Appendix I

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

SERVICE CORPORATION INTERNATIONAL, a corporation.

File No. 981 0353

ASSET MAINTENANCE AGREEMENT

This Asset Maintenance Agreement is by and between Service Corporation International, ("SCI"), a corporation organized, existing and doing business under and by virtue of the laws of the State of Texas, with its office and principal place of business located at 1929 Allen Parkway, Houston, Texas 77019, and the Federal Trade Commission, an independent agency of the United States Government, established under the Federal Trade Commission Act of 1914, 15 U.S.C. § 41, et seq.

Premises For Agreement

WHEREAS, on or about August 6, 1998, SCI entered into an agreement with Equity Corporation International ("ECI"), in which SCI agreed to acquire ECI (the "Acquisition"); and

WHEREAS, both SCI and ECI own or operate assets that provide funeral services or cemetery services to consumers; and

WHEREAS, the Commission is now investigating the Acquisition to determine whether the Acquisition would violate any of the statutes enforced by the Commission; and

WHEREAS, if the Commission accepts the Agreement Containing Consent Order to which this Appendix I is attached, the Commission is required to place it on the public record for a period of sixty (60) days for public comment and may subsequently withdraw such acceptance pursuant to the provisions of Section 2.34 of the Commission's Rules of Practice; and

WHEREAS, the purpose of this agreement and of the Consent Order is to preserve the Assets To Be Divested pending their divestiture to an acquirer or acquirers approved by the Commission, under the terms of the Consent Order, in order to remedy any anticompetitive effects of the Acquisition; and

WHEREAS, SCI's entering into this agreement shall in no way be construed as an admission by SCI that the Acquisition is illegal; and

WHEREAS, no act or transaction contemplated by this agreement shall be deemed immune or exempt from the provisions of the antitrust laws, or the Federal Trade Commission Act, by reason of anything contained in this agreement;

NOW, THEREFORE, in consideration of the Commission's agreement that, unless the Commission determines to reject the Consent Order, it will terminate SCI's obligation to give twenty (20) days' notice to the Commission's staff prior to consummating the Acquisition, the parties agree as follows:

Terms Of Agreement

1. SCI agrees to execute, and upon acceptance by the Commission of the Agreement Containing Consent Order for public comment agrees to be bound by, the Consent Order.

2. SCI agrees that from the date this agreement is accepted until the earliest of the dates listed in subparagraphs 2.a and 2.b, it will comply with the provisions of this agreement:

a. three business days after the Commission withdraws its acceptance of the Consent Order pursuant to the provisions of Section 2.34 of the Commission's Rules; or
 
b. on the day the divestitures set out in the Consent Order have been completed.

3. SCI shall maintain the viability, marketability, and competitiveness of the Assets To Be Divested, as listed in Schedule A of the Agreement Containing Consent Order, and shall not cause the wasting or deterioration of these assets, nor shall it cause the assets to be operated in a manner inconsistent with applicable laws, nor shall they sell, transfer, encumber or otherwise impair the marketability, viability, or competitiveness of the Assets. SCI shall conduct or cause to be conducted the business of the Assets To Be Divested in the regular and ordinary course and in accordance with past practice (including regular repair and maintenance efforts) and shall use its best efforts to preserve the existing relationships with each businesses' suppliers, customers, employees and others having business relations with such businesses, in the ordinary course of their business and in accordance with past practice. SCI shall not terminate the operation of any of the businesses identified within the Assets To Be Divested. SCI shall use its best efforts to keep the organization and properties of each of the businesses identified in the Assets To Be Divested intact, including current business operations, physical facilities, working conditions and a work force of equivalent size, training and expertise associated with each business. Included in the above obligations, SCI shall, without limitation:

a. maintain all operations and not reduce hours at any business;
 
b. make all payments required to be paid under any contract or lease when due, and otherwise pay all liabilities and satisfy all obligations, in a manner consistent with past practice;
 
c. maintain each businesses' books and records;
 
d. not display any signs or conduct any advertising that indicate that any business is moving its operations to another location or that the business will close;
 
e. not change or modify in any material respect the existing advertising practices, programs and policies for any business, other than changes in the ordinary course of business consistent with past practice for the business not being closed or relocated; and
 
f. not transfer any on-site employees of any business, as of the date this agreement is signed by SCI, to any other business or location, other than transfers in the ordinary course of business consistent with past practice.

4. Should the Federal Trade Commission seek in any proceeding to compel SCI to divest itself of any or all of the Assets To Be Divested, or to seek any other injunctive or equitable relief, SCI shall not raise any objection based upon the expiration of the applicable Hart-Scott-Rodino Antitrust Improvements Act waiting period or the fact that the Commission has not sought to enjoin the Acquisition. SCI also waives all rights to contest the validity of this agreement.

5. For the purpose of determining or securing compliance with this agreement, subject to any legally recognized privilege, and upon written request with reasonable notice to counsel for SCI, SCI shall permit any duly authorized representative of the Commission:

a. access during the office hours of SCI, in the presence of counsel, to inspect any facility and to inspect and copy all books, ledgers, accounts, correspondence, memoranda, and other records and documents in the possession or under the control of SCI relating to compliance with this Agreement; and
 
b upon five (5) days' notice to counsel for SCI and without restraint or interference from them, to interview officers or employees of SCI, who may have counsel present, regarding any such matters.

6. This Agreement shall not be binding until approved by the Commission.

Dated: ________________

FOR SERVICE CORPORATION INTERNATIONAL

_______________________
James M. Shelger
Senior Vice President/General Counsel

FOR THE FEDERAL TRADE COMMISSION

___________________ 
Debra A. Valentine
General Counsel