FIFTH AMENDMENT TO CREDIT AGREEMENT

Exhibit 4.16

THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Fifth Amendment”), dated effective as of December 31, 2008, is by and among CARRIAGE SERVICES, INC., a Delaware corporation (the “Borrower”), the banks listed on the signature pages hereof (the “Lenders”), XXXXX FARGO BANK,N.A., as Syndication Agent (in said capacity, the “Syndication Agent”), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (in said capacity as Administrative Agent, the “Administrative Agent”).

BACKGROUND

A. The Borrower, the Lenders, the Syndication Agent, and the Administrative Agent are parties to that certain Credit Agreement, dated as of April 27, 2005, as amended by that certain First Amendment to Credit Agreement, dated as of August 31, 2005, as modified by that certain Waiver and Consent, dated as of September 1, 2006, as amended by that certain Second Amendment to Credit Agreement, dated as of May 4, 2007, as amended by that certain Third Amendment to Credit Agreement, dated as of December 1, 2007, and as amended by that certain Fourth Amendment to Credit Agreement, dated as of November 14, 2008 (said Credit Agreement, as amended and modified, the “Credit Agreement”; the terms defined in the Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit
Agreement).

B. The Borrower has requested that the Lenders amend the Credit Agreement, as
more fully set forth herein.

C. The Lenders parties to this Fifth Amendment (which Lenders constitute the Required Lenders as required under the Credit Agreement) are willing to agree to such amendment, subject to the performance and observance in full of each of the covenants, terms and conditions, and in reliance upon all of the representations and warranties of the Borrower, set forth herein.

NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are all hereby acknowledged, the parties hereto covenant and agree as follows:

1. AMENDMENTS.

(a) The definition of “EBITDA” set forth in Section 1.01 of the Credit Agreement is hereby amended to read as follows:

“EBITDA” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to Net Income for such period plus (a) the following to the extent deducted in calculating such Net Income: (i) Interest Expense for such period, (ii) the provision for federal, state, local and foreign income taxes payable by the Borrower and its Subsidiaries for such period, (iii) depreciation and amortization expense and payments in respect of Deferred Purchase Price, and (iv) other expenses of the Borrower and its Subsidiaries reducing such Net Income which do not represent a cash item in such period or any future period and minus (b) all non-cash items increasing Net

Income for such period; provided, however, notwithstanding the above, for the calculation of EBITDA (A) for the four consecutive fiscal quarters period ending December 31, 2008, there shall be added back to Net Income, (x) $3,300,000 in respect of settlement costs for the litigation related to the alleged underpayment of employees for overtime work (the “Overtime Claim Litigation”) and (y) an amount not in excess of $895,000 in respect of legal fees and expenses for the Overtime Claim Litigation (“Overtime Claim Litigation Fees and Expenses”) and (B) for each the four consecutive fiscal quarter periods ending March 31, 2009, June 30, 2009 and September 30, 2009, there should be added back to Net Income (x) $3,300,000 in respect of the settlement costs for the Overtime Claim Litigation and (y) such amount of Overtime Claim Litigation Fees and Expenses incurred in each of such four consecutive fiscal quarter periods.

(b) Exhibit B, the Compliance Certificate, is hereby amended to be in the form of Exhibit B to this Fifth Amendment.

2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and delivery hereof, the Borrower represents and warrants that, as of the date hereof, and immediately after giving effect to this Fifth Amendment:

(a) the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct on and as of the date hereof as made on and as of such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that the representations and warranties contained in subsection (a) of Section 5.05 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement, except that to the extent that such representations and warranties refer to statements furnished pursuant to clause (b) of Section 6.01 of the Credit Agreement, the representations and warranties in subclauses (i) and (ii) of clause (a) of Section 5.05 of the Credit Agreement shall be qualified by reference to the absence of footnotes and shall be subject to normal year-end audit adjustments;

(b) no event has occurred and is continuing which constitutes a Default or Event of Default;

(c) (i) the Borrower has full power and authority to execute and deliver this Fifth Amendment, (ii) this Fifth Amendment has been duly executed and delivered by the Borrower, and (iii) this Fifth Amendment constitutes the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and except as rights to indemnity may be limited by federal or state securities laws;

(d) neither the execution, delivery and performance of this Fifth Amendment, nor the consummation of any transactions contemplated herein, will conflict with (i) the certificate or articles of incorporation or the applicable constituent documents or bylaws of the Borrower or its Subsidiaries, (ii) to Borrower’s knowledge, any provision or law, statute, rule or regulation

applicable to the Borrower or its Subsidiaries or (iii) any indenture, agreement or other instrument to which the Borrower, the Subsidiaries or any of their properties are subject; and

(e) no authorization, approval, consent, or other action by, notice to, or filing with, any Governmental Authority or other Person not previously obtained is required to be obtained or made by the Borrower pursuant to statutory law applicable to the Borrower as a condition to (i) the execution, delivery or performance by the Borrower of this Fifth Amendment or (ii) the acknowledgement by each Guarantor of this Fifth Amendment.

3. CONDITIONS OF EFFECTIVENESS. This Fifth Amendment shall be effective on and as of December 31, 2008, subject to the following:

(a) the representations and warranties set forth in Section 2 of this Fifth Amendment shall be true and correct;

(b) the Administrative Agent shall have received counterparts of this Fifth Amendment executed by the Required Lenders;

(c) the Administrative Agent shall have received from the Borrower for the account of each Lender, an amount in immediately available funds equal to the product of (i) 0.125% and (ii) each Lender’s Commitment; and

(d) the Administrative Agent shall have received counterparts of this Fifth Amendment executed by the Borrower and acknowledged by each Guarantor.

4. GUARANTOR’S ACKNOWLEDGMENT. By signing below, each Guarantor (i) acknowledges, consents and agrees to the execution, delivery and performance by the Borrower of this Fifth Amendment, (ii) acknowledges and agrees that its obligations in respect of its Guaranty are not released, diminished, waived, modified, impaired or affected in any manner by this Fifth Amendment, or any of the provisions contemplated herein, (iii) ratifies and confirms its obligations under its Guaranty and (iv) acknowledges and agrees that it has no claim or offsets against, or defenses or counterclaims to, its Guaranty.

5. REFERENCE TO THE CREDIT AGREEMENT.

(a) Upon and during the effectiveness of this Fifth Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended by this Fifth Amendment.

(b) Except as expressly set forth herein, this Fifth Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights or remedies of the Administrative Agent or the Lenders under the Credit Agreement or any of the other Loan Documents, and shall not alter, modify, amend, or in any way affect the terms, conditions, obligations, covenants, or agreements contained in the Credit Agreement or the other Loan Documents, all of which are hereby ratified and affirmed in all respects and shall continue in full force and effect.

6. COSTS AND EXPENSES. The Borrower shall be obligated to pay the reasonable costs and expenses of the Administrative Agent in connection with the preparation, reproduction, execution and delivery of this Fifth Amendment and the other instruments and documents to be delivered hereunder.

7. EXECUTION IN COUNTERPARTS. This Fifth Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. For purposes of this Fifth Amendment, a counterpart hereof (or signature page thereto) signed and transmitted by any Person party hereto to the Administrative Agent (or its counsel) by facsimile machine, telecopier or electronic mail is to be treated as an original. The signature of such Person thereon, for purposes hereof, is to be considered as an original signature, and the counterpart (or signature page thereto) so transmitted is to be considered to have the same binding effect as an original signature on an original document.

8. GOVERNING LAW; BINDING EFFECT. This Fifth Amendment shall be governed by and construed in accordance with the laws of the State of Texas applicable to agreements made and to be performed entirely within such state; provided that the Administrative Agent and each Lender shall retain all rights arising under federal law. This Fifth Amendment shall be binding upon the Borrower and each Lender and their respective successors and permitted assigns.

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

10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIFTH AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

IN WITNESS WHEREOF, the parties hereto have executed this Fifth Amendment as of the date above written.


	CARRIAGE SERVICES, INC.
	By:	/s/ Xxxxx X. Xxxxxxx
		Xxxxx X. Xxxxxxx
		Chief Financial Officer


BANK OF AMERICA, N.A., as Administrative Agent
By:	/s/ Xxxxxxx Xxxxxxx
	Name:	Xxxxxxx Xxxxxxx
	Title:	Assistant Vice President


	BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line Lender
	By:	/s/ Xxxx X. Xxxxxx
		Xxxx X. Xxxxxx
		Senior Vice President


XXXXX FARGO BANK NATIONAL ASSOCIATION, as Syndication Agent and as a Lender
By:	/s/ Xxxxxx X. Xxxx
	Name:	Xxxxxx X. Xxxx
	Title:	Vice President


	GUARANTORS: CARRIAGE FUNERAL HOLDINGS, INC. CFS FUNERAL SERVICES, INC. CARRIAGE HOLDING COMPANY, INC. CARRIAGE FUNERAL SERVICES OF MICHIGAN, INC. CARRIAGE FUNERAL SERVICES OF KENTUCKY, INC. CARRIAGE FUNERAL SERVICES OF CALIFORNIA, INC. CARRIAGE CEMETERY SERVICES OF IDAHO, INC. XXXXXX & XXXXXXX MORTUARIES ROLLING HILLS MEMORIAL PARK CARRIAGE SERVICES OF CONNECTICUT, INC. CSI FUNERAL SERVICES OF MASSACHUSETTS, INC. CHC INSURANCE AGENCY OF OHIO, INC. XXXXXXX, XXXXXX & XXXXX, INC. CARRIAGE SERVICES OF NEW MEXICO, INC. FORASTIERE FAMILY FUNERAL SERVICES, INC. CARRIAGE CEMETERY SERVICES, INC. CARRIAGE SERVICES OF OKLAHOMA, L.L.C. CARRIAGE SERVICES OF NEVADA, INC. XXXXXXX FUNERAL HOME, INC. CARRIAGE TEAM CALIFORNIA (CEMETERY), LLC CARRIAGE TEAM CALIFORNIA (FUNERAL), LLC CARRIAGE TEAM FLORIDA (CEMETERY), LLC CARRIAGE TEAM FLORIDA (FUNERAL), LLC CARRIAGE SERVICES OF OHIO, LLC CARRIAGE TEAM KANSAS, LLC CARRIAGE MUNICIPAL CEMETERY SERVICES OF NEVADA, INC. CARRIAGE CEMETERY SERVICES OF CALIFORNIA, INC. CARRIAGE INSURANCE AGENCY OF MASSACHUSETTS, INC. CARRIAGE INTERNET STRATEGIES, INC. CARRIAGE INVESTMENTS, INC. (for itself and as General Partner of Carriage Management, L.P.) CARRIAGE MANAGEMENT, X.X. XXXXXXXX’X CHAPEL OF THE ROSES, INC. HORIZON CREMATION SOCIETY, INC. CARRIAGE LIFE EVENTS, INC. CARRIAGE MERGER I, INC. CARRIAGE MERGER II, INC. CARRIAGE MERGER III, INC. ARIA CREMATION SERVICES, LLC CLOVERDALE PARK, INC. XXXXXXXXXX FUNERAL HOME, INC.
	By:	/s/ Xxxxx X. Xxxxxxx
		Xxxxx X. Xxxxxxx
		Chief Financial Officer

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FIFTH AMENDMENT TO CREDIT AGREEMENT

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