan B...............................................       300,000
10 3/4% senior subordinated notes due 2008..................       300,000
                                                                  --------
          Total sources.....................................      $737,162
                                                                  ========
USES OF FUNDS
Repayment of revolving credit facility......................      $442,000
Tender for a portion of the 6.40% ROARS due 2013
  (remarketing date 2003)(1)................................       100,103
Tender for the 6.70% Notes due 2003(1)......................        99,900
Redemption of privately held senior notes...................        64,762
Tender premiums, prepayment penalties, fees and
  expenses(2)...............................................        30,397
                                                                  --------
          Total uses........................................      $737,162
                                                                  ========


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

(1) On May 15, 2001, we commenced an offer to purchase approximately $200.0
    million in principal amount of our $300.0 million publicly held senior
    notes, which consisted of $100.0 million 6.70% Notes and $200.0 million
    6.40% ROARS. On June 29, 2001, we repurchased $99.9 million of the 6.70%
    Notes and approximately $100.1 million of the 6.40% ROARS. The remaining
    6.70% Notes and 6.40% ROARS are secured equally and ratably with the new
    senior secured credit facilities. See the section "Description of Certain
    Indebtedness and the Tender Offer."

(2) Includes $7.6 million for tender offer premiums, prepayment penalties on the
    privately held senior notes and a payment relating to the 6.40% ROARS
    purchased in the tender offer.

     In connection with the refinancing transactions, we estimate that we will
incur net charges of approximately $28.9 million, which represents tender
premiums, prepayment penalties and fees and expenses totaling $30.4 million and
a write-off of fees relating to existing debt of $.7 million, reduced by a $2.3
million write-off of 50 percent of the remaining unamortized 6.40% ROARS
remarketing option premium. Of the $28.9 million total, approximately $13.5
million (approximately $8.5 million after taxes) will be recorded during the
period the refinancing transactions are completed, and the remaining $15.4
million will be amortized over the term of the related debt instruments, which
ranges from four to seven years.

     We entered into these transactions primarily to improve our liquidity by
(1) retiring our existing $600.0 million revolving credit facility, which was
scheduled to mature on April 30, 2002, and replacing it with a new revolving
credit facility with a four-year term, and (2) generally extending the
maturities on the

                                        7
   19

remaining long-term debt in our capital structure (except with respect to the
18-month asset sale term loan). The asset sale term loan will provide us with
shorter-term financing as we pursue the sale of our foreign operations, excess
cemetery property and certain other assets. We project that if we do not sell
any assets, our cash from operations and cash and cash equivalents, along with
amounts available under the new revolving credit facility, will be sufficient to
allow us to pay the asset sale term loan when it becomes due.

     For additional information, see "Capitalization" and "Description of
Certain Indebtedness and the Tender Offer."

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

     Our principal executive offices are located at 110 Veterans Memorial
Boulevard, Metairie, Louisiana 70005, and our telephone number is (504)
837-5880.

                                        8
   20

                         SUMMARY OF THE EXCHANGE OFFER

The Initial Offering of
Outstanding Notes..........  We sold the outstanding notes on June 29, 2001 to
                             Banc of America Securities LLC, Deutsche Banc Alex.
                             Brown Inc., Credit Lyonnais Securities (USA) Inc.
                             and SunTrust Equitable Securities Corporation. We
                             collectively refer to those parties in this
                             prospectus as the "Initial Purchasers." The Initial
                             Purchasers subsequently resold the outstanding
                             notes to qualified institutional buyers pursuant to
                             Rule 144A under the Securities Act of 1933, as
                             amended and to non-U.S. Persons within the meaning
                             of Regulation S under the Securities Act.

Registration Rights
Agreement..................  Simultaneously with the initial sale of the
                             outstanding notes, we entered into a registration
                             rights agreement for the exchange offer. In the
                             registration rights agreement, we agreed, among
                             other things, to use our reasonable best efforts to
                             complete a registered exchange offer for the
                             outstanding notes or cause to become effective a
                             shelf registration statement for resales of the
                             outstanding notes. The exchange offer is intended
                             to satisfy your rights under the registration
                             rights agreement. After the exchange offer is
                             complete, you will no longer be entitled to any
                             exchange or registration rights with respect to
                             your outstanding notes.

The Exchange Offer.........  We are offering to exchange the exchange notes
                             which have been registered under the Securities Act
                             for your outstanding notes. In order to be
                             exchanged, an outstanding note must be properly
                             tendered and accepted. All outstanding notes that
                             are validly tendered and not validly withdrawn will
                             be exchanged. We will issue exchange notes promptly
                             after the expiration of the exchange offer.

Resales....................  We believe that the exchange notes issued in the
                             exchange offer may be offered for resale, resold
                             and otherwise transferred by you without compliance
                             with the registration and prospectus delivery
                             provisions of the Securities Act provided that:

                             - the exchange notes are being acquired in the
                               ordinary course of your business;

                             - you are not participating, do not intend to
                               participate, and have no arrangement or
                               understanding with any person to participate, in
                               the distribution of the exchange notes issued to
                               you in the exchange offer; and

                             - you are not an affiliate of ours.

                             If any of these conditions are not satisfied and
                             you transfer any exchange notes issued to you in
                             the exchange offer without delivering a prospectus
                             meeting the requirements of the Securities Act or
                             without an exemption from registration of your
                             exchange notes from these requirements, you may
                             incur liability under the Securities Act. We will
                             not assume, nor will we indemnify you against, any
                             such liability.

                             Each broker-dealer that is issued exchange notes in
                             the exchange offer for its own account in exchange
                             for outstanding notes that were acquired by that
                             broker-dealer as a result of market-making or other
                             trading activities, must acknowledge that it will
                             deliver a prospectus meeting the requirements of
                             the Securities Act in connection with any resale of
                             the

                                        9
   21

                             exchange notes. A broker-dealer may use this
                             prospectus for an offer to resell, resale or other
                             retransfer of the exchange notes issued to it in
                             the exchange offer.

Expiration Date............  The exchange offer will expire at 5:00 p.m., New
                             York City time,                       , 2001,
                             unless we decide to extend the expiration date.

Conditions to the Exchange
Offer......................  The exchange offer is subject to customary
                             conditions, including that it does not violate
                             applicable law or any applicable interpretation of
                             the staff of the SEC.

Procedures for Tendering
Outstanding Notes..........  If you wish to tender your outstanding notes for
                             exchange in this exchange offer, you must transmit
                             to the exchange agent on or before the expiration
                             date either:

                             - An original or a facsimile of a properly
                               completed and duly executed copy of the letter of
                               transmittal, which accompanies this prospectus,
                               together with your outstanding notes and any
                               other documentation required by the letter of
                               transmittal, at the address provided on the cover
                               page of the letter of transmittal; or

                             - If the outstanding notes you own are held of
                               record by The Depository Trust Company, or "DTC,"
                               in book-entry form and you are making delivery by
                               book-entry transfer, a computer-generated message
                               transmitted by means of the Automated Tender
                               Offer Program System of DTC, or "ATOP," in which
                               you acknowledge and agree to be bound by the
                               terms of the letter of transmittal and which,
                               when received by the exchange agent, forms a part
                               of a confirmation of book-entry transfer. As part
                               of the book-entry transfer, DTC will facilitate
                               the exchange of your outstanding notes and update
                               your account to reflect the issuance of the
                               exchange notes to you. ATOP allows you to
                               electronically transmit your acceptance of the
                               exchange offer to DTC instead of physically
                               completing and delivering a letter of transmittal
                               to the exchange agent.

                             In addition, you must deliver to the exchange agent
                             on or before the expiration date:

                             - If you are effecting delivery by book-entry
                               transfer, a timely confirmation of book-entry
                               transfer of your outstanding notes into the
                               account of the exchange agent at DTC; or

                             - If necessary, the documents required for
                               compliance with the guaranteed delivery
                               procedures.

Special Procedures for
Beneficial Owners..........  If you are the beneficial owner of book-entry
                             interests and your name does not appear on a
                             security position listing of DTC as the holder of
                             the book-entry interests or if you are a beneficial
                             owner of outstanding notes that are registered in
                             the name of a broker, dealer, commercial bank,
                             trust company or other nominee and you wish to
                             tender the book-entry interest or outstanding notes
                             in the exchange offer, you should contact the
                             person in whose name your book-entry interests or

                                        10
   22

                             outstanding notes are registered promptly and
                             instruct that person to tender on your behalf.

Withdrawal Rights..........  You may withdraw the tender of your outstanding
                             notes at any time prior to 5:00 p.m., New York City
                             time on             , 2001.

Federal Income Tax
Considerations.............  We believe that the exchange of outstanding notes
                             will not be a taxable event for U.S. federal income
                             tax purposes.

Use of Proceeds............  We will not receive any proceeds from the issuance
                             of exchange notes pursuant to the exchange offer.
                             We will pay all of our expenses incident to the
                             exchange offer.

Exchange Agent.............  Firstar Bank, N.A. is serving as the exchange agent
                             in connection with the exchange offer.

                                        11
   23

                     SUMMARY OF TERMS OF THE EXCHANGE NOTES

     The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes, except that the exchange notes will be registered
under the Securities Act. As a result, the exchange notes will not bear legends
restricting their transfer and will not contain the registration rights and
liquidated damages provisions contained in the outstanding notes. The exchange
notes represent the same debt as the outstanding notes. Both the outstanding
notes and the exchange notes are governed by the same indenture. Unless
otherwise required by the context, we use the term "notes" in this prospectus to
refer collectively to the outstanding notes and the exchange notes.

Issuer.....................  Stewart Enterprises, Inc., a Louisiana corporation.

Securities.................  $300.0 million in principal amount of 10 3/4%
                             senior subordinated notes due 2008.

Maturity...................  July 1, 2008.

Interest...................  Annual rate: 10 3/4%.
                             Payment frequency: every six months on January 1
                             and July 1.
                             First payment: January 1, 2002.

Guarantees.................  All of our existing and future direct and indirect
                             domestic subsidiaries, except for specified
                             subsidiaries, will be guarantors of the exchange
                             notes on a senior subordinated basis.

Ranking....................  The exchange notes and the guarantees of the
                             exchange notes will be general unsecured senior
                             subordinated obligations of Stewart and each
                             guarantor, respectively, and will rank junior to
                             all existing and future senior debt and equal to or
                             senior to all other existing or future debt of
                             Stewart and each guarantor, respectively. In
                             addition, the exchange notes will rank structurally
                             behind the liabilities of any of our subsidiaries
                             that are not guarantors.

                             Immediately after completing the initial offering
                             of the outstanding notes and the related
                             refinancing transactions on June 29, 2001, the
                             outstanding notes were subordinated to
                             approximately $539.2 million of our senior debt and
                             the subsidiary guarantees were subordinated to
                             approximately $551.5 million of senior debt of the
                             subsidiary guarantors, $431.5 million of which
                             represented guarantees of our senior debt. We are
                             required to maintain a bond ($41.1 million as of
                             April 30, 2001) to guarantee our obligations
                             relating to funds we withdrew from our preneed
                             funeral trusts in Florida. This amount would become
                             senior debt if we were to borrow funds under the
                             revolving credit facility to extinguish the bond
                             obligation by returning to the trusts the amounts
                             we previously withdrew that relate to the remaining
                             preneed contracts.

Optional Redemption........  On or after July 1, 2005, we may redeem some or all
                             of the notes at any time at the redemption prices
                             described in the section "Description of
                             Notes -- Optional Redemption."

                             Prior to July 1, 2004, we may redeem up to 35
                             percent of the notes with the net cash proceeds
                             from specified equity offerings at the redemption
                             price listed in the section "Description of Notes"
                             under the heading "Optional Redemption." We may,
                             however, only make such redemptions if at least 65
                             percent of the aggregate principal amount of notes
                             originally issued remains outstanding after such
                             redemptions.

                                        12
   24

Mandatory Offer to
Repurchase.................  If we experience specific kinds of changes in
                             control, we must offer to purchase the notes at 101
                             percent of their face amount, plus accrued
                             interest.

Certain Covenants..........  The indenture under which the outstanding notes
                             were issued will govern the exchange notes. This
                             indenture contains covenants that limit our ability
                             and the ability of our restricted subsidiaries to:

                             - borrow money;
                             - create liens;
                             - pay dividends on or redeem or repurchase stock;
                             - make investments;
                             - sell stock in our restricted subsidiaries;
                             - restrict dividends or other payments from
                               subsidiaries;
                             - enter into transactions with affiliates; and
                             - sell assets or merge with other companies.

                             For more details, see the section "Description of
                             Notes."

     You should refer to the section "Risk Factors" for an explanation of some
risks of participating in the exchange offer.

                                        13
   25

         SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA

     The following table sets forth our selected historical consolidated
financial and operating data as of and for the five fiscal years ended October
31, 1996, 1997, 1998, 1999 and 2000, which have been derived from our audited
consolidated financial statements, and as of and for the six months ended April
30, 2000 and 2001, which have been derived from our unaudited consolidated
financial statements. Financial data for the five fiscal years 1996, 1997, 1998,
1999 and 2000 and the six months ended April 30, 2000 do not reflect our
implementation of SAB 101. Financial data for the six months ended April 30,
2001 reflect our implementation of SAB 101 in the first quarter of fiscal year
2001. The results of operations for the six months ended April 30, 2001 are not
necessarily indicative of the results for the full year.



                                                                                                       SIX MONTHS ENDED
                                                    YEAR ENDED OCTOBER 31,(1)                              APRIL 30,
                                -----------------------------------------------------------------   -----------------------
                                   1996         1997          1998          1999          2000       2000(1)      2001(2)
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
                                          (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                   (UNAUDITED)
                                                                                            
STATEMENT OF EARNINGS DATA:
Revenues:
 Funeral......................  $  225,461   $  291,649    $  379,095    $  445,877    $  451,852   $  238,387   $  215,307
 Cemetery.....................     207,926      240,937       269,270       310,231       282,949      143,434      132,322
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
 Total revenues...............     433,387      532,586       648,365       756,108       734,801      381,821      347,629
Gross profit:
 Funeral......................      72,239       89,235       118,426       126,875       116,689       65,538       50,335
 Cemetery.....................      45,879       67,937        77,558        83,526        62,351       32,954       33,965
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
 Total gross profit...........     118,118      157,172       195,984       210,401       179,040       98,492       84,300
Corporate general and
 administrative expenses......     (14,096)     (15,402)      (16,621)      (19,161)      (19,763)     (10,143)      (9,066)
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
Operating earnings before
 performance-based stock
 options......................     104,022      141,770       179,363       191,240       159,277       88,349       75,234
Performance-based stock
 options......................          --           --       (76,762)(3)        --            --           --           --
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
Operating earnings............     104,022      141,770       102,601(3)    191,240       159,277       88,349       75,234
Interest expense, net.........     (24,435)     (36,425)      (41,792)      (52,174)      (56,284)     (29,030)     (25,783)
Other income, net.............       2,488        1,132         4,155         3,485         2,194          796        3,184
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
Earnings before income taxes
 and cumulative effect of
 change in accounting
 principles...................      82,075      106,477        64,964(3)    142,551       105,187       60,115       52,635
Income taxes..................     (30,778)     (36,735)      (23,062)      (52,031)      (38,393)     (21,942)     (19,212)
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
Earnings before cumulative
 effect of change in
 accounting principles........      51,297       69,742        41,902(3)     90,520        66,794       38,173       33,423
Cumulative effect of change in
 accounting principles........          --       (2,324)(1)        --       (50,101)(1)        --           --     (250,004)(2)
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
Net earnings (loss)...........  $   51,297   $   67,418    $   41,902(3) $   40,419    $   66,794   $   38,173   $ (216,581)
                                ==========   ==========    ==========    ==========    ==========   ==========   ==========
Earnings per share before
 cumulative effect (basic)....  $     0.62   $     0.79    $     0.43    $     0.84    $     0.63   $     0.36   $     0.31
Earnings (loss) per share
 (basic)......................        0.62         0.76          0.43          0.37          0.63         0.36        (2.02)
Earnings per share before
 cumulative effect
 (diluted)....................        0.61         0.78          0.43          0.84          0.63         0.36         0.31
Earnings (loss) per share
 (diluted)....................        0.61         0.75          0.43          0.37          0.63         0.36        (2.02)
Pro forma amounts assuming
 2001 change in accounting
 principles was applied
 retroactively:
   Net earnings(4)............                             $    7,167    $   65,329    $   57,449   $   33,180
                                                           ==========    ==========    ==========   ==========
   Basic earnings per common
     share(4).................                             $     0.07    $     0.61    $     0.54   $     0.31
   Diluted earnings per common
     share(4).................                                   0.07          0.61          0.54         0.31


                                        14
   26



                                                                                                       SIX MONTHS ENDED
                                                    YEAR ENDED OCTOBER 31,(1)                              APRIL 30,
                                -----------------------------------------------------------------   -----------------------
                                   1996         1997          1998          1999          2000       2000(1)      2001(2)
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
                                          (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                   (UNAUDITED)
                                                                                            
OTHER FINANCIAL DATA:
EBITDA(5).....................  $  129,911   $  172,951    $  145,498    $  245,345    $  215,738   $  117,852   $  117,561
Depreciation and
 amortization.................      23,401       30,049        38,742        50,620        54,267       28,707       39,143
Capital expenditures..........      26,332       44,405        44,805        54,883        36,017       23,627       11,246
Ratio of earnings to fixed
 charges(6)...................        4.0x         3.6x          2.4x          3.4x          2.6x         2.9x         2.7x
Pro forma ratio of earnings to
 fixed charges(7).............                                                               2.1x                      2.2x
BALANCE SHEET DATA:
Cash and cash equivalents.....  $   24,580   $   31,640    $   30,733    $   30,877    $   91,595   $   74,174   $  103,721
Total assets..................   1,360,913    1,637,238     2,048,938     2,283,880     2,337,008    2,341,407    3,678,046
Total debt....................     520,141      558,324       924,434       951,413       950,527      963,653      866,373
Shareholders' equity..........     547,447      819,570       839,290     1,056,612     1,074,657    1,070,978      872,930
CONSOLIDATED OPERATING DATA:
Funeral homes in operation at
 end of period................         298          401           558           635           627          628          612
At-need funerals performed....      38,351       61,682        87,653       111,250       111,136       58,496       54,380
Preneed funerals performed....      15,422       18,970        23,563        26,490        27,042       14,100       14,274
                                ----------   ----------    ----------    ----------    ----------   ----------   ----------
 Total funerals performed.....      53,773       80,652       111,216       137,740       138,178       72,596       68,654
Preneed funerals sold.........      37,545       48,676        59,112        58,430        48,844       25,057       18,457
Backlog of preneed funerals at
 end of period................     294,829      350,031       391,226       436,499       446,158      440,909      440,628
Cemeteries in operation at end
 of period....................         120          129           140           157           163          162          161
Interments performed..........      43,129       46,782        50,201        57,759        61,196       31,879       31,162
Estimated future value of
 backlog(8)...................  $1,024,661   $1,185,256    $1,222,752    $1,430,319    $1,476,341   $1,474,264   $2,521,948


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

(1) Effective November 1, 1998, we changed our method of accounting for earnings
    realized on our irrevocable preneed funeral merchandise and services trust
    funds and escrow accounts. For further details, see Note 3 to our
    consolidated financial statements for fiscal years 2000, 1999 and 1998. The
    cumulative effect of that change in accounting principle was a $50.1 million
    reduction in net earnings, net of a $28.8 million income tax benefit.
    Effective November 1, 1996, we changed our method of accounting for our
    irrevocable preneed funeral merchandise and services trust funds and escrow
    accounts and cemetery sales. The cumulative effect of that change in
    accounting principle was a $2.3 million reduction in net earnings, net of a
    $2.2 million income tax benefit. Information presented for fiscal year 1999,
    fiscal year 2000 and the six months ended April 30, 2000 reflects the fiscal
    year 1999 change in accounting principle. Information presented for fiscal
    years 1998 and 1997 reflects the fiscal year 1997 change in accounting
    principle. Information presented for fiscal year 1996 reflects results as
    originally reported under the accounting methods then in effect.

(2) Reflects our implementation of SAB 101 in the first quarter of fiscal year
    2001. See "Implementation of SAB 101" in the section "Management's
    Discussion and Analysis of Financial Condition and Results of Operations"
    and Note 2 to our unaudited consolidated financial statements for the six
    months ended April 30, 2001 and 2000. The cumulative effect of that change
    in accounting principles was a $250.0 million reduction in net earnings, net
    of a $166.7 million income tax benefit.

(3) Includes a nonrecurring, noncash charge of $76.8 million ($50.3 million or
    $.51 per share, after tax) recorded during the second quarter of fiscal year
    1998 in connection with the vesting of our performance-based stock options.
    Excluding that charge, operating earnings, earnings before income taxes and
    net earnings for fiscal year 1998 were $179.4 million, $141.7 million, and
    $92.2 million, respectively.

(4) The selected data presented for fiscal years 1998, 1999 and 2000 and for the
    six months ended April 30, 2000 are reported on a pro forma basis as if the
    implementation of SAB 101 had occurred at the beginning of each respective
    period. The selected data for fiscal years 1996 and 1997 are not presented
    on a pro forma basis as it was impractical for us to obtain the amounts on a
    pro forma basis for these years.

                                        15
   27

(5) "EBITDA" means earnings before the cumulative effect of changes in
    accounting principles and before net interest expense, taxes, depreciation
    and amortization. EBITDA for fiscal year 1998 includes the effect of a
    nonrecurring, noncash charge of $76.8 million recorded in connection with
    the vesting of our performance-based stock options; excluding the charge,
    EBITDA was $222.3 million. EBITDA is frequently used by security analysts
    and is presented here to provide additional information about our
    operations. EBITDA should not be considered as an alternative to net
    earnings, as an indicator of our operating performance or as an alternative
    to cash flows as a better measure of our liquidity. EBITDA is a non-GAAP
    measure and as calculated by us may not be comparable to EBITDA as
    calculated by other companies. EBITDA as shown in this table is different
    from our historical presentation of EBITDA. Historically, we have included
    in EBITDA earnings before gross interest expense, instead of net interest
    expense. Gross interest expense for fiscal years 1996, 1997, 1998, 1999 and
    2000 was $26.1 million, $38.0 million, $43.8 million, $54.7 million and
    $61.4 million, respectively. Gross interest expense for the six months ended
    April 30, 2000 and 2001 was $30.0 million and $29.5 million, respectively.

(6) For purposes of computing the ratio of earnings to fixed charges, earnings
    consist of pretax earnings plus fixed charges (excluding interest
    capitalized during the period). Fixed charges consist of gross interest
    expense, capitalized interest, amortization of debt expense and discount or
    premium relating to any indebtedness, and the portion of rental expense that
    we believe to be representative of the interest component of rental expense.
    1997, 1999 and 2001 exclude the cumulative effect of changes in accounting
    principles. Pretax earnings for fiscal year 1998 include a nonrecurring,
    noncash charge of $76.8 million in connection with the vesting of
    performance-based stock options. Excluding the charge, our ratio of earnings
    to fixed charges for fiscal year 1998 would have been 4.0x.

(7) For purposes of computing the pro forma ratio of earnings to fixed charges,
    the $291.8 million of proceeds from the outstanding notes were applied pro
    rata to the debt which was refinanced on June 29, 2001 as shown in
    "Refinancing Transactions."

(8) The estimated future value of the backlog represents the face value of the
    backlog plus the earnings that are projected on the funds held in trust,
    assuming an average yield of 8.6 percent and a build-up in the face value of
    insurance contracts. It assumes no future sales and assumes maturities of
    the existing contracts over a weighted average life of about ten years,
    which is consistent with our experience. While the investment yield over the
    past five years has been in this range, there is no guarantee that future
    yields will be at this level. See "Risk Factors -- Earnings from and
    principal of our trust funds and escrow accounts could be reduced by changes
    in stock and bond prices and interest and dividend rates or by declines in
    the size of the funds." For the fiscal years ending 1996, 1997, 1998, 1999
    and 2000 and the six months ending April 30, 2000 and 2001, the value of the
    preneed backlog, excluding any future earnings on the funds held in trust
    and any build-up in the face value of insurance contracts, but including
    earnings realized to date on the funds held in trust, was $.8 billion, $.9
    billion, $1.0 billion, $1.1 billion, $1.2 billion, $1.2 billion and $1.9
    billion, respectively. The estimated future value of our backlog is
    primarily related to our domestic operations. Of the $2.5 billion estimated
    future value of our backlog at April 30, 2001, $2.3 billion was related to
    our domestic operations.

                                        16
   28

    SUMMARY SUPPLEMENTAL PRO FORMA CONSOLIDATED FINANCIAL AND OPERATING DATA

     The following table sets forth our summary supplemental pro forma
consolidated financial and operating data. Financial and operating data for
fiscal years 1998, 1999 and 2000 and for the six months ended April 30, 2000 are
presented on a pro forma basis to reflect the implementation of SAB 101, as if
it had been in effect during all periods presented. Financial and operating data
for the six months ended April 30, 2001 are derived from our unaudited
historical consolidated financial statements and reflect the implementation of
SAB 101. Financial data with respect to the last twelve months ended April 30,
2001 are presented on a pro forma basis to reflect the implementation of SAB 101
and are adjusted to give effect to the offering of the notes and the other
refinancing transactions set forth in "Use of Proceeds." This summary
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Selected Historical
Consolidated Financial and Operating Data" and our consolidated financial
statements and related notes contained elsewhere in this prospectus.



                                                                                                             ADJUSTED
                                                                                 SIX MONTHS ENDED       TWELVE MONTHS ENDED
                                            YEAR ENDED OCTOBER 31,                   APRIL 30,               APRIL 30,
                                   ----------------------------------------   -----------------------   -------------------
                                      1998           1999           2000         2000         2001          2001(1)(2)
                                   ----------     ----------     ----------   ----------   ----------   -------------------
                                                              (UNAUDITED, DOLLARS IN THOUSANDS)
                                                                                      
STATEMENT OF EARNINGS DATA:
Revenues:
  Funeral........................  $  332,871     $  405,353     $  425,556   $  223,709   $  215,307       $  417,154
  Cemetery.......................     242,492        289,633        287,791      146,986      132,322          273,127
                                   ----------     ----------     ----------   ----------   ----------       ----------
  Total revenues.................     575,363        694,986        713,347      370,695      347,629          690,281
Gross profit:
  Funeral........................      86,269        106,149        102,496       57,724       50,335           95,107
  Cemetery.......................      55,863         64,581         61,829       32,906       33,965           62,888
                                   ----------     ----------     ----------   ----------   ----------       ----------
  Total gross profit.............     142,132        170,730        164,325       90,630       84,300          157,995
Corporate general and
  administrative expenses........     (16,621)       (19,161)       (19,763)     (10,143)      (9,066)         (18,686)
                                   ----------     ----------     ----------   ----------   ----------       ----------
Operating earnings before
  performance-based stock
  options........................     125,511        151,569        144,562       80,487       75,234          139,309
Performance-based stock
  options........................     (76,762)(3)         --             --           --           --               --
                                   ----------     ----------     ----------   ----------   ----------       ----------
Operating earnings...............      48,749(3)     151,569        144,562       80,487       75,234          139,309
Interest expense, net............     (41,792)       (52,174)       (56,284)     (29,030)     (25,783)         (74,861)
Other income, net................       4,155          3,485          2,194          796        3,184            4,582
                                   ----------     ----------     ----------   ----------   ----------       ----------
Earnings before income taxes and
  cumulative effect of change in
  accounting principles..........      11,112(3)     102,880         90,472       52,253       52,635           69,030
Earnings before cumulative effect
  of change in accounting
  principles.....................       7,167(3)      65,329         57,449       33,180       33,423           43,834
Cumulative effect of change in
  accounting principles..........          --             --(4)          --           --     (250,004)(5)           --
                                   ----------     ----------     ----------   ----------   ----------       ----------
Net earnings (loss)..............  $    7,167(3)  $   65,329     $   57,449   $   33,180   $ (216,581)      $   43,834
                                   ==========     ==========     ==========   ==========   ==========       ==========
OTHER FINANCIAL DATA:
EBITDA(6)........................  $  113,320     $  228,496     $  224,267   $  122,240   $  117,561       $  219,588
Depreciation and amortization....      60,416         73,442         77,511       40,957       39,143           75,697
Capital expenditures.............      44,805         54,883         36,017       23,627       11,246           23,636
Ratio of total debt to EBITDA....                                                                                 3.9x
Ratio of EBITDA to interest
  expense, net...................                                                                                 2.9x
BALANCE SHEET DATA:
Total assets.....................                                                          $3,678,046       $3,680,575
Total debt.......................                                                             866,373          852,281
Shareholders' equity.............                                                             872,930          864,392
CONSOLIDATED OPERATING DATA:
Funeral homes in operation at end
  of period......................         558            635            627          628          612              612


                                        17
   29



                                                                                                             ADJUSTED
                                                                                 SIX MONTHS ENDED       TWELVE MONTHS ENDED
                                            YEAR ENDED OCTOBER 31,                   APRIL 30,               APRIL 30,
                                   ----------------------------------------   -----------------------   -------------------
                                      1998           1999           2000         2000         2001          2001(1)(2)
                                   ----------     ----------     ----------   ----------   ----------   -------------------
                                                              (UNAUDITED, DOLLARS IN THOUSANDS)
                                                                                      
At-need funerals performed.......      87,653        111,250        111,136       58,496       54,380          107,020
Preneed funerals performed.......      23,563         26,490         27,042       14,100       14,274           27,216
                                   ----------     ----------     ----------   ----------   ----------       ----------
        Total funerals
          performed..............     111,216        137,740        138,178       72,596       68,654          134,236
Preneed funerals sold............      59,112         58,430         48,844       25,057       18,457           42,244
Backlog of preneed funerals at
  end of period..................     391,226        436,499        446,158      440,909      440,628          440,628
Cemeteries in operation at end of
  period.........................         140            157            163          162          161              161
Interments performed.............      50,201         57,759         61,196       31,879       31,162           60,479
Estimated future value of
  backlog(7).....................  $2,227,308     $2,477,358     $2,564,427   $2,541,618   $2,521,948(8)    $2,521,948
DOMESTIC OPERATING DATA:
Funeral homes in operation at end
  of period......................         292            330            325          326          321              321
At-need funerals performed.......      45,471         52,307         52,854       28,355       27,645           52,144
Preneed funerals performed.......      19,373         22,205         23,169       12,143       12,159           23,185
                                   ----------     ----------     ----------   ----------   ----------       ----------
        Total funerals
          performed..............      64,844         74,512         76,023       40,498       39,804           75,329
Preneed funerals sold............      48,253         45,413         37,987       19,771       13,640           31,856
Backlog of preneed funerals at
  end of period..................     313,615        352,652        358,984      355,617      354,059          354,059
Cemeteries in operation at end of
  period.........................         131            147            153          152          151              151
Interments performed.............      46,492         51,916         56,272       29,405       28,796           55,663


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

(1) Adjustments consist of (1) pro forma interest expense, net of interest
    income, as if the refinancing transactions had occurred on May 1, 2000,
    including amortization of deferred financing fees, (2) adjusted pro forma
    total long-term debt as if the refinancing transactions had occurred on
    April 30, 2001, and (3) pro forma shareholders' equity as if the refinancing
    transactions had occurred on April 30, 2001, reflecting a reduction of
    approximately $8.5 million for the after-tax effect of charges to be
    recorded in the period the refinancing transactions are completed. The ratio
    of total debt to EBITDA is based on adjusted pro forma total long-term debt
    as if the refinancing transactions had occurred on April 30, 2001.

(2) As a result of the definitive agreement for the sale of our Mexican
    operations, which was announced subsequent to April 30, 2001, we expect to
    receive net proceeds of approximately US$70 million, before taxes. The net
    proceeds of approximately US$70 million, before taxes will be used to repay
    debt in accordance with our deleveraging strategy. See "Recent
    Developments -- Definitive agreement to sell Mexican operations." Our
    operations in Mexico include five funeral homes. Had this transaction
    occurred on May 1, 2000 our adjusted pro forma results for the twelve months
    ended April 30, 2001 would have been as follows:



                                                                ADJUSTED
                                                              TWELVE MONTHS
                                                                  ENDED
                                                                APRIL 30,
                                                              -------------
                                                                  2001
                                                              -------------
                                                           
Revenues:
  Funeral...................................................    $396,139
  Cemetery..................................................     272,013
                                                                --------
Total revenues..............................................     668,152
EBITDA......................................................     208,505
Total debt..................................................     782,281
Interest expense, net.......................................     (71,254)
Ratio of total debt to EBITDA...............................        3.8x
Ratio of EBITDA to interest expense, net....................        2.9x


                                        18
   30

   See "Unaudited Pro Forma Financial Information" beginning on page P-1 for
   other pro forma financial information giving effect to the sale of the
   Mexican operations.

(3) Includes a nonrecurring, noncash charge of $76.8 million ($50.3 million,
    after tax) recorded during the second quarter of fiscal year 1998 in
    connection with the vesting of our performance-based stock options.
    Excluding that charge, operating earnings, earnings before income taxes and
    net earnings for fiscal year 1998 were $125.5 million, $87.9 million, and
    $57.5 million, respectively.

(4) The change in accounting for earnings realized on our irrevocable preneed
    funeral merchandise and services trust funds and escrow accounts made in
    fiscal year 1999 would have been required by SAB 101. As such, when
    presenting the information for 1999, on a pro forma basis, the cumulative
    effect of the 1999 accounting change is not presented.

(5) Although all periods in this table, except the six months ended April 30,
    2001, are presented on a pro forma basis to reflect the implementation of
    SAB 101, SAB 101 was actually implemented in the first quarter of fiscal
    year 2001. This amount represents the cumulative effect of its adoption, net
    of a $166.7 million income tax benefit, as reported.

(6) "EBITDA" means earnings before the cumulative effect of changes in
    accounting principles and before net interest expense, taxes, depreciation
    and amortization. EBITDA for fiscal year 1998 includes the effect of a
    nonrecurring, noncash charge of $76.8 million recorded in connection with
    the vesting of our performance-based stock options; excluding the charge,
    EBITDA (pro forma for SAB 101) was $190.1 million. EBITDA is frequently used
    by security analysts and is presented here to provide additional information
    about our operations. EBITDA should not be considered as an alternative to
    net earnings, as an indicator of our operating performance or as an
    alternative to cash flows as a better measure of our liquidity. EBITDA is a
    non-GAAP measure and as calculated by us may not be comparable to EBITDA as
    calculated by other companies. EBITDA as shown in this table is different
    from our historical presentation of EBITDA. Historically, we have included
    in EBITDA earnings before gross interest expense, instead of net interest
    expense. Gross interest expense for fiscal years 1998, 1999 and 2000 was
    $43.8 million, $54.7 million and $61.4 million, respectively. Gross interest
    expense for the six months ended April 30, 2000 and 2001 was $30.0 million
    and $29.5 million, respectively.

(7) The estimated future value of the backlog represents the face value of the
    backlog plus the earnings that are projected on the funds held in trust,
    assuming an average yield of 8.6 percent and a build-up in the face value of
    insurance contracts. It assumes no future sales and assumes maturities of
    the existing contracts over a weighted average life of approximately ten
    years, which is consistent with our experience. While the investment yield
    over the past five years has been in this range, there is no guarantee that
    future yields will be at this level. See "Risk Factors -- Earnings from and
    principal of our trust funds and escrow accounts could be reduced by changes
    in stock and bond prices and interest and dividend rates or by declines in
    the size of the funds." For fiscal years 1998, 1999 and 2000, and the six
    months ended April 30, 2000 and 2001, the value of the preneed backlog,
    excluding any future earnings on the funds held in trust and any build-up in
    the face value of insurance contracts, but including earnings realized to
    date on the funds held in trust, was $1.7 billion, $1.8 billion, $1.9
    billion, $1.8 billion and $1.9 billion, respectively. The estimated future
    value of our backlog is primarily related to our domestic operations. Of the
    $2.5 billion estimated future value of our backlog at April 30, 2001, $2.3
    billion was related to our domestic operations.

(8) The estimated future value of the backlog declined primarily due to the fact
    that in the first quarter of 2001, we removed $40.0 million from our trust
    funds in Florida and substituted a bond to guarantee performance under the
    related contracts. As such, the calculation for the six months ended April
    30, 2001 assumes we will not realize any trust earnings on the $40.0 million
    we withdrew from the trust but continues to include the $40.0 million in
    principal to be recognized upon delivery.

                                        19
   31

                                  RISK FACTORS

     Before you decide to participate in the exchange offer, you should
carefully consider the following factors in addition to the other information
contained in this prospectus and the documents incorporated by reference in this
prospectus.

                      RISKS RELATED TO THE EXCHANGE OFFER

BECAUSE THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES, YOU MAY NOT BE ABLE TO
RESELL YOUR EXCHANGE NOTES.

     The exchange notes will be registered under the Securities Act, but will
constitute a new issue of securities with no established trading market, and
there can be no assurance as to:

     - the liquidity of any trading market that may develop;

     - the ability of holders to sell their exchange notes; or

     - the price at which the holders would be able to sell their exchange
       notes.

     If a trading market were to develop, the exchange notes might trade at
higher or lower prices than their principal amount or purchase price, depending
on many factors, including prevailing interest rates, the market for similar
securities and our financial performance, as well as by declines in the prices
of securities, or the financial performance or prospects of, similar death care
companies.

     We understand that the Initial Purchasers presently intend to make a market
in the notes. However, they are not obligated to do so, and any market-making
activity with respect to the notes may be discontinued at any time without
notice. In addition, any market-making activity will be subject to the limits
imposed by the Securities Act and the Exchange Act, and may be limited during
the exchange offer or the pendency of an applicable shelf registration
statement. There can be no assurance that an active trading market will exist
for the notes or that any trading market that does develop will be liquid.

     In addition, any outstanding note holder who tenders in the exchange offer
for the purpose of participating in a distribution of the exchange notes may be
deemed to have received restricted securities, and if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. For a description of
these requirements, see "Exchange Offer."

YOUR NOTES WILL NOT BE ACCEPTED FOR EXCHANGE IF YOU FAIL TO FOLLOW THE EXCHANGE
OFFER PROCEDURES AND, AS A RESULT, YOUR NOTES WILL CONTINUE TO BE SUBJECT TO
EXISTING TRANSFER RESTRICTIONS AND YOU MAY NOT BE ABLE TO SELL YOUR NOTES.

     We will not accept your outstanding notes for exchange if you do not follow
the exchange offer procedures. We will issue exchange notes as part of this
exchange offer only after a timely receipt of your outstanding notes, a properly
completed and duly executed letter of transmittal and all other required
documents. Therefore, if you want to tender your outstanding notes, please allow
sufficient time to ensure timely delivery. If we do not receive your outstanding
notes, letter of transmittal and other required documents by the expiration date
of the exchange offer, we will not accept your outstanding notes for exchange.
If there are defects or irregularities with respect to your tender of
outstanding notes, we will not accept such notes for exchange. We are under no
duty to give notification of defects or irregularities with respect to the
tenders of outstanding notes for exchange.

IF YOU DO NOT EXCHANGE YOUR NOTES, YOUR NOTES WILL CONTINUE TO BE SUBJECT TO THE
EXISTING TRANSFER RESTRICTIONS AND YOU MAY NOT BE ABLE TO SELL YOUR NOTES.

     We did not register the outstanding notes, nor do we intend to do so
following the exchange offer. Outstanding notes that are not tendered will
therefore continue to be subject to the existing transfer restrictions and may
be transferred only in limited circumstances under the securities laws. If you
do not exchange your outstanding notes, you will lose your right to have such
notes registered under the federal
                                        20
   32

securities laws. As a result, if you hold outstanding notes after the exchange
offer, you may not be able to sell your outstanding notes.

THE REOFFERING AND RESALE OF THE OUTSTANDING NOTES IS SUBJECT TO SIGNIFICANT
LEGAL RESTRICTIONS.

     The outstanding notes have not been registered under the Securities Act of
1933, as amended, or any state securities laws. As a result, holders of
outstanding notes may reoffer or resell outstanding notes only if:

     - there is an applicable exemption from the registration requirement of the
       Securities Act of 1933 and applicable state laws that applies to the
       circumstances of the offer and sale, or

     - we file a registration statement and it becomes effective.

                           RISKS RELATED TO THE NOTES

WE HAVE A SIGNIFICANT AMOUNT OF DEBT, AND WE MAY INCUR ADDITIONAL DEBT.

     As of April 30, 2001, after giving effect to the refinancing transactions,
our total consolidated long-term debt would have been $852.3 million and our
total consolidated shareholders' equity would have been $864.4 million. See the
section "Capitalization."

     Our significant debt could have important consequences for the holders of
the notes, including:

     - requiring a substantial portion of our cash flow from operations for the
       payment of interest on our debt;

     - limiting our ability to use our cash flow, or to obtain additional
       financing, to fund future working capital, capital expenditures,
       acquisitions and other general corporate purposes;

     - limiting our flexibility to plan for and react to changes in our business
       and industry;

     - increasing our vulnerability to adverse economic and industry conditions;
       and

     - placing us at a competitive disadvantage to less leveraged competitors.

     In addition, we may incur additional debt. Subject to specified
limitations, the indenture permits us and our subsidiaries to incur substantial
additional debt, and our new senior secured credit facilities permit additional
borrowings.

THE $75.0 MILLION ASSET SALE TERM LOAN IS DUE IN 18 MONTHS, AND WE MAY NOT
GENERATE SUFFICIENT CASH OR HAVE SUFFICIENT AVAILABILITY UNDER OUR REVOLVING
CREDIT FACILITY TO PAY THE LOAN WHEN IT BECOMES DUE.

     Our ability to pay the asset sale term loan when it becomes due depends
primarily on our ability to obtain cash from a combination of three main
sources: (1) the sale of our foreign operations, (2) cash generated from
operations, and (3) availability under our new revolving credit facility. We
project that if we do not sell any assets, our cash from operations, along with
amounts available under the new revolving credit facility, should be sufficient
to allow us to pay the loan when it becomes due. However, if we do not sell
significant assets or generate significant cash flow from operations, it is
unlikely that we would be able to draw sufficient funds under the new revolving
credit facility to pay the loan when it becomes due. If we do not pay the asset
sale term loan when it becomes due, there will be an event of default under the
loan, which would cause cross-defaults under the documents governing
substantially all of our senior debt and under the indenture relating to the
notes.

YOUR RIGHT TO RECEIVE PAYMENT ON THE NOTES AND THE GUARANTEES IS JUNIOR TO ALL
OF STEWART ENTERPRISES, INC.'S AND THE SUBSIDIARY GUARANTORS' SENIOR DEBT.

     The notes and the guarantees are general unsecured obligations, junior in
right of payment to all existing and future senior debt of Stewart Enterprises,
Inc. and that of each subsidiary guarantor, respectively, including obligations
under our new senior secured credit facilities, our remaining publicly held
senior notes
                                        21
   33

and approximately $25.0 million in other long-term debt. Immediately after
completing the initial offering of the outstanding notes and the related
refinancing transactions on June 29, 2001, Stewart Enterprises, Inc. had $539.2
million of senior debt and the subsidiary guarantors had $551.5 million of
senior debt, $431.5 million of which represented guarantees of our senior debt.
We are required by the State of Florida to maintain a bond ($41.1 million as of
April 30, 2001) to guarantee our obligations relating to funds we withdrew from
our preneed funeral trusts in Florida. This amount would become senior debt if
we were to borrow funds under the revolving credit facility to extinguish the
bond obligation by returning to the trusts the amounts we previously withdrew
that relate to the remaining preneed contracts.

     In addition, the indenture and our new senior secured credit facilities
permit, subject to specified limitations, the incurrence of additional debt,
some or all of which may be senior debt. See the section "Description of Notes"
under the heading "Certain Covenants" and the section "Description of Certain
Indebtedness and the Tender Offer." The notes are not secured by any of Stewart
Enterprises, Inc.'s or the subsidiary guarantors' assets, and as such are
effectively subordinated to any secured debt that Stewart Enterprises, Inc. or
the subsidiary guarantors may have now or may incur in the future to the extent
of the value of the assets securing that debt.

     In the event that Stewart Enterprises, Inc. or a subsidiary guarantor is
declared bankrupt, becomes insolvent or is liquidated or reorganized, any debt
that ranks ahead of the notes and the guarantees will be entitled to be paid in
full from our assets or the assets of the guarantor, as applicable, before any
payment may be made with respect to the notes or the affected guarantees. In any
of the foregoing events, we may not have sufficient assets to pay amounts due on
the notes. The subordination provisions of the indenture will also provide that
we can make no payment to you during the continuance of payment defaults on our
senior debt, and payments to you may be suspended for a period of up to 180 days
if a nonpayment default exists under our senior debt. See the section
"Description of Notes" under the heading "Subordination."

     In addition, the notes will be structurally subordinated to all of the
liabilities of any of our subsidiaries that do not guarantee the notes. As of
April 30, 2001, assuming the refinancing transactions had been completed at that
time, non-guarantor subsidiaries had total liabilities of approximately $282.6
million, excluding intercompany payables. In the event of a bankruptcy,
liquidation or reorganization of any of the non-guarantor subsidiaries, holders
of their debt and their trade creditors will generally be entitled to payment of
their claims from the assets of those subsidiaries before any assets are made
available for distribution to Stewart Enterprises, Inc. The non-guarantor
subsidiaries generated 27 percent of our revenues and 6 percent of our net
earnings for fiscal year 2000.

     As of April 30, 2001, our balance sheet included approximately $1.4 billion
in assets (in the category prearranged receivables) reflecting funds held in our
preneed funeral merchandise and services and preneed cemetery merchandise and
services trust funds, funds due from our customers and funds due from insurance
companies. We believe that, pursuant to state laws that require the
establishment of these funds, most of these funds legally are not likely to be
available to satisfy the claims of our or our subsidiary guarantors' creditors.

STEWART ENTERPRISES, INC. IS A HOLDING COMPANY.

     Stewart Enterprises, Inc. is a holding company, and it conducts
substantially all of its operations through its subsidiaries. Consequently it
does not have any income from operations and does not expect to generate any
significant income from operations in the future. Although the notes are
guaranteed by all of our existing and future domestic subsidiaries, except for
specified subsidiaries, as a result of this holding company structure, Stewart
Enterprises, Inc.'s ability to meet its debt service obligations, including its
obligations under the notes, substantially depends upon its subsidiaries' cash
flow and payment of funds to it by its subsidiaries as dividends, loans,
advances or other payments. Stewart Enterprises, Inc.'s subsidiaries' payment of
dividends or making of loans, advances or other payments may be subject to
regulatory or contractual restrictions.

                                        22
   34

SINCE THE NOTES ARE UNSECURED, YOUR RIGHT TO ENFORCE REMEDIES IS LIMITED BY THE
RIGHTS OF HOLDERS OF SECURED DEBT.

     In addition to being contractually subordinated to all existing and future
senior debt, our and the subsidiary guarantors' obligations under the notes are
unsecured. In contrast, obligations under the senior secured credit facilities
and under our publicly held senior notes remaining outstanding after the tender
offer are secured by a significant portion of our assets and those of the
subsidiary guarantors. In addition, $12.1 million of subsidiary guarantor senior
debt assumed or incurred in connection with acquisitions is secured by liens on
the assets or stock of the related subsidiaries. In the future we and our
subsidiary guarantors may have other debt which will be secured by our or our
subsidiaries' assets. If we become insolvent or are liquidated, or if payment
under any of our secured debt is accelerated, the lenders will be entitled to
exercise the remedies available to secured lenders under applicable law. These
lenders will have a claim on all assets securing the debt before the holders of
unsecured debt, including the notes. See "Description of Certain Indebtedness
and the Tender Offer."

SERVICING OUR DEBT WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH, AND OUR ABILITY TO
GENERATE SUFFICIENT CASH DEPENDS ON MANY FACTORS, SOME OF WHICH ARE BEYOND OUR
CONTROL.

     Our ability to make payments on and to refinance our debt depends on our
ability to generate cash flow. This, to a significant extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control. In addition, our ability to borrow funds in
the future to make payments on our debt will depend on our meeting the financial
covenants in our new senior secured credit facilities and other debt agreements
we may have in the future. Our business may not generate cash flow from
operations, and future borrowings may not be available to us under our new
senior secured credit facilities or otherwise in an amount sufficient to enable
us to pay our debt or to fund other liquidity needs. As a result, we may need to
refinance all or a portion of our debt on or before maturity. We may not be able
to refinance any of our debt on favorable terms, or at all. Any inability to
generate sufficient cash flow or refinance our debt on favorable terms could
have a material adverse effect on our financial condition.

COVENANT RESTRICTIONS UNDER OUR NEW SENIOR SECURED CREDIT FACILITIES AND THE
INDENTURE MAY LIMIT OUR ABILITY TO OPERATE OUR BUSINESS.

     Our new senior secured credit facilities and the indenture governing the
notes contain, among other things, covenants that restrict our and the
subsidiary guarantors' ability to finance future operations or capital needs or
to engage in other business activities. Our new senior secured credit facilities
and the indenture limit, among other things, our and the subsidiary guarantors'
ability to: borrow money; pay dividends or distributions; purchase or redeem
stock; make investments; engage in transactions with affiliates; engage in sale
leaseback transactions; consummate specified asset sales; effect a consolidation
or merger or sell, transfer, lease, or otherwise dispose of all or substantially
all of our assets; and create liens on our assets. In addition, our new senior
secured credit facilities contain specific limits on capital expenditures as
well as a requirement that we maintain a liquidity reserve that increases over
time as long as any of the 6.70% Notes or 6.40% ROARS are outstanding.
Furthermore, our new senior secured credit facilities require us to maintain
specified financial ratios and satisfy financial condition tests.

     These covenants may require that we take action to reduce our debt or to
act in a manner contrary to our business objectives. In addition, events beyond
our control, including changes in general economic and business conditions, may
affect our ability to satisfy these covenants. We might not meet those
covenants, and the lenders might not waive any failure to meet those covenants.
A breach of any of those covenants could result in a default under our new
senior secured credit facilities and the indenture. If an event of default under
our new senior secured credit facilities occurs, the lenders could elect to
declare all amounts outstanding thereunder, together with accrued interest, to
be immediately due and payable. See the sections "Description of Certain
Indebtedness and the Tender Offer" and "Description of Notes."

                                        23
   35

WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
OF CONTROL OFFER REQUIRED BY THE INDENTURE.

     Upon a change of control, we are required to offer to repurchase all
outstanding notes at 101 percent of their principal amount, plus accrued and
unpaid interest, if any, to the date of repurchase. The source of funds for any
such purchase of notes will be our available cash or cash generated from our
subsidiaries' operations or other sources, including borrowings, sales of
assets, sales of equity or funds provided by a new controlling person.
Sufficient funds may not be available at the time of any change of control to
make any required repurchases of notes tendered. In addition, the terms of our
new senior secured credit facilities limit our ability to purchase your notes in
those circumstances. Any of our future debt agreements may contain similar
restrictions and provisions. If the holders of the notes exercise their right to
require us to repurchase all of the notes upon a change of control, the
financial effect of this repurchase could cause a default under our other debt,
even if the change in control itself would not cause a default. Accordingly, it
is possible that we will not have sufficient funds at the time of the change of
control to make the required repurchase of notes or that restrictions in our new
senior secured credit facilities or other debt that may be incurred in the
future will not allow the repurchases. See the section "Description of Notes"
under the heading "Repurchase at the Option of Holders -- Change of Control" and
the section "Description of Certain Indebtedness and the Tender Offer."

THE NOTES AND GUARANTEES MAY NOT BE ENFORCEABLE BECAUSE OF FRAUDULENT CONVEYANCE
LAWS.

     Our incurrence of debt, such as the notes, as well as our subsidiaries'
guarantees, may be subject to review under U.S. federal bankruptcy law or
relevant state fraudulent conveyance laws if a bankruptcy case or lawsuit is
commenced by or on behalf of our or the guarantors' unpaid creditors. Under
these laws, if in such a case or lawsuit a court were to find that, at the time
we or a guarantor incurred debt (including debt represented by the notes or the
guarantee):

     - we, or a guarantor, incurred this debt with the intent of hindering,
       delaying or defrauding current or future creditors; or

     - we, or a guarantor, received less than reasonably equivalent value or
       fair consideration for incurring this debt and we or a guarantor, as the
       case may be:

     - were insolvent or were rendered insolvent by reason of the related
       financing transactions;

     - were engaged, or about to engage, in a business or transaction for which
       its remaining assets constituted unreasonably small capital to carry on
       its business; or

     - intended to incur, or believed that it would incur, debts beyond its
       ability to pay these debts as they matured (as all of the foregoing terms
       are defined in or interpreted under the relevant fraudulent transfer or
       conveyance statutes);

then the court could avoid the notes or the guarantee or subordinate the amounts
owing under the notes or the guarantee to our or the guarantor's presently
existing or future debt or take other actions detrimental to you.

     In addition, the subsidiary guarantors may be subject to the allegation
that since they incurred their guarantees for the benefit of Stewart
Enterprises, Inc., they incurred the obligations under the guarantees for less
than reasonably equivalent value or fair consideration.

                                        24
   36

     The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law of the jurisdiction that is being applied in any
such proceeding. Generally, a company would be considered insolvent if, at the
time it incurred the debt or issued the guarantee:

     - it could not pay its debts or contingent liabilities as they become due;

     - the sum of its debts (including contingent liabilities) is greater than
       its assets, at fair valuation; or

     - the present fair saleable value of its assets is less than the amount
       required to pay the probable liability on its total existing debts and
       liabilities (including contingent liabilities) as they become absolute
       and matured.

     If a note or guarantee is avoided as a fraudulent conveyance or found to be
unenforceable for any other reason, you will not have a claim against that
obligor and will only be a creditor of Stewart Enterprises, Inc. or any
subsidiary guarantor whose obligation was not set aside or found to be
unenforceable.

     We believe that, at the time Stewart Enterprises, Inc. and the subsidiary
guarantors initially incurred the debt represented by the notes and the
guarantees, Stewart Enterprises, Inc. and the subsidiary guarantors were not
insolvent or rendered insolvent by the incurrence, were not lacking sufficient
capital to run their businesses effectively, or unable to pay obligations on the
notes and the guarantees as they mature or become due.

     In reaching the foregoing conclusions, we have relied upon our analyses of
internal cash flow projections and estimated values of assets and liabilities of
Stewart Enterprises, Inc. and the subsidiary guarantors. In addition, we have
relied on a limitation contained in the subsidiary guarantors' guarantees that
limits the guarantee as necessary to prevent it from constituting a fraudulent
conveyance under applicable law. However, a court passing on the same questions
might not reach the same conclusions.

                         RISKS RELATED TO OUR BUSINESS

WE MAY EXPERIENCE DECLINES IN PRENEED SALES DUE TO NUMEROUS FACTORS INCLUDING
CHANGES WE MAKE TO CONTRACT TERMS AND SALES FORCE COMPENSATION, OR A WEAKENING
ECONOMY. DECLINES IN PRENEED SALES WOULD REDUCE OUR BACKLOG AND REVENUE, AND
COULD REDUCE OUR FUTURE MARKET SHARE.

     In an effort to increase our cash flow, we modified our preneed sales
strategies early in fiscal year 2000 by increasing finance charges, requiring
larger down payments and shortening installment payment terms. Later in fiscal
year 2000, we changed the compensation structure for our preneed sales force.
These changes, and the accompanying sales force attrition and adverse impact on
sales force morale, caused our preneed sales to decline. Although we do not
anticipate making further significant changes in these areas, we may decide that
further adjustments are advisable, which could cause additional declines in
preneed sales. In addition, a weakening economy that causes customers to have
less discretionary income could cause a decline in preneed sales. Declines in
preneed cemetery property sales would reduce current revenue, and declines in
other preneed sales would reduce our backlog and future revenue, and could
reduce our future market share.

PRENEED SALES MAY HAVE A NEGATIVE IMPACT ON CASH FLOW.

     Preneed sales of cemetery property and funeral and cemetery products and
services are generally cash flow negative initially, primarily due to the
commissions we pay on the sale, the portion of the sales proceeds we are
required to place in trust, and the terms of the particular contract (such as
the size of the downpayment required and the length of the contract). See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- General." In fiscal year 2000, we changed the terms and conditions
of our preneed sales contracts and commissions, and moderated our preneed sales
effort, in order to reduce the initial negative impact on our cash flow. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Fiscal Year 2000 Compared to Fiscal Year 1999." Nevertheless, we
will continue to invest a significant portion of our cash flow in preneed
acquisition costs,

                                        25
   37

which reduces cash flow available for other activities, and, to the extent we
increase preneed activities, our cash flow will be further reduced and our
ability to service debt could be adversely affected.

PRICE COMPETITION COULD REDUCE OUR MARKET SHARE OR CAUSE US TO REDUCE PRICES TO
RETAIN OR RECAPTURE MARKET SHARE, WHICH COULD REDUCE OUR REVENUES AND MARGINS.

     Our funeral home and cemetery operations generally face intense competition
in local markets that typically are served by numerous funeral homes and
cemetery firms. We have historically experienced price competition primarily
from independent funeral home and cemetery operators, and from monument dealers,
casket retailers, low-cost funeral providers, and other non-traditional
providers of services or products. In the past, this price competition has
resulted in our losing market share in some markets. In other markets, we have
had to reduce prices and thereby our profit margins in order to retain or
recapture market share. In addition, because of competition from these types of
competitors in some of our key markets, in fiscal year 1999 we lowered our goals
for increases in average revenue per funeral service performed in the future.
Increased price competition in the future could further reduce revenues, profit
margins and backlog.

INCREASED ADVERTISING OR BETTER MARKETING BY OUR COMPETITORS, OR INCREASED
SERVICES FROM INTERNET PROVIDERS, COULD CAUSE US TO LOSE MARKET SHARE AND
REVENUES, OR CAUSE US TO INCUR INCREASED COSTS IN ORDER TO RETAIN OR RECAPTURE
OUR MARKET SHARE.

     In recent years, marketing through television, radio and print advertising,
direct mailings and personal sales calls has increased with respect to the sales
of preneed funeral services. Extensive advertising or effective marketing by
competitors in our local markets could cause us to lose market share and
revenues, or cause us to increase our own marketing costs. In addition,
competitors may change the types or mix of products or services offered. These
changes may attract customers, causing us to lose market share and revenue or to
incur costs to vary our own types or mix of products or services in response.
Also, increased use of the Internet by customers to research and/or purchase
products and services could cause us to lose market share to competitors
offering to sell products or services over the Internet. We do not currently
sell products or services over the Internet.

EARNINGS FROM AND PRINCIPAL OF OUR TRUST FUNDS AND ESCROW ACCOUNTS COULD BE
REDUCED BY CHANGES IN STOCK AND BOND PRICES AND INTEREST AND DIVIDEND RATES OR
BY DECLINES IN THE SIZE OF THE FUNDS.

     Earnings and investment gains and losses on our trust funds and escrow
accounts are affected by financial market conditions that are not within our
control. Earnings are also affected by the mix of fixed-income and equity
securities that we choose to maintain in the funds, and we may not choose the
optimal mix for any particular market condition. The size of the funds depends
upon the level of preneed sales, the amount of investment gains or losses, and
funds added through acquisitions, if any. Declines in earnings from our
perpetual care trust funds would cause a decline in current revenues, while
declines in earnings from our other trust funds and escrow accounts could cause
a decline in future revenues. In addition, any significant or sustained
investment losses could result in there being insufficient funds in the trusts
to cover our cost of delivering services and merchandise, or maintaining our
cemeteries, in the future. Any such deficiency would have to be covered by our
cash flow, which could have a material adverse effect on our financial
condition.

OUR FOREIGN OPERATIONS ARE SUBJECT TO POLITICAL, ECONOMIC, CURRENCY AND OTHER
RISKS THAT COULD ADVERSELY IMPACT OUR FINANCIAL CONDITION, OPERATING RESULTS OR
CASH FLOW.

     Our foreign operations are subject to risks inherent in doing business in
foreign countries. For fiscal year 2000 (pro forma for SAB 101), approximately
20 percent of our total revenues and 16 percent of our total EBITDA were
attributable to foreign operations. Risks associated with operating
internationally include political, social and economic instability, increased
operating costs, expropriation and complex and changing government regulations,
all of which are beyond our control. To the extent we make investments in
foreign assets or receive revenues in currencies other than U.S. dollars, the
value of our assets and our income could be, and have in the past been,
adversely affected by fluctuations in the value of local currencies.

                                        26
   38

                         RISKS RELATED TO OUR INDUSTRY

DECLINES IN THE NUMBER OF DEATHS IN OUR MARKETS CAN CAUSE A DECREASE IN OUR
REVENUES. CHANGES IN THE NUMBER OF DEATHS ARE NOT PREDICTABLE FROM MARKET TO
MARKET OR OVER THE SHORT TERM.

     Declines in the number of deaths could cause at-need sales of funeral and
cemetery services, property and merchandise to decline, which could decrease
revenues. Although the United States Bureau of the Census estimates that the
number of deaths in the United States will increase by approximately 1 percent
per year from 2000 to 2010, longer lifespans could reduce the rate of deaths. In
addition, changes in the number of deaths can vary among local markets and from
quarter to quarter, and variations in the number of deaths in different markets
or from quarter to quarter are not predictable. These variations can cause our
revenues to fluctuate.

THE INCREASING NUMBER OF CREMATIONS IN THE UNITED STATES COULD CAUSE OUR
REVENUES TO DECLINE BECAUSE WE COULD LOSE MARKET SHARE TO FIRMS SPECIALIZING IN
CREMATIONS. IN ADDITION, BASIC CREMATIONS PRODUCE NO REVENUES FOR CEMETERY
OPERATIONS AND LOWER REVENUES AND, IN CERTAIN CASES, PROFIT MARGINS THAN
TRADITIONAL FUNERALS.

     Traditional cemetery and funeral service operators like us face competition
from the increasing number of cremations in the United States. Industry studies
indicate that the percentage of cremations has steadily increased and that
cremation will represent approximately 36 percent of the United States burial
market by the year 2010, compared to 25 percent in 1999. The trend toward
cremation could cause our cemeteries and traditional funeral homes to lose
market share and revenues to firms specializing in cremations. In addition,
basic cremations (without a funeral service, casket or urn, niche in a mausoleum
or columbarium or burial) produce no revenues for cemetery operations and lower
revenues than traditional funerals and, when delivered at a traditional funeral
home, produce lower profit margins as well.

IF WE DO NOT RESPOND EFFECTIVELY TO CHANGING CONSUMER PREFERENCES, OUR MARKET
SHARE, REVENUES AND PROFITABILITY COULD DECREASE.

     Our future market share, revenues and profits will depend in part on our
ability to anticipate, identify and respond to changing consumer preferences.
During fiscal year 2000, we began to implement strategies based on a
proprietary, extensive study of consumer preferences we commissioned in 1999.
However, we may not correctly anticipate or identify trends in consumer
preferences, or we may identify them later than our competitors do. In addition,
any strategies we may implement to address these trends may prove incorrect or
ineffective.

BECAUSE THE FUNERAL AND CEMETERY BUSINESSES ARE HIGH FIXED-COST BUSINESSES,
POSITIVE OR NEGATIVE CHANGES IN REVENUE CAN HAVE A DISPROPORTIONATELY LARGE
EFFECT ON CASH FLOW AND PROFITS.

     Companies in the funeral home and cemetery businesses must incur many of
the costs of operating and maintaining facilities, land and equipment regardless
of the level of sales in any given period. For example, we must pay salaries,
utilities, property taxes and maintenance costs on our funeral homes and
maintain the grounds of our cemeteries regardless of the number of funeral
services or interments we perform. Because we cannot decrease these costs
significantly or rapidly when we experience declines in sales, declines in sales
can cause our margins, profits and cash flow to decline at a greater rate than
the decline in our revenues.

CHANGES OR INCREASES IN, OR FAILURE TO COMPLY WITH, REGULATIONS APPLICABLE TO
OUR BUSINESS COULD INCREASE OUR COSTS.

     Our industry is subject to extensive regulation and licensing requirements
under federal, state and local laws and the laws of foreign jurisdictions where
we operate. For example, the funeral home industry is regulated by the Federal
Trade Commission, which requires funeral homes to take actions designed to
protect consumers. State laws impose licensing requirements and regulate preneed
sales. Our embalming facilities are subject to stringent environmental and
health regulations. Compliance with these regulations is burdensome on us and we
are always at risk of not complying with the regulations. In addition, from time
to time, governments and agencies propose to amend or add regulations, which
could increase our costs.
                                        27
   39

                                 EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

     We and the subsidiary guarantors entered into a registration rights
agreement with the Initial Purchasers in connection with the issuance of the
outstanding notes. The registration rights agreement provides that we will take
the following actions, at our expense, for the benefit of the holders of the
outstanding notes:

     - Within 90 days after June 29, 2001, the date of the registration rights
       agreement, we will file the exchange offer registration statement, of
       which this prospectus is a part, relating to the exchange offer. The
       exchange notes will have terms substantially identical in all material
       respects to the outstanding notes except that the exchange notes will not
       contain transfer restrictions.

     - We will use our reasonable best efforts to cause the exchange offer
       registration statement to be declared effective under the Securities Act
       within 120 days after the date of the registration rights agreement.

     - We will keep the exchange offer open for a period of not less than the
       minimum period required under applicable federal and state securities
       laws to consummate the exchange offer; provided, however, that in no
       event shall such period be less than 20 days after the date notice of the
       exchange offer is mailed to the holders.

     We will be required to file a shelf registration statement covering resales
of the outstanding notes if:

     - because of any change in law or in currently prevailing interpretations
       of the staff of the SEC, we are not permitted to effect an exchange
       offer,

     - for any reason the exchange offer is not consummated within 30 days after
       the Effectiveness Target Date, as defined in the registration rights
       agreement,

     - any holder of outstanding notes notifies us within 20 business days after
       June 29, 2001 that it (i) is prohibited by law or SEC policy from
       participating in the exchange offer, (ii) may not resell the exchange
       notes acquired by it in the exchange offer to the public without
       delivering a prospectus and the prospectus contained in this registration
       statement is not appropriate or available for such resales, or (iii) is a
       broker-dealer and holds outstanding notes acquired directly from us or
       one of our affiliates.

     Following the consummation of the exchange offer, holders of the
outstanding notes who were eligible to participate in the exchange offer, but
who did not tender their outstanding notes, will not have any further
registration rights and the outstanding notes will continue to be subject to
certain restrictions on transfer. Accordingly, the liquidity of the market for
the outstanding notes could be adversely affected.

TERMS OF THE EXCHANGE OFFER

     Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all outstanding notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the expiration date of the exchange offer. We will issue $1,000 principal amount
of exchange notes in exchange for each $1,000 principal amount of outstanding
notes accepted in the exchange offer. Any holder may tender some or all of its
outstanding notes pursuant to the exchange offer. However, outstanding notes may
be tendered only in integral multiples of $1,000.

     The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes except that:

          (1) the exchange notes bear a different CUSIP Number from the
              outstanding notes;

          (2) the exchange notes have been registered under the Securities Act
              and hence will not bear legends restricting the transfer thereof;
              and

                                        28
   40

          (3) the holders of the exchange notes will not be entitled to certain
              rights under the registration rights agreement, including the
              provisions providing for liquidated damages in certain
              circumstances relating to the timing of the exchange offer, all of
              which rights will terminate when the exchange offer is terminated.

The exchange notes will evidence the same debt as the outstanding notes and will
be entitled to the benefits of the indenture.

     As of the date of this prospectus, $300,000,000 aggregate principal amount
of the outstanding notes were outstanding. We intend to conduct the exchange
offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the SEC thereunder.

     We will be deemed to have accepted validly tendered outstanding notes when,
as and if we have given oral or written notice thereof to Firstar Bank, N.A.
(the "exchange agent"). The exchange agent will act as agent for the tendering
holders for the purpose of receiving the exchange notes from us.

     If any tendered outstanding notes are not accepted for exchange because of
an invalid tender, the occurrence of specified other events set forth in this
prospectus or otherwise, the certificates for any unaccepted outstanding notes
will be returned, without expense, to the tendering holder thereof as promptly
as practicable after the expiration date of the exchange offer.

     Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes pursuant to the exchange offer. We will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection with
the exchange offer. See "-- Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

     The term "expiration date" means 5:00 p.m., New York City time, on    ,
2001, unless we, in our sole discretion, extend the exchange offer, in which
case the term "expiration date" will mean the latest date and time to which the
exchange offer is extended. We reserve the right to extend the exchange offer at
any time and from time to time prior to the expiration date by giving written
notice to the exchange agent and by timely public announcement communicated,
unless otherwise required by applicable law or regulation, by making a press
release. During any extension of the exchange offer, all outstanding notes
previously tendered pursuant to the exchange offer will remain subject to the
exchange offer.

     We reserve the right, in our sole discretion, (1) to delay accepting any
outstanding notes, to extend the exchange offer or to terminate the exchange
offer if any of the conditions set forth below under "-- Conditions" have not
been satisfied, or (2) to amend the terms of the exchange offer in any manner.
If any such termination or amendment occurs, we will notify the exchange agent
in writing and will either issue a press release or give written notice to the
holders of the outstanding notes as promptly as practicable.

INTEREST ON THE EXCHANGE NOTES

     The exchange notes will bear interest from their date of issuance. Holders
of outstanding notes that are accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the date of issuance of the
exchange notes. Such interest will be paid with the first interest payment on
the exchange notes on January 1, 2002. Interest on the outstanding notes
accepted for exchange will cease to accrue upon issuance of the exchange notes.
Interest on the exchange notes is payable semi-annually on each January 1 and
July 1, commencing on January 1, 2002.

PROCEDURES FOR TENDERING

     Only a holder of outstanding notes may tender outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must complete, sign
and date the letter of transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the letter of transmittal or transmit an
agent's message in

                                        29
   41

connection with a book-entry transfer, and mail or otherwise deliver the letter
of transmittal or the facsimile, together with the outstanding notes and any
other required documents, to the exchange agent prior to 5:00 p.m., New York
City time, on the expiration date. To be tendered effectively, the outstanding
notes, letter of transmittal or an agent's message and other required documents
must be completed and received by the exchange agent at the address set forth
below under "Exchange Agent" prior to 5:00 p.m., New York City time, on the
expiration date. Delivery of the outstanding notes may be made by book-entry
transfer in accordance with the procedures described below. Confirmation of the
book-entry transfer must be received by the exchange agent prior to the
expiration date.

     The term "agent's message" means a message, transmitted by a book-entry
transfer facility to, and received by, the exchange agent forming a part of a
confirmation of a book-entry, which states that the book-entry transfer facility
has received an express acknowledgment from the participant in the book-entry
transfer facility tendering the outstanding notes that the participant has
received and agrees: (1) to participate in ATOP; (2) to be bound by the terms of
the letter of transmittal; and (3) that we may enforce the agreement against the
participant.

     To participate in the exchange offer, each holder will be required to
furnish to us a written representation to the effect that:

     - it is not an affiliate of ours,

     - it is not engaged in, and does not intend to engage in, and has no
       arrangement or understanding with any person to participate in, a
       distribution of the exchange notes to be issued in the exchange offer,
       and

     - it is acquiring the exchange notes in its ordinary course of business.

     The tender by a holder and our acceptance thereof will constitute agreement
between the holder and us in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of transmittal or
agent's message.

     THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND THE LETTER OF TRANSMITTAL
OR AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT
THE ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD
BE SENT TO US. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR THEM.

     Any beneficial owner whose outstanding notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf.

     Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member of the Medallion System unless the
outstanding notes tendered pursuant to the letter of transmittal are tendered
(1) by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the letter of
transmittal or (2) for the account of a member firm of the Medallion System. In
the event that signatures on a letter of transmittal or a notice of withdrawal,
as the case may be, are required to be guaranteed, the guarantee must be by a
member firm of the Medallion System.

     If the letter of transmittal is signed by a person other than the
registered holder of any outstanding notes listed in this prospectus, the
outstanding notes must be endorsed or accompanied by a properly completed bond
power, signed by the registered holder as the registered holder's name appears
on the outstanding notes with the signature thereon guaranteed by a member firm
of the Medallion System.

     If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or

                                        30
   42

representative capacity, the person signing should so indicate when signing, and
evidence satisfactory to us of its authority to so act must be submitted with
the letter of transmittal.

     We understand that the exchange agent will make a request promptly after
the date of this prospectus to establish accounts with respect to the
outstanding notes at DTC for the purpose of facilitating the exchange offer, and
subject to the establishment thereof, any financial institution that is a
participant in DTC's system may make book-entry delivery of outstanding notes by
causing DTC to transfer the outstanding notes into the exchange agent's account
with respect to the outstanding notes in accordance with DTC's procedures for
the transfer. Although delivery of the outstanding notes may be effected through
book-entry transfer into the exchange agent's account at DTC, unless an agent's
message is received by the exchange agent in compliance with ATOP, an
appropriate letter of transmittal properly completed and duly executed with any
required signature guarantee and all other required documents must in each case
be transmitted to and received or confirmed by the exchange agent at its address
set forth below on or prior to the expiration date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under the procedures. Delivery of documents to DTC does not constitute
delivery to the exchange agent.

     All questions as to the validity, form, eligibility, including time of
receipt, acceptance of tendered outstanding notes and withdrawal of tendered
outstanding notes will be determined by us in our sole discretion, which
determination will be final and binding. We reserve the absolute right to reject
any and all outstanding notes not properly tendered or any outstanding notes our
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the right in our sole discretion to waive any defects, irregularities or
conditions of tender as to particular outstanding notes. Our interpretation of
the terms and conditions of the exchange offer, including the instructions in
the letter of transmittal, will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of outstanding
notes must be cured within the time we determine. Although we intend to notify
holders of defects or irregularities with respect to tenders of outstanding
notes, neither we, the exchange agent nor any other person will incur any
liability for failure to give the notification. Tenders of outstanding notes
will not be deemed to have been made until the defects or irregularities have
been cured or waived. Any outstanding notes received by the exchange agent that
are not properly tendered and as to which the defects or irregularities have not
been cured or waived will be returned by the exchange agent to the tendering
holders, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.

GUARANTEED DELIVERY PROCEDURES

     Holders who wish to tender their outstanding notes and (1) whose
outstanding notes are not immediately available, (2) who cannot deliver their
outstanding notes, the letter of transmittal or any other required documents to
the exchange agent or (3) who cannot complete the procedures for book-entry
transfer, prior to the expiration date, may effect a tender if:

          (A) the tender is made through a member firm of the Medallion System;

          (B) prior to the expiration date, the exchange agent receives from a
              member firm of the Medallion System a properly completed and duly
              executed Notice of Guaranteed Delivery by facsimile transmission,
              mail or hand delivery setting forth the name and address of the
              holder, the certificate number(s) of the outstanding notes and the
              principal amount of outstanding notes tendered, stating that the
              tender is being made thereby and guaranteeing that, within three
              New York Stock Exchange trading days after the expiration date,
              the letter of transmittal or facsimile thereof together with the
              certificate(s) representing the outstanding notes or a
              confirmation of book-entry transfer of the outstanding notes into
              the exchange agent's account at DTC, and any other documents
              required by the letter of transmittal will be deposited by the
              member firm of the Medallion System with the exchange agent; and

          (C) the properly completed and executed letter of transmittal or
              facsimile thereof, as well as the certificate(s) representing all
              tendered outstanding notes in proper form for transfer or a
              confirmation of book-entry transfer of the outstanding notes into
              the exchange agent's account

                                        31
   43

          at DTC, and all other documents required by the letter of transmittal
          are received by the exchange agent within five New York Stock Exchange
          trading days after the expiration date.

Upon request to the exchange agent, a Notice of Guaranteed Delivery will be sent
to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above.

WITHDRAWAL OF TENDERS

     Except as otherwise provided in this prospectus, tenders of outstanding
notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the expiration date.

     To withdraw a tender of outstanding notes in the exchange offer, a
telegram, telex, letter or facsimile transmission notice of withdrawal must be
received by the exchange agent at its address set forth in this prospectus prior
to 5:00 p.m., New York City time, on the expiration date of the exchange offer.
Any notice of withdrawal must:

          (1) specify the name of the person having deposited the outstanding
              notes to be withdrawn;

          (2) identify the outstanding notes to be withdrawn, including the
              certificate number(s) and principal amount of the outstanding
              notes, or, in the case of outstanding notes transferred by
              book-entry transfer, the name and number of the account at DTC to
              be credited;

          (3) be signed by the holder in the same manner as the original
              signature on the letter of transmittal by which the outstanding
              notes were tendered, including any required signature guarantees,
              or be accompanied by documents of transfer sufficient to have the
              trustee with respect to the outstanding notes register the
              transfer of the outstanding notes into the name of the person
              withdrawing the tender; and

          (4) specify the name in which any outstanding notes are to be
              registered, if different from that of the person depositing the
              outstanding notes to be withdrawn.

     All questions as to the validity, form and eligibility, including time of
receipt, of the notices of withdrawal will be determined by us. Our
determination will be final and binding on all parties. Any outstanding notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
exchange offer and no exchange notes will be issued with respect thereto unless
the outstanding notes so withdrawn are validly retendered. Any outstanding notes
which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to the holder as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer.
Properly withdrawn outstanding notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the expiration date.

CONDITIONS

     Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or exchange notes for, any outstanding notes,
and may terminate or amend the exchange offer as provided in this prospectus
before the acceptance of the outstanding notes, if:

          (1) any action or proceeding is instituted or threatened in any court
              or by or before any governmental agency with respect to the
              exchange offer which, in our sole judgment, might materially
              impair our ability to proceed with the exchange offer or any
              material adverse development has occurred in any existing action
              or proceeding with respect to us or any of our subsidiaries; or

          (2) any law, statute, rule, regulation or interpretation by the staff
              of the SEC is proposed, adopted or enacted, which, in our sole
              judgment, might materially impair our ability to proceed with the
              exchange offer or materially impair the contemplated benefits of
              the exchange offer to us; or

                                        32
   44

          (3) any governmental approval has not been obtained, which approval
              we, in our sole discretion, deem necessary for the consummation of
              the exchange offer as contemplated by this prospectus.

     If we determine in our sole discretion that any of the conditions are not
satisfied, we may (1) refuse to accept any outstanding notes and return all
tendered outstanding notes to the tendering holders, (2) extend the exchange
offer and retain all outstanding notes tendered prior to the expiration of the
exchange offer, subject, however, to the rights of holders to withdraw the
outstanding notes (see "-- Withdrawal of Tenders") or (3) waive the unsatisfied
conditions with respect to the exchange offer and accept all properly tendered
outstanding notes which have not been withdrawn.

EXCHANGE AGENT

     Firstar Bank, N.A. has been appointed as exchange agent for the exchange
offer. Questions and requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal and requests for Notice of
Guaranteed Delivery should be directed to the exchange agent addressed as
follows:

BY OVERNIGHT COURIER OR REGISTERED/CERTIFIED MAIL:
Firstar Bank, N.A.
101 East 5th Street
St. Paul, MN 55101
Attn: Frank Leslie

FACSIMILE TRANSMISSION:
(651) 229-6415

FOR INFORMATION TELEPHONE:
(651) 229-2600

DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.

FEES AND EXPENSES

     We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses incurred in connection with these services.

     We will pay the cash expenses to be incurred in connection with the
exchange offer. Such expenses include fees and expenses of the exchange agent
and trustee, accounting and legal fees and printing costs, among others.

ACCOUNTING TREATMENT

     The exchange notes will be recorded at the same carrying value as the
outstanding notes, which is face value, as reflected in our accounting records
on the date of exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes as a result of the exchange offer. The expenses of the
exchange offer will be deferred and charged to expense over the term of the
exchange notes.

CONSEQUENCES OF FAILURE TO EXCHANGE

     The outstanding notes that are not exchanged for exchange notes pursuant to
the exchange offer will remain restricted securities. Accordingly, the
outstanding notes may be resold only:

          (1) to us upon redemption thereof or otherwise;

          (2) so long as the outstanding notes are eligible for resale pursuant
              to Rule 144A, to a person inside the United States whom the seller
              reasonably believes is a qualified institutional buyer within the
              meaning of Rule 144A under the Securities Act in a transaction
              meeting the

                                        33
   45

          requirements of Rule 144A, or pursuant to another exemption from the
          registration requirements of the Securities Act, which other exemption
          is based upon an opinion of counsel reasonably acceptable to us;

          (3) outside the United States to a non-U.S. person in a transaction
              meeting the requirements of Rule 904 under the Securities Act; or

          (4) pursuant to an effective registration statement under the
              Securities Act, in each case in accordance with any applicable
              securities laws of any state of the United States.

RESALE OF THE EXCHANGE NOTES

     With respect to resales of exchange notes, based on interpretations by the
staff of the SEC set forth in no-action letters issued to third parties, we
believe that a holder or other person who receives exchange notes, whether or
not the person is the holder, other than a person that is our affiliate within
the meaning of Rule 405 under the Securities Act, in exchange for outstanding
notes in the ordinary course of business and who is not participating, does not
intend to participate, and has no arrangement or understanding with any person
to participate, in the distribution of the exchange notes, will be allowed to
resell the exchange notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the exchange notes a
prospectus that satisfies the requirements of Section 10 of the Securities Act.
However, if any holder acquires exchange notes in the exchange offer for the
purpose of distributing or participating in a distribution of the exchange
notes, the holder cannot rely on the position of the staff of the SEC expressed
in the no-action letters or any similar interpretive letters, and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction, unless an exemption from registration
is otherwise available. Further, each broker-dealer that receives exchange notes
for its own account in exchange for outstanding notes, where the outstanding
notes were acquired by the broker-dealer as a result of market-making activities
or other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of the exchange notes.

                                        34
   46

                                USE OF PROCEEDS

     This exchange offer is intended to satisfy some of our obligations under
the registration rights agreement. We will not receive any cash proceeds from
the issuance of the exchange notes. In consideration for issuing the exchange
notes contemplated in this prospectus, we will receive outstanding notes in like
principal amount, the form and terms of which are the same as the form and terms
of the exchange notes, except as otherwise described in this prospectus.

     We used the proceeds from the issuance of the outstanding notes of
approximately $291.8 million, net of discount, together with funds from our new
senior secured credit facilities and a portion of our cash and cash equivalents,
to refinance our revolving credit facility, retire our privately held senior
notes, complete an offer to purchase approximately $200.0 million in principal
amount of our $300.0 million publicly held senior notes, and pay related tender
premiums, prepayment penalties, fees and expenses. For additional information,
see "Prospectus Summary -- Refinancing Transactions."

                                        35
   47

                                 CAPITALIZATION

     The following table sets forth our unaudited cash and cash equivalent
investments and our unaudited consolidated capitalization as of April 30, 2001
on an actual basis and on an as adjusted basis giving effect to the offering of
the outstanding notes and the other refinancing transactions. This table should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Selected Historical Consolidated
Financial and Operating Data" and our consolidated financial statements and
related notes contained elsewhere in this prospectus.



                                                                AS OF APRIL 30, 2001
                                                              ------------------------
                                                                ACTUAL     AS ADJUSTED
                                                              ----------   -----------
                                                                   (IN THOUSANDS)
                                                                     
Cash and cash equivalents(1)................................  $  103,721   $   91,559
                                                              ==========   ==========
Long-term debt (including current maturities):
  Current revolving credit facility(1)(2)...................  $  472,000   $       --
  New senior secured credit facilities:
     Revolving credit facility(1)...........................          --       50,000
     Asset sale term loan...................................          --       75,000
     Term loan B............................................          --      300,000
  6.40% ROARS due 2013 (remarketing date 2003)(3)...........     204,590      102,160
  6.70% notes due 2003(3)...................................     100,000          100
  Privately held senior notes...............................      64,762           --
  10 3/4% senior subordinated notes due 2008................          --      300,000
  Other(4)..................................................      25,021       25,021
                                                              ----------   ----------
          Total long-term debt(5)...........................     866,373      852,281
Shareholders' equity(6).....................................     872,930      864,392
                                                              ----------   ----------
          Total capitalization..............................  $1,739,303   $1,716,673
                                                              ==========   ==========


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

(1) Subsequent to April 30, 2001, we used $30.0 million of our cash and cash
    equivalents to reduce the balance outstanding on our revolving credit
    facility to $442.0 million. As of April 30, 2001, we had outstanding letters
    of credit under our credit facility totaling $5.5 million.

(2) Our $600.0 million revolving credit facility, which was scheduled to mature
    on April 30, 2002, became a current liability as of April 30, 2001.

(3) On May 15, 2001, we commenced an offer to purchase approximately $200.0
    million in principal amount of our $300.0 million publicly held senior
    notes, which consisted of $100.0 million 6.70% Notes and $200.0 million
    6.40% ROARS. On June 29, 2001, we repurchased $99.9 million of the 6.70%
    Notes and approximately $100.1 million of the 6.40% ROARS. The remaining
    6.70% Notes and 6.40% ROARS are secured equally and ratably with the new
    senior secured credit facilities. See the section "Description of Certain
    Indebtedness and the Tender Offer."

(4) Represents debt of our subsidiaries incurred or assumed in connection with
    acquisitions, approximately $12.1 million of which is secured by the stock
    or assets of the related subsidiaries.

(5) We are required to maintain a bond ($41.1 million as of April 30, 2001) to
    guarantee our obligations relating to funds we withdrew from our preneed
    funeral trusts in Florida. This amount would become senior debt if we were
    to borrow funds under the revolving credit facility to extinguish the bond
    obligation by returning to the trusts the amounts we previously withdrew
    that relate to the remaining preneed contracts.

(6) Adjusted shareholders' equity reflects a reduction of approximately $8.5
    million for the after-tax effect of charges to be recorded in the period the
    refinancing transactions are completed.

                                        36
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                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis should be read in conjunction with
the section "Selected Historical Consolidated Financial and Operating Data" and
the consolidated financial statements and related notes included elsewhere in
this prospectus.

GENERAL

     We sell cemetery property and funeral and cemetery products and services
both on an at-need and preneed basis. Preneed property, products and services
are typically sold on an installment basis with terms of approximately three to
five years. In fiscal year 2000, we changed the terms and conditions of our
preneed sales contracts and commissions and moderated our preneed sales
activities in order to enhance our cash flow. These changes are described in
more detail under the heading "Fiscal Year 2000 Compared to Fiscal Year 1999"
below.

     With respect to the sale of cemetery property, whether preneed or at-need,
we are generally required by state law to place into a perpetual care trust a
portion, usually 10 percent, of the proceeds we receive, in order to fund
maintenance of the cemetery grounds. As we receive payments, we generally fund
the perpetual care trust in the same proportion as the payment bears to the
contract amount; for example, if we receive 20 percent of the contract price, we
place in trust 20 percent of the total amount to be placed in trust for that
contract. We withdraw realized earnings in these funds to use towards the
maintenance of our cemeteries, but principal, including net realized capital
gains in some jurisdictions, must generally be held in the trust in perpetuity.

     With respect to the preneed sale of cemetery and funeral products and
services, state laws generally require us to either (1) place a portion of the
installment payments we receive into a trust fund, or (2) use an insurance
policy underwritten by an insurance company to provide funds to cover the costs
of delivering funeral products and services in the future. With respect to the
preneed sale of cemetery merchandise, we are generally required to place in
trust 30 to 50 percent of each installment we receive. With respect to the
preneed sale of funeral and cemetery services, we are generally required to
place in trust 70 to 90 percent of each installment we receive. The sale of
caskets is treated in some jurisdictions in the same manner as the sale of
cemetery merchandise and in some jurisdictions in the same manner as the sale of
funeral services for these purposes. When insurance is used, we apply customer
payments to pay premiums on the insurance policies. We typically act as agent
for the insurance company and earn a commission. Generally, we can withdraw the
principal of and earnings on the funds placed in trust only at the time we
deliver the related products and services.

     If a preneed funeral product or service contract is cancelled, we generally
return to the customer the related principal that was placed in trust and retain
the portion not placed in trust. In many jurisdictions, we can withdraw and
retain all related earnings in the trust, but in other jurisdictions these
earnings must be returned to the customer. If a preneed cemetery property,
product or service contract is cancelled, we generally are not required to
return any funds to the customer.

     The impact of preneed sales on our near-term cash flow depends primarily on
the commissions we pay on the sale, the portion of the sale we are required to
place in trust, and the terms of the particular contract (such as the size of
the downpayment required and the length of the contract). We generally pay
commissions to our preneed sales counselors based on a percentage of the total
preneed contract price, but only to the extent cash is paid by the customer.
However, because we are required to place a portion of each cash installment
paid by the customer into trust, we may be required to use our own cash to cover
a portion of the commission due on the installment from the customer. If the
initial cash installment paid by the customer is not sufficient to cover the
entire commission, the remaining commission is paid from subsequent customer
installments. Accordingly, preneed sales are generally cash flow negative
initially, but become cash flow positive at varying times over the life of the
contract, depending upon the trusting requirements and the terms of the
particular contract.

                                        37
   49

     Cash expended for preneed funeral sales, principally sales commissions, are
capitalized in deferred charges on the balance sheet and amortized as the
funeral contracts are delivered. Such amortization is included in our
amortization and depreciation.

TRUST AND ESCROW INVESTMENTS

     Generally, our wholly-owned subsidiary, Investors Trust, Inc. ("ITI"), a
Texas corporation with trust powers, serves as investment adviser on our trust
funds and escrow accounts and on our investment portfolio. ITI provides
investment advisory services exclusively to us. ITI is registered with the
Securities and Exchange Commission under the Investment Advisers Act of 1940.

     As of April 30, 2001, ITI had approximately $1.1 billion in assets under
management, approximately $100.0 million of which relate to foreign assets, some
or all of which we may sell. Lawrence B. Hawkins, one of our executive officers
and a professional investment manager, serves as President of ITI. ITI operates
with the assistance of third-party professional financial consultants pursuant
to a formal investment policy established by the Investment Committee of our
Board of Directors. The policy emphasizes conservation, diversification and
preservation of principal while seeking appropriate levels of current income and
capital appreciation.

     Our investment strategy for our trust funds and escrow accounts is, among
other criteria, partially dependent on the ability to withdraw net realized
capital gains from these funds. Withdrawal of capital gains is not permitted for
perpetual care funds in some jurisdictions in which we operate. Funds for which
net capital gains are permitted to be withdrawn typically are invested in a
diversified portfolio consisting principally of U.S. government securities,
other interest-bearing securities and preferred stocks rated A or better, "blue
chip" publicly-traded common stocks, money market funds and other short-term
investments.

     Income from funds, especially those invested partially in common stock, can
be materially affected by prevailing interest rates and the performance of the
stock market. In managing our North American funds (including those in Puerto
Rico but excluding those in Mexico) that have investments in common stock, we
seek an overall annual yield of approximately 8.5 percent to 9 percent, which is
well in excess of our expectation for inflation over the short term. However, we
may not be successful in achieving any particular yield.

RESULTS OF OPERATIONS

     We provide below a comparison of the three and six months ended April 30,
2001, as reported after the implementation of SAB 101, with the three and six
months ended April 30, 2000, as reported which does not reflect the
implementation of SAB 101. Our discussion of results for fiscal years 2000, 1999
and 1998 are presented on a historical basis, which does not reflect the
implementation of SAB 101. We then provide a discussion of the pro forma impact
of SAB 101 on fiscal years 2000 and 1999, followed by a comparison of the three
and six months ended April 30, 2001, as reported after the implementation of SAB
101, with the pro forma impact of SAB 101 on the three and six months ended
April 30, 2000.

     For purposes of the following discussion, funeral homes and cemeteries
owned and operated at the beginning of the earliest year presented in each
comparison are referred to as "Existing Operations." Correspondingly, funeral
homes and cemeteries acquired or opened during either period being compared are
referred to as "Acquired/Opened Operations." Acquired operations include
businesses we purchased through our earlier acquisition strategies, and opened
operations include businesses we constructed or those we developed through the
implementation of our alternative service firm strategy.

                                        38
   50

THREE MONTHS ENDED APRIL 30, 2001 COMPARED TO THREE MONTHS ENDED APRIL 30, 2000

     The following discussion compares our financial results for the three
months ended April 30, 2001 and 2000, both as reported. Results for the three
months ended April 30, 2001 reflect the implementation of SAB 101, whereas
results for the corresponding period in 2000 do not. Therefore, the results from
these two periods are not comparable.

Funeral Segment



                                                         THREE MONTHS ENDED
                                                             APRIL 30,
                                                       ----------------------
                                                        2001        2000        (DECREASE)
                                                       ------   -------------   ----------
                                                                (AS REPORTED)
                                                                (IN MILLIONS)
                                                                       
Funeral Revenue......................................  $108.0      $115.7         $(7.7)
Funeral Costs........................................    82.4        84.9          (2.5)
                                                       ------      ------         -----
Funeral Segment Profit...............................  $ 25.6      $ 30.8         $(5.2)
                                                       ======      ======         =====


     Funeral revenue decreased $7.7 million, or 7 percent, for the three months
ended April 30, 2001, compared to the corresponding period in 2000. We
experienced a $6.7 million, or 6 percent, decrease due to the effect of
implementing SAB 101. We experienced a reduction in revenue from changes in
foreign currency exchange rates (due in part to the Euro). We also experienced a
2.9 percent decrease (995 events) in the number of funeral services performed by
Existing Operations worldwide. The number of domestic funeral services for
Existing Operations remained flat. This was partially offset by an increase in
the average revenue per funeral service performed by Existing Operations. The
increase in average revenue per funeral service was due in part to improved
merchandising, personalization of services and product offerings and enhanced
funeral arranger training implemented in response to the findings of our
extensive consumer market study.

Cemetery Segment



                                                         THREE MONTHS ENDED
                                                              APRIL 30,
                                                        ---------------------
                                                        2001        2000        (DECREASE)
                                                        -----   -------------   ----------
                                                                (AS REPORTED)
                                                                (IN MILLIONS)
                                                                       
Cemetery Revenue......................................  $63.0       $73.1         $(10.1)
Cemetery Costs........................................   47.4        54.1           (6.7)
                                                        -----       -----         ------
Cemetery Segment Profit...............................  $15.6       $19.0         $ (3.4)
                                                        =====       =====         ======


     Cemetery revenue decreased $10.1 million, or 14 percent, for the three
months ended April 30, 2001, compared to the corresponding period in 2000. We
experienced a decrease in cemetery merchandise deliveries and reduced preneed
cemetery property sales. Reduced preneed sales resulted from changes we made to
our preneed strategies in fiscal year 2000. Partially offsetting this decrease
was a $0.8 million, or 1 percent, increase due to the effect of implementing SAB
101.

Other

     Net interest expense, which is comprised of gross interest expense of $14.1
million, netted with investment income of $1.6 million, decreased $1.9 million
during the second quarter of fiscal year 2001 compared to the same period in
2000. This is due principally to a $97.3 million decrease in the average
outstanding debt balance coupled with a $0.9 million increase in investment
income from increased cash and cash equivalents, which earned an average rate of
7.4 percent, including funds in foreign jurisdictions that earned 10.6 percent.

     Other income, net, increased approximately $2.4 million during the second
quarter of fiscal year 2001 compared to the same period in 2000 due principally
to a net gain on the sale of excess cemetery property.
                                        39
   51

SIX MONTHS ENDED APRIL 30, 2001 COMPARED TO SIX MONTHS ENDED APRIL 30, 2000

     The following discussion compares our financial results for the six months
ended April 30, 2001 and 2000, both as reported. Results for the six months
ended April 30, 2001 reflect the implementation of SAB 101, whereas results for
the corresponding period in 2000 do not. Therefore, the results from these two
periods are not comparable

Funeral Segment



                                                          SIX MONTHS ENDED
                                                             APRIL 30,
                                                       ----------------------
                                                        2001        2000        (DECREASE)
                                                       ------   -------------   ----------
                                                                (AS REPORTED)
                                                                (IN MILLIONS)
                                                                       
Funeral Revenue......................................  $215.3      $238.4         $(23.1)
Funeral Costs........................................   165.0       172.8           (7.8)
                                                       ------      ------         ------
Funeral Segment Profit...............................  $ 50.3      $ 65.6         $(15.3)
                                                       ======      ======         ======


     Funeral revenue decreased $23.1 million, or 10 percent, for the six months
ended April 30, 2001, compared to the corresponding period in 2000. We
experienced a $14.7 million, or 7 percent, decrease due to the effect of
implementing SAB 101. We also experienced a reduction in revenue from changes in
foreign currency exchange rates (due in part to the Euro) and a 6.1 percent
decrease (4,339 events) in the number of funeral services performed by Existing
Operations worldwide (2.9 percent decrease (1,132 events) domestically).

     Partially offsetting this decrease was an increase in the average revenue
per funeral service performed by Existing Operations. The increase in average
revenue per funeral service was due in part to improved merchandising,
personalization of services and product offerings and enhanced funeral arranger
training implemented in response to the findings of our extensive consumer
market study.

Cemetery Segment



                                                          SIX MONTHS ENDED
                                                             APRIL 30,
                                                       ----------------------    INCREASE
                                                        2001        2000        (DECREASE)
                                                       ------   -------------   ----------
                                                                (AS REPORTED)
                                                                (IN MILLIONS)
                                                                       
Cemetery Revenue.....................................  $132.3      $143.4         $(11.1)
Cemetery Costs.......................................    98.4       110.5          (12.1)
                                                       ------      ------         ------
Cemetery Segment Profit..............................  $ 33.9      $ 32.9         $  1.0
                                                       ======      ======         ======


     Cemetery revenue decreased $11.1 million, or 8 percent, for the six months
ended April 30, 2001, compared to the corresponding period in 2000 primarily
from reduced cemetery merchandise deliveries and reduced preneed cemetery
property sales. The reduction in preneed sales is due to the changes made to our
preneed sales program in fiscal year 2000. Partially offsetting this decrease,
we experienced a $3.6 million, or 3 percent, increase due to the effect of
implementing SAB 101.

Other

     Net interest expense, which is comprised of gross interest expense of $29.5
million, netted with investment income of $3.7 million, decreased $3.2 million
during the first six months of fiscal year 2001 compared to the same period in
2000. This is due principally to a decrease in gross interest expense and a $2.7
million increase in investment income from increased cash and cash equivalents,
which earned an average rate of 7.8 percent, including funds in foreign
jurisdictions that earned 11.1 percent. The decrease in gross interest expense
was due to a $73.8 million decrease in average outstanding debt, partially
offset by an increase in average interest rates from 6.2 percent in 2000 to 6.5
percent in 2001.
                                        40
   52

     Other income, net, increased approximately $2.4 million during the first
six months of fiscal year 2001 compared to the same period in 2000. This
increase is principally due to a net gain on the sale of excess cemetery
property during the second quarter of fiscal year 2001.

     As of April 30, 2001, our outstanding borrowings totaled $866.4 million. Of
the total amount outstanding, including the portion subject to the interest rate
swap agreement, approximately 69 percent was fixed-rate debt, with the remaining
31 percent subject to short-term variable interest rates averaging approximately
6.3 percent.

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999

     The following discussion compares our financial results for fiscal year
2000 and fiscal year 1999, both as reported. These results do not reflect the
implementation of SAB 101. The accounting methods used in both periods were the
same and therefore the results for these two periods are comparable.

Funeral Segment



                                                       YEAR ENDED OCTOBER 31,
                                                       ----------------------    INCREASE
                                                        2000        1999        (DECREASE)
                                                       ------   -------------   ----------
                                                                (AS REPORTED)
                                                                (IN MILLIONS)
                                                                       
FUNERAL REVENUE
Existing Operations..................................  $409.8      $422.4         $(12.6)
Acquired/Opened Operations...........................    42.1        23.5          (18.6)
                                                       ------      ------         ------
                                                       $451.9      $445.9         $  6.0
                                                       ======      ======         ======
FUNERAL COSTS
Existing Operations..................................  $300.8      $300.7         $  0.1
Acquired/Opened Operations...........................    34.4        18.3           16.1
                                                       ------      ------         ------
                                                       $335.2      $319.0         $ 16.2
                                                       ======      ======         ======
Funeral Segment Profit...............................  $116.7      $126.9         $(10.2)
                                                       ======      ======         ======


     Funeral revenue increased $6.0 million, or 1 percent, for fiscal year 2000,
compared to fiscal year 1999. We experienced a $12.6 million, or 3 percent,
decrease in revenue from Existing Operations as a result of several factors.
First, we experienced a 6.2 percent increase in the average revenue per domestic
funeral service performed by Existing Operations (6.8 percent increase
worldwide, excluding the effect of foreign currency translation). The increase
in average revenue per funeral service was due in part to enhanced funeral
arranger training, improved merchandising and personalization of services and
product offerings based on findings of our extensive consumer market study.

     Offsetting the increase in average revenue per funeral service was a $15.0
million reduction in preneed funeral merchandise sales, a $6.6 million reduction
in revenue from changes in foreign currency exchange rates (principally the
Euro) and a 1.8 percent decrease (1,300 events) in the number of domestic
funeral services performed by Existing Operations (3.5 percent decrease (4,548
events) worldwide). However, included in the 1,300 events were more than 600
low-end direct cremation events that we elected not to sell at prices our
competitors were charging. Additionally, discount services provided in the
ordinary course of business in the industry on behalf of other funeral homes or
institutions declined by approximately 400 events as a result of our decision to
decrease our level of discounted services. When these low-end and discounted
events are taken out of the calculation, the number of domestic funeral services
performed by Existing Operations decreased by approximately 250 events, which
translates to less than one event per domestic core funeral home. These low-end
and discounted events were price-sensitive and generally not profitable.

     Changes in our preneed sales strategies during fiscal year 2000 had the
effect of increasing our cash flow, but considerably reducing all preneed sales.
We modified our preneed payment plans early in fiscal year 2000 by increasing
finance charges, requiring larger down payments and shortening installment
payment

                                        41
   53

terms. Effective the first day of the fourth quarter of fiscal year 2000, we
also substantially reduced the commissions paid on sales of preneed cemetery
services and preneed funeral and cemetery merchandise, which we believe had the
largest impact on our preneed sales. The change in commission structure provides
an incentive to our preneed sales counselors to focus on selling preneed
cemetery property and preneed funeral services. We believe that these are the
sales that build and maintain market share. In addition, the change better
aligns our operations with changes in accounting necessitated by the adoption of
SAB 101 because, after the implementation of SAB 101, preneed cemetery property
sales are the only preneed sales that we recognize on a current basis (after we
collect 10 percent of the sales price). We also believe that these changes have
improved the quality of our preneed sales and receivables. Although we reduced
or eliminated commissions available to our preneed sales counselors on certain
sales, we now provide a minimum compensation guarantee. These changes in our
preneed sales strategies contributed to a decline in our full-time domestic
preneed sales force from approximately 2,200 counselors during the first quarter
of fiscal year 2000 to approximately 1,200 counselors by the end of the first
quarter of fiscal year 2001. We do not expect any significant further decline in
the size of our preneed sales force.

     Funeral profit margin from Existing Operations decreased from 28.8 percent
in 1999 to 26.6 percent in 2000 due primarily to the reduction in sales of
preneed funeral merchandise as described above.

     The increase in revenue and costs from Acquired/Opened Operations resulted
primarily from our acquisition and construction of funeral homes from November
1998 through October 2000 which were not owned for the entirety of both periods
being presented.

     Historically, one of our goals has been to achieve 5 to 7 percent increases
annually in the average revenue per funeral service performed by Existing
Operations through a combination of price increases and improvements in
merchandising. For fiscal year 1999, the average revenue per funeral service
performed by existing funeral homes increased 0.7 percent domestically and 3.1
percent worldwide, excluding the effect of foreign currency translation, which
was below this objective. Because of intense and growing competition from
low-cost funeral service and merchandise providers in some key markets in fiscal
year 1999, we lowered our goals for increases in the average revenue per funeral
service performed to 2 to 3 percent annually. For fiscal year 2000, the average
revenue per funeral service performed by existing funeral homes increased 6.2
percent domestically and 6.8 percent worldwide, excluding the effect of foreign
currency translation. Although these results exceeded our goals, our operating
budget projects increases in average revenue per funeral service performed of 2
to 3 percent going forward.

Cemetery Segment



                                                       YEAR ENDED OCTOBER 31,
                                                       ----------------------    INCREASE
                                                        2000        1999        (DECREASE)
                                                       ------   -------------   ----------
                                                                (AS REPORTED)
                                                                (IN MILLIONS)
                                                                       
CEMETERY REVENUE
Existing Operations..................................  $252.5      $292.4         $(39.9)
Acquired/Opened Operations...........................    30.4        17.8           12.6
                                                       ------      ------         ------
                                                       $282.9      $310.2         $(27.3)
                                                       ======      ======         ======
CEMETERY COSTS
Existing Operations..................................  $195.8      $212.7         $(16.9)
Acquired/Opened Operations...........................    24.8        14.0           10.8
                                                       ------      ------         ------
                                                       $220.6      $226.7         $ (6.1)
                                                       ======      ======         ======
Cemetery Segment Profit..............................  $ 62.3      $ 83.5         $(21.2)
                                                       ======      ======         ======


     Cemetery revenue decreased $27.3 million, or 9 percent, for fiscal year
2000, compared to fiscal year 1999. We experienced a $39.9 million, or 14
percent, decrease in revenue from Existing Operations resulting primarily from
reduced preneed sales. Slightly offsetting this decrease was an approximate $4.0
million, or

                                        42
   54

13 percent, increase in revenue from preneed cemetery merchandise and services
trust funds and escrow accounts to $34.7 million. This increase was due to an
increase in the average yield on the funds coupled with an increase in the
average balance. The yield for the year was slightly higher than our goal of 8.5
percent to 9.0 percent.

     Changes in our preneed sales strategies during fiscal year 2000, which are
detailed in the funeral segment discussion above, had the effect of considerably
reducing preneed cemetery sales.

     Cemetery profit margin from Existing Operations decreased from 27.3 percent
in 1999 to 22.5 percent in 2000. The decline was attributable principally to
reduced preneed sales as described above, coupled with the high fixed-cost
nature of the cemetery business.

     The increase in revenue and costs from Acquired/Opened Operations resulted
primarily from our acquisition and construction of cemeteries from November 1998
through October 2000 which were not owned for the entirety of both periods being
presented.

Other

     Corporate general and administrative expenses increased approximately
$600,000 to 2.7 percent of revenue in fiscal year 2000, as compared to 2.5
percent in fiscal year 1999. The increase was primarily the result of a $2.3
million increase in consulting fees related to our extensive consumer market
research project, partially offset by a reduction in corporate development
costs, travel costs and executive bonus accruals.

     Net interest expense, which is comprised of gross interest expense of $61.4
million, netted with investment income of $5.1 million, increased $4.1 million
during fiscal year 2000 compared to fiscal year 1999. This was due principally
to an increase in average interest rates from 6.0 percent in 1999 to 6.4 percent
in 2000, coupled with an increase in the average outstanding debt resulting from
acquisitions that closed late in 1999. The increase in gross interest expense
was partially offset by an approximate $2.6 million increase in investment
income generated from increased cash and cash equivalents earning an average
rate of 6.9 percent, including funds in foreign jurisdictions earning 8.8
percent.

     In December 1998, we entered into an interest rate swap agreement on a
notional amount of $200.0 million. Under the terms of the agreement, effective
March 4, 1999, we pay a fixed rate of 4.915 percent and receive three-month
LIBOR. The swap expires on March 4, 2002.

     As of October 31, 2000, our outstanding borrowings totaled $950.5 million.
Of the total amount outstanding, including the portion subject to the interest
rate swap agreement, approximately 65 percent was fixed-rate debt, with the
remaining 35 percent subject to short-term variable interest rates averaging
approximately 7.2 percent.

FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998

     The following discussion compares our financial results for fiscal year
1999 and fiscal year 1998, both as reported. These results do not reflect the
implementation of SAB 101. Effective fiscal year 1999, we changed our method of
accounting for earnings realized by those preneed funeral merchandise and
services trust funds and escrow accounts where we are allowed to retain earnings
on the funds if the contract is cancelled. After the change, we defer all of the
earnings realized by these trust funds and escrow accounts until the merchandise
and services are delivered. Previously, we recognized a portion of those
earnings and deferred the remainder to offset the estimated future effects of
inflation. Accordingly, fiscal year 1999 and 1998, as reported, are not
comparable with respect to the accounting for these earnings.

                                        43
   55

Funeral Segment



                                                    YEAR ENDED OCTOBER 31,
                                                   -------------------------
                                                    1999           1998           INCREASE
                                                   ------      -------------      --------
                                                               (AS REPORTED)
                                                               (IN MILLIONS)
                                                                         
Funeral Revenue..............................      $445.9         $379.1           $66.8
Funeral Costs................................       319.0          260.7            58.3
                                                   ------         ------           -----
Funeral Segment Profit.......................      $126.9         $118.4           $ 8.5
                                                   ======         ======           =====


     Funeral revenue increased $66.8 million, or 18 percent, for fiscal year
1999, compared to fiscal year 1998 primarily due to an increase in revenue from
Acquired/Opened Operations resulting from our acquisition and construction of
funeral homes from November 1997 through October 1999 which were not owned for
the entirety of both periods being presented. Additionally, we experienced an
increase in revenue as a result of an increase in sales of certain preneed
funeral merchandise, coupled with an increase in the average revenue per funeral
service performed by Existing Operations, primarily due to price increases and
improved merchandising. Partially offsetting this increase was a 2.2 percent
(1,306 events) decrease in the number of domestic funeral services performed by
Existing Operations (2.5 percent (2,358 events) decrease worldwide) and a $13.5
million decrease due to the effect of the implementation of the 1999 change in
accounting principle.

     We believe that at-need funeral revenues in some key markets were
negatively affected in fiscal year 1999 by (1) intense and growing price
competition from low-cost funeral providers and casket stores in some markets,
(2) the continuing and accelerating trend toward cremation, and (3) a shift by
customers to lower-priced services and merchandise.

Cemetery Segment



                                                    YEAR ENDED OCTOBER 31,
                                                   -------------------------
                                                    1999           1998           INCREASE
                                                   ------      -------------      --------
                                                               (AS REPORTED)
                                                               (IN MILLIONS)
                                                                         
Cemetery Revenue.............................      $310.2         $269.3           $40.9
Cemetery Costs...............................       226.7          191.7            35.0
                                                   ------         ------           -----
Cemetery Segment Profit......................      $ 83.5         $ 77.6           $ 5.9
                                                   ======         ======           =====


     Cemetery revenue increased $40.9 million, or 15 percent, for fiscal year
1999, compared to fiscal year 1998 primarily due to an increase in revenue from
Acquired/Opened Operations resulting from our acquisition and construction of
cemeteries from November 1997 through October 1999 which were not owned for the
entirety of both periods being presented. Additionally, there was an increase in
preneed cemetery sales, due to price increases and improved merchandising,
coupled with an increase in the revenue realized from our preneed cemetery
merchandise and services trust funds and escrow accounts. The revenue from these
trust funds and escrow accounts increased $3.6 million, or 14 percent, to $29.4
million due to a 20 percent growth in the average balance in the funds,
resulting from current year customer payments deposited into the funds and funds
added through acquisitions, coupled with an increase in the average yield on the
funds. The yield was in line with our goal of 8.5 percent to 9.0 percent.

Other

     In April 1998, we achieved the performance goal for the performance-based
stock options granted under our 1995 Incentive Compensation Plan. As a result,
we were required to record a nonrecurring, noncash charge to earnings of
approximately $76.8 million (approximately $50.3 million, or $.51 per share,
after tax) in April 1998. Our repurchase of options and the exercise of the
remaining options resulted in a net cash outlay of approximately $69.4 million.

                                        44
   56

     Corporate general and administrative expenses declined to 2.5 percent of
revenue in fiscal year 1999, as compared to 2.6 percent in fiscal year 1998,
despite an aggregate increase of $2.5 million for fiscal year 1999. The increase
in these expenses was primarily the result of increasing activities to support
our growth, including a $900,000 increase in professional and consulting fees.

     Net interest expense increased $10.4 million during fiscal year 1999
compared to fiscal year 1998, resulting from an increase in average borrowings
due principally to acquisition expenditures. This increase was partially offset
by a decrease in average interest rates from 6.4 percent in 1998 to 6.0 percent
in 1999 and an increase in the investment earnings on excess cash for fiscal
year 1999 as compared to 1998.

     In December 1998, we entered into an interest rate swap agreement on a
notional amount of $200.0 million. Under the terms of the agreement, effective
March 4, 1999, we pay a fixed rate of 4.915 percent and receive three-month
LIBOR. The swap expires on March 4, 2002.

     As of October 31, 1999, our outstanding borrowings totaled $951.4 million.
Of the total amount outstanding, including the portion subject to the interest
rate swap agreement, approximately 65 percent was fixed-rate debt, with the
remaining 35 percent subject to short-term variable interest rates averaging
approximately 5.9 percent.

     We experienced an increase in our effective tax rate from 35.5 percent in
fiscal year 1998 to 36.5 percent in fiscal year 1999 due to an increase in
income from jurisdictions with higher effective tax rates.

IMPLEMENTATION OF SAB 101

     Effective fiscal year 2001, we implemented the Securities and Exchange
Commission's Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements" ("SAB 101"), which resulted in changing our methods of
accounting for some of our preneed sales activities. In the following sections,
we provide (1) a summary of the changes in our accounting resulting from the
implementation of SAB 101, (2) a summary of our current accounting (after
implementation of SAB 101) for preneed sales and for trust and escrow account
earnings, and (3) a discussion of the pro forma impact of SAB 101 on our results
for fiscal years 2000 and 1999.

     Summary of Accounting Changes.  The implementation of SAB 101 changed our
accounting for preneed sales activities as follows:

     - For preneed sales of interment rights (which we also refer to as cemetery
       property), the associated revenue and all costs to acquire the sale will
       be recognized in accordance with Statement of Financial Accounting
       Standards ("SFAS") No. 66, "Accounting for Sales of Real Estate." Under
       SFAS 66, recognition of revenue and costs must be deferred until 10
       percent of the property sale price has been collected. Previously, the
       revenue and costs were recognized when the contract was executed with the
       customer.

     - For preneed sales of cemetery merchandise, primarily vaults and markers,
       and preneed sales of cemetery services, primarily openings and closings
       of burial sites and installations of markers, the associated revenue and
       all costs to acquire the sale will be deferred until the merchandise is
       delivered or the service is performed. Previously, the revenue and costs
       were recognized when the contract was executed with the customer.

     - Preneed cemetery merchandise and services trust earnings will be deferred
       until the underlying merchandise or service is delivered. Previously, the
       earnings were recognized as earned in the trust.

     - Accounting for preneed funeral service sales and earnings on preneed
       funeral merchandise and services trust funds was not affected, as those
       revenues were recognized upon delivery of the merchandise and services
       under the prior accounting policy.

     - Preneed funeral merchandise sales (primarily caskets) and associated
       direct selling costs (primarily commissions and direct marketing costs)
       will be deferred until the merchandise is delivered, at which

                                        45
   57

       time they will be reflected in funeral revenue and funeral cost of sales,
       respectively. Previously, these sales and associated direct selling costs
       were recognized as funeral revenue and funeral cost of sales,
       respectively, when the contract was executed with the customer.

     - Our method of accounting for our perpetual care trusts was not affected.
       Earnings on those trusts will continue to be recognized as they are
       earned in the trusts.

     The implementation of SAB 101 resulted in several changes to our balance
sheet, including the addition of two new categories: prearranged receivables and
prearranged deferred revenue. Prearranged receivables are related to preneed
sales of funeral and cemetery merchandise and services, or in other words, all
of our preneed sales except for preneed sales of cemetery property. Prearranged
receivables represent the funds owed to us (1) from preneed funeral merchandise
and services trusts and from preneed cemetery merchandise and services trusts,
which represent amounts already paid by customers and realized earnings on those
amounts, (2) from customers and (3) from insurance companies. Prearranged
deferred revenue represents the revenue we will recognize upon delivery of the
preneed funeral and cemetery merchandise and services at the time of need. The
net change in prearranged receivables and prearranged deferred revenue will be
recognized in our cash flow statement in the operating section as a change in
prearranged activity.

     Prior to our adoption of SAB 101, neither the funeral trust assets nor the
receivables related to preneed funerals were included on our balance sheet.
Receivables due from customers related to preneed cemetery merchandise and
services were previously included with other receivables on the balance sheet.
The preneed cemetery merchandise and services trust asset was previously
presented net of the liability for the estimated cost to deliver.

     All direct costs to acquire preneed funeral and cemetery merchandise and
cemetery services sales will now be included in deferred charges (asset).
Previously, these costs were expensed as incurred. Also included in deferred
charges are the costs to acquire preneed funeral service sales, which is
consistent with our historical accounting methods. The cost to acquire all
preneed merchandise and service sales will be included in the operating section
of our cash flow statement as prearranged acquisition costs.

     We have filed a Form 8-K dated March 14, 2001, which describes in detail
our new accounting methods as compared to our previous accounting methods.

     The cumulative effect of these changes on prior years resulted in a
decrease in net earnings for the three and six months ended April 30, 2001 of
$250.0 million (net of a $166.7 million income tax benefit), or $2.33 per share.
The effect of the change in accounting principles for the three and six months
ended April 30, 2001 was an increase in net earnings of $3.1 million and $6.9
million, or $.03 per share and $.06 per share, respectively.

     Summary of Current Accounting for Preneed Sales.  A description of our
current accounting for preneed sales under SAB 101 follows.

     Revenue from preneed sales of funeral services and funeral merchandise is
deferred until the period in which the funeral is performed and the merchandise
is delivered. On the balance sheet, the full contract amount is included in the
prearranged deferred revenue line item (liability). The corresponding receivable
due from the customer is reflected in prearranged receivables (asset), and the
corresponding cash received from the customer is reflected part in prearranged
receivables (for the portion placed in trust) and part in cash (for the portion
we are allowed to retain). The costs to acquire the sales (primarily commissions
and direct marketing costs) are reflected on the balance sheet as deferred
charges (asset) and are charged to expense as the funeral services are performed
and products delivered. Indirect costs of marketing preneed funeral services and
merchandise are expensed in the period in which incurred.

     As the customer makes payments on the preneed contract, the portion of
prearranged receivables representing the receivable due from the customer
declines, and the portion representing the receivable from the trust increases.
We record cash for the amount of cash received that is not required to be placed
in trust. Realized earnings on the amounts held in trust are included in
prearranged receivables and prearranged

                                        46
   58

deferred revenue on the balance sheet and are not recognized as revenue until
delivery of the service or merchandise.

     When the funeral service or merchandise is delivered, we recognize as
revenue the full contract amount plus all trust earnings associated with that
contract, and record a corresponding reduction in prearranged deferred revenue
(liability). We debit cash with the amount held in trust that is attributable to
the contract (consisting of the customer's payments and related realized
earnings, all of which we withdraw at that time), and we record a corresponding
reduction in prearranged receivables (asset). Associated deferred charges
(asset) are charged to expense, and we recognize the actual expenses incurred in
delivering the services and merchandise.

     Preneed sales of cemetery merchandise, primarily vaults and markers, and
preneed sales of cemetery services, primarily openings and closings of burial
sites and installations of markers, are accounted for in essentially the same
manner as preneed sales of funeral services and merchandise.

     For preneed sales of interment rights (which we also refer to as cemetery
property), the associated revenue and all costs to acquire the sale are
recognized in accordance with SFAS 66, "Accounting for Sales of Real Estate."
Under SFAS 66, recognition of revenue and costs must be deferred until 10
percent of the property sales price has been collected. A portion, generally 10
percent, of the proceeds are placed into perpetual care trust funds. We withdraw
and recognize realized earnings from these funds monthly to apply towards the
maintenance of cemetery grounds. The perpetual care trust funds are not
reflected on our financial statements, because principal must remain in the
trust in perpetuity.

     Summary of Current Accounting for Trust and Escrow Account Earnings.  We
have three types of trust funds and escrow accounts: (1) preneed funeral
merchandise and services, (2) preneed cemetery merchandise and services, and (3)
perpetual care. As described below, earnings on preneed funeral and cemetery
merchandise and services trust funds and escrow accounts are now accounted for
in the same manner. Our accounting for earnings on perpetual care trust funds is
different from the other two types of trust funds due to the different nature of
the trusts, as described below.

          Preneed funeral merchandise and services trust funds and escrow
     accounts.  Effective fiscal year 1999, we changed our method of accounting
     for earnings realized by those preneed funeral merchandise and services
     trust funds and escrow accounts where we are allowed to retain earnings on
     the funds if the contract is cancelled. We now defer recognition of all
     earnings realized by these trust funds and escrow accounts until the
     underlying funeral service or merchandise is delivered. (For those trust
     funds and escrow accounts where we must return earnings on the funds if the
     contract is cancelled, we have always deferred recognition of realized
     earnings until the underlying funeral service or merchandise is delivered.)
     These accounting methods were not affected by our implementation of SAB
     101. We generally do not withdraw cash (principal and earnings) from these
     trust funds and escrow accounts until the merchandise or service is
     delivered. Principal and realized earnings in these funds and escrow
     accounts are reflected as prearranged receivables (asset) on our balance
     sheet. The full contract amount and realized earnings in these funds and
     escrow accounts are reflected as prearranged deferred revenue (liability)
     on our balance sheet. Unrealized gains and losses are not reflected on our
     balance sheet or income statement, but are included in the footnotes to our
     annual financial statements.

          Preneed cemetery merchandise and services trust funds and escrow
     accounts.  As discussed above, effective fiscal year 2001, we implemented
     SAB 101 and changed our method of accounting for earnings realized by
     preneed cemetery merchandise and services trust funds and escrow accounts.
     We now defer all earnings from these funds until the underlying merchandise
     or service is delivered. We generally do not withdraw cash (principal and
     earnings) from these trust funds and escrow accounts until the merchandise
     or service is delivered. Principal and realized earnings in these funds and
     escrow accounts are reflected as prearranged receivables (asset) on our
     balance sheet. The full contract amount and realized earnings in these
     funds and escrow accounts are reflected as prearranged deferred revenue
     (liability) on our balance sheet. Unrealized gains and losses are not
     reflected on our balance sheet or income statement, but are included in the
     footnotes to our annual financial statements.

                                        47
   59

          Perpetual care trust funds.  We recognize the earnings on our
     perpetual care trust funds as they are realized in the trust. This
     accounting method was not affected by our implementation of SAB 101. We
     generally withdraw the earnings on a monthly basis to offset the cost of
     maintaining our cemeteries. Principal and earnings in these funds are not
     reflected on our balance sheet, because the principal must remain in the
     trust in perpetuity.

     Comparative Actual and Pro Forma Results of Operations for Fiscal Year
2000.  The following table presents our results of operations for fiscal year
2000 as reported, in comparison to the pro forma results assuming implementation
of SAB 101:



                                                              YEAR ENDED
                                                           OCTOBER 31, 2000
                                                      ---------------------------   EFFECT OF
                                                      AS REPORTED     PRO FORMA      SAB 101
                                                      -----------   -------------   ---------
                                                                    (IN MILLIONS)
                                                                           
Revenues:
  Funeral...........................................    $451.9         $425.5        $(26.4)
  Cemetery..........................................     282.9          287.9           5.0
                                                        ------         ------        ------
                                                         734.8          713.4         (21.4)
                                                        ------         ------        ------
Costs and expenses:
  Funeral...........................................     335.2          323.1         (12.1)
  Cemetery..........................................     220.6          226.0           5.4
                                                        ------         ------        ------
                                                         555.8          549.1          (6.7)
                                                        ------         ------        ------
  Gross profit......................................     179.0          164.3         (14.7)
Corporate general and administrative expenses.......      19.7           19.7            --
                                                        ------         ------        ------
  Operating earnings................................     159.3          144.6         (14.7)
Interest expense, net...............................     (56.3)         (56.3)           --
Other income, net...................................       2.2            2.2            --
                                                        ------         ------        ------
  Earnings before income taxes and cumulative effect
     of change in accounting principles.............     105.2           90.5         (14.7)
Income taxes........................................      38.4           33.0          (5.4)
                                                        ------         ------        ------
  Earnings before cumulative effect of change in
     accounting principles..........................    $ 66.8         $ 57.5        $ (9.3)
                                                        ======         ======        ======


     Funeral revenue decreased $26.4 million, or 6 percent, due to the pro forma
effect of implementing SAB 101. On a pro forma basis, we experienced a decrease
of $44.0 million in funeral revenue due to the deferral of preneed funeral
merchandise sales, primarily caskets, occurring in fiscal year 2000. This was
partially offset by the recognition of $17.6 million of funeral revenue
representing preneed funeral merchandise sales, primarily caskets, that were
made in prior years but delivered in fiscal year 2000. The decrease in funeral
revenue resulting from SAB 101 reflects the fact that we sold more preneed
funeral merchandise in fiscal year 2000 than we delivered.

     The decrease in funeral costs of $12.1 million, or 4 percent, was due to
the deferral of $20.2 million of costs associated with preneed funeral
merchandise sales, primarily caskets, entered into in fiscal year 2000. This was
partially offset by the recognition of $8.1 million in costs relating to these
types of contracts that were entered into in prior years but delivered in fiscal
year 2000.

     Cemetery revenue increased $5.0 million, or 2 percent, due to the pro forma
effects of implementing SAB 101. On a pro forma basis, we experienced an
increase of $99.7 million in cemetery revenue due to the delivery in fiscal year
2000 of cemetery merchandise and services (openings and closings) relating to
contracts entered into prior to fiscal year 2000. This was partially offset by
the deferral of $88.8 million of cemetery revenue relating to preneed sales of
cemetery merchandise and services (openings and closings) entered into in fiscal
year 2000. The increase in cemetery revenue resulting from SAB 101 reflects the
fact that we delivered more preneed cemetery merchandise and services in fiscal
year 2000 than we sold. In

                                        48
   60

addition, on a pro forma basis we deferred $21.0 million of preneed cemetery
merchandise and services trust earnings realized in the trust during fiscal year
2000. We recognized $5.6 million of preneed cemetery merchandise and services
trust earnings realized in the trusts prior to fiscal year 2000, because the
associated merchandise and services were delivered in fiscal year 2000. We also
experienced an increase due to an adjustment related to SFAS 66 for $9.5
million.

     The increase in cemetery costs of $5.4 million, or 2 percent, was due to
the recognition of $35.3 million in costs relating to preneed cemetery
merchandise and services (openings and closings) contracts entered into in prior
fiscal years but delivered in fiscal year 2000. This was partially offset by the
deferral of $34.1 million of costs related to the same type of contracts entered
into in fiscal year 2000. We also experienced an increase due to an adjustment
related to SFAS 66 for $4.2 million.

     Comparative Actual and Pro Forma Results of Operations for Fiscal Year
1999.  The following table presents our results of operations for fiscal year
1999 as reported, in comparison to the pro forma results assuming implementation
of SAB 101:



                                                              YEAR ENDED
                                                           OCTOBER 31, 1999
                                                      ---------------------------   EFFECT OF
                                                      AS REPORTED     PRO FORMA      SAB 101
                                                      -----------   -------------   ---------
                                                                    (IN MILLIONS)
                                                                           
Revenues:
  Funeral...........................................    $445.9         $405.4        $(40.5)
  Cemetery..........................................     310.2          289.6         (20.6)
                                                        ------         ------        ------
                                                         756.1          695.0         (61.1)
                                                        ------         ------        ------
Costs and expenses:
  Funeral...........................................     319.0          299.2         (19.8)
  Cemetery..........................................     226.7          225.1          (1.6)
                                                        ------         ------        ------
                                                         545.7          524.3         (21.4)
                                                        ------         ------        ------
  Gross profit......................................     210.4          170.7         (39.7)
Corporate general and administrative expenses.......      19.2           19.2            --
                                                        ------         ------        ------
  Operating earnings................................     191.2          151.5         (39.7)
Interest expense, net...............................     (52.2)         (52.2)           --
Other income, net...................................       3.5            3.5            --
                                                        ------         ------        ------
  Earnings before income taxes and cumulative effect
     of change in accounting principles.............     142.5          102.8         (39.7)
Income taxes........................................      52.0           37.6         (14.4)
                                                        ------         ------        ------
  Earnings before cumulative effect of change in
     accounting principles..........................    $ 90.5         $ 65.2        $(25.3)
                                                        ======         ======        ======


     Funeral revenue decreased $40.5 million, or 9 percent, due to the pro forma
effect of implementing SAB 101. On a pro forma basis, we experienced a decrease
of $58.4 million in funeral revenue due to the deferral of preneed funeral
merchandise sales, primarily caskets, occurring in fiscal year 1999. This was
partially offset by the recognition of $17.9 million of funeral revenue
representing preneed funeral merchandise sales, primarily caskets, that were
made in prior years but delivered in fiscal year 1999. The decrease in funeral
revenue resulting from SAB 101 reflects the fact that we sold more preneed
funeral merchandise in fiscal year 1999 than we delivered.

     The decrease in funeral costs of $19.8 million, or 6 percent, was due to
the deferral of $29.8 million of costs associated with preneed funeral
merchandise sales, primarily caskets, entered into in fiscal year 1999. This was
partially offset by the recognition of $10.0 million in costs relating to these
types of contracts that were entered into in prior years but delivered in fiscal
year 1999.

     Cemetery revenue decreased $20.6 million, or 7 percent, due to the pro
forma effects of implementing SAB 101. On a pro forma basis, we experienced an
increase of $89.8 million in cemetery revenue due to the delivery in fiscal year
1999 of cemetery merchandise and services (openings and closings) relating to

                                        49
   61

contracts entered into prior to fiscal year 1999. This was offset by the
deferral of $97.4 million of cemetery revenue relating to preneed sales of
cemetery merchandise and services (openings and closings) entered into in fiscal
year 1999. The decrease in cemetery revenue resulting from SAB 101 reflects the
fact that we sold more preneed cemetery merchandise and services in fiscal year
1999 than we delivered. In addition, on a pro forma basis we deferred $17.3
million of preneed cemetery merchandise and services trust earnings realized in
the trust during fiscal year 1999. We recognized $4.3 million of preneed
cemetery merchandise and services trust earnings realized in the trusts prior to
fiscal year 1999 because the associated merchandise and services were delivered
in fiscal year 1999.

     The decrease in cemetery costs of $1.6 million, or 1 percent, was due to
the recognition of $35.9 million in costs relating to preneed cemetery
merchandise and services (openings and closings) contracts entered into in prior
fiscal years but delivered in fiscal year 1999. This was offset by the deferral
of $37.5 million of costs related to the same type of contracts entered into in
fiscal year 1999.

THREE MONTHS ENDED APRIL 30, 2001 COMPARED TO PRO FORMA THREE MONTHS ENDED APRIL
30, 2000

     Information for the three months ended April 30, 2001 is presented as
reported, which reflects the implementation of SAB 101. Information for the
three months ended April 30, 2000 is presented as if the change in accounting
principles due to the implementation of SAB 101 had occurred November 1, 1999.

Funeral Segment



                                                         THREE MONTHS ENDED
                                                              APRIL 30,
                                                    -----------------------------    INCREASE
                                                        2001            2000        (DECREASE)
                                                    -------------   -------------   ----------
                                                                    (PRO FORMA)
                                                    (AS REPORTED)   (IN MILLIONS)
                                                                           
FUNERAL REVENUE
Existing Operations...............................     $105.8           $108.5        $(2.7)
Opened Operations.................................        2.2              0.5          1.7
                                                       ------           ------        -----
                                                       $108.0           $109.0        $(1.0)
                                                       ======           ======        =====
FUNERAL COSTS
Existing Operations...............................     $ 80.1           $ 81.2        $(1.1)
Opened Operations.................................        2.3              0.5          1.8
                                                       ------           ------        -----
                                                       $ 82.4           $ 81.7        $ 0.7
                                                       ======           ======        =====
Funeral Segment Profit............................     $ 25.6           $ 27.3        $(1.7)
                                                       ======           ======        =====


     Funeral revenue decreased $1.0 million, or 1 percent, for the three months
ended April 30, 2001, compared to the corresponding period in 2000. We
experienced a $2.7 million, or 2 percent, decrease in funeral revenue from
Existing Operations as a result of several factors. We experienced a 2.9 percent
decrease (995 events) in the number of funeral services performed by Existing
Operations worldwide (the number of domestic funeral services performed remained
flat) and a $1.8 million reduction in revenue from changes in foreign currency
exchange rates, a portion of which was due to the Euro.

     Offsetting this decrease was an increase in the average revenue per funeral
service performed by Existing Operations of 2.2 percent worldwide, excluding the
effect of foreign currency translation. The average revenue per domestic funeral
service performed by Existing Operations increased 0.6 percent. The increase in
average revenue per funeral service was due in part to improved merchandising,
personalization of services and product offerings and enhanced funeral arranger
training implemented in response to the findings of our extensive consumer
market study.

                                        50
   62

     Funeral profit margin from Existing Operations decreased from 25.2 percent
in 2000 to 24.3 percent in 2001 primarily due to the decline in the number of
funeral services performed by Existing Operations mentioned above, coupled with
the high fixed-cost nature of the funeral business.

     The increase in revenue from Opened Operations resulted primarily from our
construction or opening of funeral homes from May 2000 through April 2001, which
were not open for the entirety of both periods presented. There were no
acquisitions during the periods presented.

Cemetery Segment



                                                          THREE MONTHS ENDED
                                                               APRIL 30,
                                                     -----------------------------
                                                         2001            2000        DECREASE
                                                     -------------   -------------   --------
                                                                     (PRO FORMA)
                                                     (AS REPORTED)   (IN MILLIONS)
                                                                            
CEMETERY REVENUE
Existing Operations................................      $61.4           $72.2        $(10.8)
Acquired/Opened Operations.........................        1.6             1.7          (0.1)
                                                         -----           -----        ------
                                                         $63.0           $73.9        $(10.9)
                                                         =====           =====        ======
CEMETERY COSTS
Existing Operations................................      $46.2           $54.1        $ (7.9)
Acquired/Opened Operations.........................        1.2             1.8          (0.6)
                                                         -----           -----        ------
                                                         $47.4           $55.9        $ (8.5)
                                                         =====           =====        ======
Cemetery Segment Profit............................      $15.6           $18.0        $ (2.4)
                                                         =====           =====        ======


     Cemetery revenue decreased $10.9 million, or 15 percent, for the three
months ended April 30, 2001, compared to the corresponding period in 2000. We
experienced a $10.8 million, or 15 percent, decrease in revenue from Existing
Operations, resulting primarily from a decrease in cemetery merchandise
deliveries during the quarter and reduced preneed cemetery property sales. The
reduction in preneed sales is due to the changes made to our preneed sales
program in fiscal year 2000.

     Cemetery profit margin from Existing Operations decreased from 25.1 percent
in 2000 to 24.8 percent in 2001. The decline was principally due to the reduced
cemetery merchandise deliveries and reduced preneed property sales mentioned
above, coupled with the high fixed-cost nature of the cemetery business.

SIX MONTHS ENDED APRIL 30, 2001 COMPARED TO PRO FORMA SIX MONTHS ENDED APRIL 30,
2000

     Information for the six months ended April 30, 2001 is presented as
reported, which reflects the implementation of SAB 101. Information for the six
months ended April 30, 2000 is presented as if the change in accounting
principles due to the implementation of SAB 101 had occurred November 1, 1999.

                                        51
   63

Funeral Segment



                                                          SIX MONTHS ENDED
                                                              APRIL 30,
                                                    -----------------------------    INCREASE
                                                        2001            2000        (DECREASE)
                                                    -------------   -------------   ----------
                                                                    (PRO FORMA)
                                                    (AS REPORTED)   (IN MILLIONS)
                                                                           
FUNERAL REVENUE
Existing Operations...............................     $211.3           $223.1        $(11.8)
Opened Operations.................................        4.0              0.6           3.4
                                                       ------           ------        ------
                                                       $215.3           $223.7        $ (8.4)
                                                       ======           ======        ======
FUNERAL COSTS
Existing Operations...............................     $160.7           $165.3        $ (4.6)
Opened Operations.................................        4.3              0.7           3.6
                                                       ------           ------        ------
                                                       $165.0           $166.0        $ (1.0)
                                                       ======           ======        ======
Funeral Segment Profit............................     $ 50.3           $ 57.7        $ (7.4)
                                                       ======           ======        ======


     Funeral revenue decreased $8.4 million, or 4 percent, for the six months
ended April 30, 2001, compared to the corresponding period in 2000. We
experienced an $11.8 million, or 5 percent, decrease in revenue from Existing
Operations as a result of several factors. We experienced a $4.4 million
reduction in revenue from changes in foreign currency exchange rates (about half
of which is due to the Euro) and a 6.1 percent decrease (4,339 events) in the
number of funeral services performed by Existing Operations worldwide (2.9
percent decrease (1,132 events) domestically). We believe that the decline in
funeral services performed by Existing Operations was the result of a decrease
in the number of deaths during the period. The timing of deaths does not occur
evenly throughout the year, and there can be significant variances from month to
month.

     Partially offsetting this decrease was a 3.0 percent increase in the
average revenue per funeral service performed by Existing Operations worldwide,
excluding the effect of foreign currency translation. The average revenue per
domestic funeral service performed by Existing Operations increased 0.9 percent.
The increase in average revenue per funeral service was due in part to improved
merchandising, personalization of services and product offerings and enhanced
funeral arranger training implemented in response to the findings of our
extensive consumer market study.

     Funeral profit margin from Existing Operations decreased from 25.9 percent
in 2000 to 23.9 percent in 2001 due to the decline in the number of funeral
services performed by Existing Operations mentioned above, coupled with the high
fixed-cost nature of the funeral business.

     The increase in revenue and costs from Opened Operations resulted primarily
from the construction or opening of funeral homes from May 2000 through April
2001, which were not open for the entirety of both periods presented. There were
no acquisitions during the periods presented.

                                        52
   64

Cemetery Segment



                                                                  SIX MONTHS ENDED
                                                                      APRIL 30,
                                                            -----------------------------    INCREASE
                                                                2001            2000        (DECREASE)
                                                            -------------   -------------   ----------
                                                                             (PRO FORMA)
                                                            (AS REPORTED)   (IN MILLIONS)
                                                                                   
CEMETERY REVENUE
Existing Operations.......................................     $129.2           $144.2        $(15.0)
Acquired/Opened Operations................................        3.1              2.8           0.3
                                                               ------           ------        ------
                                                               $132.3           $147.0        $(14.7)
                                                               ======           ======        ======
CEMETERY COSTS
Existing Operations.......................................     $ 95.8           $111.0        $(15.2)
Acquired/Opened Operations................................        2.6              3.1          (0.5)
                                                               ------           ------        ------
                                                               $ 98.4           $114.1        $(15.7)
                                                               ======           ======        ======
Cemetery Segment Profit...................................     $ 33.9           $ 32.9        $  1.0
                                                               ======           ======        ======


     Cemetery revenue decreased $14.7 million, or 10 percent, for the six months
ended April 30, 2001, compared to the corresponding period in 2000. We
experienced a $15.0 million, or 10 percent, decrease in revenue from Existing
Operations resulting primarily from reduced cemetery merchandise deliveries as a
result of a decrease in the number of deaths during the period and reduced
preneed property sales. Reduced preneed property sales resulted from the changes
made to our preneed sales program in fiscal year 2000. Slightly offsetting this
decrease was a $3.2 million increase in revenue from perpetual care trust funds
and escrow accounts to $8.9 million. This increase was due to an increase in the
average yield on the funds coupled with an increase in the average balance. The
yield was in line with our goal of 8.5 to 9.0 percent.

     Cemetery profit margin from Existing Operations increased from 23.0 percent
in 2000 to 25.9 percent in 2001. The increase was attributable principally to
cost savings achieved in the first quarter of 2001 resulting from the changes we
made in our preneed sales organization in fiscal year 2000 and additional cost
savings at our cemeteries arising from increased scrutiny of expenses primarily
by local managers. We have provided incentives to local managers to decrease
costs by tying their compensation more closely to the profitability of the
locations they manage.

     The increase in revenue from Acquired/Opened Operations resulted primarily
from our acquisition and construction of cemeteries from May 2000 through April
2001, which were not open for the entirety of both periods presented.

LIQUIDITY AND CAPITAL RESOURCES

     Early in fiscal year 2000, we resolved to improve cash flow and build cash
reserves in order to deleverage our balance sheet. We had accumulated $106.8
million in cash and marketable securities as of April 30, 2001 after reducing
debt by approximately $84 million during the first six months of fiscal 2001.
Our operations provided cash of $57.3 million for the six months ended April 30,
2001, compared to $38.4 million for the corresponding period in 2000, due
principally to a smaller increase in other receivables coupled with other
working capital changes. Our operations provided cash of $69.6 million for
fiscal year 2000, compared to $5.6 million for fiscal year 1999, due principally
to a smaller increase in receivables coupled with other working capital changes.
The smaller increase in receivables resulted from increased cash collections
combined with the moderation of our preneed sales activities, both attributable
to modifications made to our preneed sales strategies for increased cash
retention.

     Our investing activities resulted in a cash outflow of $3.2 million for the
six months ended April 30, 2001, compared to a cash inflow of $10.5 million for
the comparable period in 2000. The cash inflow from investing activities in the
first six months of 2000 was a result of converting some voluntary escrow funds
to

                                        53
   65

cash for general operating purposes. Our investing activities resulted in a cash
inflow of $15.8 million for fiscal year 2000 compared to an outflow of $197.7
million for fiscal year 1999. The reduction in cash used by investing activities
was primarily due to our cessation of acquisition activity in early 2000 and, to
a smaller extent, an increase in proceeds from the sale of marketable securities
and reductions in capital expenditures.

     Our financing activities resulted in a cash outflow of $42.9 million for
the six months ended April 30, 2001, compared to $3.5 million for the comparable
period in 2000 due principally to debt repayments during 2001. Partially
offsetting this was $40 million we withdrew from our trust funds in Florida
during the first quarter of fiscal year 2001. We substituted a bond to guarantee
performance under the related preneed contracts and agreed to maintain unused
credit facilities in an amount that will equal or exceed the bond amount. We
believe that cash flow from operations will be sufficient to cover our estimated
cost of providing the related preneed services and products in the future. Our
financing activities resulted in a cash outflow of $18.8 million for fiscal year
2000, due principally to debt repayments, compared to a cash inflow of $193.9
million for fiscal year 1999. The level of cash provided by financing activities
in 1999 resulted from our common stock offering completed in the second quarter
of 1999, which was slightly offset by our repurchase of shares of our common
stock in the second half of 1999. In February 1999, we completed the sale of
13.6 million shares of Class A common stock. This resulted in approximately
$219.0 million in net proceeds, which were used principally to repay balances
outstanding under our revolving credit facility.

     In the fourth quarter of fiscal year 2000, we paid $2.3 million to current
and former employees as a result of a self audit of pay procedures we conducted
in partnership with the Department of Labor ("DOL"). We have revised our pay
procedures and are in compliance with DOL payroll regulations. During fiscal
year 2000, we expensed $1.8 million and will expense the remaining $500,000 as
preneed funeral services are delivered in future periods.

     In September 2000, we received regulatory approval in Florida and in
November 2000, we withdrew approximately $40 million from our funeral trust
funds and obtained a bond to guarantee performance under the related contracts
in lieu of trusting requirements (the "Florida Bond Obligation"). We agreed to
maintain unused credit facilities that will equal or exceed the required bond
amount related to these contracts. We believe that cash flow from operations
will be sufficient to cover our estimated cost of providing the related preneed
services and products in the future.

     We completed the refinancing transactions described in this prospectus in
order to address our long-term debt maturities. The new financing replaces (1)
our $600.0 million revolving credit facility, which was scheduled to mature on
April 30, 2002 and which was a current liability, (2) $99.9 million of our 6.70%
Notes which mature in 2003, (3) approximately $100.1 million of our 6.40% ROARS
which will mature or be remarketed in 2003 subject to market conditions, and (4)
our privately held senior notes, which had varying maturities from fiscal years
2002 through 2007. This constituted all of our long-term debt, except for the
approximately $100.0 million in publicly held senior notes that remain
outstanding and $25.0 million of debt incurred or assumed in connection with
acquisitions.

     The new financing consists of $550.0 million of senior secured credit
facilities and $300.0 million of the notes. The senior secured credit facilities
consist of (1) a $175.0 million four-year revolving credit facility (on which we
drew approximately $50.0 million at the closing of the refinancing
transactions), (2) a $75.0 million 18-month asset sale term loan and (3) a
$300.0 million five-year term loan B. The remaining 6.70% Notes and the
remaining 6.40% ROARS are secured equally and ratably with the new senior
secured credit facilities. These refinancing transactions and the terms of the
senior secured credit facilities and the notes are described in the sections
"Description of Certain Indebtedness and the Tender Offer" and "Description of
Notes."

     In addition, upon completion of the refinancing transactions, we had
letters of credit outstanding under the revolving credit facility of
approximately $6.5 million, which constitute senior debt under the indenture for
the notes. Finally, we have agreed to maintain unused availability under the
revolving credit facility in an amount that will equal or exceed the Florida
Bond Obligation described above, which as of April 30, 2001 was $41.1 million.
This amount would also be considered senior debt if we were to borrow funds
under the
                                        54
   66

revolving credit facility to extinguish the Florida Bond Obligation by returning
to the related trust funds the amounts we previously withdrew that relate to the
remaining preneed contracts.

     The new financing has resulted in significantly higher interest costs, and
the covenants contained in the new credit agreement are significantly more
restrictive than the covenants in our current credit agreements. For a
discussion of risks associated with the 18-month asset sale term loan, see the
section "Risk Factors."

     We have implemented various initiatives to generate cash and reduce debt.
For example, we have suspended our acquisition activity, restructured and
moderated our preneed sales activities, limited spending on internal growth
initiatives and suspended the payment of quarterly dividends on Class A and
Class B common stock. Additionally, we continue to (1) pursue the sale of our
foreign operations, (2) control capital expenditures at the corporate level, (3)
analyze and re-deploy or sell certain funeral home real estate and excess
cemetery property, and (4) utilize third party at-need financing. Our plans to
sell our foreign assets and other assets will cause us to record material
noncash charges to earnings in the quarter ending July 31, 2001. However, these
plans could generate significant cash for debt reduction. See "Summary -- Recent
Developments" and "Business -- Operations -- Foreign Operations."

     Long-term debt at April 30, 2001 decreased to $866.4 million compared to
$950.5 million at October 31, 2000, as a result of debt repayments of
approximately $84 million during the six month period. Long-term debt at October
31, 2000 decreased to $950.5 million compared to $951.4 million at October 31,
1999, as a result of a reduction of debt of $13.3 million in fiscal year 2000,
offset by one seller-financed acquisition that closed in the first quarter of
fiscal year 2000, although it had been completed in 1999. Subsequent to April
30, 2001, we used $30.0 million of our cash on hand to reduce the balance
outstanding on our revolving credit facility to $442.0 million.

     During fiscal year 2000 and the six months ended April 30, 2001, we opened
four new funeral homes in an operating partnership with the Los Angeles
Archdiocese. A fifth funeral home is currently under construction. The operating
partnerships will enable us to build a total of nine funeral homes on cemetery
land owned by the Archdiocese. The number of families served by the Archdiocese
funeral homes thus far has exceeded our expectations.

     Although we have no material commitments for fiscal year 2001 capital
expenditures (other than approximately $7.0 million related to construction of
the Archdiocese of Los Angeles funeral homes), we contemplate capital
expenditures of approximately $28.0 million for fiscal year 2001, which includes
$10.0 million in new growth initiatives (including the construction of the
Archdiocese of Los Angeles funeral homes) and approximately $18.0 million for
maintenance capital expenditures.

     We believe that cash flow from operations and available cash, together with
available borrowings under our new senior secured credit facilities, will be
adequate to meet our anticipated future requirements for working capital,
budgeted capital expenditures and scheduled payments of principal and interest
on our indebtedness, including the notes, for the foreseeable future.

INFLATION

     Inflation has not had a significant impact on our operations over the past
three years, nor is it expected to have a significant impact in the foreseeable
future.

RECENT ACCOUNTING STANDARDS

SFAS 140

     In 2000, the Financial Accounting Standards Board ("FASB" or the "Board")
issued SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities -- a replacement of FASB Statement No. 125." SFAS
140 is effective for transfers occurring after March 31, 2001 and for
disclosures relating to securitization transactions and collateral for fiscal
years ending after December 15, 2000. The implementation of SFAS 140 did not
have an impact on our results of operations or financial condition for the three
and six months ended April 30, 2001.

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SFAS 141 and 142

     On June 29, 2001, the Financial Accounting Standards Board approved its
proposed SFAS 141, "Business Combinations" and SFAS 142, "Goodwill and Other
Intangible Assets." SFAS 141 amends APB Opinion No. 16, "Business Combinations,"
to prohibit use of the pooling-of-interest (pooling) method of accounting for
business combinations initiated after the issuance date of the final Statement.
SFAS 142 amends APB Opinion No. 17, "Intangible Assets," by stating that
goodwill will no longer be amortized, but will be tested for impairment in a
manner different from how other assets are tested for impairment. SFAS 142
establishes a new method of testing goodwill for impairment by requiring that
goodwill be separately tested for impairment using a fair value approach rather
than an undiscounted cash flow approach. Goodwill will be tested for impairment
at a level referred to as a reporting unit, generally a level lower than that of
the total entity. SFAS 142 requires entities to perform the first goodwill
impairment test, by comparing the fair value with the book value of a reporting
unit, on all reporting units within six months of adopting the Statement. If the
fair value of a reporting unit is less than its book value, an impairment loss
will be recognized and treated as a change in accounting principle. That change
in accounting principle must be recognized by fiscal year-end. Impairment losses
recognized as a result of an impairment test occurring subsequent to the first
six months after adoption will be included in operating income. The unamortized
balance of any existing negative goodwill will be written off upon adoption of
SFAS 142 and treated as a change in accounting principle. Goodwill of a
reporting unit must be tested for impairment after the initial adoption of the
Statement on an annual basis and between annual tests if an event occurs or
circumstances change that would more likely than not reduce the fair value of a
reporting unit below its carrying amount.

     The provisions of SFAS 141 and SFAS 142 will be effective for fiscal years
beginning after December 15, 2001. However, early adoption of SFAS 142 will be
permitted for companies with a fiscal year beginning after March 15, 2001,
provided their first quarter financial statements have not been previously
issued. In all cases, SFAS 142 must be adopted at the beginning of a fiscal
year. Therefore, we can elect to early adopt the provisions of SFAS 142 in the
first quarter of fiscal year 2002 or adopt the provisions in the first quarter
of fiscal year 2003. We have not completed our review and analysis; however,
based upon our initial interpretation of SFAS 142 and if it were effective as of
April 30. 2001, our preliminary estimate is that we would incur a pre-tax
noncash impairment charge of between $100.0 million and $300.0 million for our
domestic operations. Our foreign operations will not be affected as they will
have been previously marked to fair value. However, we will no longer be
required to amortize goodwill, which amounted to $19.6 million ($14.4 million
related to domestic operations) in fiscal year 2000. Changes in the fair value
of our relevant businesses could change the above noted estimates materially.

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                                    BUSINESS

GENERAL

     Founded in 1910, we are the third largest provider of funeral and cemetery
products and services in the death care industry in the United States. Through
our subsidiaries, we provide a complete range of funeral merchandise and
services, along with cemetery property, merchandise and services, both at-need
and prior to the time of need. As of April 30, 2001, our domestic operations
included 321 funeral homes and 151 cemeteries in 30 states within the United
States and in Puerto Rico, and our foreign operations included 291 funeral homes
and 10 cemeteries in 10 foreign countries. For the twelve months ended April 30,
2001 (pro forma for SAB 101), we had revenues of $690.3 million and EBITDA of
$219.6 million. We are currently pursuing the sale of our foreign operations,
which for fiscal year 2000 (pro forma for SAB 101) contributed approximately
$139.8 million, or 20 percent, of total revenues and approximately $36.4
million, or 16 percent, of total EBITDA.

     For fiscal year 2000 (pro forma for SAB 101), funeral operations accounted
for approximately 60 percent of our total revenues and cemetery operations
accounted for the remaining 40 percent. Our funeral homes offer a wide range of
services and products including funeral services, cremation, transportation
services, removal and preparation of remains, caskets and flowers. Our cemetery
operations sell cemetery property, merchandise and services. Cemetery property
includes lots, lawn crypts and family and community mausoleums. Cemetery
merchandise includes vaults, monuments and markers. Cemetery services include
burial site openings and closings and inscriptions.

     We believe that we operate one or more of the premier death care facilities
in each of our principal markets. Our funeral homes and cemeteries in the United
States are located primarily in the Southern, Western, Mid-Atlantic, and
Mid-Western states, generally in large metropolitan areas such as Miami,
Orlando, Tampa and St. Petersburg, Florida; Dallas, Fort Worth and Houston,
Texas; Los Angeles, San Diego and San Francisco, California; New Orleans,
Louisiana; Baltimore, Maryland and the District of Columbia. According to the
United States Bureau of the Census, many of these areas have a large population
over age 65, which represents a principal target market for our preneed sales
program as well as at-need sales. We believe that we are an industry leader in
marketing preneed cemetery property and preneed funeral and cemetery merchandise
and services, and we consider preneed sales to be an integral part of our
long-term business strategy.

     Cemetery operations account for a significantly larger percentage of our
total revenues than those of our three largest competitors. We emphasize
cemetery operations because we believe cemeteries provide the best foundation
for securing long-term market share in our industry. The sale of cemetery
property to a family creates a relationship that builds heritage over time, as
family members are buried in the plot or mausoleum and as other family members
purchase additional cemetery property in order to be buried in the same
cemetery. Our relationships with our cemetery property customers allow us to
more easily offer related products and services, such as cemetery merchandise or
a funeral service at one of our funeral homes located on the cemetery grounds or
nearby.

     We have been focused on creating combination operations by building new
funeral homes on existing cemetery property and operating the facilities
together. Combination operations help to increase market share by allowing us to
offer families the convenience of complete funeral home and cemetery planning
and services from a single location at a competitive price at the time of need
or on a preneed basis. Approximately 47 percent of our cemeteries have a funeral
home onsite that we operate in conjunction with the cemetery. In addition to our
combination operations, another approximately 39 percent of our cemeteries are
located within the same market as, and operated in conjunction with, one of our
funeral homes. We frequently organize our operating units in "clusters," which
are integrated groups of funeral homes and cemeteries that allow us to
cost-effectively pool assets, personnel and services and to generate higher
margins.

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THE DEATH CARE INDUSTRY

     Highly fragmented industry.  Death care businesses in the United States
have traditionally been relatively small, family-owned enterprises that have
passed through successive generations within the family. The last decade
witnessed a trend of family-owned firms consolidating with larger organizations
such as ours. However, this trend slowed in 1999, and the industry continues to
be characterized by a large number of locally-owned, independent operations.
More than 85 percent of the approximately 22,000 funeral homes and 10,500
cemeteries in the United States are independently owned.

     Continuing need for products and services; increasing number of
deaths.  There is an inevitable need for the products and services our industry
offers. In addition, the number of deaths in the United States is expected to
increase at a steady, moderate pace. According to the United States Bureau of
the Census, the number of deaths in the United States is expected to increase by
approximately 1 percent per year, from 2.4 million in 2000 to 2.6 million in
2010. Furthermore, the average age of the population in the United States is
increasing. According to the United States Bureau of the Census, the United
States population over 50 years of age is expected to increase by approximately
2 percent per year, from 76.1 million in 2000 to 97.1 million in 2010. We
believe the aging of the population is particularly important because it expands
our target market for preneed sales, as older persons, especially those over 50,
are most likely to make preneed funeral and cemetery arrangements.

     Importance of tradition; barriers to entry.  We believe it is difficult for
new competitors to enter existing markets successfully by opening new cemeteries
and funeral homes. Entry into the cemetery market can be difficult due to
several factors. Families tend to return to the same cemetery for generations to
bury their family members, making it difficult for new cemeteries to attract
families. Additionally, mature markets, including many of the metropolitan areas
where our cemeteries are located, are often already served by an adequate number
of cemeteries, and land for new cemetery development is scarce. Regulatory
complexities and zoning restrictions also make entry into the cemetery market
difficult. Finally, development of a new cemetery requires a significant capital
investment that usually takes several years to produce a return. Entry into the
funeral home market can be difficult for many of the same reasons. Families tend
to choose a funeral home because it previously served their family, and because
of the funeral home's reputation, which must be developed over time, although
they are often willing to move from a stand-alone funeral home to a newer one
developed on the grounds of their preferred cemetery.

     Growing demand for cremation.  Consumer preferences in our industry tend to
change slowly. One significant trend in the United States is an increase in the
preference for cremation. Industry research indicates that the percentage of
cremations has steadily increased and that cremation will represent
approximately 36 percent of the United States market by the year 2010, compared
to 25 percent in 1999. Although the percentage represented by cremations is
expected to grow, we believe this growth will come primarily from the expected
growth in the number of deaths over time, and that the number of traditional
funerals performed each year should remain relatively constant. Because
cremations have typically included few, if any, additional products or services
for the family beyond the cremation itself, the trend towards cremation has been
a concern to traditional funeral home and cemetery operators. However, industry
research has shown that the consumer chooses cremation frequently for reasons
other than cost, and we believe this increasing consumer interest in cremation
will provide us an opportunity to better serve families by offering an array of
additional products and services.

COMPETITIVE STRENGTHS

     Leading market positions.  We are the third largest provider of funeral and
cemetery products and services in the United States and have been in business
for more than 90 years. In addition, we believe that we operate one or more of
the premier death care facilities in each of our principal markets, which are
primarily in larger metropolitan areas in the Southern, Western, Mid-Atlantic
and Mid-Western states. In our view, a "premier" facility is one that is among
the most highly regarded facilities in its market area in terms of a variety of
factors such as tradition, heritage, reputation, physical size, volume of
business, available inventory, name recognition, aesthetics and/or potential for
development or expansion. For example, while

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funeral homes and cemeteries in the United States perform an average of
approximately 100 funerals and 165 burials per year, ours perform an average of
approximately 250 funerals and 375 burials per year. In addition, more than 40
percent of our domestic properties are located in California, Florida and Texas,
which are three of the four states with the highest population over age 65, an
age group that represents a large portion of our target market.

     Strong cemetery operations.  Our cemetery operations account for
approximately 40 percent of our total revenues, which is a significantly larger
percentage than any of our three largest competitors. We believe this is a
competitive advantage because families generally return to the same cemetery for
generations to bury their family members. Cemetery property often becomes an
important part of a family's heritage, and family members who move away will
often return to their home cemetery to be buried. We build on our relationships
with our cemetery customers by offering additional cemetery property to related
family members and by offering related products and services such as cemetery
merchandise or a funeral service at one of our funeral homes located on the
cemetery grounds or nearby. Approximately 42 percent of our total cemetery
acreage is available for future development.

     Emphasis on combination operations.  Approximately 47 percent of our
cemeteries have a funeral home onsite that is operated in conjunction with the
cemetery, which we refer to as a combination operation. This is a significantly
higher percentage of combination operations than any of our three largest
competitors. We believe combination operations are a competitive advantage
because they offer families the convenience of complete death care services at a
single location. Our experience demonstrates that a family planning a burial in
our cemetery often views our onsite funeral home as a more desirable location
for a funeral service than an unaffiliated offsite funeral home. Thus, the
funeral home's call volume benefits from the heritage of the cemetery, and, over
time, the cemetery's activity increases as well. In addition, combination
operations enhance our purchasing power, enable us to employ more sophisticated
management systems and allow us to share facilities, equipment, personnel and a
preneed sales force, resulting in lower average operating costs and expanded
marketing and sales opportunities. As a result, our combination operations
usually generate higher operating margins for us compared to our stand-alone
funeral homes and cemeteries. In addition to our combination operations,
approximately 39 percent of our cemeteries are located within the same market
as, and operated in conjunction with, one or more of our funeral homes.

     Expertise in preneed sales; strong backlog.  We believe that we are
distinguished from our competitors by our strong emphasis on, and more than
60-year history of experience with, preneed sales. Preneed plans enable families
to specify in advance and prepay for cemetery property and funeral and cemetery
services and products. We market these properties, services and products
domestically through our full-time staff of approximately 1,200 sales
counselors. Our expertise in preneed sales has historically developed out of,
and now complements, our strong cemetery operations. This is because cemetery
property, such as a burial plot, is usually the first purchase a family will
make when considering preneed arrangements. We build on our relationships with
our preneed cemetery property customers by offering them additional preneed
products and services such as cemetery merchandise or funeral services. Our
focus on preneed cemetery property sales is also important because these sales
generate current revenues and higher current cash flow than other types of
preneed sales. We estimate that as of April 30, 2001, the future value of our
preneed backlog (including earnings on funds held in trust and build-up in the
face value of third-party insurance contracts, in each case at assumed rates)
represented approximately $2.5 billion of revenue to be recognized in the future
as these prepaid products and services are delivered.

     Experienced management.  We have an experienced management team, many of
whom owned and operated their own funeral homes and cemeteries and joined our
company when we acquired their businesses. Our 11 top executives have an average
of 29 years of experience in the death care industry and have been with our
company for an average of 16 years.

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BUSINESS STRATEGY

     Our business strategy is to improve and expand our operations internally
and to strengthen our financial performance by improving cash flow and
profitability and deleveraging our balance sheet. Key elements of our business
strategy are as follows:

     Maintain backlog through preneed marketing.  We consider maintaining our
backlog through preneed marketing to be an integral part of our long-term
business strategy. Our primary objective is to moderate preneed sales levels to
balance our cash investment while maintaining a sustainable and predictable
level of growth in our backlog. The aging of the population represents a
significant opportunity for us to expand our customer base through preneed
marketing, as older customers, especially those over 50 years old, are most
likely to make these purchases.

     Develop additional combination operations.  We create combination
operations by (1) building funeral homes on cemetery properties that we own, and
(2) entering into operating partnerships with third parties in which we
construct, own and operate a funeral home and/or mausoleum on the grounds of a
cemetery owned by the third party. Partnerships allow us to enjoy the benefits
of operating a funeral home in a combination operation, without the capital
investment of purchasing the cemetery. Our partner benefits from being better
able to compete with other cemeteries or combination operations in its market,
increase cemetery revenues, and provide a better service to its parishioners or
other constituencies. In 1997, we entered into an operating partnership with the
Archdiocese of Los Angeles to construct and operate funeral homes at the site of
nine cemeteries owned and operated by the Archdiocese. Four of these funeral
homes have been completed, and the fifth is under construction. Over the last 50
years, through our mausoleum construction business, we have developed
relationships with the Catholic Church in approximately 70 dioceses in 39
states. We plan to pursue more of these partnerships with the Catholic Church,
other faith-based organizations and non-profit entities.

     Increase enhanced cremation products and services.  The cremation rate in
the United States has been increasing and by the year 2010 cremations are
expected to represent 36 percent of the United States burial market, according
to industry estimates. We have been addressing this trend by providing enhanced
cremation products and services at all of our funeral homes. An enhanced
cremation may include a memorial service, an urn and a niche in a mausoleum or
columbarium in which to place the remains. We are also responding to the growing
preference for cremations with our alternative service firm strategy. We
currently operate 25 alternative service locations, which primarily offer
value-priced cremation services and are located principally in California and
Nevada, states with among the highest cremation rates in the United States.
Although these locations do not offer the lowest-cost basic cremations in their
markets, the costs to the family for death care arrangements at these locations
are typically less than at a traditional funeral home. These locations are
generally leased, have lower overhead than traditional funeral homes and
generate higher operating margins than traditional funeral homes, although the
average revenue per service is lower. Additionally, we have found that families
value personalized services and products such as a personalized memorial service
designed to reflect the special interests or hobbies of the consumer. We are
training our funeral arrangers to offer and arrange these new personalized
options.

     Reduce debt through asset sales.  As of April 30, 2001, we operated a total
of 291 funeral homes and 10 cemeteries in Argentina, Australia, Belgium, Canada,
France, Mexico, the Netherlands, New Zealand, Portugal and Spain. In order to
reduce debt and focus on core domestic operations, we are currently pursuing the
sale of our foreign operations. We have engaged an investment banking firm to
assist in evaluating and executing these sales. For fiscal year 2000 (pro forma
for SAB 101), our revenues from foreign operations were $139.8 million, or 20
percent of our total revenues, and our EBITDA from foreign operations was $36.4
million, or 16 percent of our total EBITDA. If consummated, these sales will
enable us to reduce debt significantly. Additionally, we are evaluating
opportunities to rezone and sell excess cemetery property and certain other
assets. See "Recent Developments."

     Focus on improving cash flow.  We plan to continue to improve our cash flow
through a number of revenue enhancements and cost controls, and continued
moderation in our preneed sales activities. In fiscal year 2000, we restructured
our preneed sales program to focus on increasing cash flow. For example, we
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increased finance charges, required larger down payments and shortened
installment payment terms, and we decreased the overall level of preneed sales
activities. We are also increasing cash flow and reducing our credit risk by
encouraging families purchasing at-need merchandise and services to pay at the
time of delivery or to use a third-party financing program we developed. In the
past, we typically financed credit sales internally on a short-term basis. We
also plan to continue our suspension of acquisition activity and of our
dividend, and to limit capital expenditures. We plan to continue to seek to
reduce our costs by, among other things, obtaining volume discounts from
suppliers, leveraging our operating costs through clustering and combination
operations, and identifying facilities with overlapping market share and
consolidating them as appropriate. As part of these efforts, we are
incentivizing local managers to decrease costs by tying their compensation more
closely to the profitability of the locations they manage. This strategy
contributed to our increased cemetery margins for the first six months of fiscal
year 2001.

OPERATIONS

     General.  We believe that we operate one or more of the premier death care
facilities in each of our principal markets. In our view, a "premier" facility
is one that is among the most highly regarded facilities in its market area in
terms of a variety of factors such as tradition, heritage, reputation, physical
size, volume of business, available inventory, name recognition, aesthetics
and/or potential for development or expansion.

     We operate most of our funeral homes and cemeteries in "clusters." Clusters
are groups of funeral homes and cemeteries located close enough to one another
that their operations can be integrated to achieve economies of scale. For
example, clustered facilities can share vehicles, embalming services,
inventories of caskets and other merchandise and, most significantly, personnel,
including our prearrangement sales force; thus, we are able to decrease our
costs and expand our marketing and sales efforts at each location. By virtue of
their proximity to one another, clustered facilities also create opportunities
for more integrated and sophisticated management of their operations.

     Funeral Operations.  Funeral operations accounted for approximately 60
percent of our revenues for fiscal year 2000 (pro forma for SAB 101). Our
funeral homes offer a complete range of funeral services and products both at
the time of need and on a preneed basis. Our services and products include
family consultation, removal and preparation of remains, the use of funeral home
facilities for visitation, worship and funeral services, transportation
services, flowers and caskets. In addition to traditional funeral services, all
of our funeral homes offer cremation products and services. Most of our funeral
homes have a non-denominational chapel on the premises, which allows family
visitation and religious services to take place at the same location. As of
April 30, 2001, we operated 612 funeral homes.

     Cemetery Operations.  Cemetery operations accounted for approximately 40
percent of our revenues for fiscal year 2000 (pro forma for SAB 101). Our
cemetery operations involve the sale of cemetery property and related
merchandise, including lots, lawn crypts, family and community mausoleums,
monuments, markers and burial vaults, along with the sale of burial site
openings and closings and inscriptions. Cemetery property and merchandise sales
are made both at the time of need and on a preneed basis. We also maintain
cemetery grounds under perpetual care contracts and local laws. As of April 30,
2001, we owned and operated 161 cemeteries.

     Combination Funeral Home and Cemetery Operations.  Approximately 47 percent
of our cemeteries have a funeral home onsite that is operated in conjunction
with the cemetery, which is a higher percentage of combination operations than
any of our three largest competitors. Many of these facilities are in our key
markets, including New Orleans, Louisiana; Dallas, Fort Worth and Houston,
Texas; Miami, Orlando, Tampa and St. Petersburg, Florida; and Los Angeles and
San Diego, California.

     Combination operations help to increase market share by allowing us to
offer families the convenience of complete funeral home and cemetery planning
and services from a single location at a competitive price at the time of need
or on a preneed basis. Our experience demonstrates that a family planning a
burial in our cemetery often views our associated funeral home as a more
desirable location for a funeral service than an unaffiliated offsite funeral
home. Thus the funeral home's sales benefit from the heritage of the cemetery,
and, over time, the cemetery's activity increases as well. In addition,
combination operations enhance our
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purchasing power, enable us to employ more sophisticated management systems and
allow us to share facilities, equipment, personnel and a preneed sales force,
resulting in lower average operating costs and expanded marketing and sales
opportunities. Although it generally takes several years before a newly
constructed funeral home becomes profitable, our experience with combination
operations has demonstrated that the combination of a funeral home with a
cemetery can significantly increase the market share and profitability of both.

     We have developed two primary internal growth strategies that employ the
use of combination operations. One strategy is to create combination operations
by constructing funeral homes on the grounds of our cemeteries. Another strategy
is to enter into operating partnerships in which we construct funeral homes on
the grounds of unaffiliated cemeteries, which allows us to enjoy many of the
benefits of a combination operation without the capital investment of purchasing
the cemetery. Our partner benefits by being better able to compete with other
cemeteries or combination operations in its market, by increased cemetery
revenues, and by providing a better service to its parishioners or other
constituencies.

     Through an operating partnership with the Catholic Archdiocese of New
Orleans, we constructed a mausoleum for the Catholic Church on the grounds of
our combination operation in New Orleans in fiscal year 1987. We own the
mausoleum and manage the sales relating to the mausoleum for the Church.
Additionally, through an operating partnership with the Firemen's Charitable and
Benevolent Association, a non-profit organization, in fiscal year 1994 we
constructed a funeral home and mausoleum on the grounds of a cemetery owned by a
third party in New Orleans. We own and operate the funeral home in combination
with the cemetery and manage sales for the mausoleum. In 1997, we entered into
an agreement with the Archdiocese of Los Angeles to construct and operate
funeral homes on land we lease from the Archdiocese at the site of nine
cemeteries owned and operated by the Archdiocese. Four of these funeral homes
have been completed, and the fifth is under construction.

     Over the last 50 years, through our mausoleum construction business, we
have developed relationships with the Catholic Church in approximately 70
dioceses in 39 states. We plan to pursue more of these partnerships with the
Catholic Church, other faith-based organizations and non-profit entities. We
also plan to develop additional combination operations on our own cemetery
properties.

     Cremation.  In fiscal year 2000, 36 percent of the funeral services we
performed in the United States and Puerto Rico were cremations. Cremation rates
at our foreign funeral homes are higher on average than those at our domestic
funeral homes, although they vary substantially from country to country. For
fiscal year 2000, the cremation rates at our foreign funeral homes varied from 7
percent in Spain to 65 percent in New Zealand.

     The cremation rate in the United States has been increasing, and by the
year 2010 cremations are expected to represent 36 percent of the United States
burial market, according to industry estimates. We have been addressing this
trend by providing enhanced cremation products and services at all of our
funeral homes, including funeral services and memorialization for families
choosing cremation. An enhanced cremation may include a memorial service, an urn
and a niche in a mausoleum or columbarium in which to place the remains.

     We are also addressing this trend through our alternative services firm
strategy. Our alternative services locations offer an alternative to customers
who are not interested in making arrangements at a traditional funeral home.
These locations primarily offer value-priced cremation services and are located
principally in California and Nevada, states with among the highest cremation
rates in the United States. Although these locations do not offer the
lowest-cost basic cremations in their markets, the costs to the family for death
care arrangements at these locations are typically less than at a traditional
funeral home. These locations are generally leased, have lower overhead than
traditional funeral homes and generate higher operating margins than traditional
funeral homes, although the average revenue per service is lower.

     During fiscal year 1997, we acquired Sentinel Cremation Societies, Inc. of
California ("Sentinel") which operated thirteen service centers offering
cremations and related products and services. Members in the cremation society
pay a small membership fee and indicate their wish to be cremated. During fiscal
year

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1998, we acquired Desert Memorial Cremation and Burial Society in Las Vegas,
Nevada. During fiscal year 2000, we opened two additional alternative service
firms in the western United States. We currently operate 25 alternative service
locations.

     Preneed arrangements.  We market death care products and services
domestically on a preneed basis through a full-time staff of approximately 1,200
commissioned sales counselors. Preneed plans enable families to specify in
advance and prepay for funeral and cemetery arrangements. The cost of products
and services is set at prices prevailing at the time the agreement is signed,
rather than when the products and services are delivered. Preneed plans also
spare families the emotional strain of making death care decisions at the time
of need.

     We estimate that as of April 30, 2001, the future value of our preneed
backlog (including earnings on funds held in trust and build-up in the face
value of insurance contracts, in each case at assumed rates) represented
approximately $2.5 billion of revenue to be recognized in the future as these
prepaid products and services are delivered. In fiscal year 2000, we changed the
terms and conditions of our preneed sales contracts and commissions in order to
enhance our cash flow. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" under the heading "Fiscal Year 2000
Compared to Fiscal Year 2001."

     Trust Funds and Escrow Accounts.  We maintain three types of trust funds
and escrow accounts: (1) preneed funeral merchandise and services, (2) preneed
cemetery merchandise and services, and (3) perpetual care. For further
discussion of these trust funds and escrow accounts, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations." As of
April 30, 2001, our preneed funeral merchandise and services trust funds and
escrow accounts totaled approximately $591.6 million, our preneed cemetery
merchandise and services trust funds and escrow accounts totaled approximately
$206.4 million, and our perpetual care trust funds totaled approximately $206.6
million.

     We believe that balances in our trust funds and escrow accounts, along with
insurance proceeds and installment payments due under contracts, will be
sufficient to cover our estimated cost of providing the related preneed services
and products in the future.

     Management.  We have an experienced management team, many of whom joined us
through acquisitions. Our management structure is designed to allow local
funeral home directors and cemetery managers substantial flexibility in deciding
how their firms will be managed and how their products and services will be
priced and merchandised. At the same time, financial and strategic goals are
established by management at the corporate level. We provide business support
services primarily through our Shared Services Center, which opened in 1997 and
provides centralized and standardized accounting, management reporting, payroll,
contract processing, accounts receivable collection and other services for all
of our domestic facilities, including those in Puerto Rico.

     Currently, we are divided into four operating divisions in North America,
each of which is managed by a division president and chief financial officer.
These divisions are further divided into regions, each of which is managed by a
regional chief operating officer. Our operations in Europe, Latin America and
Australia are not considered separate operating divisions but are managed by
local or regional executives who report to some of our executive officers. In
fiscal year 1998, in order to meet the needs of our growing European operations,
we established our European headquarters in Amsterdam, the Netherlands. We also
have a Corporate Division, which manages our corporate services, accounting and
financial operations and strategic planning. Early in fiscal year 2000, we
formed a Sales and Marketing Division to centralize responsibility for sales
teams and to allow for more comprehensive training and sharing of information.
From time to time, we may increase, reduce or realign our divisions and regions.

     Foreign Operations.  We first entered foreign markets in fiscal year 1994
and as of April 30, 2001, we owned and operated a total of 291 funeral homes and
10 cemeteries in Argentina, Australia, Belgium, Canada, France, Mexico, the
Netherlands, New Zealand, Portugal, and Spain. For fiscal year 2000 (pro forma
for SAB 101), our revenues from foreign operations were $139.8 million, or 20
percent of our total revenues; our assets related to foreign operations were
$554.9 million, or 15 percent of our total assets; our gross profit

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from foreign operations was $22.7 million, or 14 percent of our total gross
profit; and our EBITDA from foreign operations was $36.4 million, or 16 percent
of our total EBITDA. We are currently pursuing the sale of our foreign
operations. Additional information can be found in the section
"Summary -- Recent Developments."

     Financial Information about Industry and Geographic Segments.  For
financial information about our industry and geographic segments, see Note 17 to
our consolidated financial statements for fiscal years 2000, 1999 and 1998.

COMPETITION

     Our funeral home and cemetery operations generally face intense competition
in local markets that typically are served by numerous funeral home and cemetery
firms. We also compete with monument dealers, casket retailers, low-cost funeral
providers and other non-traditional providers of limited services or products.
Market share is largely a function of goodwill and tradition, although
competitive pricing, professional service and attractive, well-maintained and
conveniently located facilities are also important. Because of the significant
role of goodwill and tradition, market share increases are usually gained over a
long period of time. Extensive marketing through media advertising, direct
mailings and personal sales calls has increased in recent years, especially with
respect to the sales of preneed funeral services. Traditional cemetery and
funeral service operators face competition from the increasing number of
cremations in the United States. For additional information about the trend
towards cremation and our strategies to address it, see "The Death Care
Industry," "Risk Factors -- Risks Relating to Our Industry" and "Business
Strategy."

REGULATION

     Our funeral home operations are regulated by the Federal Trade Commission
(the "FTC") under the FTC's Trade Regulation Rule on Funeral Industry Practices,
16 CFR Part 453 (the "Funeral Rule"), which went into effect on April 30, 1984,
and was revised effective July 19, 1994. The FTC is reviewing the Funeral Rule
and has conducted hearings to receive input from industry and consumer groups.
At this time, the FTC has not issued any proposed changes to the regulation.

     The Funeral Rule defines certain acts or practices as unfair or deceptive
and contains certain requirements to prevent these acts or practices. The
preventive measures require a funeral provider to give consumers accurate,
itemized price information and various other disclosures about funeral goods and
services and prohibit a funeral provider from: (1) misrepresenting legal,
crematory and cemetery requirements; (2) embalming for a fee without permission;
(3) requiring the purchase of a casket for direct cremation; and (4) requiring
consumers to buy certain funeral goods or services as a condition for furnishing
other funeral goods or services.

     Our operations are also subject to extensive regulation, supervision and
licensing under numerous federal, state and local laws and regulations. For
example, state laws impose licensing requirements for funeral homes and funeral
directors and regulate preneed sales. Our embalming facilities are subject to
stringent environmental and health regulations. We have a department that
monitors compliance and believe that we are in substantial compliance with the
Funeral Rule and all such laws and regulations. Federal, state and local
legislative bodies and regulatory agencies frequently propose new laws and
regulations, some of which could have a material effect on our operations and on
the death care industry in general. We cannot predict the outcome of any
proposed legislation or regulation or the effect that any such legislation or
regulation might have on us.

EMPLOYEES

     We and our subsidiaries employ approximately 9,000 persons, and we believe
that we maintain a good relationship with our employees. Approximately 100 of
our employees who are employed by our domestic operations and 755 of our
employees who are employed by our foreign operations are represented by labor
unions or collective bargaining units.

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PROPERTIES

     As of April 30, 2001, approximately 64 percent of our 612 funeral home
locations were owned by our subsidiaries, and approximately 36 percent of
funeral home premises were held under operating leases. The leased properties
have terms ranging from 1 to 23 years, except for nine leases that expire
between 2032 and 2072. Generally, we have a right of first refusal and an option
to purchase the leased premises. An aggregate of $12.1 million of our term notes
are secured by mortgages on some of our funeral homes; these notes were either
assumed by us upon our acquisition of the property or represent seller financing
for the acquired property.

     As of April 30, 2001, we owned 161 cemeteries covering a total of
approximately 11,000 acres. Approximately 42 percent of the total acreage is
available for future development.

     Our corporate headquarters occupy approximately 21,500 square feet of
office space in a building in suburban New Orleans that we leased from an
affiliate through July of 2000. We now lease this office space from a
non-affiliate. In addition, we own a 97,300 square foot building in suburban New
Orleans that we use for our Shared Services Center, Human Resources,
Communications, Internal Audit and Information Systems Departments.

     We are currently evaluating and analyzing certain of our businesses for
consolidation and may potentially sell excess cemetery property and
underperforming assets. We are also currently pursuing the sale of some or all
of our foreign operations. See the section "Summary -- Business Strategy" and
"-- Recent Developments."

LEGAL PROCEEDINGS

     We and some of our subsidiaries are parties to a number of legal
proceedings that have arisen in the ordinary course of business. While the
outcome of these proceedings cannot be predicted with certainty, we do not
expect these matters to have a material adverse effect on our consolidated
financial position, results of operations or cash flows.

     We carry insurance with coverages and coverage limits that we believe to be
adequate. Although we give no assurance that this insurance is sufficient to
protect us against all contingencies, we believe that our insurance protection
is reasonable in view of the nature and scope of our operations.

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                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS



NAME                            AGE                          POSITION
- ----                            ---                          --------
                                
Frank B. Stewart, Jr. .......   65    Chairman of the Board
William E. Rowe..............   54    President, Chief Executive Officer and Director
Brian J. Marlowe.............   54    Executive Vice President and Chief Operating Officer
Kenneth C. Budde.............   53    Executive Vice President, President-Corporate Division,
                                      Chief Financial Officer and Director
Brent F. Heffron.............   51    Executive Vice President and President-Southern
                                      Division
Lawrence B. Hawkins..........   52    Executive Vice President and President-Investors Trust,
                                      Inc.
G. Kenneth Stephens, Jr. ....   43    Senior Vice President and President-Eastern Division
Randall L. Stricklin.........   56    Senior Vice President and President-Western Division
Michael K. Crane, Sr. .......   57    Senior Vice President and President-Central Division
Everett N. Kendrick..........   59    Senior Vice President and President-Sales and Marketing
                                      Division
Darwin C. Fenner.............   69    Director
John P. Laborde..............   77    Director
James W. McFarland...........   55    Director
Michael O. Read..............   57    Director


     Frank B. Stewart, Jr.  has served as Chairman of the Board since 1984 and
as a director since 1970. He has been with our company for 42 years.

     William E. Rowe has served as Chief Executive Officer since November 15,
1999, as President since November 1, 1994 and as a director since 1994. He was
Chief Operating Officer from April 1994 until November 15, 1999. He has been
with our company for 15 years.

     Brian J. Marlowe became Chief Operating Officer on December 10, 1999. Prior
to that time, he served as Executive Vice President and President of our Eastern
Division since August 1, 1995. He has been with our company for nine years.

     Kenneth C. Budde has served as President of our Corporate Division and
Chief Financial Officer since May 1998 and as a director since June 1998. From
August 1989 to May 1998, he served as Senior Vice President of Finance,
Secretary and Treasurer. He has been with our company for 17 years.

     Brent F. Heffron has served as Executive Vice President and President of
our Southern Division since November 1, 1998. From January 1, 1997 to October
31, 1998, he served as Senior Vice President and President of our Southern
Division. From November 1992 to December 1996, he served as President and Chief
Operating Officer of the Central Region of our Eastern Division and Vice
President of our former Mid-Atlantic Division. He has been with our company for
nine years.

     Lawrence B. Hawkins has served as Executive Vice President since December
2000 and as President-Investors Trust, Inc. since 1993. Prior to December 2000,
Mr. Hawkins served as Senior Vice President since 1993. He has been with our
company for 12 years.

     G. Kenneth Stephens, Jr. has served as Senior Vice President and President
of our Eastern Division since January 31, 2000. From January 1, 1997 to January
30, 2000, he served as Chief Operating Officer of the Southern Region of our
Eastern Division. From October 21, 1993 to December 31, 1996, he served as the
Vice President of Cemetery Operations for the Southern Region of our Eastern
Division. He has been with our company for eight years.

     Randall L. Stricklin has served as Senior Vice President and President of
our Western Division since April 20, 2000. From August 10, 1999 to April 19,
2000, he served as Chief Operating Officer of the Southern Region of our Western
Division. From November 1, 1998 to August 9, 1999, he served as Chief Operating
Officer of the Catholic Mortuaries. From February 5, 1997 to October 31, 1998,
he served as Vice

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President of Management Support and Training. Prior to that time, he served as
President of his three Stricklin/Snively Mortuaries and Cremation Society of
America, which we acquired in February 1997. He has been with our company for
four years.

     Michael K. Crane, Sr. has served as President of our Central Division since
May 11, 2000. Prior to that time, he served as Chief Operating Officer of the
Southern Region of our Central Division since June 15, 1995. He has been with
our company for 37 years.

     Everett N. Kendrick has served as Senior Vice President and President of
our Sales and Marketing Division since January 31, 2000. From December 1, 1996
to January 30, 2000, he served as Chief Operating Officer of the Northern Region
of our Eastern Division. Prior to that time, he served as Vice President of
Sales and Marketing for the Northern Region of our Eastern Division since
January 1993. He has been with our company for eight years.

     Darwin C. Fenner has served as a director since 1991.  Mr. Fenner has
served as Investment Counsel, Chairman and Chief Executive Officer of Fenner,
Plauche & Williams Investment Management Company since 1972.

     John P. Laborde has served as a director since 1995.  Mr. Laborde has
served as Chairman Emeritus of Tidewater Inc. since 1995 and Chairman of Laborde
Marine Lifts, Inc. since 1996. Mr. Laborde is also a director of Stolt Offshore,
S.A. and Stone Energy Corporation.

     James W. McFarland has served as a director since 1995. Mr. McFarland has
served as Dean of A.B. Freeman School of Business, Tulane University since 1988.
Mr. McFarland is also a director of Petroleum Helicopters, Inc. and Sizeler
Property Investors, Inc.

     Michael O. Read has served as a director since 1991.  Mr. Read has served
as Senior Vice President of Hibernia National Bank since January 2001. Prior to
January 2001, Mr. Read was a Vice President at Marsh USA, Inc., an insurance
brokerage and consulting firm.

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                             PRINCIPAL STOCKHOLDERS

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

     The table below sets forth certain information concerning the beneficial
ownership, as of July 24, 2001, of our Class A and Class B common stock by (1)
each director, (2) each executive officer named in the Summary Compensation
Table of our definitive proxy statement filed with the SEC on February 23, 2001
(the "Named Executive Officers"), and (3) all of our directors and executive
officers as a group, determined in accordance with Rule 13d-3 of the Securities
Exchange Act of 1934. The Class A and Class B common stock are substantially
identical, except that holders of Class A common stock are entitled to one vote
per share and holders of Class B common stock are entitled to ten votes per
share. Each share of Class B common stock is automatically converted into one
share of Class A common stock upon transfer to persons other than certain
affiliates of Frank B. Stewart, Jr. As of July 24, 2001, Frank B. Stewart, Jr.
was the record holder of all of the shares of Class B common stock. As a result
of his ownership of Class A and Class B common stock, Frank B. Stewart, Jr.
owned shares of capital stock of Stewart Enterprises Inc. entitling him to 30.5
percent of the voting power of all shares of our voting stock. Unless otherwise
indicated, all shares shown as beneficially owned are held with sole voting and
investment power.



                                                                              ACQUIRABLE
                                                                               THROUGH
                                                        NUMBER OF SHARES      CURRENTLY
                                                          BENEFICIALLY       EXERCISABLE      PERCENT OF
              BENEFICIAL OWNER                 CLASS      OWNED(1)(2)      STOCK OPTIONS(3)    CLASS(3)
- --------------------------------------------  -------   ----------------   ----------------   ----------
                                                                                  
DIRECTORS
Frank B. Stewart, Jr. ......................  Class A      6,942,561(4)              --           6.7%
  P.O. Box 19925                              Class B      3,555,020(5)              --         100.0%
  New Orleans, Louisiana 70179
William E. Rowe.............................  Class A        224,359(6)         677,020          *
Kenneth C. Budde............................  Class A        109,539(7)         266,000          *
Darwin C. Fenner............................  Class A        490,248(8)          26,900          *
John P. Laborde.............................  Class A         52,928(9)          26,900          *
James W. McFarland..........................  Class A         16,140             26,900          *
Michael O. Read.............................  Class A         43,642(10)         26,900          *
NAMED EXECUTIVE OFFICERS(11)
Brian J. Marlowe............................  Class A        170,409(12)        426,010          *
Brent F. Heffron............................  Class A         66,665(13)        284,346          *
Joseph P. Henican, III......................  Class A        595,933(14)             --          *
All directors and executive officers as a
  group (15 persons)........................  Class A      7,866,718(15)      2,306,825           9.6%(16)
                                              Class B      3,555,020                 --         100.0%(16)


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

  *  Less than 1 percent.

 (1) Excludes shares subject to options currently exercisable or exercisable
     within 60 days, which shares are set forth separately in the next column.

 (2) Includes shares held indirectly through the Stewart Enterprises Employees'
     Retirement Trust ("SEERT"). Individuals participating in the SEERT have
     sole investment power, but no voting power, over the shares. Participants
     in the SEERT may choose to direct personal contributions, as well as
     matching contributions from our company, into the Stewart Enterprises
     Company Stock Fund (the "Fund"). The Fund is a blend of Stewart
     Enterprises, Inc. Class A common stock and cash. Participants do not have
     direct ownership of Stewart Enterprises, Inc. stock, but rather have
     ownership of units in the Fund. As of March 31, 2001, one unit in the Fund
     was equivalent to 0.790028 of a share of stock.

 (3) Consists of shares subject to options currently exercisable or exercisable
     within 60 days. These shares are deemed to be outstanding for purposes of
     computing the percentage of outstanding Class A common stock owned by a
     person individually and by all directors and executive officers as a group
     but are not

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     deemed to be outstanding for the purpose of computing the individual
     ownership percentage of any other person.

 (4) Includes 6,483,844 shares owned as community property with Mr. Stewart's
     wife, 448,000 shares owned by the Frank B. Stewart, Jr. Foundation (a
     non-profit corporation), with respect to which Mr. Stewart is a trustee and
     shares voting and investment power, and 10,717 shares held indirectly by
     Mr. Stewart through the SEERT.

 (5) Each share of Class B common stock has ten votes per share and, unless
     otherwise required by law, the holder of Class B common stock votes
     together with the holders of Class A common stock on all matters brought
     before the shareholders.

 (6) Includes 3,029 shares held indirectly by Mr. Rowe through the SEERT.

 (7) Includes 2,791 shares held indirectly by Mr. Budde through the SEERT.

 (8) Includes 900 shares owned by Mr. Fenner's wife and 448,000 shares held by
     the Frank B. Stewart, Jr. Foundation (a non-profit corporation), with
     respect to which Mr. Fenner is a trustee and shares voting and investment
     power.

 (9) Includes 428 shares owned by Mr. Laborde's wife.

(10) Includes 10,500 shares held in a trust, with respect to which Mr. Read is a
     trustee and shares voting and investment power.

(11) Information regarding Messrs. Stewart, Rowe and Budde, the Named Executive
     Officers other than Messrs. Marlowe, Heffron and Henican, appears
     immediately above under the caption "Directors."

(12) Includes 2,482 shares held indirectly by Mr. Marlowe through the SEERT and
     1,800 shares held in Mr. Marlowe's wife's retirement fund.

(13) Includes 1,473 shares held indirectly by Mr. Heffron through the SEERT.

(14) Includes 10,000 shares owned by Mr. Henican's wife, 1,200 shares owned by
     his children, and 1,701 shares held indirectly by Mr. Henican through the
     SEERT. Mr. Henican was the Chief Executive Officer and a director of our
     company until November 15, 1999.

(15) Includes 38,753 shares held through the SEERT.

(16) As of July 24, 2001 all directors and executive officers as a group
     beneficially owned shares of Class A and B common stock representing 32.2
     percent of our total voting power.

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     As of July 24, 2001, the person named below was, to our knowledge, the only
beneficial owner of more than 5 percent of our outstanding Class A common stock,
determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934,
other than Frank B. Stewart, Jr., whose beneficial ownership of our Class A and
Class B common stock is described above.



                                                                    AMOUNT AND NATURE OF   PERCENT
                   BENEFICIAL OWNER                        CLASS    BENEFICIAL OWNERSHIP   OF CLASS
                   ----------------                       -------   --------------------   --------
                                                                                  
Dimensional Fund Advisors
  1299 Ocean Avenue Santa Monica,
  California 90401.....................................   Class A       8,524,100(1)         8.2%


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

(1) Based solely on information contained in a Schedule 13F filed with the
    Securities and Exchange Commission as of March 31, 2001, indicating that all
    shares shown as beneficially owned are held with sole voting and investment
    power.

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                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Through July 2000, we leased our corporate offices from a general
partnership in which Frank B. Stewart, Jr. owned a 99.3 percent partnership
interest. We now lease the corporate offices from a non-affiliated company. We
paid an aggregate of $478,694 in rental payments to the partnership during
fiscal year 2000.

     During fiscal year 1992, Mr. Stewart and two trusts established by Mr. and
Mrs. Stewart entered into an agreement with us whereby we, with the approval of
all of the disinterested members of our board of directors, agreed to advance
the premiums on a split dollar "second-to-die" life insurance policy purchased
by the trusts and insuring the lives of Mr. and Mrs. Stewart. The premiums are
payable over a 12-year period and the trusts are required to reimburse us
currently for that portion of the premiums we paid that, if not reimbursed,
would be treated as compensation to Mr. Stewart for federal income tax purposes.
Interest accrues on the premium advances at 8 percent per annum from the date we
make each premium payment. The advances are collateralized by an assignment of
other insurance policies owned by the trusts and shares of our Class A common
stock that are held by the trusts. The trusts have agreed that, upon the death
of Mr. or Mrs. Stewart, the proceeds of such other insurance policies will be
used to reduce the outstanding balance due to us. We are entitled to
reimbursement of the unpaid balance of all amounts advanced, together with
accrued interest, upon the first to occur of (1) the surrender of the policy,
(2) the deaths of Mr. and Mrs. Stewart, or (3) the expiration of 60 days
following the payment in full of all premiums on the policy. The outstanding
amount advanced to the trusts by us, including accrued interest, was
approximately $1,570,008 as of April 30, 2001, including $110,000 advanced to
the trusts during the current fiscal year.

     In January 1998, we discontinued an insurance policy on the life of Mr.
Stewart unrelated to the policy described in the preceding paragraph. In order
to purchase a replacement policy, we, with the approval of all of the
disinterested members of the board of directors, agreed to lend The Stewart
Family Special Trust $685,000 pursuant to a promissory note due 180 days after
the death of Mr. Stewart. Interest on the note accrues annually at a rate equal
to our cost of borrowing under our revolving credit facility and is payable when
the principal becomes due. The amount of the loan is equal to the cash value
received by us upon the discontinuance of the prior insurance policy. The loan
proceeds were used by the trust to purchase a single premium policy on the life
of Mr. Stewart. Some of the beneficiaries of The Stewart Family Special Trust
are members of Mr. Stewart's family. The outstanding balance of the loan as of
April 30, 2001, including accrued interest, was approximately $832,952.

     In fiscal year 1997, in connection with our acquisition of certain
cemeteries from Dwight A. Holder, a former director, Mr. Holder's daughter
entered into a non-competition agreement with one of our subsidiaries providing
that she will be paid $342,500 in 40 equal quarterly installments. During fiscal
year 2000, she was paid $34,250 under the agreement. During fiscal year 2001
(through April 30, 2001), she was paid $17,125 under the agreement.

     Dillard Memorial, Inc., a subsidiary we acquired in 1997 from Mr. Holder,
leases one of its funeral homes from Mr. Holder pursuant to a 20-year lease
which commenced in May 1997 and provides for annual rental payments equal to the
greater of (1) $144,000 or (2) 7 percent of the previous fiscal year's gross
sales for that funeral home. During fiscal year 2000, we made rental payments
under the lease of $144,000 to Mr. Holder. During fiscal year 2001 (through
April 30, 2001), the payments totaled $72,000.

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            DESCRIPTION OF CERTAIN INDEBTEDNESS AND THE TENDER OFFER

     Concurrently with the sale of the notes, we entered into new senior secured
credit facilities. In addition, we completed a tender offer for the purchase of
approximately $200.0 million combined principal amount of our 6.70% Notes and
6.40% ROARS.

NEW SENIOR SECURED CREDIT FACILITIES

     Concurrently with the sale of the notes, we entered into a credit agreement
with a syndicate of financial institutions, which provides up to a maximum of
$550.0 million of senior secured credit facilities. The new senior secured
credit facilities consist of (1) a $175.0 million four-year revolving credit
facility, (2) a $75.0 million 18-month asset sale term loan, and (3) a five-year
$300.0 million term loan B. The borrowers under the new senior secured credit
facilities are Stewart Enterprises, Inc. and two wholly-owned subsidiaries of
Stewart Enterprises, Inc. formed under the laws of Puerto Rico (the "Puerto
Rican Subsidiaries"). In this description, "the Company" refers to Stewart
Enterprises, Inc. and not any of its subsidiaries.

Revolving Credit Facility

     The new senior secured credit facilities include a $175.0 million four-year
revolving credit facility, $10.0 million of which is available for borrowings by
the Puerto Rican Subsidiaries. The amount available for borrowings is the total
commitment amount of the revolving credit facility less the sum of (1)
outstanding balances (including obligations in respect of letters of credit),
(2) the amount of the revolving credit facility required to satisfy the reserve
requirement described below, and (3) the amount required to be bonded ($41.1
million as of April 30, 2001) to guarantee our obligations relating to funds we
withdrew from our preneed funeral trusts in Florida (the "Florida Bond
Obligation").

Asset Sale Term Loan

     The new senior secured credit facilities include an 18-month $75.0 million
asset sale term loan available for borrowings by the Company only. The loan was
drawn in full on the completion of the refinancing transactions, and the
principal amount will be due in 18 months.

Term Loan B

     The new senior secured credit facilities include a five-year $300.0 million
term loan B, $30.0 million of which was advanced to the Puerto Rican
Subsidiaries. The term loan B was drawn in full on the completion of the
refinancing transactions and will be amortized during the first two years in
quarterly installments totaling $2.5 million each year, during the third year in
quarterly installments totaling $15.0 million, during the fourth year in
quarterly installments totaling $25.0 million and during the fifth year in
quarterly installments totaling $255.0 million. Prepayments on or before the
first anniversary following the completion of the refinancing transactions must
include a call premium such that prepayments are 101.0 percent of the principal
amount prepaid.

Required Reserve

     As long as any of the 6.70% Notes or 6.40% ROARS are outstanding, the
Company, the Puerto Rican Subsidiaries, and the Company Guarantors and Puerto
Rican Guarantors described below, must maintain, on a consolidated basis, a
required reserve consisting of (1) availability under the revolving credit
facility, and/or (2) domestic cash, cash equivalents and marketable securities,
the access to which is restricted on terms satisfactory to the collateral agent
("Restricted Funds"). The required reserve is an amount equal to the lesser of
(1) the amount by which the net cash proceeds from asset sales (calculated on a
cumulative basis from the completion of the refinancing transactions) exceeds
$75.0 million and (2) the outstanding principal amount of the 6.70% Notes and
6.40% ROARS. Notwithstanding the foregoing, the required reserve cannot be less
than the following percentages of the outstanding principal amount of the 6.70%
Notes and 6.40% ROARS: 25 percent for the period June 30, 2002 through October
31, 2002, 50 percent for the period November 1, 2002 through January 31, 2003,
75 percent for the period February 1, 2003 through April 30, 2003 and
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100 percent for the period May 1, 2003 and thereafter. If the 6.40% ROARS are
remarketed (which would occur, if at all, on May 1, 2003), they will not be
considered outstanding for purposes of the requirement to maintain the required
reserve.

Purchases of 6.70% Notes and 6.40% ROARS

     In order for the Company to purchase or otherwise retire any of the
remaining 6.70% Notes or remaining 6.40% ROARS, either voluntarily or at
maturity, the Company must provide evidence satisfactory to the administrative
agent that immediately after giving effect to the transaction the Company will
have liquidity of no less than $25.0 million. Liquidity is defined as
unrestricted domestic cash, cash equivalents and marketable securities, plus the
total commitment amount for the revolving credit facility less the sum of (1)
outstanding balances and letters of credit under the revolving credit facility
(giving pro forma effect to any use of the facility for the transaction), (2)
the amount required to be bonded to secure our obligations relating to funds we
withdrew from our preneed funeral trusts in Florida, and (3) the remaining
principal amount outstanding of the 6.70% Notes and 6.40% ROARS after the effect
of the transaction.

Interest Rates and Fees

     The applicable margin spread for LIBOR rate loans under the revolving
credit facility and the term loan B is determined by reference to a pricing
schedule that is based upon our leverage ratio. The applicable margins for the
revolving credit facility and term loan B are generally subject to quarterly
adjustment within a range of 200 to 275 basis points for the revolving credit
facility and a range of 312.5 to 337.5 basis points for the term loan B, based
upon our leverage ratio. The applicable margin spread for LIBOR rate loans under
the asset sale term loan is 275 basis points. The default rate on the senior
secured credit facility is 2.0 percent above the otherwise applicable interest
rate. In addition, we will pay a commitment fee on the unused portion of the
revolving credit facility within a range of 50.0 to 62.5 basis points, based
upon our leverage ratio.

Mandatory Prepayments

     We are required to repay outstanding loans under the new senior secured
credit facilities, subject to some conditions and exceptions, with (1) 100
percent of the after-tax net cash proceeds of asset dispositions (subject to
reinvestment provisions and other exceptions), (2) 100 percent of the net cash
proceeds from the issuance of debt (excluding notes offered hereby, the
remarketing or refinancing of any of the 6.70% Notes or 6.40% ROARS, and other
exceptions), and (3) 100 percent of the net cash proceeds from the issuance of
equity by the Company or any of its subsidiaries.

     We will apply proceeds arising from these events first to reduce amounts
outstanding under the asset sale term loan. The proceeds will then be applied
(1) during the first year following completion of the refinancing transactions,
to pay amounts outstanding (but not reduce commitments) under the revolving
credit facility, and (2) thereafter to reduce outstanding amounts (but not
commitments) under the revolving credit facility until the required reserve is
equal to the outstanding principal amount of the 6.70% Notes and 6.40% ROARS.
The proceeds will then be applied to reduce the term loan B. Prepayments of the
term loan B will be applied first to reduce the principal amount due in the
fourth year ($25.0 million) until the remaining amount due in that year is not
more than $2.5 million, and thereafter in inverse order of maturity. Within each
maturity, prepayments of the term loan B will be applied first to amounts as to
which the Puerto Rican Subsidiaries are not obligors.

Optional Prepayments

     Amounts under the revolving credit facility may be repaid and reborrowed
prior to the final maturity date, subject to the availability limit. The asset
sale term loan and the term loan B may be prepaid in whole or in part at any
time without penalty other than the call premium applicable to the term loan B
described above and customary breakage costs. Optional prepayments not applied
by the Company to reduce amounts outstanding under the revolving credit facility
will be applied first to reduce amounts outstanding under the

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asset sale term loan and then to reduce amounts outstanding under the term loan
B. Prepayments of the term loan B will be applied first to reduce the principal
amount due in the fourth year ($25.0 million) until the remaining amount due in
that year is not more than $2.5 million, and thereafter in inverse order of
maturity. Within each maturity, prepayments will be applied among amounts as to
which the Company and the Puerto Rican Subsidiaries, or the Company only, are
obligors, at the Company's election.

Covenants and Borrowing Limits

     The new senior secured credit facilities contain affirmative and negative
covenants. The covenants include limitations on liens, limitations on mergers,
consolidations and asset sales, limitations on incurrence of debt, limitations
on dividends, stock redemptions and the redemption and/or prepayment of other
debt, limitations on investments and acquisitions, limitations on lease
payments, limitations on negative pledges and limitations on transactions with
affiliates. In addition, the credit agreement contains the following financial
covenants: (1) a maximum leverage ratio, (2) a minimum fixed charge coverage
ratio, and (3) a minimum interest coverage ratio. The financial covenants will
be calculated on a consolidated basis after giving pro forma effect to permitted
asset dispositions and acquisitions. Capital expenditures are limited to $35.0
million in fiscal year 2001, $45.0 million in fiscal year 2002, $50.0 million in
fiscal year 2003 and $55.0 million for each fiscal year thereafter. Beginning
with fiscal year 2003, if our leverage ratio for the preceding fiscal year is
not greater than 2.60 to 1.00, we may carry forward amounts permitted but not
used in the previous fiscal years on a cumulative basis, beginning with any
amounts unused in fiscal year 2002.

Events of Default

     Events of default under the new senior secured credit facilities include
nonpayment of principal, interest or fees, violation of covenants, inaccuracy of
representations and warranties, bankruptcy and insolvency events,
cross-defaults, a default in the event of a change of control and other
customary events of default. If an event of default occurs, the lenders are
entitled to take various actions, including accelerating the amounts due under
the new senior secured credit facilities and requiring immediate repayment of
all amounts outstanding, terminating any commitment to fund additional loans
under the revolving credit facility and commencing proceedings to foreclose on
the collateral.

Security and Guarantees

     The Company's obligations under the new senior secured credit facilities
are guaranteed by all of its existing and future direct and indirect
subsidiaries formed under the laws of the United States, any state thereof or
the District of Columbia, except for specified excluded subsidiaries (the
"Company Guarantors"). The specified excluded subsidiaries are (1) Investors
Trust, Inc. and three Delaware subsidiaries, which have been excluded for
regulatory and tax planning purposes and have combined assets of less than $4.0
million, and (2) immaterial subsidiaries prohibited by law from guaranteeing the
facilities. Each Puerto Rican Subsidiary's obligations under the new senior
secured credit facilities will be guaranteed by (1) the other Puerto Rican
Subsidiary, (2) the Company, (3) each of the Company Guarantors, and (4) all
existing and future direct and indirect subsidiaries of either of the Puerto
Rican Subsidiaries formed under the laws of Puerto Rico (the "Puerto Rican
Guarantors").

     All obligations under the new senior secured credit facilities, the
guarantees and any interest rate protection and other hedging agreements with
any lender or its affiliates are secured equally and ratably with our remaining
existing 6.70% Notes and our remaining existing 6.40% ROARS by a first priority
perfected security interest in (1) all capital stock and other equity interests
of the Company's existing and future direct and indirect domestic subsidiaries,
other than certain domestic subsidiaries acceptable to the agents, (2) 65
percent of the voting equity interests and 100 percent of all other equity
interests (other than directors qualifying shares) of all direct existing and
future foreign subsidiaries, and (3) all other existing and future assets and
properties of the Company and the Company Guarantors, except for real property,
vehicles and other specified exclusions.

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     The collateral is subject to the terms of the Collateral Documents, as
defined in the Second Supplemental Indenture dated as of June 29, 2001, relating
to the 6.70% Notes and 6.40% ROARS, which provide for a sharing of collateral
among the lenders under the new senior secured credit facilities and the holders
of our remaining 6.70% Notes and 6.40% ROARS.

THE TENDER OFFER

     On May 15, 2001, we commenced an offer to purchase approximately $200.0
million in principal amount of our $300.0 million publicly held senior notes,
which consisted of $100.0 million 6.70% Notes and $200.0 million 6.40% ROARS. On
June 29, 2001, we repurchased $99.9 million of the 6.70% Notes and approximately
$100.1 million of the 6.40% ROARS. The remaining 6.70% Notes and 6.40% ROARS are
secured equally and ratably with the new senior secured credit facilities and
are senior debt in relation to the notes.

6.70% NOTES AND 6.40% ROARS

     In December 1996, we issued $100.0 million aggregate principal amount of
the 6.70% Notes. When issued, the 6.70% Notes were unsubordinated, unsecured
obligations which ranked pari passu in right of payment with all of our other
unsubordinated and unsecured indebtedness. The 6.70% Notes are now secured
equally and ratably with the new senior secured credit facilities. The 6.70%
Notes are not redeemable prior to maturity and are not entitled to the benefit
of any mandatory redemption or sinking fund. Interest on the 6.70% Notes is
payable semi-annually on December 1 and June 1 of each year.

     In April 1998, we issued $200.0 million aggregate principal amount of the
6.40% ROARS. When issued, the 6.40% ROARS were unsubordinated, unsecured
obligations which ranked pari passu in right of payment with all of our other
unsubordinated and unsecured indebtedness. The 6.40% ROARS are now secured
equally and ratably with the new senior secured credit facilities. Interest on
the 6.40% ROARS is payable semi-annually on November 1 and May 1 of each year.

     Outstanding 6.40% ROARS must be redeemed by us or remarketed by the
remarketing dealer on May 1, 2003. We believe the remarketing dealer is likely
to elect to remarket the 6.40% ROARS if at the time immediately preceding May 1,
2003 the 10-year United States Treasury rate is less than 5.44 percent. If the
remarketing dealer does not elect to remarket the 6.40% ROARS, we must redeem
them on May 1, 2003 for 100 percent of their principal amount plus accrued
interest. If the remarketing dealer elects to remarket the 6.40% ROARS, we may
override that election by choosing to redeem the 6.40% ROARS on May 1, 2003 for
100 percent of their principal amount plus accrued interest, in which case we
will be obligated to pay the remarketing dealer the value of its remarketing
right. If the 6.40% ROARS are remarketed, holders of 6.40% ROARS immediately
prior to May 1, 2003 must tender their 6.40% ROARS to the remarketing dealer for
purchase on May 1, 2003 for a purchase price of 100 percent of their principal
amount plus accrued interest. Except as described above, the 6.40% ROARS are not
redeemable prior to maturity and are not entitled to the benefit of any
mandatory redemption or sinking fund. If remarketed, the 6.40% ROARS will become
due May 1, 2013, and the coupon for the remaining term will be 5.44 percent
(which was the 10-year United States Treasury rate at the time of initial
issuance of the 6.40% ROARS) plus our then current credit spread.

     The indenture governing the 6.40% ROARS and 6.70% Notes contains covenants
that, among other things, and subject to some exceptions, (1) restrict our
ability and the ability of our subsidiaries to create liens and enter into sale
leaseback transactions, and (2) restrict our ability (but not our subsidiaries'
ability) to sell all or substantially all of our assets or merge or consolidate
with other companies.

OTHER LONG-TERM DEBT

     As of April 30, 2001, our subsidiaries had approximately $25.0 million of
long-term debt that represents notes that our subsidiaries issued as part of the
purchase price of acquired businesses or debt that our subsidiaries assumed in
connection with acquisitions. Approximately $12.1 million of this debt is
secured by liens on the stock or assets of the related subsidiaries. This debt
remains outstanding after the completion of the refinancing transactions and is
senior debt in relation to the notes.
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     In addition, immediately upon completion of the refinancing transactions,
we had letters of credit outstanding under the new revolving credit facility of
approximately $6.5 million, which constitute senior debt under the indenture for
the notes. Also, we have agreed to maintain unused availability under the new
revolving credit facility in an amount that will equal or exceed the Florida
Bond Obligation described above, which as of April 30, 2001 was $41.1 million.
This amount would also be considered senior debt if we were to borrow funds
under the revolving credit facility to extinguish the Florida Bond Obligation by
returning to the related trust funds the amounts we previously withdrew that
relate to the remaining preneed contracts.

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                              DESCRIPTION OF NOTES

     You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." In this description, the word
"Company" refers only to Stewart Enterprises, Inc. and not to any of its
subsidiaries.

     The outstanding notes were issued under an Indenture (the "Indenture")
among the Company, the Guarantors and Firstar Bank, N.A., as trustee (the
"Trustee"), in a private transaction that was not subject to the registration
requirements of the Securities Act. The terms of the notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").

     Any outstanding notes that remain outstanding after completion of the
exchange offer, together with the exchange notes issued in the exchange offer,
will be treated as a single class of securities under the Indenture.

     The following description is a summary of the material provisions of the
Indenture and the Registration Rights Agreement. It does not restate those
agreements in their entirety. We urge you to read the Indenture and the
Registration Rights Agreement because they, and not this description, define
your rights as holders of the notes. Certain defined terms used in this
description but not defined below under "-- Certain Definitions" have the
meanings assigned to them in the Indenture.

BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES

The Notes

     The notes:

     - are general unsecured obligations of the Company;

     - are subordinated in right of payment to all existing and future Senior
       Debt of the Company;

     - are pari passu in right of payment with any future senior subordinated
       Indebtedness of the Company; and

     - are guaranteed by the Guarantors.

The Guarantees

     The notes are guaranteed by all of the Domestic Subsidiaries of the
Company, other than Investors Trust, Inc., which serves as the Company's
investment advisor on its investment portfolio and the Company's preneed
funeral, merchandise and perpetual care trust funds and escrow accounts;
SEI-DELFL, Inc., SEI-DELLA, Inc. and SEI-DELTX, Inc., which are immaterial
subsidiaries that are intended to be used for foreign tax planning purposes; and
other immaterial subsidiaries which are prohibited by law from guaranteeing the
notes. Except as provided under "-- Certain Covenants -- Limitations on
Issuances of Guarantees of Indebtedness," subsidiaries that are not Domestic
Subsidiaries will not be guarantors. For the fiscal year ended October 31, 2000,
subsidiaries which are not Guarantors had revenue of $200.3 million and net
earnings of $3.9 million, respectively. In the future, we may have additional
subsidiaries which are not "Domestic Subsidiaries."

     Each Guarantee of the notes:

     - is a general unsecured obligation of the Guarantor;

     - is subordinated in right of payment to all existing and future Senior
       Debt of the Guarantor; and

     - is pari passu in right of payment with any future senior subordinated
       Indebtedness of the Guarantor.

     As of the date of the Indenture, all of our subsidiaries were "Restricted
Subsidiaries." However, under the circumstances described below under the
subheading "-- Certain Covenants -- Designation of Restricted and Unrestricted
Subsidiaries," we will be permitted to designate certain of our subsidiaries as
"Unrestricted
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Subsidiaries." Our Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants in the Indenture. Our Unrestricted Subsidiaries will not
guarantee the notes.

PRINCIPAL, MATURITY AND INTEREST

     The Indenture provides for the issuance by the Company of notes with an
unlimited maximum aggregate principal amount. The Company may issue additional
notes (the "Additional Notes") from time to time. Any offering of Additional
Notes is subject to the covenant described below under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." The
notes and any Additional Notes subsequently issued under the Indenture would be
treated as a single class for all purposes under the Indenture, including,
without limitation, waivers, amendments, redemptions and offers to purchase. The
Company will issue notes in denominations of $1,000 and integral multiples of
$1,000. The notes will mature on July 1, 2008.

     Interest on the notes accrues at the rate of 10 3/4% per annum and is
payable semi-annually in arrears on January 1 and July 1, commencing on January
1, 2002. The Company will make each interest payment to the Holders of record on
the immediately preceding December 15 and June 15.

     Interest on the notes accrues from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest is computed on the basis of a 360-day year comprised of twelve 30-day
months.

METHODS OF RECEIVING PAYMENTS ON THE NOTES

     If a Holder has given wire transfer instructions to the Company, the
Company will pay all principal, interest and premium and Liquidated Damages, if
any, on that Holder's notes in accordance with those instructions. All other
payments on notes will be made at the office or agency of the Paying Agent and
Registrar within the City and State of New York unless the Company elects to
make interest payments by check mailed to the Holders at their addresses set
forth in the register of Holders.

PAYING AGENT AND REGISTRAR FOR THE NOTES

     The Trustee will initially act as Paying Agent and Registrar. The Company
may change the Paying Agent or Registrar without prior notice to the Holders,
and the Company or any of its Subsidiaries may act as Paying Agent or Registrar.

TRANSFER AND EXCHANGE

     A Holder may transfer or exchange notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of notes to be redeemed.

     The registered Holder of a Note will be treated as the owner of it for all
purposes.

NOTE GUARANTEES

     The Guarantors have jointly and severally guaranteed the Company's
obligations under the notes. Each Guarantee is subordinated to the prior payment
in full of all Senior Debt of that Guarantor. The obligations of each Guarantor
under its Guarantee is limited as necessary to prevent that Guarantee from
constituting a fraudulent conveyance under applicable law. See "Risk
Factors -- The notes and guarantees may not be enforceable because of fraudulent
conveyance laws."

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     A Guarantor may not sell or otherwise dispose of all or substantially all
of its assets to, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person), another Person, other than the Company or
another Guarantor, unless:

          (1) immediately after giving effect to that transaction, no Default or
     Event of Default exists; and

          (2) either:

             (a) the Person acquiring the property in any such sale or
        disposition or the Person formed by or surviving any such consolidation
        or merger is a corporation organized or existing under the laws of the
        United States, any state thereof or the District of Columbia and assumes
        all the obligations of that Guarantor under the Indenture, its Guarantee
        and the Registration Rights Agreement pursuant to a supplemental
        indenture satisfactory to the Trustee; or

             (b) such sale or other disposition complies with the "Asset Sale"
        provisions of the Indenture, including the application of the Net
        Proceeds therefrom.

     The Guarantee of a Guarantor will be released:

          (1) in connection with any sale or other disposition of all or
     substantially all of the assets of that Guarantor (including by way of
     merger or consolidation) to a Person that is not (either before or after
     giving effect to such transaction) a Restricted Subsidiary of the Company,
     if the sale or other disposition of all or substantially all of the assets
     of that Guarantor complies with the "Asset Sale" provisions of the
     Indenture, including the application of the Net Proceeds therefrom;

          (2) in connection with any sale of all of the Capital Stock of a
     Guarantor to a Person that is not (either before or after giving effect to
     such transaction) a Restricted Subsidiary of the Company, if the sale of
     all such Capital Stock of that Guarantor complies with the "Asset Sale"
     provisions of the Indenture, including the application of the Net Proceeds
     therefrom; or

          (3) if the Company properly designates any Restricted Subsidiary that
     is a Guarantor as an Unrestricted Subsidiary.

SUBORDINATION

     The payment of principal, interest and premium and Liquidated Damages, if
any, on the notes is subordinated to the prior payment in full of all Senior
Debt of the Company, including Senior Debt of the Company incurred after the
date of the Indenture.

     The holders of Senior Debt of the Company are entitled to receive payment
in full of all Obligations due in respect of Senior Debt of the Company
(including interest after the commencement of any bankruptcy proceeding at the
rate specified in the applicable Senior Debt of the Company) before the Holders
of notes are entitled to receive any payment with respect to the notes (except
that Holders of notes may receive and retain Permitted Junior Securities and
payments made from the trust described under "-- Legal Defeasance and Covenant
Defeasance"), in the event of any distribution to creditors of the Company:

          (1) in a liquidation or dissolution of the Company;

          (2) in a bankruptcy, reorganization, insolvency, receivership or
     similar proceeding relating to the Company or its property;

          (3) in an assignment for the benefit of creditors; or

          (4) in any marshaling of the Company's assets and liabilities.

     The Company also may not make any payment in respect of the notes (except
in Permitted Junior Securities or from the trust described under "-- Legal
Defeasance and Covenant Defeasance") if:

          (1) a payment default on Designated Senior Debt of the Company occurs
     and is continuing beyond any applicable grace period; or

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          (2) any other default occurs and is continuing on any series of
     Designated Senior Debt of the Company that permits holders of that series
     of Designated Senior Debt of the Company to accelerate its maturity and the
     Trustee receives a notice of such default (a "Payment Blockage Notice")
     from the Company or the holders of any Designated Senior Debt of the
     Company (a "nonpayment default").

     Payments on the notes may and shall be resumed:

          (1) in the case of a payment default on Designated Senior Debt of the
     Company, upon the date on which such default is cured or waived; and

          (2) in case of a nonpayment default, the earlier of the date on which
     such default is cured or waived or 179 days after the date on which the
     applicable Payment Blockage Notice is received, unless the maturity of such
     Designated Senior Debt of the Company has been accelerated.

     No new Payment Blockage Notice may be delivered unless and until:

          (1) 360 days have elapsed since the delivery of the immediately prior
     Payment Blockage Notice; and

          (2) all scheduled payments of principal, interest and premium and
     Liquidated Damages, if any, on the notes that have come due have been paid
     in full in cash.

     No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice.

     If the Trustee or any Holder of the notes receives a payment in respect of
the notes (except in Permitted Junior Securities or from the trust described
under "-- Legal Defeasance and Covenant Defeasance") when:

          (1) the payment is prohibited by these subordination provisions; and

          (2) the Trustee or the Holder has actual knowledge that the payment is
     prohibited;

the Trustee or the Holder, as the case may be, shall hold the payment in trust
for the benefit of the holders of Senior Debt of the Company. Upon the proper
written request of the holders of Senior Debt of the Company, the Trustee or the
Holder, as the case may be, shall deliver the amounts in trust to the holders of
Senior Debt of the Company or their proper representative.

     The Company must promptly notify holders of its Senior Debt if payment of
the notes is accelerated because of an Event of Default.

     As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of the Company, Holders of notes
may recover less ratably than creditors of the Company who are holders of Senior
Debt of the Company.

     Payments under the Note Guarantee of each Guarantor are subordinated to the
prior payment in full of all Senior Debt of such Guarantor, including Senior
Debt of such Guarantor incurred after the date of the Indenture, on the same
basis as provided above with respect to the subordination of payments on the
notes by the Company to the prior payment in full of Senior Debt of the Company.
See "Risk Factors -- Your right to receive payment on the notes and the
guarantees is junior to all of Stewart Enterprises, Inc.'s and the subsidiary
guarantor's senior debt."

     "Designated Senior Debt" means:

          (1) any Indebtedness outstanding under the Credit Agreement; and

          (2) any other Senior Debt permitted under the Indenture the principal
     amount of which is $50.0 million or more and that has been designated by
     the Company as "Designated Senior Debt."

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   91

     "Permitted Junior Securities" means:

          (1) Equity Interests in the Company or any Guarantor; or

          (2) debt securities or rights to acquire debt securities that are
     subordinated to all Senior Debt and any debt securities issued in exchange
     for Senior Debt to substantially the same extent as, or to a greater extent
     than, the notes and the Note Guarantees are subordinated to Senior Debt
     under the Indenture.

     "Senior Debt" means:

          (1) all Indebtedness of the Company or any Guarantor outstanding from
     time to time under Credit Facilities and all Hedging Obligations with
     respect thereto;

          (2) any other Indebtedness of the Company or any Guarantor permitted
     to be incurred under the terms of the Indenture, unless the instrument
     under which such Indebtedness is incurred expressly provides that it is on
     a parity with or subordinated in right of payment to the notes or any Note
     Guarantee; and

          (3) all Obligations with respect to the items listed in the preceding
     clauses (1) and (2).

     Notwithstanding anything to the contrary, Senior Debt does not include:

          (1) any liability for federal, state, local or other taxes owed or
     owing by the Company;

          (2) any Indebtedness of the Company to any of its Subsidiaries or
     other Affiliates;

          (3) any trade payables; or

          (4) the portion of any Indebtedness that is incurred in violation of
     the Indenture.

OPTIONAL REDEMPTION

     At any time prior to July 1, 2004, the Company may redeem up to 35% of the
aggregate principal amount of notes issued under the Indenture at a redemption
price of 110.75% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the redemption date, with the net
cash proceeds of one or more Qualified Equity Offerings; provided that:

          (1) at least 65% of the aggregate principal amount of notes issued
     under the Indenture remains outstanding immediately after the occurrence of
     such redemption (excluding notes held by the Company and its Subsidiaries);
     and

          (2) the redemption must occur within 45 days of the date of the
     closing of such Qualified Equity Offering.

     Except pursuant to the preceding paragraph, the notes are not redeemable at
the Company's option prior to July 1, 2005.

     On or after July 1, 2005, the Company may redeem all or a part of the notes
upon not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the applicable
redemption date, if redeemed during the twelve-month period beginning on July 1
of the years indicated below:



YEAR                                                        PERCENTAGE
- ----                                                        ----------
                                                         
2005......................................................  105.3750%
2006......................................................  102.6875%
2007 and thereafter.......................................  100.0000%


MANDATORY REDEMPTION

     The Company is not required to make mandatory redemption or sinking fund
payments with respect to the notes.

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REPURCHASE AT THE OPTION OF HOLDERS

Change of Control

     If a Change of Control occurs, each Holder of notes will have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that Holder's notes pursuant to a Change of
Control Offer on the terms set forth in the Indenture. In the Change of Control
Offer, the Company will offer a Change of Control Payment in cash equal to 101%
of the aggregate principal amount of notes repurchased plus accrued and unpaid
interest and Liquidated Damages, if any, thereon, to the date of purchase.
Within 30 days following any Change of Control, the Company will mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase notes on the Change of Control
Payment Date specified in such notice, which date shall be no earlier than 30
days and no later than 60 days from the date such notice is mailed, pursuant to
the procedures required by the Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the notes as
a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control provisions of
the Indenture, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the
Change of Control provisions of the Indenture by virtue of such conflict.

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

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

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

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

     The Paying Agent will promptly mail to each Holder of notes so tendered the
Change of Control Payment for such notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof.

     Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, the
Company will either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of notes required by this covenant. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.

     The Credit Agreement prohibits the Company from purchasing any notes, and
also provides that certain change of control events with respect to the Company
would constitute a default under that agreement. Any future credit agreements or
other agreements relating to Senior Debt to which the Company becomes a party
may contain similar restrictions and provisions. In the event a Change of
Control occurs at a time when the Company is prohibited from purchasing notes,
the Company could seek the consent of its senior lenders to the purchase of
notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing notes. In such
case, the Company's failure to purchase tendered notes would constitute an Event
of Default under the Indenture which would, in turn, constitute a default under
such Senior Debt. In such circumstances, the subordination provisions in the
Indenture would likely restrict payments to the Holders of notes.

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   93

     Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of the notes to
require that the Company repurchase or redeem the notes in the event of a
takeover, recapitalization or similar transaction.

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

     The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of the Company and its
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of notes to require the Company to repurchase such notes as a result of a
sale, lease, transfer, conveyance or other disposition of less than all of the
assets of the Company and its Subsidiaries taken as a whole to another Person or
group may be uncertain.

Asset Sales

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

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

          (2) such fair market value is evidenced by (i) for any Asset Sale
     resulting in Net Proceeds less than or equal to $10.0 million, an Officer's
     Certificate delivered to the Trustee or (ii) for any Asset Sale resulting
     in Net Proceeds in excess of $10.0 million, a resolution of the Board of
     Directors set forth in an Officers' Certificate delivered to the Trustee;
     and

          (3) at least 75% of the consideration therefor received by the Company
     or such Restricted Subsidiary is in the form of cash. For purposes of this
     provision, each of the following shall be deemed to be cash:

             (a) any liabilities (as shown on the Company's or such Restricted
        Subsidiary's most recent balance sheet) of the Company or any Restricted
        Subsidiary (other than contingent liabilities and liabilities that are
        by their terms subordinated to the notes or any Note Guarantee) that are
        assumed by the transferee of any such assets pursuant to a written
        agreement that releases or provides for the release of the Company or
        such Restricted Subsidiary from further liability; and

             (b) any securities, notes or other obligations received by the
        Company or any such Restricted Subsidiary from such transferee that are
        converted promptly, but in no event later than thirty days of such Asset
        Sale, by the Company or such Restricted Subsidiary into cash (to the
        extent of the cash received in that conversion).

     Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds at its option:

          (1) to repay Senior Debt;

          (2) to acquire all or substantially all of the assets of, or a
     majority of the Voting Stock of, another Permitted Business;

          (3) to make a capital expenditure in or that is used or useful in a
     Permitted Business; or

          (4) to acquire other long-term assets in or that are used or useful in
     a Permitted Business.

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

     Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will make
an offer to purchase (an "Asset Sale Offer") to all Holders of notes and all
holders of other Indebtedness that is pari passu with the notes containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase with the proceeds of sales of assets to purchase the maximum principal
amount of notes and such other pari passu Indebtedness that may be purchased out
of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to
100% of principal amount plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase, and will be payable in cash. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the notes and such other pari passu
Indebtedness to be purchased on a pro rata basis based on the principal amount
of notes and such other pari passu Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

     The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the Indenture by virtue of such
conflict.

     The agreements governing the Company's outstanding Senior Debt currently
prohibit the Company from purchasing any notes, and also provide that certain
asset sale events with respect to the Company would constitute a default under
these agreements. Any future credit agreements or other agreements relating to
Senior Debt to which the Company becomes a party may contain similar
restrictions and provisions. In the event an Asset Sale occurs at a time when
the Company is prohibited from purchasing notes, the Company could seek the
consent of its senior lenders to the purchase of notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or repay such borrowings, the Company will remain
prohibited from purchasing notes. In such case, the Company's failure to
purchase tendered notes would constitute an Event of Default under the Indenture
which would, in turn, constitute a default under such Senior Debt. In such
circumstances, the subordination provisions in the Indenture would likely
restrict payments to the Holders of notes.

SELECTION AND NOTICE

     If less than all of the notes are to be redeemed at any time, the Trustee
will select notes for redemption as follows:

          (1) if the notes are listed, in compliance with the requirements of
     the principal national securities exchange on which the notes are listed;
     or

          (2) if the notes are not so listed, on a pro rata basis, by lot or by
     such method as the Trustee shall deem fair and appropriate.

     No notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of notes to be redeemed at its registered
address. Notices of redemption may not be conditional.

     If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion of
the original Note will be issued in the name of the Holder thereof upon
cancellation

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of the original Note. Notes called for redemption become due on the date fixed
for redemption. On and after the redemption date, interest ceases to accrue on
notes or portions of them called for redemption.

CERTAIN COVENANTS

Restricted Payments

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

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

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

          (3) make any payment on or with respect to, or purchase, redeem,
     defease or otherwise acquire or retire for value any Indebtedness that is
     subordinated to the notes or the Note Guarantees, except a payment of
     interest or principal at the Stated Maturity thereof; or

          (4) make any Restricted Investment (all such payments and other
     actions set forth in clauses (1) through (4) above being collectively
     referred to as "Restricted Payments"),

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

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

          (2) the Company would, at the time of such Restricted Payment and
     after giving pro forma effect thereto as if such Restricted Payment had
     been made at the beginning of the applicable four-quarter period, have been
     permitted to incur at least $1.00 of additional Indebtedness pursuant to
     the Fixed Charge Coverage Ratio test set forth in the first paragraph of
     the covenant described below under the caption "-- Incurrence of
     Indebtedness and Issuance of Preferred Stock"; and

          (3) such Restricted Payment, together with the aggregate amount of all
     other Restricted Payments made by the Company and its Restricted
     Subsidiaries after the date of the Indenture (excluding Restricted Payments
     permitted by clauses (2), (3), (5) and (6) of the next succeeding
     paragraph), is less than the sum, without duplication, of:

             (a) 50% of the Consolidated Net Income of the Company for the
        period (taken as one accounting period) from the beginning of the first
        fiscal quarter commencing after the date of the Indenture to the end of
        the Company's most recently ended fiscal quarter for which internal
        financial statements are available at the time of such Restricted
        Payment (or, if such Consolidated Net Income for such period is a
        deficit, less 100% of such deficit), plus

             (b) 100% of the aggregate net cash proceeds received by the Company
        since the date of the Indenture as a contribution to its common equity
        capital or from the issue or sale of Equity Interests of the Company
        (other than Disqualified Stock) or from the issue or sale of convertible
        or exchangeable Disqualified Stock or convertible or exchangeable debt
        securities of the Company that have been converted into or exchanged for
        such Equity Interests (other than Equity Interests (or Disqualified
        Stock or debt securities) sold to a Subsidiary of the Company); plus

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             (c) to the extent that any Restricted Investment that was made
        after the date of the Indenture is sold for cash or otherwise liquidated
        or repaid for cash, the lesser of (i) the cash return of capital with
        respect to such Restricted Investment (less the cost of disposition, if
        any) and (ii) the initial amount of such Restricted Investment; plus

             (d) $15 million.

     So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:

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

          (2) the redemption, repurchase, retirement, defeasance or other
     acquisition of any subordinated Indebtedness of the Company or any
     Guarantor or of any Equity Interests of the Company in exchange for, or out
     of the net cash proceeds of the substantially concurrent sale (other than
     to a Subsidiary of the Company or under an employee stock option plan
     established by the Company) of, Equity Interests of the Company (other than
     Disqualified Stock) or from the substantially concurrent cash capital
     contribution received by the Company from its stockholders; provided that
     the amount of any such net cash proceeds that are utilized for any such
     redemption, repurchase, retirement, defeasance or other acquisition shall
     be excluded from clause (3) (b) of the preceding paragraph;

          (3) the defeasance, redemption, repurchase or other acquisition of or
     other payment on or with respect to subordinated Indebtedness of the
     Company or any Guarantor with the net cash proceeds from an incurrence of
     Permitted Refinancing Indebtedness;

          (4) the payment of any dividend by a Restricted Subsidiary of the
     Company to the holders of its common Equity Interests on a pro rata basis;

          (5) the repurchase, redemption or other acquisition or retirement for
     value of any Equity Interests of the Company or any Restricted Subsidiary
     of the Company held by any of the Company's directors or employees (or
     those of any of its Restricted Subsidiaries) pursuant to any management
     equity subscription agreement or stock option agreement; provided that the
     aggregate price paid for all such repurchased, redeemed, acquired or
     retired Equity Interests shall not exceed $1.0 million in any twelve-month
     period; provided that the Company may carry over and make in a subsequent
     calendar year, in addition to the amounts permitted for such calendar year,
     the amount of such purchases, redemptions or other acquisitions or
     retirements for value permitted to have been made but not made in any
     preceding calendar year up to a maximum of $3.0 million in any calendar
     year; and

          (6) repurchases of Capital Stock deemed to occur upon the cashless
     exercise of stock options and warrants of the Company.

     The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by the Company or such Subsidiary, as
the case may be, pursuant to the Restricted Payment. The fair market value of
any assets or securities that are required to be valued by this covenant shall
be determined by the Board of Directors whose resolution with respect thereto
shall be delivered to the Trustee. The Board of Directors' determination must be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if the fair market value exceeds
$15.0 million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this "Restricted Payments" covenant were computed,
together with a copy of any fairness opinion or appraisal required by the
Indenture.

Incurrence of Indebtedness and Issuance of Preferred Stock

     The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or
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otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt), and the Company will not issue any Disqualified Stock and the
Company will not permit any of its Restricted Subsidiaries to issue any
Disqualified Stock or preferred stock; provided, however, that the Company and
any Guarantor may incur Indebtedness (including Acquired Debt), if the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred would have
been at least 2.25 to 1 from the date of the Indenture through and including
October 31, 2002 and 2.50 to 1 thereafter, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred at the beginning of such four-quarter
period.

     So long as no Default shall have occurred and be continuing or would be
caused thereby, the first paragraph of this covenant will not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):

          (1) the incurrence by the Company of Indebtedness under Credit
     Facilities (and the incurrence by the Guarantors of guarantees thereof) in
     an aggregate principal amount at any one time outstanding (with letters of
     credit being deemed to have a principal amount equal to the maximum
     potential liability of the Company and its Restricted Subsidiaries
     thereunder) not to exceed $550 million, of which up to $40 million may be
     incurred by the Company's Puerto Rican Restricted Subsidiaries that are
     borrowers under the Credit Agreement (and the Company and its Restricted
     Subsidiaries may guarantee such borrowings by the Company's Puerto Rican
     Restricted Subsidiaries), less the aggregate amount of all Net Proceeds of
     Asset Sales applied by the Company or any Restricted Subsidiary to repay
     any term Indebtedness under Credit Facilities pursuant to the covenant
     "-- Repurchase at the Option of Holders -- Asset Sales";

          (2) the incurrence by the Company and any Restricted Subsidiary of the
     Existing Indebtedness;

          (3) the incurrence by the Company and the Guarantors of Indebtedness
     represented by the notes and the related Note Guarantees to be issued on
     the date of the Indenture and the Exchange notes and the related Note
     Guarantees to be issued pursuant to the Registration Rights Agreement;

          (4) the incurrence by the Company or any Guarantor of Indebtedness
     represented by Capital Lease Obligations, mortgage financings or purchase
     money obligations, in each case, incurred for the purpose of financing all
     or any part of the purchase price or cost of construction or improvement of
     property, plant or equipment used in the business of the Company or such
     Guarantor, in an aggregate principal amount, including all Permitted
     Refinancing Indebtedness incurred to refund, refinance or replace any
     Indebtedness incurred pursuant to this clause (4), not to exceed $25
     million at any time outstanding;

          (5) the incurrence by the Company or any of the Restricted Subsidiary
     of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
     of which are used to refund, refinance or replace Indebtedness (other than
     intercompany Indebtedness) that was permitted by the Indenture to be
     incurred under the first paragraph of this covenant or clauses (2), (3),
     (4), (5), or (11) of this paragraph;

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

             (a) if the Company or any Guarantor is the obligor on such
        Indebtedness, such Indebtedness must be expressly subordinated to the
        prior payment in full in cash of all Obligations with respect to the
        notes, in the case of the Company, or the Note Guarantee, in the case of
        a Guarantor; and

             (b) (i) any subsequent issuance or transfer of Equity Interests
        that results in any such Indebtedness being held by a Person other than
        the Company or a Restricted Subsidiary thereof and (ii) any sale or
        other transfer of any such Indebtedness to a Person that is not either
        the Company or a Wholly Owned Restricted Subsidiary thereof, shall be
        deemed, in each case, to constitute an incurrence of such Indebtedness
        by the Company or such Restricted Subsidiary, as the case may be, that
        was not permitted by this clause (6);

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          (7) the incurrence by the Company or any of its Restricted
     Subsidiaries of Hedging Obligations that are incurred for the purpose of
     fixing or hedging (a) interest rate risk with respect to any floating rate
     Indebtedness that is permitted by the terms of this Indenture to be
     outstanding, or (b) currency exchange rate risk with respect to any
     currency exchanges;

          (8) the guarantee by the Company or any of the Restricted Subsidiaries
     of Indebtedness of the Company or a Guarantor that was permitted to be
     incurred by another provision of this covenant;

          (9) the accrual of interest, the accretion or amortization of original
     issue discount and the payment of interest on any Indebtedness in the form
     of additional Indebtedness with the same terms will not be deemed to be an
     incurrence of Indebtedness for purposes of this covenant; provided, in each
     such case, that the amount thereof is included in Fixed Charges of the
     Company as accrued;

          (10) the incurrence by the Company's Unrestricted Subsidiaries of
     Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
     to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
     deemed to constitute an incurrence of Indebtedness by a Restricted
     Subsidiary of the Company that was not permitted by this clause (10);

          (11) the incurrence by the Company or any of its Restricted
     Subsidiaries of additional Indebtedness in an aggregate principal amount
     (or accreted value, as applicable) at any time outstanding, including all
     Permitted Refinancing Indebtedness incurred to refund, refinance or replace
     any Indebtedness incurred pursuant to this clause (11), not to exceed $30
     million; and

          (12) Indebtedness of the Company or any of its Restricted Subsidiaries
     in respect of performance bonds, workers' compensation claims, surety or
     appeal bonds and payment obligations in connection with self insurance or
     similar obligations, in each case, incurred in the ordinary course of
     business.

     For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that any
proposed Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (1) through (12) above, or is entitled to be
incurred pursuant to the first paragraph of this covenant, the Company will be
permitted to classify such item of Indebtedness on the date of its incurrence in
any manner that complies with this covenant. Indebtedness under Credit
Facilities outstanding on the date on which notes are first issued and
authenticated under the Indenture shall be deemed to have been incurred on such
date in reliance on the exception provided by clause (1) of the definition of
Permitted Debt.

Limitation on Senior Subordinated Debt

     The Company will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of the Company and senior in any respect in right of
payment to the notes. No Guarantor will incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to the Senior Debt of such Guarantor and senior in any respect
in right of payment to such Guarantor's Note Guarantee.

Liens

     Other than Permitted Liens, the Company will not, and will not permit any
of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind securing Indebtedness,
Attributable Debt or trade payables upon any of their property or assets, now
owned or hereafter acquired, unless all payments due under the Indenture and the
notes are secured on an equal and ratable basis with the obligations so secured
until such time as such obligations are no longer secured by a Lien.

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Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

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

          (1) pay dividends or make any other distributions on its Capital Stock
     to the Company or any of its Restricted Subsidiaries, or with respect to
     any other interest or participation in, or measured by, its profits, or pay
     any indebtedness owed to the Company or any of its Restricted Subsidiaries;

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

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

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

          (1) Existing Indebtedness and the Credit Agreement as in effect on the
     date of the Indenture and any amendments, modifications, restatements,
     renewals, increases, supplements, refundings, replacements or refinancings
     thereof, provided that such amendments, modifications, restatements,
     renewals, increases, supplements, refundings, replacements or refinancings
     are no more restrictive, taken as a whole, than those contained in such
     Existing Indebtedness and the Credit Agreement, as in effect on the date of
     the Indenture;

          (2) the Indenture, the notes and the Note Guarantees;

          (3) applicable law;

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

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

          (6) purchase money obligations for property acquired in the ordinary
     course of business that impose restrictions on the property so acquired of
     the nature described in clause (3) of the preceding paragraph;

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

          (8) Permitted Refinancing Indebtedness, provided that the restrictions
     contained in the agreements governing such Permitted Refinancing
     Indebtedness are no more restrictive, taken as a whole, than those
     contained in the agreements governing the Indebtedness being refinanced;
     and

          (9) Permitted Liens securing Indebtedness that limit the right of the
     debtor to dispose of the assets subject to such Lien.

Merger, Consolidation or Sale of Assets

     The Company may not, directly or indirectly:  (1) consolidate or merge with
or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person; unless:

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

          (2) the Person formed by or surviving any such consolidation or merger
     (if other than the Company) or the Person to which such sale, assignment,
     transfer, conveyance or other disposition shall have been made assumes all
     the obligations of the Company or such Restricted Subsidiary (if such
     Restricted Subsidiary is a Guarantor), as the case may be, under the notes,
     the Indenture and the Registration Rights Agreement pursuant to agreements
     reasonably satisfactory to the Trustee;

          (3) immediately after such transaction no Default or Event of Default
     exists; and

          (4) if such transaction involves the Company, the Company or the
     Person formed by or surviving any such consolidation or merger (if other
     than the Company), or to which such sale, assignment, transfer, conveyance
     or other disposition shall have been made will, on the date of such
     transaction after giving pro forma effect thereto and any related financing
     transactions as if the same had occurred at the beginning of the applicable
     four-quarter period, be permitted to incur at least $1.00 of additional
     Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
     the first paragraph of the covenant described above under the caption
     "-- Incurrence of Indebtedness and Issuance of Preferred Stock."

     In addition, neither the Company nor any Restricted Subsidiary may,
directly or indirectly, lease all or substantially all of its properties or
assets, in one or more related transactions, to any other Person. This "Merger,
Consolidation or Sale of Assets" covenant will not apply to a sale, assignment,
transfer, conveyance or other disposition of assets between or among the Company
and any of its Restricted Subsidiaries or to the merger or consolidation of any
Restricted Subsidiary into the Company.

Restriction on Transfer of Assets to Non-Guarantor Subsidiaries

     The Indenture provides that the Company will not sell, convey, transfer or
otherwise dispose of its assets or property to any of its Restricted
Subsidiaries that are not Guarantors, except for sales, conveyances, transfers
or other dispositions (a) of assets or property having an aggregate fair market
value no greater than $5 million made after the date of the Indenture and in the
ordinary course of business; or (b) of assets or property having a fair market
value not in excess of the amount of Investments (other than Permitted
Investments) then permitted to be made pursuant to the "Restricted Payments"
covenant. The amount of any sale, conveyance, transfer or other disposition
permitted pursuant to clause (b) of this covenant will be treated as the payment
of a Restricted Payment in calculating the amount of Restricted Payments made by
the Company.

Transactions with Affiliates

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

          (1) such Affiliate Transaction is on terms that are no less favorable
     to the Company or the relevant Restricted Subsidiary than those that would
     have been obtained in a comparable transaction by the Company or such
     Restricted Subsidiary with an unrelated Person; and

          (2) the Company delivers to the Trustee:

             (a) with respect to any Affiliate Transaction or series of related
        Affiliate Transactions involving aggregate consideration in excess of
        $3.0 million, a resolution of the Board of Directors set forth in an
        Officers' Certificate certifying that such Affiliate Transaction
        complies with this covenant and that such Affiliate Transaction has been
        approved by a majority of the disinterested members of the Board of
        Directors; and

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             (b) with respect to any Affiliate Transaction or series of related
        Affiliate Transactions involving aggregate consideration in excess of
        $5.0 million, an opinion as to the fairness to the Company or such
        Restricted Subsidiary of such Affiliate Transaction from a financial
        point of view issued by an accounting, appraisal or investment banking
        firm of national standing.

     The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:

          (1) transactions between or among the Company and/or its Restricted
     Subsidiaries;

          (2) payment of reasonable directors fees and expenses to Persons who
     are not otherwise Affiliates of the Company;

          (3) Restricted Payments that are permitted by the provisions of the
     Indenture described above under the caption "-- Restricted Payments;"

          (4) any issuance of securities, or other payments, awards or grants in
     cash, securities or otherwise pursuant to, or the funding of, employment
     arrangements, stock options and stock ownership plans approved by the Board
     of Directors and made in the ordinary course of business;

          (5) loans or advances to employees in the ordinary course of business
     in accordance with the past practices of the Company or any of the
     Restricted Subsidiaries, but in any event not to exceed $3.0 million in the
     aggregate outstanding at any one time;

          (6) the issuance or sale for cash of any Capital Stock (other than
     Disqualified Stock) to Affiliates of the Company; and

          (7) the agreements described in "Certain Relationships and Related
     Transactions" and in existence on the date of the Indenture and renewals of
     such agreements in a manner not less advantageous to the Holders of the
     notes.

Additional Note Guarantees

     If the Company or any of its Restricted Subsidiaries acquires or creates
another Domestic Subsidiary on or after the date of the Indenture, then that
newly acquired or created Domestic Subsidiary must become a Guarantor and
execute a supplemental indenture and deliver an Opinion of Counsel to the
Trustee within 15 Business Days of the date on which it was acquired or created.

Designation of Restricted and Unrestricted Subsidiaries

     The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary so designated will be deemed to be a
Restricted Investment made as of the time of such designation and that
designation will only be permitted if such Investment would be permitted at that
time and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1) such
Indebtedness is permitted under the covenant described under the caption
"-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock," calculated on a pro forma basis as if such designation had occurred at
the beginning of the four-quarter reference period; and (2) no Default or Event
of Default would be in existence following such designation.

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Sale and Leaseback Transactions

     The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if:

          (1) the Company or that Restricted Subsidiary, as applicable, could
     have incurred Indebtedness in an amount equal to the Attributable Debt
     relating to such sale and leaseback transaction under the Fixed Charge
     Coverage Ratio test in the first paragraph of the covenant described above
     under the caption "-- Incurrence of Indebtedness and Issuance of Preferred
     Stock";

          (2) the gross cash proceeds of that sale and leaseback transaction are
     at least equal to the fair market value, as determined in good faith by the
     Board of Directors and set forth in an Officers' Certificate delivered to
     the Trustee, of the property that is the subject of that sale and leaseback
     transaction; and

          (3) the transfer of assets in that sale and leaseback transaction is
     permitted by, and the Company applies the proceeds of such transaction in
     compliance with, the covenant described above under the caption
     "-- Repurchase at the Option of Holders -- Asset Sales."

Limitation on Issuances and Sales of Equity Interests in Restricted Subsidiaries

     The Company will not, and will not permit any of its Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Restricted Subsidiary of the Company to any Person
(other than the Company or a Wholly Owned Restricted Subsidiary of the Company),
unless:

          (1) such transfer, conveyance, sale, lease or other disposition is of
     all the Equity Interests in such Restricted Subsidiary, provided, that in
     the event that such Restricted Subsidiary is a non-Domestic Subsidiary, (a)
     such transfer, conveyance, sale, lease or other disposition is of Equity
     Interests representing at least eighty percent (80%) of the Voting Stock of
     all Equity Interests in such Restricted Subsidiary and (b) the Equity
     Interests retained by the Company are treated as an Investment of the
     Company; and

          (2) the cash Net Proceeds from such transfer, conveyance, sale, lease
     or other disposition are applied in accordance with the covenant described
     above under the caption "-- Repurchase at the Option of Holders -- Asset
     Sales."

     In addition, the Company will not permit any Restricted Subsidiary of the
Company to issue any of its Equity Interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company and/or a Wholly Owned Restricted Subsidiary of the
Company.

Limitations on Issuances of Guarantees of Indebtedness

     The Company will not permit any of its Restricted Subsidiaries, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of the Company unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture providing for the Guarantee of
the payment of the notes by such Restricted Subsidiary, which Guarantee shall be
senior to or pari passu with such Subsidiary's Guarantee of or pledge to secure
such other Indebtedness unless such other Indebtedness is Senior Debt, in which
case the Guarantee of the notes may be subordinated to the Guarantee of such
Senior Debt to the same extent as the notes are subordinated to such Senior
Debt.

     Notwithstanding the preceding paragraph, any Note Guarantee will provide by
its terms that it will be automatically and unconditionally released and
discharged under the circumstances described above under the caption "-- Note
Guarantees." The form of the Note Guarantee will be attached as an exhibit to
the Indenture.

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Business Activities

     The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.

Payments for Consent

     The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the notes unless such consideration is offered to be paid
and is paid to all Holders of the notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.

Reports

     Whether or not required by the Commission, so long as any notes are
outstanding, the Company will furnish to the Trustee for forwarding to the
Holders of notes, within the time periods specified in the Commission's rules
and regulations:

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

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

     In addition, whether or not required by the Commission, the Company will
file a copy of all of the information and reports referred to in clauses (1) and
(2) above with the Commission for public availability within the time periods
specified in the Commission's rules and regulations (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Company and
the Guarantors have agreed that, for so long as any notes remain outstanding,
they will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.

     If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the annual financial information required by the preceding
paragraph shall include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes thereto, of the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company.

EVENTS OF DEFAULT AND REMEDIES

     Each of the following is an Event of Default:

          (1) default for 30 days in the payment when due of interest on, or
     Liquidated Damages with respect to, the notes whether or not prohibited by
     the subordination provisions of the Indenture;

          (2) default in payment when due of the principal of, or premium, if
     any, on the notes, whether or not prohibited by the subordination
     provisions of the Indenture;

          (3) failure by the Company or any of its Restricted Subsidiaries to
     comply with the provisions described under the captions "-- Repurchase at
     the Option of Holders -- Change of Control," "-- Repurchase at the Option
     of Holders -- Asset Sales" or "-- Certain Covenants -- Merger,
     Consolidation or Sale of Assets";

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          (4) failure by the Company or any of its Restricted Subsidiaries for
     30 days after notice to comply with any of the other agreements in the
     Indenture;

          (5) default under any mortgage, indenture or instrument under which
     there may be issued or by which there may be secured or evidenced any
     Indebtedness for money borrowed by the Company or any of its Restricted
     Subsidiaries (or the payment of which is guaranteed by the Company or any
     of its Restricted Subsidiaries) whether such Indebtedness or guarantee now
     exists, or is created after the date of the Indenture, if that default:

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

             (b) results in the acceleration of such Indebtedness prior to its
        express maturity,

             and, in each case, the principal amount of any such Indebtedness,
        together with the principal amount of any other such Indebtedness under
        which there has been a Payment Default or the maturity of which has been
        so accelerated, aggregates $10.0 million or more;

          (6) failure by the Company or any of its Restricted Subsidiaries to
     pay final judgments aggregating in excess of $10.0 million, which judgments
     are not paid, discharged or stayed for a period of 60 days;

          (7) except as permitted by the Indenture, any Note Guarantee shall be
     held in any judicial proceeding to be unenforceable or invalid or shall
     cease for any reason to be in full force and effect or any Guarantor, or
     any Person acting on behalf of any Guarantor, shall deny or disaffirm its
     obligations under its Note Guarantee; and

          (8) certain events of bankruptcy or insolvency with respect to the
     Company or any of its Restricted Subsidiaries.

     In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any Restricted
Subsidiary, all outstanding notes will become due and payable immediately
without further action or notice. If any other Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding notes may declare all the notes to be due and payable
immediately.

     Holders of the notes may not enforce the Indenture or the notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest or Liquidated
Damages) if it determines that withholding notice is in their interest.

     The Holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest or Liquidated Damages on, or the principal of, the notes.

     In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the notes. If an Event of Default occurs during any time that
the notes are outstanding, by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the notes, then the premium specified in the
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the notes.

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     The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, the Company is required to deliver to the Trustee a statement
specifying such Default or Event of Default.

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS

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

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

     The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding notes and all obligations
of the Guarantors discharged with respect to their Note Guarantees ("Legal
Defeasance") except for:

          (1) the rights of Holders of outstanding notes to receive payments in
     respect of the principal of, or interest or premium and Liquidated Damages,
     if any, on such notes when such payments are due from the trust referred to
     below;

          (2) the Company's obligations with respect to the notes concerning
     issuing temporary notes, registration of notes, mutilated, destroyed, lost
     or stolen notes and the maintenance of an office or agency for payment and
     money for security payments held in trust;

          (3) the rights, powers, trusts, duties and immunities of the Trustee,
     and the Company's and the Guarantor's obligations in connection therewith;
     and

          (4) the Legal Defeasance provisions of the Indenture.

     In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company and the Guarantors released with respect to
certain covenants that are described in the Indenture ("Covenant Defeasance")
and thereafter any omission to comply with those covenants shall not constitute
a Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
notes.

     In order to exercise either Legal Defeasance or Covenant Defeasance:

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

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

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

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

          (5) such Legal Defeasance or Covenant Defeasance will not result in a
     breach or violation of, or constitute a default under any material
     agreement or instrument to which the Company or any of its Subsidiaries is
     a party or by which the Company or any of its Subsidiaries is bound;

          (6) the Company must have delivered to the Trustee an Opinion of
     Counsel to the effect that, assuming no intervening bankruptcy of the
     Company or any Guarantor between the date of deposit and the 91st day
     following the deposit and assuming that no Holder is an "insider" of the
     Company under applicable bankruptcy law, after the 91st day following the
     deposit, the trust funds will not be subject to the effect of any
     applicable bankruptcy, insolvency, reorganization or similar laws affecting
     creditors' rights generally;

          (7) the Company must deliver to the Trustee an Officers' Certificate
     stating that the deposit was not made by the Company with the intent of
     preferring the Holders of notes over the other creditors of the Company
     with the intent of defeating, hindering, delaying or defrauding creditors
     of the Company or others; and

          (8) the Company must deliver to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each stating that all conditions precedent
     relating to the Legal Defeasance or the Covenant Defeasance have been
     complied with.

AMENDMENT, SUPPLEMENT AND WAIVER

     Except as provided in the next two succeeding paragraphs, the Indenture or
the notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the Indenture or the notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).

     Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting Holder):

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

          (2) reduce the principal of or change the fixed maturity of any Note
     or alter the provisions, or waive any payment, with respect to the
     redemption of the notes;

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

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

          (5) make any Note payable in money other than U.S. dollars;

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   107

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

          (7) release any Guarantor from any of its obligations under its Note
     Guarantee or the Indenture, except in accordance with the terms of the
     Indenture;

          (8) impair the right to institute suit for the enforcement of any
     payment on or with respect to the notes or the Note Guarantees;

          (9) amend, change or modify the obligation of the Company to make and
     consummate an Asset Sale Offer with respect to any Asset Sale in accordance
     with the "Repurchase at the Option of Holders -- Asset Sales" covenant or
     the obligation of the Company to make and consummate a Change of Control
     Offer in the event of a Change of Control in accordance with the
     "Repurchase at the Option of Holders -- Change of Control" covenant,
     including, in each case, amending, changing or modifying any definition
     relating thereto;

          (10) except as otherwise permitted under the "Merger, Consolidation
     and Sale of Assets" covenant, consent to the assignment or transfer by the
     Company or any Guarantor of any of their rights or obligations under the
     Indenture;

          (11) amend or modify any of the provisions of the Indenture or the
     related definitions affecting the subordination or ranking of the notes or
     any Note Guarantee in any manner adverse to the holders of the notes or any
     Note Guarantee; or

          (12) make any change in the preceding amendment and waiver provisions.

     Notwithstanding the preceding, without the consent of any Holder of notes,
the Company, the Guarantors and the Trustee may amend or supplement the
Indenture or the notes:

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

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

          (3) to provide for the assumption of the Company's or any Guarantor's
     obligations to Holders of notes in the case of a merger or consolidation or
     sale of all or substantially all of the Company's or such Guarantor's
     assets;

          (4) to make any change that would provide any additional rights or
     benefits to the Holders of notes or that does not adversely affect the
     legal rights under the Indenture of any such Holder; or

          (5) to comply with requirements of the Commission in order to effect
     or maintain the qualification of the Indenture under the Trust Indenture
     Act.

SATISFACTION AND DISCHARGE

     The Indenture will be discharged and will cease to be of further effect as
to all notes issued thereunder, when:

          (1) either:

             (a) all notes that have been authenticated (except lost, stolen or
        destroyed notes that have been replaced or paid and notes for whose
        payment money has theretofore been deposited in trust and thereafter
        repaid to the Company) have been delivered to the Trustee for
        cancellation; or

             (b) all notes that have not been delivered to the Trustee for
        cancellation have become due and payable by reason of the making of a
        notice of redemption or otherwise or will become due and payable within
        one year and the Company or any Guarantor has irrevocably deposited or
        caused to be deposited with the Trustee as trust funds in trust solely
        for the benefit of the Holders, cash in U.S. dollars, non-callable
        Government Securities, or a combination thereof, in such amounts as will

                                        96
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        be sufficient without consideration of any reinvestment of interest, to
        pay and discharge the entire indebtedness on the notes not delivered to
        the Trustee for cancellation for principal, premium and Liquidated
        Damages, if any, and accrued interest to the date of maturity or
        redemption;

          (2) no Default or Event of Default shall have occurred and be
     continuing on the date of such deposit or shall occur as a result of such
     deposit and such deposit will not result in a breach or violation of, or
     constitute a default under, any other instrument to which the Company or
     any Guarantor is a party or by which the Company or any Guarantor is bound;

          (3) the Company or any Guarantor has paid or caused to be paid all
     sums payable by it under the Indenture; and

          (4) the Company has delivered irrevocable instructions to the Trustee
     under the Indenture to apply the deposited money toward the payment of the
     notes at maturity or the redemption date, as the case may be.

     In addition, the Company must deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.

CONCERNING THE TRUSTEE

     If the Trustee becomes a creditor of the Company or any Guarantor, the
Indenture limits its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest, it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue or
resign.

     The Holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that, in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of notes, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.

ADDITIONAL INFORMATION

     Anyone who receives this prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to Stewart Enterprises,
Inc., 110 Veterans Memorial Boulevard, Metairie, Louisiana 70005, Attention:
Martin R. de Laureal, Vice President of Investor Relations.

BOOK-ENTRY, DELIVERY AND FORM

     The exchange notes will be represented by one or more notes in registered,
global form without interest coupons (collectively, the "Global Notes"). The
Global Notes will be deposited upon issuance with the Trustee as custodian for
The Depository Trust Company ("DTC"), in New York, New York, and registered in
the name of DTC or its nominee, for credit to an account of a direct or indirect
participant in DTC, including the Euroclear System ("Euroclear") and Clearstream
Banking, S.A. ("Clearstream").

     Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for notes
in certificated form except in the limited circumstances described below. See
"-- Exchange of Global Notes for Certificated Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global
Notes will not be entitled to receive physical delivery of notes in certificated
form.

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     Transfers of beneficial interests in the Global Notes will be subject to
the applicable rules and procedures of DTC and its direct or indirect
participants (including, if applicable, those of Euroclear and Clearstream),
which may change from time to time.

DEPOSITORY PROCEDURES

     The following description of the operations and procedures of DTC,
Euroclear and Clearstream are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them. The Company takes no
responsibility for these operations and procedures and urges investors to
contact the system or their participants directly to discuss these matters.

     DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interests in, and transfers of ownership interests
in, each security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.

     DTC has also advised the Company that, pursuant to procedures established
by it:

          (1) upon deposit of the Global Notes, DTC will credit the accounts of
     Participants designated by the exchange agent with portions of the
     principal amount of the Global Notes; and

          (2) ownership of these interests in the Global Notes will be shown on,
     and the transfer of ownership thereof will be effected only through,
     records maintained by DTC (with respect to the Participants) or by the
     Participants and the Indirect Participants (with respect to other owners of
     beneficial interest in the Global Notes).

     Investors in the Global Notes who are Participants in DTC's system may hold
their interests therein directly through DTC. Investors in the Global Notes who
are not Participants may hold their interests therein indirectly through
organizations (including Euroclear and Clearstream) which are Participants in
such system. All interests in a Global Note, including those held through
Euroclear or Clearstream, may be subject to the procedures and requirements of
DTC. Those interests held through Euroclear or Clearstream may also be subject
to the procedures and requirements of such systems. The laws of some states
require that certain Persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Note to such Persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on behalf
of Indirect Participants, the ability of a Person having beneficial interests in
a Global Note to pledge such interests to Persons that do not participate in the
DTC system, or otherwise take actions in respect of such interests, may be
affected by the lack of a physical certificate evidencing such interests.

     EXCEPT AS DESCRIBED BELOW, OWNERS OF AN INTEREST IN THE GLOBAL NOTES WILL
NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.

     Payments in respect of the principal of, and interest and premium and
Liquidated Damages, if any, on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture. Under the terms of the Indenture, the Company and the
Trustee will treat the Persons in whose names the notes, including the Global
Notes, are registered as the owners thereof

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for the purpose of receiving payments and for all other purposes. Consequently,
neither the Company, the Trustee nor any agent of the Company or the Trustee has
or will have any responsibility or liability for:

          (1) any aspect of DTC's records or any Participant's or Indirect
     Participant's records relating to or payments made on account of beneficial
     ownership interest in the Global Notes or for maintaining, supervising or
     reviewing any of DTC's records or any Participant's or Indirect
     Participant's records relating to the beneficial ownership interests in the
     Global Notes; or

          (2) any other matter relating to the actions and practices of DTC or
     any of its Participants or Indirect Participants.

     DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not receive
payment on such payment date. Each relevant Participant is credited with an
amount proportionate to its beneficial ownership of an interest in the principal
amount of the relevant security as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will not
be the responsibility of DTC, the Trustee or the Company. Neither the Company
nor the Trustee will be liable for any delay by DTC or any of its Participants
in identifying the beneficial owners of the notes, and the Company and the
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.

     Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds, and transfers between
participants in Euroclear and Clearstream will be effected in accordance with
their respective rules and operating procedures.

     Cross-market transfers between the Participants in DTC, on the one hand,
and Euroclear or Clearstream participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Clearstream, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the relevant Global Note in DTC,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Euroclear participants and
Clearstream participants may not deliver instructions directly to the
depositories for Euroclear or Clearstream.

     DTC has advised the Company that it will take any action permitted to be
taken by a Holder of notes only at the direction of one or more Participants to
whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the notes as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the notes, DTC reserves the right
to exchange the Global Notes for legended notes in certificated form, and to
distribute such notes to its Participants.

     Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the Global Notes among
participants in DTC, Euroclear and Clearstream, they are under no obligation to
perform or to continue to perform such procedures, and may discontinue such
procedures at any time. Neither the Company nor the Trustee nor any of their
respective agents will have any responsibility for the performance by DTC,
Euroclear or Clearstream or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.

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EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES

     A Global Note is exchangeable for definitive notes in registered
certificated form ("Certificated Notes") if:

          (1) DTC (a) notifies the Company that it is unwilling or unable to
     continue as depositary for the Global Notes and the Company fails to
     appoint a successor depositary or (b) has ceased to be a clearing agency
     registered under the Exchange Act;

          (2) the Company, at its option, notifies the Trustee in writing that
     it elects to cause the issuance of the Certificated Notes; or

          (3) there shall have occurred and be continuing a Default or Event of
     Default with respect to the notes.

     In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the Trustee by or on
behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary
procedures).

EXCHANGE OF CERTIFICATED NOTES FOR GLOBAL NOTES

     Certificated Notes may not be exchanged for beneficial interests in any
Global Note unless the transferor first delivers to the Trustee a written
certificate (in the form provided in the Indenture) to the effect that such
transfer will comply with the appropriate transfer restrictions applicable to
such notes.

SAME DAY SETTLEMENT AND PAYMENT

     The Company will make payments in respect of the notes represented by the
Global Notes (including principal, premium, if any, interest and Liquidated
Damages, if any) by wire transfer of immediately available funds to the accounts
specified by the Global Note Holder. The Company will make all payments of
principal, interest and premium and Liquidated Damages, if any, with respect to
Certificated Notes by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address. The notes
represented by the Global Notes are expected to trade in DTC's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
notes will, therefore, be required by DTC to be settled in immediately available
funds. The Company expects that secondary trading in any Certificated Notes will
also be settled in immediately available funds.

     Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant in
DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following the
settlement date of DTC. DTC has advised the Company that cash received in
Euroclear or Cedel as a result of sales of interests in a Global Note by or
through a Euroclear or Cedel participant to a Participant in DTC will be
received with value on the settlement date of DTC but will be available in the
relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following DTC's settlement date.

CERTAIN DEFINITIONS

     Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.

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     "Acquired Debt" means, with respect to any specified Person:

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

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

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" shall have
correlative meanings.

     "Asset Sale" means:

          (1) the sale, lease, conveyance or other disposition of any assets or
     rights; provided that the sale, conveyance or other disposition of all or
     substantially all of the assets of the Company and its Restricted
     Subsidiaries taken as a whole will be governed by the provisions of the
     Indenture described above under the caption "-- Repurchase at the Option of
     Holders -- Change of Control" and/or the provisions described above under
     the caption "-- Certain Covenants -- Merger, Consolidation or Sale of
     Assets" and not by the provisions of the Asset Sale covenant; and

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

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

          (1) any single transaction or series of related transactions that
     involves assets having a fair market value of less than $3 million;

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

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

          (4) the sale or lease of equipment, inventory, accounts receivable or
     other assets in the ordinary course of business or Foreign Cash Equivalents
     owned by any Restricted Subsidiary other than a Domestic Restricted
     Subsidiary;

          (5) the sale or other disposition of cash or Cash Equivalents owned by
     the Company or its Restricted Subsidiaries or Foreign Cash Equivalents
     owned by any Restricted Subsidiary other than a Domestic Restricted
     Subsidiary;

          (6) the sale or other disposition of marketable securities owned by
     the Company or its Restricted Subsidiaries on the date of the Indenture;

          (7) a Restricted Payment that is permitted by the covenant described
     above under the caption "-- Certain Covenants -- Restricted Payments;" and

          (8) the sale or other disposition of funds placed into escrow accounts
     or trust funds for purposes of future delivery of property, merchandise or
     services or care and maintenance of cemetery property, in each case in
     connection with the ordinary course of business.

     "Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction, including any period for which such lease has
been

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extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest implicit
in such transaction, determined in accordance with GAAP.

     "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.

     "Board of Directors" means:

          (1) with respect to a corporation, the board of directors of the
     corporation;

          (2) with respect to a partnership, the Board of Directors of the
     general partner of the partnership; and

          (3) with respect to any other Person, the board or committee of such
     Person serving a similar function.

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

     "Capital Stock" means:

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

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

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

          (4) any other interest or participation that confers on a Person the
     right to receive a share of the profits and losses of, or distributions of
     assets of, the issuing Person.

     "Cash Equivalents" means:

          (1) United States dollars;

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

          (3) certificates of deposit and eurodollar time deposits with
     maturities of six months or less from the date of acquisition, bankers'
     acceptances with maturities not exceeding six months and overnight bank
     deposits, in each case, with any domestic commercial bank having capital
     and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of
     "B" or better;

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

          (5) commercial paper having the highest rating obtainable from Moody's
     Investors Service, Inc. or Standard & Poor's Rating Services and in each
     case maturing within six months after the date of acquisition; and

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

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   114

     "Change of Control" means the occurrence of any of the following:

          (1) the direct or indirect sale, transfer, conveyance or other
     disposition (other than by way of merger or consolidation), in one or a
     series of related transactions, of all or substantially all of the
     properties or assets of the Company and its Restricted Subsidiaries, taken
     as a whole, to any "person" (as that term is used in Section 13(d)(3) of
     the Exchange Act);

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

          (3) any "person" or "group" (as such terms are used in Sections 13(d)
     and 14(d) of the Exchange Act) other than the Principal and his Related
     Parties becomes the beneficial owner (as defined above), directly or
     indirectly, of 35% or more of the voting power of all classes of Voting
     Stock of the Company;

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

          (5) the Company consolidates with, or merges with or into, any Person,
     or any Person consolidates with, or merges with or into the Company, in any
     such event pursuant to a transaction in which any of the outstanding Voting
     Stock of the Company or such other Person is converted into or exchanged
     for cash, securities or other property, other than any such transaction
     where (A) the Voting Stock of the Company outstanding immediately prior to
     such transaction is converted into or exchanged for Voting Stock (other
     than Disqualified Stock) of the surviving or transferee Person constituting
     a majority of the outstanding shares of such Voting Stock of such surviving
     or transferee Person (immediately after giving effect to such issuance) and
     (B) immediately after such transaction, no "person" or "group" (as such
     terms are used in Section 13(d) and 14(d) of the Exchange Act) other than
     the Principal and his Related Parties becomes, directly or indirectly, the
     beneficial owner (as defined above) of 35% or more of the voting power of
     all classes of Voting Stock of the Company.

     "Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:

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

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

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

          (4) non-cash items increasing such Consolidated Net Income for such
     period, other than the accrual of revenue consistent with past practice, in
     each case, on a consolidated basis and determined in accordance with GAAP.

                                       103
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     Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary of the Company shall be added to Consolidated Net
Income to compute Consolidated Cash Flow of the Company only to the extent that
a corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.

     "Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:

          (1) the Net Income (but not loss) of any Person that is not a
     Restricted Subsidiary, including any Unrestricted Subsidiary, or that is
     accounted for by the equity method of accounting shall be included only to
     the extent of the amount of dividends or distributions paid in cash to the
     specified Person or a Restricted Subsidiary thereof;

          (2) the Net Income of any Restricted Subsidiary shall be excluded to
     the extent that the declaration or payment of dividends or similar
     distributions by that Restricted Subsidiary of that Net Income is not at
     the date of determination permitted without any prior governmental approval
     (that has not been obtained) or, directly or indirectly, by operation of
     the terms of its charter or any agreement, instrument, judgment, decree,
     order, statute, rule or governmental regulation applicable to that
     Restricted Subsidiary or its stockholders;

          (3) the Net Income of any Person acquired in a pooling of interests
     transaction for any period prior to the date of such acquisition shall be
     excluded; and

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

     "Consolidated Net Worth" means, with respect to any specified Person as of
any date, the sum of:

          (1) the consolidated equity of the common stockholders of such Person
     and its consolidated Restricted Subsidiaries as of such date; plus

          (2) the respective amounts reported on such Person's balance sheet as
     of such date with respect to any series of preferred stock (other than
     Disqualified Stock) that by its terms is not entitled to the payment of
     dividends unless such dividends may be declared and paid only out of net
     earnings in respect of the year of such declaration and payment, but only
     to the extent of any cash received by such Person upon issuance of such
     preferred stock.

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

          (1) was a member of such Board of Directors on the date of the
     Indenture; or

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

     "Credit Agreement" means that certain Credit Agreement, dated as of June
29, 2001, by and among the Company, the PR Borrowers (as defined therein), the
guarantor subsidiaries named therein, Bank of America, N.A., as administrative
agent, and the other Lenders named therein providing for up to $550 million in
borrowings, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, rearranged, replaced and/or refinanced
from time to time.

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     "Credit Facilities" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, rearranged, replaced and/or refinanced in
whole or in part from time to time.

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

     "Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is one year after the
date on which the notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments."

     "Domestic Subsidiary" means any Restricted Subsidiary that was formed under
the laws of the United States or any state thereof or the District of Columbia.

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

     "Existing Indebtedness" means the aggregate principal amount of
Indebtedness of the Company and its Subsidiaries (other than Indebtedness under
the Credit Agreement) in existence on the date of the Indenture.

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

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

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

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

          (4) the product of (a) all dividends, whether paid or accrued and
     whether or not in cash, on any series of Disqualified Stock or preferred
     stock of such Person or any of its Restricted Subsidiaries, other than
     dividends on Equity Interests payable solely in Equity Interests of the
     Company (other than Disqualified Stock) or to the Company or a Restricted
     Subsidiary of the Company, times (b) a fraction, the numerator of which is
     one and the denominator of which is one minus the then current combined
     federal, state and local statutory tax rate of such Person, expressed as a
     decimal, in each case, on a consolidated basis and in accordance with GAAP.

                                       105
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     "Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the specified Person or any of its Subsidiaries incurs, assumes, Guarantees,
repays, repurchases or redeems any Indebtedness or issues, repurchases or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated and on or prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee,
repayment, repurchase or redemption of Indebtedness, or such issuance,
repurchase or redemption of preferred stock, and the use of the proceeds
therefrom as if the same had occurred at the beginning of the applicable
four-quarter reference period.

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

          (1) acquisitions and dispositions that have been made by the specified
     Person or any of its Restricted Subsidiaries, including through mergers or
     consolidations and including any related financing transactions and
     application of the proceeds therefrom, during the four-quarter reference
     period or subsequent to such reference period and on or prior to the
     Calculation Date shall be given pro forma effect as if they had occurred on
     the first day of the four-quarter reference period and Consolidated Cash
     Flow for such reference period shall be calculated on a pro forma basis in
     accordance with Regulation S-X under the Securities Act, but without giving
     effect to clause (3) of the proviso set forth in the definition of
     Consolidated Net Income;

          (2) the Consolidated Cash Flow attributable to discontinued
     operations, as determined in accordance with GAAP, shall be excluded; and

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

     "Foreign Cash Equivalents" means:

          (1) the official currency of Australia, Belgium, Canada, France,
     Germany, Mexico, the Netherlands, New Zealand, Spain and the United
     Kingdom;

          (2) securities issued or directly and fully guaranteed or insured by
     the government of any of Australia, Belgium, Canada (including any province
     thereof), France, Germany, Mexico, the Netherlands, New Zealand, Spain or
     the United Kingdom or any agency or instrumentality of any of the foregoing
     (provided that the full faith and credit of the relevant jurisdiction is
     pledged in support thereof), and in each case having maturities of not more
     than six months from the date of acquisition;

          (3) certificates of deposit, time deposits and money market deposits
     with maturities of six months or less from the date of acquisition,
     bankers' acceptances with maturities not exceeding six months and overnight
     bank deposits, in each case with any commercial bank or trust company
     organized in a country listed in clause (1) above and having capital and
     surplus in excess of $500.0 million (or its foreign currency equivalent);

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

          (5) money market funds at least 95% of the assets of which constitute
     Cash Equivalents or Foreign Cash Equivalents of the kinds described in
     clauses (1) through (4) of this definition; and

          (6) other securities owned by the Company's Restricted Subsidiaries,
     other than Domestic Restricted Subsidiaries, on the date of the Indenture.

     "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other
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entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.

     "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.

     "Guarantors" means:

          (1) each direct or indirect Domestic Subsidiary of the Company,
     excluding (a) Investors Trust, Inc., (b) SEI-DELFL, Inc., SEI-DELLA, Inc.
     and SEI-DELTX, Inc., and (c) immaterial subsidiaries which are prohibited
     by law from guaranteeing the notes; and

          (2) any other subsidiary that executes a Note Guarantee in accordance
     with the provisions of the Indenture;

and their respective successors and assigns.

     "Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:

          (1) interest rate swap agreements, interest rate cap agreements and
     interest rate collar agreements; and

          (2) other agreements or arrangements designed to protect such Person
     against fluctuations in interest rates or currency exchange rates.

     "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:

          (1) in respect of borrowed money;

          (2) evidenced by bonds, notes, debentures or similar instruments or
     letters of credit (or reimbursement agreements in respect thereof);

          (3) in respect of banker's acceptances;

          (4) representing Capital Lease Obligations;

          (5) in respect of the balance deferred and unpaid of the purchase
     price of any property, except any such balance that constitutes an accrued
     expense or trade payable; or

          (6) representing any Hedging Obligations,

     if and to the extent any of the preceding items (other than letters of
     credit and Hedging Obligations) would appear as a liability upon a balance
     sheet of the specified Person prepared in accordance with GAAP. In
     addition, the term "Indebtedness" includes (a) all Indebtedness of others
     secured by a Lien on any asset of the specified Person (whether or not such
     Indebtedness is assumed by the specified Person); provided that, where the
     specified Person has not assumed or otherwise become liable for such
     Indebtedness, the amount of such Indebtedness shall be the fair market
     value (and where such fair market value is in excess of $10.0 million, such
     value shall be determined by the Board of Directors) of the asset securing
     such Indebtedness at the date of determination, and (b) to the extent not
     otherwise included, the Guarantee by the specified Person of any
     indebtedness of any other Person.

     The amount of any Indebtedness outstanding as of any date shall be:

          (1) the accreted value thereof, in the case of any Indebtedness issued
     with original issue discount; and

          (2) the principal amount thereof, together with any interest thereon
     that is more than 30 days past due, in the case of any other Indebtedness.

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     "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and other advances and loans to
officers and employees made consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of the
covenant described above under the caption "-- Certain Covenants -- Restricted
Payments." The acquisition by the Company or any Restricted Subsidiary of the
Company of a Person that holds an Investment in a third Person shall be deemed
to be an Investment by the Company or such Restricted Subsidiary in such third
Person in an amount equal to the fair market value of the Investment held by the
acquired Person in such third Person in an amount determined as provided in the
final paragraph of the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments."

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

     "Net Income" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:

          (1) any gain or loss, together with any related provision for taxes on
     such gain or loss, realized in connection with: (a) any Asset Sale (without
     taking into account clause (1) of the second paragraph of such definition)
     or any write-down resulting from the adoption by the Board of Directors of
     the specified Person of a plan for any such Asset Sale; or (b) the
     extinguishment of any Indebtedness of such Person or any of its Restricted
     Subsidiaries;

          (2) any extraordinary gain or loss, together with any related
     provision for taxes on such extraordinary gain or loss; and

          (3) any loss related to the Company or one or more of its Restricted
     Subsidiaries relieving some individuals with whom the Company or such
     Subsidiary has entered into noncompetition agreements from the obligation
     not to compete, as described elsewhere in this prospectus, in an amount not
     to exceed $20 million.

     "Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of (i) the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof, in each
case, after taking into account any available tax credits or deductions and any
tax sharing arrangements, (ii) amounts required to be applied to the repayment
of Indebtedness secured by a Lien on the asset or assets that were the subject
of such Asset Sale and (iii) any reserve for (1) any adjustment in respect of
the sale price of such asset or assets established in accordance with GAAP and
(2) any indemnification obligations associated with such transactions.

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     "Non-Recourse Debt" means Indebtedness:

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

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

          (3) as to which the lenders have been notified in writing that they
     will not have any recourse to the stock or assets of the Company or any of
     its Restricted Subsidiaries.

     "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

     "Permitted Business" means any business conducted or proposed to be
conducted (as described in the prospectus) by the Company and its Restricted
Subsidiaries on the date of the Indenture and other businesses, including those
conducting financing and insurance operations reasonably related or ancillary
thereto.

     "Permitted Investments" means:

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

          (2) any Investment in Cash Equivalents;

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

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

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

          (4) any Investment made as a result of the receipt of non-cash
     consideration from an Asset Sale that was made pursuant to and in
     compliance with the covenant described above under the caption
     "-- Repurchase at the Option of Holders -- Asset Sales";

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

          (6) Hedging Obligations;

          (7) other Investments in any Person having an aggregate fair market
     value (measured on the date each such Investment was made and without
     giving effect to subsequent changes in value), when taken together with all
     other Investments made pursuant to this clause (7) since the date of the
     Indenture, not to exceed $25 million;

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

          (9) stock, obligations or securities received in settlement of debts
     created in the ordinary course of business and owing to the company or any
     Restricted Subsidiary or in satisfaction of judgments;

          (10) investments existing as of the date of the Indenture;

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   121

          (11) funds placed into escrow accounts or trust funds for purposes of
     future delivery of property, merchandise or services or care and
     maintenance of cemetery property, all in connection with the ordinary
     course of business; and

          (12) any investment by a Restricted Subsidiary, other than a Domestic
     Restricted Subsidiary, in Foreign Cash Equivalents.

     "Permitted Liens" means:

          (1) Liens on the assets of the Company and any Guarantor securing
     Senior Debt that was permitted by the terms of the Indenture to be
     incurred;

          (2) Liens in favor of the Company or any Restricted Subsidiary;

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

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

          (5) Liens to secure Indebtedness (including Capital Lease Obligations)
     permitted by clause (4) of the second paragraph of the covenant entitled
     "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
     Preferred Stock" covering only the assets acquired with such Indebtedness;

          (6) Liens existing on the date of the Indenture; and

          (7) Liens incurred in the ordinary course of business of the Company
     or any Restricted Subsidiary of the Company with respect to obligations
     that do not exceed $10.0 million at any one time outstanding.

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

          (1) the principal amount (or accreted value, if applicable) of such
     Permitted Refinancing Indebtedness does not exceed the principal amount (or
     accreted value, if applicable) of the Indebtedness so extended, refinanced,
     renewed, replaced, defeased or refunded (plus all accrued interest thereon
     and the amount of any reasonably determined premium necessary to accomplish
     such refinancing and such reasonable expenses incurred in connection
     therewith);

          (2) such Permitted Refinancing Indebtedness has a final maturity date
     later than the final maturity date of, and has a Weighted Average Life to
     Maturity equal to or greater than the Weighted Average Life to Maturity of,
     the Indebtedness being extended, refinanced, renewed, replaced, defeased or
     refunded;

          (3) if the Indebtedness being extended, refinanced, renewed, replaced,
     defeased or refunded is subordinated in right of payment to the notes, such
     Permitted Refinancing Indebtedness has a final maturity date later than the
     final maturity date of, and is subordinated in right of payment to, the
     notes on terms at least as favorable in all material respects to the
     Holders of notes as those contained in the documentation governing the
     Indebtedness being extended, refinanced, renewed, replaced, defeased or
     refunded; and

          (4) such Indebtedness is incurred either by the Company or by the
     Restricted Subsidiary who is the obligor on the Indebtedness being
     extended, refinanced, renewed, replaced, defeased or refunded.

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     "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

     "Principal" means Frank B. Stewart, Jr.

     "Puerto Rican Restricted Subsidiary" means any wholly-owned Restricted
Subsidiary of the Company that is formed under the laws of Puerto Rico and
conducts a Permitted Business solely in Puerto Rico.

     "Qualified Equity Offering" means (a) an offer and sale of Equity Interests
(other than Disqualified Stock) of the Company pursuant to a registration
statement that has been declared effective by the Commission pursuant to the
Securities Act (other than a registration statement on Form S-8 or otherwise
relating to equity securities issuable under any employee benefit plan of the
Company) or (b) any sale (other than to a Subsidiary) of Equity Interests (other
than Disqualified Stock) of the Company so long as, at the time of consummation
of such sale, the Company has a class of common equity securities registered
pursuant to Section 12(b) or Section 12(g) under the Exchange Act.

     "Related Party" means:

          (1) any family member of any Principal; or

          (2) any trust, the beneficiary, owner or Person beneficially holding
     an 80% or more controlling interest of which consists of the Principal
     and/or such other Persons referred to in the immediately preceding clause
     (1).

     "Restricted Investment" means an Investment other than a Permitted
Investment.

     "Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

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

     "Subsidiary" means, with respect to any specified Person:

          (1) any corporation, association or other business entity of which
     more than 50% of the total voting power of shares of Capital Stock entitled
     (without regard to the occurrence of any contingency) to vote in the
     election of directors, managers or trustees thereof is at the time owned or
     controlled, directly or indirectly, by such Person or one or more of the
     other Subsidiaries of that Person (or a combination thereof); and

          (2) any partnership (a) the sole general partner or the managing
     general partner of which is such Person or a Subsidiary of such Person or
     (b) the only general partners of which are such Person or one or more
     Subsidiaries of such Person (or any combination thereof).

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

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

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

          (3) is a Person with respect to which neither the Company nor any of
     its Restricted Subsidiaries has any direct or indirect obligation (a) to
     subscribe for additional Equity Interests or (b) to maintain or

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     preserve such Person's financial condition or to cause such Person to
     achieve any specified levels of operating results; and

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

     Any designation of a Restricted Subsidiary of the Company as an
Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the preceding conditions and was permitted by the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments."
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption
"-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock," the Company shall be in default of such covenant.

     "Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

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

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

          (2) the then outstanding principal amount of such Indebtedness.

     "Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares or
Investments by foreign nationals mandated by applicable law) shall at the time
be owned by such Person and/or by one or more Wholly Owned Restricted
Subsidiaries of such Person.

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                CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

     The following general discussion of certain U.S. federal income tax
considerations relating to the exchange notes applies to you if you acquired the
outstanding notes at the original issue price within the meaning of Section 1273
of the Code and hold the outstanding notes and exchange notes as a "capital
asset" within the meaning of Section 1221 of the Code. This discussion is based
on the Internal Revenue Code of 1986, as amended, Treasury Regulations
promulgated thereunder, administrative positions of the Internal Revenue Service
and judicial decisions now in effect, all of which are subject to change
(possibly with retroactive effect) or to different interpretations.

     We have not sought a ruling from the IRS with respect to the U.S. federal
income tax consequences of the Exchange Offer or the acquiring, holding or
disposing of an exchange note. There can be no assurance that the IRS will not
challenge one or more of the conclusions described herein.

     This discussion does not purport to deal with all aspects of U.S. federal
income taxation that may be relevant to a particular holder in light of the
holder's circumstances (for example, a person subject to the alternative minimum
tax provisions of the Code). In addition, it is not intended to be wholly
applicable to all categories of investors, some of which (like dealers in
securities, banks, insurance companies, tax-exempt organizations, persons
holding a note as part of a "straddle," "hedge," "conversion transaction" or
other risk reduction transaction and persons who have a "functional currency"
other than the U.S. dollar) may be subject to special rules.

     This discussion does not address any aspect of state, local or foreign law,
or U.S. federal estate and gift tax law other than U.S. federal estate tax law
as applicable to a Non-U.S. Holder nor does it address exchange notes held
through a partnership or other pass-through entity.

     WE ADVISE YOU TO CONSULT WITH YOUR TAX ADVISERS REGARDING THE FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF HOLDING AND DISPOSING OF THE
EXCHANGE NOTES.

TAX CONSEQUENCES TO U.S. HOLDERS

     The following general discussion is limited to certain United States
federal income tax consequences to a holder of an exchange note that is a "U.S.
Holder." For purposes of this discussion, a "U.S. Holder" is a beneficial owner
of an exchange note that for U.S. federal income tax purposes is (i) a citizen
or resident (as defined in Section 7701(b) of the Code) of the United States,
(ii) a corporation (or an entity treated as a corporation) created or organized
in the United States or under the law of the United States, any state or the
District of Columbia, (iii) an estate the income of which is subject to U.S.
federal income taxation regardless of source or (iv) a trust if a U.S. court is
able to exercise primary supervision over the administration of the trust and
one or more U.S. persons have the authority to control all substantial decisions
of the trust.

     TAXATION OF STATED INTEREST ON THE NOTES.  Generally, payments of stated
interest on an exchange note will be includible in a U.S. Holder's gross income
and taxable as ordinary income for U.S. federal income tax purposes at the time
such interest is paid or accrued in accordance with the U.S. Holder's regular
method of tax accounting.

     SALE, EXCHANGE OR RETIREMENT OF AN EXCHANGE NOTE.  Each U.S. Holder
generally will recognize capital gain or loss upon a sale, exchange or
retirement of an exchange note measured by the difference, if any, between (i)
the amount of cash and the fair market value of any property received (except to
the extent that the cash or other property received in respect of an exchange
note is attributable to the payment of accrued interest on the exchange note not
previously included in income, which amount will be taxable as ordinary income)
and (ii) the holder's adjusted tax basis in the exchange note. The gain or loss
will be long-term capital gain or loss if the exchange note has been held for
more than one year at the time of the sale, exchange or retirement. A U.S.
Holder's initial basis in an exchange note generally will be the amount paid for
the exchange note.

     Prospective investors should be aware that the resale of an exchange note
may be affected by the "market discount" rules of the Code, under which a
portion of any gain realized on the retirement or other

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disposition of an exchange note by a subsequent holder that acquires the
exchange note at a market discount generally would be treated as ordinary income
to the extent of the market discount that accrues while that holder holds the
exchange note.

     EXCHANGE OFFER.  The exchange of the exchange notes for the outstanding
notes pursuant to the Exchange Offer will not constitute a material modification
of the terms of the notes and therefore will not constitute a taxable event for
U.S. federal income tax purposes. As such, the exchange will have no U.S.
federal income tax consequences to a U.S. Holder, so that the U.S. Holder's
holding period and adjusted tax basis for a note would not be affected, and the
U.S. Holder would continue to take into account income in respect of an exchange
note in the same manner as before the exchange.

     INFORMATION REPORTING AND BACKUP WITHHOLDING.  A U.S. Holder of an exchange
note may be subject, under certain circumstances, to information reporting and
"backup withholding" at a rate of 31% with respect to certain "reportable
payments," including interest on or principal (and premium, if any) of a note
and the gross proceeds from a disposition of an exchange note. The backup
withholding rules apply if the holder, among other things, (i) fails to furnish
a social security number or other taxpayer identification number ("TIN")
certified under penalties of perjury within a reasonable time after the request
therefor, (ii) furnishes an incorrect TIN, (iii) fails to properly report the
receipt of interest or dividends or (iv) under certain circumstances, fails to
provide a certified statement, signed under penalties of perjury, that the TIN
furnished is the correct number and that the holder is not subject to backup
withholding. A U.S. Holder who does not provide us with its correct TIN also may
be subject to penalties imposed by the IRS. Backup withholding will not apply
with respect to payments made to certain holders, including corporations and
tax-exempt organizations, provided their exemptions from backup withholding are
properly established. We will report annually to the IRS and to each U.S. Holder
of an exchange note the amount of any "reportable payments" and the amount of
tax withheld, if any, with respect to those payments.

     Any amounts withheld under the backup withholding rules from a payment to a
U.S. Holder will be allowed as a refund or as a credit against that U.S.
Holder's U.S. federal income tax liability, provided the requisite procedures
are followed.

TAX CONSEQUENCES TO NON-U.S. HOLDERS

     The following general discussion is limited to certain United States
federal income tax consequences to a holder of a note that is a "Non-U.S.
Holder." As used herein, a "Non-U.S. Holder" is a beneficial owner of an
exchange note, that, for U.S. federal income tax purposes, is (i) a nonresident
alien individual, (ii) a corporation (or an entity treated as a corporation)
created or organized in or under the law of a country (or a political
subdivision thereof) other than the United States or (iii) a foreign estate or
trust, which generally is an estate or trust that is not a U.S. Holder. For
purposes of the withholding tax discussed below (other than backup withholding),
a Non-U.S. Holder includes a nonresident fiduciary of an estate or trust. For
purposes of the discussion below, interest and gain on the sale, exchange or
other disposition of the exchange notes will be considered to be "U.S. trade or
business income" if such income or gain is:

     - effectively connected with the conduct of a U.S. trade or business; or

     - in the case of a treaty resident, attributable to a U.S. permanent
       establishment (or, in the case of an individual, a fixed base) in the
       United States.

     INTEREST.  Generally, interest paid to a Non-U.S. Holder of an exchange
note will not be subject to United States federal income or withholding tax if
such interest is not U.S. trade or business income and is "portfolio interest."
Generally, interest on the exchange notes will qualify as portfolio interest if
the Non-U.S. Holder:

     - does not actually or constructively own 10% or more of the total combined
       voting power of all classes of our stock;

     - is not a controlled foreign corporation with respect to which we are a
       "related person" within the meaning of the Code; and
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     - certifies, under penalties of perjury on a Form W-8BEN, that such holder
       is not a United States person and provides such holder's name and
       address.

     The gross amount of payments of interest that do not qualify for the
portfolio interest exception and that are not U.S. trade or business income will
be subject to U.S. withholding tax at a rate of 30% unless a treaty applies to
reduce or eliminate withholding. U.S. trade or business income will be taxed at
regular graduated U.S. rates rather than the 30% gross rate. In the case of a
Non-U.S. Holder that is a corporation, such U.S. trade or business income also
may be subject to the branch profits tax. To claim an exemption from
withholding, or to claim the benefits of a treaty, a Non-U.S. Holder must
provide a properly executed Form W-8BEN (claiming treaty benefits) or W-8ECI
(claiming exemption from withholding because income is U.S. trade or business
income) (or such successor forms as the IRS designates), as applicable prior to
the payment of interest. These forms must be periodically updated. A Non-U.S.
Holder who is claiming the benefits of a treaty may be required, in certain
instances, to obtain a U.S. taxpayer identification number and to provide
certain documentary evidence issued by foreign governmental authorities to prove
residence in the foreign country. Also, under these regulations special
procedures are provided for payments through qualified intermediaries.

     DISPOSITION OF THE EXCHANGE NOTES.  A Non-U.S. Holder generally will not be
subject to U.S. federal income tax in respect of gain recognized on a
disposition of the exchange notes unless:

     - the gain is U.S. trade or business income in which case the branch
       profits tax may also apply to a corporate Non-U.S. Holder;

     - the Non-U.S. Holder is an individual who is present in the United States
       for 183 or more days in the taxable year of the disposition and meets
       other requirements; or

     - the Non-U.S. Holder is subject to U.S. tax under provisions applicable to
       certain U.S. expatriates (including certain former citizens or residents
       of the United States).

     UNITED STATES FEDERAL ESTATE TAX.  Exchange notes held (or treated as held)
by an individual who is a Non-U.S. Holder at the time of his or her death will
not be subject to United States federal estate tax, provided that the interest
on such exchange notes would be exempt as portfolio interest when received by
the Non-U.S. Holder at the time of his or her death.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX

     We must report annually to the IRS and to each Non-U.S. Holder any interest
that is paid to the Non-U.S. Holder. Copies of these information returns also
may be made available under the provisions of a specific treaty or other
agreement to the tax authorities of the country in which the Non-U.S. Holder
resides.

     The 31% backup withholding tax and certain information reporting will not
apply to such payments of interest with respect to which either the requisite
certification, as described above, has been received or an exemption otherwise
has been established, provided that neither we nor our paying agent have actual
knowledge that the holder is a United States person or that the conditions of
any other exemption are not, in fact, satisfied.

     The payment of the proceeds from the disposition of the exchange notes to
or through the United States office of any broker, U.S. or foreign, will be
subject to information reporting and possible backup withholding unless the
owner certifies as to its non-U.S. status under penalties of perjury or
otherwise establishes an exemption, provided that the broker does not have
actual knowledge that the holder is a United States person or that the
conditions of any other exemption are not, in fact, satisfied. The payment of
the proceeds from the disposition of the exchange notes to or through a non-U.S.
office of a non-U.S. broker will not be subject to information reporting or
backup withholding unless the non-U.S. broker has certain types of relationships
with the United States (a "U.S. related person"). In the case of the payment of
the proceeds from the disposition of the exchange notes to or through a non-U.S.
office of a broker that is either a U.S. person or a U.S. related person, the
Treasury Regulations require information reporting (but not back-up

                                       115
   127

withholding) on the payment unless the broker has documentary evidence in its
files that the owner is a Non-U.S. Holder and the broker has no knowledge to the
contrary.

     BACKUP WITHHOLDING IS NOT AN ADDITIONAL TAX. ANY AMOUNTS WITHHELD UNDER THE
BACKUP WITHHOLDING RULES FROM A PAYMENT TO A NON-U.S. HOLDER WILL BE REFUNDED OR
CREDITED AGAINST THE HOLDER'S U.S. FEDERAL INCOME TAX LIABILITY, IF ANY, IF THE
HOLDER PROVIDES THE REQUIRED INFORMATION TO THE IRS.

                                       116
   128

                              PLAN OF DISTRIBUTION

     Each participating broker-dealer that receives exchange notes for its own
account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a participating broker-dealer in connection with resales of exchange notes
received in exchange for outstanding notes where such outstanding notes were
acquired as a result of market-making activities or other trading activities. We
have agreed that for a period of 180 days after the date of this prospectus, we
will make this prospectus, as amended or supplemented, available to any
participating broker-dealer for use in connection with any such resale.

     We will not receive any proceeds from any sales of the exchange notes by
participating broker-dealers. Exchange notes received by participating
broker-dealers for their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the exchange notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such participating broker-dealer and/or the purchasers of
any such exchange notes. Any participating broker-dealer that resells the
exchange notes that were received by it for its own account pursuant to the
exchange offer and any broker or dealer that participates in a distribution of
such exchange notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of exchange notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a participating broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.

     For a period of 180 days after the date of this prospectus we will promptly
send additional copies of this prospectus and any amendment or supplement to
this prospectus to any participating broker-dealer that requests such documents
in the letter of transmittal.

     Prior to the exchange offer, there has not been any public market for the
outstanding notes. The outstanding notes have not been registered under the
Securities Act and will be subject to restrictions on transferability to the
extent that they are not exchanged for exchange notes by holders who are
entitled to participate in this exchange offer. The holders of outstanding
notes, other than any holder that is our affiliate within the meaning of Rule
405 under the Securities Act, who are not eligible to participate in the
exchange offer are entitled to certain registration rights, and we are required
to file a shelf registration statement with respect to their outstanding notes.
The exchange notes will constitute a new issue of securities with no established
trading market. We do not intend to list the exchange notes on any national
securities exchange or to seek the admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. The Initial
Purchasers have informed us that they intend to make a market in the notes.
However, they are not obligated to do so, and any Initial Purchaser may cease
its market-making activities at any time. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the exchange offer and the pendency of
the shelf registration statements. Accordingly, no assurance can be given that
an active public or other market will develop for the exchange notes or as to
the liquidity of the trading market for the exchange notes. If a trading market
does not develop or is not maintained, holders of the exchange notes may
experience difficulty in reselling the exchange notes or may be unable to sell
them at all. If a market for the exchange notes develops, any such market may be
discontinued at any time.

                                 LEGAL MATTERS

     The validity of the exchange notes will be passed upon for us by Jones,
Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., New Orleans, Louisiana.

                                       117
   129

                                    EXPERTS

     The financial statements as of October 31, 2000 and 1999 and for each of
the three years in the period ended October 31, 2000 included in this
registration statement have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

              AVAILABLE INFORMATION AND INCORPORATION BY REFERENCE

     This prospectus is part of a registration statement on Form S-4 that we
have filed with the Securities and Exchange Commission (the "SEC"). You should
rely only on information incorporated by reference or provided in this
prospectus. We have not authorized anyone else to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front cover of
those documents.

     We are subject to the informational requirements of the Securities Exchange
Act of 1934 (the "Exchange Act") and file reports and other information with the
SEC. These reports and other information filed with the SEC can be inspected,
and copies may be obtained, at the Public Reference Room of the SEC, 450 Fifth
Street, NW, Washington, D.C. 20549, at prescribed rates, as well as at the
following regional offices of the SEC: Seven World Trade Center, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Information on the operation of the Public Reference Room
of the SEC may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information that we have filed electronically
with the SEC.

     The SEC allows the "incorporation by reference" of information filed with
them, which means we can disclose important information to you by referring you
to those documents. The information included in the following documents is
incorporated by reference and is considered to be a part of this prospectus. The
most recent information that we file with the SEC automatically updates and
supersedes older information. We have previously filed the following documents
with the SEC and we are incorporating them by reference into this prospectus.

          1. Our Annual Report on Form 10-K for the fiscal year ended October
     31, 2000 (filed January 25, 2001);

          2. Our Quarterly Reports on Form 10-Q for the quarter ended January
     31, 2001 (filed March 19, 2001) and for the quarter ended April 30, 2001
     (filed June 14, 2001); and

          3. Our Current Reports on Form 8-K filed on November 30, 2000,
     December 11, 2000, December 13, 2000, March 9, 2001, March 15, 2001, May
     16, 2001, June 4, 2001, June 5, 2001, June 14, 2001, June 21, 2001, June
     29, 2001 and July 12, 2001.

     We also incorporate by reference all documents which we may file with the
SEC after the date of this prospectus and prior to the termination of any
offering of securities offered by this prospectus under Section 13(a), 13(c), 14
or 15(d) of the Exchange Act.

     At your request, we will provide you with a free copy of any of these
filings (except for exhibits, unless the exhibits are specifically incorporated
by reference into the filing). You may request copies of these documents by
contacting us at the following address and telephone number:

                           Stewart Enterprises, Inc.
                        110 Veterans Memorial Boulevard
                           Metairie, Louisiana 70005
                        Attention: Martin R. de Laureal
                                 (504) 837-5880

                                       118
   130

             INDEX TO HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS



                                                              PAGE
                                                              ----
                                                           
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE
  AND SIX MONTHS ENDED APRIL 30, 2001 AND 2000:

Consolidated Statements of Earnings --
  Three Months Ended April 30, 2001 and 2000................   F-2

Consolidated Statements of Earnings --
  Six Months Ended April 30, 2001 and 2000..................   F-3

Consolidated Balance Sheets --
  April 30, 2001 and October 31, 2000.......................   F-4

Consolidated Statement of Shareholders' Equity --
  Six Months Ended April 30, 2001...........................   F-5

Consolidated Statements of Cash Flows --
  Six Months Ended April 30, 2001 and 2000..................   F-6

Notes to Consolidated Financial Statements --
  Six Months Ended April 30, 2001 and 2000..................   F-7

AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL
  YEARS ENDED OCTOBER 31, 2000, 1999 AND 1998:

Report of Independent Accountants...........................  F-24

Consolidated Statements of Earnings --
  Years Ended October 31, 2000, 1999 and 1998...............  F-25

Consolidated Balance Sheets as of October 31, 2000 and
  1999......................................................  F-26

Consolidated Statements of Shareholders' Equity --
  Years Ended October 31, 2000, 1999 and 1998...............  F-27

Consolidated Statements of Cash Flows --
  Years Ended October 31, 2000, 1999 and 1998...............  F-29

Notes to Consolidated Financial Statements --
  Years Ended October 31, 2000, 1999 and 1998...............  F-30

Report of Independent Accountants...........................  F-63

Schedule II --
  Valuation and Qualifying Accounts.........................  F-64


                                       F-1
   131

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF EARNINGS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                              THREE MONTHS ENDED
                                                                   APRIL 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
                                                                   
Revenues:
  Funeral...................................................  $107,958   $115,741
  Cemetery..................................................    62,981     73,120
                                                              --------   --------
                                                               170,939    188,861
                                                              --------   --------
Costs and expenses:
  Funeral...................................................    82,366     84,936
  Cemetery..................................................    47,358     54,141
                                                              --------   --------
                                                               129,724    139,077
                                                              --------   --------
  Gross profit..............................................    41,215     49,784
Corporate general and administrative expenses...............     4,905      4,883
                                                              --------   --------
  Operating earnings........................................    36,310     44,901
Interest expense, net.......................................   (12,504)   (14,447)
Other income (expense), net.................................     2,349        (10)
                                                              --------   --------
  Earnings before income taxes..............................    26,155     30,444
Income taxes................................................     9,547     11,112
                                                              --------   --------
  Net earnings..............................................  $ 16,608   $ 19,332
                                                              ========   ========
Net earnings per common share:
  Basic.....................................................  $    .15   $    .18
                                                              ========   ========
  Diluted...................................................  $    .15   $    .18
                                                              ========   ========
Weighted average common shares outstanding (in thousands):
  Basic.....................................................   107,306    106,557
                                                              ========   ========
  Diluted...................................................   107,320    106,596
                                                              ========   ========
Dividends declared per common share.........................  $     --   $    .02
                                                              ========   ========
Pro forma amounts assuming 2001 change in accounting
  principles was applied retroactively:
  Net earnings..............................................             $ 16,447
                                                                         ========
  Basic earnings per common share...........................             $    .15
                                                                         ========
  Diluted earnings per common share.........................             $    .15
                                                                         ========


          See accompanying notes to consolidated financial statements.
                                       F-2
   132

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF EARNINGS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                SIX MONTHS ENDED
                                                                   APRIL 30,
                                                              --------------------
                                                                2001        2000
                                                              ---------   --------
                                                                    
Revenues:
  Funeral...................................................  $ 215,307   $238,387
  Cemetery..................................................    132,322    143,434
                                                              ---------   --------
                                                                347,629    381,821
                                                              ---------   --------
Costs and expenses:
  Funeral...................................................    164,972    172,849
  Cemetery..................................................     98,357    110,480
                                                              ---------   --------
                                                                263,329    283,329
                                                              ---------   --------
  Gross profit..............................................     84,300     98,492
Corporate general and administrative expenses...............      9,066     10,143
                                                              ---------   --------
  Operating earnings........................................     75,234     88,349
Interest expense, net.......................................    (25,783)   (29,030)
Other income, net...........................................      3,184        796
                                                              ---------   --------
  Earnings before income taxes and cumulative effect of
     change in accounting principles........................     52,635     60,115
Income taxes................................................     19,212     21,942
                                                              ---------   --------
  Earnings before cumulative effect of change in accounting
     principles.............................................     33,423     38,173
Cumulative effect of change in accounting principles, net of
  a $166,669 income tax benefit (Note 2)....................   (250,004)        --
                                                              ---------   --------
  Net earnings (loss).......................................  $(216,581)  $ 38,173
                                                              =========   ========
Basic earnings per common share:
  Earnings before cumulative effect of change in accounting
     principles.............................................  $     .31   $    .36
  Cumulative effect of change in accounting principles......      (2.33)        --
                                                              ---------   --------
  Net earnings (loss).......................................  $   (2.02)  $    .36
                                                              =========   ========
Diluted earnings per common share:
  Earnings before cumulative effect of change in accounting
     principles.............................................  $     .31   $    .36
  Cumulative effect of change in accounting principles......      (2.33)        --
                                                              ---------   --------
  Net earnings (loss).......................................  $   (2.02)  $    .36
                                                              =========   ========
Weighted average common shares outstanding (in thousands):
  Basic.....................................................    107,131    106,414
                                                              =========   ========
  Diluted...................................................    107,136    106,432
                                                              =========   ========
Dividends declared per common share.........................  $      --   $    .04
                                                              =========   ========
Pro forma amounts assuming 2001 change in accounting
  principles was applied retroactively:
  Net earnings..............................................              $ 33,180
                                                                          ========
  Basic earnings per common share...........................              $    .31
                                                                          ========
  Diluted earnings per common share.........................              $    .31
                                                                          ========


          See accompanying notes to consolidated financial statements.
                                       F-3
   133

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                              APRIL 30,    OCTOBER 31,
                                                                 2001         2000
                                                              ----------   -----------
                                                                     
                                        ASSETS
Current assets:
  Cash and cash equivalent investments......................  $  103,721   $   91,595
  Marketable securities.....................................       3,088        7,273
  Receivables, net of allowances............................      92,825      177,474
  Inventories...............................................      52,738       51,049
  Prepaid expenses..........................................       5,618        4,063
                                                              ----------   ----------
        Total current assets................................     257,990      331,454
Receivables due beyond one year, net of allowances..........      88,089      217,073
Prearranged receivables.....................................   1,394,038           --
Intangible assets...........................................     683,614      668,462
Deferred charges............................................     265,966      126,158
Cemetery property, at cost..................................     438,771      441,646
Property and equipment, at cost:
  Land......................................................      78,855       78,736
  Buildings.................................................     357,910      353,189
  Equipment and other.......................................     166,158      161,223
                                                              ----------   ----------
                                                                 602,923      593,148
  Less accumulated depreciation.............................     159,719      145,219
                                                              ----------   ----------
  Net property and equipment................................     443,204      447,929
Long-term investments.......................................       5,586        4,203
Merchandise trust asset.....................................          --      234,752
Deferred income taxes.......................................      96,339           --
Other assets................................................       4,449        4,514
                                                              ----------   ----------
                                                              $3,678,046   $2,476,191
                                                              ==========   ==========

                         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt (Note 8).............  $  501,150   $   29,857
  Accounts payable..........................................      14,539       20,342
  Accrued payroll...........................................      16,813       17,433
  Accrued insurance.........................................      15,339       16,470
  Accrued interest..........................................      12,572       13,039
  Accrued other.............................................      21,168       22,084
  Income taxes payable......................................       6,681           --
  Deferred income taxes.....................................      17,375       15,251
                                                              ----------   ----------
        Total current liabilities...........................     605,637      134,476
Long-term debt, less current maturities.....................     365,223      920,670
Deferred income taxes.......................................          --       83,740
Prearranged deferred revenue................................   1,820,406      108,744
Estimated cost to deliver merchandise.......................          --      139,183
Other long-term liabilities.................................      13,850       14,721
                                                              ----------   ----------
        Total liabilities...................................   2,805,116    1,401,534
                                                              ----------   ----------
Commitments and contingencies (Note 5)
Shareholders' equity:
  Preferred stock, $1.00 par value, 5,000,000 shares
    authorized; no shares issued............................          --           --
  Common stock, $1.00 stated value:
    Class A authorized 150,000,000 shares; issued and
     outstanding 103,965,419 and 103,277,329 shares at April
     30, 2001 and October 31, 2000, respectively............     103,965      103,277
    Class B authorized 5,000,000 shares; issued and
     outstanding 3,555,020 shares at April 30, 2001 and
     October 31, 2000; 10 votes per share; convertible into
     an equal number of Class A shares......................       3,555        3,555
  Additional paid-in capital................................     674,847      673,658
  Retained earnings.........................................     190,817      407,398
  Cumulative foreign translation adjustment.................     (98,400)    (103,553)
  Unrealized depreciation of investments....................      (1,038)      (9,678)
  Derivative financial instrument losses....................        (816)          --
                                                              ----------   ----------
        Total shareholders' equity..........................     872,930    1,074,657
                                                              ----------   ----------
                                                              $3,678,046   $2,476,191
                                                              ==========   ==========


          See accompanying notes to consolidated financial statements.
                                       F-4
   134

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                    CUMULATIVE      UNREALIZED       DERIVATIVE
                                           ADDITIONAL                 FOREIGN      APPRECIATION      FINANCIAL          TOTAL
                                 COMMON     PAID-IN     RETAINED    TRANSLATION   (DEPRECIATION)     INSTRUMENT     SHAREHOLDERS'
                                STOCK(1)    CAPITAL     EARNINGS    ADJUSTMENT    OF INVESTMENTS   GAINS (LOSSES)      EQUITY
                                --------   ----------   ---------   -----------   --------------   --------------   -------------
                                                                                               
Balance October 31, 2000......  $106,832    $673,658    $ 407,398    $(103,553)      $(9,678)         $    --        $1,074,657
Comprehensive income (loss):
 Net loss.....................                           (216,581)                                                     (216,581)
 Other comprehensive income
   (loss):
   Foreign translation
     adjustment...............                                           5,153                                            5,153
   Cumulative effect of change
     in accounting for
     unrealized appreciation
     of investments under SAB
     No. 101..................                                                         8,494                              8,494
   Unrealized appreciation of
     investments..............                                                           229                                229
   Deferred income tax expense
     on unrealized
     appreciation of
     investments..............                                                           (83)                               (83)
   Cumulative effect of change
     in accounting for
     derivative financial
     instrument...............                                                                          4,693             4,693
   Unrealized loss on
     derivative instrument
     designated and qualifying
     as a cash flow hedging
     instrument...............                                                                         (5,509)           (5,509)
                                --------    --------    ---------    ---------       -------          -------        ----------
   Total other comprehensive
     income (loss)............                                           5,153         8,640             (816)           12,977
                                --------    --------    ---------    ---------       -------          -------        ----------
 Total comprehensive income
   (loss).....................                           (216,581)       5,153         8,640             (816)         (203,604)
Issuance of common stock......       688       1,189                                                                      1,877
                                --------    --------    ---------    ---------       -------          -------        ----------
Balance April 30, 2001........  $107,520    $674,847    $ 190,817    $ (98,400)      $(1,038)         $  (816)       $  872,930
                                ========    ========    =========    =========       =======          =======        ==========


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

(1) Amount includes shares of common stock with a stated value of $1 per share.

          See accompanying notes to consolidated financial statements.
                                       F-5
   135

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                SIX MONTHS ENDED
                                                                   APRIL 30,
                                                              --------------------
                                                                2001        2000
                                                              ---------   --------
                                                                    
Cash flows from operating activities:
  Net earnings (loss).......................................  $(216,581)  $ 38,173
  Adjustments to reconcile net earnings (loss) to net cash
     provided by operating activities:
       Depreciation and amortization........................     39,143     28,707
       Provision for doubtful accounts......................      9,148     17,584
       Cumulative effect of change in accounting
        principles..........................................    250,004         --
       Net gains on sales of marketable securities..........         --       (780)
       Loss on sale of subsidiaries.........................        776         --
       Provision (benefit) for deferred income taxes........      1,280     (1,747)
       Changes in assets and liabilities, net of effects
        from acquisitions:
          Increase in other receivables.....................     (2,023)   (15,006)
          Increase in other deferred charges and intangible
            assets..........................................       (720)    (3,751)
          (Increase) decrease in inventories and cemetery
            property........................................      1,329     (4,060)
          Increase (decrease) in accounts payable and
            accrued expenses................................        215     (3,106)
          Change in prearranged activity....................     (8,333)        57
          Prearranged acquisition costs.....................    (16,114)        --
          Increase in merchandise trust, less estimated cost
            to deliver merchandise..........................         --    (14,084)
          Decrease in other.................................       (832)    (3,545)
                                                              ---------   --------
          Net cash provided by operating activities.........     57,292     38,442
                                                              ---------   --------
Cash flows from investing activities:
  Proceeds from sales of marketable securities..............      4,474     45,816
  Purchases of marketable securities and long-term
     investments............................................       (511)   (12,946)
  Proceeds from sale of subsidiaries........................      2,881         --
  Additions to property and equipment.......................    (11,246)   (23,627)
  Other.....................................................      1,227      1,208
                                                              ---------   --------
       Net cash provided by (used in) investing
        activities..........................................     (3,175)    10,451
                                                              ---------   --------
Cash flows from financing activities:
  Funeral trust withdrawal..................................  $  40,000   $     --
  Proceeds from long-term debt..............................         --      8,366
  Repayments of long-term debt..............................    (83,483)    (9,574)
  Issuance of common stock..................................        610      1,923
  Dividends.................................................         --     (4,261)
                                                              ---------   --------
     Net cash used in financing activities..................    (42,873)    (3,546)
                                                              ---------   --------
Effect of exchange rates on cash and cash equivalents.......        882     (2,050)
                                                              ---------   --------
Net increase in cash........................................     12,126     43,297
Cash and cash equivalents, beginning of period..............     91,595     30,877
                                                              ---------   --------
Cash and cash equivalents, end of period....................  $ 103,721   $ 74,174
                                                              =========   ========
Supplemental cash flow information:
  Cash paid during the period for:
     Income taxes...........................................  $   1,100   $  8,700
     Interest...............................................  $  29,900   $ 33,600
  Noncash investing and financing activities:
     Subsidiaries acquired through seller financing.........  $      --   $ 13,900
     Issuance of common stock to fund employee benefit
      plan..................................................  $   1,267   $     --


          See accompanying notes to consolidated financial statements
                                       F-6
   136

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(1) BASIS OF PRESENTATION

  (a) The Company

     Stewart Enterprises, Inc. (the "Company") is the third largest provider of
products and services in the death care industry in the United States. Through
its subsidiaries, the Company offers a complete line of funeral merchandise and
services, along with cemetery property, merchandise and services.

     As of April 30, 2001, the Company owned and operated 321 funeral homes and
151 cemeteries in 30 states within the United States and Puerto Rico, and 291
funeral homes and 10 cemeteries in Mexico, Australia, New Zealand, Canada,
Spain, Portugal, the Netherlands, Argentina, France and Belgium. For the six
months ended April 30, 2001, foreign operations contributed approximately 18
percent of total revenue and, as of April 30, 2001, represented approximately 16
percent of total assets.

  (b) Principles of Consolidation

     The accompanying consolidated financial statements include the Company and
its subsidiaries. All significant intercompany balances and transactions have
been eliminated.

  (c) Interim Disclosures

     The information as of April 30, 2001, and for the three and six months
ended April 30, 2001 and 2000, is unaudited but, in the opinion of management,
reflects all adjustments, which are of a normal recurring nature, necessary for
a fair presentation of financial position and results of operations for the
interim periods. The accompanying consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 2000.

     The results of operations for the three and six months ended April 30, 2001
are not necessarily indicative of the results to be expected for the fiscal year
ending October 31, 2001.

  (d) Foreign Currency Translation

     All assets and liabilities of the Company's foreign subsidiaries are
translated into U.S. dollars at the exchange rate in effect at the end of the
period, and revenues and expenses are translated at average exchange rates
prevailing during the period. The resulting translation adjustments are
reflected in a separate component of shareholders' equity.

  (e) Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

  (f) Reclassifications

     Certain reclassifications have been made to the 2000 consolidated financial
statements. These reclassifications had no effect on net earnings or
shareholders' equity. In fiscal year 2001, prearranged acquisition costs and the
change in prearranged activity are included in cash flows from operating
activities in

                                       F-7
   137
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(1) BASIS OF PRESENTATION -- (CONTINUED)

the accompanying statements of cash flows. These cash flows have characteristics
of both cash flows from operating and investing activities. For comparative
purposes, a reclassification has been made to the consolidated statement of cash
flows for the six months ended April 30, 2000.

(2) CHANGE IN ACCOUNTING PRINCIPLES

  (a) SAB No. 101

     The Company reached a final resolution on discussions with the Securities
and Exchange Commission on Staff Accounting Bulletin No. 101 ("SAB No.
101") -- "Revenue Recognition in Financial Statements" as it relates to
prearranged sales activities. Although not required to implement SAB No. 101
until the fourth quarter of fiscal year 2001, the Company elected to implement
the new accounting guidance in the first fiscal quarter of 2001. The accounting
for the Company's preneed sales activities was affected as follows:

     For preneed sales of interment rights, the associated revenue and all costs
to acquire the sale are recognized in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 66, "Accounting for Sales of Real Estate."
Under SFAS No. 66, recognition of revenue and costs must be deferred until 10
percent of the property sale price has been collected. Previously, the revenue
and costs were recognized at the time the contract was executed with the
customer.

     For preneed sales of cemetery merchandise, primarily vaults and markers,
and preneed sales of cemetery service fees, primarily openings and closings of
burial sites and installations of markers, the associated revenue and all costs
to acquire the sale are deferred until the merchandise is delivered or the
service is performed. Previously, the revenue and costs were recognized at the
time the contract was executed with the customer.

     Cemetery merchandise trust earnings are deferred until the underlying
merchandise is delivered. Previously, the earnings were recognized as earned in
the trust.

     Accounting for preneed funeral service sales and earnings on preneed
funeral merchandise and services trust funds was not affected, as those revenues
were recognized upon delivery of funeral merchandise and services under the
Company's historical accounting methods.

     Preneed funeral merchandise sales, primarily caskets, and associated direct
selling costs, primarily commissions and direct marketing costs, are deferred
until the merchandise is delivered, at which time they will be reflected in
funeral revenue and funeral cost of sales, respectively. Previously, these sales
and associated direct costs were recognized as funeral revenue and funeral cost
of sales, respectively, when the contract was executed with the customer.

     The method of accounting for perpetual care trusts was not affected.
Earnings on those trusts continue to be recognized as they are earned in the
trusts to offset the costs of maintaining the Company's cemeteries.

     The implementation of SAB No. 101 resulted in several changes to the
Company's balance sheet including the addition of two new categories:
prearranged receivables and prearranged deferred revenue. Prearranged
receivables are related to preneed sales of funeral and cemetery merchandise and
services. Prearranged receivables represent the funds owed to the Company (1)
from preneed funeral merchandise and services trusts and from preneed cemetery
merchandise and services trusts, which represent amounts already paid by
customers, and realized earnings on those amounts, (2) from customers and (3)
from insurance companies. Prearranged deferred revenue represents the revenue
the Company will recognize upon delivery of

                                       F-8
   138
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(2) CHANGE IN ACCOUNTING PRINCIPLES -- (CONTINUED)

the preneed funeral and cemetery merchandise and services at the time of need.
The net change in prearranged receivables and prearranged deferred revenue is
recognized in the cash flow statement in the operating section as a change in
prearranged activity.

     Prior to the adoption of SAB No. 101, neither the funeral trust assets nor
the receivables related to preneed funerals were included on the balance sheet.
Receivables due from customers related to preneed cemetery merchandise and
services were previously included with other receivables on the balance sheet.
The preneed cemetery merchandise and services trust asset was previously
presented net of the liability for the estimated cost to deliver cemetery
services and merchandise.

     All direct costs to acquire the sales of preneed funeral and cemetery
merchandise and cemetery services are now included in deferred charges (asset).
Previously, these costs were expensed as incurred. Also included in deferred
charges are the costs to acquire preneed funeral service sales, which is
consistent with the Company's historical accounting methods. The cost to acquire
all preneed merchandise and service sales are included in the operating section
of the cash flow statement as prearranged acquisition costs.

     The Company filed a Form 8-K dated March 14, 2001 which describes in detail
the new accounting methods as compared to its previous accounting methods.

     The cumulative effect of these changes on prior years resulted in a
decrease in net earnings for the six months ended April 30, 2001 of $250,004
(net of a $166,669 income tax benefit), or $2.33 per share. The effect of the
change in accounting principles for the three and six months ended April 30,
2001 was an increase in net earnings of $3,148 and $6,868 respectively, or $.03
and $.06 per share, respectively. The Company corrected the application of
purchase price allocations related to certain prior period acquisitions. These
non-SAB No. 101 adjustments were immaterial to the Company's financial position
and current and prior period results.

  (b) Other Changes

     Effective November 1, 2000, the Company adopted SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities." SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities -- Deferral of the Effective
Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," are amendments to the
accounting and reporting standards of SFAS No. 133 and were adopted by the
Company concurrently with SFAS No. 133.

     SFAS No. 133 requires the Company to recognize all derivatives on the
balance sheet at fair value. The adoption of SFAS No. 133 on November 1, 2000
did not have an impact on results of operations and resulted in $4,693 being
recognized in other comprehensive income for the cumulative effect of a change
in accounting for a derivative financial instrument. The notional amounts of
derivative financial instruments do not represent amounts exchanged between
parties and, therefore, are not a measure of the Company's exposure resulting
from its use of derivatives. The amounts exchanged are calculated based upon the
notional amounts as well as other terms of the instruments, which relate to
interest rates, exchange rates or other indices.

     In order to hedge a portion of the interest rate risk associated with its
variable-rate debt, during the first quarter of 1999, the Company entered into a
three-year interest rate swap agreement involving a notional amount of $200,000.
This agreement, which became effective March 4, 1999, effectively converted
$200,000

                                       F-9
   139
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(2) CHANGE IN ACCOUNTING PRINCIPLES -- (CONTINUED)

of variable-rate debt bearing interest based on three-month LIBOR to a fixed
rate based on the swap rate of 4.915 percent.

     In accordance with SFAS No. 133, the Company accounts for the interest rate
swap as a cash flow hedge whereby the fair value of the interest rate swap is
reflected as a current liability in the accompanying consolidated balance sheet
with the offset recorded to other comprehensive income. The estimated fair value
of the interest rate swap as of April 30, 2001, based on quoted market prices,
was a loss of $816. The timing of the swap is simultaneous with the timing of
the variable interest payments. Therefore, interest expense includes amounts
related to the underlying hedged debt and to the swap in the accompanying
financial statements.

     In 2000, the Financial Accounting Standards Board ("FASB" or the "Board")
issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities -- a replacement of FASB Statement No. 125."
SFAS No. 140 is effective for transfers occurring after March 31, 2001 and for
disclosures relating to securitization transactions and collateral for fiscal
years ending after December 15, 2000. The implementation of SFAS No. 140 did not
have an impact on the Company's results of operations or financial condition for
the three and six months ended April 30, 2001.

(3) PROPOSED ACCOUNTING CHANGES

     In February 2001, the Financial Accounting Standards Board issued an
exposure draft of a proposed Statement, "Business Combinations and Intangible
Assets -- Accounting for Goodwill." If adopted, the exposure draft would
eliminate the amortization of goodwill, but would require that goodwill be
tested for impairment using a fair-value approach. Based on the current version
of the exposure draft, the Company would not be required or allowed to adopt the
provisions of the exposure draft until the first quarter of fiscal year 2002. If
the exposure draft is issued as currently proposed and on the schedule currently
contemplated, the Company estimates that it would incur a pre-tax noncash
impairment charge of between $100,000 and $300,000 for the Company's domestic
operations. However, the Company would no longer be required to amortize
goodwill, which amounted to $19,644 ($14,409 related to domestic operations) in
fiscal year 2000. Foreign operations would not be affected as they will have
been previously marked to fair value. See Note 8 -- "Subsequent
Events -- Foreign Asset Sales and Related Noncash Charges." The exposure draft
may or may not be issued as currently proposed, and any changes in its terms or
effective date, or changes in the fair value of the Company's relevant
businesses, could change the estimated impairment charge materially.

(4) ACQUISITIONS

     During the six months ended April 30, 2001, the Company had no
acquisitions, compared to four cemeteries purchased during the six months ended
April 30, 2000.

     These acquisitions have been accounted for by the purchase method, and
their results of operations are included in the accompanying consolidated
financial statements from the dates of acquisition. The purchase price
allocations for certain of these acquisitions were originally based on
preliminary information.

(5) CONTINGENCIES

     In Re Stewart Enterprises, Inc. Securities Litigation, No. 01-30035 on the
docket of the United States Court of Appeals for the Fifth Circuit. On March 9,
2001, plaintiffs in this action voluntarily withdrew their appeal, effectively
ending the litigation. The appeal related to 16 putative securities class action
lawsuits filed
                                       F-10
   140
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(5) CONTINGENCIES -- (CONTINUED)

in the United States District Court for the Eastern District of Louisiana in the
fall of 1999 against the Company, certain of its directors and officers and the
lead underwriters in the Company's January 1999 common stock offering. In
December 2000, the District Court dismissed the suits against all defendants for
failure of the plaintiffs to state a claim. On January 4, 2001, the plaintiffs
filed a notice of appeal which has now been withdrawn. The Company made no
payments to the plaintiffs in connection with the withdrawal.

     The Company and certain of its subsidiaries are parties to a number of
other legal proceedings that have arisen in the ordinary course of business.
While the outcome of these proceedings cannot be predicted with certainty,
management does not expect these matters to have a material adverse effect on
the consolidated financial position, results of operations or cash flows of the
Company.

     The Company carries insurance with coverages and coverage limits that it
believes to be adequate. Although there can be no assurance that such insurance
is sufficient to protect the Company against all contingencies, management
believes that its insurance protection is reasonable in view of the nature and
scope of the Company's operations.

(6) RECONCILIATION OF BASIC AND DILUTED PER SHARE DATA



                                                     EARNINGS        SHARES       PER SHARE
THREE MONTHS ENDED APRIL 30, 2001                   (NUMERATOR)   (DENOMINATOR)     DATA
- ---------------------------------                   -----------   -------------   ---------
                                                                         
Net earnings......................................    $16,608
                                                      =======
Basic earnings per common share:
          Earnings available to common
            shareholders..........................    $16,608        107,306        $.15
                                                                                    ====
Effect of dilutive securities:
          Time-vest stock options assumed
            exercised.............................         --             14
                                                      -------        -------
Diluted earnings per common share:
          Earnings available to common
            shareholders plus time-vest stock
            options assumed exercised.............    $16,608        107,320        $.15
                                                      =======        =======        ====




                                                     EARNINGS        SHARES       PER SHARE
THREE MONTHS ENDED APRIL 30, 2000                   (NUMERATOR)   (DENOMINATOR)     DATA
- ---------------------------------                   -----------   -------------   ---------
                                                                         
Net earnings......................................    $19,332
                                                      =======
Basic earnings per common share:
          Earnings available to common
            shareholders..........................    $19,332        106,557        $.18
                                                                                    ====
Effect of dilutive securities:
          Time-vest stock options assumed
            exercised.............................         --             39
                                                      -------        -------
Diluted earnings per common share:
          Earnings available to common
            shareholders plus time-vest stock
            options assumed exercised.............    $19,332        106,596        $.18
                                                      =======        =======        ====


                                       F-11
   141
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(6) RECONCILIATION OF BASIC AND DILUTED PER SHARE DATA -- (CONTINUED)




                                                     EARNINGS        SHARES       PER SHARE
SIX MONTHS ENDED APRIL 30, 2001                     (NUMERATOR)   (DENOMINATOR)     DATA
- -------------------------------                     -----------   -------------   ---------
                                                                         
Earnings before cumulative effect of change in
  accounting principles...........................    $33,423
                                                      =======
Basic earnings per common share:
          Earnings available to common
            shareholders..........................    $33,423        107,131        $.31
                                                                                    ====
Effect of dilutive securities:
          Time-vest stock options assumed
            exercised.............................         --              5
                                                      -------        -------
Diluted earnings per common share:
          Earnings available to common
            shareholders plus time-vest stock
            options assumed exercised.............    $33,423        107,136        $.31
                                                      =======        =======        ====




                                                     EARNINGS        SHARES       PER SHARE
SIX MONTHS ENDED APRIL 30, 2000                     (NUMERATOR)   (DENOMINATOR)     DATA
- -------------------------------                     -----------   -------------   ---------
                                                                         
Net earnings......................................    $38,173
                                                      =======
Basic earnings per common share:
          Earnings available to common
            shareholders..........................    $38,173        106,414        $.36
                                                                                    ====
Effect of dilutive securities:
          Time-vest stock options assumed
            exercised.............................         --             18
                                                      -------        -------
Diluted earnings per common share:
          Earnings available to common
            shareholders plus time-vest stock
            options assumed exercised.............    $38,173        106,432        $.36
                                                      =======        =======        ====


     Options to purchase 8,005,594 and 8,161,911 shares of common stock at
prices ranging from $4.28 to $27.25 per share and $3.44 to $27.25 per share were
outstanding during the three and six months ended April 30, 2001, respectively,
but were not included in the computation of diluted earnings per share because
the exercise prices of the options were greater than the average market price of
the common shares. The options, which expire between October 31, 2001 and April
12, 2005, were still outstanding as of April 30, 2001.

     Options to purchase 7,005,126 and 5,528,180 shares of common stock at
prices ranging from $5.50 to $27.25 per share were outstanding during the three
and six months ended April 30, 2000, respectively, but were not included in the
computation of diluted earnings per share because the exercise prices of the
options were greater than the average market price of the common shares.

                                       F-12
   142
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(7) SEGMENT DATA

     The Company's reportable segment information was as follows:



                                                                  RECONCILING   CONSOLIDATED
                                          FUNERAL     CEMETERY     ITEMS(1)        TOTALS
                                         ----------   ---------   -----------   ------------
                                                                    
Revenues from external customers:
  Three months ended April 30,
     2001..............................  $  107,958      62,981         --       $  170,939
     2000..............................  $  115,741      73,120         --       $  188,861
  Six months ended April 30,
     2001..............................  $  215,307     132,322         --       $  347,629
     2000..............................  $  238,387     143,434         --       $  381,821
Gross profit:
  Three months ended April 30,
     2001..............................  $   25,592      15,623         --       $   41,215
     2000..............................  $   30,805      18,979         --       $   49,784
  Six months ended April 30,
     2001..............................  $   50,335      33,965         --       $   84,300
     2000..............................  $   65,538      32,954         --       $   98,492
Total assets:
  April 30, 2001.......................  $2,344,182   1,263,496     70,368       $3,678,046
  October 31, 2000.....................  $1,253,754   1,145,612     76,825       $2,476,191


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

(1) Reconciling items consist of unallocated corporate assets, depreciation and
    amortization on unallocated corporate assets and additions to corporate
    long-lived assets.

     A reconciliation of total segment gross profit to total earnings before
income taxes and cumulative effect of change in accounting principles for the
three and six months ended April 30, 2001 and 2000, is as follows:



                                              THREE MONTHS ENDED     SIX MONTHS ENDED
                                                   APRIL 30,             APRIL 30,
                                              -------------------   -------------------
                                                2001       2000       2001       2000
                                              --------   --------   --------   --------
                                                                   
Gross profit for reportable segments........  $ 41,215   $ 49,784   $ 84,300   $ 98,492
Corporate general and administrative
  expenses..................................    (4,905)    (4,883)    (9,066)   (10,143)
Interest expense, net.......................   (12,504)   (14,447)   (25,783)   (29,030)
Other income (expense), net.................     2,349        (10)     3,184        796
                                              --------   --------   --------   --------
Earnings before income taxes and cumulative
  effect of change in accounting
  principles................................  $ 26,155   $ 30,444   $ 52,635   $ 60,115
                                              ========   ========   ========   ========


(8) SUBSEQUENT EVENTS

  (a) Refinancing Transactions

     On May 15, 2001, the Company commenced a tender offer for up to $200,000 of
its $300,000 publicly held senior notes as the first step in a comprehensive
plan to refinance substantially all of its long-term debt. Pursuant to that
plan, the Company also expects to refinance its $600,000 revolving credit
facility (of which $442,000 was outstanding as of May 31, 2001) and redeem all
of its privately held senior notes ($64,762 was outstanding as of May 31, 2001).

                                       F-13
   143
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(8) SUBSEQUENT EVENTS -- CONTINUED

     In order to provide the funds necessary to refinance those obligations and
pay related tender premiums, prepayment penalties, fees and expenses, the
Company plans to privately place, under Rule 144A, $300,000 in notes and to
enter into new senior secured credit facilities which are expected to consist of
a $225,000 four-year revolving credit facility, a $75,000 18-month asset sale
term loan and a $250,000 five-year term loan B. The obligations under the new
senior secured credit facilities and the new notes will be guaranteed by
substantially all of the Company's domestic subsidiaries. The obligations and
guarantees under the new senior secured credit facilities will be secured by a
substantial portion of the assets of the Company and the subsidiary guarantors.
If the refinancing transactions are completed, the publicly held senior notes
not purchased in the tender offer will be secured equally and ratably with the
new senior secured credit facilities but will not be guaranteed.

     The purpose of these transactions is primarily to improve the Company's
liquidity by retiring its $600,000 revolving credit facility, which matures on
April 30, 2002, and replacing it with the smaller revolving credit facility,
which will be due in 2005. In addition, the refinancing plan will generally
extend the maturities of the Company's other long-term debt, except for the
18-month asset sale term loan, which will provide the Company with shorter-term
financing while it pursues the sale of its foreign operations, excess cemetery
property and certain other assets. Although the Company's refinancing plan is
designed to improve the Company's liquidity, the new financing will result in
significantly higher interest costs, and the covenants to be contained in the
new credit agreement will be significantly more restrictive than the covenants
in its current credit agreement. As of April 30, 2001, the Company's weighted
average cost of debt was 6.3 percent. Upon completion of the refinancing, the
Company expects that its average borrowing cost will increase by 350 to 400
basis points. However, the effect of the rate increases may be mitigated in the
future if the Company is able to substantially reduce its total debt with the
proceeds from the sale of its foreign operations. In addition, the Company
expects to incur charges in the range of $5,000 to $6,000 after taxes in the
quarter ending July 31, 2001, relating to the early extinguishment of debt. In
connection with the refinancing transactions, the Company expects to incur
tender premiums, prepayment penalties and other fees and expenses which will
result in a cash outlay of approximately $31,000. This cash outlay has been
reflected in the expected 350 to 400 basis point increase in the Company's rates
and in the early extinguishment of debt charge previously mentioned.

     Each of the refinancing transactions will be conditioned on the completion
of the others, and none are yet the subject of definitive agreements.
Accordingly, no assurance can be given that any of the refinancing transactions
will be completed successfully.

  (b) Foreign Asset Sales and Related Noncash Charges

     The Company has decided to pursue the sale of its foreign operations. Its
financial advisors have completed their evaluation of those operations, and
except for Argentina, have submitted financial and other information to
prospective buyers and have received one or more indications of interest and/or
formal proposals for the purchase of each of the Company's foreign operations.
The sale process in Argentina will begin in the near term. The Company is now in
various stages of negotiations with prospective buyers and believes that it will
be able to dispose of all foreign operations at acceptable prices, resulting in
cash proceeds within the range of $200,000 to $250,000 including tax benefits.
Further, the Company expects these sales to be completed before the end of
fiscal year 2002. The revenues, operating earnings and EBITDA for the Company's
foreign operations in fiscal year 2000 pro forma for SAB No. 101 were $139,826
($129,676 funeral and $10,150 cemetery), $22,712 and $36,377, respectively. The
Company defines EBITDA as

                                       F-14
   144
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(8) SUBSEQUENT EVENTS -- CONTINUED

earnings before the cumulative effect of the change in accounting principles and
before gross interest expense, taxes, depreciation and amortization. The
Company's consolidated EBITDA for fiscal year 2000 was $229,378 (pro forma to
reflect the changes resulting from its implementation of SAB No. 101). After
applying all net proceeds to reduce debt, the net reduction in earnings per
share, assuming all sales are consummated, is expected to be approximately
$0.04.

     Based on its progress to date and management's and the Board of Directors'
decision to proceed with these sales if acceptable prices and terms can be
obtained, the Company will be writing down the aggregate value of these assets
to their estimated fair value. As a result, the Company estimates that it will
incur an aggregate pre-tax noncash charge to earnings of $230,000 to $250,000
($175,000 to $195,000, or $1.62 to $1.81 per share, after tax) in the quarter
ending July 31, 2001. Since the Company has already reduced shareholders' equity
for the cumulative foreign translation adjustment incurred in each period that
it has owned these businesses, the Company estimates that the total charge to
shareholders' equity will be $115,000 to $135,000 after tax, all of which will
be recorded in the quarter ending July 31, 2001.

  (c) Definitive Agreement to Sell Mexican Operations

     In accordance with the aforementioned plans, the Company announced in a
press release dated June 4, 2001, that it has entered into a definitive
agreement to sell its operations in Mexico. The net proceeds from the sale will
be approximately US$70,000 before taxes, which will be used to pay down
outstanding debt. The Company expects to recognize a small gain or loss on that
sale, although the exact amount will depend on the exchange rate of the Mexican
peso and the U.S. dollar at the time of closing. The transaction is scheduled to
close on or about July 31, 2001, and is subject to customary closing conditions
and a 45-day antitrust review period under Mexican antitrust laws. The revenues,
operating earnings and EBITDA for the Company's Mexican operations in fiscal
year 2000 pro forma for SAB No. 101 were $22,774, $10,145 and $12,723,
respectively.

  (d) Other Noncash Charges

     In addition to its foreign operations, the Company has identified certain
assets, primarily excess cemetery property and funeral home real estate, that it
expects to sell. In addition, it has reviewed noncompetition agreements that it
entered into with sellers, key employees and others in connection with previous
acquisitions, and it is considering relieving some of these individuals from the
obligation not to compete, although it would continue to make the payments in
accordance with the contract terms. This obligation, which the Company
previously recorded, will be included in other long-term liabilities on the
balance sheet. As a result of the foregoing, the Company estimates that it would
incur an aggregate pre-tax noncash charge to earnings of $15,000 to $30,000
($9,000 to $18,000, or $.08 to $.17 per share, after tax) in the quarter ending
July 31, 2001.

(9) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
SUBORDINATED NOTES

     The following presents the condensed consolidating historical financial
statements as of April 30, 2001 and October 31, 2000 and for the three months
and six months ended April 30, 2001, for the direct and indirect domestic
subsidiaries of the Company that are anticipated to serve as guarantors of the
Senior Subordinated Notes, and the financial results of the Company's
subsidiaries that are not anticipated to serve as guarantors.

                                       F-15
   145
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
    SUBORDINATED NOTES -- CONTINUED

 CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND OTHER COMPREHENSIVE INCOME



                                                     THREE MONTHS ENDED APRIL 30, 2001
                                    --------------------------------------------------------------------
                                               GUARANTOR     NON-GUARANTOR
                                    PARENT    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                    -------   ------------   -------------   ------------   ------------
                                                                             
Revenues:
  Funeral.........................  $    --     $ 73,586       $ 34,372        $    --        $107,958
  Cemetery........................       --       53,807          9,174             --          62,981
                                    -------     --------       --------        -------        --------
                                         --      127,393         43,546             --         170,939
                                    -------     --------       --------        -------        --------
Costs and expenses:
  Funeral.........................       --       55,388         26,978             --          82,366
  Cemetery........................       --       39,379          7,949             30          47,358
                                    -------     --------       --------        -------        --------
                                         --       94,767         34,927             30         129,724
                                    -------     --------       --------        -------        --------
  Gross profit....................       --       32,626          8,619            (30)         41,215
Corporate general and
  administrative expenses.........    5,072         (159)            (2)            (6)          4,905
                                    -------     --------       --------        -------        --------
  Operating earnings (loss).......   (5,072)      32,785          8,621            (24)         36,310
Interest income (expense), net....   20,137      (22,221)       (11,987)         1,567         (12,504)
Other income, net.................      600        2,103          1,213         (1,567)          2,349
                                    -------     --------       --------        -------        --------
  Earnings (loss) before income
     taxes........................   15,665       12,667         (2,153)           (24)         26,155
Income taxes......................    5,717        4,458           (618)           (10)          9,547
                                    -------     --------       --------        -------        --------
  Net earnings (loss) before
     equity in subsidiaries.......    9,948        8,209         (1,535)           (14)         16,608
                                    -------     --------       --------        -------        --------
Equity in subsidiaries............    6,660           --             --         (6,660)             --
                                    -------     --------       --------        -------        --------
  Net earnings (loss).............   16,608        8,209         (1,535)        (6,674)         16,608
  Other comprehensive income,
     net..........................     (816)      (1,079)        (7,032)            --          (8,927)
                                    -------     --------       --------        -------        --------
  Comprehensive income (loss).....  $15,792     $  7,130       $ (8,567)       $(6,674)       $  7,681
                                    =======     ========       ========        =======        ========


                                       F-16
   146
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
    SUBORDINATED NOTES -- CONTINUED

 CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND OTHER COMPREHENSIVE INCOME



                                                     THREE MONTHS ENDED APRIL 30, 2000
                                    --------------------------------------------------------------------
                                               GUARANTOR     NON-GUARANTOR
                                    PARENT    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                    -------   ------------   -------------   ------------   ------------
                                                                             
Revenues:
  Funeral.........................  $    --     $ 70,911       $ 44,830        $     --       $115,741
  Cemetery........................       --       64,166          8,954              --         73,120
                                    -------     --------       --------        --------       --------
                                         --      135,077         53,784              --        188,861
                                    -------     --------       --------        --------       --------
Costs and expenses:
  Funeral.........................       --       52,944         31,992              --         84,936
  Cemetery........................       --       46,197          7,938               6         54,141
                                    -------     --------       --------        --------       --------
                                         --       99,141         39,930               6        139,077
                                    -------     --------       --------        --------       --------
  Gross profit....................       --       35,936         13,854              (6)        49,784
Corporate general and
  administrative expenses.........    4,837           46             --              --          4,883
                                    -------     --------       --------        --------       --------
  Operating earnings (loss).......   (4,837)      35,890         13,854              (6)        44,901
Interest income (expense), net....   14,487      (20,217)        (9,487)            770        (14,447)
Other income (loss), net..........     (335)         966            129            (770)           (10)
                                    -------     --------       --------        --------       --------
  Earnings before income taxes....    9,315       16,639          4,496              (6)        30,444
Income taxes......................    3,400        6,073          1,641              (2)        11,112
                                    -------     --------       --------        --------       --------
  Net earnings before equity in
     subsidiaries.................    5,915       10,566          2,855              (4)        19,332
                                    -------     --------       --------        --------       --------
Equity in subsidiaries............   13,417           --             --         (13,417)            --
                                    -------     --------       --------        --------       --------
  Net earnings....................   19,332       10,566          2,855         (13,421)        19,332
  Other comprehensive income,
     net..........................       --       (2,161)       (12,884)             --        (15,045)
                                    -------     --------       --------        --------       --------
  Comprehensive income (loss).....  $19,332     $  8,405       $(10,029)       $(13,421)      $  4,287
                                    =======     ========       ========        ========       ========


                                       F-17
   147
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
    SUBORDINATED NOTES -- CONTINUED

 CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND OTHER COMPREHENSIVE INCOME



                                                         SIX MONTHS ENDED APRIL 30, 2001
                                     -----------------------------------------------------------------------
                                                   GUARANTOR     NON-GUARANTOR
                                      PARENT      SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                     ---------    ------------   -------------   ------------   ------------
                                                                                 
Revenues:
  Funeral..........................  $      --     $ 145,107       $ 70,200        $     --      $ 215,307
  Cemetery.........................         --       115,994         16,328              --        132,322
                                     ---------     ---------       --------        --------      ---------
                                            --       261,101         86,528              --        347,629
                                     ---------     ---------       --------        --------      ---------
Costs and expenses:
  Funeral..........................         --       110,282         54,690              --        164,972
  Cemetery.........................         --        82,865         15,480              12         98,357
                                     ---------     ---------       --------        --------      ---------
                                            --       193,147         70,170              12        263,329
                                     ---------     ---------       --------        --------      ---------
  Gross profit.....................         --        67,954         16,358             (12)        84,300
Corporate general and
  administrative expenses..........      9,345          (279)            --              --          9,066
                                     ---------     ---------       --------        --------      ---------
  Operating earnings (loss)........     (9,345)       68,233         16,358             (12)        75,234
Interest income (expense), net.....     40,557       (46,039)       (23,939)          3,638        (25,783)
Other income, net..................      1,731         2,707          2,384          (3,638)         3,184
                                     ---------     ---------       --------        --------      ---------
  Earnings (loss) before income
     taxes and cumulative effect of
     change in accounting
     principles....................     32,943        24,901         (5,197)            (12)        52,635
Income taxes.......................     12,024         9,089         (1,897)             (4)        19,212
                                     ---------     ---------       --------        --------      ---------
  Earnings (loss) before cumulative
     effect of change in accounting
     principles....................     20,919        15,812         (3,300)             (8)        33,423
Cumulative effect of change in
  accounting principles............         --      (234,016)       (15,988)             --       (250,004)
                                     ---------     ---------       --------        --------      ---------
  Net earnings (loss) before equity
     in subsidiaries...............     20,919      (218,204)       (19,288)             (8)      (216,581)
                                     ---------     ---------       --------        --------      ---------
Equity in subsidiaries.............   (237,500)           --             --         237,500             --
                                     ---------     ---------       --------        --------      ---------
  Net loss.........................   (216,581)     (218,204)       (19,288)        237,492       (216,581)
  Other comprehensive income,
     net...........................        386         7,437          5,154              --         12,977
                                     ---------     ---------       --------        --------      ---------
  Comprehensive loss...............  $(216,195)    $(210,767)      $(14,134)       $237,492      $(203,604)
                                     =========     =========       ========        ========      =========


                                       F-18
   148
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
    SUBORDINATED NOTES -- CONTINUED

 CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND OTHER COMPREHENSIVE INCOME



                                                       SIX MONTHS ENDED APRIL 30, 2000
                                    ---------------------------------------------------------------------
                                                GUARANTOR     NON-GUARANTOR
                                     PARENT    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                    --------   ------------   -------------   ------------   ------------
                                                                              
Revenues:
  Funeral.........................  $     --     $151,282       $ 87,105        $     --       $238,387
  Cemetery........................        --      125,408         18,026              --        143,434
                                    --------     --------       --------        --------       --------
                                          --      276,690        105,131              --        381,821
                                    --------     --------       --------        --------       --------
Costs and expenses:
  Funeral.........................        --      107,097         65,752              --        172,849
  Cemetery........................        --       93,840         16,628              12        110,480
                                    --------     --------       --------        --------       --------
                                          --      200,937         82,380              12        283,329
                                    --------     --------       --------        --------       --------
  Gross profit....................        --       75,753         22,751             (12)        98,492
Corporate general and
  administrative expenses.........    10,039          104             --              --         10,143
                                    --------     --------       --------        --------       --------
  Operating earnings (loss).......   (10,039)      75,649         22,751             (12)        88,349
Interest income (expense), net....    29,664      (40,768)       (19,016)          1,090        (29,030)
Other income (loss), net..........      (158)       1,528            516          (1,090)           796
                                    --------     --------       --------        --------       --------
  Earnings before income taxes....    19,467       36,409          4,251             (12)        60,115
Income taxes......................     7,105       13,289          1,552              (4)        21,942
                                    --------     --------       --------        --------       --------
  Net earnings before equity in
     subsidiaries.................    12,362       23,120          2,699              (8)        38,173
                                    --------     --------       --------        --------       --------
Equity in subsidiaries............    25,811           --             --         (25,811)            --
                                    --------     --------       --------        --------       --------
  Net earnings....................    38,173       23,120          2,699         (25,819)        38,173
  Other comprehensive income,
     net..........................        --       (3,392)       (18,077)             --        (21,469)
                                    --------     --------       --------        --------       --------
  Comprehensive income (loss).....  $ 38,173     $ 19,728       $(15,378)       $(25,819)      $ 16,704
                                    ========     ========       ========        ========       ========


                                       F-19
   149
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
    SUBORDINATED NOTES -- CONTINUED

                     CONDENSED CONSOLIDATING BALANCE SHEETS



                                                                  APRIL 30, 2001
                                     ------------------------------------------------------------------------
                                                    GUARANTOR     NON-GUARANTOR
                                       PARENT      SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                     -----------   ------------   -------------   ------------   ------------
                                                                                  
ASSETS


Current assets:
  Cash and cash equivalent
     investments...................  $    65,997    $   (1,960)     $  39,684       $     --      $  103,721
  Marketable securities............        2,797        (1,549)         1,840             --           3,088
  Receivables, net of allowances...        1,181        53,521         38,123             --          92,825
  Inventories......................          369        38,741         13,628             --          52,738
  Prepaid expenses.................        1,893         1,543          2,182             --           5,618
                                     -----------    ----------      ---------       --------      ----------
     Total current assets..........       72,237        90,296         95,457             --         257,990
Receivables due beyond one year,
  net of allowances................           --        61,680         26,409             --          88,089
Prearranged receivables............           --     1,263,872        130,166             --       1,394,038
Intangible assets..................          147       474,135        209,332             --         683,614
Deferred charges...................        1,869       240,511         23,586             --         265,966
Cemetery property, at cost.........           --       381,754         56,910            107         438,771
Property and equipment, at cost....       26,325       429,498        147,004             96         602,923
Less accumulated depreciation......        8,618       122,749         28,313             39         159,719
                                     -----------    ----------      ---------       --------      ----------
Net property and equipment.........       17,707       306,749        118,691             57         443,204
Deferred income taxes..............         (133)       96,472             --             --          96,339
Investment in subsidiaries.........       86,421            --             --        (86,421)             --
Other assets.......................        1,802         1,322          6,911             --          10,035
                                     -----------    ----------      ---------       --------      ----------
                                     $   180,050    $2,916,791      $ 667,462       $(86,257)     $3,678,046
                                     ===========    ==========      =========       ========      ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term
     debt..........................  $   501,150    $       --      $      --       $     --      $  501,150
  Accounts payable.................          345           798         13,367             29          14,539
  Accrued expenses.................       13,950        42,341          9,601             --          65,892
  Income taxes payable.............         (797)        2,194          7,044         (1,760)          6,681
  Deferred income taxes............         (307)       14,817          2,597            268          17,375
                                     -----------    ----------      ---------       --------      ----------
     Total current liabilities.....      514,341        60,150         32,609         (1,463)        605,637
Long-term debt, less current
  maturities.......................      288,765          (549)        77,007             --         365,223
Intercompany payables, net.........   (1,600,084)    1,126,088        489,520        (15,524)             --
Deferred income taxes..............        4,160        (2,226)        (1,326)          (608)             --
Prearranged deferred revenue.......          500     1,652,886        167,020             --       1,820,406
Other long-term liabilities........           --         6,433          7,265            152          13,850
                                     -----------    ----------      ---------       --------      ----------
     Total liabilities.............     (792,318)    2,842,782        772,095        (17,443)      2,805,116
                                     -----------    ----------      ---------       --------      ----------
Common stock.......................      107,520           336             53           (389)        107,520
Other..............................      865,664        74,712         (6,287)       (68,425)        865,664
Accumulated other comprehensive
  loss.............................         (816)       (1,039)       (98,399)            --        (100,254)
                                     -----------    ----------      ---------       --------      ----------
     Total shareholders' equity....      972,368        74,009       (104,633)       (68,814)        872,930
                                     -----------    ----------      ---------       --------      ----------
                                     $   180,050    $2,916,791      $ 667,462       $(86,257)     $3,678,046
                                     ===========    ==========      =========       ========      ==========


                                       F-20
   150
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
    SUBORDINATED NOTES -- CONTINUED

                     CONDENSED CONSOLIDATING BALANCE SHEETS



                                                                 OCTOBER 31, 2000
                                     ------------------------------------------------------------------------
                                                    GUARANTOR     NON-GUARANTOR
                                       PARENT      SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                     -----------   ------------   -------------   ------------   ------------
                                                                                  
ASSETS


Current assets:
  Cash and cash equivalent
     investments...................  $    59,862    $     (299)     $  32,032      $      --      $   91,595
  Marketable securities............        5,356           190          1,727             --           7,273
  Receivables, net of allowances...        1,004       122,232         54,238             --         177,474
  Inventories......................          383        44,467         15,799             --          60,649
  Prepaid expenses.................          769         1,941          1,353             --           4,063
                                     -----------    ----------      ---------      ---------      ----------
     Total current assets..........       67,374       168,531        105,149             --         341,054
Receivables due beyond one year,
  net of allowances................           --       152,093         64,980             --         217,073
Intangible assets..................          191       457,088        211,183             --         668,462
Deferred charges...................        2,007       108,792         15,359             --         126,158
Cemetery property, at cost.........           --       377,898         63,748             --         441,646
Property and equipment, at cost....       24,768       422,609        145,675             96         593,148
Less accumulated depreciation......        6,924       113,325         24,900             70         145,219
                                     -----------    ----------      ---------      ---------      ----------
Net property and equipment.........       17,844       309,284        120,775             26         447,929
Merchandise trust, less estimated
  cost to deliver..................           --       112,732        (26,763)            --          85,969
Investment in subsidiaries.........      323,921            --             --       (323,921)             --
Other assets.......................        1,505         1,785          5,427             --           8,717
                                     -----------    ----------      ---------      ---------      ----------
                                     $   412,842    $1,688,203      $ 559,858      $(323,895)     $2,337,008
                                     ===========    ==========      =========      =========      ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term
     debt..........................  $    29,857    $       --      $      --      $      --      $   29,857
  Accounts payable.................          299         3,988         16,026             29          20,342
  Accrued expenses.................       14,572        43,409         11,181           (136)         69,026
  Income taxes payable.............      (13,796)        3,448         12,031         (1,683)             --
  Deferred income taxes............         (307)       14,695          2,425         (1,562)         15,251
                                     -----------    ----------      ---------      ---------      ----------
     Total current liabilities.....       30,625        65,540         41,663         (3,352)        134,476
Long-term debt, less current
  maturities.......................      836,385            --         84,285             --         920,670
Intercompany payables, net.........   (1,654,754)    1,194,997        473,017        (13,260)             --
Deferred income taxes..............       13,400        71,857           (276)        (1,241)         83,740
Deferred revenue...................          500        64,664         43,580             --         108,744
Other long-term liabilities........           --         6,481          8,088            152          14,721
                                     -----------    ----------      ---------      ---------      ----------
     Total liabilities.............     (773,844)    1,403,539        650,357        (17,701)      1,262,351
                                     -----------    ----------      ---------      ---------      ----------
Common stock.......................      106,832           224             53           (277)        106,832
Other..............................    1,081,056       292,916         13,001       (305,917)      1,081,056
Accumulated other comprehensive
  loss.............................       (1,202)       (8,476)      (103,553)            --        (113,231)
                                     -----------    ----------      ---------      ---------      ----------
     Total shareholders' equity....    1,186,686       284,664        (90,499)      (306,194)      1,074,657
                                     -----------    ----------      ---------      ---------      ----------
                                     $   412,842    $1,688,203      $ 559,858      $(323,895)     $2,337,008
                                     ===========    ==========      =========      =========      ==========


                                       F-21
   151
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
    SUBORDINATED NOTES -- CONTINUED

                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



                                                       SIX MONTHS ENDED APRIL 30, 2001
                                    ---------------------------------------------------------------------
                                                GUARANTOR     NON-GUARANTOR
                                     PARENT    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                    --------   ------------   -------------   ------------   ------------
                                                                              
Net cash provided by (used in)
  operating activities............  $ 27,185     $ 29,174        $(1,331)       $ 2,264        $ 57,292
                                    --------     --------        -------        -------        --------
Cash flows from investing
  activities:
  Proceeds from sales of
     marketable securities........        --        4,474             --             --           4,474
  Purchases of marketable
     securities and long-term
     investments..................        --           --           (511)            --            (511)
  Proceeds from sale of
     subsidiaries.................        --        2,881             --             --           2,881
  Additions to property and
     equipment....................        --       (9,900)        (1,346)            --         (11,246)
  Other...........................        --          619            608             --           1,227
                                    --------     --------        -------        -------        --------
     Net cash used in investing
       activities.................        --       (1,926)        (1,249)            --          (3,175)
                                    --------     --------        -------        -------        --------
Cash flows from financing
  activities:
  Funeral trust withdrawal........        --       40,000             --             --          40,000
  Repayments of long-term debt....   (76,330)          --         (7,153)            --         (83,483)
  Intercompany receivables
     (payables)...................    54,670      (68,909)        16,503         (2,264)             --
  Issuance of common stock........       610           --             --             --             610
                                    --------     --------        -------        -------        --------
     Net cash provided by (used
       in) financing activities...   (21,050)     (28,909)         9,350         (2,264)        (42,873)
                                    --------     --------        -------        -------        --------
Effect of exchange rates on cash
  and cash equivalents............        --           --            882             --             882
                                    --------     --------        -------        -------        --------
Net increase (decrease) in cash...     6,135       (1,661)         7,652             --          12,126
Cash and cash equivalents,
  beginning of period.............    59,862         (299)        32,032             --          91,595
                                    --------     --------        -------        -------        --------
Cash and cash equivalents, end of
  period..........................  $ 65,997     $ (1,960)       $39,684        $    --        $103,721
                                    ========     ========        =======        =======        ========


                                       F-22
   152
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
    SUBORDINATED NOTES -- CONTINUED

                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



                                                      SIX MONTHS ENDED APRIL 30, 2000
                                    --------------------------------------------------------------------
                                               GUARANTOR     NON-GUARANTOR
                                    PARENT    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                    -------   ------------   -------------   ------------   ------------
                                                                             
Net cash provided by (used in)
  operating activities............  $22,759     $ 28,485       $(14,640)       $ 1,838        $ 38,442
                                    -------     --------       --------        -------        --------
Cash flows from investing
  activities:
  Proceeds from sales of
     marketable securities........       --       45,358            458             --          45,816
  Purchases of marketable
     securities and long-term
     investments..................       --       (7,821)        (5,125)            --         (12,946)
  Additions to property and
     equipment....................   (1,610)     (20,034)        (1,983)            --         (23,627)
  Other...........................       --        1,083            125             --           1,208
                                    -------     --------       --------        -------        --------
     Net cash provided by (used
       in) investing activities...   (1,610)      18,586         (6,525)            --          10,451
                                    -------     --------       --------        -------        --------
Cash flows from financing
  activities:
  Proceeds from long-term debt....    8,366           --             --             --           8,366
  Repayments of long-term debt....   (8,880)          --           (694)            --          (9,574)
  Intercompany receivables
     (payables)...................   19,043      (45,613)        28,408         (1,838)             --
  Issuance of common stock........    1,923           --             --             --           1,923
  Dividends.......................   (4,261)          --             --             --          (4,261)
                                    -------     --------       --------        -------        --------
     Net cash provided by (used
       in) financing activities...   16,191      (45,613)        27,714         (1,838)         (3,546)
                                    -------     --------       --------        -------        --------
Effect of exchange rates on cash
  and cash equivalents............       --           --         (2,050)            --          (2,050)
                                    -------     --------       --------        -------        --------
Net increase in cash..............   37,340        1,458          4,499             --          43,297
Cash and cash equivalents,
  beginning of period.............   11,689        1,649         17,539             --          30,877
                                    -------     --------       --------        -------        --------
Cash and cash equivalents, end of
  period..........................  $49,029     $  3,107       $ 22,038        $    --        $ 74,174
                                    =======     ========       ========        =======        ========


                                       F-23
   153

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of Stewart Enterprises, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, shareholders' equity and cash flows present
fairly, in all material respects, the financial position of Stewart Enterprises,
Inc. and Subsidiaries at October 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
October 31, 2000, in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As described in Note 3 to the financial statements, the Company changed its
method of accounting for funeral services investment trust fund earnings in
1999.

PricewaterhouseCoopers LLP

New Orleans, Louisiana
December 12, 2000, except for
Note 19 as to which the date is
January 9, 2001

                                       F-24
   154

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF EARNINGS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                  YEAR ENDED OCTOBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                           
Revenues:
  Funeral...................................................  $451,852   $445,877   $379,095
  Cemetery..................................................   282,949    310,231    269,270
                                                              --------   --------   --------
                                                               734,801    756,108    648,365
                                                              --------   --------   --------
Costs and expenses:
  Funeral...................................................   335,163    319,002    260,669
  Cemetery..................................................   220,598    226,705    191,712
                                                              --------   --------   --------
                                                               555,761    545,707    452,381
                                                              --------   --------   --------
  Gross profit..............................................   179,040    210,401    195,984
Corporate general and administrative expenses...............    19,763     19,161     16,621
                                                              --------   --------   --------
  Operating earnings before performance-based stock
     options................................................   159,277    191,240    179,363
Performance-based stock options.............................        --         --     76,762
                                                              --------   --------   --------
  Operating earnings........................................   159,277    191,240    102,601
Interest expense, net.......................................   (56,284)   (52,174)   (41,792)
Other income, net...........................................     2,194      3,485      4,155
                                                              --------   --------   --------
  Earnings before income taxes and cumulative effect of
     change in accounting principle.........................   105,187    142,551     64,964
Income taxes................................................    38,393     52,031     23,062
                                                              --------   --------   --------
  Earnings before cumulative effect of change in accounting
     principle..............................................    66,794     90,520     41,902
Cumulative effect of change in accounting principle (net of
  $28,798 income tax benefit in 1999) (Note 3)..............        --    (50,101)        --
                                                              --------   --------   --------
  Net earnings..............................................  $ 66,794   $ 40,419   $ 41,902
                                                              ========   ========   ========
Basic earnings per common share:
  Earnings before cumulative effect of change in accounting
     principle..............................................  $    .63   $    .84   $    .43
  Cumulative effect of change in accounting principle.......        --       (.47)        --
                                                              --------   --------   --------
  Net earnings..............................................  $    .63   $    .37   $    .43
                                                              ========   ========   ========
Diluted earnings per common share:
  Earnings before cumulative effect of change in accounting
     principle..............................................  $    .63   $    .84   $    .43
  Cumulative effect of change in accounting principle.......        --       (.47)        --
                                                              --------   --------   --------
  Net earnings..............................................  $    .63   $    .37   $    .43
                                                              ========   ========   ========
Weighted average common shares outstanding (in thousands):
  Basic.....................................................   106,600    107,452     97,691
                                                              ========   ========   ========
  Diluted...................................................   106,603    107,834     98,444
                                                              ========   ========   ========
Pro forma amounts assuming change in accounting principle
  was applied retroactively:
     Net earnings...........................................                        $ 33,199
                                                                                    ========
     Basic earnings per common share........................                        $    .34
                                                                                    ========
     Diluted earnings per common share......................                        $    .34
                                                                                    ========


          See accompanying notes to consolidated financial statements.
                                       F-25
   155

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                    OCTOBER 31,
                                                              -----------------------
                                                                 2000         1999
                                                              ----------   ----------
                                                                     
                                       ASSETS
Current assets:
  Cash and cash equivalent investments......................  $   91,595   $   30,877
  Marketable securities.....................................       7,273       46,549
  Receivables, net of allowances............................     177,474      176,215
  Inventories...............................................      60,649       51,431
  Prepaid expenses..........................................       4,063        5,997
                                                              ----------   ----------
        Total current assets................................     341,054      311,069
Receivables due beyond one year, net of allowances..........     217,073      237,578
Intangible assets...........................................     668,462      673,361
Deferred charges............................................     126,158      109,436
Cemetery property, at cost..................................     441,646      424,032
Property and equipment, at cost:
  Land......................................................      78,736       83,237
  Buildings.................................................     353,189      329,721
  Equipment and other.......................................     161,223      158,722
                                                              ----------   ----------
                                                                 593,148      571,680
  Less accumulated depreciation.............................     145,219      124,635
                                                              ----------   ----------
  Net property and equipment................................     447,929      447,045
Long-term investments.......................................       4,203       16,812
Merchandise trust, less estimated cost to deliver...........      85,969       58,999
Other assets................................................       4,514        5,548
                                                              ----------   ----------
                                                              $2,337,008   $2,283,880
                                                              ==========   ==========

                        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt......................  $   29,857   $   12,582
  Accounts payable..........................................      20,342       21,802
  Accrued payroll...........................................      17,433       21,784
  Accrued insurance.........................................      16,470       11,535
  Accrued interest..........................................      13,039       16,757
  Accrued other.............................................      22,084       26,328
  Income taxes payable......................................          --        5,495
  Deferred income taxes.....................................      15,251       17,193
                                                              ----------   ----------
    Total current liabilities...............................     134,476      133,476
Long-term debt, less current maturities.....................     920,670      938,831
Deferred income taxes.......................................      83,740       81,434
Deferred revenue............................................     108,744       64,961
Other long-term liabilities.................................      14,721        8,566
                                                              ----------   ----------
    Total liabilities.......................................   1,262,351    1,227,268
                                                              ----------   ----------
Commitments and contingencies (Note 16)
Shareholders' equity:
  Preferred stock, $1.00 par value, 5,000,000 shares
    authorized; no shares issued............................          --           --
  Common stock, $1.00 stated value:
    Class A authorized 150,000,000 shares; issued and
     outstanding 103,277,329 and 102,664,572 shares at
     October 31, 2000 and 1999, respectively................     103,277      102,664
    Class B authorized 5,000,000 shares; issued and
     outstanding 3,555,020 shares at October 31, 2000 and
     1999; 10 votes per share; convertible into an equal
     number of Class A shares...............................       3,555        3,555
  Additional paid-in capital................................     673,658      671,891
  Retained earnings.........................................     407,398      347,002
  Cumulative foreign translation adjustment.................    (103,553)     (65,152)
  Unrealized depreciation of investments....................      (9,678)      (3,348)
                                                              ----------   ----------
    Total shareholders' equity..............................   1,074,657    1,056,612
                                                              ----------   ----------
                                                              $2,337,008   $2,283,880
                                                              ==========   ==========


          See accompanying notes to consolidated financial statements.
                                       F-26
   156

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                                                     UNREALIZED
                                     COMMON STOCK                                    CUMULATIVE     APPRECIATION
                             -----------------------------   ADDITIONAL                FOREIGN     (DEPRECIATION)       TOTAL
                                 SHARES --                    PAID-IN     RETAINED   TRANSLATION         OF         SHAREHOLDERS'
                              CLASSES A AND B      AMOUNT     CAPITAL     EARNINGS   ADJUSTMENT     INVESTMENTS        EQUITY
                             ------------------   --------   ----------   --------   -----------   --------------   -------------
                               (IN THOUSANDS)
                                                                                               
Balance October 31, 1997...        97,363(2)      $ 97,363    $477,499    $279,104    $ (36,609)      $  2,213       $  819,570
Comprehensive income:
  Net earnings.............                                                 41,902                                       41,902
  Other comprehensive
    income:
    Foreign translation
      adjustment...........                                                             (28,278)                        (28,278)
    Unrealized depreciation
      of investments.......                                                                             (5,242)          (5,242)
    Deferred income tax
      benefit on unrealized
      depreciation of
      investments..........                                                                              1,861            1,861
                                  -------         --------    --------    --------    ---------       --------       ----------
    Total other
      comprehensive
      income...............                                                             (28,278)        (3,381)         (31,659)
                                  -------         --------    --------    --------    ---------       --------       ----------
Total comprehensive
  income...................                                                 41,902      (28,278)        (3,381)          10,243

Issuance of common stock...            68               68       1,320                                                    1,388
Subsidiaries acquired with
  common stock.............           294              294       7,411                                                    7,705
Stock options exercised....           637              637      14,714                                                   15,351
Purchase and retirement of
  common stock.............          (334)            (334)     (8,767)                                                  (9,101)
Dividends ($.06 per
  share)(1)................                                                 (5,866)                                      (5,866)
                                  -------         --------    --------    --------    ---------       --------       ----------
Balance October 31, 1998...        98,028(2)      $ 98,028    $492,177    $315,140    $ (64,887)      $ (1,168)      $  839,290
                                  =======         ========    ========    ========    =========       ========       ==========

Comprehensive income:
  Net earnings.............                                                 40,419                                       40,419
Other comprehensive income:
    Foreign translation
      adjustment...........                                                                (265)                           (265)
    Unrealized depreciation
      of investments.......                                                                             (3,433)          (3,433)
    Deferred income tax
      benefit on unrealized
      depreciation of
      investments..........                                                                              1,253            1,253
                                  -------         --------    --------    --------    ---------       --------       ----------
    Total other
      comprehensive
      income...............                                                                (265)        (2,180)          (2,445)
                                  -------         --------    --------    --------    ---------       --------       ----------
Total comprehensive
  income...................                                                 40,419         (265)        (2,180)          37,974

Sales and issuance of
  common stock.............        13,741           13,741     206,713                                                  220,454
Subsidiaries acquired with
  common stock.............            19               19         281                                                      300
Stock options exercised....            11               11          91                                                      102
Purchase and retirement of
  common stock.............        (5,580)          (5,580)    (27,371)                                                 (32,951)
Dividends ($.08 per
  share)...................                                                 (8,557)                                      (8,557)
                                  -------         --------    --------    --------    ---------       --------       ----------
Balance October 31, 1999...       106,219(2)      $106,219    $671,891    $347,002    $ (65,152)      $ (3,348)      $1,056,612
                                  =======         ========    ========    ========    =========       ========       ==========


                                                                     (continued)
                                       F-27
   157
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                                                     UNREALIZED
                                     COMMON STOCK                                    CUMULATIVE     APPRECIATION
                             -----------------------------   ADDITIONAL                FOREIGN     (DEPRECIATION)       TOTAL
                                 SHARES --                    PAID-IN     RETAINED   TRANSLATION         OF         SHAREHOLDERS'
                              CLASSES A AND B      AMOUNT     CAPITAL     EARNINGS   ADJUSTMENT     INVESTMENTS        EQUITY
                             ------------------   --------   ----------   --------   -----------   --------------   -------------
                               (IN THOUSANDS)
                                                                                               
Balance October 31, 1999...       106,219(2)      $106,219    $671,891    $347,002    $ (65,152)      $ (3,348)      $1,056,612
Comprehensive income:
  Net earnings.............                                                 66,794                                       66,794
  Other comprehensive
    income:
    Foreign translation
      adjustment...........                                                             (38,401)                        (38,401)
    Unrealized depreciation
      of investments.......                                                                             (9,969)          (9,969)
    Deferred income tax
      benefit on unrealized
      depreciation of
      investments..........                                                                              3,639            3,639
                                  -------         --------    --------    --------    ---------       --------       ----------
    Total other
      comprehensive
      income...............                                                             (38,401)        (6,330)         (44,731)
                                  -------         --------    --------    --------    ---------       --------       ----------
Total comprehensive
  income...................                                                 66,794      (38,401)        (6,330)          22,063

Issuance of common stock...           613              613       1,767                                                    2,380
Dividends ($.06 per
  share)...................                                                 (6,398)                                      (6,398)
                                  -------         --------    --------    --------    ---------       --------       ----------
Balance October 31, 2000...       106,832(2)      $106,832    $673,658    $407,398    $(103,553)      $ (9,678)      $1,074,657
                                  =======         ========    ========    ========    =========       ========       ==========


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

(1) Share and per share information has been adjusted to give effect to a
    two-for-one common stock split effective April 24, 1998.

(2) Includes 3,555 shares (in thousands) of Class B common stock.

          See accompanying notes to consolidated financial statements.

                                       F-28
   158

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                   YEAR ENDED OCTOBER 31,
                                                              --------------------------------
                                                                2000       1999        1998
                                                              --------   ---------   ---------
                                                                            
Cash flows from operating activities:
  Net earnings..............................................  $ 66,794   $  40,419   $  41,902
  Adjustments to reconcile net earnings to net cash provided
    by operating activities:
    Performance-based stock options.........................        --          --      76,762
    Depreciation and amortization...........................    54,267      50,620      38,742
    Provision for doubtful accounts.........................    35,877      33,914      28,325
    Cumulative effect of change in accounting principle.....        --      50,101          --
    Net gains on sales of marketable securities.............    (1,079)     (4,221)     (2,727)
    Provision for deferred income taxes.....................     9,001      11,139         532
    Changes in assets and liabilities, net of effects from
      acquisitions:
      Increase in prearranged funeral trust receivables.....        --          --      (8,252)
      Increase in other receivables.........................   (20,897)   (108,610)    (90,997)
      Increase in deferred charges and intangible assets....    (6,064)     (7,987)    (11,306)
      Increase in inventories and cemetery property.........   (16,336)    (18,831)    (15,343)
      Increase (decrease) in accounts payable and accrued
         expenses...........................................    (6,751)        683       6,517
      Increase in merchandise trust, less estimated cost to
         deliver merchandise................................   (31,541)    (28,761)    (20,641)
      Changes in prearranged funeral activity, net..........   (17,687)    (10,807)    (24,026)
      Increase (decrease) in other..........................     3,967      (2,041)      2,916
                                                              --------   ---------   ---------
    Net cash provided by operating activities...............    69,551       5,618      22,404
                                                              --------   ---------   ---------
Cash flows from investing activities:
  Proceeds from sale of marketable securities...............    65,100      42,240      19,039
  Purchases of marketable securities and long-term
    investments.............................................   (13,771)    (26,185)    (30,438)
  Purchases of subsidiaries, net of cash, seller financing
    and stock issued........................................      (804)   (162,032)   (223,414)
  Additions to property and equipment.......................   (36,017)    (54,883)    (44,805)
  Other.....................................................     1,326       3,111           2
                                                              --------   ---------   ---------
    Net cash provided by (used in) investing activities.....    15,834    (197,749)   (279,616)
                                                              --------   ---------   ---------
Cash flows from financing activities:
  Proceeds from long-term debt..............................     8,366     247,579     602,782
  Repayments of long-term debt..............................   (23,150)   (232,775)   (270,682)
  Retirement of performance-based stock options.............        --          --     (69,431)
  Issuance of common stock..................................     2,380     220,556      11,738
  Purchase and retirement of common stock...................        --     (32,951)     (9,101)
  Dividends.................................................    (6,398)     (8,557)     (5,866)
                                                              --------   ---------   ---------
    Net cash provided by (used in) financing activities.....   (18,802)    193,852     259,440
                                                              --------   ---------   ---------
Effect of exchange rates on cash and cash equivalents.......    (5,865)     (1,577)     (3,135)
                                                              --------   ---------   ---------
Net increase (decrease) in cash.............................    60,718         144        (907)
Cash and cash equivalents, beginning of year................    30,877      30,733      31,640
                                                              --------   ---------   ---------
Cash and cash equivalents, end of year......................  $ 91,595   $  30,877   $  30,733
                                                              ========   =========   =========
Supplemental cash flow information:
  Cash paid during the year for:
    Income taxes............................................  $ 30,400   $  48,900   $   8,900
    Interest................................................  $ 65,100   $  51,400   $  38,000

Noncash investing and financing activities:
  Subsidiaries acquired through seller financing............  $ 13,900   $   1,600   $  16,200
  Subsidiaries acquired with common stock...................  $     --   $     300   $   7,705


          See accompanying notes to consolidated financial statements.

                                       F-29
   159

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(1) THE COMPANY

     Stewart Enterprises, Inc. (the "Company") is the third largest provider of
products and services in the death care industry in North America. Through its
subsidiaries, the Company offers a complete line of funeral merchandise and
services, along with cemetery property, merchandise and services. For the year
ended October 31, 2000, the funeral and cemetery segments contributed
approximately 61 percent and 39 percent, respectively, of consolidated total
revenues and 65 percent and 35 percent, respectively, of consolidated total
gross profit.

     As of October 31, 2000, the Company owned and operated 627 funeral homes
and 163 cemeteries in 30 states within the United States and in Puerto Rico,
Mexico, Australia, New Zealand, Canada, Spain, Portugal, the Netherlands,
Argentina, France and Belgium. The Company commenced its international
operations in Mexico in fiscal year 1994 and entered Australia in fiscal year
1995, New Zealand and Canada in fiscal year 1996, Spain and Portugal in fiscal
year 1997, and the Netherlands, Argentina, France and Belgium in fiscal year
1998. For fiscal year 2000, foreign operations contributed approximately 20
percent of consolidated total revenue and, as of October 31, 2000, represented
approximately 19 percent of consolidated total assets.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  (a) Principles of Consolidation

     The accompanying consolidated financial statements include the Company and
its subsidiaries. All significant intercompany balances and transactions have
been eliminated.

  (b) Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

  (c) Fair Value of Financial Instruments

     Estimated fair value amounts have been determined using available market
information and the valuation methodologies described below. However,
considerable judgment is required in interpreting market data to develop
estimates of fair value. Accordingly, the estimates presented herein may not be
indicative of the amounts the Company could realize in a current market. The use
of different market assumptions or valuation methodologies may have a material
effect on the estimated fair value amounts.

     The carrying amounts of cash and cash equivalents and current receivables
approximate fair value due to the short-term nature of these instruments. The
carrying amount of receivables due beyond one year approximates fair value
because they bear interest at rates currently offered by the Company for
receivables with similar terms and maturities. The carrying amounts of
marketable securities and long-term investments are stated at fair value as they
are classified as available for sale under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The fair value of the Company's
long-term floating rate debt is estimated using future cash flows discounted at
market rates for similar types of borrowing arrangements. The fair value of the
Company's long-term fixed-rate debt is estimated using quoted market prices,
where applicable, or future cash flows discounted at rates for similar types of
borrowing arrangements. See Note 11.

                                       F-30
   160
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

  (d) Inventories

     Inventories are stated at the lower of cost (specific identification and
first-in, first-out methods) or net realizable value. The portion of developed
cemetery property that management estimates will be used in the next twelve
months is included in inventories.

  (e) Depreciation and Amortization

     Buildings and equipment are depreciated over their estimated useful lives,
ranging from 19 to 45 years and from 3 to 10 years, respectively, primarily
using the straight-line method. For the fiscal years ended October 31, 2000,
1999 and 1998, depreciation expense totaled approximately $28,938, $25,418 and
$21,094, respectively.

     Goodwill, or costs in excess of net assets of companies acquired, totaled
approximately $667,128 and $669,790 as of October 31, 2000 and 1999,
respectively, and is amortized principally over 40 years using the straight-line
method. The Company continually evaluates the recoverability of this intangible
asset by assessing whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted expected future cash flows.
Other intangible assets are amortized over five years using the straight-line
method. Accumulated amortization was $82,944 and $63,300 as of October 31, 2000
and 1999, respectively.

  (f) Foreign Currency Translation

     In accordance with SFAS No. 52, "Foreign Currency Translation," all assets
and liabilities of the Company's foreign subsidiaries are translated into U.S.
dollars at the exchange rate in effect at the end of the period, and revenues
and expenses are translated at average exchange rates prevailing during the
period. The resulting translation adjustments are reflected in a separate
component of shareholders' equity.

     During fiscal year 1998, the Company reported translation adjustments for
its Mexican operations under the method prescribed for highly inflationary
economies. Under that method, foreign currency translation adjustments are
reflected in results of operations, instead of in shareholders' equity. This
change did not have a material effect on the Company's results of operations for
fiscal year 1998.

     As of January 1, 1999, the Mexican economy was no longer considered highly
inflationary according to the SEC staff. Accordingly, subsequent to January 1,
1999, gains and losses resulting from translation of the financial statements of
the Company's Mexican operations are reflected in shareholders' equity and the
functional currency used by our Mexican operations returned to the Mexican peso.
These changes did not have a material effect on the Company's results of
operations for fiscal years 2000, 1999 and 1998.

  (g) Funeral Revenue

     The Company sells prearranged funeral services and merchandise under
contracts that provide for delivery of the services and merchandise at the time
of death. Prearranged funeral services are recorded as funeral revenue in the
period the funeral is performed. Prearranged funeral merchandise is recognized
as revenue upon delivery in jurisdictions where such sales are included in
funeral and insurance contracts. The Company considers prearranged funeral
contracts to be investments in future funeral revenue made to retain and expand
future market share. In 2000, the net effect of prearranged funeral contracts
has been reclassified from cash flows from investing activities to cash flows
from operating activities. Cash flows related to these prearranged funeral
contracts have characteristics of both cash flows from operating and investing
activities.

                                       F-31
   161
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

For comparative purposes, the reclassification was made to the 1999 and 1998
consolidated statement of cash flows.

     Commissions and direct marketing costs relating to prearranged funeral
services and prearranged funeral merchandise sales are accounted for in the same
manner as the revenue to which they relate. Where revenue is deferred, the
related commissions and direct marketing costs are deferred and amortized as the
funeral contracts are delivered. Conversely, where revenues are recognized
currently, the related costs are expensed as incurred. Indirect costs of
marketing prearranged funeral services are expensed in the period in which
incurred.

     Prearranged funeral services and merchandise generally are funded either
through trust funds or escrow accounts established by the Company or through
insurance. Principal amounts deposited in the trust funds or escrow accounts are
available to the Company as funeral services and merchandise are delivered and
are refundable to the customer in those situations where state law provides for
the return of those amounts under the purchaser's option to cancel the contract.
Certain jurisdictions provide for non-refundable trust funds or escrow accounts
where the Company receives such amounts upon cancellation by the customer.
Earnings are withdrawn only as funeral services and merchandise are delivered or
contracts are cancelled, except in jurisdictions that permit earnings to be
withdrawn currently and in unregulated jurisdictions where escrow accounts are
used. When prearranged funeral services and merchandise are funded through
insurance policies purchased by customers from third-party insurance companies,
the Company earns a commission on the sale of the policies. Insurance
commissions, net of related expenses, are recognized at the point at which the
commission is no longer subject to refund. Policy proceeds are available to the
Company as funeral services and merchandise are delivered.

     Effective November 1, 1998, the Company changed its method of accounting
for prearranged funeral trust earnings. See Note 3.

     Funeral services sold at the time of need are recorded as funeral revenue
in the period the funeral is performed.

  (h) Cemetery Revenue

     The Company recognizes income currently from the sale of unconstructed
mausoleum crypts to the extent it has available inventory. Costs of mausoleum
and lawn crypts sold but not yet constructed are based upon management's
estimated cost to construct those items.

     In certain jurisdictions in which the Company operates, local law or
contracts with customers generally require that a portion of the sale price of
prearranged cemetery merchandise be placed in trust funds or escrow accounts.
The Company recognizes as revenue on a current basis all dividends and interest
earned, and net capital gains realized, by prearranged merchandise trust funds
or escrow accounts. At the same time, the liability for the estimated cost to
deliver merchandise is adjusted through a charge to earnings to reflect
inflationary merchandise cost increases. Principal and earnings are withdrawn
only as the merchandise is delivered or contracts are cancelled.

     Pursuant to perpetual care contracts and laws, a portion, generally 10
percent, of the proceeds from cemetery property sales is deposited into
perpetual care trust funds. The income from these funds, which have been
established in most jurisdictions in which the Company operates cemeteries, is
used for maintenance of those cemeteries, but principal, including in some
jurisdictions net realized capital gains, must generally be held in perpetuity.
Accordingly, the trust fund corpus is not reflected in the consolidated
financial statements.

                                       F-32
   162
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

The Company recognizes and withdraws currently all dividend and interest income
earned and, where permitted, capital gains realized by perpetual care funds.

     Some of the Company's sales of cemetery property and merchandise are made
under installment contracts bearing interest at prevailing rates. Finance
charges are recognized as cemetery revenue under the effective interest method
over the terms of the related installment receivables.

  (i) Income Taxes

     The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between tax bases and financial
reporting bases of assets and liabilities. The Company has not provided for
possible United States federal income taxes on the undistributed earnings of
foreign subsidiaries that are considered to be reinvested indefinitely.

  (j) Earnings Per Common Share

     Basic earnings per common share is computed by dividing net earnings by the
weighted average number of common shares outstanding during each period. Diluted
earnings per common share is computed by dividing net earnings by the weighted
average number of common shares outstanding plus the number of additional common
shares that would have been outstanding if the dilutive potential common shares
(in this case, exercise of the Company's time-vest stock options) had been
issued during each period. See Note 12. The Company's share and per share
amounts have been adjusted for a two-for-one common stock split effective April
24, 1998.

  (k) Recent Accounting Standards

     SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," establishes accounting and reporting standards for derivative
instruments. SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133," and
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities," are amendments to the accounting and reporting standards of SFAS
No. 133 and must be adopted concurrently with SFAS No. 133. SFAS No. 133 is
required to be implemented in the first quarter of the Company's fiscal year
2001. The Company has begun its analysis of the impact of SFAS Nos. 133, 137 and
138 on its consolidated financial condition and results of operations, and the
pronouncements are not expected to have an impact on the Company's consolidated
statement of earnings. It is estimated that the adoption of the new standards
will result in an increase in shareholders' equity of approximately $4,693. This
estimate is based on market information and the fair value of the Company's
three-year interest rate swap as of October 31, 2000. The actual effect on the
Company's financial statements will depend on the fair value of the swap at the
date of adoption.

     The Company and other industry participants continue to discuss directly
with the staff of the Securities and Exchange Commission ("SEC") the application
of its recently issued Staff Accounting Bulletin No. 101 -- "Revenue Recognition
in Financial Statements" ("SAB 101") as it relates to prearranged sales
activities. SAB 101, which applies to all companies and was not directed at the
death care industry, emphasizes among other matters the importance of physical
delivery of a product or service to justify the recognition of revenue. Based on
currently available information, the Company believes that the implementation of
SAB 101 will require a deferral of previously recorded revenue associated with

                                       F-33
   163
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

prearranged sales. The amounts deferred will be recognized in future years as
the products and services that have been bought and paid for are ultimately
delivered.

     Based on the tentative agreement with the SEC staff, the Company estimates
that although there will be no negative impact on cash flow, had it adopted SAB
101 in fiscal year 2000, before adjusting for the cumulative effect, the
implementation would have reduced earnings by a range of $0.09 to $0.13 per
share. The Company also estimates that had SAB 101 been adopted in fiscal year
2000, it would have resulted in a nonrecurring, noncash $250,000 to $275,000
after-tax charge for the cumulative effect of the changes. This would have
resulted in an additional backlog that would have produced approximately $1
billion of revenue in the future as these prepaid products and services are
delivered. Based on what the Company currently knows, the implementation of SAB
101 should not cause a violation of any financial covenants in its debt
agreements. The SEC and the industry have not reached a final resolution of
these discussions, but the Company anticipates that they will be finalized
shortly. The Company is not required to implement the new accounting guidance
until the fourth fiscal quarter of 2001 but may choose to implement the guidance
earlier.

     Effective November 1, 1999, the Company implemented Statement of Position
98-5, "Reporting on the Costs of Start-Up Activities," ("SOP 98-5") which
requires costs of start-up activities and organization costs to be expensed as
incurred. The implementation of SOP 98-5 did not have a material impact on the
Company's financial condition or results of operations.

  (l) Reclassifications

     Certain reclassifications have been made to the 1998 and 1999 consolidated
financial statements to conform with the presentation used in the 2000
consolidated financial statements. These reclassifications had no effect on net
earnings or shareholders' equity. In addition, prearranged acquisition costs, as
previously reported, have been reclassified in the accompanying statement of
cash flows and resulted in a decrease in cash flows from operating activities
for the years ended October 31, 1998, 1999 and 2000 by $24.0 million, $10.8
million and $17.7 million, respectively, and an increase in cash flows from
investing activities by a corresponding amount.

(3) CHANGE IN ACCOUNTING PRINCIPLES

     The Company changed the following accounting principle effective November
1, 1998:

     The Company now defers all of the earnings realized by irrevocable
prearranged funeral trust funds and escrow accounts until the underlying funeral
service is delivered. Previously, the Company recognized a portion of those
earnings and deferred the remainder to offset the estimated future effects of
inflation.

     The accounting change was made principally to match revenue recognition
more closely with cash receipts and also to improve the comparability of the
Company's earnings with those of its principal competitors. The new method will
allow the Company to take a longer-term view and increase its flexibility in
managing the funeral trust funds.

     The cumulative effect of this change on prior years resulted in a decrease
in net earnings for the year ended October 31, 1999, of $50,101 (net of a
$28,798 income tax benefit), or $.47 per share. For the year ended October 31,
1999, the current year effect of the change in accounting principle was a
decrease in net earnings of $16,190, or $.15 per share.

                                       F-34
   164
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(4) ACQUISITION OF SUBSIDIARIES

     The following table reflects the Company's acquisition activity during the
past three fiscal years:



                                                                 BUSINESSES ACQUIRED
                                                              --------------------------
                                                              FUNERAL HOMES   CEMETERIES
                                                              -------------   ----------
                                                                        
Fiscal year 2000............................................        --             4
Fiscal year 1999............................................        83            17
Fiscal year 1998............................................       153             9


     These acquisitions have been accounted for by the purchase method, and
their results of operations are included in the accompanying consolidated
financial statements from the dates of acquisition. The purchase price
allocations for certain of these acquisitions are based on preliminary
information.

     The following table reflects, on an unaudited pro forma basis, the combined
operations of the Company and the businesses acquired during fiscal year 2000 as
if such acquisitions had taken place at the beginning of the respective periods
presented. Appropriate adjustments have been made to reflect the accounting
basis used in recording the acquisitions. These pro forma results have been
prepared for comparative purposes only and do not purport to be indicative of
the results of operations that would have resulted had the combinations been in
effect on the dates indicated, that have resulted since the dates of acquisition
or that may result in the future.



                                                              YEAR ENDED OCTOBER 31,
                                                              -----------------------
                                                                 2000         1999
                                                              ----------   ----------
                                                                    (UNAUDITED)
                                                                     
Revenues....................................................   $735,064     $760,491
                                                               ========     ========
Operating earnings..........................................   $159,309     $191,794
                                                               ========     ========
Earnings before cumulative effect of change in accounting
  principle.................................................   $ 66,811     $ 90,827
                                                               ========     ========
Net earnings................................................   $ 66,811     $ 40,726
                                                               ========     ========
Basic earnings per common share:
  Earnings before cumulative effect of change in accounting
     principle..............................................   $    .63     $    .85
                                                               ========     ========
  Net earnings..............................................   $    .63     $    .38
                                                               ========     ========
Diluted earnings per common share:
  Earnings before cumulative effect of change in accounting
     principle..............................................   $    .63     $    .84
                                                               ========     ========
  Net earnings..............................................   $    .63     $    .38
                                                               ========     ========
Weighted average common shares outstanding (in thousands):
  Basic.....................................................    106,600      107,452
                                                               ========     ========
  Diluted...................................................    106,603      107,834
                                                               ========     ========


                                       F-35
   165
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(4) ACQUISITION OF SUBSIDIARIES -- (CONTINUED)

     The effect of acquisitions at dates of purchase on the consolidated
financial statements was as follows:



                                                            YEAR ENDED OCTOBER 31,
                                                        ------------------------------
                                                          2000       1999       1998
                                                        --------   --------   --------
                                                                     
Current assets........................................  $ 14,878   $ 24,730   $ 35,561
Receivables due beyond one year.......................        --         70         91
Cemetery property.....................................     2,630     25,131     47,987
Property and equipment, net...........................     3,652     33,751     42,247
Deferred charges and other assets.....................     4,960      2,076      2,242
Intangible assets, net................................    30,274    125,924    177,708
Deferred tax asset....................................     2,689         --         --
Current liabilities...................................      (526)   (18,450)    (9,128)
Long-term debt........................................   (13,898)   (14,249)   (33,872)
Deferred income taxes.................................        --     (5,317)   (20,107)
Deferred revenue......................................   (41,485)    (6,942)   (10,357)
Other long-term liabilities...........................    (2,370)    (4,392)    (1,253)
                                                        --------   --------   --------
                                                             804    162,332    231,119
Common stock used for acquisitions....................        --        300      7,705
                                                        --------   --------   --------
Cash used for acquisitions............................  $    804   $162,032   $223,414
                                                        ========   ========   ========


(5) PREARRANGED FUNERAL SERVICES

     The following summary reflects prearranged funeral services sold, but not
yet delivered, which are funded with trusts, escrow accounts and insurance and
related prearranged funeral trust fund and escrow account balances. The
trust-and insurance-funded balances are not reflected in the accompanying
consolidated financial statements. Amounts which represent the Company's
voluntary deposits into escrow accounts in those jurisdictions where trust or
escrow arrangements are neither statutorily nor contractually required
aggregated $4,203 and $14,347 as of October 31, 2000 and 1999, respectively, and
are classified as long-term investments.

     Amounts deposited in the trust funds and escrow accounts and funded through
insurance are available to the Company when the services are performed. Funds
held in trust or escrow are invested, and earnings (including net realized
capital gains) realized on irrevocable trust funds and escrow accounts are
deferred until the underlying funeral service is delivered, in accordance with
the Company's change in accounting method effective November 1, 1998. Under the
Company's previous accounting method, earnings of $26,463 were included in
funeral revenue for fiscal year 1998.

                                       F-36
   166
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(5) PREARRANGED FUNERAL SERVICES -- (CONTINUED)




                                                                  OCTOBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                   
Trust or escrow funded:
  Prearranged funeral services sold, but not delivered......  $610,113   $615,956
                                                              ========   ========
  Investments at market value...............................  $614,454   $610,701
  Receivables to be collected on prearranged funeral service
     contracts..............................................   116,832    106,605
                                                              --------   --------
                                                              $731,286   $717,306
                                                              ========   ========
Insurance-funded and other prearranged funeral services.....  $259,589   $241,860
                                                              ========   ========
Investments consist of:
  U.S. Government, agencies and municipalities..............  $ 30,649   $ 27,189
  Canadian Government, agencies and municipalities..........    30,866     30,937
  Corporate bonds...........................................    82,955     80,644
  Preferred stocks..........................................    60,611     60,577
  Common stocks.............................................   185,839    177,163
  Money market funds and other short-term investments.......   169,659    183,029
  Short-term fixed income foreign investments...............    52,124     57,270
                                                              --------   --------
  Total value at cost.......................................   612,703    616,809
  Net unrealized appreciation (depreciation)................     1,751     (6,108)
                                                              --------   --------
  Total value at market.....................................  $614,454   $610,701
                                                              ========   ========


(6) CEMETERY TRUST FUNDS AND ESCROW ACCOUNTS

     The following summary reflects the Company's merchandise trust fund and
escrow account balances, as well as merchandise sold, but undelivered, at
current cost. Merchandise sold, but undelivered, is reflected at current cost in
the accompanying consolidated balance sheets net of the related merchandise
trust fund and escrow account balances and accumulated earnings. As of October
31, 2000 and 1999, there were no merchandise trust fund and escrow account
balances classified as long-term investments.

     Amounts deposited in the trust funds and escrow accounts are invested, and
the revenue on the funds (including net realized capital gains) of $21,021,
$17,371 and $13,157 is reflected in cemetery revenue for 2000, 1999 and 1998,
respectively. Amounts deposited in merchandise trust funds and escrow accounts
that are invested in debt securities as of October 31, 2000 totaled $65,704 and
are scheduled to mature as follows: $8,549 in less than one year; $21,502 in one
through five years; $35,049 in five through ten years; and $604 in more than ten
years.

                                       F-37
   167
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(6) CEMETERY TRUST FUNDS AND ESCROW ACCOUNTS -- (CONTINUED)




                                                                  OCTOBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                   
Merchandise trust funds and escrow accounts:
  Merchandise sold, but not delivered, at current cost......  $146,287   $140,270
                                                              ========   ========
  Investments at market value...............................  $232,256   $199,269
  Amounts to be collected on merchandise contracts..........    60,510     66,624
                                                              --------   --------
                                                              $292,766   $265,893
                                                              ========   ========
Investments consist of:
  U.S. Government, agencies and municipalities..............  $ 12,536   $ 10,213
  Corporate bonds...........................................    53,953     44,588
  Preferred stocks..........................................    24,336     23,737
  Common stocks.............................................   105,669     78,952
  Money market funds and other short-term investments.......    49,044     46,287
                                                              --------   --------
  Total value at cost.......................................   245,538    203,777
  Net unrealized depreciation...............................   (13,282)    (4,508)
                                                              --------   --------
  Total value at market.....................................  $232,256   $199,269
                                                              ========   ========


     The following summary reflects the Company's perpetual care trust fund and
escrow account balances. Since principal cannot be withdrawn, these balances are
not reflected in the accompanying financial statements, except for $2,465,
classified as long-term investments as of October 31, 1999, which represents the
Company's voluntary deposits into escrow accounts in those jurisdictions where
trust or escrow arrangements are neither statutorily nor contractually required.
As of October 31, 2000, there were no perpetual care escrow account balances
classified as long-term investments. Funds held in trust or escrow are invested,
and the earnings withdrawn from the trust funds and escrow accounts are used for
the maintenance of cemetery grounds. For the years ended October 31, 2000, 1999
and 1998, such withdrawals, included in cemetery revenue, totaled $16,630,
$14,470, and $12,615, respectively.



                                                                  OCTOBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                   
Perpetual care trust funds and escrow accounts:
  Investments at market value...............................  $213,588   $201,021
  Amounts to be collected under existing agreements.........    10,413     10,328
                                                              --------   --------
                                                              $224,001   $211,349
                                                              ========   ========
Investments consist of:
  U.S. Government, agencies and municipalities..............  $ 14,190   $ 15,516
  Corporate bonds...........................................    49,096     41,723
  Preferred stocks..........................................    18,897     17,676
  Common stocks.............................................    67,549     63,370
  Money market funds and other short-term investments.......    55,744     53,441
                                                              --------   --------
  Total value at cost.......................................   205,476    191,726
  Net unrealized appreciation...............................     8,112      9,295
                                                              --------   --------
  Total value at market.....................................  $213,588   $201,021
                                                              ========   ========


                                       F-38
   168
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(7) CASH AND CASH EQUIVALENT INVESTMENTS

     The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. The Company deposits
its cash and cash equivalent investments with high quality credit institutions.
Such balances typically exceed applicable FDIC insurance limits.



                                                                 OCTOBER 31,
                                                              -----------------
                                                               2000      1999
                                                              -------   -------
                                                                  
Cash........................................................  $69,594   $26,268
Cash equivalent investments.................................   22,001     4,609
                                                              -------   -------
                                                              $91,595   $30,877
                                                              =======   =======


(8) MARKETABLE SECURITIES AND LONG-TERM INVESTMENTS

     Marketable securities consist of investments in fixed maturities and equity
securities. The market value as of October 31, 2000 was $7,273, which included
gross unrealized losses of $1,893. The market value as of October 31, 1999 was
$46,549, which included gross unrealized gains of $2,040 and gross unrealized
losses of $3,287. The Company realized net gains on the sales of securities of
$1,079, $4,221 and $2,727 for the years ended October 31, 2000, 1999 and 1998,
respectively. The cost of securities sold was determined by using the average
cost method.

     The market value of long-term investments as of October 31, 2000 and 1999
was $4,203 and $16,812, respectively, which included gross unrealized gains of
$28 and $341, and gross unrealized losses of $0 and $109, respectively. There
were no amounts classified as long-term investments and invested in debt
securities as of October 31, 2000. See Notes 5 and 6 which include details of
the Company's long-term investments.

(9) RECEIVABLES



                                                                  OCTOBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                   
Current receivables are summarized as follows:
  Installment contracts due within one year.................  $ 93,061   $ 88,673
  Trade accounts, notes and other...........................    49,582     41,334
  Allowance for sales cancellations and doubtful accounts...    (9,924)   (11,432)
  Amounts to be collected for perpetual care funds..........    (5,913)    (5,628)
                                                              --------   --------
                                                               126,806    112,947
  Funeral receivables.......................................    50,668     63,268
                                                              --------   --------
          Net current receivables...........................  $177,474   $176,215
                                                              ========   ========
Long-term receivables are summarized as follows:
  Installment contracts due beyond one year.................  $238,433   $256,835
  Allowance for sales cancellations and doubtful accounts...   (16,860)   (14,557)
  Amounts to be collected for perpetual care funds..........    (4,500)    (4,700)
                                                              --------   --------
          Net long-term receivables.........................  $217,073   $237,578
                                                              ========   ========


                                       F-39
   169
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(9) RECEIVABLES -- (CONTINUED)

     The Company's receivables as of October 31, 2000 are expected to mature as
follows:

                                                         
Years ending October 31,
  2001....................................................  $177,474
  2002....................................................    36,106
  2003....................................................    33,070
  2004....................................................    24,966
  2005....................................................    22,980
  Later years.............................................    99,951
                                                            --------
                                                            $394,547
                                                            ========



(10) INVENTORIES AND CEMETERY PROPERTY

     Inventories are comprised of the following:



                                                                 OCTOBER 31,
                                                              -----------------
                                                               2000      1999
                                                              -------   -------
                                                                  
Developed cemetery property.................................  $18,248   $15,850
Merchandise and supplies....................................   42,401    35,581
                                                              -------   -------
                                                              $60,649   $51,431
                                                              =======   =======


     Cemetery property is comprised of the following:



                                                                  OCTOBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                   
Developed cemetery property.................................  $ 94,382   $ 94,221
Undeveloped cemetery property...............................   347,264    329,811
                                                              --------   --------
                                                              $441,646   $424,032
                                                              ========   ========


     The Company evaluates the recoverability of the cost of undeveloped
cemetery property through comparison with undiscounted expected future cash
flows.

                                       F-40
   170
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(11) LONG-TERM DEBT

     The following is a summary of long-term debt:



                                                                  OCTOBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                   
Revolving Credit Facilities (see "Revolving Credit Facility"
  and "Revolving Line of Credit Note" below)................  $529,000   $529,000
  Senior Notes..............................................    88,572     95,714
  6.70% Notes...............................................   100,000    100,000
  6.40% Notes...............................................   204,781    205,164
  Other, principally seller financing of acquired operations
     or assumption upon acquisition, weighted average
     interest rate of 6.4% as of October 31, 2000, partially
     secured by assets of subsidiaries, with maturities
     through 2023...........................................    28,174     21,535
                                                              --------   --------
                                                               950,527    951,413
Less current maturities.....................................    29,857     12,582
                                                              --------   --------
                                                              $920,670   $938,831
                                                              ========   ========


     In April 1997, the Company completed the syndication of a $600,000
revolving credit facility ("Revolving Credit Facility"). The Revolving Credit
Facility matures on April 30, 2002 and contains a facility fee which was 22.5
basis points on October 31, 2000. Borrowings bear interest at the lead lending
bank's prime rate or certain optional rates at the Company's election. Under
this agreement $529,000 was outstanding with weighted average interest rates of
6.46 percent and 5.63 percent as of October 31, 2000 and 1999, respectively,
which includes the effect of the interest rate swap agreement discussed below.
As of October 31, 2000 and 1999, the carrying value of these borrowings,
including accrued interest, was $529,000 and $533,086, respectively, whereas the
fair value was $512,193 and $524,924, respectively. Additionally, as of October
31, 2000 and 1999, the Company had outstanding letters of credit in the amount
of $5,551 and $4,813, respectively, resulting in $65,449 and $66,187,
respectively, of availability under its Revolving Credit Facility.

     In order to hedge a portion of the interest rate risk associated with its
variable-rate debt, during the first quarter of 1999 the Company entered into a
three-year interest rate swap agreement involving a notional amount of $200,000.
This agreement which became effective March 4, 1999, effectively converted
$200,000 of variable-rate debt bearing interest based on three-month LIBOR to a
fixed rate based on the swap rate of 4.915 percent. The estimated fair value of
the interest rate swap as of October 31, 2000 and 1999, based on quoted market
prices, was $4,693 and $6,090, respectively. As of October 31, 2000 and 1999,
the Company had $529,000 of outstanding borrowings under its $600,000 Revolving
Credit Facility, $329,000 of which was not hedged by the interest rate swap
agreement and was subject to a weighted average short-term variable interest
rate of 7.16 percent and 5.92 percent, respectively.

     Additionally, the Company has available with a separate financial
institution an uncollateralized and uncommitted revolving line of credit
("Revolving Line of Credit Note") used to support the interim cash funding for
advances to be made under the Revolving Credit Facility in amounts less than
$5,000. Borrowings under the Revolving Line of Credit Note are limited to
$10,000, bear interest at the lending bank's cost of funds rate and are payable
on demand. There were no amounts outstanding under the Revolving Line of Credit
Note as of October 31, 2000 and 1999.

                                       F-41
   171
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(11) LONG-TERM DEBT -- (CONTINUED)

     On December 21, 1993, the Company issued $50,000 of uncollateralized senior
notes, bearing interest at a rate of 6.04 percent and maturing on November 30,
2003. Principal payments of $7,143 are due each year; the first such payment was
made on November 30, 1997, and the final payment is due on November 30, 2003. On
November 7, 1994, the Company issued $75,000 of uncollateralized senior notes
with an average maturity of seven years and a weighted average interest rate of
8.44 percent. A principal payment of $15,000 was made on May 1, 1998. The
remaining notes have a weighted average interest rate of 8.49 percent, and
principal payments are due as follows: $16,667 on each of November 1, 2000, 2001
and 2002, and $10,000 on November 1, 2006. As of October 31, 2000 and 1999, the
carrying value of the Company's senior notes, including accrued interest, was
$91,822 and $99,145, respectively, whereas the fair value was $74,853 and
$91,137, respectively.

     In December 1996, the Company issued $100,000 of unsecured, unsubordinated
debt securities in the form of 6.70 percent Notes due in 2003. Net proceeds were
approximately $99,400, of which $96,800 was used to reduce balances outstanding
under the Company's revolving credit facilities, with the remaining $2,600 used
for acquisitions and general corporate purposes. As of October 31, 2000 and
1999, the carrying value of these notes, including accrued interest, was
$102,773, whereas the fair value was $65,573 and $84,553, respectively.

     In April 1998, the Company issued $200,000 of 6.40 percent Remarketable Or
Redeemable Securities ("6.40% ROARS") due May 1, 2013 (remarketing date May 1,
2003). The 6.40% ROARS were priced to the public at 99.677 percent to yield
6.476 percent. Net proceeds were approximately $203,631, including the payment
made to the Company by the remarketing dealer for the right to remarket the
securities after five years. The proceeds were used to reduce balances
outstanding under the Company's revolving credit facilities. The net effective
rate to the Company, assuming the securities are redeemed by the Company after
five years, is 5.77 percent. If the securities are remarketed after five years,
the net effective rate for the remaining term will be 5.44 percent (10-year
Treasury rate, fixed upon initial issuance of the 6.40% ROARS) plus the
Company's then current credit spread. If the 6.40% ROARS are redeemed by the
Company on May 1, 2003, a principal payment of $200,000 will be required. As of
October 31, 2000 and 1999, the carrying value of these notes, including accrued
interest and the unamortized portion of the option premium, was $211,146 and
$211,528, respectively, whereas the fair value was $136,444 and $175,366,
respectively.

     The bank loan agreements and senior note agreements contain various
restrictive covenants that limit consolidated funded indebtedness, indebtedness
of subsidiaries, the sale of assets to entities outside the consolidated group
and the payment of dividends on, and repurchases of, the capital stock of the
Company. Additionally, the bank loan agreements contain change of control
provisions. The Company is also required to maintain specified financial ratios
related to net worth and fixed charges.

     Scheduled principal payments and maturities of the Company's long-term debt
for the fiscal years ending October 31, 2001 through October 31, 2005, excluding
the Revolving Credit Facility and assuming the 6.40% ROARS are redeemed by the
Company on May 1, 2003, are approximately $29,474 in 2001, $28,482 in 2002,
$228,528 in 2003, $112,087 in 2004 and $2,049 in 2005. Current maturities of
long-term debt of $29,857 as of October 31, 2000, as reported in the Company's
consolidated balance sheets, include $383 relating to the unamortized 6.40%
ROARS option premium.

     All of the Company's debt is uncollateralized, except for approximately
$14,000 of term notes incurred principally in connection with acquisitions that
are secured by mortgages on some of the Company's funeral homes. These notes
were either assumed by the Company upon its acquisition of the property or
represent seller financing for the acquired property.

                                       F-42
   172
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(12) RECONCILIATION OF BASIC AND DILUTED PER SHARE DATA



                                                     EARNINGS        SHARES       PER SHARE
           YEAR ENDED OCTOBER 31, 2000              (NUMERATOR)   (DENOMINATOR)     DATA
           ---------------------------              -----------   -------------   ---------
                                                                         
Net earnings......................................    $66,794
                                                      =======
Basic earnings per common share:
          Net earnings available to common
            shareholders..........................    $66,794        106,600        $.63
                                                                                    ====
Effect of dilutive securities:
          Time-vest stock options assumed
            exercised.............................         --              3
                                                      -------        -------
Diluted earnings per common share:
  Net earnings available to common shareholders
     plus time-vest stock options assumed
     exercised....................................    $66,794        106,603        $.63
                                                      =======        =======        ====




                                                     EARNINGS        SHARES       PER SHARE
           YEAR ENDED OCTOBER 31, 1999              (NUMERATOR)   (DENOMINATOR)     DATA
           ---------------------------              -----------   -------------   ---------
                                                                         
Earnings before cumulative effect of change in
  accounting principle............................    $90,520
                                                      =======
Basic earnings per common share:
          Earnings available to common
            shareholders..........................    $90,520        107,452        $.84
                                                                                    ====
Effect of dilutive securities:
          Time-vest stock options assumed
            exercised.............................         --            382
                                                      -------        -------
Diluted earnings per common share:
          Earnings available to common
            shareholders plus time-vest stock
            options assumed exercised.............    $90,520        107,834        $.84
                                                      =======        =======        ====




                                                     EARNINGS        SHARES       PER SHARE
           YEAR ENDED OCTOBER 31, 1998              (NUMERATOR)   (DENOMINATOR)     DATA
           ---------------------------              -----------   -------------   ---------
                                                                         
Net earnings......................................    $41,902
                                                      =======
Basic earnings per common share:
          Net earnings available to common
            shareholders..........................    $41,902         97,691        $.43
                                                                                    ====
Effect of dilutive securities:
          Time-vest stock options assumed
            exercised.............................         --            753
                                                      -------        -------
Diluted earnings per common share:
          Net earnings available to common
            shareholders plus time-vest stock
            options assumed exercised.............    $41,902         98,444        $.43
                                                      =======        =======        ====


     Options to purchase 7,049,471 shares of common stock at prices ranging from
$4.16 to $27.25 were outstanding but were not included in the computation of
diluted earnings per share for the fiscal year ended October 31, 2000 because
the options' exercise prices were greater than the average market price of the
common shares. The options, which expire between January 2, 2001 and April 12,
2005, were still outstanding at the end of fiscal year 2000.

                                       F-43
   173
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(12) RECONCILIATION OF BASIC AND DILUTED PER SHARE DATA -- (CONTINUED)

     Options to purchase 1,733,504 shares of common stock at prices ranging from
$16.00 to $27.25 were outstanding but were not included in the computation of
diluted earnings per share for the fiscal year ended October 31, 1999 because
the options' exercise prices were greater than the average market price of the
common shares. The options, which expire between January 2, 2001 and July 31,
2004, were still outstanding at the end of fiscal year 1999.

     Options to purchase 319,210 shares of common stock at $25.81 and 895,560
shares of common stock at $27.25 were outstanding but were not included in the
computation of diluted earnings per share for the fiscal year ended October 31,
1998 because the options' exercise prices were greater than the average market
price of the common shares. The options, which expire on July 31, 2004, were
still outstanding at the end of fiscal year 1998.

(13) INCOME TAXES

     Income tax expense (benefit) is comprised of the following components:



                                                 U.S. AND
YEAR ENDED OCTOBER 31,                          POSSESSIONS   STATE    FOREIGN    TOTAL
- ----------------------                          -----------   ------   -------   -------
                                                                     
2000:
  Current tax expense.........................    $20,094     $3,196   $ 6,102   $29,392
  Deferred tax expense........................      5,626        759     2,616     9,001
                                                  -------     ------   -------   -------
                                                  $25,720     $3,955   $ 8,718   $38,393
                                                  =======     ======   =======   =======
1999:
  Current tax expense.........................    $27,869     $4,783   $ 8,240   $40,892
  Deferred tax expense........................      4,628      2,923     3,588    11,139
                                                  -------     ------   -------   -------
                                                  $32,497     $7,706   $11,828   $52,031
                                                  =======     ======   =======   =======
1998:
  Current tax expense.........................    $13,871     $3,918   $ 4,741   $22,530
  Deferred tax expense (benefit)..............     (2,075)       617     1,990       532
                                                  -------     ------   -------   -------
                                                  $11,796     $4,535   $ 6,731   $23,062
                                                  =======     ======   =======   =======


     The reconciliation of the statutory tax rate to the effective tax rate is
as follows:



                                                             YEAR ENDED OCTOBER 31,
                                                            -------------------------
                                                            2000      1999      1998
                                                            -----     -----     -----
                                                                       
Statutory tax rate........................................  35.00%    35.00%    35.00%
Increases (reductions) in tax rate resulting from:
  State and U.S. possessions..............................   2.44      4.03      6.21
  Goodwill and other......................................   2.28      2.17      3.86
  Dividend exclusion......................................  (2.48)    (1.56)    (2.21)
  Foreign tax rate differential...........................  (0.74)    (1.86)    (5.57)
  Foreign tax credit......................................     --     (1.28)    (1.79)
                                                            -----     -----     -----
Effective tax rate........................................  36.50%    36.50%    35.50%
                                                            =====     =====     =====


                                       F-44
   174
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(13) INCOME TAXES -- (CONTINUED)

     Deferred tax assets and liabilities consist of the following:



                                                                  OCTOBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                   
Deferred tax assets:
  Domestic trust earnings...................................  $ 47,416   $ 44,653
  Allowance for sales cancellations and doubtful accounts...     8,157      8,483
  Deferred preneed sales and expenses.......................    16,109     17,806
  Unrealized depreciation of investments....................     5,563      1,925
  Deferred compensation.....................................       649        795
  Other.....................................................     3,305      2,966
                                                              --------   --------
                                                                81,199     76,628
                                                              --------   --------
Deferred tax liabilities:
  Purchase accounting adjustments...........................   127,990    130,778
  Foreign trust earnings....................................    16,035     14,101
  Deferred revenue on cemetery property and merchandise
     sales..................................................    19,117     15,845
  State income taxes........................................     5,151      5,102
  Percentage of completion on long-term contracts...........       255        605
  Goodwill..................................................     6,685      4,133
  Non-compete amortization..................................     1,992      1,914
  Depreciation..............................................       877        343
  Other.....................................................     2,088      2,434
                                                              --------   --------
                                                               180,190    175,255
                                                              --------   --------
                                                              $ 98,991   $ 98,627
                                                              ========   ========
Current net deferred liability..............................  $ 15,251   $ 17,193
Long-term net deferred liability............................    83,740     81,434
                                                              --------   --------
                                                              $ 98,991   $ 98,627
                                                              ========   ========


     For the year ended October 31, 2000, the Company's earnings before income
taxes generated from properties in foreign jurisdictions were negative. For the
years ended October 31, 1999 and 1998, approximately 4 percent and 5 percent,
respectively, of the Company's earnings before performance-based stock options
and income taxes were generated from properties in foreign jurisdictions.

     The Company has not recognized a deferred tax liability of approximately
$10,000 for the undistributed earnings of non-U.S. subsidiaries because the
Company currently considers these earnings to be reinvested indefinitely.

(14) BENEFIT PLANS

  Stewart Enterprises Employees' Retirement Trust

     The Company has a defined contribution retirement plan, the "Stewart
Enterprises Employees' Retirement Trust (A Profit-Sharing Plan) ("SEERT")." This
plan covers substantially all employees with more than one year of service who
have attained the age of 21. Contributions are made to the plan at the
discretion of the Company's Board of Directors. Additionally, employees who
participate may contribute up to 15 percent of their earnings. The first 5
percent of such employee contributions are eligible for Company

                                       F-45
   175
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(14) BENEFIT PLANS -- (CONTINUED)

matching contributions at the rate of $.50 for each $1.00 contributed. The
Company's expense, including the Company's matching contributions, for the
fiscal years ended October 31, 2000, 1999 and 1998 was approximately $3,350,
$3,700 and $3,550, respectively.

  Non-qualified Supplemental Retirement and Deferred Compensation Plan

     The Company has a non-qualified key employee defined contribution
supplemental retirement plan, which provides certain highly compensated
employees the opportunity to accumulate deferred compensation which cannot be
accumulated under SEERT due to certain limitations. Contributions are made to
the plan at the discretion of the Company's Board of Directors. Additionally,
employees who participate may contribute up to 15 percent of their earnings. The
first 5 percent of such employee contributions are eligible for Company matching
contributions at the rate of $.50 for each $1.00 contributed. The Company's
expense, including the Company's matching contributions, for the fiscal years
ended October 31, 2000, 1999 and 1998 was approximately $250, $300, and $300,
respectively.

  1995 Incentive Compensation Plan

     In August 1995, the Board of Directors adopted, and in December 1995 and
December 1996 amended, the 1995 Incentive Compensation Plan, pursuant to which
officers and other employees of the Company may be granted stock options, stock
awards, restricted stock, stock appreciation rights, performance share awards or
cash awards by the Compensation Committee of the Board of Directors. From
September 7, 1995 through April 7, 1998, the Company granted options to officers
and other employees for the purchase of a total of 7,424,536 shares of Class A
common stock at exercise prices equal to the fair market value at the grant
dates, which ranged from $10.50 to $21.50 per share. In general, two thirds of
the options became exercisable in full on the first day between the date of
grant and August 31, 2000 that the average of the closing sale prices of a share
of the Company's Class A common stock for the 20 preceding consecutive trading
days equaled or exceeded $26.44, which represented a 20 percent annual
compounded growth in the price of a share of the Company's Class A common stock
over five years.

     The remaining options generally become exercisable in 20 percent annual
increments beginning on September 7, 1996, except for grants issued since the
initial grant date, which options vest over the remainder of the original
five-year period. The Compensation Committee may accelerate the exercisability
of any option at any time at its discretion and the options become immediately
exercisable in the event of a change of control of the Company, as defined in
the plan. All of these options expire on October 31, 2001. As of October 31,
2000, 4,983,230 options had been repurchased or exercised under this plan, and
1,062,118 options had been forfeited.

     During April 1998, the stock price performance target was achieved, and the
Company's performance-based stock options granted under the Company's 1995
Incentive Compensation Plan and covering 4,855,886 shares vested. Accordingly,
during the second quarter of fiscal year 1998, the Company was required by
accounting principles generally accepted in the United States of America to
record a nonrecurring, noncash charge to earnings of $76,762 ($50,279, or $.51
per share, after tax).

     Additionally, to encourage optionees to exercise their options immediately
in order to renew the performance-based option program and to reduce potential
dilution from additional shares in the market, the Company offered to repurchase
the options for the difference between $27.31, the closing price on the date on
which the options vested, and the exercise price of the options. The repurchase
of certain of the options by the Company and the exercise of the remaining
options resulted in a cash outlay of $69,431.

                                       F-46
   176
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(14) BENEFIT PLANS -- (CONTINUED)

     From July 1998 to February 1999, the Company granted new options under the
1995 Incentive Compensation Plan to officers and employees for the purchase of
3,682,250 shares of Class A common stock at exercise prices equal to the fair
market value at the grant dates, which ranged from $16.00 to $27.25 per share.
One third of the options become exercisable in 20 percent annual increments
beginning on July 17, 1999. The remaining two thirds of the options become
exercisable in full on the first day between the grant date and July 17, 2003
that the average of the closing sale prices of a share of Class A common stock
over the 20 preceding consecutive trading days equals or exceeds $67.81, which
represents a 20 percent annual compounded growth in the price of a share of
Class A common stock over five years. Accounting principles generally accepted
in the United States of America require that a charge to earnings be recorded
for the performance-based options for the difference between the exercise price
and the then current stock price when achievement of the performance objective
becomes probable. All of the options expire on July 31, 2004. As of October 31,
2000, none of these options had been exercised, and 1,427,200 options had been
forfeited.

     In January 2000, the Company granted new options under the 1995 Incentive
Compensation Plan to officers and employees for the purchase of 4,018,168 shares
of Class A common stock at exercise prices equal to the fair market value at the
grant dates, which ranged from $5.50 to $6.00 per share. The options become
exercisable in 25 percent annual increments beginning January 21, 2001. All of
these options expire on January 21, 2005. As of October 31, 2000, none of these
options had been exercised, and 620,640 options had been forfeited.

  2000 Incentive Compensation Plan

     The Board of Directors adopted, and in April 2000 the shareholders
approved, the 2000 Incentive Compensation Plan pursuant to which officers and
other employees of the Company may be granted stock options, restricted stock or
other stock-based awards by the Compensation Committee of the Board of
Directors. From April 2000 through July 2000, the Company had granted options to
officers and other employees for the purchase of a total of 2,237,732 shares of
Class A common stock at exercise prices equal to the fair market value at the
grant dates, which ranged from $2.22 to $4.41 per share. The options generally
become exercisable in 25 percent annual increments beginning on April 12, 2001.
The Compensation Committee may accelerate the exercisability of any option at
any time at its discretion, and the options become immediately exercisable in
the event of a change of control of the Company, as defined in the plan. All of
these options expire on April 12, 2005. As of October 31, 2000, none of these
options had been exercised, and 241,360 options had been forfeited.

  Directors' Stock Option Plan

     Effective January 2, 1996, the Board of Directors adopted, and in December
1996 amended, the Directors' Stock Option Plan, pursuant to which each director
of the Company who is not an employee of the Company was granted an option to
purchase 72,000 shares of the Company's Class A common stock. From January 2,
1996 through October 31, 1997, the Company granted a total of 360,000 options at
exercise prices equal to the fair market value at the grant dates, which ranged
from $12.34 to $18.25 per share. The options generally became exercisable in 25
percent annual increments beginning January 2, 1997, except for grants issued
since the initial grant date, which options vested over the remainder of the
original four-year period. All of the options expired on January 2, 2001. As of
October 31, 2000, 91,052 options had been exercised, and none of these options
had been forfeited.

     In January 2000, the Company granted new options under the Directors' Stock
Option Plan to directors of the Company who are not employees of the Company for
the purchase of a total of 72,000 shares of

                                       F-47
   177
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(14) BENEFIT PLANS -- (CONTINUED)

Class A common stock at an exercise price of $6.00 per share. The options vested
immediately. All of these options expire on January 31, 2005. As of October 31,
2000, none of these options had been exercised or forfeited.

  2000 Directors' Stock Option Plan

     The Board of Directors adopted, and in April 2000 the shareholders
approved, the 2000 Directors' Stock Option Plan pursuant to which each director
of the Company who is not an employee of the Company may be granted an option to
purchase 50,000 shares of the Company's Class A common stock. On April 13, 2000,
the Company granted a total of 200,000 options at an exercise price equal to the
fair market value at the grant date, which was $4.30 per share. The options
generally become exercisable in 25 percent annual increments beginning on April
13, 2001. The Compensation Committee may accelerate the exercisability of any
option at any time at its discretion, and the options become immediately
exercisable in the event of a change of control of the Company, as defined in
the plan. All of these options expire on January 31, 2005. As of October 31,
2000, none of these options had been exercised or forfeited.

  Employee Stock Purchase Plan

     On July 1, 1992, the Company adopted an "Employee Stock Purchase Plan" and
reserved 2,250,000 shares of Class A common stock for purchase by eligible
employees, as defined. The plan provides to eligible employees the opportunity
to purchase the Company's Class A common stock semi-annually on June 30 and
December 31. The purchase price is established at a 15 percent discount from
fair market value, as defined. As of October 31, 2000, 894,543 shares had been
acquired under this plan.

  Statement of Financial Accounting Standards No. 123

     The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," and continues to apply Accounting
Principles Board Opinion No. 25 and related interpretations in accounting for
its stock-based compensation plans. The following table is a summary of the
Company's stock options outstanding as of October 31, 2000, 1999 and 1998, and
the changes that occurred during fiscal years 2000, 1999 and 1998.



                                       2000                    1999                    1998
                               ---------------------   ---------------------   ---------------------
                               NUMBER OF    WEIGHTED   NUMBER OF    WEIGHTED   NUMBER OF    WEIGHTED
                                 SHARES     AVERAGE      SHARES     AVERAGE      SHARES     AVERAGE
                               UNDERLYING   EXERCISE   UNDERLYING   EXERCISE   UNDERLYING   EXERCISE
                                OPTIONS      PRICES     OPTIONS      PRICES     OPTIONS      PRICES
                               ----------   --------   ----------   --------   ----------   --------
                                                                          
Outstanding at beginning of
  year......................    6,241,122    $20.81     6,187,038    $20.77     6,993,710    $11.38
Granted.....................    6,527,900    $ 5.06        90,000    $22.67     4,268,250    $25.98
Exercised/Repurchased.......           --    $   --       (14,724)   $10.50    (4,991,580)   $12.24
Forfeited...................   (3,199,936)   $16.69       (21,192)   $22.58       (83,342)   $10.70
                               ----------              ----------              ----------
Outstanding at end of
  year......................    9,569,086    $11.44     6,241,122    $20.81     6,187,038    $20.77
                               ==========              ==========              ==========
Exercisable at end of
  year......................    2,023,224    $14.44     2,199,099    $13.78     1,349,651    $11.76
                               ==========              ==========              ==========
Weighted-average fair value
  of options granted........                 $ 2.60                  $10.28                  $ 7.11


                                       F-48
   178
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(14) BENEFIT PLANS -- (CONTINUED)

     The following table further describes the Company's stock options
outstanding as of October 31, 2000:



                                  OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                  ---------------------------------------------------   --------------------------------
                     NUMBER       WEIGHTED AVERAGE                         NUMBER
    RANGE OF       OUTSTANDING       REMAINING       WEIGHTED AVERAGE    EXERCISABLE    WEIGHTED AVERAGE
EXERCISE PRICES   AT 10/31/2000   CONTRACTUAL LIFE    EXERCISE PRICE    AT 10/31/2000    EXERCISE PRICE
- ----------------  -------------   ----------------   ----------------   -------------   ----------------
                                                                         
$ 2.22 to
  $ 5.00........    2,196,372        4.43 years           $ 4.24                 --          $   --
$ 5.01 to
  $10.00........    3,469,528        4.23 years           $ 5.56             72,000          $ 6.00
$10.01 to
  $15.00........    1,307,446         .86 years           $10.81          1,307,446          $10.81
$15.01 to
  $20.00........      202,416         .87 years           $17.50            196,464          $17.53
$20.01 to
  $25.00........      144,774        1.03 years           $21.49            143,474          $21.49
$25.01 to
  $27.25........    2,248,550        3.75 years           $26.75            303,840          $26.76
                    ---------                                             ---------
$ 2.22 to
  $27.25........    9,569,086        3.58 years           $11.44          2,023,224          $14.44
                    =========                                             =========


     SFAS 123 applies only to options granted and shares acquired under the
Company's Employee Stock Purchase Plan since the beginning of the Company's 1996
fiscal year. Consequently, the pro forma amounts disclosed below do not reflect
any compensation cost for the 7.8 million stock options outstanding as of the
beginning of fiscal year 1996. If the Company had elected to recognize
compensation cost for its stock option and employee stock purchase plans based
on the fair value at the grant dates for awards under those plans, in accordance
with SFAS 123, net earnings and earnings per share would have been as follows:



                                                                      (UNAUDITED)
                                                                YEAR ENDED OCTOBER 31,
                                                             -----------------------------
                                                              2000       1999       1998
                                                             -------    -------    -------
                                                                       
Net earnings                       - as reported...........  $66,794    $40,419    $41,902
                                   - pro forma.............   61,939     35,735     40,027

Basic earnings per common share    - as reported...........  $   .63    $   .37    $   .43
                                   - pro forma.............      .58        .33        .41

Diluted earnings per common share  - as reported...........  $   .63    $   .37    $   .43
                                   - pro forma.............      .58        .33        .41


     The fair value of the Company's stock options used to compute pro forma net
earnings and earnings per share disclosures is the estimated present value at
grant date using the Black-Scholes option pricing model with the following
weighted average assumptions for fiscal years 2000, 1999 and 1998, respectively:
expected dividend yield of .1 percent, .3 percent and .3 percent; expected
volatility of 39.3 percent, 21.3 percent and 20.9 percent; risk-free interest
rate of 6.2 percent, 5.5 percent and 5.5 percent; and an expected term of 4.9
years, 4.8 years and 4.7 years.

     Likewise, the fair value of shares acquired through the Employee Stock
Purchase Plan is estimated on each semi-annual grant date using the
Black-Scholes option pricing model with the following weighted average
assumptions for fiscal years 2000, 1999 and 1998, respectively: expected
dividend yield of .1 percent, .4 percent and .2 percent; expected volatility of
48.3 percent, 38.1 percent and 20.5 percent; risk-free interest rate of 5.8
percent, 4.9 percent and 5.3 percent; and an expected term of .5 years, for all
years.

                                       F-49
   179
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(15) SHAREHOLDER RIGHTS PLAN

     On November 3, 1999, the Company's Board of Directors adopted a rights plan
intended to protect shareholder interests in the event the Company becomes the
subject of a takeover initiative that the Company's Board of Directors believes
could deny the Company's shareholders the full value of their investment. This
plan does not prohibit the Board from considering any offer that it deems
advantageous to its shareholders.

     The rights were issued to each common shareholder of record on October 28,
1999, and will be exercisable only if a person acquires, or announces a tender
offer that would result in ownership of 15 percent or more of the Company's
outstanding Class A and Class B common stock. The initial exercise price will be
$24.00 per right. The rights will expire on October 28, 2009, unless redeemed or
exchanged at an earlier date.

(16) COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS

     In Re Stewart Enterprises, Inc. Securities Litigation, No. 01-30035 on the
docket of the United States Court of Appeal for the Fifth Circuit. During the
fall of 1999, 16 putative securities class action lawsuits were filed in the
United States District Court for the Eastern District of Louisiana against the
Company, certain of its directors and officers and the lead underwriters of the
Company's January 1999 common stock offering. The suits were consolidated, and
the court appointed lead plaintiffs as well as lead and liaison counsel for the
plaintiffs, who filed a consolidated amended complaint.

     The consolidated amended complaint alleges violations of Section 11,
12(a)(2) and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder on
behalf of purchasers of the Company's common stock during the period October 1,
1998 through August 12, 1999. Plaintiffs generally allege that the defendants
made false and misleading statements and failed to disclose allegedly material
information in the prospectus relating to the January 1999 common stock offering
and in certain of the Company's other public filings and announcements. The
plaintiffs also allege that these allegedly false and misleading statements and
omissions permitted the Chairman of the Company to sell Company common stock
during the class period at inflated market prices. The plaintiffs seek remedies
including certification of the putative class, unspecified damages, attorneys'
fees and costs, rescission to the extent any members of the class still hold the
Company's common stock, and such other relief as the court may deem proper.

     On December 7, 2000, the District Court granted motions to dismiss, filed
by the Company and the other defendants, dismissing the complaint against all
defendants for failure to state a claim. On January 4, 2001, the plaintiffs
filed a notice of appeal.

     The outcome and the costs of defending this litigation cannot be predicted
at this time. The Company believes that the claims are without merit and intends
to defend itself vigorously.

     The Company and certain of its subsidiaries are parties to a number of
other legal proceedings that have arisen in the ordinary course of business.
While the outcome of these proceedings cannot be predicted with certainty,
management does not expect these matters to have a material adverse effect on
the consolidated financial position, results of operations or cash flows of the
Company.

     The Company carries insurance with coverages and coverage limits that it
believes to be adequate. Although there can be no assurance that such insurance
is sufficient to protect the Company against all contingencies, management
believes that its insurance protection is reasonable in view of the nature and
scope of the Company's operations.

                                       F-50
   180
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(16) COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS -- (CONTINUED)

     As of October 31, 2000, the Company had advanced approximately $1,411,
including accrued interest, to fund premiums on a split-dollar "second-to-die"
life insurance policy on behalf of the Company's Chairman, Mr. Frank B. Stewart,
Jr., and Mrs. Stewart. The advances are collateralized by the assignment of
other insurance policies and the pledge of Class A common stock of the Company.
In 1992, the Company agreed to continue to advance such premiums for a
twelve-year period and will be repaid at the earliest of (a) the surrender of
the policy, (b) the deaths of Mr. and Mrs. Stewart, or (c) 60 days following
payment in full of all premiums on the policy.

     The Company has noncancellable operating leases, primarily for land and
buildings, that expire over the next 1 to 23 years, except for nine leases that
expire between 2032 and 2072. Rent expense under these leases was $9,527, $8,042
and $7,805 for the years ended October 31, 2000, 1999 and 1998, respectively.
Through July of 2000, the Company leased office space from an affiliated
company. Rental payments to the affiliated company were approximately $479,
$534, and $636 for the years ended October 31, 2000, 1999 and 1998,
respectively. The Company now leases a smaller portion of the office space from
a non-affiliated company. Rental payments to the non-affiliated company were
$132 for the year ended October 31, 2000.

     The Company's future minimum lease payments as of October 31, 2000 are
$8,528, $7,165, $5,693, $4,585, $3,810 and $34,749 for the years ending October
31, 2001, 2002, 2003, 2004, 2005 and later years, respectively. Additionally,
the Company has entered into non-compete agreements with prior owners of
acquired subsidiaries that expire through 2012. The Company's future non-compete
payments as of October 31, 2000 for the same periods are $6,969, $6,312, $5,625,
$4,437, $3,075 and $5,838, respectively.

     With potential long-term debt maturities of $557,482, $228,528 and $112,087
in fiscal years 2002, 2003 and 2004, respectively, management of liquidity and
capitalization represents a significant short- and medium-term priority for the
Company. The Company believes that its ability to meet its future capital
requirements will depend primarily upon the successful implementation of its
strategies to provide cash from operations and generate cash from other sources,
such as the possible sale of some or all of its foreign operations, and its
ability to refinance its revolving credit facility and public debt prior to or
at their maturities.

(17) SEGMENT DATA

     In fiscal year 1999, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The accounting policies of
the segments are the same as those described in the "Summary of Significant
Accounting Policies." The Company evaluates the performance of its segments and
allocates resources to them based on gross profit.

     The Company's operations are product-based and geographically-based. As
such, the Company's primary reportable operating segments presented in the
following table are based on products and services and include funeral and
cemetery operations.

     The Company's funeral homes offer a complete range of funeral services and
products both at the time of need and on a prearranged basis. The Company's
services and products include family consultation, removal and preparation of
remains, the use of funeral home facilities for visitation, worship and funeral
services, transportation services, flowers and caskets. In addition to
traditional funeral services, all of the Company's funeral homes offer cremation
products and services.

     The Company's cemetery operations involve the sale of cemetery property and
related merchandise, including lots, lawn crypts, family and community
mausoleums, monuments, memorials and burial vaults,

                                       F-51
   181
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(17) SEGMENT DATA -- (CONTINUED)

along with the sale of burial site openings and closings. Cemetery property and
merchandise sales are made both at the time of need and on a prearranged basis.

     The Company conducts both funeral and cemetery operations domestically
including the United States and Puerto Rico, and in Mexico, Canada, Australia
and Argentina. The Company conducts funeral operations in New Zealand, Spain,
Portugal, the Netherlands, Belgium and France.

     The table below presents information about reported segments for fiscal
years ended October 31, 2000, 1999 and 1998:



                                                                  RECONCILING   CONSOLIDATED
                                           FUNERAL     CEMETERY    ITEMS(1)        TOTALS
                                          ----------   --------   -----------   ------------
                                                                    
Revenues from external customers
  October 31, 2000......................  $  451,852   282,949          --       $  734,801
  October 31, 1999......................  $  445,877   310,231          --       $  756,108
  October 31, 1998......................  $  379,095   269,270          --       $  648,365

Gross profit
  October 31, 2000......................  $  116,689    62,351          --       $  179,040
  October 31, 1999......................  $  126,875    83,526          --       $  210,401
  October 31, 1998......................  $  118,426    77,558          --       $  195,984

Total assets
  October 31, 2000......................  $1,263,354   996,830      76,824       $2,337,008
  October 31, 1999......................  $1,242,119   996,282      45,479       $2,283,880
  October 31, 1998......................  $1,265,237   746,569      37,132       $2,048,938

Depreciation and amortization
  October 31, 2000......................  $   36,864    13,067       4,336       $   54,267
  October 31, 1999......................  $   36,373    11,850       2,397       $   50,620
  October 31, 1998......................  $   28,299     8,546       1,897       $   38,742

Additions to long-lived assets (2)
  October 31, 2000......................  $   35,371    33,714       4,394       $   73,479
  October 31, 1999......................  $   62,926    66,356      11,919       $  141,201
  October 31, 1998......................  $   64,344    81,407      10,504       $  156,255


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

(1) Reconciling items consist of unallocated corporate assets, depreciation and
    amortization on unallocated corporate assets and additions to corporate
    long-lived assets.

(2) Long-lived assets include cemetery property and net property and equipment.

                                       F-52
   182
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(17) SEGMENT DATA -- (CONTINUED)

     A reconciliation of total segment gross profit to total earnings before
income taxes and cumulative effect of change in accounting principle for fiscal
years ended October 31, 2000, 1999 and 1998, is as follows:



                                                         2000       1999       1998
                                                       --------   --------   --------
                                                                    
Gross profit for reportable segments.................  $179,040   $210,401   $195,984
Corporate general and administrative expenses........   (19,763)   (19,161)   (16,621)
Performance-based stock options......................        --         --    (76,762)
Interest expense, net................................   (56,284)   (52,174)   (41,792)
Other income, net....................................     2,194      3,485      4,155
                                                       --------   --------   --------
Earnings before income taxes and cumulative effect of
  change in accounting principle.....................  $105,187   $142,551   $ 64,964
                                                       ========   ========   ========




                                                               U.S. AND
                                                            POSSESSIONS(1)   FOREIGN(2)   CONSOLIDATED
                                                            --------------   ----------   ------------
                                                                                 
Revenues from external customers
  October 31, 2000........................................     $588,480       146,321       $734,801
  October 31, 1999........................................     $603,530       152,578       $756,108
  October 31, 1998........................................     $534,427       113,938       $648,365

Gross profit
  October 31, 2000........................................     $155,223        23,817       $179,040
  October 31, 1999........................................     $180,693        29,708       $210,401
  October 31, 1998........................................     $170,415        25,569       $195,984

Long-lived assets(3)
  October 31, 2000........................................     $765,240       124,335       $889,575
  October 31, 1999........................................     $735,649       135,428       $871,077
  October 31, 1998........................................     $647,350       121,447       $768,797


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

(1) Includes the Company's operations in the United States and the Commonwealth
    of Puerto Rico.

(2) Foreign revenue is based on the country in which the sales originate. The
    Company commenced its foreign operations as follows: Mexico - August 1994;
    Australia - December 1994; New Zealand - April 1996; Canada - October 1996;
    Spain - April 1997; Portugal - September 1997; the Netherlands - December
    1997; Argentina - April 1998; France and Belgium - May 1998.

(3) Long-lived assets include cemetery property and net property and equipment.

                                       F-53
   183
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(18) QUARTERLY FINANCIAL DATA (UNAUDITED)



YEAR ENDED OCTOBER 31, 2000                   FIRST      SECOND     THIRD      FOURTH
- ---------------------------                  --------   --------   --------   --------
                                                                  
Revenues...................................  $192,960   $188,861   $181,823   $171,157
Gross profit...............................    48,708     49,784     45,935     34,613
Net earnings...............................    18,841     19,332     18,077     10,544
Earnings per common share:
  Basic....................................       .18        .18        .17        .10
  Diluted..................................       .18        .18        .17        .10




YEAR ENDED OCTOBER 31, 1999(1)                FIRST      SECOND     THIRD      FOURTH
- ------------------------------               --------   --------   --------   --------
                                                                  
Revenues...................................  $178,172   $194,297   $193,721   $189,918
Gross profit...............................    54,241     57,668     53,674     44,818
Earnings before cumulative effect of change
  in accounting principle..................    23,501     27,108     23,347     16,564
Earnings per common share before cumulative
  effect of change in accounting principle:
  Basic....................................       .24        .24        .21        .15
  Diluted..................................       .24        .24        .21        .15
Net earnings (loss)(2).....................   (26,600)    27,108     23,347     16,564
Earnings per common share:
  Basic....................................      (.27)       .24        .21        .15
  Diluted..................................      (.27)       .24        .21        .15


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

(1) The first, second and third quarters of fiscal year 1999 have been restated
    from the Company's respective Quarterly Reports on Form 10-Q to reflect the
    Company's change in accounting principle effective November 1, 1998. As a
    result, first quarter of fiscal year 1999 reflects a $3,016 decrease in
    earnings, $.03 per share (basic and diluted), before the cumulative effect
    of the change in accounting principle. Second quarter of fiscal year 1999 as
    presented above reflects a decrease in net earnings of $5,055, or $.05 per
    share (basic and diluted), as a result of the accounting change. Third
    quarter of fiscal year 1999 as presented above reflects a decrease in net
    earnings of $5,552, or $.05 per share (basic and diluted), as a result of
    the accounting change. See Note 3.

(2) In addition, the first quarter as presented above includes a $50,101
    decrease in net earnings (net of a $28,798 income tax benefit), or $.51 per
    share (basic and diluted), for the cumulative effect of the change in
    accounting principle.

(19) SUBSEQUENT EVENTS

     Subsequent to fiscal year 2000, the Company withdrew approximately $40,000
from its funeral trust funds by obtaining a bond to guarantee performance under
certain specified contracts in lieu of trusting requirements. The Company agreed
to maintain unused credit facilities in the aggregate that will equal or exceed
the bond amount related to these contracts. The Company used the proceeds along
with cash on hand to make approximately $24,900 of regularly scheduled principal
payments and an additional $55,000 principal payment to reduce the balance of
its revolving credit facility.

                                       F-54
   184
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(20) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
SUBORDINATED NOTES

     The following presents the condensed consolidating historical financial
statements as of October 31, 2000 and 1999 and for the three fiscal years ended
October 31, 2000, 1999 and 1998, for the direct and indirect domestic
subsidiaries of the Company that are anticipated to serve as guarantors of the
Senior Subordinated Notes, and the financial results of the Company's
subsidiaries that are not anticipated to serve as guarantors.

 CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND OTHER COMPREHENSIVE INCOME



                                                         YEAR ENDED OCTOBER 31, 2000
                                    ---------------------------------------------------------------------
                                                GUARANTOR     NON-GUARANTOR
                                     PARENT    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                    --------   ------------   -------------   ------------   ------------
                                                                              
Revenues:
  Funeral.........................  $     --     $286,080       $165,772        $     --       $451,852
  Cemetery........................        --      248,434         34,515              --        282,949
                                    --------     --------       --------        --------       --------
                                          --      534,514        200,287              --        734,801
                                    --------     --------       --------        --------       --------
Costs and expenses:
  Funeral.........................      (250)     209,611        125,802              --        335,163
  Cemetery........................        --      186,436         34,155               7        220,598
                                    --------     --------       --------        --------       --------
                                        (250)     396,047        159,957               7        555,761
                                    --------     --------       --------        --------       --------
  Gross profit....................       250      138,467         40,330              (7)       179,040
Corporate general and
  administrative expenses.........    19,810           --             --             (47)        19,763
                                    --------     --------       --------        --------       --------
  Operating earnings (loss).......   (19,560)     138,467         40,330              40        159,277
Interest income (expense), net....    55,571      (79,665)       (37,300)          5,110        (56,284)
Other income, net.................     1,790        2,505          2,852          (4,953)         2,194
                                    --------     --------       --------        --------       --------
  Earnings before income taxes....    37,801       61,307          5,882             197        105,187
Income taxes......................    12,589       23,728          2,003              73         38,393
                                    --------     --------       --------        --------       --------
  Net earnings before equity in
     subsidiaries.................    25,212       37,579          3,879             124         66,794
Equity in subsidiaries............    41,582           --             --         (41,582)            --
                                    --------     --------       --------        --------       --------
  Net earnings....................    66,794       37,579          3,879         (41,458)        66,794
  Other comprehensive loss, net...    (1,202)      (5,127)       (38,402)             --        (44,731)
                                    --------     --------       --------        --------       --------
  Comprehensive income (loss).....  $ 65,592     $ 32,452       $(34,523)       $(41,458)      $ 22,063
                                    ========     ========       ========        ========       ========


                                       F-55
   185
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(20) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
     SUBORDINATED NOTES -- (CONTINUED)






                                                         YEAR ENDED OCTOBER 31, 1999
                                    ---------------------------------------------------------------------
                                                GUARANTOR     NON-GUARANTOR
                                     PARENT    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                    --------   ------------   -------------   ------------   ------------
                                                                              
Revenues:
  Funeral.........................  $     --     $281,865       $164,012        $     --       $445,877
  Cemetery........................        --      267,696         42,535              --        310,231
                                    --------     --------       --------        --------       --------
                                          --      549,561        206,547              --        756,108
                                    --------     --------       --------        --------       --------
Costs and expenses:
  Funeral.........................      (250)     193,412        125,840              --        319,002
  Cemetery........................        --      190,885         35,768              52        226,705
                                    --------     --------       --------        --------       --------
                                        (250)     384,297        161,608              52        545,707
                                    --------     --------       --------        --------       --------
  Gross profit....................       250      165,264         44,939             (52)       210,401
Corporate general and
  administrative expenses.........    16,763        2,426             --             (28)        19,161
                                    --------     --------       --------        --------       --------
  Operating earnings (loss).......   (16,513)     162,838         44,939             (24)       191,240
Interest income (expense), net....    48,413      (69,563)       (31,024)             --        (52,174)
Other income (expense) net........       (46)         345          3,186              --          3,485
                                    --------     --------       --------        --------       --------
  Earnings before income taxes and
     cumulative effect of change
     in accounting principle......    31,854       93,620         17,101             (24)       142,551
Income taxes......................    14,093       32,823          5,115              --         52,031
                                    --------     --------       --------        --------       --------
  Earnings before cumulative
     effect of change in
     accounting principle.........    17,761       60,797         11,986             (24)        90,520
Cumulative effect of change in
  accounting principle............        --      (45,442)        (4,659)             --        (50,101)
                                    --------     --------       --------        --------       --------
  Net earnings before equity in
     subsidiaries.................    17,761       15,355          7,327             (24)        40,419
Equity in subsidiaries............    22,658           --             --         (22,658)            --
                                    --------     --------       --------        --------       --------
  Net earnings....................    40,419       15,355          7,327         (22,682)        40,419
  Other comprehensive loss, net...        --       (1,827)          (618)             --         (2,445)
                                    --------     --------       --------        --------       --------
  Comprehensive income............  $ 40,419     $ 13,528       $  6,709        $(22,682)      $ 37,974
                                    ========     ========       ========        ========       ========


                                       F-56
   186
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(20) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
     SUBORDINATED NOTES -- (CONTINUED)






                                                         YEAR ENDED OCTOBER 31, 1998
                                    ---------------------------------------------------------------------
                                                GUARANTOR     NON-GUARANTOR
                                     PARENT    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                    --------   ------------   -------------   ------------   ------------
                                                                              
Revenues:
  Funeral.........................  $     --     $244,329       $134,766        $     --       $379,095
  Cemetery........................        --      234,409         34,861              --        269,270
                                    --------     --------       --------        --------       --------
                                          --      478,738        169,627              --        648,365
                                    --------     --------       --------        --------       --------
Costs and expenses:
  Funeral.........................      (250)     161,321         99,598              --        260,669
  Cemetery........................        --      167,522         24,166              24        191,712
                                    --------     --------       --------        --------       --------
                                        (250)     328,843        123,764              24        452,381
                                    --------     --------       --------        --------       --------
  Gross profit....................       250      149,895         45,863             (24)       195,984
Corporate general and
  administrative expenses.........    15,871          750             --              --         16,621
Performance-based stock options...    44,153       30,546          2,063              --         76,762
                                    --------     --------       --------        --------       --------
  Operating earnings (loss).......   (59,774)     118,599         43,800             (24)       102,601
Interest income (expense), net....    38,966      (56,669)       (26,118)          2,029        (41,792)
Other income, net.................     4,857        3,081          3,264          (7,047)         4,155
                                    --------     --------       --------        --------       --------
  Earnings (loss) before income
     taxes........................   (15,951)      65,011         20,946          (5,042)        64,964
Income taxes......................    (6,185)      24,817          6,187          (1,757)        23,062
                                    --------     --------       --------        --------       --------
  Net earnings (loss) before
     equity in subsidiaries.......    (9,766)      40,194         14,759          (3,285)        41,902
Equity in subsidiaries............    51,668           --             --         (51,668)            --
                                    --------     --------       --------        --------       --------
  Net earnings....................    41,902       40,194         14,759         (54,953)        41,902
  Other comprehensive loss, net...        --       (3,381)       (28,278)             --        (31,659)
                                    --------     --------       --------        --------       --------
  Comprehensive income (loss).....  $ 41,902     $ 36,813       $(13,519)       $(54,953)      $ 10,243
                                    ========     ========       ========        ========       ========


                                       F-57
   187
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(20) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
     SUBORDINATED NOTES -- (CONTINUED)



                     CONDENSED CONSOLIDATING BALANCE SHEETS



                                                               OCTOBER 31, 2000
                                   ------------------------------------------------------------------------
                                                  GUARANTOR     NON-GUARANTOR
                                     PARENT      SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                   -----------   ------------   -------------   ------------   ------------
                                                                                
ASSETS
Current assets:
  Cash and cash equivalent
    investments..................  $    59,862    $     (299)     $ 32,032       $      --      $   91,595
  Marketable securities..........        5,356           190         1,727              --           7,273
  Receivables, net of
    allowances...................        1,004       122,232        54,238              --         177,474
  Inventories....................          383        44,467        15,799              --          60,649
  Prepaid expenses...............          769         1,941         1,353              --           4,063
                                   -----------    ----------      --------       ---------      ----------
    Total current assets.........       67,374       168,531       105,149              --         341,054
Receivables due beyond one year,
  net of allowances..............           --       152,093        64,980              --         217,073
Intangible assets................          191       457,088       211,183              --         668,462
Deferred charges.................        2,007       108,792        15,359              --         126,158
Cemetery property, at cost.......           --       377,898        63,748              --         441,646
Property and equipment, at
  cost...........................       24,768       422,609       145,675              96         593,148
Less accumulated depreciation....        6,924       113,325        24,900              70         145,219
                                   -----------    ----------      --------       ---------      ----------
Net property and equipment.......       17,844       309,284       120,775              26         447,929
Merchandise trust, less estimated
  cost to deliver................           --       112,732       (26,763)             --          85,969
Investment in subsidiaries.......      323,921            --            --        (323,921)             --
Other assets.....................        1,505         1,785         5,427              --           8,717
                                   -----------    ----------      --------       ---------      ----------
                                   $   412,842    $1,688,203      $559,858       $(323,895)     $2,337,008
                                   ===========    ==========      ========       =========      ==========
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term
    debt.........................  $    29,857    $       --      $     --       $      --      $   29,857
  Accounts payable...............          299         3,988        16,026              29          20,342
  Accrued expenses...............       14,572        43,409        11,181            (136)         69,026
  Income taxes payable...........      (13,796)        3,448        12,031          (1,683)             --
  Deferred income taxes..........         (307)       14,695         2,425          (1,562)         15,251
                                   -----------    ----------      --------       ---------      ----------
    Total current liabilities....       30,625        65,540        41,663          (3,352)        134,476
Long-term debt, less current
  maturities.....................      836,385            --        84,285              --         920,670
Intercompany payables, net.......   (1,654,754)    1,194,997       473,017         (13,260)             --
Deferred income taxes............       13,400        71,857          (276)         (1,241)         83,740
Deferred revenue.................          500        64,664        43,580              --         108,744
Other long-term liabilities......           --         6,481         8,088             152          14,721
                                   -----------    ----------      --------       ---------      ----------
    Total liabilities............     (773,844)    1,403,539       650,357         (17,701)      1,262,351
                                   -----------    ----------      --------       ---------      ----------
Common stock.....................      106,832           224            53            (277)        106,832
Other............................    1,081,056       292,916        13,001        (305,917)      1,081,056
Accumulated other comprehensive
  loss...........................       (1,202)       (8,476)     (103,553)             --        (113,231)
                                   -----------    ----------      --------       ---------      ----------
    Total shareholders' equity...    1,186,686       284,664       (90,499)       (306,194)      1,074,657
                                   -----------    ----------      --------       ---------      ----------
                                   $   412,842    $1,688,203      $559,858       $(323,895)     $2,337,008
                                   ===========    ==========      ========       =========      ==========


                                       F-58
   188
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(20) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
     SUBORDINATED NOTES -- (CONTINUED)






                                                                   OCTOBER 31, 1999
                                       ------------------------------------------------------------------------
                                                      GUARANTOR     NON-GUARANTOR
                                         PARENT      SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                       -----------   ------------   -------------   ------------   ------------
                                                                                    
ASSETS

Current assets:
  Cash and cash equivalent
    investments......................  $    11,689    $    1,649      $ 17,539       $      --      $   30,877
  Marketable securities..............        2,920        41,529         2,100              --          46,549
  Receivables, net of allowances.....        1,311       113,441        61,463              --         176,215
  Inventories........................          364        39,408        11,659              --          51,431
  Prepaid expenses...................          514         4,166         1,317              --           5,997
                                       -----------    ----------      --------       ---------      ----------
    Total current assets.............       16,798       200,193        94,078              --         311,069
Receivables due beyond one year, net
  of allowances......................           --       173,325        64,253              --         237,578
Intangible assets....................          278       440,311       232,772              --         673,361
Deferred charges.....................        3,890        90,901        14,645              --         109,436
Cemetery property, at cost...........           --       367,229        56,803              --         424,032
Property and equipment, at cost......       22,042       388,815       160,727              96         571,680
Less accumulated depreciation........        3,668        94,543        26,397              27         124,635
                                       -----------    ----------      --------       ---------      ----------
Net property and equipment...........       18,374       294,272       134,330              69         447,045
Merchandise trust, less estimated
  cost to deliver....................           --        82,397       (23,398)             --          58,999
Investment in subsidiaries...........      282,321            --            --        (282,321)             --
Other assets.........................        1,290         5,322        15,748              --          22,360
                                       -----------    ----------      --------       ---------      ----------
                                       $   322,951    $1,653,950      $589,231       $(282,252)     $2,283,880
                                       ===========    ==========      ========       =========      ==========

LIABILITIES AND
SHAREHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term
    debt.............................  $    12,582    $       --      $     --       $      --      $   12,582
  Accounts payable...................         (227)        8,113        13,887              29          21,802
  Accrued expenses...................       19,650        41,336        15,418              --          76,404
  Income taxes payable...............      (11,429)        3,386        13,516              22           5,495
  Deferred income taxes..............         (162)       15,279         2,076              --          17,193
                                       -----------    ----------      --------       ---------      ----------
    Total current liabilities........       20,414        68,114        44,897              51         133,476
Long-term debt, less current
  maturities.........................      930,939           376         7,516              --         938,831
Intercompany payables, net...........   (1,764,347)    1,235,101       543,006         (13,760)             --
Deferred income taxes................       10,083        62,930        12,268          (3,847)         81,434
Deferred revenue.....................          750        34,954        29,257              --          64,961
Other long-term liabilities..........           --           150         8,264             152           8,566
                                       -----------    ----------      --------       ---------      ----------
    Total liabilities................     (802,161)    1,401,625       645,208         (17,404)      1,227,268
                                       -----------    ----------      --------       ---------      ----------

Common stock.........................      106,219           337            52            (389)        106,219
Other................................    1,018,893       255,337         9,122        (264,459)      1,018,893
Accumulated other comprehensive
  loss...............................           --        (3,349)      (65,151)             --         (68,500)
                                       -----------    ----------      --------       ---------      ----------
    Total shareholders' equity.......    1,125,112       252,325       (55,977)       (264,848)      1,056,612
                                       -----------    ----------      --------       ---------      ----------
                                       $   322,951    $1,653,950      $589,231       $(282,252)     $2,283,880
                                       ===========    ==========      ========       =========      ==========


                                       F-59
   189
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(20) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
     SUBORDINATED NOTES -- (CONTINUED)



                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



                                                             YEAR ENDED OCTOBER 31, 2000
                                        ---------------------------------------------------------------------
                                                    GUARANTOR     NON-GUARANTOR
                                         PARENT    SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                        --------   ------------   -------------   ------------   ------------
                                                                                  
Net cash provided by (used in)
  operating activities................  $ 39,948     $ 25,098       $  5,005         $(500)        $ 69,551
                                        --------     --------       --------         -----         --------
Cash flows from investing activities:
  Proceeds from sale of marketable
     securities.......................     2,990       45,624         16,486            --           65,100
  Purchases of marketable securities
     and long-term investments........    (5,426)      (4,285)        (4,060)           --          (13,771)
  Purchases of subsidiaries, net of
     cash, seller financing and stock
     issued...........................        --         (804)            --            --             (804)
  Additions to property and
     equipment........................    (2,936)     (28,669)        (4,412)           --          (36,017)
  Other...............................        --        1,192            134            --            1,326
                                        --------     --------       --------         -----         --------
     Net cash provided by (used in)
       investing activities...........    (5,372)      13,058          8,148            --           15,834
                                        --------     --------       --------         -----         --------
Cash flows from financing activities:
  Proceeds from long-term debt........     8,366           --             --            --            8,366
  Repayments of long-term debt........   (12,344)          --        (10,806)           --          (23,150)
  Intercompany receivables
     (payables).......................    21,593      (40,104)        18,011           500               --
  Issuance of common stock............     2,380           --             --            --            2,380
  Dividends...........................    (6,398)          --             --            --           (6,398)
                                        --------     --------       --------         -----         --------
     Net cash provided by (used in)
       financing activities...........    13,597      (40,104)         7,205           500          (18,802)
                                        --------     --------       --------         -----         --------
Effect of exchange rates on cash and
  cash equivalents....................        --           --         (5,865)           --           (5,865)
                                        --------     --------       --------         -----         --------
Net increase (decrease) in cash.......    48,173       (1,948)        14,493            --           60,718
                                        --------     --------       --------         -----         --------
Cash and cash equivalents, beginning
  of period...........................    11,689        1,649         17,539            --           30,877
                                        --------     --------       --------         -----         --------
Cash and cash equivalents, end of
  period..............................  $ 59,862     $   (299)      $ 32,032         $  --         $ 91,595
                                        ========     ========       ========         =====         ========


                                       F-60
   190
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(20) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
     SUBORDINATED NOTES -- (CONTINUED)






                                                        YEAR ENDED OCTOBER 31, 1999
                                   ----------------------------------------------------------------------
                                                GUARANTOR     NON-GUARANTOR
                                    PARENT     SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                   ---------   ------------   -------------   ------------   ------------
                                                                              
Net cash provided by (used in)
  operating activities...........  $  93,251    $ (75,363)      $(12,320)       $    50       $   5,618
                                   ---------    ---------       --------        -------       ---------
Cash flows from investing
  activities:
  Proceeds from sale of
     marketable securities.......         --       14,740         27,500             --          42,240
  Purchases of marketable
     securities and long-term
     investments.................     (2,992)     (17,126)        (6,067)            --         (26,185)
  Purchases of subsidiaries, net
     of cash, seller financing
     and stock issued............         --     (133,554)       (28,478)            --        (162,032)
  Additions to property and
     equipment...................    (10,891)     (29,238)       (14,754)            --         (54,883)
  Other..........................         --          519          2,592             --           3,111
                                   ---------    ---------       --------        -------       ---------
     Net cash used in investing
       activities................    (13,883)    (164,659)       (19,207)            --        (197,749)
                                   ---------    ---------       --------        -------       ---------
Cash flows from financing
  activities:
  Proceeds from long-term debt...    246,573           --          1,006             --         247,579
  Repayments of long-term debt...   (231,995)          --           (780)            --        (232,775)
  Intercompany receivables
     (payables)..................   (269,902)     240,238         29,714            (50)             --
  Issuance of common stock.......    220,556           --             --             --         220,556
  Purchase and retirement of
     common stock................    (32,951)          --             --             --         (32,951)
  Dividends......................     (8,557)          --             --             --          (8,557)
                                   ---------    ---------       --------        -------       ---------
     Net cash provided by (used
       in) financing
       activities................    (76,276)     240,238         29,940            (50)        193,852
                                   ---------    ---------       --------        -------       ---------
Effect of exchange rates on cash
  and cash equivalents...........         --           --         (1,577)            --          (1,577)
                                   ---------    ---------       --------        -------       ---------
Net increase (decrease) in
  cash...........................      3,092          216         (3,164)            --             144
Cash and cash equivalents,
  beginning of period............      8,597        1,433         20,703             --          30,733
                                   ---------    ---------       --------        -------       ---------
Cash and cash equivalents, end of
  period.........................  $  11,689    $   1,649       $ 17,539        $    --       $  30,877
                                   =========    =========       ========        =======       =========


                                       F-61
   191
                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(20) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS OF SENIOR
     SUBORDINATED NOTES -- (CONTINUED)






                                                            YEAR ENDED OCTOBER 31, 1998
                                       ----------------------------------------------------------------------
                                                    GUARANTOR     NON-GUARANTOR
                                        PARENT     SUBSIDIARIES   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                       ---------   ------------   -------------   ------------   ------------
                                                                                  
Net cash provided by (used in)
  operating activities...............  $  58,086    $ (14,573)      $ (17,823)      $(3,286)      $  22,404
                                       ---------    ---------       ---------       -------       ---------
Cash flows from investing activities:
  Proceeds from sale of marketable
     securities......................         --       12,567           6,472            --          19,039
  Purchases of marketable securities
     and long-term investments.......         --      (19,229)        (11,209)           --         (30,438)
  Purchases of subsidiaries, net of
     cash, seller financing and stock
     issued..........................         --     (137,855)        (85,559)           --        (223,414)
  Additions to property and
     equipment.......................     (4,053)     (28,526)        (12,224)           --         (44,803)
                                       ---------    ---------       ---------       -------       ---------
     Net cash used in investing
       activities....................     (4,053)    (173,043)       (102,520)           --        (279,616)
                                       ---------    ---------       ---------       -------       ---------
Cash flows from financing activities:
  Proceeds from long-term debt.......    602,782           --              --            --         602,782
  Repayments of long-term debt.......   (270,682)          --              --            --        (270,682)
  Intercompany receivables
     (payables)......................   (340,565)     212,004         130,293        (1,732)             --
  Retirement of performance-based
     stock options...................    (39,923)     (27,633)         (1,875)           --         (69,431)
  Issuance of common stock...........     11,738           --              --            --          11,738
  Purchase and retirement of common
     stock...........................     (9,101)          --              --            --          (9,101)
  Dividends..........................     (5,866)          --          (5,018)        5,018          (5,866)
                                       ---------    ---------       ---------       -------       ---------
     Net cash provided by (used in)
       financing activities..........    (51,617)     184,371         123,400         3,286         259,440
                                       ---------    ---------       ---------       -------       ---------
Effect of exchange rates on cash and
  cash equivalents...................         --           --          (3,135)           --          (3,135)
                                       ---------    ---------       ---------       -------       ---------
Net increase (decrease) in cash......      2,416       (3,245)            (78)           --            (907)
Cash and cash equivalents, beginning
  of period..........................      6,181        4,678          20,781            --          31,640
                                       ---------    ---------       ---------       -------       ---------
Cash and cash equivalents, end of
  period.............................  $   8,597    $   1,433       $  20,703       $    --       $  30,733
                                       =========    =========       =========       =======       =========


                                       F-62
   192

                      REPORT OF INDEPENDENT ACCOUNTANTS ON
                          FINANCIAL STATEMENT SCHEDULE

The Board of Directors and Shareholders of
Stewart Enterprises, Inc.:

     Our report on the consolidated financial statements of Stewart Enterprises,
Inc. and Subsidiaries, which includes an explanatory paragraph related to
changes in the Company's method of accounting for funeral services investment
trust fund earnings in 1999, is included on page F-24. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule listed on Page F-64. This financial statement schedule is the
responsibility of the Company's management.

     In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.

PricewaterhouseCoopers LLP

New Orleans, Louisiana
December 12, 2000, except for
Note 19 as to which the date is
January 9, 2001

                                       F-63
   193

                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
                             (DOLLARS IN THOUSANDS)



            COLUMN A                COLUMN B             COLUMN C             COLUMN D         COLUMN E
            --------                --------     ------------------------   -------------   --------------
                                                        ADDITIONS
                                                 ------------------------
                                   BALANCE AT    CHARGED TO     CHARGED
                                  BEGINNING OF   COSTS AND     TO OTHER      DEDUCTIONS     BALANCE AT END
          DESCRIPTION                PERIOD       EXPENSES    ACCOUNTS(1)   -- WRITE-OFFS     OF PERIOD
          -----------             ------------   ----------   -----------   -------------   --------------
                                                                             
Current -- Allowance for
  contract cancellations and
  doubtful accounts:
   Year ended October 31,
     2000.......................      $11,432      14,351           53          15,912         $ 9,924
     1999.......................      $10,738      14,050        2,223          15,579         $11,432
     1998.......................      $ 6,869      16,191        1,875          14,197         $10,738
Due after one year -- Allowance
  for contract cancellations and
  doubtful accounts:
   Year ended October 31,
     2000.......................      $14,557      21,526           --          19,223         $16,860
     1999.......................      $12,063      19,864           --          17,370         $14,557
     1998.......................      $ 9,696      12,134          728          10,495         $12,063
Accumulated amortization of
  intangible assets:
   Year ended October 31,
     2000.......................      $63,300      19,644           --              --         $82,944
     1999.......................      $43,831      19,469           --              --         $63,300
     1998.......................      $29,383      14,448           --              --         $43,831


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

(1) Amounts charged to other accounts represent principally the opening balance
    in the allowance for contract cancellations and doubtful accounts for
    acquired companies.

                                       F-64
   194

                   UNAUDITED PRO FORMA FINANCIAL INFORMATION

     The Company has entered into a definitive agreement to sell its operations
in Mexico. The net proceeds from the sale are expected to be approximately US
$70 million before taxes, which will be used to pay down existing debt. The
transaction is scheduled to close in August 2001. The following unaudited pro
forma information is presented for comparative purposes only and does not
purport to be indicative of the results of operations or the financial position
that would have resulted had the sale of the Company's Mexican operations been
consummated on the date indicated, at the beginning of the period indicated, or
that may result in the future.

     The following presents the condensed statement of earnings of the Company
for the six months ended April 30, 2001, pro forma adjustments assuming the
pending sale of the Company's Mexican operations had been consummated on
November 1, 2000, and the pro forma condensed statement of earnings for the six
months ended April 30, 2001.

                        CONDENSED STATEMENTS OF EARNINGS



                                                               SIX MONTHS ENDED APRIL 30, 2001
                                                        ----------------------------------------------
                                                                              PRO FORMA
                                                        CONSOLIDATED (1)   ADJUSTMENTS (2)   PRO FORMA
                                                        ----------------   ---------------   ---------
                                                                                    
Revenues:
  Funeral.............................................      $215,307          $(10,655)      $204,652
  Cemetery............................................       132,322              (490)       131,832
                                                            --------          --------       --------
                                                             347,629           (11,145)       336,484
                                                            --------          --------       --------
Costs and expenses:
  Funeral.............................................       164,972            (5,159)       159,813
  Cemetery............................................        98,357              (758)        97,599
                                                            --------          --------       --------
                                                             263,329            (5,917)       257,412
                                                            --------          --------       --------
  Gross profit........................................        84,300            (5,228)        79,072
Corporate general and administrative expenses.........         9,066                --          9,066
                                                            --------          --------       --------
  Operating earnings..................................        75,234            (5,228)        70,006
Net interest income (expense).........................       (25,783)              653        (25,130)
Other income, net.....................................         3,184               (80)         3,104
                                                            --------          --------       --------
  Earnings before income taxes and cumulative effect
     of change in accounting principles...............        52,635            (4,655)        47,980
Income taxes..........................................        19,212              (948)        18,264
                                                            --------          --------       --------
  Earnings before cumulative effect of change in
     accounting principles............................      $ 33,423          $ (3,707)      $ 29,716
                                                            ========          ========       ========
Earnings per common share:
  Basic...............................................      $    .31                         $    .28
                                                            ========                         ========
  Diluted.............................................      $    .31                         $    .28
                                                            ========                         ========
Weighted average common shares outstanding (in
  thousands):
  Basic...............................................       107,131                          107,131
                                                            ========                         ========
  Diluted.............................................       107,136                          107,136
                                                            ========                         ========


                                       P-1
   195

NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF EARNINGS FOR THE SIX MONTHS
ENDED APRIL 30, 2001

(1) Reflects the historical, condensed consolidated results of operations of
    Stewart Enterprises, Inc.

(2) Reflects the deconsolidation of the Company's Mexican operations and the pro
    forma adjustment for the interest savings relating to the repayment of the
    Company's revolving credit facility. The sale of the Company's Mexican
    operations was assumed to be consummated on November 1, 2000 for US $70
    million in net proceeds, before taxes. Such US $70 million in net proceeds
    were assumed to repay the Company's revolving credit facility which had an
    average borrowing rate of 6.878 percent for the first six months of fiscal
    year 2001 and resulted in interest savings of $2,407. The interest savings
    of $2,407 is netted with the deconsolidation of Mexico's interest income of
    $1,754 to arrive at net interest income of $653 as shown above. The gain on
    the sale of the Mexican operations and the tax liability related to the gain
    were excluded from the pro forma adjustments in the condensed statement of
    earnings above. See the discussion of the gain in the assumptions used in
    the pro forma condensed balance sheet.

                                       P-2
   196

     The following presents the condensed balance sheet of the Company as of
April 30, 2001, pro forma adjustments assuming the pending sale of the Company's
Mexican operations had been consummated on April 30, 2001, and the pro forma
condensed balance sheet as of April 30, 2001.

                            CONDENSED BALANCE SHEETS



                                                                              APRIL 30, 2001
                                                              -----------------------------------------------
                                                                                    PRO FORMA
                                                              CONSOLIDATED (1)   ADJUSTMENTS (2)   PRO FORMA
                                                              ----------------   ---------------   ----------
                                                                                          
                                                   ASSETS
Current assets:
  Cash and cash equivalent investments......................     $  103,721         $ (27,403)     $   76,318
  Marketable securities.....................................          3,088                --           3,088
  Receivables, net of allowances............................         92,825              (165)         92,660
  Inventories...............................................         52,738            (7,300)         45,438
  Prepaid expenses..........................................          5,618              (357)          5,261
                                                                 ----------         ---------      ----------
         Total current assets...............................        257,990           (35,225)        222,765
Receivables due beyond one year, net of allowances..........         88,089                --          88,089
Prearranged receivables.....................................      1,394,038          (111,861)      1,282,177
Intangible assets...........................................        683,614            (5,860)        677,754
Deferred charges............................................        265,966            (7,749)        258,217
Cemetery property, at cost..................................        438,771                --         438,771
Property and equipment, at cost.............................        602,923           (11,342)        591,581
Less accumulated depreciation...............................        159,719            (1,381)        158,338
                                                                 ----------         ---------      ----------
Net property and equipment..................................        443,204            (9,961)        433,243
Deferred income taxes.......................................         96,339           (15,302)         81,037
Other assets................................................         10,035            (5,263)          4,772
                                                                 ----------         ---------      ----------
                                                                 $3,678,046         $(191,221)     $3,486,825
                                                                 ==========         =========      ==========
                                    LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt......................     $  501,150         $ (70,000)     $  431,150
  Accounts payable..........................................         14,539              (655)         13,884
  Accrued expenses..........................................         65,892              (359)         65,533
  Income taxes payable......................................          6,681            (5,566)          1,115
  Deferred income taxes.....................................         17,375                --          17,375
                                                                 ----------         ---------      ----------
         Total current liabilities..........................        605,637           (76,580)        529,057
Long-term debt, less current maturities.....................        365,223                --         365,223
Prearranged deferred revenue................................      1,820,406          (133,968)      1,686,438
Other long-term liabilities.................................         13,850                --          13,850
                                                                 ----------         ---------      ----------
         Total liabilities..................................      2,805,116          (210,548)      2,594,568
                                                                 ----------         ---------      ----------
Shareholders' Equity:
Common stock................................................        107,520                --         107,520
Other.......................................................        865,664           (11,378)        854,286
Accumulated other comprehensive income......................       (100,254)           30,705         (69,549)
                                                                 ----------         ---------      ----------
         Total shareholders' equity.........................        872,930            19,327         892,257
                                                                 ----------         ---------      ----------
                                                                 $3,678,046         $(191,221)     $3,486,825
                                                                 ==========         =========      ==========


                                       P-3
   197

NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEETS

(1) Reflects the historical, condensed consolidated financial position of
    Stewart Enterprises, Inc.

(2) Reflects the deconsolidation of the Company's Mexican financial position and
    the pro forma adjustments for the repayment of the Company's revolving
    credit facility, the gain on the sale of the Mexican operations and the tax
    liability related to the sale. The sale of the Company's Mexican operations
    was assumed to be consummated on April 30, 2001 for US $70 million in net
    proceeds, before taxes. The proceeds were assumed to repay the Company's
    revolving credit facility. The book value of the Mexican operations was
    assumed to be $69,224, which resulted in a book gain of $776. The tax basis
    of the Mexican operations was assumed to be $35,275, which resulted in a
    taxable gain of $34,725 and a tax liability of $12,154.

                                       P-4
   198

     The following presents the condensed statement of earnings of the Company
for the fiscal year ended October 31, 2000, pro forma adjustments assuming the
pending sale of the Company's Mexican operations had been consummated on
November 1, 1999, and the pro forma condensed statement of earnings for the
fiscal year ended October 31, 2000.

                        CONDENSED STATEMENTS OF EARNINGS



                                                                 YEAR ENDED OCTOBER 31, 2000
                                                        ----------------------------------------------
                                                                              PRO FORMA
                                                        CONSOLIDATED (1)   ADJUSTMENTS (2)   PRO FORMA
                                                        ----------------   ---------------   ---------
                                                                                    
Revenues:
  Funeral.............................................      $451,852          $(26,297)      $425,555
  Cemetery............................................       282,949            (1,457)       281,492
                                                            --------          --------       --------
                                                             734,801           (27,754)       707,047
                                                            --------          --------       --------
Costs and expenses:
  Funeral.............................................       335,163           (13,535)       321,628
  Cemetery............................................       220,598            (2,672)       217,926
                                                            --------          --------       --------
                                                             555,761           (16,207)       539,554
                                                            --------          --------       --------
  Gross profit........................................       179,040           (11,547)       167,493
Corporate general and administrative expenses.........        19,763                --         19,763
                                                            --------          --------       --------
  Operating earnings..................................       159,277           (11,547)       147,730
Net interest income (expense).........................       (56,284)            3,325        (52,959)
Other income, net.....................................         2,194              (437)         1,757
                                                            --------          --------       --------
  Earnings before income taxes........................       105,187            (8,659)        96,528
Income taxes..........................................        38,393            (1,888)        36,505
                                                            --------          --------       --------
  Net earnings........................................      $ 66,794          $ (6,771)      $ 60,023
                                                            ========          ========       ========
Earnings per common share:
  Basic...............................................      $    .63                         $    .56
                                                            ========                         ========
  Diluted.............................................      $    .63                         $    .56
                                                            ========                         ========
Weighted average common shares outstanding (in
  thousands):
  Basic...............................................       106,600                          106,600
                                                            ========                         ========
  Diluted.............................................       106,603                          106,603
                                                            ========                         ========


                                       P-5
   199

NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF EARNINGS FOR THE YEAR ENDED
OCTOBER 31, 2000

(1) Reflects the historical condensed consolidated results of operations of
    Stewart Enterprises, Inc.

(2) Reflects the deconsolidation of the Company's Mexican operations and the pro
    forma adjustment for the interest savings relating to the repayment of the
    Company's revolving credit facility. The sale of the Company's Mexican
    operations was assumed to be consummated on November 1, 1999 for US $70
    million in net proceeds, before taxes. The proceeds were assumed to repay
    the Company's revolving credit facility which had an average borrowing rate
    of 6.619 percent for fiscal year 2000 and resulted in interest savings of
    $4,633. The interest savings of $4,633 is netted with the deconsolidation of
    Mexico's interest income of $1,308 to arrive at net interest income of
    $3,325 as shown above. The gain on the sale of the Mexican operations and
    the tax liability related to the gain were excluded from the pro forma
    adjustments in the condensed statement of earnings above. See the discussion
    of the gain in the assumptions used in the pro forma condensed balance
    sheet.

                                       P-6
   200

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

                                  $300,000,000

                        (STEWART ENTERPRISES, INC. LOGO)

                         Offer to Exchange $300,000,000
             Registered 10 3/4% Senior Subordinated Notes due 2008
                          for any and all outstanding
                   10 3/4% Senior Subordinated Notes due 2008

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

                                   PROSPECTUS
                              --------------------

                                August 14, 2001

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
   201

              PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     Section 83 of the Louisiana Business Corporation Law gives Louisiana
corporations broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers; gives a director or officer who
successfully defends an action the right to be so indemnified, subject to
specific conditions and exclusions; and authorizes Louisiana corporations to buy
directors' and officers' liability insurance. Such indemnification is not
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, authorization of shareholders or otherwise.

     Our By-laws make mandatory the indemnification of directors and officers
permitted by the Louisiana Business Corporation Law. The standard to be applied
in evaluating any claim for indemnification (excluding claims for expenses
incurred in connection with the successful defense of any proceeding or matter
therein for which indemnification is mandatory without reference to any such
standard) is whether the claimant acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation. With respect to any criminal action or proceeding, the standard is
that the claimant had no reasonable cause to believe the conduct was unlawful.
No indemnification is permitted in respect of any claim, issue or matter as to
which a director or officer shall have been adjudged by a court of competent
jurisdiction to be liable for willful or intentional misconduct or to have
obtained an improper personal benefit, unless, and only to the extent that the
court shall determine upon application that, in view of all the circumstances of
the case, he is fairly and reasonably entitled to indemnity for such expenses
that the court shall deem proper.

     We have in effect a directors' and officers' liability insurance policy
that provides for indemnification of our officers and directors against losses
arising from claims asserted against them in their capacities as officers and
directors, subject to limitations and conditions set forth in such policy.

     We have entered into indemnity agreements with each of our directors and
executive officers, pursuant to which we have agreed under certain circumstances
to purchase and maintain directors' and officers' liability insurance, unless
such insurance is not reasonably available or, in the reasonable judgment of the
Board of Directors, there is insufficient benefit to us from such insurance. The
agreements also provide that we will indemnify each director and executive
officer against any costs and expenses, judgments, settlements and fines
incurred in connection with any claim involving him by reason of his position as
director or officer that are in excess of the coverage provided by any such
insurance, provided that he meets certain standards of conduct.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a) Exhibits



        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
                      
          2              Definitive Agreement for the sale of Stewart's Mexican
                         operations (incorporated by reference to Exhibit 2.0 to
                         Stewart's Quarterly Report on Form 10-Q for the quarter
                         ended April 30, 2001).
          4.1            Indenture dated June 29, 2001 by and among Stewart, the
                         Guarantors named therein and Firstar Bank, N.A., as Trustee.
          4.2            Form of 10 3/4% Senior Subordinated Note due 2008 (included
                         in Exhibit 4.1).
          4.3            Registration Rights Agreement dated June 29, 2001 by and
                         among Stewart, the Guarantors named therein and Banc of
                         America Securities LLC, Deutsche Banc Alex. Brown Inc.,
                         Credit Lyonnais Securities (USA) Inc. and SunTrust Equitable
                         Securities Corporation.
          4.4            Form of exchange note.


                                       II-1
   202



        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
                      
          4.5            Indenture dated as of December 1, 1996 by and between
                         Stewart and Citibank, N.A. as Trustee (incorporated by
                         reference to Exhibit 4.1 to Stewart's Current Report on Form
                         8-K dated December 5, 1996), Supplemental Indenture dated
                         April 24, 1998 (incorporated by reference to Exhibit 4.1 to
                         Stewart's Current Report on Form 8-K dated April 21, 1998)
                         and Second Supplemental Indenture dated June 29, 2001
                         (incorporated by reference to Exhibit 4.2 to Stewart's
                         Current Report on Form 8-K dated July 12, 2001).
          4.6            Form of 6.70% Note due 2003.
          4.7            Form of 6.40% Remarketable Or Redeemable Securities (ROARS)
                         due May 1, 2013 (Remarketing date May 1, 2003).
          4.8            Credit Agreement dated June 29, 2001 by and among Stewart,
                         Empresas Stewart-Cementerios and Empresas
                         Stewart-Funerarias, as Borrowers, Bank of America, N.A., as
                         Administrative Agent, Collateral Agent and as a Lender,
                         Deutsche Banc Alex. Brown Inc., as Syndication Agent,
                         Bankers Trust Company, as a Lender and the other Lenders
                         party thereto from time to time (incorporated by reference
                         to Exhibit 4.1 to Stewart's Current Report on Form 8-K dated
                         July 12, 2001).
          4.9            Credit Agreement by and among Stewart, its subsidiaries and
                         Citicorp USA, Inc., Bank of America Illinois, and
                         NationsBank of Texas, N.A. dated April 14, 1997
                         (incorporated by reference to Exhibit 4.2 to Stewart's
                         Registration Statement on Form S-3 (Registration No.
                         333-27771) filed with the Commission on May 23, 1997).
          4.10           See Stewart's Amended and Restated Articles of
                         Incorporation, as amended, and By-laws, as amended and
                         restated, defining the rights of holders of Class A and
                         Class B common stock (incorporated by reference to Exhibit
                         3.1 to Stewart's Annual Report on Form 10-K for the fiscal
                         year ended October 31, 1999 and Exhibit 3.2 to Stewart's
                         Quarterly Report on Form 10-Q for the quarter ended July 31,
                         2000, respectively).
          4.11           Specimen of Class A common stock certificate (incorporated
                         by reference to Exhibit 4.2 to Amendment No. 3 to Stewart's
                         Registration Statement on Form S-1 (Registration No.
                         33-42336) filed with the Commission on October 7, 1991).
          4.12           Rights Agreement, dated as of October 28, 1999, between
                         Stewart and ChaseMellon Shareholder Services, L.L.C. as
                         Rights Agent (incorporated by reference to Exhibit 1 to
                         Stewart's Form 8-A dated November 3, 1999).


        Stewart hereby agrees to furnish to the Commission, upon request, a copy
        of the instruments which define the rights of holders of Stewart's
        long-term debt. None of such instruments (other than those included as
        exhibits herein) represent long-term debt in excess of 10 percent of
        Stewart's consolidated total assets.

                      
          5.1            Opinion of Jones, Walker, Waechter, Poitevent, Carrere &
                         Denegre, L.L.P. regarding the validity of the exchange
                         notes.
          5.2            Opinion of Holland & Knight, LLP regarding the validity of
                         the exchange notes.
         12.1            Calculation of Ratio of Earnings to Fixed Charges.
         12.2            Calculation of Pro Forma Ratio of Earnings to Fixed Charges.
         23.1            Consent of PricewaterhouseCoopers LLP.



                                       II-2
   203
                      
         23.2            Consent of Jones, Walker, Waechter, Poitevent, Carrere &
                         Denegre, L.L.P. (included in Exhibit 5).
         24              Power of Attorney (included on the signature page of this
                         registration statement).
         25              Statement of eligibility of trustee.
         99.1            Form of Letter of Transmittal.
         99.2            Form of Notice of Guaranteed Delivery.



     (b) Financial Statement Schedules

                      
            1            Schedule II Valuation and Qualifying Accounts (included on
                            page F-64 of the prospectus).



ITEM 22. UNDERTAKINGS.

     The undersigned registrants hereby undertake:

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

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

           (B) 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.
               Notwithstanding the foregoing, any increase or decrease in the
               volume of securities offered (if the total dollar value of
               securities offered would not exceed that which was registered)
               and any deviation from the low or high of the estimated maximum
               offering range may be reflected in the form of prospectus filed
               with the Commission pursuant to Rule 424(b) if, in the aggregate,
               the changes in volume and price represent no more than a 20%
               change in the maximum aggregate offering price set forth in the
               "Calculation of Registration Fee" table in the effective
               registration statement.

           (C) 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.

        (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 exchange offer.

        (b) For purposes of determining any liability under the Securities Act
            of 1933, each filing of the registrant's annual report pursuant to
            Section 13(a) or 15(d) of the Exchange Act that is incorporated by
            reference in this 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 may be permitted to directors, officers and
            controlling persons of the registrant pursuant to the provisions
            described under Item 20 or otherwise, the registrant has been
            advised that in the opinion of the Securities and Exchange
            Commission such indemnification is against public policy as
            expressed in the Securities Act and is, therefore, unenforceable. In
            the event that a claim for indemnification against such liabilities
            (other than the payment by the registrant of expenses incurred or
            paid by a director, officer or controlling person of the registrant
            in the successful defense of any action,

                                       II-3
   204

            suit or proceeding) is asserted by such director, officer or
            controlling person in connection with the securities being
            registered, the registrant will, unless in the opinion of counsel
            the matter has been settled by controlling precedent, submit to a
            court of appropriate jurisdiction the question whether such
            indemnification by it is against public policy as expressed in the
            Securities Act and will be governed by the final adjudication of
            such issue.

        (d) To respond to requests for information that is incorporated by
            reference into the prospectus pursuant to Items 4, 10(b), 11, or 13
            of this Form, within one business day of the receipt of such
            request, and to send the incorporated documents by first class mail
            or other equally prompt means. This includes information contained
            in documents filed subsequent to the effective date of the
            registration statement through the date of responding to the
            request.

        (e) To supply by means of a post-effective amendment all information
            concerning a transaction, and the company being acquired involved
            therein, that was not the subject of and included in the
            registration statement when it became effective.

                                       II-4
   205

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New Orleans, State of
Louisiana, on August 14, 2001.

                                            STEWART ENTERPRISES, INC.

                                            By:      /s/ WILLIAM E. ROWE
                                              ----------------------------------

                                                       William E. Rowe
                                                President and Chief Executive
                                                            Officer

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of William E. Rowe and Kenneth C. Budde, or
either of them, his true and lawful attorney-in-fact and agent, with full power
of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and ratifying
and confirming all that said attorney-in-fact and agent or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.



                      SIGNATURE                                     TITLE                    DATE
                      ---------                                     -----                    ----
                                                                                  

              /s/ FRANK B. STEWART, JR.                Chairman of the Board            August 14, 2001
- -----------------------------------------------------
                Frank B. Stewart, Jr.

                 /s/ WILLIAM E. ROWE                   President, Chief Executive       August 14, 2001
- -----------------------------------------------------    Officer and a Director
                   William E. Rowe                       (Principal Executive Officer)

                /s/ KENNETH C. BUDDE                   Executive Vice President,        August 14, 2001
- -----------------------------------------------------    President-Corporate Division,
                  Kenneth C. Budde                       Chief Financial Officer and a
                                                         Director (Principal Financial
                                                         Officer)

                /s/ MICHAEL G. HYMEL                   Vice President and Chief         August 14, 2001
- -----------------------------------------------------    Accounting Officer (Principal
                  Michael G. Hymel                       Accounting Officer)

                /s/ DARWIN C. FENNER                   Director                         August 14, 2001
- -----------------------------------------------------
                  Darwin C. Fenner

                 /s/ JOHN P. LABORDE                   Director                         August 14, 2001
- -----------------------------------------------------
                   John P. Laborde

               /s/ JAMES W. MCFARLAND                  Director                         August 14, 2001
- -----------------------------------------------------
                 James W. McFarland

                 /s/ MICHAEL O. READ                   Director                         August 14, 2001
- -----------------------------------------------------
                   Michael O. Read


                                       S-1
   206

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the registrants
named below have duly caused this registration statement to be signed on their
behalf by the undersigned, thereunto duly authorized, in the City of New
Orleans, State of Louisiana, on August 14, 2001.

S.E. OF TUCSON, ARIZONA, INC.
GRIFFIN-LEGGETT, INC.
FOREST HILLS CEMETERY, INC.
GRIFFIN LEGGETT HEALEY & ROTH, INC.
GRIFFIN-LEGGETT INSURANCE AGENCY, INC.
GROSS FUNERAL HOME, INC.
REST HILLS MEMORIAL PARK, INC.
GRIFFIN LEGGETT -- CONWAY, INC.
DILDAY BROTHERS HUNTINGTON VALLEY MORTUARY
HOPSON MORTUARY, INC.
LASSILA FUNERAL CHAPELS, INC.
SANTA BARBARA FUNERAL SERVICES, INC.
S.E. ACQUISITION OF CALIFORNIA, INC.
ALL SOULS MORTUARY, INC.
ASHES TO ASHES, INC.
ASSUMPTION MORTUARY, INC.
BARSTOW FUNERAL HOMES, INC.
BUCHHEIM FAMILY, INC.
CALVARY MORTUARY OF LOS ANGELES, CALIFORNIA, INC.
CATHOLIC MORTUARY SERVICES, INC.
DeYOUNG MEMORIAL CHAPEL, INC.
HOLY CROSS MORTUARY OF CULVER CITY, CALIFORNIA, INC.
HOLY CROSS MORTUARY OF POMONA, CALIFORNIA, INC.
LOMBARD & CO.
N.D. DAVIS & ASSOCIATES, INC.
QUEEN OF HEAVEN MORTUARY, INC.
RESURRECTION MORTUARY, INC.
RICHARD PIERCE FUNERAL SERVICE
RIVER CITIES FUNERAL CHAPEL, INC.
S.E. ACQUISITION OF DELANO, CALIFORNIA, INC.
S.E. ACQUISITION OF GLENDALE, CALIFORNIA, INC.
S.E. ACQUISITION OF LANCASTER, CALIFORNIA, INC.
S.E. ACQUISITION OF LOS OSOS MORTUARY AND MEMORIAL PARK, INC.
S.E. ACQUISITION OF OAKHURST, CALIFORNIA, INC.
S.E. ACQUISITION OF OROVILLE, CALIFORNIA, INC.
S.E. ACQUISITION OF SAN DIEGO, CALIFORNIA, INC.
SAN FERNANDO MISSION MORTUARY, INC.
SANTA CLARA MORTUARY, INC.
SCOVERN MORTUARY, A CALIFORNIA CORPORATION
SDCA HOLDINGS, INC.
SAN DIEGO CEMETERY ASSOCIATION
SIMPLICITY PLAN OF CALIFORNIA, INC.
STEWART PRE-NEED SERVICES, INC.
STRICKLIN/SNIVELY MORTUARY
CATALINA CHANNEL CREMATION SOCIETY
WALLACE E. WHITE & HOWARD J. CALLANAN, INC.
WOODSIDE CHAPEL OF CRIPPEN & FLYNN
SENTINEL CREMATION SOCIETIES, INC.
                                       S-2
   207

S.E. ACQUISITION OF MURIETTA, CALIFORNIA, INC.
S.E. ACQUISITION OF SANTA MARIA, CALIFORNIA, INC.
VICTOR V. DESROSIER, INC.
CEMETERY MANAGEMENT, INC.
ARLINGTON MEMORIAL PARK CEMETERY AND FUNERAL HOME, INC.
BALDWIN-FAIRCHILD FUNERAL HOMES, INC.
ALL FAITHS MEMORIAL PARK, INC.
ORLANDO FUNERAL HOME, INCORPORATED
THE SIMPLICITY PLAN, INC.
BAY AREA CREMATORY, INC.
BRUCE OCALA FUNERAL HOME, INC.
BETH DAVID FUNERAL CHAPEL TAMPA, INC.
BETH DAVID MEMORIAL CHAPEL, INC.
CHAPEL HILL CEMETERY, INC.
GLEN HAVEN MEMORIAL PARK, INC.
HIGHLAND MEMORY GARDENS, INC. (FL)
SEMORAN FUNERAL HOME, INC.
FLORIDA HILLS MEMORIAL GARDENS, INC.
GARDEN OF MEMORIES, INC.
A.P. BOZA FUNERAL HOME, INC.
CURRY & SON FUNERAL HOME, INC.
WOODLAWN MEMORY GARDENS, INC. (ST. PETE)
GOOD SHEPHERD MEMORIAL GARDENS, INC.
DAVID C. GROSS FUNERAL HOME, INC.
HUBBELL FUNERAL HOME AND CREMATORY, INC.
KENT R. PALMER, INC.
KICLITER FUNERAL HOME, INC.
MADCEM OF FLORIDA, INC.
MEMORIAL PARK CEMETERY, INC.
OAKLAWN PARK CEMETERY AND FUNERAL HOME, INC.
ROBERTS FUNERAL HOME, INC.
ROYAL PALM MEMORIAL GARDENS, INC.
SYLVAN ABBEY MEMORIAL PARK, INC.
TRINITY MEMORIAL GARDENS OF LAKELAND, INC.
TURNER CREMATORY, INC.
TURNER FUNERAL HOMES, INC.
WALSH & WOOD FUNERAL HOME, INC.
WOODLAWN PARK CEMETERY COMPANY (MIAMI)
MEMORIAL SUNSET PARK, INC.
NATIONAL MONUMENT CO., INC.
SOUTH DADE-PALMS MEMORIAL PARK, INC.
SIMPLE TRIBUTE OF FLORIDA, INC.
CHEATHAM HILL MEMORIAL PARK, INC.
EMPRESAS STEWART -- CEMENTERIOS, INC.
EMPRESAS STEWART -- FUNERARIAS, INC.
SIMPLE TRIBUTE, INC.
EASTLAWN CORPORATION
HOLLY HILL MEMORIAL PARK, INC.
ROSE HAVEN FUNERAL HOME & CEMETERY, INC.
ACME MAUSOLEUM CORPORATION
INTERNATIONAL STONE & ERECTORS, INC.
LAKE LAWN METAIRIE FUNERAL HOME, INC.
LAKE LAWN METAIRIE FUNERAL HOME (JOINT VENTURE)
                                       S-3
   208

LAKE LAWN PARK, INC.
METAIRIE CEMETERY ASSOCIATION
PINE CREST CEMETERY, INC.
ALL FAITHS FUNERAL HOME, INC.
MOUNT OLIVET CEMETERY, INC.
S.E. AUSTRALIA, INC.
S.E. SOUTH-CENTRAL, INC.
ELLISON FUNERAL HOME, INC.
KILGORE-GREEN FUNERAL HOME, INC.
LATHAN FUNERAL HOME, INC.
PINE CREST FUNERAL HOME, INC.
FAITH MEMORIAL PARK & MAUSOLEUM COMPANY, INC.
VALHALLA MEMORY GARDENS AND FUNERAL HOME, INC.
ROCKCO AND SON FUNERAL HOME, INC.
ROCKCO'S FUNERAL HOMES, INC.
S.E. ACQUISITION OF LITHONIA, GEORGIA, INC.
ANDREW J. McGANN & SON FUNERAL HOME, INC.
S.E. ACQUISITION OF BLUE ISLAND, ILLINOIS, INC.
S.E. ACQUISITION OF OAK LAWN AND ORLAND PARK, ILLINOIS, INC.
S.E. CEMETERY MANAGEMENT OF ILLINOIS, INC.
THEIS-GORSKI FUNERAL HOME, INC.
KNUTSON FUNERAL HOMES, INC.
PAULEY FUNERAL HOME, INC.
RUNYAN MANGOLD, INC.
PROFESSIONAL FUNERAL SERVICES, INC.
D.W. NEWCOMER'S SONS, INC.
DWN PROPERTIES, INC.
FUNERAL SECURITY PLANS, INC.
S.E. ACQUISITION OF BOONVILLE, MISSOURI, INC.
WYUKA FUNERAL HOME, INC.
WYUKA SIMPLICITY PLAN, INC.
S.E. ACQUISITION OF ALBUQUERQUE, NEW MEXICO, INC.
S.E. ACQUISITION OF SANTA FE, NEW MEXICO, INC.
S.E. ACQUISITION OF MUSKOGEE, OKLAHOMA, INC.
MT. JULIET FUNERAL HOME, INC.
MT. JULIET MEMORIAL GARDENS, INC.
NAVE FUNERAL HOME OF LEBANON, INC.
SIMPLE TRIBUTE OF TENNESSEE, INC.
CEMETERY SERVICES, INC.
S.E. CEMETERY MANAGEMENT OF WISCONSIN, INC.
WISCONSIN MEMORIAL PARK COMPANY, INC.
TIME-LOCK INSURANCE AGENCY, INC.
SIMPLE TRIBUTE, INC.
SIMPLE TRIBUTE OF FLORIDA, INC.
SIMPLE TRIBUTE OF TENNESSEE, INC.
SIMPLE TRIBUTE OF MARYLAND, INC.
ST. BERNARD MEMORIAL GARDENS, INC.
ST. BERNARD MEMORIAL FUNERAL HOME, INC.
ST. VINCENT de PAUL CEMETERY ASSOCIATION
STEWART ENTERPRISES (EUROPE), INC.
STEWART RESOURCE CENTER, INC.
STEWART SERVICES, INC.
S.E. MID-ATLANTIC, INC.
                                       S-4
   209

GARNER FAMILY FUNERAL HOME, INC.
HAISTEN FUNERAL HOMES, INC.
HAISTEN FUNERAL HOME OF HENRY COUNTY, INC.
HIGGINS AND SON FUNERAL HOME, INC.
S.E. ACQUISITION OF PIKEVILLE, KENTUCKY, INC.
BOUNDS FUNERAL HOME, INC.
CEDAR HILL CEMETERY COMPANY, INC.
CREST LAWN MEMORIAL GARDENS, INC.
FORT LINCOLN CEMETERY, INC.
FORT LINCOLN FUNERAL HOME, INC.
GALLERY GRANITE CORPORATION
HILLCREST MEMORIAL CEMETERY, INC.
HINES-RINALDI FUNERAL HOME, INC.
JOHN M. TAYLOR FUNERAL HOME, INC.
LOUDON PARK CEMETERY COMPANY
DRUID RIDGE CEMETERY COMPANY
LOUDON PARK FUNERAL HOME, INC.
NALLEY'S FUNERAL HOME, INC.
NATIONAL HARMONY MEMORIAL PARK, INC.
PARKLAWN, INC.
THE PARKWOOD CEMETERY COMPANY
PARKWOOD MANAGEMENT COMPANY
WILLIAM W. CHAMBERS, INC.
SIMPLE TRIBUTE OF MARYLAND, INC.
GORNY & GORNY PATERSON-CLIFTON MORTUARY
S.E. ACQUISITION OF CLIFTON, NEW JERSEY, INC.
C.J. APPLEGATE AND SONS, INC.
GARDINIER COLLETTI MEMORIAL HOME, INC.
MATTLE GRAY NULTON FUNERAL HOME, INC.
MURPHY FUNERAL SERVICE, INC.
NULTON FUNERAL HOME, INC.
OTTO REDANZ FUNERAL HOME, INC.
CORNELL & DAGGETT, INC.
S.E. ACQUISITION OF FREDONIA, NEW YORK, INC.
BROWN MEMORIALS, INC.
CATAWBA MEMORIAL PARK, INC.
CENTRAL STONE WORKS, INCORPORATED
HAROLD C. DAVIS, INC.
EVANS FUNERAL HOME, INC.
EVERGREEN MEMORIAL GARDENS, INC.
GARRETT -- HILLCREST, INC.
HIGHLAND MEMORY GARDENS OF FRANKLIN COUNTY, INC.
JOHNSON FUNERAL HOME, INC.
LANCASTER FUNERAL HOMES, INC.
MCLAURIN'S FUNERAL HOME, INC.
MILLER-LEE, INC.
PARKLAWN MEMORIAL GARDENS, INC.
POLLOCK WELLS FUNERAL SERVICE, INC.
STEPHENS SERVICES, INC.
THOMAS-YELVERTON COMPANY
1730 INVESTMENT CO., INC.
MEMORIAL PARKS, INCORPORATED
BENJAMIN FRANKLIN P. M., INC.
                                       S-5
   210

GEORGE WASHINGTON MEMORIAL PARK, INC.
KIRK & NICE SUBURBAN CHAPEL, INC.
KIRK & NICE, INC.
S.E. ACQUISITION OF PENNSYLVANIA, INC.
S.E. CEMETERY MANAGEMENT OF PENNSYLVANIA, INC.
SUNSET MEMORIAL PARK COMPANY
PET HAVEN, INC.
DUNBAR FUNERAL HOME, INC.
THE MACKEY MORTUARY, INC.
CANNON FUNERAL HOME, INC.
OCONEE MEMORIAL FUNERAL HOME, INC.
PINEVIEW, INC.
S.E. ACQUISITION OF NORTH AUGUSTA, SOUTH CAROLINA, INC.
S.E. ACQUISITION OF CHARLESTON, INC.
S.E. ACQUISITION OF LIBERTY, SOUTH CAROLINA, INC.
S.E. ACQUISITION OF SOUTH CAROLINA, INC.
MONTE VISTA BURIAL PARK, INC.
BLUE RIDGE MEMORIAL GARDENS, INC. (VA)
CLINCH VALLEY MEMORIAL CEMETERY, INC.
EVERLY COMMUNITY FUNERAL CARE, INC.
EVERLY FUNERAL HOMES, INCORPORATED
EVERLY PFP, INC.
SIMPLICITY PLANS OF ALABAMA, INC.
FAIRFAX FUNERAL HOME, INC.
JOSEPH W. TEAGUE FUNERAL HOME, INC.
RICHMOND MEMORIAL PARKS, INC.
WASHINGTON MEMORIAL CEMETERY, INCORPORATED
WISE CORPORATION
BARTLETT-BURDETTE-COX FUNERAL HOME, INC.
CALFEE FUNERAL SERVICE OF PINEVILLE, INC.
CASDORPH & CURRY FUNERAL HOME, INC.
DODD-PAYNE-HESS FUNERAL HOME, INC.
EVANS FUNERAL HOME, INC. (WEST VIRGINIA)
GRACELAND MAUSOLEUM, INC.
KIMES FUNERAL HOME, INC.
KLINGEL-CARPENTER MORTUARY, INC.
S.E. ACQUISITION OF MALDEN, WEST VIRGINIA, INC.
WILSON FUNERAL HOME, INC.
LAKEWOOD MEMORIAL PARK, INC.
MEMORIAL SERVICES OF COLUMBIA, INC.
MEMORIAL FUNERAL HOME, INC.
LINCOLN MEMORIAL MORTUARY, INC.
S.E. ACQUISITION OF NEVADA, INC.
DESERT MEMORIAL, INC.
NEPTUNE SOCIETY OF NEVADA, INC.
RENO MEMORIAL, INC.
S.E. ACQUISITION OF RENO, NEVADA, INC.
STRONG & BURNS FUNERAL HOME, INC.
MONTLAWN MEMORIAL PARK, INC.
ROCKY MOUNT MEMORIAL PARK, INC.
S.E. ACQUISITION OF OREGON, INC.
AMLING/SCHROEDER FUNERAL SERVICE, INC.
CASCADE CREMATORY, INC.
                                       S-6
   211

CHAPEL OF THE ROSES, INC.
CHAPEL OF THE VALLEY FUNERAL HOME, INC.
DUTTON, INC.
J.P. FINLEY AND SON MORTUARY, INC.
SUNSET HILLS MEMORIAL PARK
GREENWOOD CEMETERY, INC.
NISWONGER & REYNOLDS, INC.
S.E. ACQUISITION OF MYRTLE CREEK, OREGON, INC.
S.E. ACQUISITION OF REEDSPORT, OREGON, INC.
TABOR'S DESERT HILLS MORTUARY, INC.
CAROLINA FINANCIAL CORPORATION OF PICKENS
HILL-CREST MEMORIAL PARK
OCONEE MEMORIAL GARDENS, INC.
DILLARD MEMORIAL, INC.
COLE & GARRETT FUNERAL HOMES, INC.
HIGHLAND MEMORIAL CEMETERY, INC.
HOLLY HILLS, INC.
KINGSPORT CEMETERY CORPORATION
THE NASHVILLE HISTORIC CEMETERY ASSOCIATION, INC.
PASADENA FUNERAL HOME, INC.
RESTLAND FUNERAL HOME, INC.
ANDERSON-CLAYTON BROS. FUNERAL HOMES, INC.
LITTLE BETHEL MEMORIAL PARK, INC.
ROSELAWN MEMORIAL GARDENS, INC.
BELEW FUNERAL HOME, INC.
BEXAR COUNTY MORTUARY SERVICES, INC.
BLUEBONNET HILLS MEMORIAL PARK, INC.
BLUEBONNET HILLS FUNERAL HOME, INC.
BRIGHT-HOLLAND FUNERAL HOME, INC.
CRESPO & SONS, INCORPORATED
DALTON & SON FUNERAL HOME, INC.
EMERALD HILLS FUNERAL CORPORATION
J. E. FOUST & SON FUNERAL DIRECTORS, INC.
GUARDIAN CREMATION SOCIETY, INC.
GUARDIAN FUNERAL HOME, INC.
HILLTOP MEMORIAL PARK
LAUREL LAND MEMORIAL PARK, INC.
LAUREL LAND FUNERAL HOME, INC.
SINGING HILLS FUNERAL HOME, INC.
LAUREL LAND OF FORT WORTH, INC.
LAUREL LAND FUNERAL HOME OF FORT WORTH, INC.
LYONS FUNERAL HOME, INC.
METROCREST FUNERAL HOME, INC.
RESTLAND OF DALLAS, INC.
ABBEY PLAN OF TEXAS, INC.
HIGHLAND MEMORIAL GARDENS, INC.
SIMPLICITY PLAN OF TEXAS, INC.
SOUTHPARK FUNERAL HOME, INC.
SOUTH MEMORIAL PARK, INC.
S.E. ACQUISITION OF WASHINGTON, INC.
E.R. BUTTERWORTH & SONS
CREMATION SOCIETY NORTHWEST, INC.
EVERGREEN STAPLES FUNERAL CHAPEL, INC.
                                       S-7
   212

CUNNINGHAM MEMORIAL PARK, INC.
LEGACY ONE, INC.
FINDLAY CEMETERY, INC.
EASTLAWN MEMORIAL GARDENS, INCORPORATED
GRANDVIEW MEMORY GARDENS, INCORPORATED
GREENHILLS MEMORY GARDENS, INC.
HIGHLAND MEMORY GARDENS, INCORPORATED (VA)
HOLLY MEMORIAL GARDENS, INC.
MONTICELLO MEMORY GARDENS, INC.
SUNSET MEMORY GARDENS, INC.
BLUE RIDGE FUNERAL HOME, INC.
BLUE RIDGE MEMORIAL GARDENS, INC. (WVA)
C.G.R., INC.
EASTERN CEMETERY ASSOCIATES, INC.
ETERNAL LIGHT FUNERALS, INC.
KANAWHA PLAZA PARTNERSHIP
LEGACY ONE SERVICE CORPORATION
LOI CHARLESTON, INC.
MOUNTAIN VIEW MEMORY GARDENS, INC.
NATIONAL EXCHANGE TRUST, LTD.
NATIONAL FUNERAL SERVICES, INCORPORATED
PLEASANT VIEW MEMORY GARDENS, INC.
WILLIAMS-BLUE RIDGE FUNERAL HOME, INC.

                                            By:      /s/ KENNETH C. BUDDE
                                              ----------------------------------
                                                       Kenneth C. Budde
                                                     Assistant Treasurer

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of William E. Rowe and Kenneth C. Budde, or
either of them, his true and lawful attorney-in-fact and agent, with full power
of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and ratifying
and confirming all that said attorney-in-fact and agent or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.



                      SIGNATURE                                      TITLE                        DATE
                      ---------                                      -----                        ----
                                                                                    

                 /s/ WILLIAM E. ROWE                   Vice-President, Director             August 13, 2001
- -----------------------------------------------------    (Principal Executive Officer)
                   William E. Rowe

                /s/ KENNETH C. BUDDE                   Assistant Secretary, Assistant       August 13, 2001
- -----------------------------------------------------    Treasurer, Director (Principal
                  Kenneth C. Budde                       Financial and Accounting
                                                         Officer)

                /s/ BRIAN J. MARLOWE                   Vice-President, Director             August 13, 2001
- -----------------------------------------------------
                  Brian J. Marlowe


                                       S-8
   213

                                  EXHIBIT LIST



        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
                      
          2              Definitive Agreement for the sale of Stewart's Mexican
                         operations (incorporated by reference to Exhibit 2.0 to
                         Stewart's Quarterly Report on Form 10-Q for the quarter
                         ended April 30, 2001).
          4.1            Indenture dated June 29, 2001 by and among Stewart, the
                         Guarantors named therein and Firstar Bank, N.A., as Trustee.
          4.2            Form of 10 3/4% Senior Subordinated Note due 2008 (included
                         in Exhibit 4.1).
          4.3            Registration Rights Agreement dated June 29, 2001 by and
                         among Stewart, the Guarantors named therein and Banc of
                         America Securities LLC, Deutsche Banc Alex. Brown Inc.,
                         Credit Lyonnais Securities (USA) Inc. and SunTrust Equitable
                         Securities Corporation.
          4.4            Form of exchange note.
          4.5            Indenture dated as of December 1, 1996 by and between
                         Stewart and Citibank, N.A. as Trustee (incorporated by
                         reference to Exhibit 4.1 to Stewart's Current Report on Form
                         8-K dated December 5, 1996), Supplemental Indenture dated
                         April 24, 1998 (incorporated by reference to Exhibit 4.1 to
                         Stewart's Current Report on Form 8-K dated April 21, 1998)
                         and Second Supplemental Indenture dated June 29, 2001
                         (incorporated by reference to Exhibit 4.2 to Stewart's
                         Current Report on Form 8-K dated July 12, 2001).
          4.6            Form of 6.70% Note due 2003.
          4.7            Form of 6.40% Remarketable Or Redeemable Securities (ROARS)
                         due May 1, 2013 (Remarketing date May 1, 2003).
          4.8            Credit Agreement dated June 29, 2001 by and among Stewart,
                         Empresas Stewart-Cementerios and Empresas
                         Stewart-Funerarias, as Borrowers, Bank of America, N.A., as
                         Administrative Agent, Collateral Agent and as a Lender,
                         Deutsche Banc Alex. Brown Inc., as Syndication Agent,
                         Bankers Trust Company, as a Lender and the other Lenders
                         party thereto from time to time (incorporated by reference
                         to Exhibit 4.1 to Stewart's Current Report on Form 8-K dated
                         July 12, 2001).
          4.9            Credit Agreement by and among Stewart, its subsidiaries and
                         Citicorp USA, Inc., Bank of America Illinois, and
                         NationsBank of Texas, N.A. dated April 14, 1997
                         (incorporated by reference to Exhibit 4.2 to Stewart's
                         Registration Statement on Form S-3 (Registration No.
                         333-27771) filed with the Commission on May 23, 1997).
          4.10           See Stewart's Amended and Restated Articles of
                         Incorporation, as amended, and By-laws, as amended and
                         restated, defining the rights of holders of Class A and
                         Class B common stock (incorporated by reference to Exhibit
                         3.1 to Stewart's Annual Report on Form 10-K for the fiscal
                         year ended October 31, 1999 and Exhibit 3.2 to Stewart's
                         Quarterly Report on Form 10-Q for the quarter ended July 31,
                         2000, respectively).
          4.11           Specimen of Class A common stock certificate (incorporated
                         by reference to Exhibit 4.2 to Amendment No. 3 to Stewart's
                         Registration Statement on Form S-1 (Registration No.
                         33-42336) filed with the Commission on October 7, 1991).
          4.12           Rights Agreement, dated as of October 28, 1999, between
                         Stewart and ChaseMellon Shareholder Services, L.L.C. as
                         Rights Agent (incorporated by reference to Exhibit 1 to
                         Stewart's Form 8-A dated November 3, 1999).
          5.1            Opinion of Jones, Walker, Waechter, Poitevent, Carrere &
                         Denegre, L.L.P. regarding the validity of the exchange
                         notes.
          5.2            Opinion of Holland & Knight, LLP regarding the validity of
                         the exchange notes.


                                        i
   214



        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
                      
         12.1            Calculation of Ratio of Earnings to Fixed Charges.
         12.2            Calculation of Pro Forma Ratio of Earnings to Fixed Charges.
         23.1            Consent of PricewaterhouseCoopers LLP.
         23.2            Consent of Jones, Walker, Waechter, Poitevent, Carrere &
                         Denegre, L.L.P. (included in Exhibit 5).
         24              Power of Attorney (included on the signature page of this
                         registration statement).
         25              Statement of eligibility of trustee.
         99.1            Form of Letter of Transmittal.
         99.2            Form of Notice of Guaranteed Delivery.


                                        ii

EX-4.1

   1

                                                                     EXHIBIT 4.1


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


                            STEWART ENTERPRISES, INC.





                   10 3/4% SENIOR SUBORDINATED NOTES DUE 2008











                                   ----------

                                    INDENTURE

                            Dated as of June 29, 2001

                                   ----------

                               FIRSTAR BANK, N.A.,

                                   AS TRUSTEE

                                   ----------



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


   2

                             CROSS-REFERENCE TABLE*



TRUST INDENTURE
  ACT SECTION                                                                               INDENTURE SECTION
- ---------------                                                                             -----------------

                                                                                         
  310(a)(1)......................................................................................7.10
     (a)(2)......................................................................................7.10
     (a)(3)......................................................................................N.A.
     (a)(4)......................................................................................N.A.
     (a)(5)......................................................................................7.10
     (b).........................................................................................7.10
     (c).........................................................................................N.A.
  311(a).........................................................................................7.11
     (b).........................................................................................7.11
     (c).........................................................................................N.A.
  312(a).........................................................................................2.06
     (b).........................................................................................13.03
     (c).........................................................................................13.03
  313(a).........................................................................................7.06, 13.03
     (b)(1)......................................................................................N.A.
     (b)(2)......................................................................................7.06, 7.07
     (c).........................................................................................7.06, 13.02
     (d).........................................................................................7.06
  314(a).........................................................................................7.06, 13.05
     (b).........................................................................................N.A.
     (c)(1)......................................................................................N.A.
     (c)(2)......................................................................................N.A.
     (c)(3)......................................................................................N.A.
     (d).........................................................................................N.A.
     (e).........................................................................................13.05
     (f).........................................................................................N.A.
  315(a).........................................................................................N.A.
     (b).........................................................................................N.A.
     (c).........................................................................................N.A.
     (d).........................................................................................N.A.
     (e).........................................................................................N.A.
  316(a) (last sentence).........................................................................N.A.
     (a)(1)(A)...................................................................................N.A.
     (a)(1)(B)...................................................................................N.A.
     (a)(2)......................................................................................N.A.
     (b).........................................................................................N.A.
     (c).........................................................................................13.13


- ----------

N.A. means not applicable.

*This Cross-Reference Table is not part of the Indenture.



                                       i


   3

                                                                                         
  317(a)(1)......................................................................................N.A.
     (a)(2)......................................................................................N.A.
     (b).........................................................................................N.A.
  318(a).........................................................................................N.A.
     (b).........................................................................................N.A.
     (c).........................................................................................13.01






                                       ii
   4

                                TABLE OF CONTENTS



                                                                                                              Page
                                                                                                              ----
                                                                                                        

CROSS-REFERENCE TABLE ..........................................................................................i

                                                    ARTICLE ONE
                                           DEFINITIONS AND INCORPORATION
                                                   BY REFERENCE

Section 1.01          Definitions...............................................................................1
Section 1.02          Other Definitions........................................................................18
Section 1.03          Incorporation by Reference of Trust Indenture Act........................................19
Section 1.04          Rules of Construction....................................................................20

                                                    ARTICLE TWO
                                                     THE NOTES

Section 2.01          Form and Dating..........................................................................20
Section 2.02          Execution and Authentication.............................................................21
Section 2.03          Methods of Receiving Payments on the Notes...............................................22
Section 2.04          Registrar and Paying Agent...............................................................22
Section 2.05          Paying Agent to Hold Money in Trust......................................................22
Section 2.06          Holder Lists.............................................................................23
Section 2.07          Transfer and Exchange....................................................................23
Section 2.08          Replacement Notes........................................................................36
Section 2.09          Outstanding Notes........................................................................36
Section 2.10          Treasury Notes...........................................................................37
Section 2.11          Temporary Notes..........................................................................37
Section 2.12          Cancellation.............................................................................37
Section 2.13          Defaulted Interest.......................................................................37
Section 2.14          CUSIP Numbers............................................................................38

                                                   ARTICLE THREE
                                            REDEMPTION AND PREPAYMENT;
                                            SATISFACTION AND DISCHARGE

Section 3.01          Notices to Trustee.......................................................................38
Section 3.02          Selection of Notes to Be Redeemed........................................................38
Section 3.03          Notice of Redemption.....................................................................38
Section 3.04          Effect of Notice of Redemption...........................................................39
Section 3.05          Deposit of Redemption Price..............................................................39
Section 3.06          Notes Redeemed in Part...................................................................40
Section 3.07          Optional Redemption......................................................................40
Section 3.08          Mandatory Redemption.....................................................................41
Section 3.09          Repurchase Offers........................................................................41
Section 3.10          Application of Trust Money...............................................................43



   5

                                                                                                        
                                                   ARTICLE FOUR
                                                     COVENANTS

Section 4.01          Payment of Notes.........................................................................43
Section 4.02          Maintenance of Office or Agency..........................................................43
Section 4.03          Reports..................................................................................44
Section 4.04          Compliance Certificate...................................................................45
Section 4.05          Taxes....................................................................................45
Section 4.06          Stay, Extension and Usury Laws...........................................................45
Section 4.07          Restricted Payments......................................................................46
Section 4.08          Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries................48
Section 4.09          Incurrence of Indebtedness and Issuance of Preferred Stock...............................50
Section 4.10          Asset Sales..............................................................................52
Section 4.11          Transactions with Affiliates.............................................................53
Section 4.12          Liens....................................................................................55
Section 4.13          Business Activities......................................................................55
Section 4.14          Limitation on Senior Subordinated Debt...................................................55
Section 4.15          Offer to Repurchase upon a Change of Control.............................................55
Section 4.16          Limitation on Issuances and Sales of Equity Interests in Restricted Subsidiaries.........56
Section 4.17          Designation of Restricted and Unrestricted Subsidiaries..................................57
Section 4.18          Payments for Consent.....................................................................57
Section 4.19          Limitations on Issuances of Guarantees of Indebtedness...................................57
Section 4.20          Sale and Leaseback Transactions..........................................................58
Section 4.21          Additional Subsidiary Guarantees.........................................................58
Section 4.22          Restriction on Transfer of Assets to Non-Guarantor Subsidiaries..........................58

                                                   ARTICLE FIVE
                                                    SUCCESSORS

Section 5.01          Merger Consolidation or Sale of Assets...................................................59

                                                    ARTICLE SIX
                                               DEFAULTS AND REMEDIES

Section 6.01          Events of Default........................................................................60
Section 6.02          Acceleration.............................................................................61
Section 6.03          Other Remedies...........................................................................62
Section 6.04          Waiver of Past Defaults..................................................................62
Section 6.05          Control by Majority......................................................................62
Section 6.06          Limitation on Suits......................................................................63
Section 6.07          Rights of Holders of Notes to Receive Payment............................................63
Section 6.08          Collection Suit by Trustee...............................................................63
Section 6.09          Trustee May File Proofs of Claim.........................................................64
Section 6.10          Priorities...............................................................................64
Section 6.11          Undertaking for Costs....................................................................64




                                       ii
   6

                                                                                                        
                                                   ARTICLE SEVEN
                                                      TRUSTEE

Section 7.01          Duties of Trustee........................................................................65
Section 7.02          Certain Rights of Trustee................................................................66
Section 7.03          Individual Rights of Trustee.............................................................66
Section 7.04          Trustee's Disclaimer.....................................................................67
Section 7.05          Notice of Defaults.......................................................................67
Section 7.06          Reports by Trustee to Holders of the Notes...............................................67
Section 7.07          Compensation and Indemnity...............................................................67
Section 7.08          Replacement of Trustee...................................................................68
Section 7.09          Successor Trustee by Merger, Etc.........................................................69
Section 7.10          Eligibility; Disqualification............................................................69
Section 7.11          Preferential Collection of Claims Against Company........................................69

                                                   ARTICLE EIGHT
                                        DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01          Option to Effect Legal Defeasance or Covenant Defeasance.................................70
Section 8.02          Legal Defeasance and Discharge...........................................................70
Section 8.03          Covenant Defeasance......................................................................71
Section 8.04          Conditions to Legal or Covenant Defeasance...............................................71
Section 8.05          Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous
                           Provisions..........................................................................72
Section 8.06          Repayment to the Company.................................................................73
Section 8.07          Reinstatement............................................................................73

                                                   ARTICLE NINE
                                         AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01          Without Consent of Holders of Notes......................................................74
Section 9.02          With Consent of Holders of Notes.........................................................74
Section 9.03          Compliance with Trust Indenture Act......................................................76
Section 9.04          Revocation and Effect of Consents........................................................76
Section 9.05          Notation on or Exchange of Notes.........................................................76
Section 9.06          Trustee to Sign Amendments, Etc..........................................................77

                                                    ARTICLE TEN
                                                   SUBORDINATION

Section 10.01         Agreement to Subordinate.................................................................77
Section 10.02         Liquidation; Dissolution; Bankruptcy.....................................................77
Section 10.03         Default on Designated Senior Debt........................................................77
Section 10.04         Acceleration of Securities...............................................................78
Section 10.05         When Distribution Must Be Paid Over......................................................78
Section 10.06         Notice by the Company....................................................................79
Section 10.07         Subrogation..............................................................................79




                                       iii
   7

                                                                                                        
Section 10.08         Relative Rights..........................................................................79
Section 10.09         Subordination May Not Be Impaired by the Company.........................................80
Section 10.10         Distribution or Notice to Representative.................................................80
Section 10.11         Rights of Trustee and Paying Agent.......................................................80
Section 10.12         Authorization to Effect Subordination....................................................80

                                                  ARTICLE ELEVEN
                                               SUBSIDIARY GUARANTEES

Section 11.01         Guarantee................................................................................81
Section 11.02         Subordination of Subsidiary Guarantee....................................................82
Section 11.03         Limitation on Guarantor Liability........................................................82
Section 11.04         Execution and Delivery of Subsidiary Guarantee...........................................82
Section 11.05         Guarantors May Consolidate, Etc., on Certain Terms.......................................83
Section 11.06         Releases Following Sale of Assets........................................................84

                                                  ARTICLE TWELVE
                                            SATISFACTION AND DISCHARGE

Section 12.01         Satisfaction and Discharge...............................................................84
Section 12.02         Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous
                           Provisions..........................................................................85
Section 12.03         Repayment to the Company.................................................................85

                                                 ARTICLE THIRTEEN
                                                   MISCELLANEOUS

Section 13.01         Trust Indenture Act Controls.............................................................86
Section 13.02         Notices..................................................................................86
Section 13.03         Communication by Holders of Notes with Other Holders of Notes............................87
Section 13.04         Certificate and Opinion as to Conditions Precedent.......................................87
Section 13.05         Statements Required in Certificate or Opinion............................................87
Section 13.06         Rules by Trustee and Agents..............................................................88
Section 13.07         No Personal Liability of Directors, Officers, Employees and Stockholders.................88
Section 13.08         Governing Law............................................................................88
Section 13.09         Consent to Jurisdiction..................................................................88
Section 13.10         No Adverse Interpretation of Other Agreements............................................89
Section 13.11         Successors...............................................................................89
Section 13.12         Severability.............................................................................89
Section 13.13         Counterpart Originals....................................................................89
Section 13.14         Acts of Holders..........................................................................89
Section 13.15         Benefit of Indenture.....................................................................90
Section 13.16         Table of Contents, Headings, Etc. .......................................................91




                                       iv
   8


                                    EXHIBITS

Exhibit A1        FORM OF NOTE

Exhibit A2        FORM OF REGULATION S TEMPORARY GLOBAL NOTE

Exhibit B         FORM OF CERTIFICATE OF TRANSFER

Exhibit C         FORM OF CERTIFICATE OF EXCHANGE

Exhibit D         FORM OF NOTATION OF GUARANTEE

Exhibit E         FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY
                  SUBSEQUENT GUARANTORS


                                        v
   9


                  INDENTURE dated as of June 29, 2001 among Stewart Enterprises,
Inc., a Louisiana corporation (the "COMPANY"), the Guarantors and Firstar Bank,
N.A., a national banking association, as trustee.

                  The Company (as defined below), the Guarantors and the Trustee
(as defined below) agree as follows for the benefit of each other and for the
equal and ratable benefit of the Holders (as defined below) of the 10 3/4%
Senior Subordinated Notes due 2008:

                                  ARTICLE ONE
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01      Definitions.

                  "144A GLOBAL NOTE" means a global note substantially in the
form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of, and registered in the name
of, the Depositary or its nominee that shall be issued in a denomination equal
to the outstanding principal amount at maturity of the Notes sold in reliance on
Rule 144A.

                  "ACQUIRED DEBT" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.

                  "ADDITIONAL NOTES" means an unlimited maximum aggregate
principal amount of Notes (other than the Notes issued on the date hereof)
issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof.

                  "AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control," as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise. For purposes of this definition, the
terms "controlling," "controlled by" and "under common control with" shall have
correlative meanings.

                  "AGENT" means any Registrar, Paying Agent or co-registrar.

                  "APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Clearstream that apply to such
transfer or exchange.

                  "ASSET SALE" means: (1) the sale, lease, conveyance or other
disposition of any assets or rights; provided that the sale, lease, conveyance
or other disposition of all or


                                       1

   10

substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole will be governed by Sections 4.15 and/or 5.01 hereof and not by
Section 4.10 hereof; and (2) the issuance of Equity Interests by any of the
Company's Restricted Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.

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

                  (1) any single transaction or series of related transactions
         that involves assets having a fair market value of less than $3
         million;

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

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

                  (4) the sale or lease of equipment, inventory, accounts
         receivable or other assets in the ordinary course of business or
         Foreign Cash Equivalents owned by any Restricted Subsidiary other than
         a Domestic Restricted Subsidiary;

                  (5) the sale or other disposition of cash or Cash Equivalents
         owned by the Company or its Restricted Subsidiaries or Foreign Cash
         Equivalents owned by any Restricted Subsidiary other than a Domestic
         Restricted Subsidiary;

                  (6) the sale or other disposition of marketable securities
         owned by the company or its Restricted Subsidiaries on the date of this
         Indenture;

                  (7) a Restricted Payment that is permitted by Section 4.07
         hereof; and

                  (8) the sale or other disposition of funds placed into escrow
         accounts or trust funds for purposes of future delivery of property,
         merchandise or services or care and maintenance of cemetery property,
         in each case in connection with the ordinary course of business.

                  "ATTRIBUTABLE DEBT" in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction, including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP.

                  "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.

                  "BENEFICIAL OWNER" has the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person"



                                       2
   11

shall be deemed to have beneficial ownership of all securities that such
"person" has the right to acquire by conversion or exercise of other securities,
whether such right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition. The terms "BENEFICIALLY OWNS" and
"BENEFICIALLY OWNED" shall have a corresponding meaning.

                  "BOARD OF DIRECTORS" means (i) with respect to a corporation,
the board of directors of the corporation; (ii) with respect to a partnership,
the board of directors of the general partner of the partnership; and (iii) with
respect to any other Person, the board or committee of such Person serving a
similar function.

                  "BROKER-DEALER" has the meaning set forth in the Registration
Rights Agreement.

                  "BUSINESS DAY" means any day other than a Legal Holiday.

                  "CAPITAL LEASE OBLIGATION" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at that time be required to be capitalized on a balance
sheet in accordance with GAAP.

                  "CAPITAL STOCK" means (i) in the case of a corporation,
corporate stock; (ii) in the case of an association or a business entity, any
and all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock; (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited); and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

                  "CASH EQUIVALENTS" means: (i) United States dollars; (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition; (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case,
with any domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better; (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above; (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each case
maturing within six months after the date of acquisition; and (vi) money market
funds at least 95% of the assets of which constitute Cash Equivalents of the
kinds described in clauses (i) through (v) of this definition.

                  "CHANGE OF CONTROL" means the occurrence of any of the
following: (i) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or assets
of the Company and its Restricted Subsidiaries, taken as a whole, to any
"person" (as that term is used in Section 13(d)(3) of the Exchange Act); (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Company; (iii) any "person" or "group" (as



                                       3
   12

such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than
the Principal and his Related Parties becomes the beneficial owner (as defined
above), directly or indirectly, of 35% or more of the voting power of all
classes of Voting Stock of the Company; (iv) the first day on which a majority
of the members of the Board of Directors of the Company are not Continuing
Directors; or (v) the Company consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or into the Company, in
any such event pursuant to a transaction in which any of the outstanding Voting
Stock of the Company or such other Person is converted into or exchanged for
cash, securities or other property, other than any such transaction where (A)
the Voting Stock of the Company outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting a
majority of the outstanding shares of such Voting Stock of such surviving or
transferee Person (immediately after giving effect to such issuance) and (B)
immediately after such transaction, no "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) other than the Principal
and his Related Parties becomes, directly or indirectly, the beneficial owner
(as defined above) of 35% or more of the voting power of all classes of Voting
Stock of the Company.

                  "CLEARSTREAM" means Clearstream Banking, societe anonyme,
Luxembourg.

                  "CLOSING DATE" means June 29, 2001.

                  "COMPANY" means Stewart Enterprises, Inc.

                  "CONSOLIDATED CASH FLOW" means, with respect to any specified
Person for any period, the Consolidated Net Income of such Person for such
period plus (i) provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income; plus
(ii) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether or not paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
pursuant to, and other net costs associated with, Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income; plus (iii) depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and all other non-cash expenses
(excluding any such non-cash expense to the extent that it represents (i) an
accrual of or reserve for cash expenses in any future period or (ii)
amortization of a prepaid cash expense that was paid in a prior period (except
for amortization representing prearranged or preneed acquisition costs)) of such
Person and its Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus (iv) non-cash items increasing
such Consolidated Net Income for such period, other than the accrual of revenue
consistent with past practice, in each case, on a consolidated basis and
determined in accordance with GAAP.



                                       4
   13

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

                  "CONSOLIDATED NET INCOME" means, with respect to any specified
Person for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary including any Unrestricted Subsidiary, or that is
accounted for by the equity method of accounting, shall be included only to the
extent of the amount of dividends or distributions paid in cash to the specified
Person or a Restricted Subsidiary thereof; (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders; (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded; and (iv) the cumulative effect of a
change in accounting principles shall be excluded.

                  "CONSOLIDATED NET WORTH" means, with respect to any specified
Person as of any date, the sum of (i) the consolidated equity of the common
stockholders of such Person and its consolidated Restricted Subsidiaries as of
such date; plus (ii) the respective amounts reported on such Person's balance
sheet as of such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such preferred
stock.

                  "CONTINUING DIRECTORS" means, as of any date of determination,
any member of the Board of Directors of the Company who: (i) was a member of
such Board of Directors on the date hereof; or (ii) was nominated for election
or elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

                  "CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the
address of the Trustee specified in Section 13.02 hereof or such other address
as to which the Trustee may give notice to the Company.

                  "CREDIT AGREEMENT" means that certain Credit Agreement, dated
as of June 29, 2001, by and among the Company, the PR Borrowers (as defined
therein), the guarantor subsidiaries named therein, Bank of America, N.A., as
administrative agent, and the other



                                       5
   14

Lenders named therein providing for up to $550 million in borrowings, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, rearranged, replaced and/or refinanced from time to time.

                  "CREDIT FACILITIES" means one or more debt facilities
(including, without limitation, the Credit Agreement) or commercial paper
facilities, in each case with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, rearranged, replaced
and/or refinanced in whole or in part from time to time.

                  "CUSTODIAN" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.

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

                  "DEFINITIVE NOTE" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.07 hereof,
substantially in the form of Exhibit A1 hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.

                  "DEPOSITARY" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.04
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

                  "DESIGNATED SENIOR DEBT" means: (i) any Indebtedness
outstanding under the Credit Agreement; and (ii) any other Senior Debt permitted
under this Indenture the principal amount of which is $50.0 million or more and
that has been designated by the Company as "Designated Senior Debt."

                  "DISQUALIFIED STOCK" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, in each case at the option of the holder thereof), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is one year
after the date on which the Notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require the Company to repurchase
such Capital Stock upon the occurrence of a change of control or an asset sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
Section 4.07.

                  "DOMESTIC SUBSIDIARY" means any Restricted Subsidiary that was
formed under the laws of the United States or any state thereof or the District
of Columbia.



                                       6
   15

                  "EQUITY INTERESTS" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

                  "EXCHANGE NOTES" means the Notes issued in the Exchange Offer
in accordance with Section 2.07(f) hereof.

                  "EXCHANGE OFFER" has the meaning set forth in the Registration
Rights Agreement.

                  "EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set
forth in the Registration Rights Agreement.

                  "EXISTING INDEBTEDNESS" means the aggregate principal amount
of Indebtedness of the Company and its Subsidiaries (other than Indebtedness
under the Credit Agreement) in existence on the date hereof.

                  "FIXED CHARGES" means, with respect to any specified Person
for any period, the sum, without duplication, of: (i) the consolidated interest
expense of such Person and its Restricted Subsidiaries for such period, whether
paid or accrued, including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net of the effect of all payments made or received pursuant to Hedging
Obligations; plus (ii) the consolidated interest of such Person and its
Restricted Subsidiaries that was capitalized during such period; plus (iii) any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries, whether or not such Guarantee
or Lien is called upon; plus (iv) the product of (a) all dividends, whether paid
or accrued and whether or not in cash, on any series of Disqualified Stock or
preferred stock of such Person or any of its Restricted Subsidiaries, other than
dividends on Equity Interests payable solely in Equity Interests of the Company
(other than Disqualified Stock) or to the Company or a Restricted Subsidiary of
the Company, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.

                  "FIXED CHARGE COVERAGE RATIO" means, with respect to any
specified Person for any period, the ratio of the Consolidated Cash Flow of such
Person for such period to the Fixed Charges of such Person for such period. In
the event that the specified Person or any of its Subsidiaries incurs, assumes,
Guarantees, repays, repurchases or redeems any Indebtedness or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the



                                       7
   16

"CALCULATION DATE"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.

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

                  (1) acquisitions and dispositions that have been made by the
         specified Person or any of its Restricted Subsidiaries, including
         through mergers or consolidations and including any related financing
         transactions and application of the proceeds therefrom, during the
         four-quarter reference period or subsequent to such reference period
         and on or prior to the Calculation Date shall be given pro forma effect
         as if they had occurred on the first day of the four-quarter reference
         period and Consolidated Cash Flow for such reference period shall be
         calculated on a pro forma basis in accordance with Regulation S-X under
         the Securities Act, but without giving effect to clause (iii) of the
         proviso set forth in the definition of Consolidated Net Income;

                  (2) the Consolidated Cash Flow attributable to discontinued
         operations, as determined in accordance with GAAP, shall be excluded;
         and

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

                  "FOREIGN CASH EQUIVALENTS" means: (i) the official currency of
Australia, Belgium, Canada, France, Germany, Mexico, the Netherlands, New
Zealand, Spain and the United Kingdom; (ii) securities issued or directly and
fully guaranteed or insured by the government of any of Australia, Belgium,
Canada (including any province thereof), France, Germany, Mexico, the
Netherlands, New Zealand, Spain or the United Kingdom or any agency or
instrumentality of any of the foregoing (provided that the full faith and credit
of the relevant jurisdiction is pledged in support thereof), and in each case
having maturities of not more than six months from the date of acquisition;
(iii) certificates of deposit, time deposits and money market deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any commercial bank or trust company organized in a
country listed in clause (i) above and having capital and surplus in excess of
$500.0 million (or its foreign currency equivalent); (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above; (v)
money market funds at least 95% of the assets of which constitute Cash
Equivalents or Foreign Cash Equivalents of the kinds described in clauses (i)
through (iv) of this definition; and (vi) other securities owned by the
Company's Restricted Subsidiaries, other than Domestic Restricted Subsidiaries,
on the date hereof.

                  "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified



                                       8
   17

Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entities as have been
approved by a significant segment of the accounting profession, which are in
effect on the Issue Date.

                  "GLOBAL NOTE LEGEND" means the legend set forth in Section
2.07(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.

                  "GLOBAL NOTES" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, substantially in
the form of Exhibit A1 or A2 hereto, as appropriate, issued in accordance with
Section 2.01, 2.07(b)(iv), 2.07(d)(ii) or 2.07(f) of this Indenture.

                  "GOVERNMENT SECURITIES" means securities that are (a) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (b) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the Company, and shall also include
a depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as a custodian with respect to any such U.S. Government
obligation or a specific payment of principal of or interest on any such U.S.
Government obligation held by such custodian for the account of the holder of
such depository receipt. However, except as required by law, such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government obligation or the specific payment of principal of or
interest on the U.S. Government obligation evidenced by such depository receipt.

                  "GUARANTEE" means a guarantee other than by endorsement of
negotiable instruments for collection in the ordinary course of business, direct
or indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.

                  "GUARANTORS" means (i) each direct or indirect Domestic
Subsidiary of the Company, excluding Investors Trust, Inc., SEI-DELFL, Inc.,
SEI-DELLA, Inc., SEI DELTX, Inc., West Lawn Cemetery and The Lincoln Memorial
Park Cemetery Association and immaterial subsidiaries which are prohibited by
law from guaranteeing the Notes; and (ii) any other subsidiary that executes a
Subsidiary Guarantee in accordance with the provisions hereof; and their
respective successors and assigns.

                  "HEDGING OBLIGATIONS" means, with respect to any specified
Person, the obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.

                  "HOLDER" means a Person in whose name a Note is registered.

                  "INDEBTEDNESS" means, with respect to any specified Person,
any indebtedness of such Person, whether or not contingent, (i) in respect of
borrowed money; (ii) evidenced by



                                       9
   18

bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof); (iii) in respect of bankers'
acceptances; (iv) representing Capital Lease Obligations; (v) in respect of the
balance deferred and unpaid of the purchase price of any property, except any
such balance that constitutes an accrued expense or trade payable; or (vi)
representing any Hedging Obligations; if and to the extent any of the preceding
items (other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of the specified Person prepared in accordance
with GAAP. In addition, the term "Indebtedness" includes (a) all Indebtedness of
others secured by a Lien on any asset of the specified Person (whether or not
such Indebtedness is assumed by the specified Person); provided that, where the
specified Person has not assumed or otherwise become liable for such
Indebtedness, the amount of such Indebtedness shall be the fair market value
(and where such fair market value is in excess of $10.0 million, such value
shall be determined by the Board of Directors) of the asset securing such
Indebtedness at the date of determination, and (b) to the extent not otherwise
included, the Guarantee by the specified Person of any indebtedness of any other
Person.

                  The amount of any Indebtedness outstanding as of any date
shall be: (i) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.

                  "INDENTURE" means this Indenture, as amended or supplemented
from time to time.

                  "INDIRECT PARTICIPANT" means a Person who holds a beneficial
interest in a Global Note through a Participant.

                  "INITIAL PURCHASERS" means the initial purchasers listed on
Schedule B of the Purchase Agreement dated June 19, 2001.

                  "INVESTMENTS" means, with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and other advances and loans
to officers and employees made consistent with past practices), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of
Section 4.07. The acquisition by the Company or any Restricted Subsidiary of the
Company of a Person that holds an Investment in a third Person shall be deemed
to be an Investment by the Company or such Restricted Subsidiary in such third
Person in an amount equal to the fair market value of the Investment held by the
acquired Person in such third Person in an amount determined as provided in the
final paragraph of Section 4.07.



                                       10
   19

                  "ISSUE DATE" means the date on which the initial $300.0
million in aggregate principal amount of the Notes were originally issued under
this Indenture.

                  "LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions in The City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.

                  "LETTER OF TRANSMITTAL" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.

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

                  "LIQUIDATED DAMAGES" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.

                  "MOODY'S" means Moody's Investors Service and any successor
thereof.

                  "NET INCOME" means, with respect to any specified Person, the
net income (loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of preferred stock dividends, excluding, however: (i)
any gain or loss, together with any related provision for taxes on such gain or
loss, realized in connection with: (a) any Asset Sale (without taking into
account clause (i) of the second paragraph of such definition) or any write-down
resulting from the adoption by the Board of Directors of the specified Person of
a plan for any such Asset Sale; or (b) the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; (ii) any extraordinary gain
or loss, together with any related provision for taxes on such extraordinary
gain or loss; and (iii) any loss related to the Company or one or more of its
Restricted Subsidiaries relieving some individuals with whom the Company or such
Subsidiary has entered into noncompetition agreements from the obligation not to
compete, as described in the Offering Memorandum, in an amount not to exceed $20
million.

                  "NET PROCEEDS" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
(i) the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, (ii) amounts required to
be applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such Asset Sale and (iii) any reserve for (1)
adjustment in



                                       11
   20

respect of the sale price of such asset or assets established in accordance with
GAAP and (2) any indemnification obligations associated with such transactions.

                  "NON-RECOURSE DEBT" means Indebtedness: (i) as to which
neither the Company nor any of its Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable as a
guarantor or otherwise, or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit upon notice,
lapse of time or both any holder of any other Indebtedness (other than the
Notes) of the Company or any of its Restricted Subsidiaries to declare a default
on such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and (iii) as to which the lenders have
been notified in writing that they will not have any recourse to the stock or
assets of the Company or any of its Restricted Subsidiaries.

                  "NON-U.S. PERSON" means a Person who is not a U.S. Person.

                  "NOTES" means the 10 3/4 % Senior Subordinated Notes due 2008
of the Company issued on the date hereof and the Exchange Notes. The Notes and
the Additional Notes, if any, shall be treated as a single class for all
purposes under this Indenture.

                  "OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

                  "OFFERING" means the offering of the Notes by the Company.

                  "OFFERING MEMORANDUM" means the offering memorandum of the
Company for the offering of the Notes, dated June 19, 2001.

                  "OFFICER" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.

                  "OFFICERS' CERTIFICATE" means a certificate signed on behalf
of the Company by at least two Officers of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.

                  "OPINION OF COUNSEL" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof; provided, however, that such legal counsel shall not be an
employee of, or internal counsel to, the Company, or any of its Subsidiaries.

                  "OWNERSHIP INTEREST" means, with respect to any Person,
Capital Stock of such Person or any interest which carries the right to elect or
appoint any member of the Board of Directors or other executive officer of such
Person.



                                       12
   21

                  "PARTICIPANT" means, with respect to the Depositary, Euroclear
or Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and with respect to DTC, shall include Euroclear and
Clearstream).

                  "PERMITTED BUSINESS" means any business conducted or proposed
to be conducted (as described in the Offering Memorandum) by the Company and its
Restricted Subsidiaries on the date hereof and other businesses, including those
conducting financing and insurance operations reasonably related or ancillary
thereto.

                  "PERMITTED INVESTMENTS" means (i) any Investment in the
Company or in a Wholly Owned Restricted Subsidiary of the Company; (ii) any
Investment in Cash Equivalents; (iii) any Investment by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment: (a) such Person becomes a Wholly Owned Restricted Subsidiary of the
Company, or (b) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is liquidated
into, the Company or a Wholly Owned Restricted Subsidiary of the Company; (iv)
any Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10; (v)
any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company; (vi) Hedging
Obligations; (vii) other Investments in any Person or Persons having an
aggregate fair market value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (vii) since the date
hereof, not to exceed $25 million; (viii) receivables owing to the Company or
any Restricted Subsidiary if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such concessionaire trade
terms as the Company or any such Restricted Subsidiary deems reasonable under
the circumstances; (ix) stock, obligations or securities received in settlement
of debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments; (x) investments
existing as of the date hereof; (xi) funds placed into escrow accounts or trust
funds for purposes of future delivery of property, merchandise or services or
care and maintenance of cemetery property, all in connection with the ordinary
course of business; and (xii) any investment by a Restricted Subsidiary, other
than a Domestic Restricted Subsidiary, in Foreign Cash Equivalents.

                  "PERMITTED JUNIOR SECURITIES" means: (i) Equity Interests in
the Company or any Guarantor; or (ii) debt securities or rights to acquire debt
securities that are subordinated to all Senior Debt and any debt securities
issued in exchange for Senior Debt to substantially the same extent as, or to a
greater extent than, the Notes and the Subsidiary Guarantees are subordinated to
Senior Debt under this Indenture.

                  "PERMITTED LIENS" means: (i) Liens on the assets of the
Company and any Guarantor securing Senior Debt that was permitted by the terms
of this Indenture to be incurred; (ii) Liens in favor of the Company or any
Restricted Subsidiary; (iii) Liens on property of a Person existing at the time
such Person is merged with or into or consolidated with the Company or any
Restricted Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company or the Restricted Subsidiary;



                                       13
   22

(iv) Liens on property existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary of the Company, provided that such Liens
were in existence prior to the contemplation of such acquisition and do not
extend to any property other than the property so acquired by the Company or the
Restricted Subsidiary; (v) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of the second paragraph of Section 4.09
covering only the assets acquired with such Indebtedness; (vi) Liens existing on
the date hereof; and (vii) Liens incurred in the ordinary course of business of
the Company or any Restricted Subsidiary of the Company with respect to
obligations that do not exceed $10.0 million at any one time outstanding.

                  "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, rearrange, renew, replace,
defease or refund other Indebtedness of the Company or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); provided that (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus all accrued interest thereon and the amount
of any reasonably determined premium necessary to accomplish such refinancing
and such reasonable expenses incurred in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable in all material respects to the Holders of Notes as those contained in
the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and (iv) such indebtedness is incurred
either by the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.

                  "PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.

                  "PRINCIPAL" means Frank B. Stewart, Jr.

                  "PRIVATE PLACEMENT LEGEND" means the legend set forth in
Section 2.07(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.

                  "PUERTO RICAN RESTRICTED SUBSIDIARY" means any wholly-owned
Restricted Subsidiary of the Company that is formed under the laws of Puerto
Rico and conducts a Permitted Business solely in Puerto Rico.

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



                                       14
   23

                  "QUALIFIED EQUITY OFFERING" means (a) an offer and sale of
Equity Interests (other than Disqualified Stock) of the Company pursuant to a
registration statement that has been declared effective by the SEC pursuant to
the Securities Act (other than a registration statement on Form S-8 or otherwise
relating to equity securities issuable under any employee benefit plan of the
Company) or (b) any sale (other than to a Subsidiary) of Equity Interests (other
than Disqualified Stock) of the Company so long as, at the time of consummation
of such sale, the Company has a class of common equity securities registered
pursuant to Section 12(b) or Section 12(g) under the Exchange Act.

                  "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of June 29, 2001, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.

                  "REGULATION S" means Regulation S promulgated under the
Securities Act.

                  "REGULATION S GLOBAL NOTE" means a Regulation S Temporary
Global Note or a Regulation S Permanent Global Note, as appropriate.

                  "REGULATION S PERMANENT GLOBAL NOTE" means a permanent Global
Note in the form of Exhibit A1 hereto bearing the Global Note Legend and the
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount at maturity of the Regulation S Temporary Global
Note upon expiration of the Restricted Period.

                  "REGULATION S TEMPORARY GLOBAL NOTE" means a temporary Global
Note in the form of Exhibit A2 hereto bearing the Global Note Legend, the
Private Placement Legend and the Temporary Regulation S Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount at
maturity of the Notes initially sold in reliance on Rule 903 of Regulation S.

                  "RELATED PARTY" means (i) any family member of any Principal;
or (ii) any trust, the beneficiary, owner or Person beneficially holding an 80%
or more controlling interest of which consists of the Principal and/or such
other Persons referred to in the immediately preceding clause (i).

                  "RESPONSIBLE OFFICER," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.

                  "RESTRICTED DEFINITIVE NOTE" means a Definitive Note bearing
the Private Placement Legend.

                  "RESTRICTED GLOBAL NOTE" means a Global Note bearing the
Private Placement Legend.



                                       15
   24

                  "RESTRICTED INVESTMENT" means an Investment other than a
Permitted Investment.

                  "RESTRICTED PERIOD" means the 40-day restricted period as
defined in Regulation S.

                  "RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of
the referred Person that is not an Unrestricted Subsidiary.

                  "RULE 144" means Rule 144 promulgated under the Securities
Act.

                  "RULE 144A" means Rule 144A promulgated under the Securities
Act.

                  "RULE 903" means Rule 903 promulgated under the Securities
Act.

                  "RULE 904" means Rule 904 promulgated the Securities Act.

                  "SEC" means the Securities and Exchange Commission.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SENIOR DEBT" means: (i) all Indebtedness of the Company or
any Guarantor outstanding from time to time under Credit Facilities and all
Hedging Obligations with respect thereto; (ii) any other Indebtedness of the
Company or any Guarantor permitted to be incurred under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or any Subsidiary Guarantee; and (iii) all Obligations with
respect to the items listed in the preceding clauses (i) and (ii).
Notwithstanding anything to the contrary in the preceding, Senior Debt shall not
include: (i) any liability for federal, state, local or other taxes owed or
owing by the Company; (ii) any Indebtedness of the Company to any of its
Subsidiaries or other Affiliates; (iii) any trade payables; or (iv) the portion
of any Indebtedness that is incurred in violation of this Indenture.

                  "SHELF REGISTRATION STATEMENT" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.

                  "S&P" means Standard & Poor's Ratings Group and any successor
thereof.

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

                  "SUBORDINATED INDEBTEDNESS" means any Indebtedness which by
its terms is expressly subordinate in right of payment in any respect to the
payment of any obligation on the Notes.



                                       16
   25

                  "SUBSIDIARY" means, with respect to any specified Person: (i)
any corporation, association or other business entity of which more than 50% of
the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such Person or one
or more Subsidiaries of such Person (or any combination thereof).

                  "SUBSIDIARY GUARANTEE" means the Guarantee by each Guarantor
of the Company's payment obligations under this Indenture and on the Notes,
executed pursuant to the provisions of this Indenture.

                  "TEMPORARY REGULATION S LEGEND" means the legend set forth in
Section 2.07(h) hereof, which is required to be placed on the Regulation S
Temporary Global Note.

                  "TIA" means the Trust Indenture Act of 1939, as in effect on
the date on which this Indenture is qualified under the TIA.

                  "TRANSACTION DATE" means, with respect to the incurrence of
any Indebtedness by the Company or any of its Restricted Subsidiaries, the date
such Indebtedness is to be incurred and, with respect to any Restricted Payment,
the date such Restricted Payment is to be made.

                  "TRUSTEE" means Firstar Bank, N.A., a national banking
association, until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.

                  "UNRESTRICTED DEFINITIVE NOTE" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.

                  "UNRESTRICTED GLOBAL NOTE" means a permanent Global Note
substantially in the form of Exhibit A1 attached hereto that bears the Global
Note Legend and that has the "Schedule of Exchanges of Interests in the Global
Note" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Notes that do
not bear the Private Placement Legend.

                  "UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company
that is designated by the Board of Directors as an Unrestricted Subsidiary
pursuant to a board resolution, but only to the extent that such Subsidiary: (i)
has no Indebtedness other than Non-Recourse Debt; (ii) is not party to any
agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary of the Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company or
such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (iii) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any direct
or indirect obligation (a) to subscribe for additional Equity Interests or (b)
to maintain or preserve such Person's financial condition or to cause such



                                       17
   26

Person to achieve any specified levels of operating results; and (iv) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries unless such
guarantee or credit support is released upon such designation.

                  Any designation of a Restricted Subsidiary of the Company as
an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the board resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the preceding conditions and was permitted by Section 4.07. If, at
any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such Section 4.09.

                  "U.S. PERSON" means a U.S. person as defined in Rule 902(k)
under the Securities Act.

                  "VOTING STOCK" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.

                  "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (ii) the then outstanding principal
amount of such Indebtedness.

                  "WHOLLY OWNED RESTRICTED SUBSIDIARY" of any specified Person
means a Restricted Subsidiary of such Person all of the outstanding Capital
Stock or other ownership interests of which (other than directors' qualifying
shares or Investments by foreign nationals mandated by applicable law) shall at
the time be owned by such Person and/or by one or more Wholly Owned Restricted
Subsidiaries of such Person.

Section 1.02      Other Definitions.



                                                                                         DEFINED
                                                                                            IN
        TERM                                                                             SECTION
        ----                                                                             -------

                                                                                      
        "AFFILIATE TRANSACTION"....................................................        4.11
        "ASSET SALE OFFER".........................................................        4.10
        "AUTHENTICATION ORDER".....................................................        2.02
        "CHANGE OF CONTROL OFFER"..................................................        4.15
        "CHANGE OF CONTROL PAYMENT"................................................        4.15



                                       18
   27



                                                                                         DEFINED
                                                                                            IN
        TERM                                                                             SECTION
        ----                                                                             -------

                                                                                      
        "CHANGE OF CONTROL PAYMENT DATE"...........................................        4.15
        "COVENANT DEFEASANCE"......................................................        8.03
        "DTC"......................................................................        2.01
        "EVENT OF DEFAULT".........................................................        6.01
        "EXCESS PROCEEDS"..........................................................        4.10
        "INCUR"....................................................................        4.09
        "LEGAL DEFEASANCE".........................................................        8.02
        "OFFER AMOUNT".............................................................        3.10
        "OFFER PERIOD".............................................................        3.10
        "OFFSHORE TRANSACTION".....................................................        2.07
        "PAYING AGENT".............................................................        2.03
        "PAYMENT DEFAULT"..........................................................        6.01
        "PERMITTED DEBT"...........................................................        4.09
        "PURCHASE DATE"............................................................        3.10
        "REGISTRAR"................................................................        2.04
        "RELATED JUDGMENT".........................................................       13.09
        "RELATED PROCEEDINGS"......................................................       13.09
        "REPURCHASE OFFER".........................................................        3.10
        "RESALE RESTRICTION TERMINATION DATE"......................................        2.07
        "RESTRICTED PAYMENTS"......................................................        4.07
        "SPECIFIED COURTS".........................................................       13.09
        "UNITED STATES"............................................................        2.07


Section 1.03      Incorporation by Reference of Trust Indenture Act.

                  Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.

                  The following TIA terms used in this Indenture have the
following meanings:

                  "INDENTURE SECURITIES" means the Notes;

                  "INDENTURE SECURITY HOLDER" means a Holder of a Note;

                  "INDENTURE TO BE QUALIFIED" means this Indenture;

                  "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee; and

                  "OBLIGOR" on the Notes means the Company and any successor
obligor upon the Notes.



                                       19
   28

                  All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.

Section 1.04      Rules of Construction.

                  Unless the context otherwise requires:

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

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

                  (c) "or" is not exclusive;

                  (d) words in the singular include the plural, and in the
         plural include the singular;

                  (e) provisions apply to successive events and transactions;
         and

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

                                   ARTICLE TWO
                                    THE NOTES

Section 2.01      Form and Dating.

                  (a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A1 or A2 hereto.
The Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its authentication.
The Notes shall be (i) initially issued in registered, global form without
interest coupons and (ii) only shall be in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof.

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

                  (b) Global Notes. Notes issued in global form shall be
substantially in the form of Exhibit A1 or A2 attached hereto (including the
Global Note Legend thereon and the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A1 attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall



                                       20
   29

be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee in accordance
with instructions given by the Holder thereof as required by Section 2.07
hereof.

                  (c) Temporary Global Notes. Notes offered and sold in reliance
on Regulation S shall be issued initially in the form of the Regulation S
Temporary Global Note, which shall be deposited on behalf of the purchasers of
the Notes represented thereby with the Trustee, as custodian for The Depository
Trust Company ("DTC") in New York, New York, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Clearstream, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of (i) a written
certificate from Euroclear and Clearstream certifying that they have received
certification of Beneficial Ownership of 100% of the aggregate principal amount
at maturity of the Regulation S Temporary Global Note by non-U.S. persons
(except to the extent of any Beneficial Owners thereof who acquired an interest
therein during the Restricted Period pursuant to another exemption from
registration under the Securities Act and who shall take delivery of a
beneficial ownership interest in a 144A Global Note bearing a Private Placement
Legend, all as contemplated by Section 2.07(a)(ii) hereof), and (ii) an
Officers' Certificate from the Company. Following the termination of the
Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S Permanent
Global Notes pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Notes, the Trustee shall cancel
the Regulation S Temporary Global Note. The aggregate principal amount of the
Regulation S Temporary Global Note and the Regulation S Permanent Global Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.

                  (d) Euroclear and Clearstream Procedures Applicable. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the "General Terms and Conditions of
Cedel Bank" and "Customer Handbook" of Clearstream shall be applicable to
transfers of beneficial interests in the Regulation S Temporary Global Note and
the Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Clearstream.

Section 2.02      Execution and Authentication.

                  Two Officers of the Company shall sign the Notes for the
Company by manual or facsimile signature.

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



                                       21
   30

                  A Note shall not be valid until authenticated by the manual
signature of the Trustee. Such signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.

                  The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is unlimited.

                  The Trustee shall, upon a written order of the Company signed
by two Officers of the Company (an "AUTHENTICATION ORDER"), authenticate Notes
for original issue with an unlimited maximum aggregate principal amount, of
which $300 million will be issued on the date of this Indenture.

                  The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

Section 2.03      Methods of Receiving Payments on the Notes.

                  If a Holder of Notes has given wire transfer instructions to
the Company, the Company shall pay all principal, interest and premium and
Liquidated Damages, if any, on that Holder's Notes in accordance with those
instructions. All other payments on Notes shall be made at the office or agency
of the Paying Agent and Registrar within the City and State of New York unless
the Company elects to make interest payments by check mailed to the Holders at
their addresses set forth in the register of Holders.

Section 2.04      Registrar and Paying Agent.

                  The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("REGISTRAR") and an
office or agency where Notes may be presented for payment ("PAYING AGENT"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without prior notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.

                  The Company initially appoints DTC to act as Depositary with
respect to the Global Notes.

                  The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes.



                                       22
   31

Section 2.05      Paying Agent to Hold Money in Trust.

                  The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, and shall notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or one of its
Subsidiaries) shall have no further liability for the money. If the Company or
one of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.

Section 2.06      Holder Lists.

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

Section 2.07      Transfer and Exchange.

(a) Transfer and Exchange of Global Notes. A Global Note may not be transferred
as a whole except by the Depositary to a nominee of the Depositary, by a nominee
of the Depositary to the Depositary or to another nominee of the Depositary, or
by the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary. All Global Notes shall be exchanged by the Company
for Definitive Notes if (i) the Company delivers to the Trustee notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and, in
either case, a successor Depositary is not appointed by the Company within 120
days after the date of such notice from the Depositary; (ii) the Company in its
sole discretion determines that the Global Notes (in whole but not in part)
should be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee; provided that in no event shall the Regulation S
Temporary Global Note be exchanged by the Company for Definitive Notes prior to
(x) the expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the
Securities Act; or (iii) there shall have occurred and be continuing a Default
or Event of Default with respect to the Notes. Upon the occurrence of either of
the preceding events in (i), (ii) or (iii) above, Definitive Notes shall be
issued in such names as the Depositary shall instruct the Trustee. Global Notes
also may be exchanged or replaced, in whole or in part, as provided in Sections
2.08 and 2.11 hereof. Except as otherwise provided above in this Section
2.07(a), every Note authenticated and delivered in exchange for, or in lieu of,
a Global Note or any portion thereof, pursuant to this Section 2.07 or Section
2.08 or 2.11 hereof, shall be authenticated and delivered in the form of, and
shall be, a Global Note. A Global Note may not be exchanged for another Note
other than as provided in



                                       23
   32

this Section 2.07(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.07(b), (c) or (f) hereof.

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

                  (i) Transfer of Beneficial Interests in the Same Global Note.
         Beneficial interests in any Restricted Global Note may be transferred
         to Persons who take delivery thereof in the form of a beneficial
         interest in the same Restricted Global Note in accordance with the
         transfer restrictions set forth in the Private Placement Legend;
         provided, however, that prior to the expiration of the Restricted
         Period, transfers of beneficial interests in the Regulation S Temporary
         Global Note may not be made to a U.S. Person or for the account or
         benefit of a U.S. Person (other than an Initial Purchaser). Beneficial
         interests in any Unrestricted Global Note may be transferred to Persons
         who take delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note. Except as required pursuant to the Private
         Placement Legend, no written orders or instructions shall be required
         to be delivered to the Registrar to effect the transfers described in
         this Section 2.07(b)(i).

                  (ii) All Other Transfers and Exchanges of Beneficial Interests
         in Global Notes. In connection with all transfers and exchanges of
         beneficial interests that are not subject to Section 2.07(b)(i) above,
         the transferor of such beneficial interest must deliver to the
         Registrar either (A) (1) a written order from a Participant or an
         Indirect Participant given to the Depositary in accordance with the
         Applicable Procedures directing the Depositary to credit or cause to be
         credited a beneficial interest in another Global Note in an amount
         equal to the beneficial interest to be transferred or exchanged and (2)
         instructions given in accordance with the Applicable Procedures
         containing information regarding the Participant account to be credited
         with such increase or (B) (1) a written order from a Participant or an
         Indirect Participant given to the Depositary in accordance with the
         Applicable Procedures directing the Depositary to cause to be issued a
         Definitive Note in an amount equal to the beneficial interest to be
         transferred or exchanged and (2) instructions given by the Depositary
         to the Registrar containing information regarding the Person in whose
         name such Definitive Note shall be registered to effect the transfer or
         exchange referred to in (1) above; provided that in no event shall
         Definitive Notes be issued upon the transfer or exchange of beneficial
         interests in the Regulation S Temporary Global Note prior to (x) the
         expiration of the Restricted Period and (y) the receipt by the
         Registrar of any certificates required pursuant to Rule 903 under the
         Securities Act. Upon consummation of an Exchange Offer by the Company
         in accordance with Section 2.07(f) hereof, the requirements of this
         Section 2.07(b)(ii) shall be deemed to have been satisfied upon receipt
         by the Registrar of the instructions contained in the Letter of
         Transmittal delivered by the Holder of such



                                       24
   33

         beneficial interests in the Restricted Global Notes. Upon satisfaction
         of all of the requirements for transfer or exchange of beneficial
         interests in Global Notes contained in this Indenture and the Notes or
         otherwise applicable under the Securities Act, the Trustee shall adjust
         the principal amount at maturity of the relevant Global Notes pursuant
         to Section 2.07(h) hereof.

                  (iii) Transfer of Beneficial Interests to Another Restricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         transferred to a Person who takes delivery thereof in the form of a
         beneficial interest in another Restricted Global Note if the transfer
         complies with the requirements of Section 2.07(b)(ii) above and the
         Registrar receives the following:

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

                           (B) if the transferee shall take delivery in the form
                  of a beneficial interest in the Regulation S Temporary Global
                  Note or Regulation S Permanent Global Note, then the
                  transferor must deliver a certificate in the form of Exhibit B
                  hereto, including the certifications in item (2) thereof.

                  (iv) Transfer and Exchange of Beneficial Interests in a
         Restricted Global Note for Beneficial Interests in the Unrestricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         exchanged by any Holder thereof for a beneficial interest in an
         Unrestricted Global Note or transferred to a Person who takes delivery
         thereof in the form of a beneficial interest in an Unrestricted Global
         Note if the exchange or transfer complies with the requirements of
         Section 2.07(b)(ii) above and:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder of the beneficial interest to be
                  transferred, in the case of an exchange, or the transferee, in
                  the case of a transfer, certifies in the applicable Letter of
                  Transmittal that it is not (1) a Broker-Dealer, (2) a Person
                  participating in the distribution of the Exchange Notes or (3)
                  a Person who is an affiliate (as defined in Rule 144) of the
                  Company;

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

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

                           (D) the Registrar receives the following:

                           (1) if the Holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a beneficial interest in an



                                       25
   34

                  Unrestricted Global Note, a certificate from such Holder in
                  the form of Exhibit C hereto, including the certifications in
                  item (1)(a) thereof; or

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

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

                  If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.

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

                  (c) Transfer or Exchange of Beneficial Interests for
         Definitive Notes.

                  (i) Beneficial Interests in Restricted Global Notes to
         Restricted Definitive Notes. If any Holder of a beneficial interest in
         a Restricted Global Note proposes to exchange such beneficial interest
         for a Restricted Definitive Note as permitted by this Indenture or to
         transfer such beneficial interest to a Person who takes delivery
         thereof in the form of a Restricted Definitive Note, then, upon receipt
         by the Registrar of the following documentation:

                           (A) if the Holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a Restricted Definitive Note, a certificate from
                  such Holder in the form of Exhibit C hereto, including the
                  certifications in item (2)(a) thereof;

                           (B) if such beneficial interest is being transferred
                  to a QIB in accordance with Rule 144A under the Securities
                  Act, a certificate to the effect set forth in Exhibit B
                  hereto, including the certifications in item (1) thereof;

                           (C) if such beneficial interest is being transferred
                  to a Non-U.S. Person in an offshore transaction in accordance
                  with Rule 903 or Rule 904 under the



                                       26
   35

                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (2)
                  thereof;

                           (D) if such beneficial interest is being transferred
                  pursuant to an exemption from the registration requirements of
                  the Securities Act in accordance with Rule 144 under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications and opinion in
                  item (3)(a) thereof;

                           (E) if such beneficial interest is being transferred
                  to the Company or any of its Subsidiaries, a certificate to
                  the effect set forth in Exhibit B hereto, including the
                  certifications in item (3)(b) thereof; or

                           (F) if such beneficial interest is being transferred
                  pursuant to an effective registration statement under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certification in item 3(c)
                  thereof,

         the Trustee shall cause the aggregate principal amount of the
         applicable Global Note to be reduced accordingly pursuant to Section
         2.07(i) hereof, and the Company shall execute and the Trustee shall
         authenticate and deliver to the Person designated in the instructions a
         Definitive Note in the appropriate principal amount. Any Definitive
         Note issued in exchange for a beneficial interest in a Restricted
         Global Note pursuant to this Section 2.07(c)(i) shall be registered in
         such name or names and in such authorized denomination or denominations
         as the Holder of such beneficial interest shall instruct the Registrar
         through instructions from the Depositary and the Participant or
         Indirect Participant. The Trustee shall deliver such Definitive Notes
         to the Persons in whose names such Notes are so registered. Any
         Definitive Note issued in exchange for a beneficial interest in a
         Restricted Global Note pursuant to this Section 2.07(c)(i) shall bear
         the Private Placement Legend and shall be subject to all restrictions
         on transfer contained therein.

                  (ii) Beneficial Interests in Regulation S Temporary Global
         Note to Definitive Notes. Notwithstanding Sections 2.07(c)(i)(A) and
         (C) hereof, a beneficial interest in the Regulation S Temporary Global
         Note may not be exchanged for a Definitive Note or transferred to a
         Person who takes delivery thereof in the form of a Definitive Note
         prior to (x) the expiration of the Restricted Period and (y) the
         receipt by the Registrar of any certificates required pursuant to Rule
         903(b)(3)(ii)(B) under the Securities Act, except in the case of a
         transfer pursuant to an exemption from the registration requirements of
         the Securities Act other than Rule 903 or Rule 904.

                  (iii) Beneficial Interests in Restricted Global Notes to
         Unrestricted Definitive Notes. A Holder of a beneficial interest in a
         Restricted Global Note may exchange such beneficial interest for an
         Unrestricted Definitive Note as permitted by this Indenture or may
         transfer such beneficial interest to a Person who takes delivery
         thereof in the form of an Unrestricted Definitive Note as permitted by
         this Indenture only if:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder of



                                       27
   36

                  such beneficial interest, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal that it is not (1) a
                  Broker-Dealer, (2) a Person participating in the distribution
                  of the Exchange Notes or (3) a Person who is an affiliate (as
                  defined in Rule 144) of the Company;

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

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

                           (D) the Registrar receives the following:

                           (1) if the Holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a Definitive Note that does not bear the Private
                  Placement Legend, a certificate from such Holder in the form
                  of Exhibit C hereto, including the certifications in item
                  (1)(b) thereof; or

                           (2) if the Holder of such beneficial interest in a
                  Restricted Global Note proposes to transfer such beneficial
                  interest to a Person who shall take delivery thereof in the
                  form of a Definitive Note that does not bear the Private
                  Placement Legend, a certificate from such Holder in the form
                  of Exhibit B hereto, including the certifications in item (4)
                  thereof;

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

                  (iv) Beneficial Interests in Unrestricted Global Notes to
         Unrestricted Definitive Notes. If any Holder of a beneficial interest
         in an Unrestricted Global Note proposes to exchange such beneficial
         interest for an Unrestricted Definitive Note as permitted by this
         Indenture or to transfer such beneficial interest to a Person who takes
         delivery thereof in the form of an Unrestricted Definitive Note, then,
         upon satisfaction of the conditions set forth in Section 2.07(b)(ii)
         hereof, the Trustee shall cause the aggregate principal amount of the
         applicable Global Note to be reduced accordingly pursuant to Section
         2.07(i) hereof, and the Company shall execute and the Trustee shall
         authenticate and deliver to the Person designated in the instructions
         an Unrestricted Definitive Note in the appropriate principal amount.
         Any Definitive Note issued in exchange for a beneficial interest
         pursuant to this Section 2.07(c)(iv) shall be registered in such name
         or names and in such authorized denomination or denominations as the
         Holder of such beneficial interest shall instruct the Registrar through
         instructions from the Depositary and the Participant or Indirect
         Participant. The Trustee shall deliver such Definitive Notes to the
         Persons in whose names such Notes are so registered. Any Definitive
         Note



                                       28
   37

         issued in exchange for a beneficial interest pursuant to this Section
         2.07(c)(iv) shall not bear the Private Placement Legend.

                  (d) Transfer and Exchange of Definitive Notes for Beneficial
         Interests.

                  (i) Restricted Definitive Notes to Beneficial Interests in
         Restricted Global Notes. If any Holder of a Restricted Definitive Note
         proposes to exchange such Note for a beneficial interest in a
         Restricted Global Note or to transfer such Restricted Definitive Notes
         to a Person who takes delivery thereof in the form of a beneficial
         interest in a Restricted Global Note, then, upon receipt by the
         Registrar of the following documentation:

                           (A) if the Holder of such Restricted Definitive Note
                  proposes to exchange such Note for a beneficial interest in a
                  Restricted Global Note, a certificate from such Holder in the
                  form of Exhibit C hereto, including the certifications in item
                  (2)(b) thereof;

                           (B) if such Restricted Definitive Note is being
                  transferred to a QIB in accordance with Rule 144A under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                           (C) if such Restricted Definitive Note is being
                  transferred to a Non-U.S. Person in an offshore transaction in
                  accordance with Rule 903 or Rule 904 under the Securities Act,
                  a certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (2) thereof;

                           (D) if such Restricted Definitive Note is being
                  transferred pursuant to an exemption from the registration
                  requirements of the Securities Act in accordance with Rule 144
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications and
                  opinion in item (3)(a) thereof;

                           (E) if such Restricted Definitive Note is being
                  transferred to the Company or any of its Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof; or

                           (F) if such Restricted Definitive Note is being
                  transferred pursuant to an effective registration statement
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof,

         the Trustee shall cancel the Restricted Definitive Note, increase or
         cause to be increased the aggregate principal amount of, in the case of
         clause (A) above, the appropriate Restricted Global Note, in the case
         of clause (B) above, the 144A Global Note, and in the case of clause
         (C) above, the Regulation S Global Note and in all other cases the 144A
         Global Note.



                                       29
   38

                  (ii) Restricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
         exchange such Note for a beneficial interest in an Unrestricted Global
         Note or transfer such Restricted Definitive Note to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note only if:

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

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

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

                           (D) the Registrar receives the following:

                           (1) if the Holder of such Definitive Notes proposes
                  to exchange such Notes for a beneficial interest in the
                  Unrestricted Global Note, a certificate from such Holder in
                  the form of Exhibit C hereto, including the certifications in
                  item (1)(c) thereof; or

                           (2) if the Holder of such Definitive Notes proposes
                  to transfer such Notes to a Person who shall take delivery
                  thereof in the form of a beneficial interest in the
                  Unrestricted Global Note, a certificate from such Holder in
                  the form of Exhibit B hereto, including the certifications in
                  item (4) thereof;

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

                  Upon satisfaction of the conditions of any of the
         subparagraphs in this Section 2.07(d)(ii), the Trustee shall cancel the
         Definitive Notes and increase or cause to be increased the aggregate
         principal amount of the Unrestricted Global Note.

                  (iii) Unrestricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
         may exchange such Note for a beneficial interest in an Unrestricted
         Global Note or transfer such Definitive Notes to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note at any time. Upon receipt of a request for
         such an exchange or transfer, the



                                       30
   39

         Trustee shall cancel the applicable Unrestricted Definitive Note and
         increase or cause to be increased the aggregate principal amount of one
         of the Unrestricted Global Notes.

                  If any such exchange or transfer from a Definitive Note to a
         beneficial interest is effected pursuant to subparagraphs (ii)(B),
         (ii)(D) or (iii) above at a time when an Unrestricted Global Note has
         not yet been issued, the Company shall issue and, upon receipt of an
         Authentication Order in accordance with Section 2.02 hereof, the
         Trustee shall authenticate one or more Unrestricted Global Notes in an
         aggregate principal amount equal to the principal amount of Definitive
         Notes so transferred.

                  (e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.07(e), the Registrar shall register the
transfer or exchange of Definitive Notes for Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by its attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.07(e).

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

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

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

                           (C) if the transfer shall be made pursuant to any
                  other exemption from the registration requirements of the
                  Securities Act, then the transferor must deliver a certificate
                  in the form of Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable.

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

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal that it is not (1) a
                  broker-dealer, (2) a Person



                                       31
   40

                  participating in the distribution of the Exchange Notes or (3)
                  a Person who is an affiliate (as defined in Rule 144) of the
                  Company;

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

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

                           (D) the Registrar receives the following:

                           (1) if the Holder of such Restricted Definitive Notes
                  proposes to exchange such Notes for an Unrestricted Definitive
                  Note, a certificate from such Holder in the form of Exhibit C
                  hereto, including the certifications in item (1)(d) thereof;
                  or

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

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

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

                  (f) Exchange Offer. Upon the occurrence of the Exchange Offer
in accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of an Authentication Order in accordance with Section 2.02,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
Broker-Dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Unrestricted Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated



                                       32
   41

by the Holders of Definitive Notes so accepted Definitive Notes in the
appropriate principal amount. Any Notes that remain outstanding after the
consummation of the Exchange Offer, and Exchange Notes issued in connection with
the Exchange Offer, shall be treated as a single class of securities under this
Indenture.

                  (g) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

                  (i) Private Placement Legend. Except as permitted below, each
Global Note and each Definitive Note (and all Notes issued in exchange therefor
or substitution thereof) shall bear the legend in substantially the following
form:

                           THIS NOTE AND THE GUARANTEES ENDORSED HEREON HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                  (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
                  THIS NOTE NOR THE GUARANTEES ENDORSED HEREON NOR ANY INTEREST
                  OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
                  TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
                  THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
                  EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
                  OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AND THE
                  GUARANTEES ENDORSED HEREON BY ITS ACCEPTANCE HEREOF AGREES TO
                  OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
                  DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
                  DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
                  AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE AND THE
                  GUARANTEES ENDORSED HEREON (OR ANY PREDECESSOR OF THIS NOTE
                  AND THE GUARANTEES ENDORSED HEREON) (THE "RESALE RESTRICTION
                  TERMINATION DATE") ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY
                  THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
                  UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE
                  ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
                  ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
                  "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
                  PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
                  QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
                  TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT
                  TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
                  UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
                  SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
                  FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
                  SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
                  SUCH OFFER, SALE OR TRANSFER (i)



                                       33
   42

                  PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40-DAY
                  DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF
                  REGULATION S UNDER THE SECURITIES ACT OR PURSUANT TO CLAUSE
                  (E) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO
                  REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
                  AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND
                  (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
                  CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS NOTE IS
                  COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
                  LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
                  RESALE RESTRICTION TERMINATION DATE.

         Notwithstanding the foregoing, any Global Note or Definitive Note
         issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii),
         (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.07 (and all Notes
         issued in exchange therefor or substitution thereof) shall not bear the
         Private Placement Legend.

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

                  THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
                  INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR
                  THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
                  TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT
                  (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE
                  REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
                  GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT
                  TO SECTION 2.07(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
                  MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
                  SECTION 2.12 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
                  TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
                  CONSENT OF THE COMPANY.

                  (h) Regulation S Temporary Global Note Legend. The Regulation
S Temporary Global Note shall bear a legend in substantially the following form:

                  THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL
                  NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
                  FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS
                  DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS
                  OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
                  TO RECEIVE PAYMENT OF INTEREST HEREON.



                                       34
   43

                  (i) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed, repurchased
or canceled in whole and not in part, each such Global Note shall be returned to
or retained and canceled by the Trustee in accordance with Section 2.12 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who shall take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who shall take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

                  (j) General Provisions Relating to Transfers and Exchanges.

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

                  (ii) No service charge shall be made to a Holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections 2.11,
3.06, 3.09, 4.10, 4.15 and 9.05 hereof).

                  (iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.

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

                  (v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period beginning at
the opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on the
day of selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest payment
date.



                                       35
   44

                  (vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and treat
the Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on such
Notes and for all other purposes, and none of the Trustee, any Agent or the
Company shall be affected by notice to the contrary.

                  (vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02 hereof.

                  (viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this Section 2.07
to effect a registration of transfer or exchange may be submitted by facsimile
with the original to follow by first class mail.

Section 2.08      Replacement Notes.

                  If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's and the Company's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.

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

Section 2.09      Outstanding Notes.

                  The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.10 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.

                  If a Note is replaced pursuant to Section 2.08 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.

                  If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.

                  If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any of the foregoing) holds, on a redemption date or maturity
date, money sufficient to pay Notes



                                       36
   45

payable on that date, then on and after that date such Notes shall be deemed to
be no longer outstanding and shall cease to accrue interest.

Section 2.10      Treasury Notes.

                  In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.

Section 2.11      Temporary Notes.

                  Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.

                  Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.

Section 2.12      Cancellation.

                  The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
canceled Notes in accordance with its procedures for the disposition of canceled
securities in effect as of the date of such disposition (subject to the record
retention requirement of the Exchange Act). Certification of the disposition of
all canceled Notes shall be delivered to the Company. The Company may not issue
new Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.

Section 2.13      Defaulted Interest.

                  If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a



                                       37
   46

notice that states the special record date, the related payment date and the
amount of such interest to be paid.

Section 2.14      CUSIP Numbers.

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

                                  ARTICLE THREE
                           REDEMPTION AND PREPAYMENT;
                           SATISFACTION AND DISCHARGE

Section 3.01      Notices to Trustee.

                  If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an Officers
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.

Section 3.02      Selection of Notes to Be Redeemed.

                  If less than all of the outstanding Notes are to be redeemed
or purchased in an offer to purchase at any time, the Trustee shall select the
Notes to be redeemed or purchased among the Holders of the Notes in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed or, if the Notes are not so listed, on a pro rata
basis, by lot or in accordance with any other method the Trustee considers fair
and appropriate. In the event of partial redemption by lot, the particular Notes
to be redeemed shall be selected, unless otherwise provided herein, not less
than 30 nor more than 60 days prior to the redemption date by the Trustee from
the outstanding Notes not previously called for redemption.

                  The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount at maturity thereof to be redeemed. No
Notes in amounts of $1,000 or less shall be redeemed in part. Notes and portions
of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.



                                       38
   47

Section 3.03      Notice of Redemption.

                  Subject to the provisions of Section 3.10 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.

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

                  (a) the redemption date;

                  (b) the redemption price;

                  (c) if any Note is being redeemed in part, the portion of the
         principal amount of such Note to be redeemed and that, after the
         redemption date upon surrender of such Note, a new Note or Notes in
         principal amount equal to the unredeemed portion of the original Note
         shall be issued in the name of the Holder thereof upon cancellation of
         the original Note;

                  (d) the name and address of the Paying Agent;

                  (e) that Notes called for redemption must be surrendered to
         the Paying Agent to collect the redemption price and become due on the
         date fixed for redemption;

                  (f) that, unless the Company defaults in making such
         redemption payment, interest, and liquidated damages, if any, on Notes
         called for redemption ceases to accrue on and after the redemption
         date;

                  (g) the paragraph of the Notes and/or Section of this
         Indenture pursuant to which the Notes called for redemption are being
         redeemed; and

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

                  At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph. The notice, if mailed in the manner provided herein
shall be presumed to have been given, whether or not the Holder receives such
notice.

Section 3.04      Effect of Notice of Redemption.

                  Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.



                                       39
   48

Section 3.05      Deposit of Redemption Price.

                  One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest and Liquidated Damages, if any, on
all Notes to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Company any money deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be redeemed.

                  If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest and liquidated damages, if
any, shall cease to accrue on the Notes or the portions of Notes called for
redemption. If a Note is redeemed on or after an interest record date but on or
prior to the related interest payment date, then any accrued and unpaid interest
shall be paid to the Person in whose name such Note was registered at the close
of business on such record date. If any Note called for redemption shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest and liquidated damages, if any
shall be paid on the unpaid principal, from the redemption date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Notes and in Section
4.01 hereof.

Section 3.06      Notes Redeemed in Part.

                  Upon surrender of a Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Note equal in principal amount to the unredeemed portion of
the Note surrendered. No Notes in denominations of $1,000 or less shall be
redeemed in part.

Section 3.07      Optional Redemption.

                  (a) Except as set forth in clause (b) and (c) of this Section
3.07, the Company shall not have the option to redeem the Notes pursuant to this
Section 3.07 prior to July 1, 2005. On or after July 1, 2005, the Company may
redeem all or a part of the Notes upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the applicable redemption date, if redeemed during the twelve-month
period beginning on July 1 of the years indicated below:



          YEAR                                     PERCENTAGE
          ----                                     ----------

                                               
          2005...............................      105.3750%

          2006...............................      102.6875%

          2007 and thereafter................      100.0000%


                  (b) At any time prior to July 1, 2004, the Company may redeem
up to 35% of the aggregate principal amount of Notes issued under this Indenture
at a redemption price of 110.75% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, to the redemption date, with
the net cash proceeds of one or more Qualified Equity Offerings of the Company;
provided that (A) at least 65% of the aggregate principal



                                       40
   49

amount of the Notes issued under this Indenture remains outstanding immediately
after the occurrence of such redemption, (excluding Notes held by the Company
and its Subsidiaries); and (B) the redemption must occur within 45 days of the
date of the closing of such Qualified Equity Offering.

                  (c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.

Section 3.08      Mandatory Redemption.

                  The Company shall not be required to make mandatory redemption
payments or sinking fund payments with respect to the Notes.

Section 3.09      Repurchase Offers.

                  In the event that, pursuant to Sections 4.10 and 4.15 hereof,
the Company shall be required to commence an offer to all Holders to purchase
their respective Notes (a "REPURCHASE OFFER"), it shall follow the procedures
specified below.

                  The Repurchase Offer shall remain open for a period of 30
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "OFFER PERIOD"). No
later than five Business Days after the termination of the Offer Period (the
"PURCHASE DATE"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Sections 4.10 and 4.15 hereof (the "OFFER
AMOUNT") or, if less than the Offer Amount has been tendered, all Notes tendered
in response to the Repurchase Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.

                  If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Repurchase Offer.

                  Upon the commencement of a Repurchase Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders, with
a copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of the Repurchase Offer, shall state:

                  (a) that the Repurchase Offer is being made pursuant to this
         Section 3.09 and Section 4.10 or Section 4.15 hereof, and the length of
         time the Repurchase Offer shall remain open;

                  (b) the Offer Amount, the purchase price and the Purchase
         Date;

                  (c) that any Note not tendered or accepted for payment shall
         continue to accrete or accrue interest and Liquidated Damages, if any;



                                       41
   50

                  (d) that, unless the Company defaults in making such payment,
         any Note (or portion thereof) accepted for payment pursuant to the
         Repurchase Offer shall cease to accrete or accrue interest and
         Liquidated Damages, if any, after the Purchase Date;

                  (e) that Holders electing to have a Note purchased pursuant to
         a Repurchase Offer may elect to have Notes purchased in integral
         multiples of $1,000 only;

                  (f) that Holders electing to have a Note purchased pursuant to
         any Repurchase Offer shall be required to surrender the Note, with the
         form entitled "Option of Holder to Elect Purchase" on the reverse of
         the Note completed, or transfer by book-entry transfer, to the Company,
         a depositary, if appointed by the Company, or a Paying Agent at the
         address specified in the notice at least three days before the Purchase
         Date;

                  (g) that Holders shall be entitled to withdraw their election
         if the Company, the Depositary or the Paying Agent, as the case may be,
         receives, not later than the expiration of the Offer Period, a
         telegram, telex, facsimile transmission or letter setting forth the
         name of the Holder, the principal amount of the Note the Holder
         delivered for purchase and a statement that such Holder is withdrawing
         his election to have such Note purchased;

                  (h) that, if the aggregate amount of Notes surrendered by
         Holders exceeds the Offer Amount, the Trustee shall select the Notes to
         be purchased pursuant to the terms of Section 3.02 hereof (with such
         adjustments as may be deemed appropriate by the Trustee so that only
         Notes in denominations of $1,000, or integral multiples thereof, shall
         be purchased); and

                  (i) that Holders whose Notes were purchased only in part shall
         be issued new Notes equal in principal amount to the unpurchased
         portion of the Notes surrendered (or transferred by book-entry
         transfer).

                  On the Purchase Date, the Company shall, to the extent lawful,
accept for payment on a pro rata basis to the extent necessary, the Offer Amount
of Notes (or portions thereof) tendered pursuant to the Repurchase Offer, or if
less than the Offer Amount has been tendered, all Notes tendered, and shall
deliver to the Trustee an Officers' Certificate stating that such Notes (or
portions thereof) were accepted for payment by the Company in accordance with
the terms of this Section 3.09. The Company, the Depositary or the Paying Agent,
as the case may be, shall promptly (but in any case not later than five days
after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of Notes tendered by such Holder, as the case may
be, and accepted by the Company for purchase, and the Company, shall promptly
issue a new Note. The Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount at maturity equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Company to the
respective Holder thereof. The Company shall publicly announce the results of
the Repurchase Offer on the Purchase Date.

                  The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act, and any other securities laws and regulations thereunder
to the extent such laws



                                       42
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or regulations are applicable in connection with the repurchase of the Notes
pursuant to a Repurchase Offer. To the extent that the provision of any
securities laws or regulations conflict with the provisions of this Section
3.09, the Company shall comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 3.09, by virtue of such conflict.

                  Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.

Section 3.10      Application of Trust Money.

                  All money deposited with the Trustee pursuant to Section 12.02
shall be held in trust and applied by it, in accordance with the provisions of
the Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee; but such money need not be segregated from other funds except
to the extent required by law.

                                  ARTICLE FOUR
                                    COVENANTS

Section 4.01      Payment of Notes.

                  The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or one of its Subsidiaries, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.

                  The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest, and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.

Section 4.02      Maintenance of Office or Agency.

                  The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of the Trustee or
an agent of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of



                                       43
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the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.

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

                  The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.04 of this Indenture.

Section 4.03      Reports.

                  (a) Whether or not required by the SEC, so long as any Notes
         are outstanding, the Company shall furnish to the Trustee for
         forwarding to the Holders of Notes, within the time periods specified
         in the SEC's rules and regulations:

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

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

                  In addition, whether or not required by the SEC, the Company
shall file a copy of all of the information and reports referred to in clauses
(i) and (ii) above with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, the Company and the Guarantors
have agreed that, for so long as any Notes remain outstanding, they will furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.

                  (b) If the Company has designated any of its Subsidiaries as
         Unrestricted Subsidiaries, then the annual financial information
         required by the preceding paragraph shall include a reasonably detailed
         presentation, either on the face of the financial statements or in the
         footnotes thereto, of the financial condition and results of operations
         of the Company and its Restricted Subsidiaries separate from the
         financial condition and results of operations of the Unrestricted
         Subsidiaries of the Company.



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   53

Section 4.04      Compliance Certificate.

                  (a) The Company and each Guarantor (to the extent that such
Guarantor is so required under the TIA) shall deliver to the Trustee, within 120
days after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge, the Company has kept, observed, performed and fulfilled
its obligations under this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto) and that
to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.

                  (b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (which shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article Four or Article Five hereof or,
if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.

                  (c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.

Section 4.05      Taxes.

                  The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, any material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.

Section 4.06      Stay, Extension and Usury Laws.

                  The Company and each of the Guarantors covenant (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture;



                                       45
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and the Company and each of the Guarantors (to the extent that it may lawfully
do so) hereby expressly waive all benefit or advantage of any such law, and
covenant that they shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.

Section 4.07      Restricted Payments.

                  The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:

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

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

                  (3) make any payment on or with respect to, or purchase,
         redeem, defease or otherwise acquire or retire for value any
         Indebtedness that is subordinated to the Notes or the Subsidiary
         Guarantees, except a payment of interest or principal at the Stated
         Maturity thereof; or

                  (4) make any Restricted Investment (all such payments and
         other actions set forth in clauses (1) through (4) above being
         collectively referred to as "RESTRICTED PAYMENTS"),

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

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

                  (2) the Company would, at the time of such Restricted Payment
         and after giving pro forma effect thereto as if such Restricted Payment
         had been made at the beginning of the applicable four-quarter period,
         have been permitted to incur at least $1.00 of additional Indebtedness
         pursuant to the Fixed Charge Coverage Ratio test set forth in the first
         paragraph of Section 4.09; and



                                       46
   55

                  (3) such Restricted Payment, together with the aggregate
         amount of all other Restricted Payments made by the Company and its
         Restricted Subsidiaries after the date hereof (excluding Restricted
         Payments permitted by clauses (2), (3), (5) and (6) of the next
         succeeding paragraph), is less than the sum, without duplication, of:

                           (a) 50% of the Consolidated Net Income of the Company
                  for the period (taken as one accounting period) from the
                  beginning of the first fiscal quarter commencing after the
                  date of this Indenture to the end of the Company's most
                  recently ended fiscal quarter for which internal financial
                  statements are available at the time of such Restricted
                  Payment (or, if such Consolidated Net Income for such period
                  is a deficit, less 100% of such deficit), plus

                           (b) 100% of the aggregate net cash proceeds received
                  by the Company since the date of this Indenture as a
                  contribution to its common equity capital or from the issue or
                  sale of Equity Interests of the Company (other than
                  Disqualified Stock) or from the issue or sale of convertible
                  or exchangeable Disqualified Stock or convertible or
                  exchangeable debt securities of the Company that have been
                  converted into or exchanged for such Equity Interests (other
                  than Equity Interests (or Disqualified Stock or debt
                  securities) sold to a Subsidiary of the Company); plus

                           (c) to the extent that any Restricted Investment that
                  was made after the date hereof is sold for cash or otherwise
                  liquidated or repaid for cash, the lesser of (i) the cash
                  return of capital with respect to such Restricted Investment
                  (less the cost of disposition, if any) and (ii) the initial
                  amount of such Restricted Investment; plus

                           (d) $15 million.

                  So long as no Default has occurred and is continuing or would
be caused thereby, the preceding provisions will not prohibit:

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

                  (2) the redemption, repurchase, retirement, defeasance or
         other acquisition of any subordinated Indebtedness of the Company or
         any Guarantor or of any Equity Interests of the Company in exchange
         for, or out of the net cash proceeds of the substantially concurrent
         sale (other than to a Subsidiary of the Company or under an employee
         stock option plan established by the Company) of, Equity Interests of
         the Company (other than Disqualified Stock) or from the substantially
         concurrent cash capital contribution received by the Company from its
         stockholders; provided that the amount of any such net cash proceeds
         that are utilized for any such redemption, repurchase, retirement,
         defeasance or other acquisition shall be excluded from clause (3) (b)
         of the preceding paragraph;



                                       47
   56

                  (3) the defeasance, redemption, repurchase or other
         acquisition of or other payment on or with respect to subordinated
         Indebtedness of the Company or any Guarantor with the net cash proceeds
         from an incurrence of Permitted Refinancing Indebtedness;

                  (4) the payment of any dividend by a Restricted Subsidiary of
         the Company to the holders of its common Equity Interests on a pro rata
         basis;

                  (5) the repurchase, redemption or other acquisition or
         retirement for value of any Equity Interests of the Company or any
         Restricted Subsidiary of the Company held by any of the Company's
         directors or employees (or those of any of its Restricted Subsidiaries)
         pursuant to any management equity subscription agreement or stock
         option agreement; provided that the aggregate price paid for all such
         repurchased, redeemed, acquired or retired Equity Interests shall not
         exceed $1.0 million in any twelve-month period; provided that the
         Company may carry over and make in a subsequent calendar year, in
         addition to the amounts permitted for such calendar year, the amount of
         such purchases, redemptions or other acquisitions or retirements for
         value permitted to have been made but not made in any preceding
         calendar year up to a maximum of $3.0 million in any calendar year; and

                  (6) repurchases of Capital Stock deemed to occur upon the
         cashless exercise of stock options and warrants of the Company.

                  The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued to or by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
Section shall be determined by the Board of Directors, whose resolution with
respect thereto shall be delivered to the Trustee. The Board of Directors'
determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $15.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.

Section 4.08      Dividend and Other Payment Restrictions Affecting Restricted
                  Subsidiaries.

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

                  (1) pay dividends or make any other distributions on its
         Capital Stock to the Company or any of its Restricted Subsidiaries, or
         with respect to any other interest or participation in, or measured by,
         its profits, or pay any indebtedness owed to the Company or any of its
         Restricted Subsidiaries;



                                       48
   57

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

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

                  However, the restrictions above shall not apply to
encumbrances or restrictions existing under or by reason of:

                  (1) Existing Indebtedness and the Credit Agreement as in
         effect on the date of this Indenture and any amendments, modifications,
         restatements, renewals, increases, supplements, refundings,
         replacements or refinancings thereof, provided that such amendments,
         modifications, restatements, renewals, increases, supplements,
         refundings, replacements or refinancings are no more restrictive, taken
         as a whole, than those contained in such Existing Indebtedness and the
         Credit Agreement, as in effect on the date of this Indenture;

                  (2) this Indenture, the Notes and the Subsidiary Guarantees;

                  (3) applicable law;

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

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

                  (6) purchase money obligations for property acquired in the
         ordinary course of business that impose restrictions on the property so
         acquired of the nature described in clause (3) of the first paragraph
         of Section 4.08;

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

                  (8) Permitted Refinancing Indebtedness, provided that the
         restrictions contained in the agreements governing such Permitted
         Refinancing Indebtedness are no more restrictive, taken as a whole,
         than those contained in the agreements governing the Indebtedness being
         refinanced; and



                                       49
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                  (9) Permitted Liens securing Indebtedness that limit the right
         of the debtor to dispose of the assets subject to such Lien.

Section 4.09      Incurrence of Indebtedness and Issuance of Preferred Stock.

                  The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "INCUR") any
Indebtedness (including Acquired Debt), and the Company will not issue any
Disqualified Stock, and the Company will not permit any of its Restricted
Subsidiaries to issue any Disqualified Stock or preferred stock; provided,
however, that the Company and any Guarantor may incur Indebtedness (including
Acquired Debt), if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred would have been at least 2.25 to 1 from the date of
this Indenture through and including October 31, 2002 and 2.50 to 1 thereafter,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred at the
beginning of such four-quarter period.

                  So long as no Default shall have occurred and be continuing or
would be caused thereby, the first paragraph of this Section 4.09 will not
prohibit the incurrence of any of the following items of Indebtedness
(collectively, "PERMITTED DEBT"):

                  (1) the incurrence by the Company of Indebtedness under Credit
         Facilities (and the incurrence by the Guarantors of guarantees thereof)
         in an aggregate principal amount at any one time outstanding (with
         letters of credit being deemed to have a principal amount equal to the
         maximum potential liability of the Company and its Restricted
         Subsidiaries thereunder) not to exceed $550 million, of which up to $40
         million may be incurred by the Company's Puerto Rican Restricted
         Subsidiaries that are borrowers under the Credit Agreement (and the
         Company and its Restricted Subsidiaries may guarantee such borrowings
         by the Company's Puerto Rican Restricted Subsidiaries), less the
         aggregate amount of all Net Proceeds of Asset Sales applied by the
         Company or any Restricted Subsidiary to repay any term Indebtedness
         under Credit Facilities pursuant to Section 4.10 hereof;

                  (2) the incurrence by the Company and any Restricted
         Subsidiary of the Existing Indebtedness;

                  (3) the incurrence by the Company and the Guarantors of
         Indebtedness represented by the Notes and the related Subsidiary
         Guarantees to be issued on the date hereof and the Exchange Notes and
         the related Subsidiary Guarantees to be issued pursuant to the
         Registration Rights Agreement;

                  (4) the incurrence by the Company or any Guarantor of
         Indebtedness represented by Capital Lease Obligations, mortgage
         financings or purchase money obligations, in each case incurred for the
         purpose of financing all or any part of the purchase price or cost of
         construction or improvement of property, plant or equipment



                                       50
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         used in the business of the Company or such Guarantor, in an aggregate
         principal amount, including all Permitted Refinancing Indebtedness
         incurred to refund, refinance or replace any Indebtedness incurred
         pursuant to this clause (4), not to exceed $25 million at any time
         outstanding;

                  (5) the incurrence by the Company or any of the Restricted
         Subsidiary of Permitted Refinancing Indebtedness in exchange for, or
         the net proceeds of which are used to refund, refinance or replace
         Indebtedness (other than intercompany Indebtedness) permitted to be
         incurred under the first paragraph of this Section 4.09 or clauses (2),
         (3), (4), (5), or (11) of this paragraph;

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

                         (a) if the Company or any Guarantor is the obligor on
                  such Indebtedness, such Indebtedness must be expressly
                  subordinated to the prior payment in full in cash of all
                  Obligations with respect to the Notes, in the case of the
                  Company, or the Subsidiary Guarantee, in the case of a
                  Guarantor; and

                         (b) (i) any subsequent issuance or transfer of Equity
                  Interests that results in any such Indebtedness being held by
                  a Person other than the Company or a Restricted Subsidiary
                  thereof and (ii) any sale or other transfer of any such
                  Indebtedness to a Person that is not either the Company or a
                  Wholly Owned Restricted Subsidiary thereof, shall be deemed,
                  in each case, to constitute an incurrence of such Indebtedness
                  by the Company or such Restricted Subsidiary, as the case may
                  be, that was not permitted by this clause (6);

                  (7) the incurrence by the Company or any of its Restricted
         Subsidiaries of Hedging Obligations that are incurred for the purpose
         of fixing or hedging (a) interest rate risk with respect to any
         floating rate Indebtedness that is permitted by the terms of this
         Indenture to be outstanding, or (b) currency exchange rate risk with
         respect to any currency exchanges;

                  (8) the guarantee by the Company or any of the Restricted
         Subsidiaries of Indebtedness of the Company or a Guarantor that was
         permitted to be incurred by another provision of this Section 4.09;

                  (9) the accrual of interest, the accretion or amortization of
         original issue discount and the payment of interest on any Indebtedness
         in the form of additional Indebtedness with the same terms will not be
         deemed to be an incurrence of Indebtedness for purposes of this Section
         4.09; provided, in each such case, that the amount thereof is included
         in Fixed Charges of the Company as accrued;

                  (10) the incurrence by the Company's Unrestricted Subsidiaries
         of Non-Recourse Debt, provided, however, that if any such Indebtedness
         ceases to be



                                       51
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         Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
         deemed to constitute an incurrence of Indebtedness by a Restricted
         Subsidiary of the Company that was not permitted by this clause (10);

                  (11) the incurrence by the Company or any of its Restricted
         Subsidiaries of additional Indebtedness in an aggregate principal
         amount (or accreted value, as applicable) at any time outstanding,
         including all Permitted Refinancing Indebtedness incurred to refund,
         refinance or replace any Indebtedness incurred pursuant to this clause
         (11), not to exceed $30 million; and

                  (12) Indebtedness of the Company or any of its Restricted
         Subsidiaries in respect of performance bonds, workers' compensation
         claims, surety or appeal bonds and payment obligations in connection
         with self insurance or similar obligations, in each case, incurred in
         the ordinary course of business.

                  For purposes of determining compliance with this Section 4.09,
in the event that any proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (1) through (12) above,
or is entitled to be incurred pursuant to the first paragraph of this Section
4.09, the Company will be permitted to classify such item of Indebtedness on the
date of its incurrence in any manner that complies with this Section 4.09.
Indebtedness under Credit Facilities outstanding on the date on which Notes are
first issued and authenticated hereunder shall be deemed to have been incurred
on such date in reliance on the exception provided by clause (1) of the
definition of Permitted Debt.

Section 4.10      Asset Sales.

                  The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:

                  (1) the Company or the Restricted Subsidiary, as the case may
         be, receives consideration at the time of the Asset Sale at least equal
         to the fair market value of the assets or Equity Interests issued, sold
         or otherwise disposed of;

                  (2) such fair market value is evidenced by (i) for any Asset
         Sale resulting in Net Proceeds less than or equal to $10.0 million, an
         Officer's Certificate delivered to the Trustee, or (ii) for any Asset
         Sale resulting in Net Proceeds in excess of $10.0 million, a resolution
         of the Board of Directors set forth in an Officers' Certificate
         delivered to the Trustee; and

                  (3) at least 75% of the consideration therefor received by the
         Company or such Restricted Subsidiary is in the form of cash. For
         purposes of this Section 4.10, each of the following shall be deemed to
         be cash:

                           (a) any liabilities (as shown on the Company's or
                  such Restricted Subsidiary's most recent balance sheet) of the
                  Company or any Restricted Subsidiary (other than contingent
                  liabilities and liabilities that are by their terms
                  subordinated to the Notes or any Subsidiary Guarantee) that
                  are assumed by the



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                  transferee of any such assets pursuant to a written agreement
                  that releases or provides for the release of the Company or
                  such Restricted Subsidiary from further liability; and

                           (b) any securities, notes or other obligations
                  received by the Company or any such Restricted Subsidiary from
                  such transferee that are converted promptly, but in any event
                  no later than 30 days after such Asset Sale, by the Company or
                  such Restricted Subsidiary into cash (to the extent of the
                  cash received in that conversion).

                  Within 365 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds at its option: (i) to repay
Senior Debt; (ii) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Permitted Business; (iii) to make a
capital expenditure in or that is used or useful in a Permitted Business; or
(iv) to acquire other long-term assets in or that are used or useful in a
Permitted Business.

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

                  Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the preceding paragraph will constitute "EXCESS
PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company will make an offer to purchase an ("Asset Sale Offer") to all
Holders of Notes and all holders of other Indebtedness that is pari passu with
the Notes containing provisions similar to those set forth in this Indenture
with respect to offers to purchase with the proceeds of sales of assets to
purchase the maximum principal amount of Notes and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds. The offer price
in any Asset Sale Offer will be equal to 100% of principal amount plus accrued
and unpaid interest and Liquidated Damages, if any, to the date of purchase, and
will be payable in cash. If any Excess Proceeds remain after consummation of an
Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise prohibited by this Indenture. If the aggregate principal amount of
Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such other pari passu Indebtedness to be purchased on a pro rata basis based on
the principal amount of Notes and such other pari passu Indebtedness tendered.
Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.

                  The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of this Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of this Indenture by virtue of such
conflict.



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Section 4.11      Transactions with Affiliates.

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

                  (1) such Affiliate Transaction is on terms that are no less
         favorable to the Company or the relevant Restricted Subsidiary than
         those that would have been obtained in a comparable transaction by the
         Company or such Restricted Subsidiary with an unrelated Person; and

                  (2) the Company delivers to the Trustee:

                           (a) with respect to any Affiliate Transaction or
                  series of related Affiliate Transactions involving aggregate
                  consideration in excess of $3.0 million, a resolution of the
                  Board of Directors set forth in an Officers' Certificate
                  certifying that such Affiliate Transaction complies with this
                  Section and that such Affiliate Transaction has been approved
                  by a majority of the disinterested members of the Board of
                  Director; and

                           (b) with respect to any Affiliate Transaction or
                  series of related Affiliate Transactions involving aggregate
                  consideration in excess of $5.0 million, an opinion as to the
                  fairness to the Company or such Restricted Subsidiary of such
                  Affiliate Transaction from a financial point of view issued by
                  an accounting, appraisal or investment banking firm of
                  national standing.

                  The following items shall not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the provisions of the prior
paragraph:

                  (1) transactions between or among the Company and/or its
         Restricted Subsidiaries;

                  (2) payment of reasonable directors fees and expenses to
         Persons who are not otherwise Affiliates of the Company;

                  (3) Restricted Payments that are permitted by Section 4.07 of
         this Indenture;

                  (4) any issuance of securities, or other payments, awards or
         grants in cash, securities or otherwise pursuant to, or the funding of,
         employment arrangements, stock options and stock ownership plans
         approved by the Board of Directors and made in the ordinary course of
         business;

                  (5) loans or advances to employees in the ordinary course of
         business in accordance with the past practices of the Company or any of
         the Restricted Subsidiaries, but in any event not to exceed $3.0
         million in the aggregate outstanding at any one time;



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                  (6) the issuance or sale for cash of any Capital Stock (other
         than Disqualified Stock) to Affiliates of the Company; and

                  (7) the agreements described in "Certain Relationships and
         Related Transactions" of the Offering Memorandum and in existence on
         the date of this Indenture and renewals of such agreements in a manner
         not less advantageous to the Holders of the Notes.

Section 4.12      Liens.

                  Other than Permitted Liens, the Company will not, and will not
permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise
cause or suffer to exist or become effective any Lien of any kind securing
Indebtedness, Attributable Debt or trade payables upon any of their property or
assets, now owned or hereafter acquired, unless all payments due under this
Indenture and the Notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligations are no longer secured
by a Lien.

Section 4.13      Business Activities.

                  The Company will not, and will not permit any Restricted
Subsidiary to, engage in any business other than Permitted Businesses, except to
such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.

Section 4.14      Limitation on Senior Subordinated Debt.

                  The Company will not incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt of the Company and senior in any respect in
right of payment to the Notes. No Guarantor will incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate or
junior in right of payment to the Senior Debt of such Guarantor and senior in
any respect in right of payment to such Guarantor's Subsidiary Guarantee.

Section 4.15      Offer to Repurchase upon a Change of Control.

                  (a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount repurchased
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and stating
(1) that the Change of Control Offer is being made pursuant to this Section 4.15
and that all Notes tendered will be accepted for payment and (2) the purchase
price and the purchase date, which shall be no earlier than 30 days and no later
than 60 days from the date such notice is mailed (the "Change of Control Payment
Date"), and containing the other provisions required by Section 3.09. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities



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laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Indenture relating to such
Change of Control Offer, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
described in this Indenture by virtue thereof.

                  (b) By 12:00 p.m. (noon) Eastern Time on the Change of Control
Payment Date, the Company shall, to the extent lawful, (1) accept for payment
all Notes or portions thereof properly tendered pursuant to the Change of
Control Offer, (2) deposit with the Paying Agent an amount equal to the Change
of Control Payment in respect of all Notes or portions thereof so tendered and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount of
Notes or portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to each Holder of Notes so tendered the Change of Control Payment
for such Notes, and the Trustee shall promptly authenticate and mail (or cause
to be transferred by book entry) to each Holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any; provided
that each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. Prior to compliance with this Section 4.15, but in any event
within 90 days following a Change of Control, the Company will either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of Notes
required by this Section 4.15. The Company shall publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.

                  (c) Notwithstanding anything to the contrary in this Section
4.15, the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.15 and Section 3.09 hereof and all other provisions of this
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.

Section 4.16      Limitation on Issuances and Sales of Equity Interests in
                  Restricted Subsidiaries.

                  The Company will not, and will not permit any of its
Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Restricted Subsidiary of the Company to any
Person (other than the Company or a Wholly Owned Restricted Subsidiary of the
Company), unless:

                  (1) such transfer, conveyance, sale, lease or other
         disposition is of all the Equity Interests in such Restricted
         Subsidiary, provided that, in the event that such Restricted Subsidiary
         is a non-Domestic Subsidiary, (a) such transfer, conveyance, sale,
         lease or other disposition is of Equity Interests representing at least
         eighty percent (80%) of the Voting Stock of all Equity Interests in
         such Restricted Subsidiary and (b) the Equity Interests retained by the
         Company are treated as an Investment of the Company; and



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                  (2) the cash Net Proceeds from such transfer, conveyance,
         sale, lease or other disposition are applied in accordance with Section
         4.10.

                  In addition, the Company will not permit any Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company and/or a Wholly Owned Restricted
Subsidiary of the Company.

Section 4.17      Designation of Restricted and Unrestricted Subsidiaries.

                  The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if that designation would not cause a Default.
If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the
aggregate fair market value of all outstanding Investments owned by the Company
and its Restricted Subsidiaries in the Subsidiary so designated will be deemed
to be a Restricted Investment made as of the time of such designation and that
designation will only be permitted if such Investment would be permitted at that
time and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1) such
Indebtedness is permitted under Section 4.09, calculated on a pro forma basis as
if such designation had occurred at the beginning of the four-quarter reference
period; and (2) no Default or Event of Default would be in existence following
such designation.

Section 4.18      Payments for Consent.

                  The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.

Section 4.19      Limitations on Issuances of Guarantees of Indebtedness.

                  The Company will not permit any of its Restricted
Subsidiaries, directly or indirectly, to Guarantee or pledge any assets to
secure the payment of any other Indebtedness of the Company unless such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture providing for the Guarantee of the payment of the Notes by such
Restricted Subsidiary, which Guarantee shall be senior to or pari passu with
such Subsidiary's Guarantee of or pledge to secure such other Indebtedness
unless such other Indebtedness is Senior Debt, in which case the Guarantee of
the Notes may be subordinated to the Guarantee of such Senior Debt to the same
extent as the Notes are subordinated to such Senior Debt.

                  Notwithstanding the preceding paragraph, any Subsidiary
Guarantee will provide by its terms that it will be automatically and
unconditionally released and discharged under the



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circumstances described in Section 11.06. The form of the Subsidiary Guarantee
is attached as Exhibit D.

Section 4.20      Sale and Leaseback Transactions.

                  The Company will not, and will not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company or any Restricted Subsidiary may enter into a sale and
leaseback transaction if:

                  (1) the Company or that Restricted Subsidiary, as applicable,
         could have incurred Indebtedness in an amount equal to the Attributable
         Debt relating to such sale and leaseback transaction under the Fixed
         Charge Coverage Ratio test in the first paragraph of Section 4.09;

                  (2) the gross cash proceeds of that sale and leaseback
         transaction are at least equal to the fair market value, as determined
         in good faith by the Board of Directors and set forth in an Officers'
         Certificate delivered to the Trustee, of the property that is the
         subject of that sale and leaseback transaction; and

                  (3) the transfer of assets in that sale and leaseback
         transaction is permitted by, and the Company applies the proceeds of
         such transaction in compliance with Section 4.10.

Section 4.21      Additional Subsidiary Guarantees.

                  If the Company or any of its Restricted Subsidiaries acquires
or creates another Domestic Subsidiary on or after the date of this Indenture,
then that newly acquired or created Domestic Subsidiary must become a Guarantor
and execute a supplemental indenture (in the form of Exhibit E hereto providing
for the Guarantee of the payment of the Notes by such Domestic Subsidiary on the
same basis as the Guarantors at the time of the execution of such supplemental
indenture) and deliver an Opinion of Counsel to the Trustee within 15 Business
Days of the date on which it was acquired or created.

Section 4.22      Restriction on Transfer of Assets to Non-Guarantor
                  Subsidiaries.

                  The Company will not sell, convey, transfer or otherwise
dispose of its assets or property to any of its Restricted Subsidiaries that are
not Guarantors, except for sales, conveyances, transfers or other dispositions
(a) of assets or property having an aggregate fair market value no greater than
$5 million made after the date of this Indenture and in the ordinary course of
business; or (b) of assets or property having a fair market value not in excess
of the amount of Investments (other than Permitted Investments) then permitted
to be made pursuant to Section 4.07. The amount of any sale, conveyance,
transfer or other disposition permitted pursuant to clause (b) of Section 4.07
will be treated as the payment of a Restricted Payment in calculating the amount
of Restricted Payments made by the Company.



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                                  ARTICLE FIVE
                                   SUCCESSORS

Section 5.01      Merger Consolidation or Sale of Assets.

                  The Company may not, directly or indirectly: (1) consolidate
or merge with or into another Person (whether or not the Company is the
surviving corporation); or (2) sell, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of the Company
and its Restricted Subsidiaries taken as a whole, in one or more related
transactions, to another Person; unless:

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

                  (2) the Person formed by or surviving any such consolidation
         or merger (if other than the Company) or the Person to which such sale,
         assignment, transfer, conveyance or other disposition shall have been
         made assumes all the obligations of the Company or such Restricted
         Subsidiary (if such Restricted Subsidiary is a Guarantor), as the case
         may be, under the Notes, this Indenture and the Registration Rights
         Agreement pursuant to agreements reasonably satisfactory to the
         Trustee;

                  (3) immediately after such transaction no Default or Event of
         Default exists; and

                  (4) if such transaction involves the Company, the Company or
         the Person formed by or surviving any such consolidation or merger (if
         other than the Company), or to which such sale, assignment, transfer,
         conveyance or other disposition shall have been made will, on the date
         of such transaction after giving pro forma effect thereto and any
         related financing transactions as if the same had occurred at the
         beginning of the applicable four-quarter period, be permitted to incur
         at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
         Coverage Ratio test set forth in the first paragraph of Section 4.09.

                  In addition, neither the Company nor any Restricted Subsidiary
may, directly or indirectly, lease all or substantially all of its properties or
assets, in one or more related transactions, to any other Person. This Section
5.01 will not apply to a sale, assignment, transfer, lease, conveyance or other
disposition of assets between or among the Company and any of its Restricted
Subsidiaries or to the merger or consolidation of any Restricted Subsidiary into
the Company.



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                                   ARTICLE SIX
                              DEFAULTS AND REMEDIES

Section 6.01      Events of Default.

                  Each of the following is an Event of Default:

                  (1) default for 30 days in the payment when due of interest
         on, or Liquidated Damages with respect to, the Notes whether or not
         prohibited by the subordination provisions of this Indenture;

                  (2) default in payment when due of the principal of, or
         premium, if any, on the Notes, whether or not prohibited by the
         subordination provisions of this Indenture;

                  (3) failure by the Company or any of its Restricted
         Subsidiaries to comply with the provisions described in Sections 4.10,
         4.15 and 5.01;

                  (4) failure by the Company or any of its Restricted
         Subsidiaries for 30 days after notice to comply with any of the other
         agreements in this Indenture;

                  (5) default under any mortgage, indenture or instrument under
         which there may be issued or by which there may be secured or evidenced
         any Indebtedness for money borrowed by the Company or any of its
         Restricted Subsidiaries (or the payment of which is guaranteed by the
         Company or any of its Restricted Subsidiaries) whether such
         Indebtedness or guarantee now exists, or is created after the date of
         this Indenture, if that default:

                           (a) is caused by a failure to pay principal of, or
                  interest or premium, if any, on such Indebtedness prior to the
                  expiration of the grace period provided in such Indebtedness
                  on the date of such default (a "PAYMENT DEFAULT"); or

                           (b) results in the acceleration of such Indebtedness
                  prior to its express maturity,

         and, in each case, the principal amount of any such Indebtedness,
         together with the principal amount of any other such Indebtedness under
         which there has been a Payment Default or the maturity of which has
         been so accelerated, aggregates $10.0 million or more;

                  (6) failure by the Company or any of its Restricted
         Subsidiaries to pay final judgments aggregating in excess of $10.0
         million, which judgments are not paid, discharged or stayed for a
         period of 60 days;

                  (7) except as permitted this Indenture, any Subsidiary
         Guarantee shall be held in any judicial proceeding to be unenforceable
         or invalid or shall cease for any reason to be in full force and effect
         or any Guarantor, or any Person acting on behalf of any Guarantor,
         shall deny or disaffirm its obligations under its Subsidiary Guarantee;



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                  (8) the Company or any of its Restricted Subsidiaries,
         pursuant to or within the meaning of Bankruptcy Law:

                           (i) commences a voluntary case, or

                           (ii) consents to the entry of an order for relief
                  against it in an involuntary case, or

                           (iii) consents to the appointment of a custodian of
                  it or for all or substantially all of its property, or

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

                           (v) generally is not paying its debts as they become
                  due; and

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

                           (i) is for relief against the Company or any of its
                  Restricted Subsidiaries, in an involuntary case, or

                           (ii) appoints a custodian of the Company or any of
                  its Restricted Subsidiaries or for all or substantially all of
                  the property of the Company or any of its Restricted
                  Subsidiaries, or

                           (iii) orders the liquidation of the Company or any of
                  its Restricted Subsidiaries;

and the order or decree remains unstayed and in effect for 60 consecutive days.

Section 6.02      Acceleration.

                  If any Event of Default (other than an Event of Default
specified in clause (8) or (9) of Section 6.01) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all principal, premium, if any, accrued interest
and Liquidated Damages, if any, of the Notes to be due and payable immediately.
Upon any such declaration, the Notes shall become due and payable immediately.
If any Event of Default specified in clause (8) or (9) of Section 6.01 occurs
and is continuing, then the principal, premium, if any, accrued interest and
Liquidated Damages, if any, on the Notes shall ipso facto become and be
immediately due and payable without any declaration or other action on the part
of the Trustee or any Holder.

                  If any Event of Default occurs by reason of any willful action
or inaction taken or not taken by the Company or on its behalf with the
intention of avoiding payment of the premium that the Company would have had to
pay if it then had elected to redeem the Notes pursuant to Section 3.07 hereof,
then, upon acceleration of the Notes, an equivalent premium shall also become
and be immediately due and payable, to the extent permitted by law. If an



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Event of Default occurs during any time that the Notes are outstanding, by
reason of any willful action or inaction taken or not taken by or on behalf of
the Company with the intention of avoiding the prohibition on redemption of the
Notes, then, the premium specified in this Indenture shall also become
immediately due and payable to the extent permitted by law upon the acceleration
of the Notes.

Section 6.03      Other Remedies.

                  If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, interest, and Liquidated Damages, if any, with respect to, the Notes or to
enforce the performance of any provision of the Notes or this Indenture.

                  The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.

Section 6.04      Waiver of Past Defaults.

                  Holders of a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee, may on behalf of the Holders of
all of the Notes, waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages, if any, on, or the principal of, the
Notes (including in connection with an offer to purchase) (provided, however,
that the Holders of a majority in principal amount of the then outstanding Notes
may rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). The Company shall deliver to the
Trustee an Officer's Certificate stating that the requisite percentage of
Holders have consented to such waiver and attaching copies of such consents. In
case of any such waiver, the Company, the Trustee and the Holders shall be
restored to their former positions and rights hereunder and under the Notes,
respectively. This Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the
TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded from
this Indenture and the Notes, as permitted by the TIA. Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

Section 6.05      Control by Majority.

                  Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability. The Trustee may withhold from Holders
of the Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the



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payment of principal or interest or Liquidated Damages, if any) if it determines
that withholding notice is in their interest.

Section 6.06      Limitation on Suits.

                  A Holder may pursue a remedy with respect to this Indenture,
or the Notes or the Subsidiary Guarantees only if:

                  (a) the Holder gives to the Trustee written notice of a
         continuing Event of Default;

                  (b) the Holders of at least 25% in principal amount of the
         then outstanding Notes make a written request to the Trustee to pursue
         the remedy;

                  (c) such Holder of a Note or Holders of Notes offer and, if
         requested, provide to the Trustee security and indemnity satisfactory
         to the Trustee against any loss, liability or expense that might be
         incurred by it in connection with the request or direction;

                  (d) the Trustee does not comply with the request within 60
         days after receipt of the request and the offer of and, if requested,
         the provision of indemnity; and

                  (e) during such 60-day period the Holders of a majority in
         principal amount of the then outstanding Notes do not give the Trustee
         a direction inconsistent with the request.

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

Section 6.07      Rights of Holders of Notes to Receive Payment.

                  Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium, if any,
interest on, and Liquidated Damages, if any, with respect to, the Note, on or
after the respective due dates expressed in the Note (including in connection
with an offer to purchase), or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.

Section 6.08      Collection Suit by Trustee.

                  If an Event of Default specified in Section 6.01(1) or (2)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, interest, and Liquidated Damages, if
any, remaining unpaid on the Notes and interest on overdue principal and
premium, if any, and, to the extent lawful, interest and Liquidated Damages, if
any, and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.



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Section 6.09      Trustee May File Proofs of Claim.

                  The Trustee is authorized 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 (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Company or any Guarantor (or any other obligor upon the Notes), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other securities or property payable or deliverable on
any such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding,
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, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.

Section 6.10      Priorities.

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

                  First: to the Trustee, its agents and attorneys for amounts
         due under Section 7.07 hereof, including payment of all compensation,
         expense and liabilities incurred, and all advances made, by the Trustee
         and the costs and expenses of collection;

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

                  Third: to the Company or to such party as a court of competent
         jurisdiction shall direct.

                  The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.

Section 6.11      Undertaking for Costs.

                  In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the



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costs of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of
more than ten percent in principal amount of the then outstanding Notes.

                                  ARTICLE SEVEN
                                     TRUSTEE

Section 7.01      Duties of Trustee.

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

                  (b) Except during the continuance of an Event of Default:

                  (i) the duties of the Trustee shall be determined solely by
         the express provisions of this Indenture and the Trustee need perform
         only those duties that are specifically set forth in this Indenture and
         no others, and no implied covenants or obligations shall be read into
         this Indenture against the Trustee; and

                  (ii) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture. However, the Trustee shall examine the certificates and
         opinions to determine whether or not they conform to the requirements
         of this Indenture.

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

                  (i) this paragraph does not limit the effect of paragraph (b)
         of this Section;

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

                  (iii) the Trustee shall not be liable with respect to any
         action it takes or omits to take in good faith in accordance with a
         direction received by it pursuant to Section 6.05 hereof.

                  (d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.



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                  (e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
costs, liability or expense that might be incurred by it in connection with the
request or direction.

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

Section 7.02      Certain Rights of Trustee.

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

                  (b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.

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

                  (d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.

                  (e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

                  (f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to it against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.

                  (g) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of such event is sent to the
Trustee in accordance with Section 12.02 hereof, and such notice references the
Notes.

Section 7.03      Individual Rights of Trustee.

                  The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may become a creditor of, or otherwise deal
with, the Company or any of



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its Affiliates with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest as
described in the Trust Indenture Act of 1939, it must eliminate such conflict
within 90 days, apply to the SEC for permission to continue as trustee or
resign. Any Agent may do the same with like rights and duties. The Trustee is
also subject to Sections 7.10 and 7.11 hereof.

Section 7.04      Trustee's Disclaimer.

                  The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

Section 7.05      Notice of Defaults.

                  If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of, premium
and Liquidated Damages, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of the
Holders of the Notes.

Section 7.06      Reports by Trustee to Holders of the Notes.

                  Within 60 days after each May 15 beginning with the May 15
following the date hereof, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA Section 313(c).

                  A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Notes are listed
on any stock exchange or any delisting thereof.

Section 7.07      Compensation and Indemnity.

                  The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder in accordance with a written schedule provided by the Trustee to the
Company. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.



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                  The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the Company
(including this Section 7.07) and defending itself against any claim (whether
asserted by either of the Company or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.

                  The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.

                  To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.

                  When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(8) or (9) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.

                  The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.

Section 7.08      Replacement of Trustee.

                  A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.

                  The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of a majority in principal amount of the then outstanding Notes may
remove the Trustee by so notifying the Trustee and the Company in writing. The
Company may remove the Trustee if:

                  (a) the Trustee fails to comply with Section 7.10 hereof;

                  (b) the Trustee is adjudged a bankrupt or an insolvent or an
         order for relief is entered with respect to the Trustee under any
         Bankruptcy Law;

                  (c) a custodian or public officer takes charge of the Trustee
         or its property; or



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                  (d) the Trustee becomes incapable of acting.

                  If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

                  If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition at the expense of the Company any court of
competent jurisdiction for the appointment of a successor Trustee.

                  If the Trustee, after written request by any Holder who has
been a Holder for at least six months, fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

                  A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

Section 7.09      Successor Trustee by Merger, Etc.

                  If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
Person, the successor Person without any further act shall be the successor
Trustee.

Section 7.10      Eligibility; Disqualification.

                  There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100.0 million as set forth in its most recent published annual report of
condition.

                  This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).

Section 7.11      Preferential Collection of Claims Against Company.

                  The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a)



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to the extent indicated therein. The Trustee hereby waives any right to set-off
any claim that it may have against the Company in any capacity (other than as
Trustee and Paying Agent) against any of the assets of the Company held by the
Trustee; provided, however, that if the Trustee is or becomes a lender of any
other Indebtedness permitted hereunder to be pari passu with the Notes, then
such waiver shall not apply to the extent of such Indebtedness.

                                  ARTICLE EIGHT
                       DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01      Option to Effect Legal Defeasance or Covenant Defeasance.

                  The Company may, at the option of the Board of Directors
evidenced by a resolution set forth in an Officer's Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article Eight.

Section 8.02      Legal Defeasance and Discharge.

                  Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
and all obligations of the Guarantors shall be deemed to have been discharged
with respect to their obligations under the Subsidiary Guarantees on the date
the conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE").
For this purpose, Legal Defeasance means that the Company and the Guarantors
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Notes and Subsidiary Guarantees, respectively, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.05
hereof and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder:

                  (a) the rights of Holders of outstanding Notes to receive
         payments in respect of the principal of, or interest or premium and
         Liquidated Damages, if any, on such Notes when such payments are due
         from the trust referred to below,

                  (b) the Company's obligations with respect to such Notes under
         Article Two and Section 4.02 hereof,

                  (c) the rights, powers, trusts, duties and immunities of the
         Trustee hereunder and the Company's obligations in connection herewith,
         and

                  (d) this Article Eight.



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                  Subject to compliance with this Article Eight, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.

Section 8.03      Covenant Defeasance.

                  Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21 and 4.22
hereof with respect to the outstanding Notes on and after the date the
conditions set forth in Section 8.04 are satisfied (hereinafter, "COVENANT
DEFEASANCE"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(3) through (6) shall not constitute Events of Default.

Section 8.04      Conditions to Legal or Covenant Defeasance.

                  The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:

                  (a) the Company must irrevocably deposit with the Trustee, in
         trust, for the benefit of the Holders of the Notes, cash in United
         States dollars, non-callable Government Securities, or a combination
         thereof, in such amounts as will be sufficient, in the opinion of a
         nationally recognized firm of independent public accountants, to pay
         the principal of, or interest, premium and Liquidated Damages, if any,
         on the outstanding Notes on the stated maturity or on the applicable
         redemption date, as the case may be, and the Company must specify
         whether the Notes are being defeased to maturity or to a particular
         redemption date;

                  (b) in the case of an election under Section 8.02 hereof, the
         Company shall have delivered to the Trustee an Opinion of Counsel
         reasonably acceptable to the Trustee confirming that (i) the Company
         has received from, or there has been published by, the Internal Revenue
         Service a ruling or (ii) since the date hereof, there has been a change
         in the applicable federal income tax law, in either case to the effect
         that, and based thereon, such Opinion of Counsel shall confirm that,
         the Holders of the outstanding Notes will not



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         recognize income, gain or loss for federal income tax purposes as a
         result of such Legal Defeasance and will be subject to federal income
         tax on the same amounts, in the same manner and at the same times as
         would have been the case if such Legal Defeasance had not occurred;

                  (c) in the case of an election under Section 8.03 hereof, the
         Company shall have delivered to the Trustee an Opinion of Counsel
         reasonably acceptable to the Trustee confirming that the Holders of the
         outstanding Notes will not recognize income, gain or loss for federal
         income tax purposes as a result of such Covenant Defeasance and will be
         subject to federal income tax on the same amounts, in the same manner
         and at the same times as would have been the case if such Covenant
         Defeasance had not occurred;

                  (d) no Default or Event of Default shall have occurred and is
         continuing either (i) on the date of such deposit or (ii) insofar as
         Sections 6.01(8) and (9) hereof are concerned, at any time in the
         period ending on the 91st day after the date of deposit;

                  (e) such Legal Defeasance or Covenant Defeasance shall not
         result in a breach or violation of, or constitute a default under, any
         material agreement or instrument to which the Company or any of its
         Subsidiaries are a party or by which the Company or any of its
         Subsidiaries are bound;

                  (f) the Company must have delivered to the Trustee an Opinion
         of Counsel to the effect that, assuming no intervening bankruptcy of
         the Company or any Guarantor between the date of deposit and the 91st
         day following the deposit and assuming that no Holder is an "insider"
         of the Company under applicable bankruptcy law, after the 91st day
         following the deposit, the trust funds will not be subject to the
         effect of any applicable bankruptcy, insolvency, reorganization or
         similar laws affecting creditors' rights generally;

                  (g) the Company must deliver to the Trustee an Officers'
         Certificate stating that the deposit was not made by the Company with
         the intent of preferring the Holders of Notes over the other creditors
         of the Company with the intent of defeating, hindering, delaying or
         defrauding creditors of the Company or others; and

                  (h) the Company must deliver to the Trustee an Officers'
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent relating to the Legal Defeasance or the Covenant Defeasance
         have been complied with.

Section 8.05      Deposited Money and Government Securities to Be Held in Trust;
Other Miscellaneous Provisions.

                  Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "TRUSTEE") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of



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principal, premium and Liquidated Damages, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.

                  The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

                  Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.

Section 8.06      Repayment to the Company.

                  Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to the Company.

Section 8.07      Reinstatement.

                  If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company
makes any payment of principal of, premium, if any, or interest on any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.



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                                  ARTICLE NINE
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01      Without Consent of Holders of Notes.

                  Notwithstanding Section 9.02 of this Indenture, the Company,
the Guarantors and the Trustee may amend or supplement this Indenture or the
Notes without the consent of any Holder of a Note:

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

                  (b) to provide for uncertificated Notes in addition to or in
         place of certificated Notes;

                  (c) to provide for the assumption of the Company's or any
         Guarantor's obligations to the Holders of the Notes in the case of a
         merger or consolidation or sale of all or substantially all of the
         Company's or such Guarantor's assets;

                  (d) to make any change that would provide any additional
         rights or benefits to the Holders of the Notes or that does not
         adversely affect the legal rights hereunder of any Holder of a Note; or

                  (e) to comply with requirements of the SEC in order to effect
         or maintain the qualification of this Indenture under the TIA.

                  Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.

Section 9.02      With Consent of Holders of Notes.

                  Except as provided below in this Section 9.02, the Company,
the Guarantors and the Trustee may amend or supplement this Indenture or the
Notes with the consent of the Holders of at least a majority in principal amount
of the Notes (including Additional Notes, if any) then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and, subject to Sections 6.04 and
6.07 hereof, any existing Default or Event of Default or compliance with any
provision of this Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including Additional Notes, if any) (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes).

                  The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record



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date is fixed, the Holders on such record date, or its duly designated proxies,
and only such Persons, shall be entitled to consent to such supplemental
indenture, whether or not such Holders remain Holders after such record date;
provided that unless such consent shall have become effective by virtue of the
requisite percentage having been obtained prior to the date which is 90 days
after such record date, any such consent previously given shall automatically
and without further action by any Holder be cancelled and of no further effect.

                  Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Company in the execution of such amended
or supplemental Indenture unless such amended or supplemental Indenture directly
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 amended or supplemental Indenture.

                  It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.

                  After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the then outstanding
Notes (including Additional Notes, if any) may waive compliance in a particular
instance by the Company with any provision of this Indenture, or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

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

                  (b) reduce the principal of or change the fixed maturity of
         any Note or alter the provisions, or waive any payment, with respect to
         the redemption of the Notes;

                  (c) reduce the rate of or change the time for payment of
         interest on any Note;

                  (d) waive a Default or Event of Default in the payment of
         principal of, or interest or premium, or Liquidated Damages, if any, on
         the Notes (except a rescission of acceleration of the Notes (including
         Additional Notes, if any) by the Holders of at least a majority in
         aggregate principal amount of the Notes and a waiver of the payment
         default that resulted from such acceleration);

                  (e) make any Note payable in money other than U.S. dollars;



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                  (f) make any change in the provisions of this Indenture
         relating to waivers of past Defaults or Events of Default or the rights
         of Holders of Notes to receive payments of principal of, or interest or
         premium or Liquidated Damages, if any, on the Notes;

                  (g) release any Guarantor from any of its obligations under
         its Subsidiary Guarantee or this Indenture, except in accordance with
         the terms of this Indenture;

                  (h) impair the right to institute suit for the enforcement of
         any payment on or with respect to the Notes or the Subsidiary
         Guarantees;

                  (i) amend, change or modify the obligation of the Company to
         make and consummate an Asset Sale Offer with respect to any Asset Sale
         in accordance with Section 4.10 or the obligation of the Company to
         make and consummate a Change of Control Offer in the event of a Change
         of Control in accordance with Section 4.15, including, in each case,
         amending, changing or modifying any definition relating thereto;

                  (j) except as otherwise permitted under Article Five, consent
         to the assignment or transfer by the Company or any Guarantor of any of
         their rights or obligations under this Indenture;

                  (k) amend or modify any of the provisions of this Indenture or
         the related definitions affecting the subordination or ranking of the
         Notes or any Subsidiary Guarantee in any manner adverse to the holders
         of the Notes or any Subsidiary Guarantee; or

                  (l) make any change in the preceding amendment and waiver
         provisions.

Section 9.03      Compliance with Trust Indenture Act.

                  Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental Indenture that complies with the
TIA as then in effect.

Section 9.04      Revocation and Effect of Consents.

                  Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

Section 9.05      Notation on or Exchange of Notes.

                  The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may


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issue and the Trustee shall, upon receipt of an Authentication Order,
authenticate new Notes that reflect the amendment, supplement or waiver.

                  Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.

Section 9.06      Trustee to Sign Amendments, Etc.

                  The Trustee shall sign any amended or supplemental indenture
or Note authorized pursuant to this Article Nine if the amendment or supplement
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Company may not sign an amendment or supplemental Indenture or Note
until its Board of Directors approves it. In executing any amended or
supplemental indenture or Note, the Trustee shall be entitled to receive and
(subject to Section 7.01 hereof) shall be fully protected in relying upon an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture.

                                   ARTICLE TEN
                                  SUBORDINATION

Section 10.01     Agreement to Subordinate.

                  The Company agrees, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article Ten, to the
prior payment in full of all Senior Debt (whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt.

Section 10.02     Liquidation; Dissolution; Bankruptcy.

                  The holders of Senior Debt of the Company will be entitled to
receive payment in full of all Obligations due in respect of Senior Debt of the
Company (including interest after the commencement of any bankruptcy proceeding
at the rate specified in the applicable Senior Debt of the Company) before the
Holders of Notes will be entitled to receive any payment with respect to the
Notes (except that Holders of Notes may receive and retain Permitted Junior
Securities and payments made from the trust pursuant to Article Eight hereof),
in the event of any distribution to creditors of the Company: (i) in a
liquidation or dissolution of the Company; (ii) in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property; (iii) in an assignment for the benefit of creditors; or (iv) in any
marshaling of the Company's assets and liabilities.

Section 10.03     Default on Designated Senior Debt.

                  The Company may not make any payment in respect of the Notes
(except in Permitted Junior Securities or from the trust pursuant to Article
Eight hereof).



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                  (a) In the event of and during the continuation beyond any
         applicable grace period of any default in the payment of principal of,
         interest or premium, if any, on any Designated Senior Debt, or any
         Obligation owing from time to time under or in respect of Senior Debt,
         or in the event that any default (other than a payment default) with
         respect to any Designated Senior Debt shall have occurred and be
         continuing and shall have resulted in such Designated Senior Debt
         becoming or being declared due and payable prior to the date on which
         it would otherwise have become due and payable; or

                  (b) If any event of default other than as described in clause
         (a) above with respect to any Designated Senior Debt shall have
         occurred and be continuing permitting the holders of such Designated
         Senior Debt or the holders of any series thereof (or their
         Representative or Representatives) to declare such Designated Senior
         Debt due and payable prior to the date on which it would otherwise have
         become due and payable;

                           (1) in case of any payment or nonpayment default
                  specified in clause (a), unless and until such default shall
                  have been cured or waived in writing in accordance with the
                  instruments governing such Designated Senior Debt or such
                  acceleration shall have been rescinded or annulled, or

                           (2) in case of any nonpayment default specified in
                  clause (b), during the period (a "PAYMENT BLOCKAGE Period")
                  commencing on the date the Trustee receives written notice (a
                  "PAYMENT BLOCKAGE Notice") of such default from the Company or
                  a Representative of the holders of such Designated Senior Debt
                  (which notice shall be binding on the Company, the Trustee and
                  the Holders of Notes as to the occurrence of such a nonpayment
                  event of default) and ending on the earlier of: the date on
                  which such default is cured or waived or 179 days after the
                  date on which the applicable Payment Blockage Notice is
                  received, unless the maturity of such Designated Senior Debt
                  of the Company has been accelerated.

                  No new Payment Blockage Notice may be delivered to the Company
or the Trustee that would start a new Payment Blockage Period unless and until:
(i) 360 days have elapsed since the delivery of the immediately prior Payment
Blockage Notice that started a Payment Blockage Period; and (ii) all scheduled
payments of principal, interest and premium and Liquidated Damages, if any, on
the Notes that have come due have been paid in full in cash. No nonpayment
default which existed or was continuing with respect to the Designated Senior
Debt on the date of delivery of any Payment Blockage Notice to the Trustee shall
be, or be made, the basis for the commencement of any subsequent Payment
Blockage Period.

Section 10.04     Acceleration of Securities.

                  If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.

Section 10.05     When Distribution Must Be Paid Over.

                  In the event that the Trustee or any Holder receives any
payment of any Obligations with respect to the Notes (except in Permitted Junior
Securities or from the trust



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pursuant to Article Eight hereof) at a time when the Trustee or such Holder, as
applicable, has actual knowledge that such payment is prohibited by Article Ten
hereof, such payment shall be held by the Trustee or such Holder, as applicable,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to the holders of Senior Debt as their interests may
appear or their Representative under this Indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.

                  With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
Holders or the Company or any other Person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article Ten, except if such
payment is made as a result of the willful misconduct or gross negligence of the
Trustee.

Section 10.06     Notice by the Company.

                  The Company shall promptly notify the Trustee and the Paying
Agent in writing of any facts known to the Company that would cause a payment of
any Obligations with respect to the Notes to violate this Article Ten, but
failure to give such notice shall not affect the subordination of the Notes to
the Senior Debt as provided in this Article Ten.

Section 10.07     Subrogation.

                  After all Senior Debt is paid in full and until the Notes are
paid in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article Ten to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.

Section 10.08     Relative Rights.

                  This Article Ten defines the relative rights of Holders of
Notes and holders of Senior Debt. Nothing in this Indenture shall:

                  (a) impair, as between the Company and Holders of Notes, the
         obligation of the Company, which is absolute and unconditional, to pay
         principal of and interest on the Notes in accordance with their terms;

                  (b) affect the relative rights of Holders of Notes and
         creditors of the Company other than their rights in relation to holders
         of Senior Debt; or



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                  (c) prevent the Trustee or any Holder of Notes from exercising
         its available remedies upon a Default or Event of Default, subject to
         the rights of holders and owners of Senior Debt to receive
         distributions and payments otherwise payable to Holders of Notes.

                  If the Company fails because of this Article Ten to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.

Section 10.09     Subordination May Not Be Impaired by the Company.

                  No right of any holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.

Section 10.10     Distribution or Notice to Representative.

                  Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice given to
their representative.

                  Upon any payment or distribution of assets of the Company
referred to in this Article Ten, the Trustee and the Holders of Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Notes for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior Debt and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Ten.

Section 10.11     Rights of Trustee and Paying Agent.

                  Notwithstanding the provisions of this Article Ten or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment or distribution by the Trustee, and the Trustee and the Paying Agent may
continue to make payments on the Notes, unless the Trustee shall have received
at its Corporate Trust Office at least five Business Days prior to the date of
such payment written notice of facts that would cause the payment of any
Obligations with respect to the Notes to violate this Article Ten. Only the
Company or a representative may give the notice. Nothing in this Article Ten
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.

                  The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.

Section 10.12     Authorization to Effect Subordination.

                  Each Holder of Notes, by the Holder's acceptance thereof,
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to



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effectuate the subordination as provided in this Article Ten, and appoints the
Trustee to act as such Holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in Section 6.09 hereof at least 30
days before the expiration of the time to file such claim, the lenders under the
Credit Agreement are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.

                                 ARTICLE ELEVEN
                              SUBSIDIARY GUARANTEES

Section 11.01     Guarantee.

                  Subject to this Article Eleven each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Notes or the obligations of the Company hereunder or thereunder, that: (a)
the principal of and interest on the Notes will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and interest
on the overdue principal of and interest on the Notes, if any, if lawful
(subject in all cases to any applicable grace period provided herein), and all
other obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that 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 or
otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors shall be jointly
and severally obligated to pay the same immediately. Each Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection.

                  The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Subject to Section 6.06 hereof, each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenant
that this Subsidiary Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.

                  If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.



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                  Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Six
hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article Six hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Subsidiary Guarantee.

Section 11.02     Subordination of Subsidiary Guarantee.

                  The Obligations of each Guarantor under its Subsidiary
Guarantee pursuant to this Article Eleven shall be junior and subordinated to
any of the existing and future Senior Debt of such Guarantor on the same basis
as the Notes are junior and subordinated to Senior Debt of the Company. For the
purposes of the foregoing sentence, the Trustee and the Holders shall have the
right to receive and/or retain payments by any of the Guarantors only at such
times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture, including Article Ten hereof.

Section 11.03     Limitation on Guarantor Liability.

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

Section 11.04     Execution and Delivery of Subsidiary Guarantee.

                  To evidence its Subsidiary Guarantee set forth in Section
11.01, each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit D shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee.

                  Each Guarantor hereby agrees that its Subsidiary Guarantee set
forth in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.

                  If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.



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

                  In the event that the Company or any of its Restricted
Subsidiaries creates or acquires any new Domestic Subsidiaries subsequent to the
date of this Indenture, if required by Section 4.21 hereof, the Company shall
cause such Domestic Subsidiaries to execute supplemental indentures to this
Indenture and Subsidiary Guarantees in accordance with Section 4.21 hereof and
this Article Eleven, to the extent applicable.

Section 11.05     Guarantors May Consolidate, Etc., on Certain Terms.

                  Except as otherwise provided in Section 11.06, a Guarantor may
not sell or otherwise dispose of all or substantially all of its assets or
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person unless:

                  (a) immediately after giving effect to such transaction, no
         Default or Event of Default exists; and

                  (b) either:

                           (i) the Person acquiring the property in any such
                  sale or disposition or the Person formed by or surviving any
                  such consolidation or merger is a corporation, organized or
                  existing under the laws of the United States, any state
                  thereof or the District of Columbia and assumes all the
                  obligations of that Guarantor under this Indenture, its
                  Subsidiary Guarantee and the Registration Rights Agreement
                  pursuant to a supplemental indenture satisfactory to the
                  Trustee; or

                           (ii) such sale or other disposition complies with
                  Section 4.10, including the application of the Net Proceeds
                  therefrom.

                  In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by a Guarantor, such successor Person shall succeed to and be
substituted for a Guarantor with the same effect as if it had been named herein
as a Guarantor. Such successor Person thereupon may cause to be signed any or
all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Subsidiary Guarantees so issued shall in all
respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.

                  Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall



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prevent any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.

Section 11.06     Releases Following Sale of Assets.

                  Any Guarantor will be released and relieved of any obligations
under its Subsidiary Guarantee, (i) in connection with any sale or other
disposition of all or substantially all of the assets of that Guarantor
(including by way of merger or consolidation) to a Person that is not (either
before or after giving effect to such transaction) a Restricted Subsidiary of
the Company, if the sale or other disposition of all or substantially all of the
assets of that Guarantor complies with Section 4.10 hereof, including the
application of the Net Proceeds therefrom; (ii) in connection with any sale of
all of the Capital Stock of a Guarantor to a Person that is not (either before
or after giving effect to such transaction) a Restricted Subsidiary of the
Company, if the sale of all such Capital Stock of that Guarantor complies with
Section 4.10 hereof, including the application of the Net Proceeds therefrom and
(iii) if the Company properly designates any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary. Upon delivery by the Company to the
Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Company in accordance with the
provisions of this Indenture, including without limitation Section 4.10 hereof,
the Trustee shall execute any documents reasonably required in order to evidence
the release of any Guarantor from its obligations under its Subsidiary
Guarantee.

                  Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor under this
Indenture as provided in this Article Eleven.

                                 ARTICLE TWELVE
                           SATISFACTION AND DISCHARGE

Section 12.01     Satisfaction and Discharge.

                  This Indenture shall be discharged and shall cease to be of
further effect as to all Notes issued thereunder, when:

                  (a) either:

                  (i) all Notes that have been authenticated (except lost,
         stolen or destroyed Notes that have been replaced or paid and Notes for
         whose payment money has theretofore been deposited in trust and
         thereafter repaid to the Company) have been delivered to the Trustee
         for cancellation; or

                  (ii) all Notes that have not been delivered to the Trustee for
         cancellation have become due and payable by reason of the making of a
         notice of redemption or otherwise



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         or will become due and payable within one year and the Company has
         irrevocably deposited or caused to be deposited with the Trustee as
         trust funds in trust solely for the benefit of the Holders, cash in
         U.S. dollars, non-callable Government Securities, or a combination
         thereof, in such amounts as will be sufficient without consideration of
         any reinvestment of interest, to pay and discharge the entire
         indebtedness on the Notes not delivered to the Trustee for cancellation
         for principal, premium, accrued interest and Liquidated Damages, if
         any, to the date of maturity or redemption;

                  (b) no Default or Event of Default shall have occurred and be
         continuing on the date of such deposit or shall occur as a result of
         such deposit and such deposit will not result in a breach or violation
         of, or constitute a default under, any other instrument to which the
         Company or any Guarantor is a party or by which it is bound;

                  (c) the Company has paid or caused to be paid all sums payable
         by it under this Indenture; and

                  (d) the Company has delivered irrevocable instructions to the
         Trustee under this Indenture to apply the deposited money toward the
         payment of the Notes at maturity or the redemption date, as the case
         may be.

                  The Company shall deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.

                  Notwithstanding the above, the Trustee shall pay to the
Company from time to time upon its request any cash or Government Securities
held by it as provided in this section which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification delivered to the Trustee, are in excess of the amount thereof that
would then be required to be deposited to effect a satisfaction and discharge
under this Article Twelve.

Section 12.02 Deposited Money and Government Securities to Be Held in Trust;
Other Miscellaneous Provisions.

                  Subject to Section 12.03 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
12.02, the "TRUSTEE") pursuant to Section 12.01 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium and
Liquidated Damages, if any, and interest, but such money shall be segregated
from other funds except to the extent required by law.

Section 12.03     Repayment to the Company.

                  Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium
and Liquidated Damages, if any, or interest on any Note and remaining unclaimed
for two years after such principal, and premium



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and Liquidated Damages, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times or The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to the Company.

                                ARTICLE THIRTEEN
                                  MISCELLANEOUS

Section 13.01     Trust Indenture Act Controls.

                  If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.

Section 13.02     Notices.

                  Any notice or communication by the Company or any Guarantor,
on the one hand, or the Trustee, on the other hand, to the other is duly given
if in writing and delivered in Person or mailed by first class mail (registered
or certified, return receipt requested), telecopier or overnight air courier
guaranteeing next day delivery, to the others' address:

                  If to the Company or any Guarantor:

                  Stewart Enterprises, Inc.
                  110 Veterans Memorial Boulevard
                  Metairie, LA 70005
                  Telecopier No.: (504) 849-2307
                  Attention: Kenneth C. Budde, Chief Financial Officer

                  With copies to:

                  Jones, Walker, Waechter, Poitevent,
                         Carrere and Denegre, L.L.P.
                  201 St. Charles Avenue
                  New Orleans, LA 70170-5100
                  Telecopier No.: (504) 582-8012
                  Attention: L. Richards McMillan, Esq.

                  If to the Trustee:

                  Firstar Bank, N.A.
                  101 East 5th Street
                  St. Paul, MN 55101
                  Telecopier No.: (651) 229-6415
                  Attention: Frank Leslie



                                       86
   95

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

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

                  Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.

                  If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.

                  If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.

Section 13.03     Communication by Holders of Notes with Other Holders of Notes.

                  Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to its rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).

Section 13.04     Certificate and Opinion as to Conditions Precedent.

                  Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:

                  (a) an Officers' Certificate in form and substance reasonably
         satisfactory to the Trustee (which shall include the statements set
         forth in Section 13.05 hereof) stating that, in the opinion of the
         signers, all conditions precedent and covenants, if any, provided for
         in this Indenture relating to the proposed action have been satisfied;
         and

                  (b) an Opinion of Counsel in form and substance reasonably
         satisfactory to the Trustee (which shall include the statements set
         forth in Section 13.05 hereof) stating that, in the opinion of such
         counsel, all such conditions precedent and covenants have been
         satisfied.



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   96

Section 13.05     Statements Required in Certificate or Opinion.

                  Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and 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 or she
         has made such examination or investigation as is necessary to enable
         him to express an informed opinion as to whether or not such covenant
         or condition has been satisfied; and

                  (d) a statement as to whether or not, in the opinion of such
         Person, such condition or covenant has been satisfied.

Section 13.06     Rules by Trustee and Agents.

                  The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.

Section 13.07 No Personal Liability of Directors, Officers, Employees and
Stockholders.

                  No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor as such shall have any liability for any
obligations of the Company or the Guarantors under the Notes, this Indenture,
the Subsidiary Guarantees or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases these individuals from this liability. The waiver and
release are part of the consideration for issuance of the Notes. The waiver may
not be effective to waive liabilities under the federal securities laws.

Section 13.08     Governing Law.

                  THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 13.09     Consent to Jurisdiction.

                  Any legal suit, action or proceeding arising out of or based
upon this Indenture or the transactions contemplated hereby ("RELATED
PROCEEDINGS") may be instituted in the federal courts of the United States of
America located in the City of New York or the courts of the State of New York
in each case located in the City of New York (collectively, the "SPECIFIED
COURTS"), and each party irrevocably submits to the non-exclusive jurisdiction
(except for



                                       88
   97

proceedings instituted in regard to the enforcement of a judgment of any such
court (a "RELATED JUDGMENT"), as to which such jurisdiction is non-exclusive) of
such courts in any such suit, action or proceeding. Service of any process,
summons, notice or document by mail to such party's address set forth above
shall be effective service of process for any suit, action or other proceeding
brought in any such court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any suit, action or other proceeding in the
Specified Courts and irrevocably and unconditionally waive and agree not to
plead or claim in any such court has been brought in an inconvenient forum.

Section 13.10     No Adverse Interpretation of Other Agreements.

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

Section 13.11     Successors.

                  All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors. All agreements of each Guarantor in this Indenture shall
bind its successors, except as otherwise provided in Section 11.05 and 11.06.

Section 13.12     Severability.

                  In case any provision in this Indenture or the Notes 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.

Section 13.13     Counterpart Originals.

                  The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.

Section 13.14     Acts of Holders.

                  (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by the Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents 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 and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company if made in the
manner provided in this Section 13.14.



                                       89
   98

                  (b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such witness, notary or officer the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of authority. The fact and date of the execution of
any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.

                  (c) Notwithstanding anything to the contrary contained in this
Section 13.14, the principal amount and serial numbers of Notes held by any
Holder, and the date of holding the same, shall be proved by the register of the
Notes maintained by the Registrar as provided in Section 2.04 hereof.

                  (d) If the Company shall solicit from the Holders of the Notes
any request, demand, authorization, direction, notice, consent, waiver or other
Act, the Company may, at its option, by or pursuant to a resolution of its Board
of Directors, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
Notwithstanding TIA Section 316(c), such record date shall be the record date
specified in or pursuant to such resolution, which shall be a date not earlier
than the date 30 days prior to the first solicitation of Holders generally in
connection therewith or the date of the most recent list of Holders forwarded to
the Trustee prior to such solicitation pursuant to Section 2.06 hereof and not
later than the date such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of the then outstanding Notes have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the then outstanding Notes shall be computed as
of such record date; provided that no such authorization, agreement or consent
by the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
eleven months after the record date.

                  (e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration or transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Note.

                  (f) Without limiting the foregoing, a Holder entitled
hereunder to take any action hereunder with regard to any particular Note may do
so itself with regard to all or any part of the principal amount of such Note or
by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.



                                       90
   99

Section 13.15     Benefit of Indenture.

                  Nothing, in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto, any Paying
Agent, any Registrar and its successors hereunder, and the Holders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.

Section 13.16     Table of Contents, Headings, Etc.

                  The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





                                       91
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                                   SIGNATURES



STEWART ENTERPRISES, INC.


By:      /s/ WILLIAM E. ROWE
         ----------------------------------------------
         Name:  William E. Rowe
         Title: President and Chief Executive Officer

GUARANTORS:

S.E. OF TUCSON, ARIZONA, INC.
GRIFFIN-LEGGETT, INC.
FOREST HILLS CEMETERY, INC.
GRIFFIN LEGGETT HEALEY & ROTH, INC.
GRIFFIN-LEGGETT INSURANCE AGENCY, INC
GROSS FUNERAL HOME, INC.
REST HILLS MEMORIAL PARK, INC.
GRIFFIN LEGGETT - CONWAY, INC.
DILDAY BROTHERS HUNTINGTON VALLEY
   MORTUARY
HOPSON MORTUARY, INC.
LASSILA FUNERAL CHAPELS, INC.
SANTA BARBARA FUNERAL SERVICES, INC.
S.E. ACQUISITION OF CALIFORNIA, INC.
ALL SOULS MORTUARY, INC.
ASHES TO ASHES, INC.
ASSUMPTION MORTUARY, INC.
BARSTOW FUNERAL HOMES, INC.
BUCHHEIM FAMILY, INC.
CALVARY MORTUARY OF LOS ANGELES,
   CALIFORNIA, INC.
CATHOLIC MORTUARY SERVICES, INC.
DeYOUNG MEMORIAL CHAPEL, INC.
HOLY CROSS MORTUARY OF CULVER CITY, CALIFORNIA, INC.
HOLY CROSS MORTUARY OF POMONA, CALIFORNIA, INC.
LOMBARD & CO.
N.D. DAVIS & ASSOCIATES, INC.
QUEEN OF HEAVEN MORTUARY, INC.
RESURRECTION MORTUARY, INC.
RICHARD PIERCE FUNERAL SERVICE
RIVER CITIES FUNERAL CHAPEL, INC.
S.E. ACQUISITION OF DELANO, CALIFORNIA, INC.
S.E. ACQUISITION OF GLENDALE, CALIFORNIA, INC.
S.E. ACQUISITION OF LANCASTER, CALIFORNIA, INC.



   101

S.E. ACQUISITION OF LOS OSOS MORTUARY AND MEMORIAL PARK, INC.
S.E. ACQUISITION OF OAKHURST, CALIFORNIA, INC.
S.E. ACQUISITION OF OROVILLE, CALIFORNIA, INC.
S.E. ACQUISITION OF SAN DIEGO, CALIFORNIA, INC.
SAN FERNANDO MISSION MORTUARY, INC.
SANTA CLARA MORTUARY, INC.
SCOVERN MORTUARY, A CALIFORNIA CORPORATION
SDCA HOLDINGS, INC.
SAN DIEGO CEMETERY ASSOCIATION
SIMPLICITY PLAN OF CALIFORNIA, INC.
STEWART PRE-NEED SERVICES, INC.
STRICKLIN/SNIVELY MORTUARY
CATALINA CHANNEL CREMATION SOCIETY
WALLACE E. WHITE & HOWARD J. CALLANAN, INC.
WOODSIDE CHAPEL OF CRIPPEN & FLYNN
SENTINEL CREMATION SOCIETIES, INC.
S.E. ACQUISITION OF MURIETTA, CALIFORNIA, INC.
S.E. ACQUISITION OF SANTA MARIA, CALIFORNIA, INC.
VICTOR V. DESROSIER, INC.
CEMETERY MANAGEMENT, INC.
ARLINGTON MEMORIAL PARK CEMETERY AND FUNERAL HOME, INC.
BALDWIN-FAIRCHILD FUNERAL HOMES, INC.
ALL FAITHS MEMORIAL PARK, INC.
ORLANDO FUNERAL HOME, INCORPORATED
THE SIMPLICITY PLAN, INC.
BAY AREA CREMATORY, INC.
BRUCE OCALA FUNERAL HOME, INC.
BETH DAVID FUNERAL CHAPEL TAMPA, INC.
BETH DAVID MEMORIAL CHAPEL, INC.
CHAPEL HILL CEMETERY, INC.
GLEN HAVEN MEMORIAL PARK, INC.
HIGHLAND MEMORY GARDENS, INC.
SEMORAN FUNERAL HOME, INC.
FLORIDA HILLS MEMORIAL GARDENS, INC.
GARDEN OF MEMORIES, INC.
A.P. BOZA FUNERAL HOME, INC.
CURRY & SON FUNERAL HOME, INC.
WOODLAWN MEMORY GARDENS, INC. (ST. PETE)
GOOD SHEPHERD MEMORIAL GARDENS, INC.
DAVID C. GROSS FUNERAL HOME, INC.
HUBBELL FUNERAL HOME AND CREMATORY, INC.


   102

KENT R. PALMER, INC.
KICLITER FUNERAL HOME, INC.
MADCEM OF FLORIDA, INC.
MEMORIAL PARK CEMETERY, INC.
OAKLAWN PARK CEMETERY AND FUNERAL HOME, INC.
ROBERTS FUNERAL HOME, INC.
ROYAL PALM MEMORIAL GARDENS, INC.
SYLVAN ABBEY MEMORIAL PARK, INC.
TRINITY MEMORIAL GARDENS OF LAKELAND, INC.
TURNER CREMATORY, INC.
TURNER FUNERAL HOMES, INC.
WALSH & WOOD FUNERAL HOME, INC.
WOODLAWN PARK CEMETERY COMPANY
MEMORIAL SUNSET PARK, INC.
NATIONAL MONUMENT CO., INC.
SOUTH DADE-PALMS MEMORIAL PARK, INC.
CHEATHAM HILL MEMORIAL PARK, INC.
EMPRESAS STEWART - CEMENTERIOS, INC.
EMPRESAS STEWART - FUNERARIAS, INC.
EASTLAWN CORPORATION
HOLLY HILL MEMORIAL PARK, INC.
ROSE HAVEN FUNERAL HOME & CEMETERY, INC.
ACME MAUSOLEUM CORPORATION
INTERNATIONAL STONE & ERECTORS, INC.
LAKE LAWN METAIRIE FUNERAL HOME, INC.
LAKE LAWN METAIRIE FUNERAL HOME (JOINT VENTURE)
LAKE LAWN PARK, INC.
METAIRIE CEMETERY ASSOCIATION
PINE CREST CEMETERY, INC.
ALL FAITHS FUNERAL HOME, INC.
MOUNT OLIVET CEMETERY, INC.
S.E. AUSTRALIA, INC.
S.E. SOUTH-CENTRAL, INC.
ELLISON FUNERAL HOME, INC.
KILGORE-GREEN FUNERAL HOME, INC.
LATHAN FUNERAL HOME, INC.
PINE CREST FUNERAL HOME, INC.
FAITH MEMORIAL PARK & MAUSOLEUM COMPANY, INC.
VALHALLA MEMORY GARDENS AND FUNERAL HOME, INC.
ROCKCO AND SON FUNERAL HOME, INC.
ROCKCO'S FUNERAL HOMES, INC.
S.E. ACQUISITION OF LITHONIA, GEORGIA, INC.
ANDREW J. McGANN & SON FUNERAL HOME, INC.
S.E. ACQUISITION OF BLUE ISLAND, ILLINOIS, INC.


   103

S.E. ACQUISITION OF OAK LAWN AND ORLAND PARK, ILLINOIS, INC.
S.E. CEMETERY MANAGEMENT OF ILLINOIS, INC.
THEIS-GORSKI FUNERAL HOME, INC.
KNUTSON FUNERAL HOMES, INC.
PAULEY FUNERAL HOME, INC.
RUNYAN MANGOLD, INC.
PROFESSIONAL FUNERAL SERVICES, INC.
D.W. NEWCOMER'S SONS, INC.
DWN PROPERTIES, INC.
FUNERAL SECURITY PLANS, INC.
S.E. ACQUISITION OF BOONVILLE, MISSOURI, INC.
WYUKA FUNERAL HOME, INC.
WYUKA SIMPLICITY PLAN, INC.
S.E. ACQUISITION OF ALBUQUERQUE, NEW MEXICO, INC.
S.E. ACQUISITION OF SANTA FE, NEW MEXICO, INC.
S.E. ACQUISITION OF MUSKOGEE, OKLAHOMA, INC.
MT. JULIET FUNERAL HOME, INC.
MT. JULIET MEMORIAL GARDENS, INC.
NAVE FUNERAL HOME OF LEBANON, INC.
CEMETERY SERVICES, INC.
S.E. CEMETERY MANAGEMENT OF WISCONSIN, INC.
WISCONSIN MEMORIAL PARK COMPANY, INC.
TIME-LOCK INSURANCE AGENCY, INC.
SIMPLE TRIBUTE, INC.
SIMPLE TRIBUTE OF FLORIDA, INC.
SIMPLE TRIBUTE OF TENNESSEE, INC.
SIMPLE TRIBUTE OF MARYLAND, INC.
ST. BERNARD MEMORIAL GARDENS, INC.
ST. BERNARD MEMORIAL FUNERAL HOME, INC.
ST. VINCENT de PAUL CEMETERY ASSOCIATION
STEWART ENTERPRISES (EUROPE), INC.
STEWART RESOURCE CENTER, INC.
STEWART SERVICES, INC.
S.E. MID-ATLANTIC, INC.
GARNER FAMILY FUNERAL HOME, INC.
HAISTEN FUNERAL HOMES, INC.
HAISTEN FUNERAL HOME OF HENRY COUNTY, INC.
HIGGINS AND SON FUNERAL HOME, INC.
S.E. ACQUISITION OF PIKEVILLE, KENTUCKY, INC.
BOUNDS FUNERAL HOME, INC.
CEDAR HILL CEMETERY COMPANY, INC.
CREST LAWN MEMORIAL GARDENS, INC.
FORT LINCOLN CEMETERY, INC.
FORT LINCOLN FUNERAL HOME, INC.


   104

GALLERY GRANITE CORPORATION
HILLCREST MEMORIAL CEMETERY, INC.
HINES-RINALDI FUNERAL HOME, INC.
JOHN M. TAYLOR FUNERAL HOME, INC.
LOUDON PARK CEMETERY COMPANY
DRUID RIDGE CEMETERY COMPANY
LOUDON PARK FUNERAL HOME, INC.
NALLEY'S FUNERAL HOME, INC.
NATIONAL HARMONY MEMORIAL PARK, INC.
PARKLAWN, INC.
THE PARKWOOD CEMETERY COMPANY
PARKWOOD MANAGEMENT COMPANY
WILLIAM W. CHAMBERS, INC.
GORNY & GORNY PATERSON-CLIFTON MORTUARY
S.E. ACQUISITION OF CLIFTON, NEW JERSEY, INC.
C.J. APPLEGATE & SONS, INC.
GARDINIER COLLETTI MEMORIAL HOME, INC.
MATTLE GRAY NULTON FUNERAL HOME, INC.
MURPHY FUNERAL SERVICE, INC.
NULTON FUNERAL HOME, INC.
OTTO REDANZ FUNERAL HOME, INC.
CORNELL & DAGGETT, INC.
S.E. ACQUISITION OF FREDONIA, NEW YORK, INC.
BROWN MEMORIALS, INC.
CATAWBA MEMORIAL PARK, INC.
CENTRAL STONE WORKS, INCORPORATED
HAROLD C. DAVIS, INC.
EVANS FUNERAL HOME, INC.
EVERGREEN MEMORIAL GARDENS, INC.
GARRETT - HILLCREST, INC.
HIGHLAND MEMORY GARDENS OF FRANKLIN COUNTY, INC.
JOHNSON FUNERAL HOME, INC.
LANCASTER FUNERAL HOMES, INC.
MCLAURIN'S FUNERAL HOME, INC.
MILLER-LEE, INC.
PARKLAWN MEMORIAL GARDENS, INC.
POLLOCK WELLS FUNERAL SERVICE, INC.
STEPHENS SERVICES, INC.
THOMAS-YELVERTON COMPANY
1730 INVESTMENT CO., INC.
MEMORIAL PARKS, INCORPORATED
BENJAMIN FRANKLIN  P. M., INC.
GEORGE WASHINGTON MEMORIAL PARK, INC.
KIRK & NICE SUBURBAN CHAPEL, INC.
KIRK & NICE, INC.
S.E. ACQUISITION OF PENNSYLVANIA, INC.
S.E. CEMETERY MANAGEMENT OF PENNSYLVANIA, INC.
SUNSET MEMORIAL PARK COMPANY


   105

PET HAVEN, INC.
DUNBAR FUNERAL HOME, INC.
THE MACKEY MORTUARY, INC.
CANNON FUNERAL HOME, INC.
OCONEE MEMORIAL FUNERAL HOME, INC.
PINEVIEW, INC.
S.E. ACQUISITION OF NORTH AUGUSTA, SOUTH CAROLINA, INC.
S.E. ACQUISITION OF CHARLESTON, INC.
S.E. ACQUISITION OF LIBERTY, SOUTH CAROLINA, INC.
S.E. ACQUISITION OF SOUTH CAROLINA, INC.
MONTE VISTA BURIAL PARK, INC.
BLUE RIDGE MEMORIAL GARDENS, INC.
CLINCH VALLEY MEMORIAL CEMETERY, INC.
EVERLY COMMUNITY FUNERAL CARE, INC.
EVERLY FUNERAL HOMES, INCORPORATED
EVERLY PFP, INC.
SIMPLICITY PLANS OF ALABAMA, INC.
FAIRFAX FUNERAL HOME, INC.
JOSEPH W. TEAGUE FUNERAL HOME, INC.
RICHMOND MEMORIAL PARKS, INC.
WASHINGTON MEMORIAL CEMETERY, INCORPORATED
WISE CORPORATION
BARTLETT-BURDETTE-COX FUNERAL HOME, INC.
CALFEE FUNERAL SERVICE OF PINEVILLE, INC.
CASDORPH & CURRY FUNERAL HOME, INC.
DODD-PAYNE-HESS FUNERAL HOME, INC.
EVANS FUNERAL HOME, INC. (WEST VIRGINIA)
GRACELAND MAUSOLEUM, INC.
KIMES FUNERAL HOME, INC.
KLINGEL-CARPENTER MORTUARY, INC.
S.E. ACQUISITION OF MALDEN, WEST VIRGINIA, INC.
WILSON FUNERAL HOME, INC.
LAKEWOOD MEMORIAL PARK, INC.
MEMORIAL SERVICES OF COLUMBIA, INC.
MEMORIAL FUNERAL HOME, INC.
LINCOLN MEMORIAL MORTUARY, INC.
S.E. ACQUISITION OF NEVADA, INC.
DESERT MEMORIAL, INC.
NEPTUNE SOCIETY OF NEVADA, INC.
RENO MEMORIAL, INC.
S.E. ACQUISITION OF RENO, NEVADA, INC.
STRONG & BURNS FUNERAL HOME, INC.
MONTLAWN MEMORIAL PARK, INC.
ROCKY MOUNT MEMORIAL PARK, INC.
S.E. ACQUISITION OF OREGON, INC.
AMLING/SCHROEDER FUNERAL SERVICE, INC.
CASCADE CREMATORY, INC.


   106

CHAPEL OF THE ROSES, INC.
CHAPEL OF THE VALLEY FUNERAL HOME, INC.
DUTTON, INC.
J.P. FINLEY AND SON MORTUARY, INC.
SUNSET HILLS MEMORIAL PARK
GREENWOOD CEMETERY, INC.
NISWONGER & REYNOLDS, INC.
S.E. ACQUISITION OF MYRTLE CREEK, OREGON, INC.
S.E. ACQUISITION OF REEDSPORT, OREGON, INC.
TABOR'S DESERT HILLS MORTUARY, INC.
CAROLINA FINANCIAL CORPORATION OF PICKENS
HILL-CREST MEMORIAL PARK
OCONEE MEMORIAL GARDENS, INC.
DILLARD MEMORIAL, INC.
COLE & GARRETT FUNERAL HOMES, INC.
HIGHLAND MEMORIAL CEMETERY, INC.
HOLLY HILLS, INC.
KINGSPORT CEMETERY CORPORATION
THE NASHVILLE HISTORIC CEMETERY ASSOCIATION, INC.
PASADENA FUNERAL HOME, INC.
RESTLAND FUNERAL HOME, INC.
ANDERSON-CLAYTON BROS. FUNERAL HOMES, INC.
LITTLE BETHEL MEMORIAL PARK, INC.
ROSELAWN MEMORIAL GARDENS, INC.
BELEW FUNERAL HOME, INC.
BEXAR COUNTY MORTUARY SERVICES, INC.
BLUEBONNET HILLS MEMORIAL PARK, INC.
BLUEBONNET HILLS FUNERAL HOME, INC.
BRIGHT-HOLLAND FUNERAL HOME, INC.
CRESPO & SONS, INCORPORATED
DALTON & SON FUNERAL HOME, INC.
EMERALD HILLS FUNERAL CORPORATION
J. E. FOUST & SON FUNERAL DIRECTORS, INC.
GUARDIAN CREMATION SOCIETY, INC.
GUARDIAN FUNERAL HOME, INC.
HILLTOP MEMORIAL PARK
LAUREL LAND MEMORIAL PARK, INC.
LAUREL LAND FUNERAL HOME, INC.
SINGING HILLS FUNERAL HOME, INC.
LAUREL LAND OF FORT WORTH, INC.
LAUREL LAND FUNERAL HOME OF FORT WORTH, INC.
LYONS FUNERAL HOME, INC.
METROCREST FUNERAL HOME, INC.
RESTLAND OF DALLAS, INC.
ABBEY PLAN OF TEXAS, INC.
HIGHLAND MEMORIAL GARDENS, INC.


   107

SIMPLICITY PLAN OF TEXAS, INC.
SOUTHPARK FUNERAL HOME, INC.
SOUTH MEMORIAL PARK, INC.
S.E. ACQUISITION OF WASHINGTON, INC.
E.R. BUTTERWORTH & SONS
CREMATION SOCIETY NORTHWEST, INC.
EVERGREEN STAPLES FUNERAL CHAPEL, INC.
CUNNINGHAM MEMORIAL PARK, INC.
LEGACY ONE, INC.
FINDLAY CEMETERY, INC.
EASTLAWN MEMORIAL GARDENS, INCORPORATED
GRANDVIEW MEMORY GARDENS, INCORPORATED
GREENHILLS MEMORY GARDENS, INC.
HIGHLAND MEMORY GARDENS, INCORPORATED
HOLLY MEMORIAL GARDENS, INC. (VA)
MONTICELLO MEMORY GARDENS, INC.
SUNSET MEMORY GARDENS, INC.
BLUE RIDGE FUNERAL HOME, INC.
BLUE RIDGE MEMORIAL GARDENS, INC.
C.G.R., INC.
EASTERN CEMETERY ASSOCIATES, INC.
ETERNAL LIGHT FUNERALS, INC.
KANAWHA PLAZA PARTNERSHIP
LEGACY ONE SERVICE CORPORATION
LOI CHARLESTON, INC.
MOUNTAIN VIEW MEMORY GARDENS, INC.
NATIONAL EXCHANGE TRUST, LTD.
NATIONAL FUNERAL SERVICES, INCORPORATED
PLEASANT VIEW MEMORY GARDENS, INC.
WILLIAMS-BLUE RIDGE FUNERAL HOME, INC.


By:     /s/ KENNETH C. BUDDE
        -------------------------------------
        Name:  Kenneth C. Budde
        Title: Assistant Treasurer



FIRSTAR BANK, N.A.
         as Trustee

By:     /s/ FRANK LESLIE
        -------------------------------------
        Name:  Frank Leslie
        Title:  Vice President



   108

                                                                      EXHIBIT A1

                                 [Face of Note]

                                                                 CUSIP 860370AC9

No. _______                                                     **$298,960,000**


                            STEWART ENTERPRISES, INC.


                   10 3/4% Senior Subordinated Notes due 2008

Issue Date: June 29, 2001

         Stewart Enterprises, Inc., a Louisiana Corporation (the "Company",
which term includes any successor under this Indenture hereinafter referred to),
for value received, promises to pay to CEDE & CO., or its registered assigns,
the principal sum of TWO HUNDRED AND NINETY EIGHT MILLION NINE HUNDRED AND SIXTY
THOUSAND DOLLARS ($298,960,000) on July 1, 2008.

Interest Payment Dates: January 1 and July 1, commencing January 1, 2002.

Record Dates: December 15 and June 15.

         Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.

                                   STEWART ENTERPRISES, INC.


                                   By:
                                      ------------------------------------------
                                        Name:  William E. Rowe
                                        Title: President and Chief Executive
                                               Officer

                                   By:
                                      ------------------------------------------
                                        Name:  Kenneth C. Budde
                                        Title: Chief Financial Officer

This is one of the 10 3/4% Senior Subordinated Notes due 2008 described in the
within-mentioned Indenture.




                                      A1-1
   109

Dated:


FIRSTAR BANK, N.A., as Trustee

By:
    --------------------------------------
             Authorized Signatory







                                      A1-2
   110

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

         THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.12 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

THIS NOTE AND THE GUARANTEES ENDORSED HEREON HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS NOTE NOR THE GUARANTEES ENDORSED HEREON NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AND THE GUARANTEES
ENDORSED HEREON BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE AND THE GUARANTEES ENDORSED
HEREON (OR ANY PREDECESSOR OF THIS NOTE AND THE GUARANTEES ENDORSED HEREON) (THE
"RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D)



                                      A1-3
   111

PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) PRIOR TO THE END OF
THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT OR PURSUANT TO CLAUSE (E) PRIOR TO THE RESALE
RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.



                                      A1-4
   112

[Reverse Side of Note]


                            STEWART ENTERPRISES, INC.

                   10 3/4% Senior Subordinated Notes due 2008

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

                  1. Interest. The Company promises to pay interest on the
principal amount of this Note at 10 3/4% per annum from the date hereof until
maturity and shall pay the Liquidated Damages, if any, payable pursuant to
Section 5 of the Registration Rights Agreement referred to below. The Company
shall pay interest and Liquidated Damages, if any, semi-annually in arrears on
January 1 and July 1 of each year, or if any such day is not a Business Day, on
the next succeeding Business Day (each an "Interest Payment Date"). Interest on
the Notes shall accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of original issuance; provided
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided further that the first Interest
Payment Date shall be January 1, 2002. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.

                  2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons
who are registered Holders of Notes at the close of business on the December 15
or June 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.13 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose in The City of New York maintained for such purposes, or, at
the option of the Company, payment of interest and Liquidated Damages, if any,
may be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds shall be required with respect to principal of and interest,
premium and Liquidated Damages, if any, on, all Global Notes and all other Notes
the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.

                  3. Paying Agent and Registrar. Initially, Firstar Bank, N.A.,
the Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any



                                      A1-5
   113

Paying Agent or Registrar without prior notice to any Holder. The Company or any
of its Subsidiaries may act in any such capacity.

                  4. Indenture. The Company issued the Notes under an Indenture
dated as of June 29, 2001 ("Indenture") among the Company, the Guarantors and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended. The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling. This
Note is an obligation of the Company limited to $300,000,000 in aggregate
principal amount. The Indenture pursuant to which this Note is issued provides
that an unlimited aggregate principal amount of Additional Notes may be issued
thereunder.

                  5. Optional Redemption. (a) Except as set forth in paragraphs
5(b) and 8 below, the Company shall not have the option to redeem the Notes
prior to July 1, 2005. On or after July 1, 2005, the Company shall have the
option to redeem the Notes, in whole or in part, upon not less than 30 nor more
than 60 days' prior notice, at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on July 1 of the years
indicated below:



         Year                                                              Percentage
         ----                                                              ----------
                                                                       
         2005.......................................................        105.3750%
         2006.......................................................        102.6875%
         2007 and thereafter........................................        100.0000%


                  (b) Notwithstanding the foregoing, at any time prior to July
1, 2004, the Company may redeem up to 35% of the aggregate principal amount of
Notes issued under the Indenture at a redemption price of 110.75% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
one or more Qualified Equity Offerings of the Company; provided that at least
65% of the aggregate principal amount of Notes issued under the Indenture
remains outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Company and its Subsidiaries); and such redemption
shall occur within 45 days of the date of the closing of such Qualified Equity
Offering.

                  6. Mandatory Redemption. The Company shall not be required to
make mandatory redemption payments or sinking fund payments with respect to the
Notes.

                  7. Selection and Notice of Redemption. If less than all of the
Notes are to be redeemed at any time, the Trustee will select Notes for
redemption as follows: (i) if the Notes are listed, in compliance with the
requirements of the principal national securities exchange on which the Notes
are listed, or (ii) if the Notes are not so listed, on a pro rata basis, by lot
or by any method as the Trustee deems fair and appropriate. No Notes of $1,000
or less may be redeemed in part. Notices of redemption shall be mailed by first
class mail at least 30 but not more than 60 days before the redemption date to
each Holder of Notes to be redeemed at its



                                      A1-6
   114

registered address. Notices of redemption may not be conditional. If any Note is
to be redeemed in part only, the notice of redemption that relates to that Note
shall state the portion of the principal amount thereof to be redeemed. A new
Note in principal amount equal to the unredeemed portion of the original Note
will be issued in the name of the Holder thereof upon cancellation of the
original Note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest and liquidated damages,
if any, cease to accrue on Notes or portions of them called for redemption.

                  8. Repurchase at Option of Holder. (a) Upon the occurrence of
a Change of Control, each Holder of Notes shall have the right to require the
Company to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount repurchased plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder describing the transaction or transactions
that constitute the Change of Control and offering to repurchase Notes on the
date specified in such notice which shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed, pursuant to the
procedures required by the Indenture and described in such notice.

                  (b) When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company will make an offer to purchase an ("Asset Sale Offer"),
pursuant to Section 4.10 of the Indenture, to all Holders of Notes and all
holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase with the proceeds of sales of assets to purchase the maximum principal
amount of Notes and such other pari passu Indebtedness that may be purchased out
of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to
100% of principal amount plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase, and will be payable in cash. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis based on the principal amount
of Notes and such other pari passu Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

                  9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company is not required
to transfer or exchange any Note selected for redemption. Also, the Company is
not required to transfer or exchange any Note for a period of 15 days before a
selection of Notes to be redeemed.

                  10. Persons Deemed Owners. The registered Holder of a Note
will be treated as its owner for all purposes.



                                      A1-7
   115

                  11. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding and Additional Notes, if any, voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, the Notes), and any existing Default
or compliance with any provision of the Indenture or the Notes may be waived
with the consent of the Holders of a majority in principal of the Notes then
outstanding and Additional Notes, if any, voting as a single class (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, the Notes). Without the consent of any
Holder of Notes, the Indenture or the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of Definitive Notes, to provide for the assumption of
the Company's or any Guarantor's obligations to Holders of the Notes in case of
a merger or consolidation or sale of all or substantially all of the assets of
the Company or any Guarantor, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.

                  12. Defaults and Remedies. In the case of an Event of Default,
as defined in the Indenture arising from certain events of bankruptcy or
insolvency with respect to the Company or any of its Restricted Subsidiaries,
all outstanding Notes will become due and payable immediately without further
action or notice. If any other Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest or Liquidated
Damages, if any) if it determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may, on behalf of the Holders of all of the
Notes, waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest or Liquidated Damages, if any, on, or the principal of, the Notes.

                  In the case of any Event of Default occurring by reason of any
willful action or inaction taken or not taken by the Company or on their behalf
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Notes pursuant to
the optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs during any
time that the Notes are outstanding, by reason of any willful action (or
inaction) taken (or not taken) by the Company or on its behalf with the
intention of avoiding the prohibition on redemption of the Notes, then the
premium specified in the Indenture shall also become immediately due and payable
to the extent permitted by law upon the acceleration of the Notes.



                                      A1-8
   116

                  13. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.

                  14. No Recourse Against Others. No director, officer,
employee, incorporator or stockholder of the Company or of any of the Guarantors
as such will have any liability for any of the Company's or any Guarantors'
obligations under the Notes, the Indenture, any Subsidiary Guarantees, or for
any claim based on, in respect of, or by reason of, these obligations or their
creation. Each Holder by accepting a Note waives and releases these individuals
from this liability. The waiver and release are part of the consideration for
issuance of the Notes.

                  15. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

                  16. Additional Rights of Holders of Restricted Global Notes
and Restricted Definitive Notes. In addition to the rights provided to Holders
under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of June 29, 2001, between the Company, the Guarantors and the
parties named on the signature pages thereof or, in the case of Additional
Notes, Holders of Additional Notes shall have the rights set forth in one or
more registration rights agreements, if any, between the Company, the Guarantors
and the other parties thereto, relating to rights given by the Company and the
Guarantors to the purchasers of Additional Notes (the "Registration Rights
Agreement").

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

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

                  Stewart Enterprises, Inc.
                  110 Veterans Memorial Boulevard
                  Metairie, LA 70005
                  Telecopier No.: (504) 849-2307
                  Attention: Martin R. de Laureal, Vice President of Investor
                             Relations

                  with copies to:

                  Jones, Walker, Waechter, Poitevent,
                         Carrere and Denegre, L.L.P.
                  201 St. Charles Avenue
                  New Orleans, LA 70170-5100
                  Telecopier: (504) 582-8012
                  Attention: L. Richards McMillan, Esq.




                                      A1-9
   117

                                 ASSIGNMENT FORM

                  To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:
                                              ----------------------------------
                                                (Insert assignee's legal name)


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

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

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

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

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

and irrevocably appoint
                        --------------------------------------------------------

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

Date:
      -----------------

                             Your Signature:
                                             -----------------------------------
                                                 (Sign exactly as your name
                                               appears on the face of this Note)


Signature Guarantee*:
                      -------------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).




                                     A1-10
   118

                       OPTION OF HOLDER TO ELECT PURCHASE

                  If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate
box below:

                     [ ] Section 4.10     [ ] Section 4.15

                  If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased:

                                $
                                 ---------------


Date:
     -----------------

                             Your Signature:
                                             -----------------------------------
                                                 (Sign exactly as your name
                                               appears on the face of this Note)

                             Tax Identification No.:
                                                    ----------------------------

Signature Guarantee*:
                     -------

*  Participant in a recognized Signature Guarantee Medallion Program (or other
   signature guarantor acceptable to the Trustee).



                                     A1-11
   119

              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

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



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






   120

                                                                      EXHIBIT A2

                                 [Face of Note]

                                                                 CUSIP U85049AA0

No. _______                                                       **$1,040,000**


                            STEWART ENTERPRISES, INC.


                   10 3/4% Senior Subordinated Notes due 2008

Issue Date: June 29, 2001

         Stewart Enterprises, Inc., a Louisiana Corporation (the "Company")
which term includes any successor under the Indenture hereinafter referred to),
for value received, promises to pay to CEDE & CO., or its registered assigns,
the principal sum of ONE MILLION AND FORTY THOUSAND DOLLARS ($1,040,000) on July
1, 2008.

Interest Payment Dates: January 1 and July 1, commencing January 1, 2001.

Record Dates: December 15 and June 15.

         Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.

                            STEWART ENTERPRISES, INC.

                                By:
                                   ---------------------------------------------
                                    Name:  William E. Rowe
                                    Title: President and Chief Executive Officer

                                By:
                                   ---------------------------------------------
                                    Name:  Kenneth C. Budde
                                    Title: Chief Financial Officer

This is one of the 10 3/4% Senior Subordinated Notes due 2008 described in the
within-mentioned Indenture.




                                      A2-1
   121

Dated:

FIRSTAR BANK, N.A., as Trustee

By:
   -----------------------------------------
            Authorized Signatory





                                      A2-2
   122

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.12 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

         THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.

         THIS NOTE AND THE GUARANTEES ENDORSED HEREON HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THIS NOTE NOR THE GUARANTEES ENDORSED HEREON NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AND THE
GUARANTEES ENDORSED HEREON BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE AND THE GUARANTEES
ENDORSED HEREON (OR ANY PREDECESSOR OF THIS NOTE AND THE GUARANTEES ENDORSED
HEREON) (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY OR
ANY SUBSIDIARY



                                      A2-3
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THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D) PRIOR TO THE END OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR PURSUANT TO CLAUSE (E)
PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.





                                      A2-4
   124

                             [Reverse Side of Note]


                            STEWART ENTERPRISES, INC.

                   10 3/4% Senior Subordinated Notes due 2008

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

                  1. Interest. The Company promises to pay interest on the
principal amount of this Note at 10 3/4% per annum from the date hereof until
maturity and shall pay the Liquidated Damages, if any, payable pursuant to
Section 5 of the Registration Rights Agreement referred to below. The Company
shall pay interest and Liquidated Damages, if any, semi-annually in arrears on
January 1 and July 1 of each year, or if any such day is not a Business Day, on
the next succeeding Business Day (each an "Interest Payment Date"). Interest on
the Notes shall accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of original issuance; provided
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided further that the first Interest
Payment Date shall be January 1, 2002. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.

                  2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons
who are registered Holders of Notes at the close of business on the December 15
or June 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.13 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose in The City of New York maintained for such purposes, or, at
the option of the Company, payment of interest and Liquidated Damages, if any,
may be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds shall be required with respect to principal of and interest,
premium and Liquidated Damages, if any, on, all Global Notes and all other Notes
the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.

                  3. Paying Agent and Registrar. Initially, Firstar Bank, N.A.,
the Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any



                                      A2-5
   125

Paying Agent or Registrar without prior notice to any Holder. The Company or any
of its Subsidiaries may act in any such capacity.

                  4. Indenture. The Company issued the Notes under an Indenture
dated as of June 29, 2001 ("Indenture") among the Company, the Guarantors and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended. The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling. This
Note is an obligation of the Company limited to $300,000,000 in aggregate
principal amount. The Indenture pursuant to which this Note is issued provides
that an unlimited aggregate principal amount of Additional Notes may be issued
thereunder.

                  5. Optional Redemption. (a) Except as set forth in paragraphs
5(b) and 8 below, the Company shall not have the option to redeem the Notes
prior to July 1, 2005. On or after July 1, 2005, the Company shall have the
option to redeem the Notes, in whole or in part, upon not less than 30 nor more
than 60 days' prior notice, at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on July 1 of the years
indicated below:



         Year                                                            Percentage
         ----                                                            ----------
                                                                      
         2005.....................................................        105.3750%
         2006.....................................................        102.6875%
         2007 and thereafter......................................        100.0000%


                  (b) Notwithstanding the foregoing, at any time prior to July
1, 2004, the Company may redeem up to 35% of the aggregate principal amount of
Notes issued under the Indenture at a redemption price of 110.75% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
one or more Qualified Equity Offerings of the Company; provided that at least
65% of the aggregate principal amount of Notes issued under the Indenture
remains outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Company and its Subsidiaries); and such redemption
shall occur within 45 days of the date of the closing of such Qualified Equity
Offering.

                  6. Mandatory Redemption. The Company shall not be required to
make mandatory redemption payments or sinking fund payments with respect to the
Notes.

                  7. Selection and Notice of Redemption. If less than all
of the Notes are to be redeemed at any time, the Trustee will select Notes for
redemption as follows: (i) if the Notes are listed, in compliance with the
requirements of the principal national securities exchange on which the Notes
are listed, or (ii) if the Notes are not so listed, on a pro rata basis, by lot
or by any method as the Trustee deems fair and appropriate. No Notes of $1,000
or less may be redeemed in part. Notices of redemption shall be mailed by first
class mail at least 30 but not more than 60 days before the redemption date to
each Holder of Notes to be redeemed at its



                                      A2-6
   126

registered address. Notices of redemption may not be conditional. If any Note is
to be redeemed in part only, the notice of redemption that relates to that Note
shall state the portion of the principal amount thereof to be redeemed. A new
Note in principal amount equal to the unredeemed portion of the original Note
will be issued in the name of the Holder thereof upon cancellation of the
original Note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest and liquidated damages,
if any, cease to accrue on Notes or portions of them called for redemption.

                  8. Repurchase at Option of Holder. (a) Upon the occurrence of
a Change of Control, each Holder of Notes shall have the right to require the
Company to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount repurchased plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder describing the transaction or transactions
that constitute the Change of Control and offering to repurchase Notes on the
date specified in such notice which shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed, pursuant to the
procedures required by the Indenture and described in such notice.

                  (b) When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company will make an offer to purchase an ("Asset Sale Offer"),
pursuant to Section 4.10 of the Indenture, to all Holders of Notes and all
holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase with the proceeds of sales of assets to purchase the maximum principal
amount of Notes and such other pari passu Indebtedness that may be purchased out
of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to
100% of principal amount plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase, and will be payable in cash. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis based on the principal amount
of Notes and such other pari passu Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

                  9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company is not required
to transfer or exchange any Note selected for redemption. Also, the Company is
not required to transfer or exchange any Note for a period of 15 days before a
selection of Notes to be redeemed.

                  10. Persons Deemed Owners. The registered Holder of a Note
will be treated as its owner for all purposes.



                                      A2-7
   127

                  11. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding and Additional Notes, if any, voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, the Notes), and any existing Default
or compliance with any provision of the Indenture or the Notes may be waived
with the consent of the Holders of a majority in principal of the Notes then
outstanding and Additional Notes, if any, voting as a single class (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, the Notes). Without the consent of any
Holder of Notes, the Indenture or the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of Definitive Notes, to provide for the assumption of
the Company's or any Guarantor's obligations to Holders of the Notes in case of
a merger or consolidation or sale of all or substantially all of the assets of
the Company or any Guarantor, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.

                  12. Defaults and Remedies. In the case of an Event of Default,
as defined in the Indenture arising from certain events of bankruptcy or
insolvency with respect to the Company or any of its Restricted Subsidiaries,
all outstanding Notes will become due and payable immediately without further
action or notice. If any other Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest or Liquidated
Damages, if any) if it determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may, on behalf of the Holders of all of the
Notes, waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest or Liquidated Damages, if any, on, or the principal of, the Notes.

                  In the case of any Event of Default occurring by reason of any
willful action or inaction taken or not taken by the Company or on their behalf
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Notes pursuant to
the optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs during any
time that the Notes are outstanding, by reason of any willful action (or
inaction) taken (or not taken) by the Company or on its behalf with the
intention of avoiding the prohibition on redemption of the Notes, then the
premium specified in the Indenture shall also become immediately due and payable
to the extent permitted by law upon the acceleration of the Notes.



                                      A2-8
   128

                  13. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.

                  14. No Recourse Against Others. No director, officer,
employee, incorporator or stockholder of the Company or of any of the Guarantors
as such will have any liability for any of the Company's or any Guarantors'
obligations under the Notes, the Indenture, any Subsidiary Guarantees, or for
any claim based on, in respect of, or by reason of, these obligations or their
creation. Each Holder by accepting a Note waives and releases these individuals
from this liability. The waiver and release are part of the consideration for
issuance of the Notes.

                  15. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

                  16. Additional Rights of Holders of Restricted Global Notes
and Restricted Definitive Notes. In addition to the rights provided to Holders
under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of June 29, 2001, between the Company, the Guarantors and the
parties named on the signature pages thereof or, in the case of Additional
Notes, Holders of Additional Notes shall have the rights set forth in one or
more registration rights agreements, if any, between the Company, the Guarantors
and the other parties thereto, relating to rights given by the Company and the
Guarantors to the purchasers of Additional Notes (the "Registration Rights
Agreement").

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

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

                  Stewart Enterprises, Inc.
                  110 Veterans Memorial Boulevard
                  Metairie, LA 70005
                  Telecopier No.: (504) 849-2307
                  Attention: Martin R. de Laureal, Vice President of Investor
                         Relations



                  with copies to:

                  Jones, Walker, Waechter, Poitevent,
                         Carrere and Denegre, L.L.P.
                  201 St. Charles Avenue
                  New Orleans, LA 70170-5100
                  Telecopier: (504) 582-8012
                  Attention: L. Richards McMillan, Esq.




                                      A2-9
   129

                                 ASSIGNMENT FORM

                  To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:
                                              ----------------------------------
                                                (Insert assignee's legal name)


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

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

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

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

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

and irrevocably appoint
                        --------------------------------------------------------

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

Date:
      -----------------

                             Your Signature:
                                             -----------------------------------
                                                 (Sign exactly as your name
                                               appears on the face of this Note)


Signature Guarantee*:
                      -------------------------

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).



                                     A2-10
   130

                       OPTION OF HOLDER TO ELECT PURCHASE

                  If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate
box below:

                     [ ] Section 4.10     [ ] Section 4.15

                  If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased:

                                $
                                 ---------------


Date:
     -----------------

                             Your Signature:
                                             -----------------------------------
                                                 (Sign exactly as your name
                                               appears on the face of this Note)

                             Tax Identification No.:
                                                    ----------------------------

Signature Guarantee*:
                     -------

*  Participant in a recognized Signature Guarantee Medallion Program (or other
   signature guarantor acceptable to the Trustee).




                                     A2-11
   131

           SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE

                  The following exchanges of a part of this Regulation S
Temporary Global Note for an interest in another Global Note or of other
Restricted Global Notes for an interest in this Regulation S Temporary Global
Note, have been made:



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






                                     A2-12
   132

                                                                       EXHIBIT B


                         FORM OF CERTIFICATE OF TRANSFER

Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, LA 70005
Telecopier No.: (504) 849-2307
Attention: Kenneth C. Budde, Chief Financial Officer

Firstar Bank, N.A.
101 East 5th Street
St. Paul, MN 55101
Telecopier No.: (651) 229-6415
Attention: Frank Leslie


                  Re:  10 3/4% Senior Subordinated Notes due 2008

                  Reference is hereby made to the Indenture, dated as of June
29, 2001 (the "Indenture"), among Stewart Enterprises, Inc., a Louisiana
Corporation (the "Company"), the Guarantors, and Firstar Bank, N.A., as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

                  ___________________ (the "Transferor") owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in
the principal amount at maturity of $___________ in such Note[s] or interests
(the "Transfer"), to ___________________________ (the "Transferee"), as further
specified in Annex A hereto. In connection with the Transfer, the Transferor
hereby certifies that:

                             [CHECK ALL THAT APPLY]

                  1. Check if Transferee will take delivery of a
beneficial interest in the 144A Global Note or a Definitive Note Pursuant to
Rule 144A. The Transfer is being effected pursuant to and in accordance with
Rule 144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the Transferor hereby further certifies
that the beneficial interest or Definitive Note is being transferred to a Person
that the Transferor reasonably believed and believes is purchasing the
beneficial interest or Definitive Note for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the 144A Global
Note and/or the Definitive Note and in the Indenture and the Securities Act.



                                      B-1
   133

                  2. Check if Transferee will take delivery of a
beneficial interest in the Regulation S Temporary Global Note, the Regulation S
Permanent Global Note or a Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and either (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(a) or Rule
904(a) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Permanent Global Note, the
Regulation S Temporary Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.

                  3. Check and complete if Transferee will take delivery
of a beneficial interest in a Restricted Global Note or a Restricted Definitive
Note pursuant to any provision of the Securities Act other than Rule 144A or
Regulation S. The Transfer is being effected in compliance with the transfer
restrictions applicable to beneficial interests in Restricted Global Notes and
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):

                  (a) such Transfer is being effected pursuant to and in
         accordance with Rule 144 under the Securities Act and the requirements
         of the exemption claimed, which certification is supported by an
         Opinion of Counsel provided by the Transferor or the Transferee (a copy
         of which the Transferor has attached to this certification);

                                       or

                  (b) such Transfer is being effected to the Company or a
         subsidiary thereof;

                                       or

                  (c) such Transfer is being effected pursuant to an effective
         registration statement under the Securities Act and in compliance with
         the prospectus delivery requirements of the Securities Act.

                  4. Check if Transferee will take delivery of a beneficial
         interest in an Unrestricted Global Note or of an Unrestricted
         Definitive Note.



                                      B-2
   134

                  (a) Check if Transfer is Pursuant to Rule 144. (i) The
Transfer is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.

                  (b) Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.

                  (c) Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.

                  This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.


                                             -----------------------------------
                                                 [Insert Name of Transferor]

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:
Dated:
      ---------------------




                                      B-3
   135

                       ANNEX A TO CERTIFICATE OF TRANSFER

1.       The Transferor owns and proposes to transfer the following:


                            [CHECK ONE OF (A) OR (B)]

                  (A)      a beneficial interest in the:

                           (i)      144A Global Note (CUSIP 860370AC9); or

                           (ii)     Regulation S Global Note (CUSIP U85049AA0);

                  (B)      a Restricted Definitive Note.

2.       After the Transfer the Transferee will hold:


                                   [CHECK ONE]

                  (A)      a beneficial interest in the:

                           (i)      144A Global Note (CUSIP 860370AC9); or

                           (ii)     Regulation S Global Note (CUSIP U85049AA0);

                           (iii)    Unrestricted Global Note (CUSIP _______); or

                  (B)      a Restricted Definitive Note; or

                  (C)      an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.




                                      B-4
   136

                                                                       EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, LA 70005
Telecopier No.: (504) 849-2307
Attention: Kenneth C. Budde, Chief Financial Officer

Firstar Bank, N.A.
101 East 5th Street
St. Paul, MN 55101
Telecopier No.: (651) 229-6415
Attention: Frank Leslie

                  Re: 10 3/4% Senior Subordinated Notes due 2008

                  Reference is hereby made to the Indenture, dated as of June
29, 2001 (the "Indenture"), among Stewart Enterprises, Inc., a Louisiana
corporation (the "Company"), the Guarantors and Firstar Bank, N.A., as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

                  __________________________ (the "Owner") owns and proposes to
exchange the Note[s] or interest in such Note[s] specified herein, in the
principal amount at maturity of $____________ in such Note[s] or interests (the
"Exchange"). In connection with the Exchange, the Owner hereby certifies that:

                  1. Exchange of Restricted Definitive Notes or Beneficial
Interests in a Restricted Global Note for Unrestricted Definitive Notes or
Beneficial Interests in an Unrestricted Global Note

                  (a) Check if Exchange is from beneficial interest in a
Restricted Global Note to beneficial interest in an Unrestricted Global Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount at maturity, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Global Notes and pursuant to and in accordance with the United
States Securities Act of 1933, as amended (the "Securities Act"), (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the beneficial interest in an Unrestricted Global Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

                  (b) Check if Exchange is from beneficial interest in a
Restricted Global Note to Unrestricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer,



                                      C-1
   137

(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.

                  (c) Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

                  (d) Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

                  2. Exchange of Restricted Definitive Notes or Beneficial
Interests in Restricted Global Notes for Restricted Definitive Notes or
Beneficial Interests in Restricted Global Notes

                  (A) Check if Exchange is from beneficial interest in a
         Restricted Global Note to Restricted Definitive Note. In connection
         with the Exchange of the Owner's beneficial interest in a Restricted
         Global Note for a Restricted Definitive Note with an equal principal
         amount at maturity, the Owner hereby certifies that the Restricted
         Definitive Note is being acquired for the Owner's own account without
         transfer. Upon consummation of the proposed Exchange in accordance with
         the terms of the Indenture, the Restricted Definitive Note issued will
         continue to be subject to the restrictions on transfer enumerated in
         the Private Placement Legend printed on the Restricted Definitive Note
         and in the Indenture and the Securities Act.

                  (B) Check if Exchange is from Restricted Definitive Note to
         beneficial interest in a Restricted Global Note. In connection with the
         Exchange of the Owner's Restricted Definitive Note for a beneficial
         interest in the [CHECK ONE] [ ] 144A Global Note, [ ] Regulation S
         Global Note, [ ] IAI Global Note with an equal principal amount at
         maturity, the Owner hereby certifies (i) the beneficial interest is
         being acquired for the Owner's



                                      C-2
   138

         own account without transfer and (ii) such Exchange has been effected
         in compliance with the transfer restrictions applicable to the
         Restricted Global Notes and pursuant to and in accordance with the
         Securities Act, and in compliance with any applicable blue sky
         securities laws of any state of the United States. Upon consummation of
         the proposed Exchange in accordance with the terms of the Indenture,
         the beneficial interest issued will be subject to the restrictions on
         transfer enumerated in the Private Placement Legend printed on the
         relevant Restricted Global Note and in the Indenture and the Securities
         Act.

                  This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.


                                             -----------------------------------
                                                 [Insert Name of Transferor]


                                             By:
                                                --------------------------------
                                                Name:
                                                Title:
Dated:
      ------------------------




                                      C-3
   139

                                                                       EXHIBIT D

                          FORM OF NOTATION OF GUARANTEE

                  For value received, each Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and subject
to the provisions in the Indenture dated as of June 29, 2001 (the "Indenture")
among Stewart Enterprises, Inc., the other Guarantors (as defined in the
Indenture and Firstar Bank, N.A., as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Indenture), whether at maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that 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 or otherwise. The obligations of the Guarantors to the
Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee and the
Indenture are expressly set forth in Article Eleven of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Subsidiary Guarantee. Each Holder of a Note, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose; provided,
however, that the Indebtedness evidenced by this Subsidiary Guarantee shall
cease to be so subordinated and subject in right of payment upon any defeasance
of this Note in accordance with the provisions of the Indenture.

                                             [Name of Guarantor]


                                             By:
                                                ------------------------------
                                                  Name:
                                                  Title:






                                      D-1
   140

                                                                       EXHIBIT E

                         FORM OF SUPPLEMENTAL INDENTURE
                    TO BE DELIVERED BY SUBSEQUENT GUARANTORS

                  Supplemental Indenture (this "Supplemental Indenture"), dated
as of _____________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Stewart Enterprises, Inc. (or its permitted successor), a
Louisiana corporation (the "Company"), the Company, the other Guarantors (as
defined in the Indenture referred to herein) and Firstar Bank, N.A., as trustee
under the Indenture referred to below (the "Trustee").

                                   WITNESSETH

                  WHEREAS, the Company has heretofore executed and delivered to
the Trustee an indenture (the "Indenture"), dated as of June 29, 2001 providing
for the issuance of an aggregate principal amount of $300 million of 10 3/4%
Senior Subordinated Notes due 2008 (the "Notes");

                  WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Company's obligations under the Notes
and the Indenture on the terms and conditions set forth herein (the "Subsidiary
Guarantee"); and

                  WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.

                  NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

                  1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.

                  2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby
agrees as follows:

         (a) Along with all other Guarantors, to jointly and severally Guarantee
to each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that:

                           (i) the principal of and interest on the Notes will
be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest
on the Notes, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and



                                      E-1
   141

                           (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, 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 or otherwise. Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Guarantors shall be jointly and severally obligated to
pay the same immediately. This Subsidiary Guarantee is a guarantee of payment
and not of collection.

         (b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance that might otherwise constitute a legal or equitable discharge or
defense of a guarantor.

         (c) Subject to Section 6.06 of the Indenture, the following is hereby
waived: diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands
whatsoever.

         (d) The Subsidiary Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the Indenture.

         (e) If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Guarantors, or any Custodian, Trustee, liquidator
or other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.

         (f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby.

         (g) As between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six of the Indenture for the
purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article Six of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Subsidiary Guarantee.

         (h) Pursuant to Section 11.03 of the Indenture, the Trustee, the
Holders and the Guarantors irrevocably agree that the obligations of such
Guarantor under its Subsidiary Guarantee shall be limited to the extent
necessary so that they shall not constitute a fraudulent transfer or conveyance.



                                      E-2
   142

                  3. Subordination. The Obligations of the Guaranteeing
Subsidiary under its Subsidiary Guarantee pursuant to this Supplemental
Indenture shall be junior and subordinated to the Senior Debt of the
Guaranteeing Subsidiary on the same basis as the Notes are junior and
subordinated to the Senior Debt of the Company. For the purposes of the
foregoing sentence, the Trustee and the Holders shall have the right to receive
and/or retain payments by the Guaranteeing Subsidiary only at such time as they
may receive and/or retain payments in respect of the Notes pursuant to the
Indenture, including Article Ten thereof.

                  4. Execution and Delivery. Each Guaranteeing Subsidiary agrees
that the Subsidiary Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.

                  5. Guaranteeing Subsidiary May Consolidate, Etc., on Certain
Terms. Except as otherwise provided in Section 11.06 of the Indenture, a
Guarantor may not sell or otherwise dispose of all or substantially all of its
assets, or consolidate with or merge with or into (whether or not such Guarantor
is the surviving Person) another Person unless:

                  (a) immediately after giving effect to such transaction, no
                  Default or Event of Default exists; and

                  (b) either:

                      (i) the Person acquiring the property in any such sale or
                      disposition or the Person formed by or surviving any such
                      consolidation or merger is a corporation, organized or
                      existing under the laws of the United States, any state
                      thereof or the District of Columbia and assumes all the
                      obligations of that Guarantor under this Indenture, its
                      Subsidiary Guarantee and the Registration Rights Agreement
                      pursuant to a supplemental indenture satisfactory to the
                      Trustee; or

                      (ii) such sale or other disposition complies with Section
                      4.10, including the application of the Net Proceeds
                      therefrom.

                  In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by a Guarantor, such successor Person shall succeed to and be
substituted for a Guarantor with the same effect as if it had been named herein
as a Guarantor. Such successor Person thereupon may cause to be signed any or
all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Subsidiary Guarantees so issued shall in all
respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.



                                      E-3
   143

                  Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.

                  6. Releases.

                  (a) Any Guarantor will be released and relieved of any
obligations under its Subsidiary Guarantee, (i) in connection with any sale or
other disposition of all or substantially all of the assets of that Guarantor
(including by way of merger or consolidation) to a Person that is not (either
before or after giving effect to such transaction) a Restricted Subsidiary of
the Company, if the sale or other disposition of all or substantially all of the
assets of that Guarantor complies with Section 4.10 of the Indenture, including
the application of the Net Proceeds therefrom; (ii) in connection with any sale
of all of the Capital Stock of a Guarantor to a Person that is not (either
before or after giving effect to such transaction) a Restricted Subsidiary of
the Company, if the sale of all such Capital Stock of that Guarantor complies
with Section 4.10 of the Indenture, including the application of the Net
Proceeds therefrom and (iii) if the Company properly designates any Restricted
Subsidiary that is a Guarantor as an Unrestricted Subsidiary. Upon delivery by
the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel
to the effect that such sale or other disposition was made by the Company in
accordance with the provisions of this Indenture, including without limitation
Section 4.10 hereof, the Trustee shall execute any documents reasonably required
in order to evidence the release of any Guarantor from its obligations under its
Subsidiary Guarantee.

                  (b) Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor under the
Indenture as provided in Article Eleven of the Indenture.

                  7. No Recourse Against Others. No past, present or future
director, officer, employee, incorporator, stockholder or agent of the
Guaranteeing Subsidiary, as such, shall have any liability for any obligations
of the Company or any Guaranteeing Subsidiary under the Notes, any Subsidiary
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws.

                  8. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF
NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT
THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.



                                      E-4
   144

                  9. Counterparts. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.

                  10. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.

                  11. Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.



                                      E-5
   145

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

Dated:                ,
       ---------------  ----

                                        [Guaranteeing Subsidiary]


                                        By:
                                            ------------------------------------
                                              Name:
                                              Title:


                                        STEWART ENTERPRISES, INC.


                                        By:
                                            ------------------------------------
                                              Name:
                                              Title:

                                        FIRSTAR BANK, N.A.,  AS TRUSTEE

                                        By:
                                            ------------------------------------
                                              Name:
                                              Title:


                                      E-6

EX-4.3

   1
                                                                     EXHIBIT 4.3


                          REGISTRATION RIGHTS AGREEMENT

                                  BY AND AMONG

                           STEWART ENTERPRISES, INC.,

                                 THE GUARANTORS
                          LISTED ON SCHEDULE A HERETO,

                                       AND


                         BANC OF AMERICA SECURITIES LLC,

                         DEUTSCHE BANC ALEX. BROWN INC.,

                      CREDIT LYONNAIS SECURITIES (USA) INC.

                                       AND

                    SUNTRUST EQUITABLE SECURITIES CORPORATION





                            DATED AS OF JUNE 29, 2001



   2


                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of June 29, 2001, by and among Stewart Enterprises, Inc., a
Louisiana corporation (the "COMPANY"), the Guarantors listed on Schedule A
hereto (the "GUARANTORS"), and Banc of America Securities LLC, Deutsche Banc
Alex. Brown Inc., Credit Lyonnais Securities (USA) Inc. and SunTrust Equitable
Securities Corporation (each an "INITIAL PURCHASER" and, collectively, the
"INITIAL PURCHASERS"), each of whom has agreed to purchase the Company's 10 3/4%
Senior Subordinated Notes due 2008 (the "INITIAL NOTES") pursuant to the
Purchase Agreement (as defined below).

                  This Agreement is made pursuant to the Purchase Agreement,
dated as of June 19, 2001 (the "Purchase Agreement"), by and among the Company,
the Guarantors and the Initial Purchasers (i) for your benefit and for the
benefit of each other Initial Purchaser and (ii) for the benefit of the holders
from time to time of the Notes (including you and each other Initial Purchaser).
In order to induce the Initial Purchasers to purchase the Initial Notes, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 5(i) of the Purchase
Agreement.

                  The parties hereby agree as follows:

                  SECTION 1. DEFINITIONS

                  As used in this Agreement, the following capitalized terms
shall have the following meanings:

     BROKER-DEALER: Any broker or dealer registered under the Exchange Act.

     CLOSING DATE:  The date of this Agreement.

     COMMISSION:  The Securities and Exchange Commission.

     CONSUMMATE: A Registered Exchange Offer shall be deemed "Consummated" for
     purposes of this Agreement upon the occurrence of (i) the filing and
     effectiveness under the Securities Act of the Exchange Offer Registration
     Statement relating to the Exchange Notes to be issued in the Exchange
     Offer, (ii) the maintenance of such Registration Statement continuously
     effective and the keeping of the Exchange Offer open for a period not less
     than the minimum period required pursuant to Section 3(b) hereof, and (iii)
     the delivery by the Company to the Registrar under the Indenture of
     Exchange Notes in the same aggregate principal amount as the aggregate
     principal amount of Initial Notes that were tendered by Holders thereof
     pursuant to the Exchange Offer.

     EFFECTIVENESS TARGET DATE:  As defined in Section 5.

     EXCHANGE ACT:  The Securities Exchange Act of 1934, as amended.

     EXCHANGE NOTES: The 10 3/4% Senior Subordinated Notes due 2008, of the same
     series under the Indenture as the Initial Notes, to be issued to Holders in
     exchange for Transfer Restricted Securities pursuant to this Agreement.


   3


     EXCHANGE OFFER: The registration by the Company under the Securities Act of
     the Exchange Notes pursuant to a Registration Statement pursuant to which
     the Company offers the Holders of all outstanding Transfer Restricted
     Securities the opportunity to exchange all such outstanding Transfer
     Restricted Securities held by such Holders for Exchange Notes in an
     aggregate principal amount equal to the aggregate principal amount of the
     Transfer Restricted Securities tendered in such exchange offer by such
     Holders.

     EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating
     to the Exchange Offer, including the related Prospectus.

     EXEMPT RESALES: The transactions in which the Initial Purchasers propose to
     sell the Initial Notes to certain "qualified institutional buyers," as such
     term is defined in Rule 144A under the Securities Act, and to certain
     non-U.S. persons, in accordance with such Rule 144A and Regulation S under
     the Securities Act, respectively

     HOLDERS:  As defined in Section 2(b) hereof.

     INDEMNIFIED HOLDER:  As defined in Section 8(a) hereof.

     INDENTURE: The Indenture, dated as of June 29, 2001, among the Company and
     Firstar Bank, N.A., as trustee (the "TRUSTEE"), pursuant to which the Notes
     are to be issued, as such Indenture is amended or supplemented from time to
     time in accordance with the terms thereof.

     INITIAL PURCHASER:  As defined in the preamble hereto.

     INITIAL NOTES: The 10 3/4% Senior Subordinated Notes due 2008, of the same
     series under the Indenture as the Exchange Notes, for so long as such
     securities constitute Transfer Restricted Securities.

     INITIAL PLACEMENT: The issuance and sale by the Company of the Initial
     Notes to the Initial Purchasers pursuant to the Purchase Agreement.

     INTEREST PAYMENT DATE:  As defined in the Indenture and the Notes.

     NASD:  National Association of Securities Dealers, Inc.

     NOTES:  The Initial Notes and the Exchange Notes.

     PERSON: An individual, partnership, corporation, trust or unincorporated
     organization, or a government or agency or political subdivision thereof.

     PROSPECTUS: The prospectus included in a Registration Statement, as amended
     or supplemented by any prospectus supplement and by all other amendments
     thereto, including post-effective amendments, and all material incorporated
     by reference into such Prospectus.

     RECORD HOLDER: With respect to any Damages Payment Date relating to the
     Notes, each Person who is a Holder of Notes on the record date with respect
     to the Interest Payment Date on which such Damages Payment Date shall
     occur.

     REGISTRATION DEFAULT:  As defined in Section 5 hereof.

     REGISTRATION STATEMENT: Any registration statement of the Company relating
     to (a) an offering of Exchange Notes pursuant to an Exchange Offer or (b)
     the registration for resale of Transfer Restricted Securities pursuant to
     the Shelf Registration Statement, which is filed pursuant to the provisions
     of this Agreement, in each case, including the Prospectus included


                                       2
   4


     therein, all amendments and supplements thereto (including post-effective
     amendments) and all exhibits and material incorporated by reference
     therein.

     SECURITIES ACT:  The Securities Act of 1933, as amended.

     SHELF FILING DEADLINE:  As defined in Section 4 hereof.

     SHELF REGISTRATION STATEMENT:  As defined in Section 4 hereof.

     TRUST INDENTURE ACT: The Trust Indenture Act of 1939 as in effect on the
     date of the Indenture.

     TRANSFER RESTRICTED SECURITIES: Each Initial Note, until the earliest to
     occur of (a) the date on which such Initial Note is exchanged in the
     Exchange Offer and entitled to be resold to the public by the Holder
     thereof without complying with the prospectus delivery requirements of the
     Securities Act, (b) the date on which such Initial Note has been
     effectively registered under the Securities Act and disposed of in
     accordance with a Shelf Registration Statement and (c) the date on which
     such Initial Note is distributed to the public pursuant to Rule 144 under
     the Securities Act or by a Broker-Dealer pursuant to the "Plan of
     Distribution" contemplated by the Exchange Offer Registration Statement
     (including delivery of the Prospectus contained therein).

     UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in which
     securities of the Company are sold to an underwriter for reoffering to the
     public.

                  SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT

                  (a) TRANSFER RESTRICTED SECURITIES. The securities entitled to
the benefits of this Agreement are the Transfer Restricted Securities.

                  (b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is
deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER")
whenever such Person owns Transfer Restricted Securities.

                  SECTION 3. REGISTERED EXCHANGE OFFER

                  (a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Company and the Guarantors shall (i)
cause to be filed with the Commission as soon as practicable after the Closing
Date, but in no event later than 90 days after the Closing Date, a Registration
Statement under the Securities Act relating to the Exchange Notes and the
Exchange Offer, (ii) use their reasonable best efforts to cause such
Registration Statement to become effective at the earliest possible time, but in
no event later than 120 days after the Closing Date, (iii) in connection with
the foregoing, file (A) all pre-effective amendments to such Registration
Statement as may be necessary in order to cause such Registration Statement to
become effective, (B) if applicable, a post-effective amendment to such
Registration Statement pursuant to Rule 430A under the Securities Act and (C)
cause all necessary filings in connection with the registration and
qualification of the Exchange Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Registration Statement, commence the
Exchange Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the Exchange Notes to be


                                       3
   5


offered in exchange for the Transfer Restricted Securities and to permit resales
of Notes held by Broker-Dealers as contemplated by Section 3(c) below.

                  (b) The Company shall cause the Exchange Offer Registration
Statement to be effective continuously and shall keep the Exchange Offer open
for a period of not less than the minimum period required under applicable
federal and state securities laws to Consummate the Exchange Offer; provided,
however, that in no event shall such period be less than 20 days after the date
notice of the Exchange Offer is mailed to the Holders. The Company shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Notes shall be included in the Exchange Offer
Registration Statement. The Company shall use its best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 days after the Effectiveness Target Date.

                  (c) The Company shall indicate in a "Plan of Distribution"
section contained in the Prospectus forming a part of the Exchange Offer
Registration Statement that any Broker-Dealer who holds Initial Notes that are
Transfer Restricted Securities and that were acquired for its own account as a
result of market-making activities or other trading activities (other than
Transfer Restricted Securities acquired directly from the Company), may exchange
such Initial Notes pursuant to the Exchange Offer; however, such Broker-Dealer
may be deemed to be an "underwriter" within the meaning of the Securities Act
and must, therefore, deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of the Exchange Notes received by
such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement
may be satisfied by the delivery by such Broker-Dealer of the Prospectus
contained in the Exchange Offer Registration Statement. Such "Plan of
Distribution" section shall also contain all other information with respect to
such resales by Broker-Dealers that the Commission may require in order to
permit such resales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.

                  The Company and the Guarantors shall use their best efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for resales of Notes
acquired by Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities, and to ensure that it conforms with the
requirements of this Agreement, the Securities Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period
ending on the earlier of (i) 180 days from the date on which the Exchange Offer
Registration Statement is declared effective and (ii) the date on which a
Broker-Dealer is no longer required to deliver a prospectus in connection with
market-making or other trading activities.

                  The Company shall provide sufficient copies of the latest
version of such Prospectus to Broker-Dealers promptly upon request at any time
during such 180-day (or shorter as provided in the foregoing sentence) period in
order to facilitate such resales.


                                       4
   6


                  SECTION 4. SHELF REGISTRATION

                  (a) If (i) the Company is not required to file an Exchange
Offer Registration Statement or to consummate the Exchange Offer because the
Exchange Offer is not permitted by applicable law or Commission policy (after
the procedures set forth in Section 6(a) below have been complied with), (ii)
for any reason the Exchange Offer is not Consummated within 30 days after the
Effectiveness Target Date, or (iii) any Holder of Transfer Restricted Securities
shall have notified the Company in writing within 20 Business Days following the
Closing Date that (A) such Holder is prohibited by applicable law or Commission
policy from participating in the Exchange Offer, or (B) such Holder may not
resell the Exchange Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and that the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder, or (C) such Holder is a Broker-Dealer and holds Initial
Notes acquired directly from the Company or one of its affiliates, then, upon
such Holder's request, the Company and the Guarantors shall (x) cause to be
filed a shelf registration statement pursuant to Rule 415 under the Securities
Act, which may be an amendment to the Exchange Offer Registration Statement (in
either event, the "SHELF REGISTRATION STATEMENT") on or prior to the earliest to
occur of (1) the 60th day after the date on which the Company determines that it
is not required to file the Exchange Offer Registration Statement, (2) the 60th
day after the date on which the Company receives notice from a Holder of
Transfer Restricted Securities as contemplated by clause (ii) above, and (3) the
60th day after the Closing Date (such earliest date being the "SHELF FILING
DEADLINE"), which Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(c) hereof; and (y) use their
reasonable best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission on or before the 30th day after the Shelf
Filing Deadline.

                  (b) The Company and the Guarantors shall use their best
efforts to keep such Shelf Registration Statement continuously effective,
supplemented and amended as required by the provisions of Sections 6(b) and (c)
hereof to the extent necessary to ensure that it is available for resales of
Notes by the Holders of Transfer Restricted Securities entitled to the benefit
of this Section 4(a), and to ensure that it conforms with the requirements of
this Agreement, the Securities Act and the policies, rules and regulations of
the Commission as announced from time to time, for a period of at least two
years following the effective date of such Shelf Registration Statement (or
shorter period that will terminate when all the Notes covered by such Shelf
Registration Statement have been sold pursuant to such Shelf Registration
Statement).

                  (c) No Holder of Transfer Restricted Securities may include
any of its Transfer Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes to the Company
in writing, within 20 business days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading.


                                       5
   7


                  SECTION 5. LIQUIDATED DAMAGES

                  If (i) any of the Registration Statements required by this
Agreement is not filed with the Commission on or prior to the date specified for
such filing in this Agreement, (ii) any of such Registration Statements has not
been declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement (the "EFFECTIVENESS TARGET DATE"), (iii)
the Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within three business
days by a post-effective amendment to such Registration Statement that cures
such failure and that is itself promptly declared effective (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Company
and the Guarantors hereby jointly and severally agree to pay to each Holder of
Transfer Restricted Securities affected thereby liquidated damages in an amount
equal to one half of one percent (0.50%) per annum on the principal amounts of
the Transfer Restricted Securities held by such Holder during the 90-day period
immediately following the occurrence of any Registration Default and shall
increase by an additional one half of one percent (0.50%) per annum on the
principal amounts of such Transfer Restricted Securities at the end of each
subsequent 90-day period, but in no event shall such increase exceed 2.00% per
annum. Following the cure of all Registration Defaults relating to any
particular Transfer Restricted Securities, the liquidated damages payable with
respect to the Transfer Restricted Securities as a result of the provisions of
this paragraph shall cease.

                  All obligations of the Company and the Guarantors set forth in
the preceding paragraph that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations with respect to
such Note shall have been satisfied in full.

                  SECTION 6. REGISTRATION PROCEDURES

                  (a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with
the Exchange Offer, the Company and the Guarantors shall comply with all of the
provisions of Section 6(c) below, shall use their best efforts to effect such
exchange to permit the sale of Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:

                  (i) If in the reasonable opinion of counsel to the Company
         there is a question as to whether the Exchange Offer is permitted by
         applicable law, the Company and the Guarantors hereby agree to seek a
         no-action letter or other favorable decision from the Commission
         allowing the Company and the Guarantors to Consummate an Exchange Offer
         for such Initial Notes. The Company and the Guarantors each hereby
         agrees to pursue the issuance of such a decision to the Commission
         staff level but shall not be required to take commercially unreasonable
         action to effect a change of Commission policy. The Company and the
         Guarantors each hereby agrees, however, to (A) participate in
         telephonic conferences with the Commission, (B) deliver to the
         Commission staff an analysis prepared by counsel to the Company setting
         forth the legal bases, if any, upon which such counsel has concluded
         that such an Exchange Offer should be permitted and (C) diligently
         pursue a favorable resolution by the Commission staff of such
         submission.


                                       6
   8


                  (ii) As a condition to its participation in the Exchange Offer
         pursuant to the terms of this Agreement, each Holder of Transfer
         Restricted Securities shall furnish, upon the request of the Company,
         prior to the Consummation thereof, a written representation to the
         Company (which may be contained in the letter of transmittal
         contemplated by the Exchange Offer Registration Statement) to the
         effect that (A) it is not an affiliate of the Company, (B) it is not
         engaged in, and does not intend to engage in, and has no arrangement or
         understanding with any person to participate in, a distribution of the
         Exchange Notes to be issued in the Exchange Offer and (C) it is
         acquiring the Exchange Notes in its ordinary course of business. In
         addition, all such Holders of Transfer Restricted Securities shall
         otherwise cooperate in the Company's preparations for the Exchange
         Offer. Each Holder hereby acknowledges and agrees that any
         Broker-Dealer and any such Holder using the Exchange Offer to
         participate in a distribution of the securities to be acquired in the
         Exchange Offer (1) could not under Commission policy as in effect on
         the date of this Agreement rely on the position of the Commission
         enunciated in MORGAN STANLEY AND CO., INC. (available June 5, 1991) and
         EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), as
         interpreted in the Commission's letter to Shearman & Sterling dated
         July 2, 1993, and similar no-action letters (which may include any
         no-action letter obtained pursuant to clause (i) above), and (2) must
         comply with the registration and prospectus delivery requirements of
         the Securities Act in connection with a secondary resale transaction
         and that such a secondary resale transaction should be covered by an
         effective registration statement containing the selling security holder
         information required by Item 507 or 508, as applicable, of Regulation
         S-K if the resales are of Exchange Notes obtained by such Holder in
         exchange for Initial Notes acquired by such Holder directly from the
         Company.

                  (b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their reasonable best efforts to
effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Company will as expeditiously as
possible prepare and file with the Commission a Registration Statement relating
to the registration on any appropriate form under the Securities Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof.

                  (c) GENERAL PROVISIONS. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Notes by Broker-Dealers), the Company shall:

                  (i) use its best efforts to keep such Registration Statement
         continuously effective and provide all requisite financial statements
         (including, if required by the Securities Act or any regulation
         thereunder, financial statements of the Guarantors) for the period
         specified in Section 3 or 4 of this Agreement, as applicable; upon the
         occurrence of any event that would cause any such Registration
         Statement or the Prospectus contained therein (A) to contain a material
         misstatement or omission or (B) not to be effective and usable for
         resale of Transfer Restricted Securities during the


                                       7
   9


         period required by this Agreement, the Company shall file promptly an
         appropriate amendment to such Registration Statement, in the case of
         clause (A), correcting any such misstatement or omission, and, in the
         case of either clause (A) or (B), use its reasonable best efforts to
         cause such amendment to be declared effective and such Registration
         Statement and the related Prospectus to become usable for their
         intended purpose(s) as soon as practicable thereafter;

                  (ii) prepare and file with the Commission such amendments and
         post-effective amendments to the Registration Statement as may be
         necessary to keep the Registration Statement effective for the
         applicable period set forth in Section 3 or 4 hereof, as applicable, or
         such shorter period as will terminate when all Transfer Restricted
         Securities covered by such Registration Statement have been sold; cause
         the Prospectus to be supplemented by any required Prospectus
         supplement, and as so supplemented to be filed pursuant to Rule 424
         under the Securities Act, and to comply fully with the applicable
         provisions of Rules 424 and 430A under the Securities Act in a timely
         manner; and comply with the provisions of the Securities Act with
         respect to the disposition of all securities covered by such
         Registration Statement during the applicable period in accordance with
         the intended method or methods of distribution by the sellers thereof
         set forth in such Registration Statement or supplement to the
         Prospectus;

                  (iii) advise the underwriter(s), if any, and selling Holders
         promptly and, if requested by such Persons, to confirm such advice in
         writing, (A) when the Prospectus or any Prospectus supplement or
         post-effective amendment has been filed, and, with respect to any
         Registration Statement or any post-effective amendment thereto, when
         the same has become effective, (B) of any request by the Commission for
         amendments to the Registration Statement or amendments or supplements
         to the Prospectus or for additional information relating thereto, (C)
         of the issuance by the Commission of any stop order suspending the
         effectiveness of the Registration Statement under the Securities Act or
         of the suspension by any state securities commission of the
         qualification of the Transfer Restricted Securities for offering or
         sale in any jurisdiction, or the initiation of any proceeding for any
         of the preceding purposes, (D) of the existence of any fact or the
         happening of any event that makes any statement of a material fact made
         in the Registration Statement, the Prospectus, any amendment or
         supplement thereto, or any document incorporated by reference therein
         untrue, or that requires the making of any additions to or changes in
         the Registration Statement or the Prospectus in order to make the
         statements therein not misleading. If at any time the Commission shall
         issue any stop order suspending the effectiveness of the Registration
         Statement, or any state securities commission or other regulatory
         authority shall issue an order suspending the qualification or
         exemption from qualification of the Transfer Restricted Securities
         under state securities or Blue Sky laws, the Company and the Guarantors
         shall use their best efforts to obtain the withdrawal or lifting of
         such order at the earliest possible time;

                  (iv) furnish without charge to each of the Initial Purchasers,
         each selling Holder named in any Registration Statement, and each of
         the underwriter(s), if any, before filing with the Commission, copies
         of any Registration Statement or any Prospectus included therein or any
         amendments or supplements to any such Registration Statement or
         Prospectus (including all documents incorporated by reference after the


                                       8
   10


         initial filing of such Registration Statement), which documents
         (excluding documents incorporated by reference as a result of
         requirements for periodic reporting under the Exchange Act prior to the
         initial filing of the Registration Statement) will be subject to the
         review of such Holders and underwriter(s) in connection with such sale,
         if any, for a period of at least three business days, and the Company
         will not file any such Registration Statement or Prospectus or any
         amendment or supplement to any such Registration Statement or
         Prospectus (excluding all such documents incorporated by reference as a
         result of requirements for periodic reporting under the Exchange Act)
         to which an Initial Purchaser of Transfer Restricted Securities covered
         by such Registration Statement or the underwriter(s), if any, shall
         reasonably object in writing within three business days after the
         receipt thereof (such objection to be deemed timely made upon
         confirmation of telecopy transmission within such period). The
         objection of an Initial Purchaser or underwriter, if any, shall be
         deemed to be reasonable if such Registration Statement, amendment,
         Prospectus or supplement, as applicable, as proposed to be filed,
         contains a material misstatement or omission;

                  (v) promptly prior to the filing of any document that is to be
         incorporated by reference into a Registration Statement or Prospectus,
         provide copies of such document to the Initial Purchasers, each selling
         Holder named in any Registration Statement, and to the underwriter(s),
         if any, make the Company's representatives and representatives of the
         Guarantors available for discussion of such document and other
         customary due diligence matters, and include such information in such
         document prior to the filing thereof as such selling Holders or
         underwriter(s), if any, reasonably may request;

                  (vi) make available at reasonable times for inspection by each
         selling Holder, the Initial Purchasers, any managing underwriter
         participating in any disposition pursuant to such Registration
         Statement and any attorney or accountant retained by such Initial
         Purchasers or any of the underwriter(s), all financial and other
         records, pertinent corporate documents and properties of the Company
         and the Guarantors and cause the Company's and the Guarantors'
         officers, directors and employees to supply all information reasonably
         requested by any such Holder, underwriter, attorney or accountant in
         connection with such Registration Statement subsequent to the filing
         thereof and prior to its effectiveness; provided, however, that the
         foregoing information gathering (i) shall be coordinated on behalf of
         the selling Holders, Initial Purchasers, managing underwriter or any
         representative thereof, by one counsel, who shall be Shearman &
         Sterling, or such other counsel as may be chosen by the Holders of a
         majority in principal amount of Transfer Restricted Securities and (ii)
         shall not be available for any such Holder who does not agree in
         writing to hold such information in confidence;

                  (vii) if requested by any selling Holders or the
         underwriter(s), if any, promptly incorporate in any Registration
         Statement or Prospectus, pursuant to a supplement or post-effective
         amendment if necessary, such information as such selling Holders and
         underwriter(s), if any, may reasonably request to have included
         therein, including, without limitation, information relating to the
         "Plan of Distribution" of the Transfer Restricted Securities,
         information with respect to the principal amount of Transfer Restricted
         Securities being sold to such underwriter(s), the purchase price being
         paid


                                       9
   11


         therefor and any other terms of the offering of the Transfer Restricted
         Securities to be sold in such offering; and make all required filings
         of such Prospectus supplement or post-effective amendment as soon as
         practicable after the Company is notified of the matters to be
         incorporated in such Prospectus supplement or post-effective amendment;

                  (viii) cause the Transfer Restricted Securities covered by the
         Registration Statement to be rated with at least one rating agency,
         acceptable to the underwriter(s), if any, if so requested by the
         Holders of a majority in aggregate principal amount of Notes covered
         thereby or the underwriter(s), if any;

                  (ix) furnish to each selling Holder and each of the
         underwriter(s), if any, without charge, at least one copy of the
         Registration Statement, as first filed with the Commission, and of each
         amendment thereto, including financial statements and schedules, all
         documents incorporated by reference therein and all exhibits (including
         exhibits incorporated therein by reference);

                  (x) deliver to each selling Holder and each of the
         underwriter(s), if any, without charge, as many copies of the
         Prospectus (including each preliminary prospectus) and any amendment or
         supplement thereto as such Persons reasonably may request; the Company
         and the Guarantors hereby consent to the use of the Prospectus and any
         amendment or supplement thereto by each of the selling Holders and each
         of the underwriter(s), if any, in connection with the offering and the
         sale of the Transfer Restricted Securities covered by the Prospectus or
         any amendment or supplement thereto, subject to compliance by such
         Holder with the final paragraph of this Section;

                  (xi) enter into, and cause the Guarantors to enter into, such
         customary agreements (including an underwriting agreement), and make,
         and cause the Guarantors to make, such customary representations and
         warranties, and take all such other customary actions in connection
         therewith in order to expedite or facilitate the disposition of the
         Transfer Restricted Securities pursuant to any Registration Statement
         contemplated by this Agreement, all to such extent as may be reasonably
         requested by any Initial Purchaser or by any Holder of Transfer
         Restricted Securities or underwriter in connection with any sale or
         resale pursuant to any Registration Statement contemplated by this
         Agreement; and whether or not an underwriting agreement is entered into
         and whether or not the registration is an Underwritten Registration,
         the Company and the Guarantors shall:

                           (A) furnish to each Initial Purchaser, each selling
                  Holder and each underwriter, if any, in such substance and
                  scope as they may reasonably request and as are customarily
                  made by issuers to underwriters in primary underwritten
                  offerings, upon the date of the Consummation of the Exchange
                  Offer and, if applicable, the effectiveness of the Shelf
                  Registration Statement:

                                    (1) a certificate, dated the date of
                           Consummation of the Exchange Offer or the date of
                           effectiveness of the Shelf Registration Statement, as
                           the case may be, signed by (y) the President or any
                           Vice President and (z) a principal financial or
                           accounting officer, treasurer,


                                       10
   12


                           assistant treasurer, secretary or assistant secretary
                           of each of the Company and the Guarantors,
                           confirming, as of the date thereof, the matters set
                           forth in paragraphs (i), (ii) and (iii) of Section 5
                           (f) of the Purchase Agreement and such other matters
                           as such parties may reasonably request;

                                    (2) an opinion, dated the date of
                           Consummation of the Exchange Offer or the date of
                           effectiveness of the Shelf Registration Statement, as
                           the case may be, of counsel for the Company and the
                           Guarantors, covering the matters set forth in
                           paragraph (c) of Section 5 of the Purchase Agreement
                           and such other matters as such parties may reasonably
                           request, and in any event including a statement to
                           the effect that such counsel has participated in
                           conferences with officers and other representatives
                           of the Company, representatives of the independent
                           public accountants for the Company, the Initial
                           Purchasers' representatives and the Initial
                           Purchasers' counsel in connection with the
                           preparation of such Registration Statement and the
                           related Prospectus and have considered the matters
                           required to be stated therein and the statements
                           contained therein, although such counsel has not
                           independently verified the accuracy, completeness or
                           fairness of such statements; and that such counsel
                           advises that, on the basis of the foregoing (relying
                           as to materiality to a large extent upon facts
                           provided to such counsel by officers and other
                           representatives of the Company and without
                           independent check or verification), no facts came to
                           such counsel's attention that caused such counsel to
                           believe that the applicable Registration Statement,
                           at the time such Registration Statement or any
                           post-effective amendment thereto became effective,
                           and, in the case of the Exchange Offer Registration
                           Statement, as of the date of Consummation, contained
                           an 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, or that the Prospectus contained in such
                           Registration Statement as of its date and, in the
                           case of the opinion dated the date of Consummation of
                           the Exchange Offer, as of the date of Consummation,
                           contained an untrue statement of a material fact or
                           omitted to state a material fact necessary in order
                           to make the statements therein, in light of the
                           circumstances under which they were made, not
                           misleading. Without limiting the foregoing, such
                           counsel may state further that such counsel assumes
                           no responsibility for, and has not independently
                           verified, the accuracy, completeness or fairness of
                           the financial statements, notes and schedules and
                           other financial data included in any Registration
                           Statement contemplated by this Agreement or the
                           related Prospectus; and

                                    (3) a customary comfort letter, dated as of
                           the date of Consummation of the Exchange Offer or the
                           date of effectiveness of the Shelf Registration
                           Statement, as the case may be, from the Company's
                           independent accountants, in the customary form and
                           covering matters


                                       11
   13


                           of the type customarily covered in comfort letters by
                           underwriters in connection with primary underwritten
                           offerings, and affirming the matters set forth in the
                           comfort letters delivered pursuant to Section 5(a) of
                           the Purchase Agreement, without exception;

                           (B) set forth in full or incorporate by reference in
                  the underwriting agreement, if any, the indemnification
                  provisions and procedures of Section 8 hereof with respect to
                  all parties to be indemnified pursuant to said Section; and

                           (C) deliver such other documents and certificates as
                  may be reasonably requested by such parties to evidence
                  compliance with clause (A) above and with any customary
                  conditions contained in the underwriting agreement or other
                  agreement entered into by the Company or the Guarantors
                  pursuant to this clause (xi), if any.

                  If at any time the representations and warranties of the
Company and the Guarantors contemplated in clause (A)(1) above cease to be true
and correct, the Company or the Guarantors shall so advise the Initial
Purchasers and the underwriter(s), if any, and each selling Holder promptly and,
if requested by such Persons, shall confirm such advice in writing;

                  (xii) prior to any public offering of Transfer Restricted
         Securities, cooperate with, and cause the Guarantors to cooperate with,
         the selling Holders, the underwriter(s), if any, and their respective
         counsel in connection with the registration and qualification of the
         Transfer Restricted Securities under the securities or Blue Sky laws of
         such jurisdictions as the selling Holders or underwriter(s) may request
         and do any and all other acts or things necessary or reasonably
         advisable to enable the disposition in such jurisdictions of the
         Transfer Restricted Securities covered by the Shelf Registration
         Statement; provided, however, that neither the Company nor the
         Guarantors shall be required to register or qualify as a foreign
         corporation where it is not then so qualified or to take any action
         that would subject it to the service of process in suits or to
         taxation, other than as to matters and transactions relating to the
         Registration Statement, in any jurisdiction where it is not then so
         subject;

                  (xiii) shall issue, upon the request of any Holder of Initial
         Notes covered by the Shelf Registration Statement, Exchange Notes,
         having an aggregate principal amount equal to the aggregate principal
         amount of Initial Notes surrendered to the Company by such Holder in
         exchange therefor or being sold by such Holder; such Exchange Notes to
         be registered in the name of such Holder or in the name of the
         purchaser(s) of such Notes, as the case may be; in return, the Initial
         Notes held by such Holder shall be surrendered to the Company for
         cancellation;

                  (xiv) cooperate with, and cause the Guarantors to cooperate
         with, the selling Holders and the underwriter(s), if any, to facilitate
         the timely preparation and delivery of certificates representing
         Transfer Restricted Securities to be sold and not bearing any
         restrictive legends; and enable such Transfer Restricted Securities to
         be in such denominations and registered in such names as the Holders or
         the underwriter(s), if any, may request at least two business days
         prior to any sale of Transfer Restricted Securities made by such
         underwriter(s);


                                       12
   14


                  (xv) use its best efforts to cause the Transfer Restricted
         Securities covered by the Registration Statement to be registered with
         or approved by such other governmental agencies or authorities as may
         be necessary to enable the seller or sellers thereof or the
         underwriter(s), if any, to consummate the disposition of such Transfer
         Restricted Securities, subject to the proviso contained in clause (xii)
         above;

                  (xvi) if any fact or event contemplated by clause (c)(iii)(D)
         above shall exist or have occurred, prepare a supplement or
         post-effective amendment to the Registration Statement or related
         Prospectus or any document incorporated therein by reference or file
         any other required document so that, as thereafter delivered to the
         purchasers of Transfer Restricted Securities, the Prospectus will not
         contain an untrue statement of a material fact or omit to state any
         material fact necessary to make the statements therein not misleading;

                  (xvii) provide a CUSIP number for all Transfer Restricted
         Securities not later than the effective date of the Registration
         Statement and provide the Trustee under the Indenture with printed
         certificates for the Transfer Restricted Securities which are in a form
         eligible for deposit with the Depositary Trust Company;

                  (xviii) cooperate and assist in any filings required to be
         made with the NASD and in the performance of any due diligence
         investigation by any underwriter (including any "qualified independent
         underwriter") that is required to be retained in accordance with the
         rules and regulations of the NASD, and use its reasonable best efforts
         to cause such Registration Statement to become effective and approved
         by such governmental agencies or authorities as may be necessary to
         enable the Holders selling Transfer Restricted Securities to consummate
         the disposition of such Transfer Restricted Securities;

                  (xix) otherwise use its best efforts to comply with all
         applicable rules and regulations of the Commission, and make generally
         available to its security holders, as soon as practicable, a
         consolidated earnings statement meeting the requirements of Rule 158
         (which need not be audited) for the twelve-month period (A) commencing
         at the end of any fiscal quarter in which Transfer Restricted
         Securities are sold to underwriters in a firm or best efforts
         Underwritten Offering or (B) if not sold to underwriters in such an
         offering, beginning with the first month of the Company's first fiscal
         quarter commencing after the effective date of the Registration
         Statement;

                  (xx) cause the Indenture to be qualified under the Trust
         Indenture Act not later than the effective date of the first
         Registration Statement required by this Agreement, and, in connection
         therewith, cooperate, and cause the Guarantors to cooperate, with the
         Trustee and the Holders of Notes to effect such changes to the
         Indenture as may be required for such Indenture to be so qualified in
         accordance with the terms of the Trust Indenture Act; and to execute,
         and cause the Guarantors to execute, and use its best efforts to cause
         the Trustee to execute, all documents that may be required to effect
         such changes and all other forms and documents required to be filed
         with the Commission to enable such Indenture to be so qualified in a
         timely manner;


                                       13
   15


                  (xxi) cause all Transfer Restricted Securities covered by the
         Registration Statement to be listed on each securities exchange on
         which similar securities issued by the Company are then listed if
         requested by the Holders of a majority in aggregate principal amount of
         Initial Notes or the managing underwriter(s), if any; and

                  (xxii) provide promptly to each Holder upon request each
         document filed with the Commission pursuant to the requirements of
         Section 13 and Section 15 of the Exchange Act.

                  Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will
keep such notice confidential and forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing (the
"ADVICE") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus. If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice. In the event the Company shall give any such notice, the
time period regarding the effectiveness of such Registration Statement set forth
in Section 3 or 4 hereof, as applicable, shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 6(c)(iii)(D) hereof to and including the date when each
selling Holder covered by such Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof or shall have received the Advice; however, no such extension
shall be taken into account in determining whether Liquidated Damages are due
pursuant to Section 5 hereof or the amount of such Liquidated Damages. It is
agreed that the Company's option to suspend use of a Registration Statement
pursuant to this paragraph for more than three business days shall be treated as
a Registration Default for purposes of Section 5. Each Holder agrees to deliver
the Prospectus, if required by the Securities Act, and, if so required, in the
manner and at the time required by the Securities Act. Each Holder further
agrees that it will use the Prospectus and any amendment or supplement thereto,
and make any offer and sale of the Notes, only in compliance with the terms of
this Agreement and all laws and regulations applicable to it, and will conform
its offering and sale of Notes to the plan of distribution set forth in the
Prospectus.

                  SECTION 7. REGISTRATION EXPENSES

                  (a) All expenses incident to the Company's or the Guarantors'
performance of or compliance with this Agreement will be borne by the Company
and/or the Guarantors, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses (including filings made by any Initial Purchaser or Holder with the
NASD (and, if applicable, the reasonable fees and expenses of any "qualified
independent underwriter" and its counsel that may be required by the rules and
regulations of the NASD)); (ii) all fees and expenses of compliance with federal
securities and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Exchange


                                       14
   16


Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company, the Guarantors and, subject to Section 7(b) below,
the Holders of Transfer Restricted Securities; (v) all application and filing
fees in connection with listing the Exchange Notes on a national securities
exchange or automated quotation system pursuant to the requirements thereof, if
such listing is required pursuant to Section 6(c)(xxi) hereof; and (vi) all fees
and disbursements of independent certified public accountants of the Company and
the Guarantors (including the expenses of any special audit and comfort letters
required by or incident to such performance).

                  The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company. Notwithstanding any requirement to the contrary set
forth in this Agreement, the Purchase Agreement or the Indenture, the Company
shall not be responsible for any costs, included but not limited to commissions,
fees, discounts of underwriter(s), brokers, dealers or agents.

                  (b) In connection with any Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Shearman & Sterling unless another firm shall be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.

                  SECTION 8. INDEMNIFICATION

                  (a) The Company agrees and the Guarantors, jointly and
severally, agree to indemnify and hold harmless (i) each Holder and (ii) each
person, if any, who controls (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) any Holder (any of the persons referred
to in this clause (ii) being hereinafter referred to as a "controlling person")
and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"INDEMNIFIED HOLDER"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing, settling, compromising, paying or
defending any claim or action, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the reasonable
fees and expenses of counsel to any Indemnified Holder), joint or several,
directly or indirectly caused by, related to, based upon, arising out of or in
connection with any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus (or any amendment or
supplement thereto), or 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,
liabilities or expenses are caused by an untrue statement or omission or alleged
untrue


                                       15
   17


statement or omission that is made in reliance upon and in conformity with
information relating to any of the Holders furnished in writing to the Company
by any of the Holders expressly for use therein. This indemnity agreement shall
be in addition to any liability which the Company may otherwise have.

                  In case any action or proceeding (including any governmental
or regulatory investigation or proceeding) shall be brought or asserted against
any of the Indemnified Holders with respect to which indemnity may be sought
against the Company or the Guarantors, such Indemnified Holder (or the
Indemnified Holder controlled by such controlling person) shall promptly notify
the Company and the Guarantors in writing (provided, that the failure to give
such notice shall not relieve the Company or the Guarantors of their respective
obligations pursuant to this Agreement). The Company shall be liable for any
settlement of any such action or proceeding effected with the Company's prior
written consent, which consent shall not be withheld unreasonably, and the
Company agrees to indemnify and hold harmless any Indemnified Holder from and
against any loss, claim, damage, liability or expense by reason of any
settlement of any action effected with the written consent of the Company. The
Company shall not, without the prior written consent of each Indemnified Holder,
settle or compromise or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, claim, litigation or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not any Indemnified Holder is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional release
of each Indemnified Holder from all liability arising out of such action, claim,
litigation or proceeding. This indemnity will be in addition to any liability
that the Company and the Guarantors may otherwise have under this Agreement.

                  (b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Company and the
Guarantors and any person controlling (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) the Company, or any Guarantor,
and the respective officers, directors, partners, employees, representatives and
agents of each such person (collectively, the "COMPANY INDEMNITEES"), to the
same extent as the foregoing indemnity from the Company and the Guarantors to
each of the Indemnified Holders, but only with respect to claims and actions
based on information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement. In case any action or
proceeding shall be brought against the Company or its directors or officers or
any such controlling person in respect of which indemnity may be sought against
a Holder of Transfer Restricted Securities, such Holder shall have the rights
and duties given the Company by the preceding paragraph. In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Securities
giving rise to such indemnification obligation. This indemnity will be in
addition to any liability that the Holders may otherwise have under this
Agreement.

                  (c) In case any action is brought against any indemnified
party and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in
and, to the extent that it shall elect, jointly with all other indemnifying
parties similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party;


                                       16
   18


provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party, representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.

                  (d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities, judgments, actions or expenses
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantors, on the one hand,
and the Holders, on the other hand, from the Initial Placement (which in the
case of the Issuer shall be deemed to be equal to the total net proceeds from
the Initial Placement as set forth on the cover page of the Offering
Memorandum), the amount of Liquidated Damages which did not become payable as a
result of the filing of the Registration Statement resulting in such losses,
claims, damages, liabilities, judgments actions or expenses, and such
Registration Statement, or if such allocation is not permitted by applicable
law, the relative fault of the Company and the Guarantors on the one hand, and
of the Indemnified Holder, on the other hand, in connection with the statements
or omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the Indemnified Holder 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 Indemnified Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.


                                       17
   19


                  The Company, the Guarantors and each Holder of Transfer
Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 8(c) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses 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 party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, none of the Holders (and its
related Indemnified Holders) shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the total proceeds received by such
Holder with respect to the Initial Notes exceeds the amount of any damages which
such Holder 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 Holders' obligations to
contribute pursuant to this Section 8(c) are several in proportion to the
respective principal amount of Initial Notes held by each of the Holders
hereunder and not joint.

                  SECTION 9. RULE 144A

                  The Company and the Guarantors each hereby agrees with each
Holder, for so long as any Transfer Restricted Securities remain outstanding, to
make available to any Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities from such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.

                  SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS

                  No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the terms hereof and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
underwriting arrangements.

                  SECTION 11. SELECTION OF UNDERWRITERS

                  The Holders of Transfer Restricted Securities covered by the
Shelf Registration Statement who desire to do so may sell such Transfer
Restricted Securities in an Underwritten Offering. In any such Underwritten
Offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.


                                       18
   20


                  SECTION 12. MISCELLANEOUS

                  (a) REMEDIES. The Company and the Guarantors each hereby
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agree to waive the defense in any action for specific performance that a
remedy at law would be adequate; provided, that the Liquidated Damages
contemplated hereunder shall be the exclusive remedy for any breach of Section 3
or 4 of the Agreement.

                  (b) NO INCONSISTENT AGREEMENTS. The Company will not, and will
cause the Guarantors not to, on or after the date of this Agreement enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Other than this Agreement, neither the Company nor the
Guarantors has entered into any agreement granting any registration rights with
respect to its debt securities to any Person. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under any agreement in
effect on the date hereof.

                  (c) ADJUSTMENTS AFFECTING THE NOTES. The Company will not take
any action, and will use its reasonable best efforts to prevent any change from
occuring, with respect to the Notes that would materially and adversely affect
the ability of the Holders to Consummate any Exchange Offer.

                  (d) AMENDMENTS AND WAIVERS. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities being tendered or registered;
provided that, with respect to any matter that directly or indirectly affects
the rights of any Initial Purchaser hereunder, the Company shall obtain the
written consent of each such Initial Purchaser with respect to which such
amendment, qualification, supplement, waiver, consent or departure is to be
effective.

                  (e) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:

                  (i) if to a Holder, at the address set forth on the records of
         the Registrar under the Indenture, with a copy to the Registrar under
         the Indenture; and

                  (ii) if to the Company:

                       Stewart Enterprises, Inc.
                       110 Veterans Memorial Boulevard
                       Metairie, LA 70005


                                       19
   21


                       Telecopier No.: (504) 837-5880
                       Attention: Kenneth C. Budde,
                                  Executive Vice President and Chief Financial
                                  Officer

                       With a copy to:
                       Jones, Walker, Waechter, Poitevent, Carrere and Denegre,
                           L.L.P.
                       201 St. Charles Avenue
                       New Orleans, LA  70170
                       Telecopier No.: (504) 582-8012
                       Attention: Lee Richards McMillan, Esq.

                  All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.

                  Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.

                  (f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder.

                  (g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                  (h) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.

                  (j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.

                  (k) ENTIRE AGREEMENT. This Agreement together with the other
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final


                                       20
   22


expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.



                                       21
   23



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



                                         STEWART ENTERPRISES, INC.


                                         By:    /s/ WILLIAM E. ROWE
                                              ----------------------------------
                                              Name:  William E. Rowe
                                              Title: President and Chief
                                                     Executive Officer

GUARANTORS:

S.E. OF TUCSON, ARIZONA, INC.
GRIFFIN-LEGGETT, INC.
FOREST HILLS CEMETERY, INC.
GRIFFIN LEGGETT HEALEY & ROTH, INC.
GRIFFIN-LEGGETT INSURANCE AGENCY, INC
GROSS FUNERAL HOME, INC.
REST HILLS MEMORIAL PARK, INC.
GRIFFIN LEGGETT - CONWAY, INC.
DILDAY BROTHERS HUNTINGTON VALLEY MORTUARY
HOPSON MORTUARY, INC.
LASSILA FUNERAL CHAPELS, INC.
SANTA BARBARA FUNERAL SERVICES, INC.
S.E. ACQUISITION OF CALIFORNIA, INC.
ALL SOULS MORTUARY, INC.
ASHES TO ASHES, INC.
ASSUMPTION MORTUARY, INC.
BARSTOW FUNERAL HOMES, INC.
BUCHHEIM FAMILY, INC.
CALVARY MORTUARY OF LOS
   ANGELES, CALIFORNIA, INC.
CATHOLIC MORTUARY SERVICES, INC.
DeYOUNG MEMORIAL CHAPEL, INC.
HOLY CROSS MORTUARY OF CULVER CITY, CALIFORNIA, INC.
HOLY CROSS MORTUARY OF POMONA, CALIFORNIA, INC.
LOMBARD & CO.
N.D. DAVIS & ASSOCIATES, INC.
QUEEN OF HEAVEN MORTUARY, INC.
RESURRECTION MORTUARY, INC.
RICHARD PIERCE FUNERAL SERVICE
RIVER CITIES FUNERAL CHAPEL, INC.
S.E. ACQUISITION OF DELANO, CALIFORNIA, INC.
S.E. ACQUISITION OF GLENDALE, CALIFORNIA, INC.



   24


S.E. ACQUISITION OF LANCASTER, CALIFORNIA, INC.
S.E. ACQUISITION OF LOS OSOS MORTUARY AND MEMORIAL PARK, INC.
S.E. ACQUISITION OF OAKHURST, CALIFORNIA, INC.
S.E. ACQUISITION OF OROVILLE, CALIFORNIA, INC.
S.E. ACQUISITION OF SAN DIEGO, CALIFORNIA, INC.
SAN FERNANDO MISSION MORTUARY, INC.
SANTA CLARA MORTUARY, INC.
SCOVERN MORTUARY, A CALIFORNIA CORPORATION
SDCA HOLDINGS, INC.
SAN DIEGO CEMETERY ASSOCIATION
SIMPLICITY PLAN OF CALIFORNIA, INC.
STEWART PRE-NEED SERVICES, INC.
STRICKLIN/SNIVELY MORTUARY
CATALINA CHANNEL CREMATION SOCIETY
WALLACE E. WHITE & HOWARD J. CALLANAN, INC.
WOODSIDE CHAPEL OF CRIPPEN & FLYNN
SENTINEL CREMATION SOCIETIES, INC.
S.E. ACQUISITION OF MURIETTA, CALIFORNIA, INC.
S.E. ACQUISITION OF SANTA MARIA, CALIFORNIA, INC.
VICTOR V. DESROSIER, INC.
CEMETERY MANAGEMENT, INC.
ARLINGTON MEMORIAL PARK CEMETERY AND FUNERAL HOME, INC.
BALDWIN-FAIRCHILD FUNERAL HOMES, INC.
ALL FAITHS MEMORIAL PARK, INC.
ORLANDO FUNERAL HOME, INCORPORATED
THE SIMPLICITY PLAN, INC.
BAY AREA CREMATORY, INC.
BRUCE OCALA FUNERAL HOME, INC.
BETH DAVID FUNERAL CHAPEL TAMPA, INC.
BETH DAVID MEMORIAL CHAPEL, INC.
CHAPEL HILL CEMETERY, INC.
GLEN HAVEN MEMORIAL PARK, INC.
HIGHLAND MEMORY GARDENS, INC.
SEMORAN FUNERAL HOME, INC.
FLORIDA HILLS MEMORIAL GARDENS, INC.
GARDEN OF MEMORIES, INC.
A.P. BOZA FUNERAL HOME, INC.
CURRY & SON FUNERAL HOME, INC.
WOODLAWN MEMORY GARDENS, INC. (ST. PETE)
GOOD SHEPHERD MEMORIAL GARDENS, INC.
DAVID C. GROSS FUNERAL HOME, INC.




   25


HUBBELL FUNERAL HOME AND CREMATORY, INC.
KENT R. PALMER, INC.
KICLITER FUNERAL HOME, INC.
MADCEM OF FLORIDA, INC.
MEMORIAL PARK CEMETERY, INC.
OAKLAWN PARK CEMETERY AND FUNERAL HOME, INC.
ROBERTS FUNERAL HOME, INC.
ROYAL PALM MEMORIAL GARDENS, INC.
SYLVAN ABBEY MEMORIAL PARK, INC.
TRINITY MEMORIAL GARDENS OF LAKELAND, INC.
TURNER CREMATORY, INC.
TURNER FUNERAL HOMES, INC.
WALSH & WOOD FUNERAL HOME, INC.
WOODLAWN PARK CEMETERY COMPANY
MEMORIAL SUNSET PARK, INC.
NATIONAL MONUMENT CO., INC.
SOUTH DADE-PALMS MEMORIAL PARK, INC.
CHEATHAM HILL MEMORIAL PARK, INC.
EMPRESAS STEWART - CEMENTERIOS, INC.
EMPRESAS STEWART - FUNERARIAS, INC.
EASTLAWN CORPORATION
HOLLY HILL MEMORIAL PARK, INC.
ROSE HAVEN FUNERAL HOME & CEMETERY, INC.
ACME MAUSOLEUM CORPORATION
INTERNATIONAL STONE & ERECTORS, INC.
LAKE LAWN METAIRIE FUNERAL HOME, INC.
LAKE LAWN METAIRIE FUNERAL HOME (JOINT VENTURE)
LAKE LAWN PARK, INC.
METAIRIE CEMETERY ASSOCIATION
PINE CREST CEMETERY, INC.
ALL FAITHS FUNERAL HOME, INC.
MOUNT OLIVET CEMETERY, INC.
S.E. AUSTRALIA, INC.
S.E. SOUTH-CENTRAL, INC.
ELLISON FUNERAL HOME, INC.
KILGORE-GREEN FUNERAL HOME, INC.
LATHAN FUNERAL HOME, INC.
PINE CREST FUNERAL HOME, INC.
FAITH MEMORIAL PARK & MAUSOLEUM COMPANY, INC.
VALHALLA MEMORY GARDENS AND FUNERAL HOME, INC.
ROCKCO AND SON FUNERAL HOME, INC.
ROCKCO'S FUNERAL HOMES, INC.
S.E. ACQUISITION OF LITHONIA, GEORGIA, INC.
ANDREW J. McGANN & SON FUNERAL HOME, INC.
S.E. ACQUISITION OF BLUE ISLAND, ILLINOIS, INC.


   26


S.E. ACQUISITION OF OAK LAWN AND ORLAND PARK, ILLINOIS, INC.
S.E. CEMETERY MANAGEMENT OF ILLINOIS, INC.
THEIS-GORSKI FUNERAL HOME, INC.
KNUTSON FUNERAL HOMES, INC.
PAULEY FUNERAL HOME, INC.
RUNYAN MANGOLD, INC.
PROFESSIONAL FUNERAL SERVICES, INC.
D.W. NEWCOMER'S SONS, INC.
DWN PROPERTIES, INC.
FUNERAL SECURITY PLANS, INC.
S.E. ACQUISITION OF BOONVILLE, MISSOURI, INC.
WYUKA FUNERAL HOME, INC.
WYUKA SIMPLICITY PLAN, INC.
S.E. ACQUISITION OF ALBUQUERQUE, NEW MEXICO, INC.
S.E. ACQUISITION OF SANTA FE, NEW MEXICO, INC.
S.E. ACQUISITION OF MUSKOGEE, OKLAHOMA, INC.
MT. JULIET FUNERAL HOME, INC.
MT. JULIET MEMORIAL GARDENS, INC.
NAVE FUNERAL HOME OF LEBANON, INC.
CEMETERY SERVICES, INC.
S.E. CEMETERY MANAGEMENT OF WISCONSIN, INC.
WISCONSIN MEMORIAL PARK COMPANY, INC.
TIME-LOCK INSURANCE AGENCY, INC.
SIMPLE TRIBUTE, INC.
SIMPLE TRIBUTE OF FLORIDA, INC.
SIMPLE TRIBUTE OF TENNESSEE, INC.
SIMPLE TRIBUTE OF MARYLAND, INC.
ST. BERNARD MEMORIAL GARDENS, INC.
ST. BERNARD MEMORIAL FUNERAL HOME, INC.
ST. VINCENT de PAUL CEMETERY ASSOCIATION
STEWART ENTERPRISES (EUROPE), INC.
STEWART RESOURCE CENTER, INC.
STEWART SERVICES, INC.
S.E. MID-ATLANTIC, INC.
GARNER FAMILY FUNERAL HOME, INC.
HAISTEN FUNERAL HOMES, INC.
HAISTEN FUNERAL HOME OF HENRY COUNTY, INC.
HIGGINS AND SON FUNERAL HOME, INC.
S.E. ACQUISITION OF PIKEVILLE, KENTUCKY, INC.
BOUNDS FUNERAL HOME, INC.
CEDAR HILL CEMETERY COMPANY, INC.
CREST LAWN MEMORIAL GARDENS, INC.
FORT LINCOLN CEMETERY, INC.


   27


FORT LINCOLN FUNERAL HOME, INC.
GALLERY GRANITE CORPORATION
HILLCREST MEMORIAL CEMETERY, INC.
HINES-RINALDI FUNERAL HOME, INC.
JOHN M. TAYLOR FUNERAL HOME, INC.
LOUDON PARK CEMETERY COMPANY
DRUID RIDGE CEMETERY COMPANY
LOUDON PARK FUNERAL HOME, INC.
NALLEY'S FUNERAL HOME, INC.
NATIONAL HARMONY MEMORIAL PARK, INC.
PARKLAWN, INC.
THE PARKWOOD CEMETERY COMPANY
PARKWOOD MANAGEMENT COMPANY
WILLIAM W. CHAMBERS, INC.
GORNY & GORNY PATERSON-CLIFTON MORTUARY
S.E. ACQUISITION OF CLIFTON, NEW JERSEY, INC.
C.J. APPLEGATE & SONS, INC.
GARDINIER COLLETTI MEMORIAL HOME, INC.
MATTLE GRAY NULTON FUNERAL HOME, INC.
MURPHY FUNERAL SERVICE, INC.
NULTON FUNERAL HOME, INC.
OTTO REDANZ FUNERAL HOME, INC.
CORNELL & DAGGETT, INC.
S.E. ACQUISITION OF FREDONIA, NEW YORK, INC.
BROWN MEMORIALS, INC.
CATAWBA MEMORIAL PARK, INC.
CENTRAL STONE WORKS, INCORPORATED
HAROLD C. DAVIS, INC.
EVANS FUNERAL HOME, INC.
EVERGREEN MEMORIAL GARDENS, INC.
GARRETT - HILLCREST, INC.
HIGHLAND MEMORY GARDENS OF FRANKLIN COUNTY, INC.
JOHNSON FUNERAL HOME, INC.
LANCASTER FUNERAL HOMES, INC.
MCLAURIN'S FUNERAL HOME, INC.
MILLER-LEE, INC.
PARKLAWN MEMORIAL GARDENS, INC.
POLLOCK WELLS FUNERAL SERVICE, INC.
STEPHENS SERVICES, INC.
THOMAS-YELVERTON COMPANY
1730 INVESTMENT CO., INC.
MEMORIAL PARKS, INCORPORATED
BENJAMIN FRANKLIN  P. M., INC.
GEORGE WASHINGTON MEMORIAL PARK, INC.
KIRK & NICE SUBURBAN CHAPEL, INC.
KIRK & NICE, INC.
S.E. ACQUISITION OF PENNSYLVANIA, INC.
S.E. CEMETERY MANAGEMENT OF PENNSYLVANIA, INC.


   28


SUNSET MEMORIAL PARK COMPANY
PET HAVEN, INC.
DUNBAR FUNERAL HOME, INC.
THE MACKEY MORTUARY, INC.
CANNON FUNERAL HOME, INC.
OCONEE MEMORIAL FUNERAL HOME, INC.
PINEVIEW, INC.
S.E. ACQUISITION OF NORTH AUGUSTA, SOUTH CAROLINA, INC.
S.E. ACQUISITION OF CHARLESTON, INC.
S.E. ACQUISITION OF LIBERTY, SOUTH CAROLINA, INC.
S.E. ACQUISITION OF SOUTH CAROLINA, INC.
MONTE VISTA BURIAL PARK, INC.
BLUE RIDGE MEMORIAL GARDENS, INC.
CLINCH VALLEY MEMORIAL CEMETERY, INC.
EVERLY COMMUNITY FUNERAL CARE, INC.
EVERLY FUNERAL HOMES, INCORPORATED
EVERLY PFP, INC.
SIMPLICITY PLANS OF ALABAMA, INC.
FAIRFAX FUNERAL HOME, INC.
JOSEPH W. TEAGUE FUNERAL HOME, INC.
RICHMOND MEMORIAL PARKS, INC.
WASHINGTON MEMORIAL CEMETERY, INCORPORATED
WISE CORPORATION
BARTLETT-BURDETTE-COX FUNERAL HOME, INC.
CALFEE FUNERAL SERVICE OF PINEVILLE, INC.
CASDORPH & CURRY FUNERAL HOME, INC.
DODD-PAYNE-HESS FUNERAL HOME, INC.
EVANS FUNERAL HOME, INC. (WEST VIRGINIA)
GRACELAND MAUSOLEUM, INC.
KIMES FUNERAL HOME, INC.
KLINGEL-CARPENTER MORTUARY, INC.
S.E. ACQUISITION OF MALDEN, WEST VIRGINIA, INC.
WILSON FUNERAL HOME, INC.
LAKEWOOD MEMORIAL PARK, INC.
MEMORIAL SERVICES OF COLUMBIA, INC.
MEMORIAL FUNERAL HOME, INC.
LINCOLN MEMORIAL MORTUARY, INC.
S.E. ACQUISITION OF NEVADA, INC.
DESERT MEMORIAL, INC.
NEPTUNE SOCIETY OF NEVADA, INC.
RENO MEMORIAL, INC.
S.E. ACQUISITION OF RENO, NEVADA, INC.
STRONG & BURNS FUNERAL HOME, INC.
MONTLAWN MEMORIAL PARK, INC.
ROCKY MOUNT MEMORIAL PARK, INC.
S.E. ACQUISITION OF OREGON, INC.
AMLING/SCHROEDER FUNERAL SERVICE, INC.


   29


CASCADE CREMATORY, INC.
CHAPEL OF THE ROSES, INC.
CHAPEL OF THE VALLEY FUNERAL HOME, INC.
DUTTON, INC.
J.P. FINLEY AND SON MORTUARY, INC.
SUNSET HILLS MEMORIAL PARK
GREENWOOD CEMETERY, INC.
NISWONGER & REYNOLDS, INC.
S.E. ACQUISITION OF MYRTLE CREEK, OREGON, INC.
S.E. ACQUISITION OF REEDSPORT, OREGON, INC.
TABOR'S DESERT HILLS MORTUARY, INC.
CAROLINA FINANCIAL CORPORATION OF PICKENS
HILL-CREST MEMORIAL PARK
OCONEE MEMORIAL GARDENS, INC.
DILLARD MEMORIAL, INC.
COLE & GARRETT FUNERAL HOMES, INC.
HIGHLAND MEMORIAL CEMETERY, INC.
HOLLY HILLS, INC.
KINGSPORT CEMETERY CORPORATION
THE NASHVILLE HISTORIC CEMETERY ASSOCIATION, INC.
PASADENA FUNERAL HOME, INC.
RESTLAND FUNERAL HOME, INC.
ANDERSON-CLAYTON BROS. FUNERAL HOMES, INC.
LITTLE BETHEL MEMORIAL PARK, INC.
ROSELAWN MEMORIAL GARDENS, INC.
BELEW FUNERAL HOME, INC.
BEXAR COUNTY MORTUARY SERVICES, INC.
BLUEBONNET HILLS MEMORIAL PARK, INC.
BLUEBONNET HILLS FUNERAL HOME, INC.
BRIGHT-HOLLAND FUNERAL HOME, INC.
CRESPO & SONS, INCORPORATED
DALTON & SON FUNERAL HOME, INC.
EMERALD HILLS FUNERAL CORPORATION
J. E. FOUST & SON FUNERAL DIRECTORS, INC.
GUARDIAN CREMATION SOCIETY, INC.
GUARDIAN FUNERAL HOME, INC.
HILLTOP MEMORIAL PARK
LAUREL LAND MEMORIAL PARK, INC.
LAUREL LAND FUNERAL HOME, INC.
SINGING HILLS FUNERAL HOME, INC.
LAUREL LAND OF FORT WORTH, INC.
LAUREL LAND FUNERAL HOME OF FORT WORTH, INC.
LYONS FUNERAL HOME, INC.
METROCREST FUNERAL HOME, INC.
RESTLAND OF DALLAS, INC.
ABBEY PLAN OF TEXAS, INC.


   30


HIGHLAND MEMORIAL GARDENS, INC.
SIMPLICITY PLAN OF TEXAS, INC.
SOUTHPARK FUNERAL HOME, INC.
SOUTH MEMORIAL PARK, INC.
S.E. ACQUISITION OF WASHINGTON, INC.
E.R. BUTTERWORTH & SONS
CREMATION SOCIETY NORTHWEST, INC.
EVERGREEN STAPLES FUNERAL CHAPEL, INC.
CUNNINGHAM MEMORIAL PARK, INC.
LEGACY ONE, INC.
FINDLAY CEMETERY, INC.
EASTLAWN MEMORIAL GARDENS, INCORPORATED
GRANDVIEW MEMORY GARDENS, INCORPORATED
GREENHILLS MEMORY GARDENS, INC.
HIGHLAND MEMORY GARDENS, INCORPORATED
HOLLY MEMORIAL GARDENS, INC. (VA)
MONTICELLO MEMORY GARDENS, INC.
SUNSET MEMORY GARDENS, INC.
BLUE RIDGE FUNERAL HOME, INC.
BLUE RIDGE MEMORIAL GARDENS, INC.
C.G.R., INC.
EASTERN CEMETERY ASSOCIATES, INC.
ETERNAL LIGHT FUNERALS, INC.
KANAWHA PLAZA PARTNERSHIP
LEGACY ONE SERVICE CORPORATION
LOI CHARLESTON, INC.
MOUNTAIN VIEW MEMORY GARDENS, INC.
NATIONAL EXCHANGE TRUST, LTD.
NATIONAL FUNERAL SERVICES, INCORPORATED
PLEASANT VIEW MEMORY GARDENS, INC.
WILLIAMS-BLUE RIDGE FUNERAL HOME, INC.


By:  /s/  KENNETH C. BUDDE
     ---------------------------------------
     Name:  Kenneth C. Budde
     Title:  Authorized Signatory




   31



The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.

BANC OF AMERICA SECURITIES LLC

DEUTSCHE BANC ALEX. BROWN INC.

CREDIT LYONNAIS (USA) INC.

SUNTRUST EQUITABLE SECURITIES CORPORATION

BY:  BANC OF AMERICA SECURITIES LLC


By:   /s/  JAMES G. ROSE, JR.
      ---------------------------------------
      Name: James G. Rose, Jr.
      Title: Managing Director



   32



   SCHEDULE A
   GUARANTORS
- --------------------------------------------------------------------------------




                                                                                                       JURISDICTION OF
       #                            COMPANY                                                              ORGANIZATION
                                                                                                 
        1      S.E. OF TUCSON, ARIZONA, INC.                                                               ARIZONA
        2      GRIFFIN-LEGGETT, INC.                                                                       ARKANSAS
        3                FOREST HILLS CEMETERY, INC.                                                       ARKANSAS
        4                GRIFFIN LEGGETT HEALEY & ROTH, INC.                                               ARKANSAS
        5                GRIFFIN-LEGGETT INSURANCE AGENCY, INC.                                            ARKANSAS
        6                GROSS FUNERAL HOME, INC.                                                          ARKANSAS
        7                REST HILLS MEMORIAL PARK, INC.                                                    ARKANSAS
        8      GRIFFIN LEGGETT - CONWAY, INC.                                                              ARKANSAS
        9      DILDAY BROTHERS HUNTINGTON VALLEY MORTUARY                                                 CALIFORNIA
       10      HOPSON MORTUARY, INC.                                                                      CALIFORNIA
       11      LASSILA FUNERAL CHAPELS, INC.                                                              CALIFORNIA
       12      SANTA BARBARA FUNERAL SERVICES, INC.                                                       CALIFORNIA
       13      S.E. ACQUISITION OF CALIFORNIA, INC.                                                       CALIFORNIA
       14                ALL SOULS MORTUARY, INC.                                                         CALIFORNIA
       15                ASHES TO ASHES, INC.                                                             CALIFORNIA
       16                ASSUMPTION MORTUARY, INC.                                                        CALIFORNIA
       17                BARSTOW FUNERAL HOMES, INC.                                                      CALIFORNIA
       18                BUCHHEIM FAMILY, INC.                                                            CALIFORNIA
       19                CALVARY MORTUARY OF LOS ANGELES, CALIFORNIA, INC.                                CALIFORNIA
       20                CATHOLIC MORTUARY SERVICES, INC.                                                 CALIFORNIA
       21                DeYOUNG MEMORIAL CHAPEL, INC.                                                    CALIFORNIA
       22                HOLY CROSS MORTUARY OF CULVER CITY, CALIFORNIA, INC.                             CALIFORNIA
       23                HOLY CROSS MORTUARY OF POMONA, CALIFORNIA, INC.                                  CALIFORNIA
       24                LOMBARD & CO.                                                                    CALIFORNIA
       25                N.D. DAVIS & ASSOCIATES, INC.                                                    CALIFORNIA
       26                QUEEN OF HEAVEN MORTUARY, INC.                                                   CALIFORNIA
       27                RESURRECTION MORTUARY, INC.                                                      CALIFORNIA
       28                RICHARD PIERCE FUNERAL SERVICE                                                   CALIFORNIA
       29                RIVER CITIES FUNERAL CHAPEL, INC.                                                CALIFORNIA
       30                S.E. ACQUISITION OF DELANO, CALIFORNIA, INC.                                     CALIFORNIA
       31                S.E. ACQUISITION OF GLENDALE, CALIFORNIA, INC.                                   CALIFORNIA
       32                S.E. ACQUISITION OF LANCASTER, CALIFORNIA, INC.                                  CALIFORNIA
       33                S.E. ACQUISITION OF LOS OSOS MORTUARY AND MEMORIAL PARK, INC.                    CALIFORNIA
       34                S.E. ACQUISITION OF OAKHURST, CALIFORNIA, INC.                                   CALIFORNIA
       35                S.E. ACQUISITION OF OROVILLE, CALIFORNIA, INC.                                   CALIFORNIA
       36                S.E. ACQUISITION OF SAN DIEGO, CALIFORNIA, INC.                                  CALIFORNIA
       37                SAN FERNANDO MISSION MORTUARY, INC.                                              CALIFORNIA
       38                SANTA CLARA MORTUARY, INC.                                                       CALIFORNIA
       39                SCOVERN MORTUARY, A CALIFORNIA CORPORATION                                       CALIFORNIA
       40                SDCA HOLDINGS, INC.                                                              CALIFORNIA
       41                          SAN DIEGO CEMETERY ASSOCIATION                                         CALIFORNIA
       42                SIMPLICITY PLAN OF CALIFORNIA, INC.                                              CALIFORNIA



   33




                                                                                                       JURISDICTION OF
       #                            COMPANY                                                              ORGANIZATION
                                                                                                 
       43                STEWART PRE-NEED SERVICES, INC.                                                  CALIFORNIA
       44                STRICKLIN/SNIVELY MORTUARY                                                       CALIFORNIA
       45                          CATALINA CHANNEL CREMATION SOCIETY                                     CALIFORNIA
       46                WALLACE E. WHITE & HOWARD J. CALLANAN, INC.                                      CALIFORNIA
       47                WOODSIDE CHAPEL OF CRIPPEN & FLYNN                                               CALIFORNIA
       48                SENTINEL CREMATION SOCIETIES, INC.                                                DELAWARE
       49      S.E. ACQUISITION OF MURIETTA, CALIFORNIA, INC.                                             CALIFORNIA
       50      S.E. ACQUISITION OF SANTA MARIA, CALIFORNIA, INC.                                          CALIFORNIA
       51      VICTOR V. DESROSIER, INC.                                                                  CALIFORNIA
       52      CEMETERY MANAGEMENT, INC.                                                                   FLORIDA
       53                ARLINGTON MEMORIAL PARK CEMETERY AND FUNERAL HOME, INC.                           FLORIDA
       54                BALDWIN-FAIRCHILD FUNERAL HOMES, INC.                                             FLORIDA
       55                          ALL FAITHS MEMORIAL PARK, INC.                                          FLORIDA
       56                          ORLANDO FUNERAL HOME, INCORPORATED                                      FLORIDA
       57                           THE SIMPLICITY PLAN, INC.                                              FLORIDA
       58                BAY AREA CREMATORY, INC.                                                          FLORIDA
       59                BRUCE OCALA FUNERAL HOME, INC.                                                    FLORIDA
       60                BETH DAVID FUNERAL CHAPEL TAMPA, INC.                                             FLORIDA
       61                BETH DAVID MEMORIAL CHAPEL, INC.                                                  FLORIDA
       62                CHAPEL HILL CEMETERY, INC.                                                        FLORIDA
       63                          GLEN HAVEN MEMORIAL PARK, INC.                                          FLORIDA
       64                                    HIGHLAND MEMORY GARDENS, INC.                                 FLORIDA
       65                          SEMORAN FUNERAL HOME, INC.                                              FLORIDA
       66                FLORIDA HILLS MEMORIAL GARDENS, INC.                                              FLORIDA
       67                GARDEN OF MEMORIES, INC.                                                          FLORIDA
       68                          A.P. BOZA FUNERAL HOME, INC.                                            FLORIDA
       69                          CURRY & SON FUNERAL HOME, INC.                                          FLORIDA
       70                          WOODLAWN MEMORY GARDENS, INC. (ST. PETE)                                FLORIDA
       71                GOOD SHEPHERD MEMORIAL GARDENS, INC.                                              FLORIDA
       72                DAVID C. GROSS FUNERAL HOME, INC.                                                 FLORIDA
       73                HUBBELL FUNERAL HOME AND CREMATORY, INC.                                          FLORIDA
       74                KENT R. PALMER, INC.                                                              FLORIDA
       75                KICLITER FUNERAL HOME, INC.                                                       FLORIDA
       76                MADCEM OF FLORIDA, INC.                                                           FLORIDA
       77                MEMORIAL PARK CEMETERY, INC.                                                      FLORIDA
       78                OAKLAWN PARK CEMETERY AND FUNERAL HOME, INC.                                      FLORIDA
       79                ROBERTS FUNERAL HOME, INC.                                                        FLORIDA
       80                ROYAL PALM MEMORIAL GARDENS, INC.                                                 FLORIDA
       81                SYLVAN ABBEY MEMORIAL PARK, INC.                                                  FLORIDA
       82                TRINITY MEMORIAL GARDENS OF LAKELAND, INC.                                        FLORIDA
       83                TURNER CREMATORY, INC.                                                            FLORIDA
       84                TURNER FUNERAL HOMES, INC.                                                        FLORIDA
       85                WALSH & WOOD FUNERAL HOME, INC.                                                   FLORIDA



   34




                                                                                                       JURISDICTION OF
       #                            COMPANY                                                              ORGANIZATION
                                                                                                 
       86                WOODLAWN PARK CEMETERY COMPANY                                                    FLORIDA
       87                          MEMORIAL SUNSET PARK, INC.                                              FLORIDA
       88                          NATIONAL MONUMENT CO., INC.                                             FLORIDA
       89                          SOUTH DADE-PALMS MEMORIAL PARK, INC.                                    FLORIDA
       90                CHEATHAM HILL MEMORIAL PARK, INC.                                                 GEORGIA
       91                EMPRESAS STEWART - CEMENTERIOS, INC.                                             LOUISIANA
       92                EMPRESAS STEWART - FUNERARIAS, INC.                                              LOUISIANA
       93      EASTLAWN CORPORATION                                                                        GEORGIA
       94      HOLLY HILL MEMORIAL PARK, INC.                                                              GEORGIA
       95      ROSE HAVEN FUNERAL HOME & CEMETERY, INC.                                                    GEORGIA
       96      ACME MAUSOLEUM CORPORATION                                                                 LOUISIANA
       97      INTERNATIONAL STONE & ERECTORS, INC.                                                       LOUISIANA
       98      LAKE LAWN METAIRIE FUNERAL HOME, INC.                                                      LOUISIANA
       99      LAKE LAWN METAIRIE FUNERAL HOME (JOINT VENTURE)                                            LOUISIANA
      100      LAKE LAWN PARK, INC.                                                                       LOUISIANA
      101      METAIRIE CEMETERY ASSOCIATION                                                              LOUISIANA
      102                PINE CREST CEMETERY, INC.                                                         ALABAMA
      103                ALL FAITHS FUNERAL HOME, INC.                                                    LOUISIANA
      104      MOUNT OLIVET CEMETERY, INC.                                                                LOUISIANA
      105      S.E. AUSTRALIA, INC.                                                                       LOUISIANA
      106      S.E. SOUTH-CENTRAL, INC.                                                                   LOUISIANA
      107                ELLISON FUNERAL HOME, INC.                                                        ALABAMA
      108                KILGORE-GREEN FUNERAL HOME, INC.                                                  ALABAMA
      109                LATHAN FUNERAL HOME, INC.                                                         ALABAMA
      110                PINE CREST FUNERAL HOME, INC.                                                     ALABAMA
      111                          FAITH MEMORIAL PARK & MAUSOLEUM COMPANY, INC.                           ALABAMA
      112                          VALHALLA MEMORY GARDENS AND FUNERAL HOME, INC.                          ALABAMA
      113                ROCKCO AND SON FUNERAL HOME, INC.                                                 ALABAMA
      114                ROCKCO'S FUNERAL HOMES, INC.                                                      ALABAMA
      115                S.E. ACQUISITION OF LITHONIA, GEORGIA, INC.                                       GEORGIA
      116                ANDREW J. McGANN & SON FUNERAL HOME, INC.                                         ILLINOIS
      117                S.E. ACQUISITION OF BLUE ISLAND, ILLINOIS, INC.                                   ILLINOIS
      118                S.E. ACQUISITION OF OAK LAWN AND ORLAND PARK, ILLINOIS, INC.                      ILLINOIS
      119                S.E. CEMETERY MANAGEMENT OF ILLINOIS, INC.                                        ILLINOIS
      120                THEIS-GORSKI FUNERAL HOME, INC.                                                   ILLINOIS
      121                KNUTSON FUNERAL HOMES, INC.                                                         IOWA
      122                PAULEY FUNERAL HOME, INC.                                                           IOWA
      123                RUNYAN MANGOLD, INC.                                                               KANSAS
      124                PROFESSIONAL FUNERAL SERVICES, INC.                                              LOUISIANA
      125                D.W. NEWCOMER'S SONS, INC.                                                        MISSOURI
      126                DWN PROPERTIES, INC.                                                              MISSOURI
      127                          FUNERAL SECURITY PLANS, INC.                                            MISSOURI
      128                S.E. ACQUISITION OF BOONVILLE, MISSOURI, INC.                                     MISSOURI



   35




                                                                                                       JURISDICTION OF
       #                            COMPANY                                                              ORGANIZATION
                                                                                                 
      129                WYUKA FUNERAL HOME, INC.                                                          NEBRASKA
      130                WYUKA SIMPLICITY PLAN, INC.                                                       NEBRASKA
      131                S.E. ACQUISITION OF ALBUQUERQUE, NEW MEXICO, INC.                                NEW MEXICO
      132                S.E. ACQUISITION OF SANTA FE, NEW MEXICO, INC.                                   NEW MEXICO
      133                S.E. ACQUISITION OF MUSKOGEE, OKLAHOMA, INC.                                      OKLAHOMA
      134                MT. JULIET FUNERAL HOME, INC.                                                    TENNESSEE
      135                MT. JULIET MEMORIAL GARDENS, INC.                                                TENNESSEE
      136                NAVE FUNERAL HOME OF LEBANON, INC.                                               TENNESSEE
      137                CEMETERY SERVICES, INC.                                                          WISCONSIN
      138                S.E. CEMETERY MANAGEMENT OF WISCONSIN, INC.                                      WISCONSIN
      139                WISCONSIN MEMORIAL PARK COMPANY, INC.                                            WISCONSIN
      140                          TIME-LOCK INSURANCE AGENCY, INC.                                       WISCONSIN
      141      SIMPLE TRIBUTE, INC.                                                                       LOUISIANA
      142                SIMPLE TRIBUTE OF FLORIDA, INC.                                                   FLORIDA
      143                SIMPLE TRIBUTE OF TENNESSEE, INC.                                                TENNESSEE
      144                SIMPLE TRIBUTE OF MARYLAND, INC.                                                  MARYLAND
      145      ST. BERNARD MEMORIAL GARDENS, INC.                                                         LOUISIANA
      146                ST. BERNARD MEMORIAL FUNERAL HOME, INC.                                          LOUISIANA
      147      ST. VINCENT de PAUL CEMETERY ASSOCIATION                                                   LOUISIANA
      148      STEWART ENTERPRISES (EUROPE), INC.                                                         LOUISIANA
      149      STEWART RESOURCE CENTER, INC.                                                              LOUISIANA
      150      STEWART SERVICES, INC.                                                                     LOUISIANA
      151      S.E. MID-ATLANTIC, INC.                                                                     MARYLAND
      152                GARNER FAMILY FUNERAL HOME, INC.                                                  GEORGIA
      153                HAISTEN FUNERAL HOMES, INC.                                                       GEORGIA
      154                HAISTEN FUNERAL HOME OF HENRY COUNTY, INC.                                        GEORGIA
      155                HIGGINS AND SON FUNERAL HOME, INC.                                                GEORGIA
      156                S.E. ACQUISITION OF PIKEVILLE, KENTUCKY, INC.                                     KENTUCKY
      157                BOUNDS FUNERAL HOME, INC.                                                         MARYLAND
      158                CEDAR HILL CEMETERY COMPANY, INC.                                                 MARYLAND
      159                CREST LAWN MEMORIAL GARDENS, INC.                                                 MARYLAND
      160                FORT LINCOLN CEMETERY, INC.                                                       MARYLAND
      161                FORT LINCOLN FUNERAL HOME, INC.                                                   MARYLAND
      162                GALLERY GRANITE CORPORATION                                                       MARYLAND
      163                HILLCREST MEMORIAL CEMETERY, INC.                                                 MARYLAND
      164                HINES-RINALDI FUNERAL HOME, INC.                                                  MARYLAND
      165                JOHN M. TAYLOR FUNERAL HOME, INC.                                                 MARYLAND
      166                LOUDON PARK CEMETERY COMPANY                                                      MARYLAND
      167                          DRUID RIDGE CEMETERY COMPANY                                            MARYLAND
      168                LOUDON PARK FUNERAL HOME, INC.                                                    MARYLAND
      169                NALLEY'S FUNERAL HOME, INC.                                                       MARYLAND
      170                NATIONAL HARMONY MEMORIAL PARK, INC.                                              MARYLAND
      171                PARKLAWN, INC.                                                                    MARYLAND



   36




                                                                                                       JURISDICTION OF
       #                            COMPANY                                                              ORGANIZATION
                                                                                                 
      172                THE PARKWOOD CEMETERY COMPANY                                                     MARYLAND
      173                          PARKWOOD MANAGEMENT COMPANY                                             MARYLAND
      174                WILLIAM W. CHAMBERS, INC.                                                         MARYLAND
      175                GORNY & GORNY PATERSON-CLIFTON MORTUARY                                          NEW JERSEY
      176                S.E. ACQUISITION OF CLIFTON, NEW JERSEY, INC.                                    NEW JERSEY
      177                C.J. APPLEGATE & SONS, INC.                                                       NEW YORK
      178                GARDINIER COLLETTI MEMORIAL HOME, INC.                                            NEW YORK
      179                MATTLE GRAY NULTON FUNERAL HOME, INC.                                             NEW YORK
      180                MURPHY FUNERAL SERVICE, INC.                                                      NEW YORK
      181                NULTON FUNERAL HOME, INC.                                                         NEW YORK
      182                OTTO REDANZ FUNERAL HOME, INC.                                                    NEW YORK
      183                          CORNELL & DAGGETT, INC.                                                 NEW YORK
      184                S.E. ACQUISITION OF FREDONIA, NEW YORK, INC.                                      NEW YORK
      185                BROWN MEMORIALS, INC.                                                          NORTH CAROLINA
      186                CATAWBA MEMORIAL PARK, INC.                                                    NORTH CAROLINA
      187                CENTRAL STONE WORKS, INCORPORATED                                              NORTH CAROLINA
      188                HAROLD C. DAVIS, INC.                                                          NORTH CAROLINA
      189                EVANS FUNERAL HOME, INC.                                                       NORTH CAROLINA
      190                EVERGREEN MEMORIAL GARDENS, INC.                                               NORTH CAROLINA
      191                GARRETT - HILLCREST, INC.                                                      NORTH CAROLINA
      192                HIGHLAND MEMORY GARDENS OF FRANKLIN COUNTY, INC.                               NORTH CAROLINA
      193                JOHNSON FUNERAL HOME, INC.                                                     NORTH CAROLINA
      194                LANCASTER FUNERAL HOMES, INC.                                                  NORTH CAROLINA
      195                MCLAURIN'S FUNERAL HOME, INC.                                                  NORTH CAROLINA
      196                MILLER-LEE, INC.                                                               NORTH CAROLINA
      197                PARKLAWN MEMORIAL GARDENS, INC.                                                NORTH CAROLINA
      198                POLLOCK WELLS FUNERAL SERVICE, INC.                                            NORTH CAROLINA
      199                STEPHENS SERVICES, INC.                                                        NORTH CAROLINA
      200                THOMAS-YELVERTON COMPANY                                                       NORTH CAROLINA
      201                1730 INVESTMENT CO., INC.                                                      NORTH CAROLINA
      202                          MEMORIAL PARKS, INCORPORATED                                         NORTH CAROLINA
      203                BENJAMIN FRANKLIN  P. M., INC.                                                  PENNSYLVANIA
      204                GEORGE WASHINGTON MEMORIAL PARK, INC.                                           PENNSYLVANIA
      205                KIRK & NICE SUBURBAN CHAPEL, INC.                                               PENNSYLVANIA
      206                KIRK & NICE, INC.                                                               PENNSYLVANIA
      207                S.E. ACQUISITION OF PENNSYLVANIA, INC.                                          PENNSYLVANIA
      208                S.E. CEMETERY MANAGEMENT OF PENNSYLVANIA, INC.                                  PENNSYLVANIA
      209                SUNSET MEMORIAL PARK COMPANY                                                    PENNSYLVANIA
      210                          PET HAVEN, INC.                                                       PENNSYLVANIA
      211                DUNBAR FUNERAL HOME, INC.                                                      SOUTH CAROLINA
      212                THE MACKEY MORTUARY, INC.                                                      SOUTH CAROLINA
      213                          CANNON FUNERAL HOME, INC.                                            SOUTH CAROLINA
      214                OCONEE MEMORIAL FUNERAL HOME, INC.                                             SOUTH CAROLINA



   37




                                                                                                       JURISDICTION OF
       #                            COMPANY                                                              ORGANIZATION
                                                                                                 
      215                PINEVIEW, INC.                                                                 SOUTH CAROLINA
      216                S.E. ACQUISITION OF NORTH AUGUSTA, SOUTH CAROLINA, INC.                        SOUTH CAROLINA
      217                S.E. ACQUISITION OF CHARLESTON, INC.                                           SOUTH CAROLINA
      218                S.E. ACQUISITION OF LIBERTY, SOUTH CAROLINA, INC.                              SOUTH CAROLINA
      219                S.E. ACQUISITION OF SOUTH CAROLINA, INC.                                       SOUTH CAROLINA
      220                MONTE VISTA BURIAL PARK, INC.                                                    TENNESSEE
      221                BLUE RIDGE MEMORIAL GARDENS, INC.                                                 VIRGINIA
      222                CLINCH VALLEY MEMORIAL CEMETERY, INC.                                             VIRGINIA
      223                EVERLY COMMUNITY FUNERAL CARE, INC.                                               VIRGINIA
      224                EVERLY FUNERAL HOMES, INCORPORATED                                                VIRGINIA
      225                EVERLY PFP, INC.                                                                  VIRGINIA
      226                          SIMPLICITY PLANS OF ALABAMA, INC.                                       ALABAMA
      227                FAIRFAX FUNERAL HOME, INC.                                                        VIRGINIA
      228                JOSEPH W. TEAGUE FUNERAL HOME, INC.                                               VIRGINIA
      229                RICHMOND MEMORIAL PARKS, INC.                                                     VIRGINIA
      230                WASHINGTON MEMORIAL CEMETERY, INCORPORATED                                        VIRGINIA
      231                WISE CORPORATION                                                                  VIRGINIA
      232                BARTLETT-BURDETTE-COX FUNERAL HOME, INC.                                       WEST VIRGINIA
      233                CALFEE FUNERAL SERVICE OF PINEVILLE, INC.                                      WEST VIRGINIA
      234                CASDORPH & CURRY FUNERAL HOME, INC.                                            WEST VIRGINIA
      235                DODD-PAYNE-HESS FUNERAL HOME, INC.                                             WEST VIRGINIA
      236                EVANS FUNERAL HOME, INC. (WEST VIRGINIA)                                       WEST VIRGINIA
      237                GRACELAND MAUSOLEUM, INC.                                                      WEST VIRGINIA
      238                KIMES FUNERAL HOME, INC.                                                       WEST VIRGINIA
      239                KLINGEL-CARPENTER MORTUARY, INC.                                               WEST VIRGINIA
      240                S.E. ACQUISITION OF MALDEN, WEST VIRGINIA, INC.                                WEST VIRGINIA
      241                WILSON FUNERAL HOME, INC.                                                      WEST VIRGINIA
      242      LAKEWOOD MEMORIAL PARK, INC.                                                              MISSISSIPPI
      243      MEMORIAL SERVICES OF COLUMBIA, INC.                                                         MISSOURI
      244                MEMORIAL FUNERAL HOME, INC.                                                       MISSOURI
      245                LINCOLN MEMORIAL MORTUARY, INC.                                                   NEBRASKA
      246      S.E. ACQUISITION OF NEVADA, INC.                                                             NEVADA
      247                DESERT MEMORIAL, INC.                                                              NEVADA
      248                NEPTUNE SOCIETY OF NEVADA, INC.                                                    NEVADA
      249                RENO MEMORIAL, INC.                                                                NEVADA
      250                S.E. ACQUISITION OF RENO, NEVADA, INC.                                             NEVADA
      251      STRONG & BURNS FUNERAL HOME, INC.                                                           NEW YORK
      252      MONTLAWN MEMORIAL PARK, INC.                                                             NORTH CAROLINA
      253      ROCKY MOUNT MEMORIAL PARK, INC.                                                          NORTH CAROLINA
      254      S.E. ACQUISITION OF OREGON, INC.                                                             OREGON
      255                AMLING/SCHROEDER FUNERAL SERVICE, INC.                                             OREGON
      256                CASCADE CREMATORY, INC.                                                            OREGON
      257                CHAPEL OF THE ROSES, INC.                                                          OREGON



   38




                                                                                                       JURISDICTION OF
       #                            COMPANY                                                              ORGANIZATION
                                                                                                 
      258                CHAPEL OF THE VALLEY FUNERAL HOME, INC.                                            OREGON
      259                DUTTON, INC.                                                                       OREGON
      260                J.P. FINLEY AND SON MORTUARY, INC.                                                 OREGON
      261                          SUNSET HILLS MEMORIAL PARK                                               OREGON
      262                GREENWOOD CEMETERY, INC.                                                           OREGON
      263                NISWONGER & REYNOLDS, INC.                                                         OREGON
      264                S.E. ACQUISITION OF MYRTLE CREEK, OREGON, INC.                                     OREGON
      265                S.E. ACQUISITION OF REEDSPORT, OREGON, INC.                                        OREGON
      266                TABOR'S DESERT HILLS MORTUARY, INC.                                                OREGON
      267      CAROLINA FINANCIAL CORPORATION OF PICKENS                                                SOUTH CAROLINA
      268                HILL-CREST MEMORIAL PARK                                                       SOUTH CAROLINA
      269                OCONEE MEMORIAL GARDENS, INC.                                                  SOUTH CAROLINA
      270      DILLARD MEMORIAL, INC.                                                                   SOUTH CAROLINA
      271      COLE & GARRETT FUNERAL HOMES, INC.                                                         TENNESSEE
      272      HIGHLAND MEMORIAL CEMETERY, INC.                                                           TENNESSEE
      273      HOLLY HILLS, INC.                                                                          TENNESSEE
      274      KINGSPORT CEMETERY CORPORATION                                                             TENNESSEE
      275      THE NASHVILLE HISTORIC CEMETERY ASSOCIATION, INC.                                          TENNESSEE
      276      PASADENA FUNERAL HOME, INC.                                                                  TEXAS
      277      RESTLAND FUNERAL HOME, INC.                                                                  TEXAS
      278                ANDERSON-CLAYTON BROS. FUNERAL HOMES, INC.                                         TEXAS
      279                          LITTLE BETHEL MEMORIAL PARK, INC.                                        TEXAS
      280                          ROSELAWN MEMORIAL GARDENS, INC.                                          TEXAS
      281                BELEW FUNERAL HOME, INC.                                                           TEXAS
      282                BEXAR COUNTY MORTUARY SERVICES, INC.                                               TEXAS
      283                BLUEBONNET HILLS MEMORIAL PARK, INC.                                               TEXAS
      284                         BLUEBONNET HILLS FUNERAL HOME, INC.                                       TEXAS
      285                BRIGHT-HOLLAND FUNERAL HOME, INC.                                                  TEXAS
      286                CRESPO & SONS, INCORPORATED                                                        TEXAS
      287                DALTON & SON FUNERAL HOME, INC.                                                    TEXAS
      288                EMERALD HILLS FUNERAL CORPORATION                                                  TEXAS
      289                J. E. FOUST & SON FUNERAL DIRECTORS, INC.                                          TEXAS
      290                GUARDIAN CREMATION SOCIETY, INC.                                                   TEXAS
      291                GUARDIAN FUNERAL HOME, INC.                                                        TEXAS
      292                HILLTOP MEMORIAL PARK                                                              TEXAS
      293                LAUREL LAND MEMORIAL PARK, INC.                                                    TEXAS
      294                          LAUREL LAND FUNERAL HOME, INC.                                           TEXAS
      295                         SINGING HILLS FUNERAL HOME, INC.                                          TEXAS
      296                LAUREL LAND OF FORT WORTH, INC.                                                    TEXAS
      297                          LAUREL LAND FUNERAL HOME OF FORT WORTH, INC.                             TEXAS
      298                LYONS FUNERAL HOME, INC.                                                           TEXAS
      299                METROCREST FUNERAL HOME, INC.                                                      TEXAS



   39




                                                                                                       JURISDICTION OF
       #                            COMPANY                                                              ORGANIZATION
                                                                                                 
      300                RESTLAND OF DALLAS, INC.                                                           TEXAS
      301                          ABBEY PLAN OF TEXAS, INC.                                                TEXAS
      302                          HIGHLAND MEMORIAL GARDENS, INC.                                          TEXAS
      303                SIMPLICITY PLAN OF TEXAS, INC.                                                     TEXAS
      304                SOUTHPARK FUNERAL HOME, INC.                                                       TEXAS
      305                          SOUTH MEMORIAL PARK, INC.                                                TEXAS
      306      S.E. ACQUISITION OF WASHINGTON, INC.                                                       WASHINGTON
      307                E.R. BUTTERWORTH & SONS                                                          WASHINGTON
      308                CREMATION SOCIETY NORTHWEST, INC.                                                WASHINGTON
      309                EVERGREEN STAPLES FUNERAL CHAPEL, INC.                                           WASHINGTON
      310      CUNNINGHAM MEMORIAL PARK, INC.                                                           WEST VIRGINIA
      311      LEGACY ONE, INC.                                                                         WEST VIRGINIA
      312                FINDLAY CEMETERY, INC.                                                              OHIO
      313                EASTLAWN MEMORIAL GARDENS, INCORPORATED                                           VIRGINIA
      314                GRANDVIEW MEMORY GARDENS, INCORPORATED                                            VIRGINIA
      315                GREENHILLS MEMORY GARDENS, INC.                                                   VIRGINIA
      316                HIGHLAND MEMORY GARDENS, INCORPORATED                                             VIRGINIA
      317                HOLLY MEMORIAL GARDENS, INC. (VA)                                                 VIRGINIA
      318                MONTICELLO MEMORY GARDENS, INC.                                                   VIRGINIA
      319                SUNSET MEMORY GARDENS, INC.                                                       VIRGINIA
      320                BLUE RIDGE FUNERAL HOME, INC.                                                  WEST VIRGINIA
      321                BLUE RIDGE MEMORIAL GARDENS, INC.                                              WEST VIRGINIA
      322                C.G.R., INC.                                                                   WEST VIRGINIA
      323                EASTERN CEMETERY ASSOCIATES, INC.                                              WEST VIRGINIA
      324                ETERNAL LIGHT FUNERALS, INC.                                                   WEST VIRGINIA
      325                KANAWHA PLAZA PARTNERSHIP                                                      WEST VIRGINIA
      326                LEGACY ONE SERVICE CORPORATION                                                 WEST VIRGINIA
      327                LOI CHARLESTON, INC.                                                           WEST VIRGINIA
      328                MOUNTAIN VIEW MEMORY GARDENS, INC.                                             WEST VIRGINIA
      329                NATIONAL EXCHANGE TRUST, LTD.                                                  WEST VIRGINIA
      330                NATIONAL FUNERAL SERVICES, INCORPORATED                                        WEST VIRGINIA
      331                PLEASANT VIEW MEMORY GARDENS, INC.                                             WEST VIRGINIA
      332                WILLIAMS-BLUE RIDGE FUNERAL HOME, INC.                                         WEST VIRGINIA

EX-4.4

   1
                                                                    EXHIBIT 4.4

                                  FORM OF NOTE

                                 [Face of Note]

                                                                CUSIP 860370AD7


No.                                                            **            **
    -------                                                      ------------


                            STEWART ENTERPRISES, INC.


                   10 3/4% Senior Subordinated Notes due 2008

Issue Date:___________________, 2001


         Stewart Enterprises, Inc., a Louisiana Corporation (the "Company",
which term includes any successor under this Indenture hereinafter referred to),
for value received, promises to pay to CEDE & CO., or its registered assigns,
the principal sum of _________________ on July 1, 2008.

Interest Payment Dates: January 1 and July 1, commencing January 1, 2002.

Record Dates: December 15 and June 15.

         Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.

                                STEWART ENTERPRISES, INC.


                                By:
                                   -------------------------------------------
                                   Name:  William E. Rowe
                                   Title: President and Chief Executive Officer

                                By:
                                   -------------------------------------------
                                   Name:  Kenneth C. Budde
                                   Title: Chief Financial Officer
Dated:

FIRSTAR BANK, N.A., as Trustee

By:
   ----------------------------------
         Authorized Signatory

   2
                                                                     EXHIBIT 4.4


         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.12 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.



                                       2
   3

                             [Reverse Side of Note]


                            STEWART ENTERPRISES, INC.

                   10 3/4% Senior Subordinated Notes due 2008

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

         1. Interest. The Company promises to pay interest on the principal
amount of this Note at 10 3/4% per annum from the date hereof until maturity and
shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company shall pay interest
and Liquidated Damages, if any, semi-annually in arrears on January 1 and July 1
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes shall
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance; provided that if
there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided further that the first Interest
Payment Date shall be January 1, 2002. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.

         2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the December 15 or
June 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.13 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose in The City of New York maintained for such purposes, or, at
the option of the Company, payment of interest and Liquidated Damages, if any,
may be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds shall be required with respect to principal of and interest,
premium and Liquidated Damages, if any, on, all Global Notes and all other Notes
the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.

         3. Paying Agent and Registrar. Initially, Firstar Bank, N.A., the
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any

   4

Paying Agent or Registrar without prior notice to any Holder. The Company or any
of its Subsidiaries may act in any such capacity.

         4. Indenture. The Company issued the Notes under an Indenture dated as
of June 29, 2001 ("Indenture") among the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended. The Notes are subject to all such terms, and Holders are referred to
the Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling. This Note is an
obligation of the Company limited to $_________________ in aggregate principal
amount. The Indenture pursuant to which this Note is issued provides that an
unlimited aggregate principal amount of Additional Notes may be issued
thereunder.

         5. Optional Redemption. (a) Except as set forth in paragraphs 5(b) and
8 below, the Company shall not have the option to redeem the Notes prior to July
1, 2005. On or after July 1, 2005, the Company shall have the option to redeem
the Notes, in whole or in part, upon not less than 30 nor more than 60 days'
prior notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on July 1 of the years indicated below:



         Year                                                  Percentage
         ----                                                  ----------
                                                            
         2005..............................................     105.3750%
         2006..............................................     102.6875%
         2007 and thereafter...............................     100.0000%


         (b) Notwithstanding the foregoing, at any time prior to July 1, 2004,
the Company may redeem up to 35% of the aggregate principal amount of Notes
issued under the Indenture at a redemption price of 110.75% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the redemption date, with the net cash proceeds of one or more
Qualified Equity Offerings of the Company; provided that at least 65% of the
aggregate principal amount of Notes issued under the Indenture remains
outstanding immediately after the occurrence of such redemption (excluding Notes
held by the Company and its Subsidiaries); and such redemption shall occur
within 45 days of the date of the closing of such Qualified Equity Offering.

         6. Mandatory Redemption. The Company shall not be required to make
mandatory redemption payments or sinking fund payments with respect to the
Notes.

         7. Selection and Notice of Redemption. If less than all of the Notes
are to be redeemed at any time, the Trustee will select Notes for redemption as
follows: (i) if the Notes are listed, in compliance with the requirements of the
principal national securities exchange on which the Notes are listed, or (ii) if
the Notes are not so listed, on a pro rata basis, by lot or by any method as the
Trustee deems fair and appropriate. No Notes of $1,000 or less may be redeemed
in part. Notices of redemption shall be mailed by first class mail at least 30
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. Notices of redemption may not be
conditional. If any Note is to be redeemed

   5

in part only, the notice of redemption that relates to that Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion of the original Note will be issued in
the name of the Holder thereof upon cancellation of the original Note. Notes
called for redemption become due on the date fixed for redemption. On and after
the redemption date, interest and liquidated damages, if any, cease to accrue on
Notes or portions of them called for redemption.

         8. Repurchase at Option of Holder. (a) Upon the occurrence of a Change
of Control, each Holder of Notes shall have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to 101% of the aggregate
principal amount repurchased plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes on the date
specified in such notice which shall be no earlier than 30 days and no later
than 60 days from the date such notice is mailed, pursuant to the procedures
required by the Indenture and described in such notice.

         (b) When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company will make an offer to purchase an ("Asset Sale Offer"), pursuant to
Section 4.10 of the Indenture, to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in the Indenture with respect to offers to purchase with the
proceeds of sales of assets to purchase the maximum principal amount of Notes
and such other pari passu Indebtedness that may be purchased out of the Excess
Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of
principal amount plus accrued and unpaid interest and Liquidated Damages, if
any, to the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for any purpose not otherwise prohibited by the Indenture.
If the aggregate principal amount of Notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis based on the principal amount
of Notes and such other pari passu Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

         9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any Note selected for redemption. Also, the Company is not required to transfer
or exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.

         10. Persons Deemed Owners. The registered Holder of a Note will be
treated as its owner for all purposes.


   6

         11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Notes then
outstanding and Additional Notes, if any, voting as a single class (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, the Notes), and any existing Default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal of the Notes then
outstanding and Additional Notes, if any, voting as a single class (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, the Notes). Without the consent of any
Holder of Notes, the Indenture or the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of Definitive Notes, to provide for the assumption of
the Company's or any Guarantor's obligations to Holders of the Notes in case of
a merger or consolidation or sale of all or substantially all of the assets of
the Company or any Guarantor, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.

         12. Defaults and Remedies. In the case of an Event of Default, as
defined in the Indenture arising from certain events of bankruptcy or insolvency
with respect to the Company or any of its Restricted Subsidiaries, all
outstanding Notes will become due and payable immediately without further action
or notice. If any other Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Holders of the
Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest or Liquidated Damages, if any)
if it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may, on behalf of the Holders of all of the Notes, waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest or
Liquidated Damages, if any, on, or the principal of, the Notes.

         In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by the Company or on their behalf with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs during any time that
the Notes are outstanding, by reason of any willful action (or inaction) taken
(or not taken) by the Company or on its behalf with the intention of avoiding
the prohibition on redemption of the Notes, then the premium specified in the
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Notes.


   7

         13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

         14. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder of the Company or of any of the Guarantors as such
will have any liability for any of the Company's or any Guarantors' obligations
under the Notes, the Indenture, any Subsidiary Guarantees, or for any claim
based on, in respect of, or by reason of, these obligations or their creation.
Each Holder by accepting a Note waives and releases these individuals from this
liability. The waiver and release are part of the consideration for issuance of
the Notes.

         15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.

         16. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement
dated as of June 29, 2001, between the Company, the Guarantors and the parties
named on the signature pages thereof or, in the case of Additional Notes,
Holders of Additional Notes shall have the rights set forth in one or more
registration rights agreements, if any, between the Company, the Guarantors and
the other parties thereto, relating to rights given by the Company and the
Guarantors to the purchasers of Additional Notes (the "Registration Rights
Agreement").

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

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

         Stewart Enterprises, Inc.
         110 Veterans Memorial Boulevard
         Metairie, LA 70005
         Telecopier No.: (504) 849-2307
         Attention: Martin R. de Laureal, Vice President of Investor Relations

         with copies to:

         Jones, Walker, Waechter, Poitevent,
                  Carrere and Denegre, L.L.P.
         201 St. Charles Avenue
         New Orleans, LA  70170-5100
         Telecopier: (504) 582-8012
         Attention: L. Richards McMillan, Esq.

   8

                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: _________________________________
                                               (Insert assignee's legal name)

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

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

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

and irrevocably appoint _______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:
     ----------------
                              Your Signature:
                                             -----------------------------------
                                             (Sign exactly as your name appears
                                                  on the face of this Note)

Signature Guarantee*:
                     -----------------------

- ----------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

   9

                       OPTION OF HOLDER TO ELECT PURCHASE

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:

                  [ ] Section 4.10           [ ] Section 4.15

         If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                                 $_____________


Date:
      ---------------------

                              Your Signature:
                                             ----------------------------------
                                             (Sign exactly as your name appears
                                                  on the face of this Note)

                              Tax Identification No.:
                                                     --------------------------

Signature Guarantee*:
                     -------

- ----------
*  Participant in a recognized Signature Guarantee Medallion Program (or other
   signature guarantor acceptable to the Trustee).

   10

              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

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



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

EX-4.6

   1
                                                                     EXHIBIT 4.6

                                 [FACE OF NOTE]

         THIS SECURITY IS ISSUED IN SUBSTITUTION FOR, AND NOT IN NOVATION OF,
THAT CERTAIN 6.70% NOTE DUE 2003, DATED DECEMBER 9, 1996, BY THE COMPANY AND
PAYABLE TO CEDE & CO, OR REGISTERED ASSIGNS. THIS SECURITY IS A REGISTERED
SECURITY IN GLOBAL FORM WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC") OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A SECURITY IN DEFINITIVE REGISTERED FORM, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED IN THE NAME OF ANY PERSON
OTHER THAN DTC OR ITS NOMINEE, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                            STEWART ENTERPRISES, INC.

                           Secured 6.70% Note Due 2003

No.                                 $100,000              CUSIP No.: 860370 AA 3
   ----


         Stewart Enterprises, Inc., a Louisiana corporation (hereinafter called
the "Company," which term shall include any successor under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co., or registered assigns, the principal sum of $100,000 (One Hundred Thousand
Dollars) at the Company's office or agency for said purpose in the Borough of
Manhattan, the City of New York on December 1, 2003, in such coin or currency of
the United States of America as at the time of payment is legal tender for the
payment of public and private debts, and to pay the interest thereon in like
coin or currency semi-annually on December 1 and June 1 of each year, commencing
December 1, 2001, on said principal sum at the rate of 6.70% per annum at said
office or agency from the most recent Interest Payment Date to which interest on
this Note has been paid or duly provided for until payment of said principal sum
has been made or duly provided for. The interest so payable on any December 1 or
June 1 will, except as otherwise provided in the Indenture referred to on the
reverse hereof, be paid to the Person in whose name this Note is registered at
the close of business on the November 15 or May 15 preceding such December 1 or
June 1, whether or not such day is a Business Day; provided that interest may be
paid, at the option of the Company, if this Note is no longer in the form of a
Registered Security in global form, by mailing a check therefor payable to the
registered holder entitled thereto at his last address as it appears on the
Security Register. Interest on this Note shall be computed on the basis of a
360-day year consisting of twelve 30-day months.

ADDITIONAL PROVISIONS OF THIS SECURITY ARE CONTAINED ON THE REVERSE HEREOF AND
SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET
FORTH AT THIS PLACE.

         This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.

         In Witness Whereof, Stewart Enterprises, Inc. has caused this
Instrument to be duly executed.

Dated:  June 29, 2001                        STEWART ENTERPRISES, INC.



                                             By:
                                                --------------------------------
                                                         Kenneth C. Budde
                                                     Chief Financial Officer,
Attest:                                         President-Corporate Division and
        --------------------------                  Executive Vice President
             Lisa T. Winningkoff
             Assistant Secretary

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

                                     CITIBANK, N.A., as Trustee


                                     By:
                                        ----------------------------------------
                                                 Authorized Signatory



   2




                                [Reverse of Note]

                            STEWART ENTERPRISES, INC.

                           Secured 6.70% Note due 2003

         This Security is one of a duly authorized issue of debt securities of
the Company designated as its Secured 6.70% Notes Due 2003 (the "Securities"),
limited to the aggregate principal amount of $100,000,000 (except as otherwise
provided in the Indenture mentioned below), issued or to be issued pursuant to
an indenture dated as of December 1, 1996, duly executed and delivered by the
Company to Citibank, N.A., as trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), as supplemented by the
First Supplemental Indenture dated April 24, 1998 between the Company and the
Trustee and the Second Supplemental Indenture dated June 29, 2001 between the
Company and the Trustee, as the same shall be further amended and supplemented
from time to time as provided in the Indenture (as so amended and supplemented,
the "Indenture"). The terms of the Securities include those in the Indenture.
Reference is hereby made to the Indenture and all other indentures supplemental
thereto for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the Holders of
the Securities. Capitalized terms used but not defined herein which are defined
in the Indenture have the meanings assigned to them in the Indenture.

         If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. The Indenture provides that under certain circumstances a declaration
of acceleration and its consequences may be rescinded and annulled by the
Holders of a majority in principal amount of the Outstanding Securities of the
series.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Outstanding
Securities of all series to be affected (acting as one class). The Indenture
provides that the Holders of a majority in principal amount of the Outstanding
Securities of any series (or, in certain cases, of all Outstanding Securities)
may, on behalf of the Holders of all the securities of such series (or, in
certain cases, of all securities under the Indenture) waive certain past
defaults under the Indenture. The Indenture also provides that the Holders of a
majority in principal amount of the Outstanding Securities of all series
affected (acting as one class) may waive compliance by the Company with certain
restrictive provisions of the Indenture. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders and owners of this Security and any Security issued in
exchange or substitution hereof or upon registration of transfer hereof, whether
or not notation of such consent or waiver is made upon this Security or such
other Securities.

         The Indenture contains provisions for the legal defeasance at any time
of the entire indebtedness of the Company on this Security upon compliance by
the Company with certain conditions set forth therein, which provisions apply to
this Security. Upon compliance with such provisions, the Company shall be deemed
to have paid and discharged the entire indebtedness on this Security and the
Company's obligation to pay the principal of (and premium, if any) and interest
on this Security shall cease, terminate and be completely discharged.

         The Indenture provides that no Holder of any Securities may enforce any
remedy under the Indenture except in the case of refusal or neglect of the
Trustee to act after notice of default and request by the Holders of 25% in
principal amount of Outstanding Securities in the series for which a remedy is
sought to be enforced and the offer to the Trustee of reasonable indemnity.

         The Securities do not have the benefit of any sinking fund obligation
and are not redeemable.

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

         The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.

         No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

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

         In order to secure the due and punctual payment of all obligations
payable by the Company under the Indenture and that certain Credit Agreement by
and among the Company, Empresas Stewart-Cementerios, Empresas Stewart-Funeraris,
Bank of America, N.A., as Collateral Agent, Administrative Agent and Lender and
the other Lenders, dated as of June 29, 2001, as amended, restated, rearranged
or otherwise modified from time to time, the Company and its Subsidiaries have
granted a first priority Lien (subject to certain exceptions permitted by the
Collateral Documents) on and security interest in the Collateral owned by it to
the Collateral Agent for the pari passu benefit of (a) the Trustee and the
Holders of the Securities and (b) the Administrative Agent, the Collateral Agent
and the Lenders, pursuant to the Indenture and the Collateral Documents.

         The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York.

EX-4.7

   1
                                                                     EXHIBIT 4.7

                                 [FACE OF NOTE]

         This Security is issued in substitution for, and not in novation of,
that certain 6.40% Remarketable or Redeemable Note (ROARSSM) Due May 1, 2013
(Remarketing Date May 1, 2003), dated April 24, 1998, by the Company and payable
to Cede & Co, or registered assigns. Unless this certificate is presented by an
authorized representative of The Depository Trust Company, a New York
corporation ("DTC"), to the issuer or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.

         This Security is a Book-Entry Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depository
or a nominee of a Depository. This Security is exchangeable for Securities
registered in the name of a Person other than the Depository or its nominee only
in the limited circumstances described in the Indenture, and no transfer of this
Security (other than a transfer of this Security as a whole by the Depository to
a nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository) may be registered except in such limited
circumstances.

                            STEWART ENTERPRISES, INC.

          SECURED 6.40% REMARKETABLE OR REDEEMABLE SECURITIES (ROARS[SM])
                                 DUE MAY 1, 2013
                         (REMARKETING DATE MAY 1, 2003)
No.                                                          CUSIP No: 860370AB1
    --------
                                   $99,897,000

         Stewart Enterprises, Inc., a Louisiana corporation (herein called the
"Company," which term shall include any successor under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, the principal sum of $99,897,000 (Ninety Nine
Million, Eight Hundred Ninety Seven Thousand Dollars) at the Company's office or
agency for said purpose in the Borough of Manhattan, the City of New York on May
1, 2013 (the "Stated Maturity Date") in such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts, and to pay interest thereon in like coin or currency
semi-annually on November 1 and May 1 of each year (each, an "Interest Payment
Date"), on said principal sum at the rate of 6.40% per annum (except that on and
after the Remarketing Date (defined below), such rate shall be the Interest Rate
to Maturity (defined below)) at said office or agency from the date of the
original issuance of the ROARS or from the most recent Interest Payment Date to
which interest on this ROARS has been paid or duly provided for until payment of
said principal sum has been made or duly provided for. The interest so payable
on any Interest Payment Date will, except as otherwise provided in the Indenture
referred to on the reverse hereof, be paid to the Person in whose name this
ROARS is registered at the close of business on the October 15 or April 15
preceding such November 1 or May 1, whether or not such day is a Business Day
(as defined below); provided, however, that interest payable on the Remarketing
Date and on the Stated Maturity Date will be payable to the Person to whom
principal shall be payable. Interest payments will be in the amount of interest
accrued from and including the next preceding Interest Payment Date (or from and
including the date of the original issuance of the ROARS if no interest



                                      -1-
   2



has been paid or duly provided for with respect to the ROARS) to but excluding
the relevant Interest Payment Date, the Remarketing Date or the Stated Maturity
Date, as the case may be. Interest may be paid, at the option of the Company, if
this ROARS is no longer in the form of a Registered Security in global form, by
mailing a check therefor payable to the registered holder entitled thereto at
his last address as it appears on the Security Register (as defined in the
Indenture). Interest on this ROARS shall be computed on the basis of a 360-day
year consisting of twelve 30-day months.

         On May 1, 2003 (the "Remarketing Date"), pursuant to the Remarketing
Agreement dated as of the date hereof (the "Remarketing Agreement"), between the
Company and Banc of America Securities LLC, or its successor, as Remarketing
Dealer (the "Remarketing Dealer"), the ROARS will either be (i) mandatorily
tendered to and purchased by the Remarketing Dealer, in which case the
Remarketing Dealer shall pay 100% of the principal amount of the ROARS and the
Company shall pay accrued and unpaid interest, if any, to the Remarketing Date,
or (ii) redeemed by the Company at 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the Remarketing Date. If the ROARS are
purchased by the Remarketing Dealer on the Remarketing Date, the ROARS shall
bear interest for the period on and after the Remarketing Date to the Stated
Maturity Date at the Interest Rate to Maturity determined in accordance with the
procedures set forth on the reverse hereof.

ADDITIONAL PROVISIONS OF THIS SECURITY ARE CONTAINED ON THE REVERSE HEREOF AND
SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET
FORTH AT THIS PLACE.

         This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, or become valid or obligatory for any purpose, until
the Trustee under the Indenture shall have signed the form of certificate of
authentication endorsed hereon.

         In Witness Whereof, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:  June 29, 2001                       STEWART ENTERPRISES, INC.


                                            By:
                                               ---------------------------------
                                               Kenneth C. Budde
                                               Chief Financial Officer,
                                               President-Corporate Division and
                                               Executive Vice President

Attest:
        -------------------------------
           Lisa T. Winningkoff
           Assistant Secretary


         This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.

                                               CITIBANK, N.A., as Trustee

                                               By:
                                                  ------------------------------
                                                            Authorized Signatory

                                [REVERSE OF NOTE]



                                      -2-
   3



                            STEWART ENTERPRISES, INC.

          Secured 6.40% Remarketable Or Redeemable Securities (ROARS[SM])
                                 due May 1, 2013
                         (Remarketing Date May 1, 2003)


         1. INDENTURE. (a) This Security is one of a duly authorized issue of
debt securities of the Company designated as its Secured 6.40% Remarketable Or
Redeemable Securities (ROARS[SM]) due May 1, 2013 (Remarketing Date May 1, 2003)
(the "ROARS"), limited to the aggregate principal amount of $200,000,000 (Two
Hundred Million Dollars) (except as otherwise provided in the Indenture
mentioned below), issued or to be issued pursuant to an indenture dated as of
December 1, 1996, duly executed and delivered by the Company to Citibank, N.A.,
as trustee (herein called the "Trustee," which term includes any successor
trustee under the Indenture), as supplemented by the First Supplemental
Indenture dated April 24, 1998 between the Company and the Trustee and the
Second Supplemental Indenture dated June 29, 2001 between the Company and the
Trustee, as the same shall be further amended and supplemented from time to time
as provided in the Indenture (as so amended and supplemented, the "Indenture").
The terms of the ROARS include those in the Indenture. Reference is hereby made
to the Indenture and all other indentures supplemental thereto for a complete
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the ROARS.
Capitalized terms used but not defined herein which are defined in the Indenture
have the meanings assigned to them in the Indenture.

                  (b) If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture. The Indenture provides that under certain
circumstances a declaration of acceleration and its consequences may be
rescinded and annulled by the Holders of a majority in principal amount of the
Outstanding Securities of the series.

                  (c) The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal amount of
the Outstanding Securities of each series to be affected (acting as one class).
The Indenture provides that the Holders of a majority in principal amount of the
Outstanding Securities of any series (or, in certain cases, of all Outstanding
Securities) may, on behalf of the Holders of all the Securities of such series
(or, in certain cases, of all Securities under the Indenture) waive certain past
defaults under the Indenture. The Indenture also provides that the Holders of a
majority in principal amount of the Outstanding Securities of all series
affected (acting as one class) may waive compliance by the Company with certain
restrictive provisions of the Indenture. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued in exchange
or substitution or hereof upon registration of transfer hereof whether or not
notation of such consent or waiver is made upon this Security or such other
Securities.



                                      -3-
   4




                  (d) The Indenture contains provisions for the legal defeasance
at any time of the entire indebtedness of the Company on this Security upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security after the Remarketing Date. Upon compliance
with such provisions, the Company shall be deemed to have paid and discharged
the entire indebtedness on this Security and the Company's obligation to pay the
principal of (and premium, if any) and interest on this Security shall cease,
terminate and be completely discharged.

                  (e) The Indenture provides that no Holder of any Securities
may enforce any remedy under the Indenture except in the case of refusal or
neglect of the Trustee to act after notice of default and request by the Holders
of 25% in principal amount of Outstanding Securities in the series for which a
remedy is sought to be enforced and the offer to the Trustee of reasonable
indemnity.

                  (f) The ROARS do not have the benefit of any sinking fund
obligation and are redeemable only as provided herein.

                  (g) No reference herein to the Indenture and no provision of
the ROARS or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on the ROARS at the place, times and rate, and in the currency, herein
prescribed.

                  (h) The Securities of this series are issuable only in
registered form without coupons in denominations of $100,000 and any integral
multiples of $1,000 in excess thereof. As provided in the Indenture and subject
to certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
of a different authorized denomination, as requested by the Holder surrendering
the same.

                  (i) As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of the ROARS is registrable in the
Security Register, upon surrender of the ROARS for registration of transfer at
the office or agency of the Company in any place where the principal of (and
premium, if any) and interest on the ROARS are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.

                  (j) No service charge shall be made for any such registration
of transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

                  (k) Prior to surrender of the ROARS for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee,
may deem and treat the registered Holder hereof as the absolute owner of the
ROARS (whether or not the ROARS shall be overdue and notwithstanding any
notation of ownership or other writing hereon), for the purpose of receiving
payment of, or on account of, the principal hereof and interest hereon and for
all other purposes, and



                                      -4-
   5



neither the Company nor the Trustee nor any agent of the Company or the Trustee
shall be affected by any notice to the contrary. Notwithstanding the foregoing,
payment of principal of and interest on any Security of this series in permanent
global form should be made in the manner provided in the arrangements of the
Company with the Depository.

                  (l) In order to secure the due and punctual payment of all
obligations payable by the Company under the Indenture and that certain Credit
Agreement by and among the Company, Empresas Stewart-Cementerios, Empresas
Stewart-Funeraris, Bank of America, N.A., as Collateral Agent, Administrative
Agent and Lender and the other Lenders, dated as of June 29, 2001, as amended,
restated, rearranged or otherwise modified from time to time, the Company and
its Subsidiaries have granted a first priority Lien (subject to certain
exceptions permitted by (i) that certain Security Agreement dated as of June 29,
2001 by and among the Company, certain of the Company's Subsidiaries and the
Collateral Agent; (ii) that certain Securities Pledge Agreement dated as of June
29, 2001 by and among the certain Subsidiaries of the Company and the Collateral
Agent; (iii) that certain Securities Pledge Agreement dated as of June 29, 2001
by and between the Company and the Collateral Agent; (iv) that certain
Intellectual Property Security Agreement dated as of June 29, 2001 by and among
the Company, certain of the Company's Subsidiaries, and the Collateral Agent;
and (v) that certain Assignment of Patents, Trademarks and Copyrights dated as
of June 29, 2001 by and among the Company, certain of the Company's
Subsidiaries, and the Collateral Agent (collectively, the "Collateral
Documents")) on and security interest in the Collateral owned by it to the
Collateral Agent for the pari passu benefit of (a) the Trustee and the Holders
of the Securities and (b) the Administrative Agent, the Collateral Agent and the
Lenders, pursuant to the Indenture and the Collateral Documents.

                  (m) The Indenture and the ROARS shall be governed by and
construed in accordance with the laws of the State of New York.

         2. MANDATORY TENDER ON REMARKETING DATE; PURCHASE AND SETTLEMENT. (a)
If the Remarketing Dealer gives notice to the Company and the Trustee on the
fifth Business Day prior to the Remarketing Date (the "Notification Date") at no
later than 4:00 p.m. New York City time of its intention to purchase the ROARS
for remarketing, each ROARS will be automatically tendered, or deemed tendered,
to the Remarketing Dealer for purchase on the Remarketing Date in accordance
with Paragraph 2(b) below, except as set forth in Paragraphs 5 and 6 below. The
purchase price for the ROARS to be paid by the Remarketing Dealer will be equal
to 100% of the principal amount thereof, and the Company will pay accrued
interest, if any, to the Remarketing Date. If the ROARS are tendered for
remarketing, the Remarketing Dealer may remarket the ROARS for its own account
at varying prices to be determined by the Remarketing Dealer at the time of each
sale. From and after the Remarketing Date, the ROARS will bear interest at the
Interest Rate to Maturity (defined in Paragraph 4 below). If the Remarketing
Dealer elects to remarket the ROARS, the obligation of the Remarketing Dealer to
purchase the ROARS on the Remarketing Date is subject to the conditions set
forth in the Remarketing Agreement. If for any reason the Remarketing Dealer
does not purchase all ROARS on the Remarketing Date, the Company will be
required to redeem the ROARS on the Remarketing Date at a price equal to 100% of
the principal amount thereof plus all accrued and unpaid interest, if any, on
the ROARS to the Remarketing Date. No holders of beneficial interests in the
ROARS (the "Beneficial Owners") shall have any rights or claims under the
Remarketing Agreement or against the Company or the Remarketing Dealer as a
result of the Remarketing Dealer



                                      -5-
   6



not purchasing the ROARS. Each Holder and Beneficial Owner of a ROARS by its
acceptance hereof agrees to deliver its ROARS on the Remarketing Date for either
purchase or redemption as provided herein.

                  (b) Following the Notification Date, the tender and purchase
of the ROARS provided for in Paragraph 2(a) above shall be effected as follows,
subject to Paragraphs 5 and 6 below:

                           (i) All of the ROARS shall be delivered automatically
                  to the account of the Trustee, by book-entry through The
                  Depository Trust Company or any successor thereto ("DTC")
                  pending payment of the purchase price therefor, on the
                  Remarketing Date.

                           (ii) The Remarketing Dealer shall deliver the
                  purchase price for the ROARS to the Trustee by 3:00 p.m. New
                  York City time on the Business Day immediately preceding the
                  Remarketing Date for payment to the DTC participant (each, a
                  "Participant") of each Beneficial Owner of ROARS, through DTC
                  in accordance with the procedures of DTC, against delivery or
                  deemed delivery through DTC of such Beneficial Owner's ROARS.
                  The Company will make, or cause the Trustee to make, payment
                  of interest due on the Remarketing Date to DTC for
                  distribution to each Beneficial Owner of ROARS by book-entry
                  through DTC by the close of business on the Remarketing Date.

         3. MAINTENANCE OF BOOK-ENTRY SYSTEM. (a) The tender and settlement
procedures set forth in Paragraph 2(b) above shall be subject to modification to
the extent required by DTC or, if the book-entry system is no longer available
for the ROARS at the time of the remarketing, to the extent required to
facilitate the tendering and remarketing of ROARS in a form other than global
form. In addition, the Remarketing Dealer may modify (with the consent of the
Trustee to the extent required by the Indenture) the settlement procedures set
forth herein in order to facilitate the settlement process in any manner not
contrary to the Indenture or adverse to the interests of the Holders of the
ROARS; provided that such procedures must, in the reasonable opinion of the
Company, allow the Company sufficient time to fund the redemption of the ROARS
on the Remarketing Date.

                  (b) The Company hereby agrees with the Trustee and the Holders
of the ROARS that at all times, (i) it will use its best efforts to maintain the
ROARS in book-entry form with DTC or any successor thereto and to appoint a
successor depository to the extent necessary to maintain the ROARS in book-entry
form and (ii) it will waive any discretionary right that it otherwise may have
under the Indenture to cause the ROARS to be issued in a form other than global
form.

         4. DETERMINATION OF INTEREST RATE TO MATURITY; NOTIFICATION THEREOF. If
the Remarketing Dealer elects to remarket the ROARS as provided in Paragraph
2(a), by 3:30 p.m. New York City time, on the third Business Day immediately
preceding the Remarketing Date (the "Determination Date"), the Remarketing
Dealer shall determine the Interest Rate to Maturity to the nearest one
thousandth (0.001) of one percent per annum. The "Interest Rate to Maturity"
shall be equal to the sum of 5.44% per annum (the "Base Rate") and the
Applicable Spread (as defined below), which will be based on the Dollar Price
(as defined below) of the ROARS.



                                      -6-
   7



                  "Applicable Spread" shall be the lowest bid indication,
         expressed as a spread (in the form of a percentage or in basis points)
         above the Base Rate, obtained by the Remarketing Dealer on the
         Determination Date from the bids quoted by five Reference Corporate
         Dealers (as defined below) for the full aggregate principal amount of
         the ROARS at the Dollar Price, but assuming (i) an issue date that is
         the Remarketing Date, with settlement on such date without accrued
         interest, (ii) a maturity date that is the Stated Maturity Date and
         (iii) a stated annual interest rate equal to the Base Rate plus the
         spread bid by the applicable Reference Corporate Dealer. If fewer than
         five Reference Corporate Dealers bid as described above, then the
         Applicable Spread shall be the lowest of such bid indications obtained
         as described above. THE INTEREST RATE TO MATURITY ANNOUNCED BY THE
         REMARKETING DEALER, ABSENT MANIFEST ERROR, SHALL BE BINDING AND
         CONCLUSIVE UPON THE BENEFICIAL OWNERS AND HOLDERS OF THE ROARS, THE
         COMPANY AND THE TRUSTEE.

                  "Comparable Treasury Issues" means the United States Treasury
         security or securities selected by the Remarketing Dealer as having an
         actual or interpolated maturity or maturities comparable to the
         remaining term of the ROARS being purchased by the Remarketing Dealer.

                  "Comparable Treasury Price" means, with respect to the
         Remarketing Date, (a) the offer prices for the Comparable Treasury
         Issues (expressed in each case as a percentage of its principal amount)
         on the Determination Date, as set forth on "Telerate Page 500" (or such
         other page as may replace Telerate Page 500), or (b) if such page (or
         any successor page) is not displayed or does not contain such offer
         prices on the Determination Date, (i) the average of the Reference
         Treasury Dealer Quotations (defined below) for the Remarketing Date,
         after excluding the highest and lowest such Reference Treasury Dealer
         Quotations, or (ii) if the Remarketing Dealer obtains fewer than four
         such Reference Treasury Dealer Quotations, the average of all such
         Reference Treasury Dealer Quotations. "Telerate Page 500" means the
         display designated as "Telerate Page 500" on Dow Jones Markets (or such
         other page as may replace Telerate Page 500 on such service) or such
         other service displaying the offer prices specified in (a) above as may
         replace Dow Jones Markets.

                  "Dollar Price" means, with respect to the ROARS, the present
         value, as of the Remarketing Date, of the Remaining Scheduled Payments
         (as defined below) discounted to the Remarketing Date on a semi-annual
         basis (assuming a 360-day year consisting of twelve 30-day months) at
         the Treasury Rate (as defined below).

                  "Reference Corporate Dealer" means each of Banc of America
         Securities LLC, Bear Stearns & Co., Citicorp Securities, Inc., and two
         other dealers to be selected by the Company and their respective
         successors; provided that if any of the foregoing or their affiliates
         shall cease to be a leading dealer of publicly traded debt securities
         of the Company (a "Primary Corporate Dealer"), the Remarketing Dealer
         shall substitute therefor another Primary Corporate Dealer.

                  "Reference Treasury Dealer" means each of Banc of America
         Securities LLC, Bear Stearns & Co., Citicorp Securities, Inc., and two
         other dealers to be selected by the Company



                                      -7-
   8



         and their respective successors; provided that if any of the foregoing
         or their affiliates shall cease to be a primary U.S. Government
         securities dealer (a "Primary Treasury Dealer"), the Remarketing Dealer
         shall substitute therefor another Primary Treasury Dealer.

                  "Reference Treasury Dealer Quotations" means, with respect to
         each Reference Treasury Dealer and the Remarketing Date, the offer
         prices for the Comparable Treasury Issues (expressed in each case as a
         percentage of its principal amount) quoted in writing to the
         Remarketing Dealer by such Reference Treasury Dealer by 3:30 p.m. on
         the Determination Date.

                  "Remaining Scheduled Payments" means, with respect to the
         ROARS, the remaining scheduled payments of the principal thereof and
         interest thereon, calculated at the Base Rate only, that would be due
         after the Remarketing Date to and including the Stated Maturity Date;
         provided that if the Remarketing Date is not an Interest Payment Date
         with respect to the ROARS, the amount of the next succeeding scheduled
         interest payment thereon, calculated at the Base Rate only, will be
         reduced by the amount of interest accrued thereon, calculated at the
         Base Rate only, to the Remarketing Date.

                  "Treasury Rate" means, with respect to the Remarketing Date,
         the rate per annum equal to the semi-annual equivalent yield to
         maturity or interpolated (on a day count basis) yield to maturity of
         the Comparable Treasury Issues, assuming a price for the Comparable
         Treasury Issues (expressed as a percentage of its principal amount),
         equal to the Comparable Treasury Price for the Remarketing Date.

         If the Remarketing Dealer elects to remarket the ROARS, the Remarketing
Dealer will notify the Company, the Trustee and DTC by telephone, confirmed in
writing (which may include facsimile or other electronic transmission), by 4:00
p.m. New York City time on the Determination Date of the Interest Rate to
Maturity applicable to the ROARS effective from and including the Remarketing
Date.

         Upon the occurrence of certain termination events set forth in the
Remarketing Agreement, the Remarketing Dealer, in its sole discretion, in lieu
of terminating the Remarketing Agreement, at any time between the Determination
Date and 10:30 a.m. New York City time, on the Business Day immediately
preceding the Remarketing Date, may elect to purchase the ROARS for remarketing
and determine a new Interest Rate to Maturity in the manner set forth above in
this Paragraph 4, except that for purposes of determining the new Interest Rate
to Maturity pursuant to this provision, the Determination Date referred to above
shall be the date of such election and redetermination. The Remarketing Dealer
shall notify the Company, the Trustee and DTC by telephone, confirmed in writing
(which may include facsimile or other electronic transmission), by 11:00 a.m.
New York City time, on the date of such election, of the new Interest Rate to
Maturity applicable to the ROARS. THEREUPON, SUCH NEW INTEREST RATE TO MATURITY
SHALL SUPERSEDE AND REPLACE ANY INTEREST RATE TO MATURITY PREVIOUSLY DETERMINED
BY THE REMARKETING DEALER AND, ABSENT MANIFEST ERROR, SHALL BE BINDING AND
CONCLUSIVE UPON THE BENEFICIAL OWNERS AND HOLDERS OF THE ROARS ON AND AFTER THE
REMARKETING DATE, THE COMPANY AND THE TRUSTEE. Notwithstanding the foregoing,
the Remarketing Dealer, by redetermining the Interest Rate to Maturity upon the
occurrence of any such termination event, shall not thereby be deemed to have
waived its right to determine a new Interest



                                      -8-
   9



Rate to Maturity or to terminate the Remarketing Agreement upon the subsequent
occurrence of another such termination event. If the Remarketing Dealer elects
to purchase the ROARS and redetermine the Interest Rate to Maturity in
accordance with the foregoing provisions in this paragraph, the Company will
retain the right to redeem the ROARS as specified in Paragraph 6, provided that
such election shall be made no later than 12:30 p.m. New York City time on the
Business Day immediately preceding the Remarketing Date.

         5. MANDATORY REDEMPTION. Subject to the Remarketing Dealer's right to
elect to purchase the ROARS and redetermine the Interest Rate to Maturity
described in the immediately preceding paragraph, the Company shall redeem the
ROARS as a whole on the Remarketing Date at a price equal to 100% of the
principal amount thereof plus all accrued and unpaid interest, if any, on the
ROARS to the Remarketing Date in the event that (a) the Remarketing Dealer for
any reason does not notify the Company of the Interest Rate to Maturity by 4:00
p.m. New York City time, on the Determination Date, (b) prior to the Remarketing
Date, the Remarketing Dealer has resigned and no successor has been appointed on
or before the Determination Date, (c) at any time after the Remarketing Dealer
elects on the Notification Date to remarket the ROARS, the Remarketing Dealer
shall have elected to terminate the Remarketing Agreement in accordance with the
terms thereof, (d) the Remarketing Dealer does not give notice to the Company
and the Trustee by 4:00 p.m. New York City time on the Notification Date of its
intention to purchase the ROARS on the Remarketing Date, (e) the Remarketing
Dealer for any reason fails to deliver the purchase price of the ROARS to the
Trustee by 3:00 p.m. New York City time on the Business Day immediately
preceding the Remarketing Date, or (f) the Company fails for any reason to
redeem the ROARS following its election to effect such redemption as specified
in Paragraph 6. In any such case, payment shall be made by the Company through
the Trustee to the Participant of each Beneficial Owner of ROARS, by book-entry
through DTC, by the close of business on the Remarketing Date against delivery
or deemed delivery through DTC of such Beneficial Owner's ROARS. No defense or
right against the Remarketing Dealer shall relieve the Company of its
obligations to the Holders of the ROARS to make such mandatory redemption.

         6. OPTIONAL REDEMPTION. (a) Notwithstanding any election by the
Remarketing Dealer to remarket the ROARS, the tendering of the ROARS for
purchase by the Remarketing Dealer shall be subject to the right of the Company
to redeem the ROARS as provided in Paragraph 6(b) below.

                  (b) The Company, in its sole and absolute discretion, shall
have the right, upon notice to the Remarketing Dealer and the Trustee not later
than 4:00 p.m. New York City time on the Business Day immediately preceding the
Determination Date, to irrevocably elect to redeem the ROARS, in whole but not
in part, on the Remarketing Date. If the Remarketing Dealer elects to purchase
the ROARS and redetermine the Interest Rate to Maturity under the circumstances
described in the last paragraph of Paragraph 4 above, the Company will retain
the right to redeem the ROARS, provided that such election must be made by 12:30
p.m. New York City time on the Business Day immediately preceding the
Remarketing Date. If the Company gives such notice to the Remarketing Dealer and
the Trustee, then (i) the Remarketing Dealer will be deemed to have elected not
to remarket the ROARS, (ii) the Company shall redeem the ROARS from Holders as a
whole on the Remarketing Date at a price equal to 100% of the aggregate
principal amount of the ROARS plus all accrued and unpaid interest, if any, on
the ROARS to the Remarketing Date (such payment to be




                                      -9-
   10



made by the Company through the Trustee to DTC for distribution to the DTC
Participant of each Beneficial Owner of ROARS, by the close of business on the
Remarketing Date against delivery through DTC of such Beneficial Owner's ROARS)
and (iii) the Company will pay to the Remarketing Dealer the Calculation Amount,
as defined in the Remarketing Agreement.


                                   * * * * * *


                                      -10-

EX-5.1

   1
                                                                     EXHIBIT 5.1



                               August 13, 2001



Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005


         Re:      Registration Statement on Form S-4
                  $300,000,000 aggregate principal amount of
                  10 3/4% Senior Subordinated Notes due 2008

Ladies and Gentlemen:

         We have acted as your counsel in connection with the preparation of the
registration statement on Form S-4 (the "Registration Statement") filed by
Stewart Enterprises, Inc., a Louisiana corporation (the "Company"), and the
guarantors named therein (the "Guarantors"), with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended, on
or about the date hereof with respect to the Company's offer to exchange (the
"Exchange Offer") up to $300 million aggregate principal amount of the Company's
registered 10 3/4% Senior Subordinated Notes due 2008 (the "Exchange Notes") for
a like principal amount of the Company's unregistered 10 3/4% Senior
Subordinated Notes due 2008 (the "Outstanding Notes"). The Guarantors will
guarantee (the "Guarantees") the Exchange Notes on a senior subordinated basis.
The Exchange Notes will be offered under the Indenture dated as of June 29, 2001
by and among the Company, the Guarantors and Firstar Bank, N.A., as trustee (the
"Indenture").

         In so acting, we have examined originals, or photostatic or certified
copies of the Indenture, the form of the Exchange Notes and such records of the
Company and Guarantors, certificates of the Company, the Guarantors and of
public officials, and such other documents as we have deemed relevant. In such
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic copies
and the authenticity of the originals of such documents.

   2

Stewart Enterprises, Inc.
August 13, 2001
Page 2


         Based upon the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:

                  1. When the Exchange Notes issuable upon consummation of the
         Exchange Offer have been (i) duly executed by the Company and
         authenticated in the manner provided for in the Indenture and (ii) duly
         issued and delivered in accordance with the terms of the Exchange Offer
         against the receipt of Outstanding Notes surrendered in exchange
         therefor, the Exchange Notes, assuming the terms thereof are valid,
         binding and enforceable under the laws of the State of New York (as to
         which matters of New York law we refer you to the New York Opinion),
         will constitute the legal, valid and binding obligations of the
         Company, enforceable against the Company in accordance with their
         terms, except as rights to indemnification thereunder may be limited by
         public policy and except as the enforcement thereof may be limited by
         bankruptcy, insolvency, fraudulent conveyance, reorganization,
         moratorium or similar laws and court decisions relating to or affecting
         the enforcement of creditors' rights generally and except as
         enforcement thereof is subject to general principles of equity
         (regardless of whether enforcement is considered in a proceeding in
         equity or at law).

                  2. When the Exchange Notes issuable upon consummation of the
         Exchange Offer have been (i) duly executed by the Company and
         authenticated in the manner provided for in the Indenture and (ii) duly
         issued and delivered in accordance with the terms of the Exchange Offer
         against the receipt of Outstanding Notes surrendered in exchange
         therefor, the Guarantees issuable by each Guarantor upon consummation
         of the Exchange Offer, assuming the terms thereof are valid, binding
         and enforceable under the laws the State of New York (as to which
         matters of New York law we refer you to the New York Opinion), will
         constitute the legal, valid and binding obligations of such Guarantor,
         enforceable against such Guarantor in accordance with their terms,
         except as rights to indemnification thereunder may be limited by public
         policy and except as the enforcement thereof may be limited by
         bankruptcy, insolvency, fraudulent conveyance, reorganization,
         moratorium or similar laws and court decisions relating to or affecting
         the enforcement of creditors' rights generally and except as
         enforcement thereof is subject to general principles of equity
         (regardless of whether enforcement is considered in a proceeding in
         equity or at law).

         The opinions rendered herein are specifically limited to currently
applicable United States federal law and the laws of the State of Louisiana and
are given in reliance upon the opinion of Holland & Knight, LLP, special New
York counsel to the Company and Guarantors (the "New York Opinion"). We are
members of the Bar of the State of


   3


Stewart Enterprises, Inc.
August 13, 2001
Page 3


Louisiana and have neither been admitted to nor purport to be experts on the
laws of any other jurisdiction.

         We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the prospectus included
therein under the caption "Legal Matters." In giving this consent, we do not
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the general rules and
regulations of the Commission promulgated thereunder.

                                      Very truly yours,


                                      JONES, WALKER, WAECHTER,
                                       POITEVENT, CARRERE &
                                       DENEGRE, L.L.P.

                                      By:
                                          -------------------------------------
                                                  Dionne M. Rousseau
                                                        Partner

EX-5.2

   1
                                                                     EXHIBIT 5.2





                                 August 14, 2001



Jones, Walker, Waechter, Poitevent,
  Carrere & Denegre, L.L.P.
201 St. Charles Avenue
New Orleans, Louisiana 70170


Gentlemen:

         We have acted as special counsel in the State of New York (the "State")
to Stewart Enterprises, Inc., a Louisiana corporation (the "Company"), and the
guarantors identified in the Registration Statement described below (the
"Guarantors") in connection with the preparation of the registration statement
on Form S-4 (the "Registration Statement"). The Registration Statement is being
filed by the Company and the Guarantors with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), on or about the date hereof with respect to the Company's
offer to exchange (the "Exchange Offer") up to $300 million aggregate principal
amount of the Company's registered 10 3/4% Senior Subordinated Notes due 2008
(the "Exchange Notes") for a like principal amount of the Company's unregistered
10 3/4% Senior Subordinated Notes due 2008 (the "Outstanding Notes"). The
Guarantors will guarantee (the "Guarantees") the Exchange Notes on a senior
subordinated basis. The Exchange Notes will be offered under the Indenture dated
as of June 29, 2001 by and among the Company, the Guarantors and Firstar Bank,
N.A., as trustee (the "Indenture").

         As such special counsel, we have examined originals, or copies
certified or otherwise authenticated to our satisfaction, of the Indenture, the
Guarantees and the form of the Exchange Notes (collectively, the "Transaction
Documents") and such records of the Company and Guarantors, certificates of the
Company, the Guarantors and of public officials, and such other documents as we
have deemed



   2



Jones, Walker, Waechter, Poitevent,
  Carrere & Denegre, L.L.P.
August 14, 2001
Page 2


relevant. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such documents.

         For purposes of the opinions expressed below, we have assumed that the
Transaction Documents have been duly authorized, executed and delivered by the
respective parties thereto. As to matters of fact, we have relied exclusively on
representations and warranties made by the parties in the Transaction Documents.
We have made no independent investigation of the accuracy or completeness of
such matters of fact.

         In rendering the following opinions, we have further relied, without
independent investigation, upon the following assumptions:

         (a) the accuracy and completeness of all certificates and other
statements, documents, records, financial statements and papers reviewed by us,
and the accuracy and completeness of all representations, warranties, schedules
and exhibits contained in the Transaction Documents, in each case with respect
to the factual matters set forth therein;

         (b) all corporate or limited liability company parties to the documents
reviewed by us are duly organized, validly existing and in good standing under
the laws of all jurisdictions where they are conducting their business or
otherwise required to be so qualified, and have full power and authority to
execute, deliver, and perform their respective obligations under, such
documents; each natural person party to the Transaction Documents has legal
capacity to execute, deliver, and perform its respective obligations under, such
documents, and all such documents have been duly authorized, executed and
delivered by such parties;

         (c) all Transaction Documents that contain legal obligations constitute
the legal, valid and binding obligations of the parties thereto (other than the
Company and the Guarantors), enforceable against such parties in accordance with
their respective terms;

         (d) no consent, approval or authorization is required of any
governmental authority outside the State by any person or entity other than
those already obtained, in connection with the transactions contemplated by the
Transaction Documents;



   3




Jones, Walker, Waechter, Poitevent,
  Carrere & Denegre, L.L.P.
August 14, 2001
Page 3


         (e) each natural person executing the Transaction Documents or any
document referred to therein is legally competent to do so, and each Person who
has taken any action relevant to any of our opinions in the capacity of director
or officer was duly elected to that director or officer position and held that
position when such action was taken;

         (f) there has not been any mutual mistake of fact or misunderstanding,
fraud, duress or undue influence;

         (g) the Transaction Documents will be enforced in circumstances and in
a manner that is commercially reasonable and the conduct of the parties complies
with any requirement of good faith and fair dealing; and

         (h) there are no agreements or understandings among the parties,
written or oral, and there is no usage of trade or course of prior dealing among
the parties that would, in either case, define, supplement or qualify the terms
of the Transaction Documents.

         The conclusions expressed below are limited to the application of the
laws of the State, and we have, with your consent, not considered the
applicability or the effect of any laws of any other state or any other
jurisdiction or of the United States.

         Based upon and subject to the foregoing, it is our opinion that:

         (i) When the Exchange Notes issuable upon consummation of the Exchange
Offer have been (i) duly executed by the Company and authenticated in the manner
provided for in the Indenture and (ii) duly issued and delivered in accordance
with the terms of the Exchange Offer against the receipt of Outstanding Notes
surrendered in exchange therefor, the Exchange Notes will constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as rights to indemnification thereunder may
be limited by public policy, and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.

         (ii) When the Exchange Notes issuable upon consummation of the Exchange
Offer have been (i) duly executed by the Company and authenticated in the manner
provided for in the Indenture and (ii) duly issued and delivered in accordance
with the terms of the Exchange Offer against the receipt of Outstanding



   4




Jones, Walker, Waechter, Poitevent,
  Carrere & Denegre, L.L.P.
August 14, 2001
Page 4


Notes surrendered in exchange therefor, the Guarantees issuable by each
Guarantor upon consummation of the Exchange Offer will constitute the legal,
valid and binding obligations of such Guarantor, enforceable against such
Guarantor in accordance with their terms, except as rights to indemnification
thereunder may be limited by public policy, and except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws relating to or affecting the rights
and remedies of creditors or by general equitable principles.

         Our opinions are also subject to the effect of rules of law that may,
if less than all of a contract is unenforceable, limit the enforceability of the
remainder of the contract to circumstances in which the unenforceable part is
not an essential part of the agreement.

         Our advice on each legal issue addressed herein represents our opinion
concerning how that issue would be resolved were it to be considered by the
highest court of the State. The manner in which any particular issue would be
treated in any actual court case would depend in part on facts and circumstances
peculiar to the case, and our opinions are not a guaranty of an outcome of any
legal dispute which may arise with regard to the Transaction Documents.

         This opinion is limited to matters expressly set forth herein, and no
opinion is to be implied or may be inferred beyond the matters expressly stated
herein.

         This letter speaks as of the date hereof. We disclaim any obligation to
provide you with any subsequent opinion or advice by reason of any future
changes or events which may affect or alter any opinion rendered herein.

         Except as provided in the next paragraph, our opinions contained herein
are rendered solely in connection with the Exchange Offer and may not be relied
upon in any manner or quoted or otherwise included, summarized or referred to in
any publication or document, in whole or in part, for any other purpose
whatsoever, without our prior written consent.



   5



Jones, Walker, Waechter, Poitevent,
  Carrere & Denegre, L.L.P.
August 14, 2001
Page 5


         You may rely on this opinion in connection with your delivery to the
Commission of your opinion in accordance with Item 601(b)(5) of Regulation S-K
promulgated under the Securities Act. Additionally, we consent to the filing of
this opinion as an exhibit to the Registration Statement. In giving this
consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act or the general rules
and regulations of the Commission promulgated thereunder.


                                Very truly yours,


                                HOLLAND & KNIGHT LLP

EX-12.1

   1
                                                                   EXHIBIT 12.1


                           STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

               CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)





                                                                                                                     SIX MONTHS
                                                                                                                        ENDED
                                                                            YEARS ENDED OCTOBER 31,                    APRIL 30,
                                                      --------------------------------------------------------------   ---------
                                                        1996        1997           1998           1999        2000       2001
                                                      --------    --------       --------       --------    --------   ---------
                                                                                                     
Earnings from operations
  before income taxes...............................  $ 82,075    $106,477(1)    $ 64,964(2)    $142,551(3) $105,187   $52,635(4)

Fixed charges:
  Interest charges..................................    26,051      38,031         44,107         55,543      62,748    29,787
  Interest portion of lease expense.................     1,522       2,181          2,814          2,859       3,379     1,421
                                                      --------    --------       --------       --------    --------   --------
Total fixed charges.................................    27,573      40,212         46,921         58,402      66,127    31,208

Earnings from operations before income
  taxes and fixed charges, less capitalized
  interest..........................................  $109,648   $146,689(1)     $111,599(2)    $200,118(3) $169,960   $83,477(4)
                                                      ========   ========        ========       ========    ========   =======
Ratio of earnings to fixed charges..................      3.98       3.65(1)         2.38(2)        3.43(3)     2.57      2.67(4)
                                                      ========   ========        ========       ========    ========   =======



- ----------

(1)  Excludes cumulative effect of change in accounting principles of $2,324
     (net of a $2,230 income tax benefit).

(2)  Includes a nonrecurring, noncash charge of $76,762 recorded in connection
     with the vesting of the Company's performance - based stock options.

(3)  Excludes cumulative effect of change in accounting principle of $50,101
     (net of a $28,798 income tax benefit).

(4)  Excludes cumulative effect of change in accounting principles of $250,004
     (net of a $166,669 income tax benefit).

- ----------
During the periods presented the Company had no preferred stock outstanding.
Therefore, the ratio of earnings to combined fixed charges and preference
dividends was the same as the ratio of earnings to fixed charges for each of
the periods presented.

EX-12.2

   1
                                                                   EXHIBIT 12.2


                            STEWART ENTERPRISES, INC.
                                AND SUBSIDIARIES

           CALCULATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)



                                                                PRO FORMA (1)
                                                       ------------------------------
                                                       YEAR ENDED    SIX MONTHS ENDED
                                                       OCTOBER 31,       APRIL 30,
                                                       -----------   ----------------
                                                          2000             2001
                                                       -----------   ----------------
                                                               
Net earnings from continuing
  operations before income taxes                       $   90,243      $   45,410
Less: Capitalized interest                                  1,354             366
                                                       ----------      ----------
                                                           88,889          45,044
Fixed Charges:
  Interest expense:
     Interest expense, gross                               76,338          36,646
     Capitalized interest                                   1,354             366
                                                       ----------      ----------
                                                           77,692          37,012
  Interest portion of lease expenses                        3,379           1,421
                                                       ----------      ----------
Total fixed charges                                        81,071          38,433
                                                       ----------      ----------

Net earnings from continuing operations
  before income taxes and fixed charges                $  169,960      $   83,477
                                                       ==========      ==========

Ratio of earnings to fixed charges                           2.10            2.17
                                                       ==========      ==========


- ----------
(1) For purposes of computing the pro forma ratio of earnings to fixed charges,
the $291.8 million of proceeds from the outstanding notes were applied pro rata
to the debt which was refinanced on June 29, 2001 as shown in "Refinancing
Transactions."

- ----------
During the periods presented the Company had no preferred stock outstanding.
Therefore, the ratio of earnings to combined fixed charges and preference
dividends was the same as the ratio of earnings to fixed charges for each of the
periods presented.

EX-23.1

   1

                                                                    EXHIBIT 23.1

                       CONSENT OF INDEPENDENT ACCOUNTANTS

         We hereby consent to the use in this Registration Statement on Form S-4
of Stewart Enterprises, Inc. of our reports dated December 12, 2000, except for
Note 19 as to which the date is January 9, 2001, relating to the financial
statements and financial statement schedule of Stewart Enterprises, Inc. and
subsidiaries, which appear in such Registration Statement. We also consent to
the reference to us under the heading "Experts" in such Registration Statement.



PricewaterhouseCoopers LLP


New Orleans, Louisiana
August 14, 2001

EX-25

   1
                                                                      EXHIBIT 25

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   ----------

                                    FORM T-1

                   STATEMENT OF ELIGIBILITY AND QUALIFICATION
             UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
                          DESIGNATED TO ACT AS TRUSTEE


                                   ----------


                               FIRSTAR BANK, N.A.
               (Exact name of Trustee as specified in its charter)

                                                    
A National Banking Association                         41-0122055
(State of incorporation if not a national bank)        (IRS Employer Identification No.)

101 East Fifth Street
Corporate Trust Department
St. Paul, Minnesota                                    55101
(Address of principal executive offices)               (Zip Code)



                               FIRSTAR BANK, N.A.
                              101 East Fifth Street
                            St. Paul, Minnesota 55101
                                 (651) 229-2600
         (Exact name, address and telephone number of agent for service)

                                   ----------


                            STEWART ENTERPRISES, INC.

                                                    
Louisiana                                              72-0693290
(State of incorporation or other jurisdiction)         (IRS Employer Identification No.)

110 Veterans Boulevard
Metairie, Louisiana                                    70005
(Address of principal executive offices)               (Zip Code)




                                   ----------


                   10 3/4% Senior Subordinated Notes due 2008
                         (Title of Indenture Securities)


   2



                         TABLE OF ADDITIONAL REGISTRANTS

         Each of the following subsidiaries of Stewart Enterprises, Inc., and
each other subsidiary that is or becomes a guarantor of the securities
registered hereby, is hereby deemed to be a registrant.





                                                                              STATE OF          I.R.S. EMPLOYER
                                                                          INCORPORATION OR       IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                                        FORMATION               NUMBER

                                                                                          
S.E. OF TUCSON, ARIZONA, INC.                                                 ARIZONA              86-0905540
GRIFFIN-LEGGETT, INC.                                                         ARKANSAS             71-0078620
FOREST HILLS CEMETERY, INC.                                                   ARKANSAS             71-0249636
GRIFFIN LEGGETT HEALEY & ROTH, INC.                                           ARKANSAS             71-0455597
GRIFFIN-LEGGETT INSURANCE AGENCY, INC.                                        ARKANSAS             72-1420663
GROSS FUNERAL HOME, INC.                                                      ARKANSAS             71-0311354
REST HILLS MEMORIAL PARK, INC.                                                ARKANSAS             71-0350100
GRIFFIN LEGGETT - CONWAY, INC.                                                ARKANSAS             71-0675698
DILDAY BROTHERS HUNTINGTON VALLEY MORTUARY                                   CALIFORNIA            95-2556142
HOPSON MORTUARY, INC.                                                        CALIFORNIA            95-2803488
LASSILA FUNERAL CHAPELS, INC.                                                CALIFORNIA            94-2756152
SANTA BARBARA FUNERAL SERVICES, INC.                                         CALIFORNIA            95-2485442
S.E. ACQUISITION OF CALIFORNIA, INC.                                         CALIFORNIA            72-1307437
ALL SOULS MORTUARY, INC.                                                     CALIFORNIA            94-3274423
ASHES TO ASHES, INC.                                                         CALIFORNIA            95-3983428
ASSUMPTION MORTUARY, INC.                                                    CALIFORNIA            77-0498846
BARSTOW FUNERAL HOMES, INC.                                                  CALIFORNIA            33-0638122
BUCHHEIM FAMILY, INC.                                                        CALIFORNIA            94-2746770
CALVARY MORTUARY OF LOS ANGELES, CALIFORNIA, INC.                            CALIFORNIA            94-3281559
CATHOLIC MORTUARY SERVICES, INC.                                             CALIFORNIA            68-6186018
DeYOUNG MEMORIAL CHAPEL, INC.                                                CALIFORNIA            94-2564101
HOLY CROSS MORTUARY OF CULVER CITY, CALIFORNIA, INC.                         CALIFORNIA            94-3281560
HOLY CROSS MORTUARY OF POMONA, CALIFORNIA, INC.                              CALIFORNIA            94-3281562
LOMBARD & CO.                                                                CALIFORNIA            94-1495254
N.D. DAVIS & ASSOCIATES, INC.                                                CALIFORNIA            94-2303150
QUEEN OF HEAVEN MORTUARY, INC.                                               CALIFORNIA            94-3281558
RESURRECTION MORTUARY, INC.                                                  CALIFORNIA            94-3281561
RICHARD PIERCE FUNERAL SERVICE                                               CALIFORNIA            94-1726912
RIVER CITIES FUNERAL CHAPEL, INC.                                            CALIFORNIA            68-0361610
S.E. ACQUISITION OF DELANO, CALIFORNIA, INC.                                 CALIFORNIA            94-3289240
S.E. ACQUISITION OF GLENDALE, CALIFORNIA, INC.                               CALIFORNIA            72-1318639
S.E. ACQUISITION OF LANCASTER, CALIFORNIA, INC.                              CALIFORNIA            72-1313799
S.E. ACQUISITION OF LOS OSOS MORTUARY AND MEMORIAL PARK, INC.                CALIFORNIA            72-1312297
S.E. ACQUISITION OF OAKHURST, CALIFORNIA, INC.                               CALIFORNIA            94-3269965
S.E. ACQUISITION OF OROVILLE, CALIFORNIA, INC.                               CALIFORNIA            91-1751841
S.E. ACQUISITION OF SAN DIEGO, CALIFORNIA, INC.                              CALIFORNIA            94-3293688
SAN FERNANDO MISSION MORTUARY, INC.                                          CALIFORNIA            94-3281557
SANTA CLARA MORTUARY, INC.                                                   CALIFORNIA            77-0498848
SCOVERN MORTUARY, A CALIFORNIA CORPORATION                                   CALIFORNIA            95-3780939
SDCA HOLDINGS, INC.                                                          CALIFORNIA            95-6062503
SAN DIEGO CEMETERY ASSOCIATION                                               CALIFORNIA            95-2131281
SIMPLICITY PLAN OF CALIFORNIA, INC.                                          CALIFORNIA            68-0404445
STEWART PRE-NEED SERVICES, INC.                                              CALIFORNIA            68-0404446
STRICKLIN/SNIVELY MORTUARY                                                   CALIFORNIA            95-2426875
CATALINA CHANNEL CREMATION SOCIETY                                           CALIFORNIA            33-0422532
WALLACE E. WHITE & HOWARD J. CALLANAN, INC.                                  CALIFORNIA            95-1370180
WOODSIDE CHAPEL OF CRIPPEN & FLYNN                                           CALIFORNIA            94-1494933
SENTINEL CREMATION SOCIETIES, INC.                                            DELAWARE             94-3085260
S.E. ACQUISITION OF MURIETTA, CALIFORNIA, INC.                               CALIFORNIA            68-0420934
S.E. ACQUISITION OF SANTA MARIA, CALIFORNIA, INC.                            CALIFORNIA            68-0420935
VICTOR V. DESROSIER, INC.                                                    CALIFORNIA            95-1535997



                                       ii
   3




                                                                              STATE OF          I.R.S. EMPLOYER
                                                                          INCORPORATION OR       IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                                        FORMATION               NUMBER

                                                                                          
CEMETERY MANAGEMENT, INC.                                                     FLORIDA              59-2200905
ARLINGTON MEMORIAL PARK CEMETERY AND FUNERAL HOME, INC.                       FLORIDA              59-1008713
BALDWIN-FAIRCHILD FUNERAL HOMES, INC.                                         FLORIDA              59-2050710
ALL FAITHS MEMORIAL PARK, INC.                                                FLORIDA              59-1825207
ORLANDO FUNERAL HOME, INCORPORATED                                            FLORIDA              59-0385477
THE SIMPLICITY PLAN, INC.                                                     FLORIDA              59-3506520
BAY AREA CREMATORY, INC.                                                      FLORIDA              59-1706261
BRUCE OCALA FUNERAL HOME, INC.                                                FLORIDA              59-2256460
BETH DAVID FUNERAL CHAPEL TAMPA, INC.                                         FLORIDA              59-3278592
BETH DAVID MEMORIAL CHAPEL, INC.                                              FLORIDA              59-3054190
CHAPEL HILL CEMETERY, INC.                                                    FLORIDA              59-1036850
GLEN HAVEN MEMORIAL PARK, INC.                                                FLORIDA              59-1280092
HIGHLAND MEMORY GARDENS, INC. (FL)                                            FLORIDA              59-1311244
SEMORAN FUNERAL HOME, INC.                                                    FLORIDA              59-2174496
FLORIDA HILLS MEMORIAL GARDENS, INC.                                          FLORIDA              59-1472326
GARDEN OF MEMORIES, INC.                                                      FLORIDA              59-0259432
A.P. BOZA FUNERAL HOME, INC.                                                  FLORIDA              59-1237218
CURRY & SON FUNERAL HOME, INC.                                                FLORIDA              59-2232961
WOODLAWN MEMORY GARDENS, INC. (ST. PETE)                                      FLORIDA              59-0586203
GOOD SHEPHERD MEMORIAL GARDENS, INC.                                          FLORIDA              59-1157844
DAVID C. GROSS FUNERAL HOME, INC.                                             FLORIDA              59-3061484
HUBBELL FUNERAL HOME AND CREMATORY, INC.                                      FLORIDA              59-2031206
KENT R. PALMER, INC.                                                          FLORIDA              59-2786934
KICLITER FUNERAL HOME, INC.                                                   FLORIDA              65-0327962
MADCEM OF FLORIDA, INC.                                                       FLORIDA              59-2815682
MEMORIAL PARK CEMETERY, INC.                                                  FLORIDA              59-2977889
OAKLAWN PARK CEMETERY AND FUNERAL HOME, INC.                                  FLORIDA              59-2872325
ROBERTS FUNERAL HOME, INC.                                                    FLORIDA              59-3483106
ROYAL PALM MEMORIAL GARDENS, INC.                                             FLORIDA              59-2741049
SYLVAN ABBEY MEMORIAL PARK, INC.                                              FLORIDA              59-0600575
TRINITY MEMORIAL GARDENS OF LAKELAND, INC.                                    FLORIDA              59-3325358
TURNER CREMATORY, INC.                                                        FLORIDA              59-2992267
TURNER FUNERAL HOMES, INC.                                                    FLORIDA              59-2109540
WALSH & WOOD FUNERAL HOME, INC.                                               FLORIDA              59-0614284
WOODLAWN PARK CEMETERY COMPANY (MIAMI)                                        FLORIDA              59-0516280
MEMORIAL SUNSET PARK, INC.                                                    FLORIDA              65-0103104
NATIONAL MONUMENT CO., INC.                                                   FLORIDA              59-0941038
SOUTH DADE-PALMS MEMORIAL PARK, INC.                                          FLORIDA              59-0778117
SIMPLE TRIBUTE OF FLORIDA, INC.                                               FLORIDA              62-1856388
CHEATHAM HILL MEMORIAL PARK, INC.                                             GEORGIA              58-1354650
EMPRESAS STEWART - CEMENTERIOS, INC.                                         LOUISIANA             72-1244353
EMPRESAS STEWART - FUNERARIAS, INC.                                          LOUISIANA             72-1246744
SIMPLE TRIBUTE, INC.                                                         LOUISIANA             72-1505419
EASTLAWN CORPORATION                                                          GEORGIA              58-6017469
HOLLY HILL MEMORIAL PARK, INC.                                                GEORGIA              58-1392485
ROSE HAVEN FUNERAL HOME & CEMETERY, INC.                                      GEORGIA              59-3295367
ACME MAUSOLEUM CORPORATION                                                   LOUISIANA             72-1149943
INTERNATIONAL STONE & ERECTORS, INC.                                         LOUISIANA             72-0699525
LAKE LAWN METAIRIE FUNERAL HOME, INC.                                        LOUISIANA             72-1114514
LAKE LAWN METAIRIE FUNERAL HOME (JOINT VENTURE)                              LOUISIANA             72-0851803
LAKE LAWN PARK, INC.                                                         LOUISIANA             72-0398541
METAIRIE CEMETERY ASSOCIATION                                                LOUISIANA             72-0684451
PINE CREST CEMETERY, INC.                                                     ALABAMA              72-1206115
ALL FAITHS FUNERAL HOME, INC.                                                LOUISIANA             72-1240228
MOUNT OLIVET CEMETERY, INC.                                                  LOUISIANA             72-0266567
S.E. AUSTRALIA, INC.                                                         LOUISIANA             72-1283266



                                      iii
   4




                                                                              STATE OF          I.R.S. EMPLOYER
                                                                          INCORPORATION OR       IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                                        FORMATION               NUMBER

                                                                                          
S.E. SOUTH-CENTRAL, INC.                                                     LOUISIANA             72-1239618
ELLISON FUNERAL HOME, INC.                                                    ALABAMA              63-1061611
KILGORE-GREEN FUNERAL HOME, INC.                                              ALABAMA              63-0569262
LATHAN FUNERAL HOME, INC.                                                     ALABAMA              63-0591928
PINE CREST FUNERAL HOME, INC.                                                 ALABAMA              63-1168352
FAITH MEMORIAL PARK & MAUSOLEUM COMPANY, INC.                                 ALABAMA              63-0742168
VALHALLA MEMORY GARDENS AND FUNERAL HOME, INC.                                ALABAMA              63-0568093
ROCKCO AND SON FUNERAL HOME, INC.                                             ALABAMA              63-0515943
ROCKCO'S FUNERAL HOMES, INC.                                                  ALABAMA              63-0944886
S.E. ACQUISITION OF LITHONIA, GEORGIA, INC.                                   GEORGIA              58-2212760
ANDREW J. McGANN & SON FUNERAL HOME, INC.                                     ILLINOIS             36-3199562
S.E. ACQUISITION OF BLUE ISLAND, ILLINOIS, INC.                               ILLINOIS             36-4234016
S.E. ACQUISITION OF OAK LAWN AND ORLAND PARK, ILLINOIS, INC.                  ILLINOIS             36-4262912
S.E. CEMETERY MANAGEMENT OF ILLINOIS, INC.                                    ILLINOIS             36-4287051
THEIS-GORSKI FUNERAL HOME, INC.                                               ILLINOIS             36-2377875
KNUTSON FUNERAL HOMES, INC.                                                     IOWA               42-0951378
PAULEY FUNERAL HOME, INC.                                                       IOWA               42-1029161
RUNYAN MANGOLD, INC.                                                           KANSAS              48-0922874
PROFESSIONAL FUNERAL SERVICES, INC.                                          LOUISIANA             72-0969989
D.W. NEWCOMER'S SONS, INC.                                                    MISSOURI             43-1843891
DWN PROPERTIES, INC.                                                          MISSOURI             43-1450708
FUNERAL SECURITY PLANS, INC.                                                  MISSOURI             44-0664950
S.E. ACQUISITION OF BOONVILLE, MISSOURI, INC.                                 MISSOURI             43-1840692
WYUKA FUNERAL HOME, INC.                                                      NEBRASKA             47-0814740
WYUKA SIMPLICITY PLAN, INC.                                                   NEBRASKA             47-0814533
S.E. ACQUISITION OF ALBUQUERQUE, NEW MEXICO, INC.                            NEW MEXICO            62-1669343
S.E. ACQUISITION OF SANTA FE, NEW MEXICO, INC.                               NEW MEXICO            62-1688895
S.E. ACQUISITION OF MUSKOGEE, OKLAHOMA, INC.                                  OKLAHOMA             74-2807790
MT. JULIET FUNERAL HOME, INC.                                                TENNESSEE             62-0946762
MT. JULIET MEMORIAL GARDENS, INC.                                            TENNESSEE             62-0816875
NAVE FUNERAL HOME OF LEBANON, INC.                                           TENNESSEE             72-1411524
SIMPLE TRIBUTE OF TENNESSEE, INC.                                            TENNESSEE             62-1857416
CEMETERY SERVICES, INC.                                                      WISCONSIN             39-1147526
S.E. CEMETERY MANAGEMENT OF WISCONSIN, INC.                                  WISCONSIN             39-1940681
WISCONSIN MEMORIAL PARK COMPANY, INC.                                        WISCONSIN             39-1260321
TIME-LOCK INSURANCE AGENCY, INC.                                             WISCONSIN             39-1639947
ST. BERNARD MEMORIAL GARDENS, INC.                                           LOUISIANA             72-0604551
ST. BERNARD MEMORIAL FUNERAL HOME, INC.                                      LOUISIANA             72-0938467
ST. VINCENT de PAUL CEMETERY ASSOCIATION                                     LOUISIANA             72-0308250
STEWART ENTERPRISES (EUROPE), INC.                                           LOUISIANA             72-1358384
STEWART RESOURCE CENTER, INC.                                                LOUISIANA             72-0114030
STEWART SERVICES, INC.                                                       LOUISIANA             72-1346587
S.E. MID-ATLANTIC, INC.                                                       MARYLAND             52-1602273
GARNER FAMILY FUNERAL HOME, INC.                                              GEORGIA              58-2064086
HAISTEN FUNERAL HOMES, INC.                                                   GEORGIA              58-1421290
HAISTEN FUNERAL HOME OF HENRY COUNTY, INC.                                    GEORGIA              58-2022340
HIGGINS AND SON FUNERAL HOME, INC.                                            GEORGIA              58-2425644
S.E. ACQUISITION OF PIKEVILLE, KENTUCKY, INC.                                 KENTUCKY             72-1403502
BOUNDS FUNERAL HOME, INC.                                                     MARYLAND             52-1630262
CEDAR HILL CEMETERY COMPANY, INC.                                             MARYLAND             52-1602271
CREST LAWN MEMORIAL GARDENS, INC.                                             MARYLAND             52-1602272
FORT LINCOLN CEMETERY, INC.                                                   MARYLAND             52-1376288
FORT LINCOLN FUNERAL HOME, INC.                                               MARYLAND             52-0703419
GALLERY GRANITE CORPORATION                                                   MARYLAND             52-1988923
HILLCREST MEMORIAL CEMETERY, INC.                                             MARYLAND             52-0625906
HINES-RINALDI FUNERAL HOME, INC.                                              MARYLAND             52-0959564



                                       iv

   5



                                                                              STATE OF          I.R.S. EMPLOYER
                                                                          INCORPORATION OR       IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                                        FORMATION               NUMBER

                                                                                          
JOHN M. TAYLOR FUNERAL HOME, INC.                                             MARYLAND             52-0744522
LOUDON PARK CEMETERY COMPANY                                                  MARYLAND             52-0395020
DRUID RIDGE CEMETERY COMPANY                                                  MARYLAND             52-0297170
LOUDON PARK FUNERAL HOME, INC.                                                MARYLAND             52-0559766
NALLEY'S FUNERAL HOME, INC.                                                   MARYLAND             52-0581481
NATIONAL HARMONY MEMORIAL PARK, INC.                                          MARYLAND             53-0260676
PARKLAWN, INC.                                                                MARYLAND             52-0702108
THE PARKWOOD CEMETERY COMPANY                                                 MARYLAND             52-0439130
PARKWOOD MANAGEMENT COMPANY                                                   MARYLAND             52-1512350
WILLIAM W. CHAMBERS, INC.                                                     MARYLAND             53-0239999
SIMPLE TRIBUTE OF MARYLAND, INC.                                              MARYLAND             52-2323145
GORNY & GORNY PATERSON-CLIFTON MORTUARY                                      NEW JERSEY            22-1851465
S.E. ACQUISITION OF CLIFTON, NEW JERSEY, INC.                                NEW JERSEY            22-3620444
C.J. APPLEGATE AND SONS, INC.                                                 NEW YORK             15-0611808
GARDINIER COLLETTI MEMORIAL HOME, INC.                                        NEW YORK             16-1083308
MATTLE GRAY NULTON FUNERAL HOME, INC.                                         NEW YORK             16-1188100
MURPHY FUNERAL SERVICE, INC.                                                  NEW YORK             16-1154577
NULTON FUNERAL HOME, INC.                                                     NEW YORK             16-1380326
OTTO REDANZ FUNERAL HOME, INC.                                                NEW YORK             16-0843505
CORNELL & DAGGETT, INC.                                                       NEW YORK             16-0393170
S.E. ACQUISITION OF FREDONIA, NEW YORK, INC.                                  NEW YORK             52-2073694
BROWN MEMORIALS, INC.                                                      NORTH CAROLINA          56-1401127
CATAWBA MEMORIAL PARK, INC.                                                NORTH CAROLINA          56-1186602
CENTRAL STONE WORKS, INCORPORATED                                          NORTH CAROLINA          56-0172230
HAROLD C. DAVIS, INC.                                                      NORTH CAROLINA          56-0558688
EVANS FUNERAL HOME, INC.                                                   NORTH CAROLINA          56-1766627
EVERGREEN MEMORIAL GARDENS, INC.                                           NORTH CAROLINA          56-0564225
GARRETT - HILLCREST, INC.                                                  NORTH CAROLINA          56-0497389
HIGHLAND MEMORY GARDENS OF FRANKLIN COUNTY, INC.                           NORTH CAROLINA          56-0766494
JOHNSON FUNERAL HOME, INC.                                                 NORTH CAROLINA          56-1415185
LANCASTER FUNERAL HOMES, INC.                                              NORTH CAROLINA          56-0790520
MCLAURIN'S FUNERAL HOME, INC.                                              NORTH CAROLINA          56-0774793
MILLER-LEE, INC.                                                           NORTH CAROLINA          56-1666506
PARKLAWN MEMORIAL GARDENS, INC.                                            NORTH CAROLINA          56-1002833
POLLOCK WELLS FUNERAL SERVICE, INC.                                        NORTH CAROLINA          56-1076994
STEPHENS SERVICES, INC.                                                    NORTH CAROLINA          56-1782322
THOMAS-YELVERTON COMPANY                                                   NORTH CAROLINA          56-0428110
1730 INVESTMENT CO., INC.                                                  NORTH CAROLINA          56-1220783
MEMORIAL PARKS, INCORPORATED                                               NORTH CAROLINA          56-0320583
BENJAMIN FRANKLIN  P. M., INC.                                              PENNSYLVANIA           36-3410961
GEORGE WASHINGTON MEMORIAL PARK, INC.                                       PENNSYLVANIA           23-1196097
KIRK & NICE SUBURBAN CHAPEL, INC.                                           PENNSYLVANIA           23-1322135
KIRK & NICE, INC.                                                           PENNSYLVANIA           23-1543090
S.E. ACQUISITION OF PENNSYLVANIA, INC.                                      PENNSYLVANIA           23-2774157
S.E. CEMETERY MANAGEMENT OF PENNSYLVANIA, INC.                              PENNSYLVANIA           23-2999841
SUNSET MEMORIAL PARK COMPANY                                                PENNSYLVANIA           23-1137620
PET HAVEN, INC.                                                             PENNSYLVANIA           23-1954580
DUNBAR FUNERAL HOME, INC.                                                  SOUTH CAROLINA          57-0283484
THE MACKEY MORTUARY, INC.                                                  SOUTH CAROLINA          57-0509513
CANNON FUNERAL HOME, INC.                                                  SOUTH CAROLINA          57-0446751
OCONEE MEMORIAL FUNERAL HOME, INC.                                         SOUTH CAROLINA          57-1025046
PINEVIEW, INC.                                                             SOUTH CAROLINA          57-1015766
S.E. ACQUISITION OF NORTH AUGUSTA, SOUTH CAROLINA, INC.                    SOUTH CAROLINA          57-0966654
S.E. ACQUISITION OF CHARLESTON, INC.                                       SOUTH CAROLINA          57-0994297
S.E. ACQUISITION OF LIBERTY, SOUTH CAROLINA, INC.                          SOUTH CAROLINA          58-2448833
S.E. ACQUISITION OF SOUTH CAROLINA, INC.                                   SOUTH CAROLINA          57-0982608




                                       v

   6




                                                                              STATE OF          I.R.S. EMPLOYER
                                                                          INCORPORATION OR       IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                                        FORMATION               NUMBER

                                                                                          
MONTE VISTA BURIAL PARK, INC.                                                TENNESSEE             62-0298090
BLUE RIDGE MEMORIAL GARDENS, INC. (VA)                                        VIRGINIA             54-0627484
CLINCH VALLEY MEMORIAL CEMETERY, INC.                                         VIRGINIA             54-1406409
EVERLY COMMUNITY FUNERAL CARE, INC.                                           VIRGINIA             54-1917599
EVERLY FUNERAL HOMES, INCORPORATED                                            VIRGINIA             54-0611646
EVERLY PFP, INC.                                                              VIRGINIA             54-1425591
SIMPLICITY PLANS OF ALABAMA, INC.                                             ALABAMA              72-1492844
FAIRFAX FUNERAL HOME, INC.                                                    VIRGINIA             54-0718777
JOSEPH W. TEAGUE FUNERAL HOME, INC.                                           VIRGINIA             54-0787590
RICHMOND MEMORIAL PARKS, INC.                                                 VIRGINIA             54-0801902
WASHINGTON MEMORIAL CEMETERY, INCORPORATED                                    VIRGINIA             54-0490257
WISE CORPORATION                                                              VIRGINIA             54-0832763
BARTLETT-BURDETTE-COX FUNERAL HOME, INC.                                   WEST VIRGINIA           55-0568150
CALFEE FUNERAL SERVICE OF PINEVILLE, INC.                                  WEST VIRGINIA           55-0266450
CASDORPH & CURRY FUNERAL HOME, INC.                                        WEST VIRGINIA           55-0721178
DODD-PAYNE-HESS FUNERAL HOME, INC.                                         WEST VIRGINIA           55-0523311
EVANS FUNERAL HOME, INC. (WEST VIRGINIA)                                   WEST VIRGINIA           55-0526285
GRACELAND MAUSOLEUM, INC.                                                  WEST VIRGINIA           55-0645205
KIMES FUNERAL HOME, INC.                                                   WEST VIRGINIA           55-0485749
KLINGEL-CARPENTER MORTUARY, INC.                                           WEST VIRGINIA           55-0460584
S.E. ACQUISITION OF MALDEN, WEST VIRGINIA, INC.                            WEST VIRGINIA           55-0764400
WILSON FUNERAL HOME, INC.                                                  WEST VIRGINIA           55-0329572
LAKEWOOD MEMORIAL PARK, INC.                                                MISSISSIPPI            64-0188145
MEMORIAL SERVICES OF COLUMBIA, INC.                                           MISSOURI             43-1171239
MEMORIAL FUNERAL HOME, INC.                                                   MISSOURI             43-0683654
LINCOLN MEMORIAL MORTUARY, INC.                                               NEBRASKA             47-0637566
S.E. ACQUISITION OF NEVADA, INC.                                               NEVADA              88-0397289
DESERT MEMORIAL, INC.                                                          NEVADA              88-0360543
NEPTUNE SOCIETY OF NEVADA, INC.                                                NEVADA              88-0285085
RENO MEMORIAL, INC.                                                            NEVADA              88-0405570
S.E. ACQUISITION OF RENO, NEVADA, INC.                                         NEVADA              88-0405123
STRONG & BURNS FUNERAL HOME, INC.                                             NEW YORK             16-1449371
MONTLAWN MEMORIAL PARK, INC.                                               NORTH CAROLINA          56-1338130
ROCKY MOUNT MEMORIAL PARK, INC.                                            NORTH CAROLINA          56-1014862
S.E. ACQUISITION OF OREGON, INC.                                               OREGON              93-1187545
AMLING/SCHROEDER FUNERAL SERVICE, INC.                                         OREGON              93-1181655
CASCADE CREMATORY, INC.                                                        OREGON              93-1179976
CHAPEL OF THE ROSES, INC.                                                      OREGON              93-0474022
CHAPEL OF THE VALLEY FUNERAL HOME, INC.                                        OREGON              93-1162684
DUTTON, INC.                                                                   OREGON              93-1064740
J.P. FINLEY AND SON MORTUARY, INC.                                             OREGON              93-1066620
SUNSET HILLS MEMORIAL PARK                                                     OREGON              93-0395535
GREENWOOD CEMETERY, INC.                                                       OREGON              93-0179035
NISWONGER & REYNOLDS, INC.                                                     OREGON              93-0497426
S.E. ACQUISITION OF MYRTLE CREEK, OREGON, INC.                                 OREGON              93-1204595
S.E. ACQUISITION OF REEDSPORT, OREGON, INC.                                    OREGON              91-1852408
TABOR'S DESERT HILLS MORTUARY, INC.                                            OREGON              93-1136418
CAROLINA FINANCIAL CORPORATION OF PICKENS                                  SOUTH CAROLINA          57-0792449
HILL-CREST MEMORIAL PARK                                                   SOUTH CAROLINA          57-0310741
OCONEE MEMORIAL GARDENS, INC.                                              SOUTH CAROLINA          57-1019419
DILLARD MEMORIAL, INC.                                                     SOUTH CAROLINA          57-0142493
COLE & GARRETT FUNERAL HOMES, INC.                                           TENNESSEE             62-1269993
HIGHLAND MEMORIAL CEMETERY, INC.                                             TENNESSEE             62-1515308
HOLLY HILLS, INC.                                                            TENNESSEE             62-1516351
KINGSPORT CEMETERY CORPORATION                                               TENNESSEE             62-0453134
THE NASHVILLE HISTORIC CEMETERY ASSOCIATION, INC.                            TENNESSEE             62-1455239



                                       vi
   7



                                                                              STATE OF          I.R.S. EMPLOYER
                                                                          INCORPORATION OR       IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS*                                        FORMATION               NUMBER

                                                                                          
PASADENA FUNERAL HOME, INC.                                                    TEXAS               75-2640884
RESTLAND FUNERAL HOME, INC.                                                    TEXAS               75-0948243
ANDERSON-CLAYTON BROS. FUNERAL HOMES, INC.                                     TEXAS               75-0113340
LITTLE BETHEL MEMORIAL PARK, INC.                                              TEXAS               75-2047789
ROSELAWN MEMORIAL GARDENS, INC.                                                TEXAS               75-1853478
BELEW FUNERAL HOME, INC.                                                       TEXAS               75-2579187
BEXAR COUNTY MORTUARY SERVICES, INC.                                           TEXAS               74-2174694
BLUEBONNET HILLS MEMORIAL PARK, INC.                                           TEXAS               75-0940778
BLUEBONNET HILLS FUNERAL HOME, INC.                                            TEXAS               75-1887053
BRIGHT-HOLLAND FUNERAL HOME, INC.                                              TEXAS               75-2555413
CRESPO & SONS, INCORPORATED                                                    TEXAS               74-1663926
DALTON & SON FUNERAL HOME, INC.                                                TEXAS               75-1420288
EMERALD HILLS FUNERAL CORPORATION                                              TEXAS               75-2153941
J. E. FOUST & SON FUNERAL DIRECTORS, INC.                                      TEXAS               75-2546901
GUARDIAN CREMATION SOCIETY, INC.                                               TEXAS               75-2783157
GUARDIAN FUNERAL HOME, INC.                                                    TEXAS               75-0308465
HILLTOP MEMORIAL PARK                                                          TEXAS               75-0845982
LAUREL LAND MEMORIAL PARK, INC.                                                TEXAS               75-0387310
LAUREL LAND FUNERAL HOME, INC.                                                 TEXAS               75-1179873
SINGING HILLS FUNERAL HOME, INC.                                               TEXAS               75-1452354
LAUREL LAND OF FORT WORTH, INC.                                                TEXAS               75-2163741
LAUREL LAND FUNERAL HOME OF FORT WORTH, INC.                                   TEXAS               75-2163737
LYONS FUNERAL HOME, INC.                                                       TEXAS               75-2552395
METROCREST FUNERAL HOME, INC.                                                  TEXAS               75-2186675
RESTLAND OF DALLAS, INC.                                                       TEXAS               75-1506921
ABBEY PLAN OF TEXAS, INC.                                                      TEXAS               74-2869205
HIGHLAND MEMORIAL GARDENS, INC.                                                TEXAS               75-1641443
SIMPLICITY PLAN OF TEXAS, INC.                                                 TEXAS               75-2317933
SOUTHPARK FUNERAL HOME, INC.                                                   TEXAS               74-1457971
SOUTH MEMORIAL PARK, INC.                                                      TEXAS               74-1404087
S.E. ACQUISITION OF WASHINGTON, INC.                                         WASHINGTON            91-1869762
E.R. BUTTERWORTH & SONS                                                      WASHINGTON            91-0161720
CREMATION SOCIETY NORTHWEST, INC.                                            WASHINGTON            91-1689873
EVERGREEN STAPLES FUNERAL CHAPEL, INC.                                       WASHINGTON            91-1435155
CUNNINGHAM MEMORIAL PARK, INC.                                             WEST VIRGINIA           55-0675890
LEGACY ONE, INC.                                                           WEST VIRGINIA           55-0451101
FINDLAY CEMETERY, INC.                                                          OHIO               55-0600689
EASTLAWN MEMORIAL GARDENS, INCORPORATED                                       VIRGINIA             54-0630640
GRANDVIEW MEMORY GARDENS, INCORPORATED                                        VIRGINIA             55-0418106
GREENHILLS MEMORY GARDENS, INC.                                               VIRGINIA             55-0453246
HIGHLAND MEMORY GARDENS, INCORPORATED (VA)                                    VIRGINIA             55-0398489
HOLLY MEMORIAL GARDENS, INC.                                                  VIRGINIA             54-0679281
MONTICELLO MEMORY GARDENS, INC.                                               VIRGINIA             55-0590890
SUNSET MEMORY GARDENS, INC.                                                   VIRGINIA             55-0588991
BLUE RIDGE FUNERAL HOME, INC.                                              WEST VIRGINIA           55-0479644
BLUE RIDGE MEMORIAL GARDENS, INC. (WVA)                                    WEST VIRGINIA           55-0385960
C.G.R., INC.                                                               WEST VIRGINIA           55-0542566
EASTERN CEMETERY ASSOCIATES, INC.                                          WEST VIRGINIA           55-0548764
ETERNAL LIGHT FUNERALS, INC.                                               WEST VIRGINIA           55-0493366
KANAWHA PLAZA PARTNERSHIP                                                  WEST VIRGINIA           55-0540511
LEGACY ONE SERVICE CORPORATION                                             WEST VIRGINIA           55-0658005
LOI CHARLESTON, INC.                                                       WEST VIRGINIA           55-0722745
MOUNTAIN VIEW MEMORY GARDENS, INC.                                         WEST VIRGINIA           55-0416346
NATIONAL EXCHANGE TRUST, LTD.                                              WEST VIRGINIA           55-0579178
NATIONAL FUNERAL SERVICES, INCORPORATED                                    WEST VIRGINIA           55-0604593
PLEASANT VIEW MEMORY GARDENS, INC.                                         WEST VIRGINIA           55-0418939
WILLIAMS-BLUE RIDGE FUNERAL HOME, INC.                                     WEST VIRGINIA           55-0534313



- ----------
* The address for each of the additional Registrants is 110 Veterans Memorial
Boulevard, Metairie, LA 70005, telephone (504) 837-5880.




                                      vii
   8



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
                           Treasury Department
                           Washington, DC

                           Federal Deposit Insurance Corporation
                           Washington, DC

                           The Board of Governors of the Federal Reserve System
                           Washington, DC

         (b)      The Trustee is authorized to exercise corporate trust powers.

                                     GENERAL

Item 2. Affiliations with Obligor and Underwriters. If the obligor or any
        underwriter for the obligor is an affiliate of the Trustee, describe
        each such affiliation.

        None
        See Note following Item 16.

Items 3-15 are not applicable because to the best of the Trustee's knowledge the
obligor is not in default under any Indenture for which the Trustee acts as
Trustee.

Item 16. List of Exhibits. Listed below are all the exhibits filed as a part of
         this statement of eligibility and qualification. Exhibits 1-4 are
         incorporated by reference from filing 333-35544.

         Exhibit 1. Copy of Articles of Association of the trustee now in
                    effect.

         Exhibit 2. a.     A copy of the certificate of the Comptroller of
                           Currency dated June 1, 1965, authorizing Firstar Bank
                           of Minnesota, N. A. to act as fiduciary.

                    b.     A copy of the certificate of authority of the trustee
                           to commence business issued June 9, 1903, by the
                           Comptroller of the Currency to Firstar Bank of
                           Minnesota, N.A.

         Exhibit 3. A copy of the authorization of the trustee to exercise
                    corporate trust powers issued by the Federal Reserve Board.

         Exhibit 4. Copy of the By-Laws of the trustee as now in effect.




                                       1
   9

         Exhibit 5. Copy of each Indenture referred to in Item 4.

         Exhibit 6. The consent of the trustee required by Section 321(b) of
                    the Act.

         Exhibit 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.

                                      NOTE

         The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligor within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligor, or affiliates, are based
upon information furnished to the Trustee by the obligor. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.

                                    SIGNATURE

         Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, a national banking association organized and existing under the laws of
the United States, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, hereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City of
Saint Paul and State of Minnesota on the 17th day of July, 2001.

                                  FIRSTAR BANK, N.A.,


          (Seal)
                                  /s/  Frank P. Leslie III, Vice President
                                  --------------------------------------------



                                       2
   10



                                                                       EXHIBIT 6

                                     CONSENT

         In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, Firstar Bank of Minnesota, N.A., hereby consents that reports
of examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.


Dated:  July 17, 2001

                                  FIRSTAR BANK, N.A.,



                                  /s/  Frank P. Leslie III, Vice President
                                  --------------------------------------------



                                       3
   11



                                                                       EXHIBIT 7

                        FIRSTAR BANK NATIONAL ASSOCIATION
                        STATEMENT OF FINANCIAL CONDITION
                                AS OF 12/31/2000

                                    ($000'S)



                                                              12/31/00
                                                            ------------
                                                         
ASSETS

         Cash and Due From Depository Institutions          $  4,544,505
         Federal Reserve Stock                                       -0-
         Securities                                           12,945,944
         Federal Funds                                           410,689
         Loans & Lease Financing Receivables                  50,162,986
         Fixed Assets                                            931,227
         Intangible Assets                                     1,322,468
         Other Assets                                          2,275,734
                                                            ------------
                  TOTAL ASSETS                              $ 72,593,553


LIABILITIES

         Deposits                                           $ 53,380,847
         Fed Funds                                             5,278,558
         Treasury Demand Notes                                   357,723
         Trading Liabilities                                       4,682
         Other Borrowed Money                                  4,446,474
         Acceptances                                              19,638
         Subordinated Notes and Debentures                     2,016,942
         Other Liabilities                                  $  1,642,637
                                                            ------------
                  TOTAL LIABILITIES                         $ 67,147,501


EQUITY

         Common and Preferred Stock                         $     18,200
         Surplus                                               3,540,002
         Undivided Profits                                     1,887,850
                                                            ------------
                  TOTAL EQUITY CAPITAL                      $  5,446,052


TOTAL LIABILITIES AND EQUITY CAPITAL                        $ 72,593,553





                                       4

EX-99.1

   1
                                                                    EXHIBIT 99.1

- --------------------------------------------------------------------------------
   THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON   , 2001
                    UNLESS EXTENDED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------

                            STEWART ENTERPRISES, INC.

                              LETTER OF TRANSMITTAL
                                       FOR

                                OFFER TO EXCHANGE
    UP TO $300,000,000 REGISTERED 10 3/4% SENIOR SUBORDINATED NOTES DUE 2008
                                       FOR
 ANY AND ALL OUTSTANDING UNREGISTERED 10 3/4% SENIOR SUBORDINATED NOTES DUE 2008

                               THE EXCHANGE AGENT
                           FOR THE EXCHANGE OFFER IS:

                               FIRSTAR BANK, N.A.

                              For Delivery by Mail/
                        Hand Delivery/Overnight Delivery:

                               Firstar Bank, N.A.
                               101 East 5th Street
                               St. Paul, MN 55101
                               Attn: Frank Leslie

           By Facsimile Transmission (for eligible institutions only):

                                 (651) 229-6415

                               To Confirm Receipt:

                                 (651) 229-2600

                              For Information Call:

                                 (651) 229-2600

(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or by overnight delivery service.)

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED. DO NOT DELIVER THIS LETTER OF TRANSMITTAL TO STEWART
ENTERPRISES, INC.



   2



         By completing this letter of transmittal ("Letter of Transmittal"), you
acknowledge that you have received and reviewed the prospectus dated      , 2001
(the "Prospectus") of Stewart Enterprises, Inc. ("Stewart") and this Letter of
Transmittal, which together constitute the "Exchange Offer." This Letter of
Transmittal and the Prospectus have been delivered to you in connection with
Stewart's offer to exchange $300,000,000 in aggregate principal amount of its 10
3/4% Senior Subordinated Notes due 2008 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act")
for the same amount of its outstanding unregistered 10 3/4% Senior Subordinated
Notes due 2008 (the "Outstanding Notes").

         Stewart reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest date to which the Exchange Offer is extended. Stewart
shall timely notify the Exchange Agent of any extension by written notice.

         This Letter of Transmittal is to be completed by a Holder (this term is
defined below) of Outstanding Notes if:

         (1)      the Holder is delivering certificates for Outstanding Notes
                  with this document, or

         (2)      the tender of certificates for Outstanding Notes will be made
                  by book-entry transfer to the account maintained by Firstar
                  Bank, N.A., the exchange agent (the "Exchange Agent") for
                  these notes, at The Depository Trust Company ("DTC") according
                  to the procedures described in the Prospectus under the
                  heading "Exchange Offer - Procedures for Tendering." Please
                  note that delivery of documents required by this Letter of
                  Transmittal to DTC does not constitute delivery to the
                  Exchange Agent.

         You must tender your Outstanding Notes according to the guaranteed
delivery procedures described in this document if:

         (1)      your Outstanding Notes are not immediately available;

         (2)      you cannot deliver your Outstanding Notes, this Letter of
                  Transmittal and all required documents to the Exchange Agent
                  on or before the Expiration Date; or

         (3)      you are unable to obtain confirmation of a book-entry tender
                  of your Outstanding Notes into the Exchange Agent's account at
                  DTC on or before the Expiration Date.

         More complete information about guaranteed delivery procedures is
contained in the Prospectus under the heading "Exchange Offer - Guaranteed
Delivery Procedures."

         As used in this Letter of Transmittal, the term "Holder" means (1) any
person in whose name Outstanding Notes are registered on the books of Stewart,
(2) any other person who has obtained a properly executed bond power from the
registered Holder or (3) any person whose Outstanding Notes are held of record
by DTC who desires to deliver such notes by book-entry transfer at DTC. You
should use this Letter of Transmittal to indicate whether or not you would like
to participate in the Exchange Offer. If you decide to tender your Outstanding
Notes, you must complete this entire Letter of Transmittal.

         PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW. IF YOU HAVE QUESTIONS OR NEED HELP, OR
IF YOU WOULD LIKE ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF
TRANSMITTAL, YOU SHOULD CONTACT THE EXCHANGE AGENT AT (651) 229-2600 OR AT ITS
ADDRESS SET FORTH ABOVE.



   3



List below the Outstanding Notes to which this Letter of Transmittal relates. If
the space below is inadequate, list the registered numbers and principal amount
on a separate signed schedule and affix the list to this Letter of Transmittal.



                    DESCRIPTION OF OUTSTANDING NOTES TENDERED
- --------------------------------------------------------------------------------


Name(s) and Address(es) of Registered Owner(s) as (it/they)
             appear(s) on the Outstanding Notes
                                                               Certificate   Aggregate Principal   Principal
                                                                  Numbers          Amount
                                                              of Outstanding  Amount Represented
                                                                  Notes*     by Outstanding Notes   Tendered
                                                                                           
                                                              -------------- --------------------   --------

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

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

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

                                                              -------------- --------------------   --------
                                                                                 Total Principal
                                                                                    Amount of
                                                                                   Outstanding
                                                                                 Notes Tendered**
                                                              -------------- --------------------   --------

           (If additional space is required, attach a continuation sheet in substantially the above form.)




*        Need not be completed by book-entry holders.

**       Unless otherwise indicated, any tendering holder of Outstanding Notes
         will be deemed to have tendered the entire aggregate principal amount
         represented by such Outstanding Notes. All tenders must be in integral
         multiples of $1,000.


                               METHOD OF DELIVERY


[ ]      Check here if tendered Outstanding Notes are enclosed herewith.

[ ]      Check here if tendered Outstanding Notes are being delivered by
         book-entry transfer made to an account maintained by the Exchange Agent
         with a Book-Entry Transfer Facility and complete the following:

                                                                                                   
              Name of Tendering Institution:.........................................................
              Account Number:  ......................................................................
              Transaction Code Number:  .............................................................




[ ]      Check here if tendered Outstanding Notes are being delivered pursuant
         to a Notice of Guaranteed Delivery and complete the following:


                                                                                                   
              Name(s) of Registered Holder(s):.......................................................
              .......................................................................................

              Date of Execution of Notice of Guaranteed Delivery:....................................
              Window Ticket Number (if available):...................................................

              Name of Eligible Institution that guaranteed delivery:  ...............................
              .......................................................................................

              Account Number (if delivered by book-entry transfer): .................................






   4



                        SIGNATURES MUST BE PROVIDED BELOW
               PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

         According to the terms and conditions of the Exchange Offer, I hereby
tender to Stewart the principal amount of Outstanding Notes indicated above. At
the time these notes are accepted by Stewart, and exchanged for the same
principal amount of Exchange Notes, I will sell, assign, and transfer to Stewart
all right, title and interest in and to the Outstanding Notes I have tendered. I
am aware that the Exchange Agent also acts as the agent of Stewart. By executing
this document, I irrevocably appoint the Exchange Agent as my agent and
attorney-in-fact for the tendered Outstanding Notes with full power of
substitution to:

         1.       deliver certificates for the Outstanding Notes, or transfer
                  ownership of the Outstanding Notes on the account books
                  maintained by DTC, to Stewart and deliver all accompanying
                  evidences of transfer and authenticity to Stewart, and

         2.       present the Outstanding Notes for transfer on the books of
                  Stewart, receive all benefits and exercise all rights of
                  beneficial ownership of these Outstanding Notes, according to
                  the terms of the Exchange Offer. The power of attorney granted
                  in this paragraph is irrevocable and coupled with an interest.

         I represent and warrant that I have full power and authority to tender,
sell, assign, and transfer the Outstanding Notes that I am tendering. I
represent and warrant that Stewart will acquire good and unencumbered title to
the Outstanding Notes, free and clear of all liens, restrictions, charges and
encumbrances and that the Outstanding Notes will not be subject to any adverse
claim at the time Stewart acquires them. I further represent that:

         1.       any Exchange Notes I will acquire in exchange for the
                  Outstanding Notes I have tendered will be acquired in the
                  ordinary course of business;

         2.       I have not engaged in, do not intend to engage in, and have no
                  arrangement with any person to engage in, a distribution of
                  any Exchange Notes issued to me; and

         3.       I am not an "affiliate" (as defined in Rule 405 under the
                  Securities Act) of Stewart.

         I understand that the Exchange Offer is being made in reliance on
interpretations contained in letters issued to third parties by the staff of the
Securities and Exchange Commission ("Commission"). These letters provide that
the Exchange Notes issued in exchange for the Outstanding Notes in the Exchange
Offer may be offered for resale, resold, and otherwise transferred by a Holder
of Exchange Notes, unless that person is an "affiliate" of Stewart within the
meaning of Rule 405 under the Securities Act, without compliance with the
registration and prospectus delivery provisions of the Securities Act. The
Exchange Notes must be acquired in the ordinary course of the Holder's business
and the Holder must not be engaging in, must not intend to engage in, and must
not have any arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes.

         If I am not a broker-dealer, I represent that I am not engaged in, and
do not intend to engage in, a distribution of the Exchange Notes. If I am a
broker-dealer that will receive Exchange Notes for my own account in exchange
for Outstanding Notes that were acquired as a result of market-making activities
or other trading activities (an "Exchanging Dealer"), I acknowledge that I will
deliver a prospectus in connection with any resale of the Exchange Notes;
however, by so acknowledging and by delivering a prospectus, I will not be
deemed to admit that I am an "underwriter" within the meaning of the Securities
Act.

         Stewart has agreed that, subject to the provisions of the registration
rights agreement, the Prospectus, as it may be amended or supplemented from time
to time, may be used by an Exchanging Dealer in connection with resales of
Exchange Notes received in exchange for Outstanding Notes, where such
Outstanding Notes were acquired by such Exchanging Dealer for its own account as
a result of market-making activities or other trading activities, for a period
ending 180 days after the date on which the registration statement of which the
Prospectus is a part is declared effective or, if earlier, when all such
Exchange Notes have been disposed of by such Exchanging



   5



Dealer. In that regard, if I am an Exchanging Dealer, by tendering such
Outstanding Notes and executing this Letter of Transmittal, I agree that, upon
receipt of notice from Stewart of the occurrence of any event or the discovery
of any fact which makes any statement contained or incorporated by reference in
the Prospectus untrue in any material respect or which causes the Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference therein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the registration rights agreement, I will suspend the sale
of Exchange Notes pursuant to the Prospectus until Stewart has amended or
supplemented the Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to the Exchanging
Dealer or Stewart has given notice that the sale of the Exchange Notes may be
resumed, as the case may be. If Stewart gives such notice to suspend the sale of
the Exchange Notes, it shall extend the 180-day period referred to above during
which Exchanging Dealers are entitled to use the Prospectus in connection with
the resale of Exchange Notes by the number of days during the period from and
including the date of the giving of such notice to and including the date when
Exchanging Dealers shall have received copies of the supplemented or amended
Prospectus necessary to permit resales of the Exchange Notes or to and including
the date on which Stewart has given notice that the sale of Exchange Notes may
be resumed, as the case may be.

         Upon request, I will execute and deliver any additional documents
deemed by the Exchange Agent or Stewart to be necessary or desirable to complete
the assignment, transfer, and purchase of the Outstanding Notes I have tendered.

         I understand that Stewart will be deemed to have accepted validly
tendered Outstanding Notes when Stewart gives oral or written notice of
acceptance to the Exchange Agent.

         If, for any reason, any tendered Outstanding Notes are not accepted for
exchange in the Exchange Offer, certificates for those unaccepted Outstanding
Notes will be returned to me without charge at the address shown below or at a
different address if one is listed under "Special Delivery Instructions." Any
unaccepted Outstanding Notes which had been tendered by book-entry transfer will
be credited to an account at DTC, as soon as reasonably possible after the
Expiration Date.

         All authority granted or agreed to be granted by this Letter of
Transmittal will survive my death, incapacity or, if I am a corporation or
institution, my dissolution and every obligation under this Letter of
Transmittal is binding upon my heirs, personal representatives, successors, and
assigns.

         I understand that tenders of Outstanding Notes according to the
procedures described in the Prospectus under the heading "Exchange Offer -
Procedures for Tendering" and in the instructions included in this document
constitute a binding agreement between myself and Stewart subject to the terms
and conditions of the Exchange Offer.

         Unless I have described other instructions in this Letter of
Transmittal under the section "Special Issuance Instructions," please issue the
certificates representing Exchange Notes issued in exchange for my tendered and
accepted Outstanding Notes in my name, and issue any replacement certificates
for Outstanding Notes not tendered or not exchanged in my name. Similarly,
unless I have instructed otherwise under the section "Special Delivery
Instructions," please send the certificates representing the Exchange Notes
issued in exchange for tendered and accepted Outstanding Notes and any
certificates for Outstanding Notes that were not tendered or not exchanged, as
well as any accompanying documents, to me at the address shown below my
signature. If both "Special Issuance Instructions" and "Special Delivery
Instructions" are completed, please issue the certificates representing the
Exchange Notes issued in exchange for my tendered and accepted Outstanding Notes
in the name(s) of, and return any Outstanding Notes that were not tendered or
exchanged and send such certificates to, the person(s) so indicated. I
understand that if Stewart does not accept any of the tendered Outstanding Notes
for exchange, Stewart has no obligation to transfer any Outstanding Notes from
the name of the registered Holder(s) according to my instructions in the
"Special Issuance Instructions" and "Special Delivery Instructions" sections of
this document.




   6




                                                                      
               SPECIAL ISSUANCE INSTRUCTIONS                               SPECIAL DELIVERY INSTRUCTIONS
               (SEE INSTRUCTIONS 4, 5 AND 6)                               (SEE INSTRUCTIONS 4, 5 AND 6)

     To be  completed  only (i) if  Outstanding  Notes in a           To be completed  ONLY if the  Exchange  Notes
principal amount not tendered,  or Exchange Notes issued in      are to be issued  or sent to  someone  other  than
exchange for Outstanding  Notes accepted for exchange,  are      you  or  to  you  at  an  address  other  than  as
to be  issued in the name of  someone  other  than you,  or      indicated above.
(ii) if Outstanding  Notes tendered by book-entry  transfer
which are not  exchanged are to be returned by credit to an              [ ] Mail [ ] Issue (check  appropriate
account  maintained at the  Book-Entry  Transfer  Facility.              boxes) certificates to:
Issue Exchange Notes and/or Outstanding Notes to:
                                                                 Name.............................................
Name...................................................                            (Type or Print)
                     (Type or Print)
                                                                 Address..........................................
Address................................................
                                                                 .................................................
 .......................................................                                              (Zip Code)
                                          (Zip Code)
 .......................................................          .................................................
      (Tax Identification or Social Security Number)               (Tax Identification or Social Security Number)

              (Complete Substitute Form W-9)

Credit unexchanged Outstanding Notes delivered by book-entry
transfer to the Book-Entry Transfer Facility set forth below:

Book-Entry Transfer Facility Account Number:

 .......................................................


                                 SPECIAL BROKER-DEALER INSTRUCTIONS

         [ ]  Check here if you are a broker-dealer and wish to receive 10
              additional copies of the Prospectus and 10 copies of any
              amendments or supplements thereto.

              Name
                     ......................................................................................
              Address
                     ......................................................................................

                     ......................................................................................
                                                                       (Zip Code)




   7
- --------------------------------------------------------------------------------

                                    IMPORTANT
                         PLEASE SIGN HERE WHETHER OR NOT
             OUTSTANDING NOTES ARE BEING PHYSICALLY TENDERED HEREBY
            (Complete Accompanying Substitute Form W-9 on Last Page)

 ................................................................................

 ................................................................................
            (Signature(s) of Registered Holders of Outstanding Notes)

                         Dated ..................., 2001

(The above lines must be signed by the registered holder(s) of Outstanding Notes
as name(s) appear(s) on the Outstanding Notes or on a security position listing,
or by person(s) authorized to become registered holder(s) by a properly
completed bond power from the registered holder(s), a copy of which must be
transmitted with this Letter of Transmittal. If Outstanding Notes to which this
Letter of Transmittal relate are held of record by two or more joint holders,
then all such holders must sign this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
then such person must (i) set forth his or her full title below and (ii) unless
waived by Stewart, submit evidence satisfactory to Stewart of such person's
authority so to act. See Instructions 1 and 5 regarding completion of this
Letter of Transmittal, printed below.)

Name(s).........................................................................
                             (Please Type or Print)

Capacity:.......................................................................

Address:........................................................................

        ........................................................................
                               (Include Zip Code)

Area Code and Telephone Number:  ...............................................

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


- --------------------------------------------------------------------------------
                          MEDALLION SIGNATURE GUARANTEE
                      (If Required by Instructions 1 and 5)

Certain signatures must be Guaranteed by an Eligible Institution.

Signature(s) Guaranteed by an Eligible Institution: ............................
                                                      (Authorized Signature)

 ................................................................................
                                     (Title)

 ................................................................................
                                 (Name of Firm)

 ................................................................................
                           (Address, Include Zip Code)

 ................................................................................
                        (Area Code and Telephone Number)

Dated:...................................................................., 2001

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

   8

                                  INSTRUCTIONS
                     PART OF THE TERMS AND CONDITIONS OF THE
                                 EXCHANGE OFFER

1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OUTSTANDING NOTES. The tendered
Outstanding Notes or a confirmation of book-entry delivery, as well as a
properly completed and executed copy or facsimile of this Letter of Transmittal
and any other required documents must be received by the Exchange Agent at its
address listed on the cover of this document before 5:00 p.m., New York City
time, on the Expiration Date. YOU ARE RESPONSIBLE FOR THE DELIVERY OF THE
OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND ALL REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT. EXCEPT UNDER THE LIMITED CIRCUMSTANCES DESCRIBED BELOW, THE
DELIVERY OF THESE DOCUMENTS WILL BE CONSIDERED TO HAVE BEEN MADE ONLY WHEN
ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. WHILE THE METHOD OF
DELIVERY IS AT YOUR RISK AND CHOICE, STEWART RECOMMENDS THAT YOU USE AN
OVERNIGHT OR HAND DELIVERY SERVICE RATHER THAN REGULAR MAIL. YOU SHOULD SEND
YOUR DOCUMENTS WELL BEFORE THE EXPIRATION DATE TO ENSURE RECEIPT BY THE EXCHANGE
AGENT. YOU MAY REQUEST THAT YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY
OR NOMINEE DELIVER YOUR OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND ALL
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT. DO NOT SEND YOUR OUTSTANDING NOTES TO
STEWART.

         If you wish to tender your Outstanding Notes, but:

                  (a) your Outstanding Notes are not immediately available;

                  (b)      you cannot deliver your Outstanding Notes, this
                           Letter of Transmittal and all required documents to
                           the Exchange Agent before the Expiration Date; or

                  (c)      you are unable to complete the book-entry tender
                           procedure before the Expiration Date,

you must tender your Outstanding Notes according to the guaranteed delivery
procedure. A summary of this procedure follows, but you should read the section
in the Prospectus titled "Exchange Offer - Procedures for Tendering" for more
complete information. As used in this Letter of Transmittal, an "Eligible
Institution" is any participant in a Recognized Signature Guarantee Medallion
Program within the meaning of Rule 17Ad-15 of the Exchange Act.

         For a tender made through the guaranteed delivery procedure to be
valid, the Exchange Agent must receive a properly completed and executed Notice
of Guaranteed Delivery or a facsimile of that notice before 5:00 p.m., New York
City time, on the Expiration Date. The Notice of Guaranteed Delivery must be
delivered by an Eligible Institution and must:

                  (a)      state your name and address;

                  (b)      list the certificate numbers and principal amounts of
                           the Outstanding Notes being tendered;

                  (c)      state that tender of your Outstanding Notes is being
                           made through the Notice of Guaranteed Delivery; and

                  (d)      guarantee that this Letter of Transmittal, or a
                           facsimile of it, the certificates representing the
                           Outstanding Notes, or a confirmation of DTC
                           book-entry transfer, and all other required documents
                           will be deposited with the Exchange Agent by the
                           Eligible Institution within three New York Stock
                           Exchange trading days after the Expiration Date.

         The Exchange Agent must receive your Outstanding Notes certificates, or
a confirmation of DTC book entry, in proper form for transfer, this Letter of
Transmittal and all required documents within three New York Stock

   9

Exchange trading days after the Expiration Date or your tender will be invalid
and may not be accepted for exchange.

         Stewart has the sole right to decide any questions about the validity,
form, eligibility, time of receipt, acceptance or withdrawal of tendered
Outstanding Notes, and its decision will be final and binding. Stewart's
interpretation of the terms and conditions of the Exchange Offer, including the
instructions contained in this Letter of Transmittal and in the Prospectus under
the heading "Exchange Offer - Conditions," will be final and binding on all
parties.

         Stewart has the absolute right to reject any or all of the tendered
Outstanding Notes if

         (1)      the Outstanding Notes are not properly tendered or

         (2)      in the opinion of counsel, the acceptance of those Outstanding
                  Notes would be unlawful.

         Stewart may also decide to waive any conditions, defects, or invalidity
of tender of Outstanding Notes and accept such Outstanding Notes for exchange.
Any defect or invalidity in the tender of Outstanding Notes that is not waived
by Stewart must be cured within the period of time set by Stewart.

         It is your responsibility to identify and cure any defect or invalidity
in the tender of your Outstanding Notes. Tender of your Outstanding Notes will
not be considered to have been made until any defect is cured or waived. Neither
Stewart, the Exchange Agent nor any other person is required to notify you that
your tender was invalid or defective, and no one will be liable for any failure
to notify you of such a defect or invalidity in your tender of Outstanding
Notes. As soon as reasonably possible after the Expiration Date, the Exchange
Agent will return to the Holder any Outstanding Notes that were invalidly
tendered if the defect of invalidity has not been cured or waived.

         2. TENDER BY HOLDER. You must be a Holder of Outstanding Notes in order
to participate in the Exchange Offer. If you are a beneficial holder of
Outstanding Notes who wishes to tender, but you are not the registered Holder,
you must arrange with the registered Holder to execute and deliver this Letter
of Transmittal on his, her or its behalf. Before completing and executing this
Letter of Transmittal and delivering the registered Holder's Outstanding Notes,
you must either make appropriate arrangements to register ownership of the
Outstanding Notes in your name, or obtain a properly executed bond power from
the registered Holder. The transfer of registered ownership of Outstanding Notes
may take a long period of time.

         3. PARTIAL TENDERS. If you are tendering less than the entire principal
amount of Outstanding Notes represented by a certificate, you should fill in the
principal amount you are tendering in the last column of the box entitled
"Description of Outstanding Notes." The entire principal amount of Outstanding
Notes listed on the certificate delivered to the Exchange Agent will be deemed
to have been tendered unless you fill in the appropriate box. If the entire
principal amount of all Outstanding Notes is not tendered, a certificate will be
issued for the principal amount of those untendered Outstanding Notes not
tendered.

         Unless a different address is provided in the appropriate box on this
Letter of Transmittal, certificate(s) representing Exchange Notes issued in
exchange for any tendered and accepted Outstanding Notes will be sent to the
registered Holder at his or her registered address, promptly after the
Outstanding Notes are accepted for exchange. In the case of Outstanding Notes
tendered by book-entry transfer, any untendered Outstanding Notes and any
Exchange Notes issued in exchange for tendered and accepted Outstanding Notes
will be credited to accounts at DTC.

         4. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.

         If you are the registered Holder of the Outstanding Notes tendered with
this document, and are signing this Letter of Transmittal, your signature must
match exactly with the name(s) written on the face of the Outstanding Notes.
There can be no alteration, enlargement, or change in your signature in any
manner. If certificates representing the Exchange Notes, or certificates issued
to replace any Outstanding Notes you have not tendered are


   10

to be issued to you as the registered Holder, do not endorse any tendered
Outstanding Notes, and do not provide a separate bond power.

         If you are not the registered Holder, or if Exchange Notes or any
replacement Outstanding Note certificates will be issued to someone other than
you, you must either properly endorse the Outstanding Notes you have tendered or
deliver with this Letter of Transmittal a properly completed separate bond
power. Please note that the signatures on any endorsement or bond power must be
guaranteed by an Eligible Institution.

         If you are signing this Letter of Transmittal but are not the
registered Holder(s) of any Outstanding Notes listed on this document under the
"Description of Outstanding Notes Tendered," the Outstanding Notes tendered must
be endorsed or accompanied by appropriate bond powers, in each case signed in
the name of the registered Holder(s) exactly as it appears on the Outstanding
Notes. Please note that the signatures on any endorsement or bond power must be
guaranteed by an Eligible Institution.

         If this Letter of Transmittal, any Outstanding Notes tendered or any
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, that person must indicate their title or capacity when
signing. Unless waived by Stewart, evidence satisfactory to Stewart of that
person's authority to act must be submitted with this Letter of Transmittal.
Please note that the signatures on any endorsement or bond power must be
guaranteed by an Eligible Institution.

         ALL SIGNATURES ON THIS LETTER OF TRANSMITTAL MUST BE GUARANTEED BY AN
ELIGIBLE INSTITUTION UNLESS ONE OF THE FOLLOWING SITUATIONS APPLY:

- - If this Letter of Transmittal is signed by the registered Holder(s) of the
Outstanding Notes tendered with this Letter of Transmittal and such Holder(s)
has not completed the box titled "Special Payment Instructions" or the box
titled "Special Delivery Instructions;" or

- - If the Outstanding Notes are tendered for the account of an Eligible
Institution.

         5. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If different from the
name and address of the person signing this Letter of Transmittal, you should
indicate, in the applicable box or boxes, the name and address where Outstanding
Notes issued in replacement for any untendered or tendered but unaccepted
Outstanding Notes should be issued or sent. If replacement notes for Outstanding
Notes are to be issued in a different name, you must indicate the taxpayer
identification or social security number of the person named.

         6. TRANSFER TAXES. Stewart will pay all transfer taxes, if any,
applicable to the exchange of Outstanding Notes in the Exchange Offer. However,
transfer taxes will be payable by you (or by the tendering Holder if you are
signing this letter on behalf of a tendering Holder) if:

- -        certificates representing Exchange Notes or notes issued to replace any
         Outstanding Notes not tendered or accepted for exchange are to be
         delivered to, or are to be registered or issued in the name of, a
         person other than the registered Holder;

- -        tendered Outstanding Notes are registered in the name of any person
         other than the person signing this Letter of Transmittal; or

- -        a transfer tax is imposed for any reason other than the exchange of
         Outstanding Notes according to the Exchange Offer. If satisfactory
         evidence of the payment of those taxes or an exemption from payment is
         not submitted with this Letter of Transmittal, the amount of those
         transfer taxes will be billed directly to the tendering Holder. Until
         those transfer taxes are paid, Stewart will not be required to deliver
         any Exchange Notes required to be delivered to, or at the direction of,
         such tendering Holder.

         Except as provided in this Instruction 6, it is not necessary for
transfer tax stamps to be attached to the Outstanding Notes listed in this
Letter of Transmittal.


   11

         7. SUBSTITUTE FORM W-9. You must provide the Exchange Agent with a
correct Taxpayer Identification Number ("TIN") for the Holder on the enclosed
Substitute Form W-9. If the Holder is an individual, the TIN is his or her
social security number. If you do not provide the required information on the
Substitute Form W-9, you may be subject to 31% federal income tax withholding on
certain payments made to the Holders of Exchange Notes. Certain Holders, such as
corporations and certain foreign individuals, are not subject to these backup
withholding and reporting requirements. For additional information, please read
the enclosed Guidelines for Certification of TIN on Substitute Form W-9. To
prove to the Exchange Agent that a foreign individual qualifies as an exempt
Holder, the foreign individual must submit a Form W-8, Form W-8 BEN or other
similar statement, signed under penalties of perjury, certifying as to that
individual's exempt status. You can obtain the appropriate form from the
Exchange Agent.

         8. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of
Outstanding Notes tendered for exchange will be determined by Stewart, in its
sole discretion, which determination shall be final and binding. Stewart
reserves the absolute right to reject any or all tenders not properly tendered
or to not accept any particular Outstanding Notes which acceptance might, in the
judgment of Stewart or its counsel, be unlawful. Stewart also reserves the
absolute right to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Outstanding Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender Outstanding Notes in the Exchange Offer). Stewart's
interpretation of the terms and conditions of the Exchange Offer as to any
particular Outstanding Notes either before or after the Expiration Date
(including the Letter of Transmittal and the instructions thereto) shall be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Outstanding Notes for exchange must be cured
within such reasonable period of time as Stewart shall determine. Neither
Stewart, the Exchange Agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of
Outstanding Notes for exchange; nor shall any of them incur any liability for
failure to give such notification. Tenders of Outstanding Notes will not be
deemed to have been made until such defects or irregularities have been cured or
waived. Any Outstanding Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.

         9. WAIVER OF CONDITIONS. Stewart may choose, at any time and for any
reason, to amend, waive or modify certain of the conditions to the Exchange
Offer. The conditions applicable to tenders of Outstanding Notes in the Exchange
Offer are described in the Prospectus under the heading "Exchange Offer -
Conditions."

         10. NO CONDITIONAL TENDER. No alternative, conditional, irregular or
contingent tender of Outstanding Notes on transmittal of this Letter of
Transmittal will be accepted.

         11. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES. If your
Outstanding Notes have been mutilated, lost, stolen or destroyed, you should
contact the Exchange Agent at the address listed on the cover page of this
document for further instructions.

         12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. If you have
questions, need assistance, or would like to receive additional copies of the
Prospectus or this Letter of Transmittal, you should contact the Exchange Agent
at the address listed in the Prospectus. You may also contact your broker,
dealer, commercial bank, trust company, or other nominee for assistance
concerning the Exchange Offer.

         13. WITHDRAWAL. Tenders may be withdrawn only pursuant to the
withdrawal rights set forth in the Prospectus under the caption "Exchange Offer
- - Withdrawal of Tenders."

   12

TO BE COMPLETED BY ALL TENDERING HOLDERS



                                                 (SEE INSTRUCTION 7)
- ------------------------------------ --------------------------------------- ---------------------------------------
                                                                       
            SUBSTITUTE               PART 1 - PLEASE PROVIDE YOUR TIN IN             Social Security Number
                                     THE BOX AT RIGHT AND CERTIFY BY                           OR
             FORM W-9                SIGNING AND DATING BELOW                    Employer Identification Number

                                                                                 ______________________________
                                     -------------------------------------------------------------------------------
    DEPARTMENT OF THE TREASURY       PART 2 - Certification - Under penalties of         PART 3 -
     INTERNAL REVENUE SERVICE                 perjury, I certify that:

                                     (1)   The number shown on this form is my           Awaiting TIN
                                           correct Taxpayer Identification Number
                                           (or I am waiting for a number to be
                                           issued to me) and

                                     (2)   I am not subject to backup withholding        Please complete the
   PAYER'S REQUEST FOR TAXPAYER            either because I have not been notified by    Certificate of Awaiting
    IDENTIFICATION NUMBER (TIN)            the Internal Revenue Service ("IRS") that     Taxpayer Identification
                                           I am subject to backup withholding as a       Number below.
                                           result of failure to report all interest or
                                           dividends, or the IRS has notified me that
                                           I am no longer subject to backup
                                           withholding.

                                     (3)   I am a U. S. person (including a U. S.
                                           resident alien).
                                     -------------------------------------------------------------------------------
                                     Certificate Instructions - You must cross out item (2) in Part 2 above if you
                                     have been notified by the IRS that you are subject to backup withholding
                                     because of under reporting interest or dividends on your tax return. However,
                                     if after being notified by the IRS that you were subject to backup withholding
                                     you received another notification from the IRS stating that you are no longer
                                     subject to backup withholding, do not cross out item (2).

                                     SIGNATURE                                                  DATE         , 2001
                                               -----------------------------------------------      ---------
- --------------------------------------------------------------------------------------------------------------------


NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
      OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
      THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
      NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

           YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
                  THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9

- --------------------------------------------------------------------------------
             CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

      I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number to the payor within 60
days, 31% of all reportable payments made to me thereafter will be withheld
until I provide a number.
- --------------------------------------------------------------------------------

                                                                         , 2001
- ----------------------------------------       -------------------------
               Signature                                 Date

- --------------------------------------------------------------------------------
                     CERTIFICATE FOR FOREIGN RECORD HOLDERS

     Under penalties of perjury, I certify that I am not a United States citizen
or resident (or I am signing for a foreign corporation, partnership, estate or
trust).

                                                                         , 2001
- ----------------------------------------       -------------------------
               Signature                                 Date

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

   13

        INSTRUCTIONS FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
                               (THE "GUIDELINES")

PURPOSE OF FORM.-A person who is required to file an information return with the
IRS must obtain your correct Taxpayer Identification Number ("TIN") to report
income paid to you, real estate transactions, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. For most individuals, your taxpayer identification number will be your
Social Security Number ("SSN"). Use the form provided to furnish your correct
TIN and, when applicable, (1) to certify that the TIN you are furnishing is
correct (or that you are waiting for a number to be issued), (2) to certify that
you are not subject to backup withholding, and (3) to claim exemption from
backup withholding if you are an exempt payee. Furnishing your correct TIN and
making the appropriate certifications will prevent certain payments from being
subject to backup withholding.

If you are an individual, you must generally provide the name shown on your
social security card. However, if you have changed your last name, for instance,
due to marriage, without informing the Social Security Administration of the
name change, please enter your first name, the last name shown on your social
security card, and your new last name.

If you are a sole proprietor, you must furnish your INDIVIDUAL name and either
your SSN or Employer Identification Number ("EIN"). You may also enter your
business name or "doing business as" name on the business name line. Enter your
name(s) as shown on your social security card and/or as it was used to apply for
your EIN on Form SS-4.

You must sign the certification or backup withholding will apply.

HOW TO OBTAIN A TIN.-If you do not have a TIN, apply for one immediately. To
apply, get FORM SS-5, Application for a Social Security Card (for individuals),
from your local office of the Social Security Administration, or FORM SS-4,
Application for Employer Identification Number (for businesses and all other
entities), from your local IRS office.

Once you receive your TIN, complete the enclosed form and return it to us.
Please note that you will be subject to backup withholding at a 31% rate until
we receive your TIN.



FOR THIS TYPE OF ACCOUNT:    GIVE NAME AND SSN OF:     FOR THIS TYPE OF ACCOUNT:      GIVE  NAME  AND EIN OF:
- -------------------------    ---------------------     -------------------------      -----------------------
                                                                             
1. Individual                The individual            6. Sole proprietorship         The owner(3)

2. Two or more individuals   The actual owner of       7. A valid trust, estate,      Legal entity(4)
   (joint account)           the account or, if           or pension trust
                             combined funds, the
                             first individual on
                             the account(1)

3. Custodian account of      The minor(2)              8. Corporate                   The corporation
   a minor (Uniform Gift
   to Minors Act)

4. a. The usual revocable    The grantor-trustee(1)    9. Association, club,          The organization
      savings trust                                       religious, charitable,
      (grantor is also                                    education, or other
      trustee)                                            tax-exempt organization

   b. So-called trust        The actual owner(1)       10. Partnership                The partnership
      account that is
      not a legal or
      valid trust under
      state law

5. Sole proprietorship       The owner(3)              11. A broker or registered     The broker or nominee
                                                           nominee

                                                       12. Account with the           The public entity
                                                           Department of
                                                           Agriculture in the
                                                           name of a public
                                                           entity (such as a
                                                           state or local
                                                           government, school
                                                           district or prison)
                                                           that receives
                                                           agricultural
                                                           program payments


- ----------
(1) List first and circle the name of the person whose number you furnish
(2) Circle the minor's name and furnish the minor's SSN
(3) Show your individual name. You may also enter your business name.
    You may use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
    (Do not furnish the TIN of the personal representative or trustee unless the
    legal entity itself is not designated in the account title.)

NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.


   14

WHAT IS BACKUP WITHHOLDING? -Persons making dividend payments to you after 1992
are required to withhold and pay to the IRS 31% of such payments under certain
conditions. This is called "backup withholding."

If you give the requester your correct TIN, make the appropriate certifications,
and report all your taxable interest and dividends on your tax return, your
payments will not be subject to backup withholding. Payments you receive will be
subject to backup withholding if:

1. You do not furnish your TIN to the requester;

2. The IRS notifies the requester that you furnished an incorrect TIN;

3. You are notified by the IRS that you are subject to backup withholding
because you failed to report all our interest and dividends on your tax return;

4. You do not certify to the requester that you are to subject to backup
withholding under 3 above; or

5. You do not certify your TIN.

PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING.-The following is a list of
payees exempt from backup withholding and for which no information reporting is
required.

(1) A corporation. (2) An organization exempt from tax under section 501(a), or
an IRA, or a custodial account under section 403(b)(7). (3) The United States or
any of its agencies or instrumentalities. (4) A state, the District of Columbia,
a possession of the United States, or any of their political subdivisions or
instrumentalities. (5) A foreign government or any of its political
subdivisions, agencies, or instrumentalities. (6) An international organization
or any of its agencies or instrumentalities. (7) A foreign central bank of
issue. (8) A dealer in securities or commodities required to register in the
United States or a possession of the United States.(9) A real estate
reinvestment trust. (10) An entity registered at all times during the tax year
under the Investment Company Act of 1940. (11) A common trust fund operated by a
bank under section 584(a). (12) A financial institution. (13) A middleman known
in the investment community as a nominee or listed in the most recent
publication of the American Society of Corporate Secretaries, Inc., Nominee
List. (14) A trust exempt from tax under section 664 or described in section
4947.

Payments of dividends generally not subject to backup withholding include the
following:

o Payments to nonresident aliens subject to withholding under section 1441.

o Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.

o Payments of patronage dividends not paid in money.

o Payments made by certain foreign organizations.

PENALTIES

FAILURE TO FURNISH TIN.-If you fail to furnish your correct TIN, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.

CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.-If you make a
false statement with no reasonable basis that results in no backup withholding,
you are subject to a $500 penalty.

CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-Willfully falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.

MISUSE OF TINS.-If the requester discloses or uses TINs in violation of Federal
law, the requester may be subject to civil and criminal penalties.

EX-99.2

   1
                                                                   EXHIBIT 99.2




                          NOTICE OF GUARANTEED DELIVERY
                                  FOR TENDER OF
       OUTSTANDING UNREGISTERED 10 3/4% SENIOR SUBORDINATED NOTES DUE 2008
                                       OF
                            STEWART ENTERPRISES, INC.



         This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's (as defined below) 10 3/4% Senior Subordinated
Notes due 2008 (the "Outstanding Notes") are not immediately available, (ii)
Outstanding Notes, the Letter of Transmittal and all other required documents
cannot be delivered to Firstar Bank, N.A. (the "Exchange Agent") on or prior to
5:00 p.m., New York City time, on the Expiration Date (as defined in the
Prospectus referred to below) or (iii) the procedures for delivery by book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand, overnight courier or mail, or transmitted by
facsimile transmission, to the Exchange Agent. See "Exchange Offer - Guaranteed
Delivery Procedures" in the Prospectus. In addition, in order to utilize the
guaranteed delivery procedure to tender Outstanding Notes pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal relating to
Outstanding Notes (or facsimile thereof) must also be received by the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
Capitalized terms not defined herein have the meanings assigned to them in the
Prospectus.


                               THE EXCHANGE AGENT
                           FOR THE EXCHANGE OFFER IS:

                               Firstar Bank, N.A.

                              For Delivery by Mail/
                        Hand Delivery/Overnight Delivery:

                               Firstar Bank, N.A.
                               101 East 5th Street
                               St. Paul, MN 55101
                               Attn: Frank Leslie



           By Facsimile Transmission (for eligible institutions only):

                                 (651) 229-6415

                               To Confirm Receipt:

                                 (651) 229-2600

                              For Information Call:

                                 (651) 229-2600

         DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.

         THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.


   2



Ladies and Gentlemen:

         The undersigned hereby tenders to Stewart Enterprises, Inc., a
Louisiana corporation (the "Company"), upon the terms and subject to the
conditions set forth in the prospectus dated       , 2001 (as the same may be
amended or supplemented from time to time, the "Prospectus"), and the related
Letter of Transmittal (which together constitute the "Exchange Offer"), receipt
of which is hereby acknowledged, the aggregate principal amount of Outstanding
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus under the caption "Exchange Offer - Guaranteed Delivery
Procedures."

         The undersigned understands and acknowledges that the Exchange Offer
will expire at 5:00 p.m., New York City time, on         , 2001, unless extended
by the Company. With respect to the Exchange Offer, "Expiration Date" means such
time and date, or if the Exchange Offer is extended, the latest time and date to
which the Exchange Offer is so extended by the Company.

         All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.




                                      DESCRIPTION OF OUTSTANDING NOTES TENDERED
                                      -----------------------------------------

    CERTIFICATE NUMBER(S) (IF KNOWN)
     OF OUTSTANDING NOTES OR ACCOUNT          AGGREGATE PRINCIPAL AMOUNT               PRINCIPAL
         NUMBER AT THE BOOK-ENTRY                 REPRESENTED BY                        AMOUNT
             TRANSFER FACILITY                   OUTSTANDING NOTES                     TENDERED
  ------------------------------------        ---------------------------        --------------------------
                                                                           


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


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


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


                                                                          TOTAL:
  ------------------------------------        ---------------------------        --------------------------



                            PLEASE SIGN AND COMPLETE



                                                          
  Signature(s):                                              Name(s):
                ------------------------------                        ----------------------------------------------

  --------------------------------------------               -------------------------------------------------------
  Address:                                                   Capacity (full title), if signing in a representative
           -----------------------------------               capacity:
                                                                      ----------------------------------------------
  --------------------------------------------
                                    (Zip Code)
  Area Code and Telephone Number:
  --------------------------------------------               Taxpayer Identification or Social Security Number:

  Dated:
        --------------------------------------               -------------------------------------------------------






   3



                                    GUARANTEE
                    (NOT TO BE USED FOR SIGNATURE GUARANTEE)

         The undersigned, a firm or other entity identified in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
learning agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent either the Outstanding Notes tendered hereby in proper form for
transfer, or confirmation of the book-entry transfer of such Outstanding Notes
to the Exchange Agent's account at The Depository Trust Company, pursuant to the
procedures for book-entry transfer set forth in the Prospectus, in either case
together with one or more properly completed and duly executed Letter(s) of
Transmittal (or facsimile thereof) and any other required documents within three
New York Stock Exchange trading days after the date of execution of this Notice
of Guaranteed Delivery.

         The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Outstanding Notes tendered hereby to the Exchange Agent
within the time period set forth above and that failure to do so could result in
a financial loss to the undersigned.




                                   -------------------------------------------
                                                 (Name of Firm)


                                   Sign here:
                                             ---------------------------------
                                                   (Authorized Signature)


                                   Name:
                                        --------------------------------------
                                                  (Please type or print)

                                   Title:
                                         -------------------------------------


                                   -------------------------------------------
                                         (Area Code and Telephone Number)


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


Dated:_____________, 2001          --------------------------------------------
                                   Address                            Zip Code



NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM.
CERTIFICATES FOR OUTSTANDING NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF
TRANSMITTAL.