Document:

exv10w14

 

Exhibit 10.14

EMPLOYMENT AND NONCOMPETITION AGREEMENT

     THIS AGREEMENT is made and effective this 30th day of June, 2006 between SCI Funeral &
Cemetery Purchasing Cooperative, Inc., a Delaware corporation (the “Company”), and Jeffrey E.
Curtiss (the “Employee”):

ARTICLE I

EMPLOYMENT

     1.1 Employment Term. The Company agrees to employ the Employee and the Employee
agrees to accept such employment, in accordance with the terms and conditions of this Agreement,
for the period beginning on the date of this Agreement and ending as of the close of business on
February 9, 2008 (such period is referred to hereinafter as the “Employment Term”). Upon
expiration of the Employment Term, the employment of Employee with the Company shall terminate, and
such termination shall be considered, for purposes of stock option and restricted stock agreements,
to be a voluntary termination by Employee.

     1.2 Duties. The Employee shall serve the Company in an advisory capacity
regarding financial and accounting matters as may be requested by the Chief Executive Officer, the
Chief Financial Officer or the Treasurer of Service Corporation International (“SCI”). Employee
shall furnish his best advice, information, judgment and knowledge with respect to the financial
and accounting matters of the Company and such other matters as may be designated by SCI’s Chief
Executive Officer, and generally seek to preserve and increase the business and goodwill of the
Company. The term “Company” as used hereinafter shall be deemed to include and refer to
subsidiaries and affiliated corporations and partnerships. Employee agrees and acknowledges that
he owes, and will comply with, a fiduciary duty of loyalty, fidelity and allegiance to act at all
times in the best interests of the Company and to take no action or fail to take action if such
action or failure to act would injure the Company’s business, its interests or its reputation.

     1.3 Extent of Service. During the Employment Term, the Employee shall devote his
time, attention and energy to the business of the Company on an as-needed basis without regularly
scheduled hours. The foregoing shall not be construed as preventing the Employee from making
passive investments in other businesses or enterprises, provided, however, that such investments
will not: (1) require services on the part of the Employee which would in any way impair the
performance of his duties under this Agreement, or (2) in any manner significantly interfere with
Employee’s responsibilities as an Employee of the Company in accordance with this Agreement.

     1.4 Compensation.

          (a) Salary. The Company shall pay to the Employee a salary at the rate of
$100,000 per year until December 31, 2006, after which the Company shall pay to the Employee a
salary at the rate of $50,000 per year for the remainder of the Employment Term. Such salary is to
be payable in installments in accordance with the payroll policies of the Company in effect from
time to time during the term of this Agreement.

 

 

          (b) Other Benefits. The Employee shall be reimbursed in accordance with the
Company’s normal expense reimbursement policy for all of the actual and reasonable costs and
expenses accrued by Employee in the performance of his or her services and duties hereunder,
including but not limited to, travel and entertainment expenses. During the Employment Term, the
Employee shall be entitled to participate in (i) all welfare and retirement plans which are
generally available to all Company employees (including the 401(k) plan), upon such terms and
conditions as are applicable to Company employees, and (ii) the EXEC-U-CARE program. Employee
shall not be entitled to receive during the Employment Term any future grants of stock options,
restricted stock or performance units. All rights of Employee respecting his current interests in
stock options, restricted stock, performance units, the Supplemental Executive Retirement Plan for
Senior Officers and deferred compensation will be governed by the terms of the respective
agreements and plans governing such matters.

     1.5 Termination.

          (a) Death. If the Employee dies during the term of this Agreement and while in
the employ of the Company, this Agreement shall automatically terminate and the Company shall have
no further obligation under this Agreement to the Employee or his estate except that the Company
shall pay the Employee’s estate the Employee’s salary through the date of death.

          (b) Disability. Prior to the end of the Employment Term, the Company may not
terminate Employee’s employment under this Agreement for the reason of disability of the Employee.

          (c) Certain Discharges. Prior to the end of the Employment Term, the Company may
discharge the Employee for Cause and terminate Employee’s employment hereunder without notice and
without any further liability hereunder to Employee or his estate. For purposes of this Agreement,
“Cause” shall mean a determination by the Company that Employee: (i) has been convicted of a crime
involving moral turpitude; (ii) has regularly failed or refused to follow policies or directives
established by the Company or the Board of Directors of SCI; (iii) has willfully and persistently
failed to attend to his duties; (iv) has committed acts amounting to gross negligence or willful
misconduct to the detriment of the Company or its affiliates; (v) has violated any of his
obligations under Articles II or III of this Agreement; or (vi) has otherwise breached any of the
terms or provisions of this Agreement.

          (d) Without Cause. Prior to the end of the Employment Term, the employment of the
Employee with the Company may not be terminated by the Company other than for Cause or death.

          (e) Voluntary Termination by Employee. If during the term of this Agreement, the
Employee voluntarily terminates his employment with the Company, the Company shall be relieved of
all of its obligations under this Agreement, except that the Company shall pay the Employee (or his
estate, in the event of his subsequent death) the Employee’s salary through the date of Employee’s
termination.

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ARTICLE II

INFORMATION

          2.1 Nondisclosure of Information. The Employee acknowledges that in the course of
his employment by the Company he will receive certain trade secrets, which may include, but are not
limited to, programs, lists of acquisition or disposition prospects and knowledge of acquisition
strategy, financial information and reports, lists of customers or potential customers and other
confidential information and knowledge concerning the business of the Company (hereinafter
collectively referred to as “Information”) which the Company desires to protect. The Employee
understands that the Information is confidential and agrees not to reveal the Information to anyone
outside the Company so long as the confidential or secret nature of the Information shall continue,
unless compelled to do so by any federal or state regulatory agency or by a court order. If
Employee becomes aware that disclosure of any Information is being sought by such an agency or
through a court order, Employee will immediately notify the Company. The Employee further agrees
that he will at no time use the Information in competing with the Company. Upon termination of
Employee’s employment with the Company, the Employee shall surrender to the Company all papers,
documents, writings and other property produced by him or coming into his possession by or through
his employment or relating to the Information, and the Employee agrees that all such materials are
and will at all times remain the property of the Company and to the extent the Employee has any
rights therein, he hereby irrevocably assigns such rights to the Company.

     2.2 Disclosure of Information, Ideas, Concepts, Improvements, Discoveries and
Inventions. As part of the Employee’s fiduciary duties to the Company, Employee agrees that
during his employment by the Company, and for a period of six months after the termination of the
employment relationship for any reason, Employee shall promptly disclose in writing to the Company
all information, ideas, concepts, improvements, discoveries and inventions, whether patentable or
not, and whether or not reduced to practice, which are conceived, developed, made or acquired by
Employee, either individually or jointly with others, and which relate to the business, products or
services of the Company or any of its subsidiaries or affiliates, irrespective of whether Employee
utilized the Company’s time or facilities and irrespective of whether such information, idea,
concept, improvement, discovery or invention was conceived, developed, discovered or acquired by
the Employee on the job, at home, or elsewhere. This obligation extends to all types of
information, ideas and concepts, including information, ideas and concepts relating to new types of
services, corporate opportunities, acquisition prospects, the identity of key representatives
within acquisition prospect organizations, prospective names or service marks for the Company’s
business activities, and the like.

     2.3 Ownership of Information, Ideas, Concepts, Improvements, Discoveries and Inventions
and All Original Works of Authorship.

          (a) All information, ideas, concepts, improvements, discoveries and inventions, whether
patentable or not, which are conceived, made, developed or acquired by Employee or which are
disclosed or made known to Employee, individually or in conjunction with others, during Employee’s
employment by the Company and which relate to the Company’s business, products or services
(including but not limited to all such information relating to corporate

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opportunities, research, financial and sales data, pricing and trading terms, evaluations,
opinions, interpretations, acquisition prospects, the identity of customers or their requirements,
the identity of key contacts within the customer’s organization or within the organization of
acquisition prospects, or marketing and merchandising techniques, prospective names and marks), are
and shall be the sole and exclusive property of the Company. Moreover, all drawings, memoranda,
notes, records, files, correspondence, manuals, models, specifications, computer programs, maps and
all other writings or materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries and inventions are and shall be the sole and exclusive property of the
Company.

          (b) In particular, Employee hereby specifically sells, assigns and transfers to the
Company all of his worldwide right, title and interest in and to all such information, ideas,
concepts, improvements, discoveries or inventions described in Section 2.3 (a) above, and any
United States or foreign applications for patents, inventor’s certificates or other industrial
rights that may be filed thereon, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such names and marks. Both
during the period of Employee’s employment by the Company and thereafter, Employee shall assist the
Company and its nominees at all times in the protection of such information, ideas, concepts,
improvements, discoveries or inventions both in the United States and all foreign countries,
including but not limited to the execution of all lawful oaths and all assignment documents
requested by the Company or its nominee in connection with the preparation, prosecution, issuance
or enforcement of any applications for United States or foreign letters patent, including
divisions, continuations, continuations-in-part, reissues, and/or extensions thereof, and any
application for the registration of such names and marks.

          (c) Moreover, if during Employee’s employment by the Company, Employee creates any
original work of authorship fixed in any tangible medium of expression which is the subject matter
of copyright (such as videotapes, written presentations on acquisitions, computer programs,
drawing, maps, architectural renditions, models, manuals, brochures or the like) relating to the
Company’s business, products, or services, whether such work is created solely by Employee or
jointly with others, the Company shall be deemed the author of such work if the work is prepared by
Employee in the scope of his or her employment; or, if the work is not prepared by Employee within
the scope of his or her employment but is specially ordered by Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation or as an instructional text, then the work shall be considered
to be work made for hire and the Company shall be considered the author of the work. In the event
such work is neither prepared by the Employee within the scope of his or her employment or is not a
work specially ordered and deemed to be a work made for hire, then Employee hereby agrees to
assign, and by these presents, does assign, to the Company all of Employee’s worldwide right, title
and interest in and to the work and all rights of copyright therein. Both during the period of
Employee’s employment by the Company and thereafter, Employee agrees to assist the Company and its
nominee, at any time, in protection of the Company’s worldwide right, title and interest in and to
the work and all rights of copyright therein, including but not limited to, the execution of all
formal assignment documents requested by the Company or its nominees and the execution of all
lawful oaths and applications for registration of copyright in the United States and foreign
countries.

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ARTICLE III

NONCOMPETITION

     3.1 Noncompetition. During the Employment Term (and for a period of one or two
years thereafter if the Company exercises its options under Section 3.2 hereof), Employee shall
not, acting alone or in conjunction with others, directly or indirectly, in any market in which the
Company or any of its affiliated companies conducts business, work for or engage in any business in
competition with the business conducted by the Company or any of its affiliated companies, whether
for his own account or by soliciting, canvassing or accepting any business or transaction for or
from any other company or business in competition with such business of the Company or any of its
affiliated companies. In the event that a court should determine that any restriction herein is
unenforceable, the parties hereto agree that the obligations under this paragraph shall be
enforceable for the maximum term and maximum geographical area allowable by law.

     3.2 Extension. The Company shall have the option to extend Employee’s obligations
under Section 3.1 for one additional year (the “First Extension Term”) beyond the end of the
Employment Term. If the Company exercises such option, it shall be required to pay Employee an
amount equal to one year’s salary, based on Employee’s salary rate as of the date his employment
with the Company ceased (the “Noncompetition Payment”). Such Noncompetition Payment shall be made
in 12 equal monthly installments (each installment being an amount equal to 1/12th of such annual
salary) commencing on the date which is thirty (30) days after the last day of the Employment Term.
Subsequent payments shall be made on the same day of each succeeding month until 12 payments have
been made. If the Employee breaches his noncompetition obligations, the Company shall be entitled
to cease making such monthly payments. The purpose of this paragraph is to make the noncompetition
obligation of the Employee more reasonable from the Employee’s point of view. The amounts to be
paid by the Company are not intended to be liquidated damages or an estimate of the actual damages
that would be sustained by the Company if the Employee breaches his post-employment noncompetition
obligation. If the Employee breaches his post-employment noncompetition obligation, the Company
shall be entitled to all of its remedies at law or in equity for damages and injunctive relief. The
Company may exercise the option conferred by this paragraph at any time within 30 days after the
last day of the Employment Term by mailing written notice of such exercise to Employee.

     If the Company exercises its option to extend Employee’s obligations as set forth in the
preceding paragraph, then the Company shall have the option to extend Employee’s obligations under
Section 3.1 for one additional year (the “Second Extension Term”) beyond the end of the First
Extension Term. If the Company exercises its option to extend Employee’s obligations for the Second
Extension Term, the rights and obligations of the parties set forth in the preceding paragraph
shall be applicable during the Second Extension Term. The Company may exercise the option conferred
by this paragraph at any time within 30 days after the last day of the First Extension Term by
mailing written notice of such exercise to Employee.

     3.3 Termination For Cause or Termination By Employee. Notwithstanding anything to
the contrary in this Agreement, in the event that Employee’s employment hereunder is terminated

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for Cause pursuant to Section 1.5(c) hereof, or in the event Employee voluntarily terminates the
employment relationship pursuant to Section 1.5(e), the noncompetition obligations of Employee
described in Section 3.1 above shall automatically continue for a period of two years from the date
the employment relationship ceases, and the Company shall not be required to (i) make any payments
to Employee in consideration for such obligations, or (ii) provide any notice to Employee.

     3.4 Obligations to Refrain From Competing Unfairly. In addition to the other
obligations agreed to by Employee in this Agreement, Employee agrees that during the Employment
Term and for five (5) year(s) thereafter, he shall not at any time, directly or indirectly for the
benefit or any other party than the Company or any of its affiliated companies, (a) induce, entice,
or solicit any employee of the Company or any of its affiliated companies to leave his employment,
or (b) contact, communicate or solicit any customer of the Company or any of its affiliated
companies derived from any customer list, customer lead, mail, printed matter or other information
secured from the Company or any of its affiliated companies or their present or past employees, or
(c) in any other manner use any customer lists or customer leads, mail, telephone numbers, printed
material or material of the Company or any of its affiliated companies relating thereto.

     3.5 Acknowledgement. Employee acknowledges that Employee’s compliance with the
provisions of this Article III is necessary to protect the existing goodwill and other proprietary
rights of the Company, as well as all goodwill and relationships that may be acquired or enhanced
during the course of Employee’s employment with the Company, and all confidential information which
may come into existence or to which Employee may have access during his employment with the
Company. Employee further acknowledges that Employee will become familiar with certain of the
Company’s affairs, operations, customers and confidential information and data by means of his
employment with the Company, and that failure to comply with the provisions of this Article III
will result in irreparable and continuing damage to the Company for which there will be no adequate
remedy at law. The Company shall be entitled to all of its remedies at law or in equity for damages
and injunctive relief in the event of any violation of this Article III by Employee.

ARTICLE IV

MISCELLANEOUS

     4.1 Notices. All notices, requests, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been delivered on the date personally
delivered or on the date mailed, postage prepaid, by certified mail, return receipt requested, or
telegraphed and confirmed if addressed to the respective parties as follows:

	 	 	 	 	 
	 

	 	If to the Employee:
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

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	 	If to the Company:	 	 
	 

	 	General Counsel	 	 
	 

	 	c/o SCI Funeral & Cemetery Purchasing Cooperative, Inc.	 	 
	 

	 	1929 Allen Parkway	 	 
	 

	 	Houston, Texas 77019	 	 
	 

	 	Attention: Legal Department	 	 

     Either party hereto may designate a different address by providing written notice of such new
address to the other party hereto.

     4.2 Entire Agreement. This Agreement replaces and merges all previous agreements
and discussions relating to the same or similar subject matters between Employee and the Company
(or any of its affiliates) and constitutes the entire agreement between the Employee and the
Company (and any of its affiliates) with respect to the subject matter of this Agreement. Any
existing employment agreement between the Employee and the Company (or any of its affiliates) is
hereby terminated, effective immediately. This Agreement may not be modified in any respect by any
verbal statement, representation or agreement made by an employee, officer, or representative of
the Company or by any written agreement unless signed by an officer of the Company who is expressly
authorized by the Company to execute such document. It is agreed that the Employment and
Noncompetition Agreement dated January 1, 2004 between Employee and SCI Executive Services, Inc.,
as amended by the Addendum to Employment and Non-competition Agreement dated December 1, 2005, is
hereby terminated and cancelled as of the date hereof.

     4.3 Specific Performance. The Employee acknowledges that a remedy at law for any
breach of Article II or III of this Agreement will be inadequate, agrees that the Company shall be
entitled to specific performance and injunctive and other equitable relief in case of any such
breach or attempted breach, and further agrees to waive any requirement for the securing or posting
of any bond in connection with the obtaining of any such injunctive or any other equitable relief.

     4.4 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid or unenforceable under applicable law, such
provision shall be ineffective to the extent of such prohibition, invalidity or unenforceability
without invalidating the remainder of such provision or the remaining provisions of this Agreement.

     4.5 Assignment. This Agreement may not be assigned by the Employee. Neither the
Employee, his spouse, nor his estate shall have any right to commute, encumber or dispose of any
right to receive payments hereunder, it being understood that such payments and the right thereto
are nonassignable and nontransferable. This Agreement may be assigned by the Company.

     4.6 Binding Effect. Subject to the provisions of Section 4.5 of this Agreement,
this Agreement shall be binding upon and inure to the benefit of the parties hereto, the Employee’s
heirs and personal representatives, and the successors and assigns of the Company.

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     4.7 Captions. The section and paragraph headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.

     4.8 Governing Law. This Agreement shall be construed and enforced in accordance
with, and governed by, the laws of Texas.

     4.9 Counterparts. This Agreement may be executed in multiple original
counterparts, each of which shall be deemed an original, but all of which together shall constitute
the same instrument.

     4.10 Survival of Certain Obligations. Employee’s obligations under Articles II and
III hereof shall survive any termination of Employee’s employment hereunder.

     4.11 Waiver. The waiver by either party of any right hereunder or of any breach of
this Agreement shall not operate as or be construed to be an amendment of this Agreement or a
waiver of any future right or breach.

     4.12 Gender. All references to the masculine pronoun herein are used for
convenience and ease of reading only and are intended and apply to the feminine gender as well.

     4.13 Dispute Resolution.

          (a) Employee and the Company agree that, except for the matters identified in Section
4.13(b) below, all disputes relating to any aspects of Employee’s employment with the Company shall
be resolved by binding arbitration. This includes, but is not limited to, any claims against the
Company, its affiliates or their officers, directors, employees, or agents for breach of contract,
wrongful discharge, discrimination, harassment, defamation, misrepresentation, and emotional
distress, as well as any disputes pertaining to the meaning or effect of this Agreement.

          (b) It is expressly agreed that this Section 4.13 shall not govern claims for workers’
compensation or unemployment benefits, or any claim by the Company against Employee which is based
on fraud, theft or other dishonest conduct of Employee.

          (c) Any claim which either party has against the other must be presented in writing by
the claiming party to the other within one year of the date the claiming party knew or should have
known of the facts giving rise to the claim. Otherwise, the claim shall be deemed waived and
forever barred even if there is a federal or state statute of limitations which would have given
more time to pursue the claim.

          (d) Each party may retain legal counsel and shall pay its own costs and attorneys’ fees,
regardless of the outcome of the arbitration. Each party shall pay one-half of the compensation to
be paid to the arbitrators, as well as one-half of any other costs relating to the administration
of the arbitration proceeding (for example, room rental, court reporter, etc.).

          (e) An arbitrator shall be selected by mutual agreement of the parties. If the

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parties are unable to agree on a single arbitrator, each party shall select one arbitrator,
and the two arbitrators so selected shall select a third arbitrator. The three arbitrators so
selected will then hear and decide the matter. All arbitrators must be attorneys, judges or retired
judges who are licensed to practice law in the state where the Employee is or most recently was
employed by the Company. The arbitration proceedings shall be conducted within the county in which
Employee is or most recently was employed by the Company or at another mutually agreeable location.

          (f) Except as otherwise provided herein, the arbitration proceedings shall be conducted
in accordance with the statutes, rules or regulations governing arbitration in the state in which
Employee is or most recently was employed by the Company. In the absence of such statutes, rules or
regulations, the arbitration proceedings shall be conducted in accordance with the employment
arbitration rules of the American Arbitration Association (“AAA”); provided however, that the
foregoing reference to the AAA rules shall not be deemed to require any filing with that
organization, nor any direct involvement of that organization. In the event of any inconsistency
between this Agreement and the statutes, rules or regulations to be applied pursuant to this
paragraph, the terms of this Agreement shall apply.

          (g) The arbitrator shall issue a written award, which shall contain, at a minimum, the
names of the parties, a summary of the issues in controversy, and a description of the award
issued. Upon motion to a court of competent jurisdiction, either party may obtain a judgment or
decree in conformity with the arbitration award, and said award shall be enforced as any other
judgment or decree.

          (h) In resolving claims governed by this Section 4.13, the arbitrator shall apply the
laws of the state in which Employee is or most recently was employed by the Company, and/or federal
law, if applicable.

          (i) Employee and the Company agree and acknowledge that any arbitration proceedings
between them, and the outcome of such proceedings, shall be kept strictly confidential; provided
however, that the Company may disclose such information to the extent required by law and to its
employees, agents and professional advisors who have a legitimate need to know such information,
and the Employee may disclose such information (1) to the extent required by law, (2) to the extent
that the Employee is required to disclose same to professional persons assisting Employee in
preparing tax returns; and (3) to Employee’s legal counsel.

     4.14 Section 409 A.

          (a) Notwithstanding the applicable provisions of this Agreement regarding timing of
distribution of payments, the following special rules shall apply in order for this Agreement to
comply with Internal Revenue Code Section 409A: (i) to the extent any distribution is to a
“specified employee” (as defined under IRC §409A) and to the extent such applicable provisions of
IRC §409A require a delay of such distributions by a six month period after the date of such
Employee’s separation of service with the Company, the provisions of this Agreement shall be
construed and interpreted as requiring a six month delay in the commencement of such distributions
thereunder, and (ii) in the event there are any installment payments under this

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Agreement that are required to be delayed by a six month period in order to comply with IRC
§409A, the monthly installments that would have been paid during such six month delay shall be
accumulated and paid to the Employee in a single lump sum within five business days after the end
of such six month delay, and (iii) the Company shall not have the discretion to prepay any
installment payments otherwise provided under this Agreement.

          (b) To the extent of any compliance issues under Internal Revenue Code Section 409A, the
Agreement shall be construed in such a manner so as to comply with the requirements of such
provision so as to avoid any adverse tax consequences to the Employee.

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

	 	 	 	 	 	 	 
	 	 	“COMPANY”
	 
	 	 	 	 	 	 
	 	 	SCI Funeral & Cemetery Purchasing Cooperative, Inc.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Curtis G. Briggs	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curtis G. Briggs	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	“EMPLOYEE”
	 
	 	 	 	 	 	 
	 	 	/s/ Jeffrey E. Curtiss	 	 
	 	 	 	 	 
	 	 	Jeffrey E. Curtiss	 	 

SCI Executive Services, Inc., solely for the purpose of evidencing its agreement to the last
sentence set forth in Section 4.2 of the Agreement, has executed this Agreement as of the date and
year first above written.

	 	 	 	 	 	 	 
	 	 	SCI Executive Services, Inc.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Curtis G. Briggs	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Curtis G. Briggs	 	 
	 

	 	 	 	Vice President	 	 

10exv10w27

 

Exhibit
10.27

FOURTH AMENDMENT TO THE

SCI 401(K) RETIREMENT SAVINGS PLAN

(AS AMENDED AND RESTATED JANUARY 14, 2004)

     WHEREAS, Service Corporation International (the “Company”) previously adopted and maintains
the SCI 401(k) Retirement Savings Plan, as amended and restated effective January 14, 2004 (the
“Plan”); and

     WHEREAS, the Company reserved the right to amend the Plan at any time; and

     WHEREAS, the Plan has been amended by the “First Amendment” dated October 22, 2004, the
“Second Amendment” dated December 8, 2004 and the “Third Amendment” dated February 25, 2005; and

     WHEREAS, the Company now desires to amend the Plan to comply with final regulations under Code
Sections 401(k) and 401(m);

     NOW, THEREFORE, the Plan shall be and hereby is amended, effective as of January 1, 2006, as
follows:

     1. The following Addendum G shall be added to the Plan to comply with final regulations
under Code Sections 401(k) and 401(m):

     “ADDENDUM G — FINAL 401(k)/401(m) REGULATIONS ADDENDUM

PREAMBLE

	1.	 	Adoption and effective date of amendment. This Amendment to the Plan is adopted to
reflect certain provisions of the Final Regulations under Code Sections 401(k) and 401(m) that
were published on December 29, 2004 (hereinafter referred to as the “Final 401(k)
Regulations”). This Amendment is intended as good faith compliance with the requirements of
these provisions.
	 
	2.	 	Supersession of inconsistent provisions. This Amendment shall supersede the
provisions of the Plan to the extent those provisions are inconsistent with the provisions of
this Amendment.

SECTION 1. GENERAL RULES

	1.	 	Deferral elections. A cash or deferred arrangement (CODA) is an arrangement under
which eligible Employees may make elective deferral elections. Such elections cannot relate to
compensation that is currently available prior to the adoption or effective date of the CODA.
In addition, except for occasional, bona fide administrative considerations, contributions
made pursuant to such an election cannot precede the earlier of (1) the performance of
services relating to the contribution and (2) when the compensation that is subject to the
election would be currently available to the Employee in the absence of an election to defer.

 

	2.	 	Vesting provisions. Elective Deferrals are always fully vested and nonforfeitable.
The Plan shall disregard Elective Deferrals in applying the vesting provisions of the Plan to
other contributions or benefits under Code Section 411(a)(2). However, the Plan shall
otherwise take a Participant’s Elective Deferrals into account in determining the
Participant’s vested benefits under the Plan. Thus, for example, the Plan shall take Elective
Deferrals into account in determining whether a Participant has a nonforfeitable right to
contributions under the Plan for purposes of forfeitures, and for applying provisions
permitting the repayment of distributions to have forfeited amounts restored, and the
provisions of Code Sections 410(a)(5)(D)(iii) and 411(a)(6)(D)(iii) permitting a plan to
disregard certain service completed prior to breaks-in-service (sometimes referred to as “the
rule of parity”).

SECTION 2. HARDSHIP DISTRIBUTIONS

	1.	 	Hardship events. A distribution under the Plan is hereby deemed to be on account of
an immediate and heavy financial need of a Participant if the distribution is for one of the
following:

	 	(a)	 	Expenses for (or necessary to obtain) medical care incurred by the Participant,
the Participant’s spouse, or any of the Participant’s dependents (as defined in Code
Section 152 without regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B)) that would
be deductible under Code Section 213(d) (determined without regard to whether the
expenses exceed 7.5% of adjusted gross income);
	 
	 	(b)	 	The costs directly related to the purchase (excluding mortgage payments) of a
principal residence for the Participant;
	 
	 	(c)	 	Payment of tuition, related educational fees, and room and board expenses for
the next twelve (12) months of post secondary education for the Participant and the
Participant’s spouse, children, or dependents (as defined in Code Section 152 without
regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B));
	 
	 	(d)	 	Payments necessary to prevent the eviction of the Participant from the
Participant’s principal residence or foreclosure on the mortgage on that residence;
	 
	 	(e)	 	Payments for burial or funeral expenses for the Participant’s deceased parent,
spouse, children or dependents (as defined in Code Section 152 without regard to Code
Section 152(d)(1)(B));
	 
	 	(f)	 	Expenses for the repair of damage to the Participant’s principal residence that
would qualify for the casualty deduction under Code Section 165 (determined without
regard to whether the loss exceeds 10% of adjusted gross income); or
	 
	 	(g)	 	Any need the Internal Revenue Service prescribes in a revenue ruling, notice or
other document of general applicability which satisfies the safe harbor definition of
hardship under Regulation Section 1.401(k)-1(d)(3)(iii)(B).

 

SECTION 3. ACTUAL DEFERRAL PERCENTAGE (ADP) TEST

	1.	 	Targeted contribution limit. Qualified Non-Elective Contributions (as defined in
Regulation Section 1.401(k)-6) cannot be taken into account in determining the actual deferral
ratio (ADR) for a Plan Year for a Non-Highly Compensated Employee (NHCE) to the extent such
contributions exceed the product of that NHCE’s Code Section 414(s) compensation and the
greater of five percent (5%) or two (2) times the Plan’s “representative contribution rate.”
Any Qualified Non-Elective Contribution taken into account under an Actual Contribution
Percentage (ACP) test under Regulation Section 1.401(m)-2(a)(6) (including the determination
of the “representative contribution rate” for purposes of Regulation Section
1.401(m)-2(a)(6)(v)(B)), is not permitted to be taken into account for purposes of this
Section (including the determination of the “representative contribution rate” under this
Section). For purposes of this Section:

	 	(a)	 	The Plan’s “representative contribution rate” is the lowest “applicable
contribution rate” of any eligible NHCE among a group of eligible NHCEs that consists
of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest “applicable
contribution rate” of any eligible NHCE who is in the group of all eligible NHCEs for
the Plan Year and who is employed by the Employer on the last day of the Plan Year),
and
	 
	 	(b)	 	The “applicable contribution rate” for an eligible NHCE is the sum of the
Qualified Matching Contributions (as defined in Regulation Section 1.401(k)-6) taken
into account in determining the ADR for the eligible NHCE for the Plan Year and the
Qualified Non-Elective Contributions made for the eligible NHCE for the Plan Year,
divided by the eligible NHCE’s Code Section 414(s) compensation for the same period.

Notwithstanding the above, Qualified Non-Elective Contributions that are made in connection
with an Employer’s obligation to pay prevailing wages under the Davis-Bacon Act (46 Stat.
1494), Public Law 71-798, Service Contract Act of 1965 (79 Stat. 1965), Public Law 89-286,
or similar legislation can be taken into account for a Plan Year for an NHCE to the extent
such contributions do not exceed 10 percent (10%) of that NHCE’s Code Section 414(s)
compensation.

Qualified Matching Contributions may only be used to calculate an ADR to the extent that
such Qualified Matching Contributions are matching contributions that are not precluded from
being taken into account under the ACP test for the Plan Year under the rules of Regulation
Section 1.401(m)-2(a)(5)(ii) and as set forth in Section 5.1.

	2.	 	Limitation on QNECs and QMACs. Qualified Non-Elective Contributions and Qualified
Matching Contributions cannot be taken into account to determine an ADR to the extent such
contributions are taken into account for purposes of satisfying any other ADP test, any ACP
test, or the requirements of Regulation Section 1.401(k)-3, 1.401(m)-3, or 1.401(k)-4. Thus,
for example, matching contributions that are made pursuant to Regulation Section 1.401(k)-3(c)
cannot be taken into account under the ADP test. Similarly, if a plan switches from the
current year testing method to the prior year testing method pursuant to Regulation Section
1.401(k)-2(c), Qualified Non-Elective

 

 

Contributions that are taken into account under the current year testing method for a year
may not be taken into account under the prior year testing method for the next year.

	3.	 	ADR of HCE if multiple plans. The ADR of any Participant who is a Highly Compensated
Employee (HCE) for the Plan Year and who is eligible to have Elective Deferrals (as defined in
Regulation Section 1.401(k)-6) (and Qualified Non-Elective Contributions and/or Qualified
Matching Contributions, if treated as Elective Deferrals for purposes of the ADP test)
allocated to such Participant’s accounts under two (2) or more cash or deferred arrangements
described in Code Section 401(k), that are maintained by the same Employer, shall be
determined as if such Elective Deferrals (and, if applicable, such Qualified Non-Elective
Contributions and/or Qualified Matching Contributions) were made under a single arrangement.
If an HCE participates in two or more cash or deferred arrangements of the Employer that have
different Plan Years, then all Elective Deferrals made during the Plan Year being tested under
all such cash or deferred arrangements shall be aggregated, without regard to the plan years
of the other plans. However, for Plan Years beginning before the effective date of this
Amendment, if the plans have different plan years, then all such cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single cash or deferred
arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated under the Regulations of Code Section 401(k).
	 
	4.	 	Plans using different testing methods for the ADP and ACP test. Except as otherwise
provided in this Section, the Plan may use the current year testing method or prior year
testing method for the ADP test for a Plan Year without regard to whether the current year
testing method or prior year testing method is used for the ACP test for that Plan Year.
However, if different testing methods are used, then the Plan cannot use:

	 	(a)	 	The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct
excess contributions for a Plan Year;
	 
	 	(b)	 	The rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Deferrals
into account under the ACP test (rather than the ADP test); or
	 
	 	(c)	 	The rules of Regulation Section 1.401(k)-2(a)(6)(v) to take Qualified Matching
Contributions into account under the ADP test (rather than the ACP test).

SECTION 4. ADJUSTMENT TO ADP TEST

	1.	 	Distribution of income attributable to excess contributions. Distributions of excess
contributions must be adjusted for income (gain or loss), including an adjustment for income
for the period between the end of the Plan Year and the date of the distribution (the “gap
period”). The Administrator has the discretion to determine and allocate income using any of
the methods set forth below:

	 	(a)	 	Reasonable method of allocating income. The Administrator may use any
reasonable method for computing the income allocable to excess contributions, provided
that the method does not violate Code Section 401(a)(4), is used

 

 

consistently for all Participants and for all corrective distributions under the
Plan for the Plan Year, and is used by the Plan for allocating income to
Participant’s accounts. A Plan will not fail to use a reasonable method for
computing the income allocable to excess contributions merely because the income
allocable to excess contributions is determined on a date that is no more than seven
(7) days before the distribution.

	 	(b)	 	Alternative method of allocating income. The Administrator may
allocate income to excess contributions for the Plan Year by multiplying the income for
the Plan Year allocable to the Elective Deferrals and other amounts taken into account
under the ADP test (including contributions made for the Plan Year), by a fraction, the
numerator of which is the excess contributions for the Employee for the Plan Year, and
the denominator of which is the sum of the:

	 	(1)	 	Account balance attributable to Elective Deferrals and other
amounts taken into account under the ADP test as of the beginning of the Plan
Year, and
	 
	 	(2)	 	Any additional amount of such contributions made for the Plan
Year.

	 	(c)	 	Safe harbor method of allocating gap period income. The Administrator
may use the safe harbor method in this paragraph to determine income on excess
contributions for the gap period. Under this safe harbor method, income on excess
contributions for the gap period is equal to ten percent (10%) of the income allocable
to excess contributions for the Plan Year that would be determined under paragraph (b)
above, multiplied by the number of calendar months that have elapsed since the end of
the Plan Year. For purposes of calculating the number of calendar months that have
elapsed under the safe harbor method, a corrective distribution that is made on or
before the fifteenth (15th) day of a month is treated as made on the last day of the
preceding month and a distribution made after the fifteenth day of a month is treated
as made on the last day of the month.
	 
	 	(d)	 	Alternative method for allocating Plan Year and gap period income. The
Administrator may determine the income for the aggregate of the Plan Year and the gap
period, by applying the alternative method provided by paragraph (b) above to this
aggregate period. This is accomplished by (1) substituting the income for the Plan Year
and the gap period, for the income for the Plan Year, and (2) substituting the amounts
taken into account under the ADP test for the Plan Year and the gap period, for the
amounts taken into account under the ADP test for the Plan Year in determining the
fraction that is multiplied by that income.

	2.	 	Corrective contributions. If a failed ADP test is to be corrected by making an
Employer contribution, then the provisions of the Plan for the corrective contributions shall
be applied by limiting the contribution made on behalf of any NHCE pursuant to such provisions
to an amount that does not exceed the contribution limits on the amount of Qualified
Non-Elective Contributions that can be taken into account under Section 3.1 of

 

 

this Amendment, or in the case of a corrective contribution that is a Qualified Matching
Contribution, the contribution limit on the amount of matching contributions that can be
taken into account under Section 5.1 of this Amendment.

SECTION 5. ACTUAL CONTRIBUTION PERCENTAGE (ACP) TEST

	1.	 	Targeted matching contribution limit. A matching contribution with respect to an
Elective Deferral for a Plan Year is not taken into account under the ACP test for an NHCE to
the extent it exceeds the greatest of:

	 	(a)	 	five percent (5%) of the NHCE’s Code Section 414(s) compensation for the Plan
Year;
	 
	 	(b)	 	the NHCE’s Elective Deferrals for the Plan Year; and
	 
	 	(c)	 	the product of two (2) times the Plan’s “representative matching rate” and the
NHCE’s Elective Deferrals for the Plan Year.

For purposes of this Section, the Plan’s “representative matching rate” is the lowest
“matching rate” for any eligible NHCE among a group of NHCEs that consists of half of all
eligible NHCEs in the Plan for the Plan Year who make Elective Deferrals for the Plan Year
(or, if greater, the lowest “matching rate” for all eligible NHCEs in the Plan who are
employed by the Employer on the last day of the Plan Year and who make Elective Deferrals
for the Plan Year).

For purposes of this Section, the “matching rate” for an Employee generally is the matching
contributions made for such Employee divided by the Employee’s Elective Deferrals for the
Plan Year. If the matching rate is not the same for all levels of Elective Deferrals for an
Employee, then the Employee’s “matching rate” is determined assuming that an Employee’s
Elective Deferrals are equal to six percent (6%) of Code Section 414(s) compensation.

If the Plan provides a match with respect to the sum of the Employee’s after-tax Employee
contributions and Elective Deferrals, then for purposes of this Section, that sum is
substituted for the amount of the Employee’s Elective Deferrals in subsections (b) & (c)
above and in determining the “matching rate,” and Employees who make either after-tax
Employee contributions or Elective Deferrals are taken into account in determining the
Plan’s “representative matching rate.” Similarly, if the Plan provides a match with respect
to the Employee’s after-tax Employee contributions, but not Elective Deferrals, then for
purposes of this subsection, the Employee’s after-tax Employee contributions are substituted
for the amount of the Employee’s Elective Deferrals in subsections (b) & (c) above and in
determining the “matching rate,” and Employees who make after-tax Employee contributions are
taken into account in determining the Plan’s “representative matching rate.”

	2.	 	Targeted QNEC limit. Qualified Non-Elective Contributions cannot be taken into
account under the ACP test for a Plan Year for an NHCE to the extent such contributions exceed
the product of that NHCE’s Code Section 414(s) compensation and the greater of

  

 

five percent (5%) or two (2) times the Plan’s “representative contribution rate.” Any
Qualified Non-Elective Contribution taken into account under an ADP test under Regulation
Section 1.401(k)-2(a)(6) (including the determination of the “representative contribution
rate” for purposes of Regulation Section 1.401(k)-2(a)(6)(iv)(B)) is not permitted to be
taken into account for purposes of this Section (including the determination of the
“representative contribution rate” for purposes of subsection (a) below). For purposes of
this Section:

	 	(a)	 	The Plan’s “representative contribution rate” is the lowest “applicable
contribution rate” of any eligible NHCE among a group of eligible NHCEs that consists
of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest “applicable
contribution rate” of any eligible NHCE who is in the group of all eligible NHCEs for
the Plan Year and who is employed by the Employer on the last day of the Plan Year),
and
	 
	 	(b)	 	The “applicable contribution rate” for an eligible NHCE is the sum of the
matching contributions (as defined in Regulation Section 1.401(m)-1(a)(2)) taken into
account in determining the actual contribution ratio (ACR) for the eligible NHCE for
the Plan Year and the Qualified Non-Elective Contributions made for that NHCE for the
Plan Year, divided by that NHCE’s Code Section 414(s) compensation for the Plan Year.

Notwithstanding the above, Qualified Non-Elective Contributions that are made in connection
with an Employer’s obligation to pay prevailing wages under the Davis-Bacon Act (46 Stat.
1494), Public Law 71-798, Service Contract Act of 1965 (79 Stat. 1965), Public Law 89-286,
or similar legislation can be taken into account for a Plan Year for an NHCE to the extent
such contributions do not exceed 10 percent (10%) of that NHCE’s Code Section 414(s)
compensation.

	3.	 	ACR of HCE if multiple plans. The ACR for any Participant who is a HCE and who is
eligible to have matching contributions or after-tax Employee contributions allocated to his
or her account under two (2) or more plans described in Code Section 401(a), or arrangements
described in Code Section 401(k) that are maintained by the same Employer, shall be determined
as if the total of such contributions was made under each plan and arrangement. If an HCE
participates in two (2) or more such plans or arrangements that have different plan years,
then all matching contributions and after-tax Employee contributions made during the Plan Year
being tested under all such plans and arrangements shall be aggregated, without regard to the
plan years of the other plans. For plan years beginning before the effective date of this
Amendment, all such plans and arrangements ending with or within the same calendar year shall
be treated as a single plan or arrangement. Notwithstanding the foregoing, certain plans shall
be treated as separate if mandatorily disaggregated under the Regulations of Code Section
401(m).
	 
	4.	 	Plans using different testing methods for the ACP and ADP test. Except as otherwise
provided in this Section, the Plan may use the current year testing method or prior year
testing method for the ACP test for a Plan Year without regard to whether the current

 

 

year testing method or prior year testing method is used for the ADP test for that Plan
Year. However, if different testing methods are used, then the Plan cannot use:

	 	(a)	 	The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct
excess contributions for a Plan Year;
	 
	 	(b)	 	The rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Deferrals
into account under the ACP test (rather than the ADP test); or
	 
	 	(c)	 	The rules of Regulation Section 1.401(k)-2(a)(6) to take Qualified Matching
Contributions into account under the ADP test (rather than the ACP test).

SECTION 6. ADJUSTMENT TO ACP TEST

	1.	 	Distribution of income attributable to excess aggregate contributions. Distributions
of excess aggregate contributions must be adjusted for income (gain or loss), including an
adjustment for income for the period between the end of the Plan Year and the date of the
distribution (the “gap period”). For the purpose of this Section, “income” shall be determined
and allocated in accordance with the provisions of Section 4.1 of this Amendment, except that
such Section shall be applied by substituting “excess contributions” with “excess aggregate
contributions” and by substituting amounts taken into account under the ACP test for amounts
taken into account under the ADP test.
	 
	2.	 	Corrective contributions. If a failed ACP test is to be corrected by making an
Employer contribution, then the provisions of the Plan for the corrective contributions shall
be applied by limiting the contribution made on behalf of any NHCE pursuant to such provisions
to an amount that does not exceed the contribution limits for the amount of matching
contributions and Qualified Non-Elective Contributions that can be taken into account under
Sections 5.1 and 5.2 of this Amendment.”

	 	2.	 	Except as amended herein, the Plan is hereby specifically ratified and affirmed.

     IN WITNESS WHEREOF, the Company has executed this Fourth Amendment this 20th day of December,
2006.

SERVICE CORPORATION INTERNATIONAL

	 	 	 	 	 
	By:

	 	/s/ Jane D. Jones
 

	 	 
	Title:

	 	Vice President, Human Resources	 	 
	 

	 	 	 	 
	Printed Name:

	 	 Jane D. Jones

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