EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS AGREEMENT, dated August 7, 2007, is between CARRIAGE SERVICES, INC., a Delaware
corporation (the “Company”), and Xxx X. Xxxxx, a resident of Xxxxxx County, Texas (the
“Employee”).
1. Employment Term. The Company hereby continues the employment of the
Employee for a term commencing as of the date first above written and, subject to earlier
termination or extension as provided in Section 7 hereof, continuing until August 6, 2010
(such
term being herein referred to as the “term of this Agreement”). The term of this Agreement
shall
automatically be renewed on an annual basis thereafter, unless terminated by either party upon
sixty (60) days’ written notice prior to the end of the term then in effect. The Employee
agrees to
accept such employment and to perform the services specified herein, all upon the terms and
conditions hereinafter stated.
2. Duties. The Employee shall serve the Company and shall report to, and be subject
to the general direction and control of the Chief Executive Officer of the Company or any
other
executive officer designated by him. The Employee shall faithfully, diligently, competently,
and
to the best of Employee’s ability, perform the management and administrative duties of
Regional
Managing Partner and Regional Vice President of Operations. The Employee shall also serve as
Regional Managing Partner and Regional Vice President of Operations of any subsidiary of the
Company as requested by the Company, and the Employee shall perform such other duties as are
from time to time assigned to him by the Chief Executive Officer or any other executive
officer
designated by him as are not inconsistent with the provisions hereof. The Employee represents
and warrants to the Company that Employee is not subject to any obligation to any third party
that would restrict or interfere with Employee’s ability to perform hereunder.
3. Extent of Service. The Employee shall devote his full business time and attention
to the business of the Company, and, except as may be specifically permitted by the Company,
shall not be engaged in any other business activity during the term of this Agreement. The
foregoing shall not be construed as preventing the Employee (i) from making passive
investments in other businesses or enterprises, and (ii) from engaging in other civic,
charitable
and business activities, provided, however, that such investments and activities will not
require
services on the part of the Employee which would in any way impair the performance of his
duties under this Agreement.
4. Compensation. During the term of this Agreement, the Company shall pay the
Employee an annual salary of not less than $230,000 per full calendar year of service
completed
(“Base Salary”), appropriately prorated for partial months at the commencement and end of the
term of this Agreement. The Employee’s salary and benefits will be reviewed annually, and any
increase therein shall remain in the sole discretion of the Company, acting through the
Compensation Committee of its Board of Directors if required. The salary set forth herein
shall
not be subject to reduction and shall be payable in bi-weekly installments in accordance with
the
payroll policies of the Company in effect from time to time during the term of this Agreement.
The Company shall have the right to deduct from any payment of all compensation to the Employee
hereunder (x) any federal, state or local taxes required by law to be withheld with respect to
such payments, and (y) any other amounts specifically authorized to be withheld or deducted by the
Employee.
5. Benefits. In addition to the Base Salary, the Employee shall be entitled to
participate in the following benefits during the term of this Agreement:
(i) Consideration for an annual performance-based bonus within the sole discretion of
the Company, as may be recommended by the Chief Executive Officer and approved by the
Compensation Committee of the Company’s Board of Directors. A target bonus will be set by
the Company, and approved by the Compensation Committee of the Company’s Board of
Directors, on an annual basis.
(ii) Eligibility for consideration of Awards of Restricted Stock or other
incentive-based compensation under the terms of the Company’s 2006 Long Term Incentive Plan
or one or more of the Company’s other incentive plans, as the Chief Executive Officer in his
sole discretion may determine and subject to approval of the Company’s Compensation
Committee.
(iii) Four weeks of paid vacation in each calendar year, subject to the Company’s
personnel policies respecting such matters.
(iv) Participation in the Company’s group health and hospitalization program, and
inclusion in such other employee benefits, as are available generally to executive-level
employees of the Company.
(v) Reimbursement for travel, lodging and other out-of-pocket expenses reasonably
incurred by Employee in the exercise of Employee’s duties under this Agreement which are
approved by the Company in advance and are duly substantiated in accordance with the
Company’s policies as to reimbursement. In order to assure compliance with Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”), such reimbursements shall be
made as soon as practicable, but in no event later than the last day of the calendar year
following the calendar year in which the expense was incurred.
6. Certain Additional Matters. The Employee agrees that at all times during the term
of this Agreement and for a period of two years following any cessation of employment with the
Company:
of this Agreement and for a period of two years following any cessation of employment with the
Company:
(a) The Employee will not knowingly or intentionally do or say any act or thing which
will or may impair, damage or destroy the goodwill and esteem for the Company held by its
suppliers, employees, patrons, customers and others who may at any time have or have had
business relations with the Company.
-2-
(b) The Employee will not knowingly or intentionally do any act or thing detrimental to the
Company or its business.
Nothing herein shall be construed to prevent the Employee from complying with any requirements
of law or legal process or taking such actions as the Company may consent to in writing.
7. 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 to the Employee or his estate except that the
Company shall pay the Employee’s estate (i) that portion of the Employee’s Base Salary
accrued through the date on which the Employee’s death occurred, (ii) a pro rata amount
of the annual bonus described in Section 5(i) above, based on the number of days the
Employee was employed in the year in comparison to 365, and (iii) all benefits payable
under the governing provisions of any benefit plan or program of the Company. Such
payment of Base Salary and bonus to the Employee’s estate shall be made in the same
manner and at the same times as they would have been paid to the Employee had he not
died.
(b) Disability. If during the term of this Agreement, the Employee shall be
prevented from performing his duties hereunder by reason of disability, and such
disability shall continue for a period of six months, then the Company may terminate this
Agreement at any time after the expiration of such six-month period. For purposes of this
Agreement, the Employee shall be deemed to have become disabled when the Company,
upon the advice of a qualified physician, shall have determined that the Employee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months. In the event of
a termination pursuant to this paragraph (b), the Company shall be relieved of all its
obligations under this Agreement, except that the Company shall pay to the Employee (or
his estate in the event of his subsequent death), (i) the Employee’s Base Salary through
the date on which such termination shall have occurred, reduced during such period by
the amount of any benefits received under any disability policy maintained by the
Company, (ii) a pro rata amount of the annual bonus described in Section 5(i) above,
based on the number of days the Employee was employed in the year in comparison to
365, and (iii) all benefits payable under the governing provisions of any benefit plan or
program of the Company. All such payments to the Employee or his estate shall be made
in the same manner and at the same times as they would have been paid to the Employee
had he not become disabled. No such termination pursuant to this paragraph (b) will
relieve the Employee of his obligations under Sections 6, 8 and 9 hereunder.
(c) Discharge for Cause. Prior to the end of the term of this Agreement, the
Company may discharge the Employee for Cause and terminate this Agreement. In such
-3-
case this Agreement shall automatically terminate and the Company shall have no further obligation
to the Employee or his estate other than to pay to the Employee (or his estate in the event of his
subsequent death) that portion of the Employee’s salary accrued through the date of termination.
For purposes of this Agreement, the Company shall have “Cause” to discharge the Employee or
terminate the Employee’s employment hereunder upon (i) the Employee’s conviction of any felony or
any other crime involving moral turpitude, (ii) the Employee’s repeated failure or refusal to
perform all of his duties, obligations and agreements herein contained or imposed by law,
including his fiduciary duties, to the reasonable satisfaction of the Chief Executive Officer of
the Company, (iii) the Employee’s commission of acts amounting to gross negligence or willful
misconduct to the detriment of the Company, or (iv) the Employee’s material breach of any
provision of this Agreement or uniformly applied provisions of the Company’s employee handbook or
other personnel policies, including without limitation, its Code of Business Conduct and Ethics.
Such determination of “Cause” shall be made by the Chief Executive Officer of the Company.
Any such termination by virtue of this paragraph (c) shall not prejudice any remedy that the
Company may have at law, in equity, or under this Agreement, for breach hereof by Employee. No
such termination pursuant to this paragraph (c) will relieve the Employee of his obligations under
Sections 6, 8 and 9 hereunder.
(d) Discharge Without Cause. Prior to the end of the term of this Agreement, the
Company may discharge the Employee without Cause (as defined in paragraph (c) above) and terminate
this Agreement. In such case this Agreement shall automatically terminate and the Company shall
have no further obligation to the Employee or his estate, except that the Company shall continue
to pay to the Employee (or his estate in the event of his subsequent death), (i) the Employee’s
Base Salary for a period of 18 months following the date of discharge, (ii) 50% of the annual
target bonus described in Section 5(i) above for the year of termination, and (iii) all benefits
payable under the governing provisions of any benefit plan or program of the Company, In addition,
if following the date of such discharge, the Employee becomes eligible to elect continuation
coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) and properly elects
such coverage, the Company shall reimburse the Employee or pay on the Employee’s behalf 100% of
applicable medical continuation premiums for the benefit of the Employee (and his covered
dependents as of the date of his termination, if any) under the Employee’s then-current plan
election, with such coverage to be provided under the closest comparable plan as offered by the
Company from time to time, for so long during the 18-month period following termination as he
remains eligible for and elects COBRA coverage, except as otherwise provided in paragraph (e)
below. All such payments to the Employee or his estate shall be made in the same manner and at the
same times as they would have been paid to the Employee had he not been discharged. No such
termination pursuant to this paragraph (d) will relieve the Employee of his obligations under
Sections 6, 8 and 9 hereunder.
-4-
(e) Corporate Change. If following a Corporate Change (as defined in the
Company’s 2006 Long-Term Incentive Plan), the Employee voluntarily terminates his
employment for Good Reason (as defined below) or the Employee is discharged without
Cause, in either case within 24 months following the Corporate Change, then this
Agreement shall automatically terminate and the Company shall have no further
obligation to the Employee or his estate, except that the Company shall pay to the
Employee (or his estate in the event of his subsequent death), (i) a lump sum payment
payable following such termination equal to one and one-half times the Employee’s Base
Salary, (ii) 50% of the annual target bonus described in Section 5(i) above for the
year of
termination and (iii) all benefits payable under the governing provisions of any
benefit
plan or program of the Company, In addition, if following the date of such resignation
or
discharge, the Employee becomes eligible to elect continuation coverage under COBRA
and properly elects such coverage, the Company shall reimburse the Employee or pay on
the Employee’s behalf 100% of applicable medical continuation premiums for the benefit
of the Employee (and his covered dependents as of the date of his termination, if any)
under the Employee’s then-current plan election, with such coverage to be provided
under
the closest comparable plan as offered by the Company from time to time, for so long
during the 18-month period following the date of resignation or discharge as he remains
eligible for and elects COBRA coverage. No such termination pursuant to this paragraph
(e) will relieve the Employee of his obligations under Sections 6 and 9 hereunder.
“Good Reason” means any of the following actions if taken without the Employee’s prior
written consent: (A) any material breach by the Company to comply with its obligations
under the terms of the Agreement; (B) any material diminution in the Employee’s
responsibilities, authority or duties, (C) a material diminution in the Employee’s Base
Salary; or (D) any material change in the permanent location at which the Employee performs
services for the Company. The Employee shall give written notice to the Board specifying
such actions within 90 days of the existence of such action and providing a period of 30
days in which the Company shall be allowed to cure such circumstances.
(f) Notice. Prior to the end of the term of this Agreement, the Employee may
terminate this Agreement upon ninety (90) days written notice. This Agreement shall
automatically terminate at the end of the notice period, and the Company shall have no
further obligation to the Employee other than to pay to the Employee that portion of
the
Employee’s salary accrued through the date of termination. No such termination pursuant
to this paragraph (f) will relieve the Employee of his obligations under Sections 6, 8
and 9
hereunder.
8. Restrictive Covenants. The Company has provided and shall provide in the future to
the Employee, confidential and proprietary information as that term is defined in Section 9 of
this Agreement (“Confidential Information”). The Employee acknowledges that in the course of his
employment with the Company as a member of the Company’s senior management team, he shall be given
possession of and access to Confidential Information of the Company and its affiliates, and will
develop through such employment business systems, methods of doing
-5-
business, and contacts within the death care industry, all of which will help to identify him with
the business and goodwill of the Company. Consequently, it is important that the Company protect
its interests in regard to such matters from unfair competition. In consideration of the
Confidential Information that has been received and that the Company covenants to provide the
Employee in the future, the sufficiency of which is hereby acknowledged by the Employee, the
Employee agrees to enter into the covenants contained in this Agreement. The parties therefore
agree that for so long as the Employee shall remain employed by the Company and, if the employment
of the Employee ceases for any reason (including voluntary resignation), then for a period of two
(2) years thereafter, the Employee shall not, directly or indirectly:
(i) alone or for his own account, or as a officer, director, shareholder, partner,
member, trustee, employee, consultant, advisor, agent or any other capacity of any
corporation, partnership, joint venture, trust, or other business organization or entity,
encourage, support, finance, be engaged in, interested in, or concerned with (x) any of the
companies and entities described on Schedule I hereto, except to the extent that any
activities in connection therewith are confined exclusively outside the continental United
States, or (y) any other business within the death care industry having an office or being
conducted within a radius of fifty (50) miles of any funeral home, cemetery or other death
care business owned or operated by the Company or any of its subsidiaries at the time of
such termination, if the Employee had management responsibility, either directly or
indirectly, over that funeral home, cemetery, or other death care business at any time
during the previous 12 months;
(ii) induce or assist anyone in inducing in any way any employee of the Company or any
of its subsidiaries to resign or sever or her employment or to breach an employment
contract with the Company or any such subsidiary; or
(iii) own, manage, advise, encourage, support, finance, operate, join, control, or
participate in the ownership, management, operation, or control of or be connected in any
manner with any business which is or may be in the funeral, mortuary, crematory, cemetery
or burial insurance business or in any business related thereto (x) as part of any of the
companies or entities listed on Schedule I, or (y) otherwise within a radius of fifty (50)
miles of any funeral home, cemetery or other death care business owned or operated by the
Company or any of its subsidiaries at the time of such termination, if the Employee had
management responsibility, either directly or indirectly, over that funeral home, cemetery,
or other death care business at any time during the previous 12 months.
Notwithstanding the foregoing, the above covenants shall not prohibit the passive ownership
of not more than one percent (1%) of the outstanding voting securities of any entity within the
death care industry. The foregoing covenants shall not be held invalid or unenforceable because of
the scope of the territory or actions subject hereto or restricted hereby, or the period of time
within which such covenants respectively are operative, but the maximum territory, the action
subject to such covenants and the period of time they are enforceable are subject to any
determination by a final judgment of any court which has jurisdiction over the parties and subject
matter.
-6-
Upon termination of employment, whether voluntary or involuntary, the above covenants shall
not prohibit Employee from being employed directly by Aria Cremation Services, LLC or Homestead
Funeral Home, 00000 Xxxx Xxxx Xxxx, Xxxxx Xxxxxxx, Xxxxx 00000.
9. Confidential Information; Copyrightable Material. The Employee acknowledges
that in the course of his employment by the Company he shall receive and access certain trade
secrets, management methods, financial and accounting data (including, but not limited to,
reports, studies, analyses, spreadsheets and other materials and information),
operating
techniques, prospective acquisitions, employee lists, training manuals and procedures,
personnel
evaluation procedures, and other confidential information and knowledge concerning the
business of the Company and its affiliates (hereinafter collectively referred to as
“Confidential
Information”) which the Company desires to protect. The Employee understands that the
Confidential Information is confidential and he agrees not to reveal the Confidential
Information
to anyone outside the Company so long as the confidential or secret nature of the Confidential
Information shall continue, except as required by law or legal process. The Employee further
agrees that he will at no time use the Confidential Information in competing with the Company.
Upon termination of this Agreement, 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 Confidential Information and the Employee agrees
that
all such materials will at all times remain the property of the Company. The Employee
acknowledges that all materials and other copyrightable works and subject matter (regardless
of
whether or not constituting “Confidential Information”) produced by the Employee within the
scope of his employment (regardless of whether or not denoted as copyrighted material) shall
be
deemed “works made for hire” and shall be owned by and proprietary to the Company and may
not be used or reproduced in whole or in part without the Company’s prior written consent.
10. Remedies. The parties recognize that the services to be rendered under this
Agreement by the Employee are special, unique, and of extraordinary character, and that in the
event of the breach by the Employee of the covenants contained in Section 8 or Section 9
hereof,
the Company may suffer irreparable harm as a result. The parties therefore agree that, in
the
event of any breach or threatened breach of any of such covenants, the Company shall be
entitled
to specific performance or injunctive relief, or both, and may, in addition to and not in lieu
of any
claim or proceeding for damages, institute and prosecute proceedings in any court of competent
jurisdiction to enforce through injunctive relief such covenants. In addition, the Company
may,
if it so elects, suspend (if applicable) any payments due under this Agreement pending any
such
breach and offset against any future payments the amount of the Company’s damages arising
from any such breach. The Employee agrees to waive and hereby waives any requirement for the
Company to secure any bond in connection with the obtaining of such injunction or other
equitable relief.
11. 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 three business days after the date mailed, postage prepaid, by certified mail,
return
receipt requested, or when sent by electronic means or facsimile and receipt is confirmed, if
addressed to the respective parties as follows:
-7-
| If to the Employee: | Xxx X. Xxxxx | |||
| 0000 Xxxxxxxxxx Xxxx Xxx | ||||
| Xxxxxx, Xxxxx 00000 | ||||
| If to the Company: | Carriage Services, Inc. | |||
| 0000 Xxxx Xxx Xxxx, Xxxxx 000 | ||||
| Xxxxxxx, Xxxxx 00000 | ||||
| Attn: Chief Executive Officer |
Either party hereto may designate a different address by providing written notice of such new
address to the other party hereto.
12. 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 under applicable law, such provision shall
be
ineffective to the extent of such provision or invalidity, without invalidating the remainder
of
such provision or the remaining provisions of this Agreement.
13. Assignment. This Agreement may not be assigned by the Employee. Neither the
Employee nor his estate shall have any right to commute, encumber or dispose of any right to
receive payments hereunder, it being agreed that such payments and the right thereto are
nonassignable and nontransferable.
14. Binding Effect. Subject to the provisions of Section 13 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.
15. 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.
16. Complete Agreement. This Agreement represents the entire agreement between
the parties concerning the subject hereof and supersedes all prior agreements and arrangements
between the parties concerning the subject thereof.
17. Governing Law; Venue. A substantial portion of the Employee’s duties under this
Agreement shall be performed at the Company’s corporate headquarters in Houston, Texas, and
this Agreement has been substantially negotiated and is being executed and delivered in the
State
of Texas. This Agreement shall be construed and enforced in accordance with and governed by
the laws of the State of Texas. Any suit, claim or proceeding arising under or in connection
with
this Agreement or the employment relationship evidenced hereby must be brought, if at all, in
a
state district court in Xxxxxx County, Texas or federal district court in the Southern
District of
Texas, Houston Division. Each party submits to the jurisdiction of such courts and agrees not
to
raise any objection to such jurisdiction.
-8-
18. Survival. The provisions of Sections 6, 8 and 9 shall survive any termination of
this Agreement or the employment relationship of the Company and Employee; provided,
however, if such termination is the result of Corporate Change as provided in Section 7(e)
hereof,
Employee shall not thereafter be bound by the provisions of Section 8 hereof.
19. 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 one and
the
same instrument.
20. Time of Payments. All amounts payable under Sections 7(d) and (e) of this
Agreement shall be paid within 10 days after the Employee’s execution without revocation of a
release in a form satisfactory to the Company and within the time period prescribed by the
Company (which may not be less than 21 days after the date of termination of employment). If
the Employee is a “specified employee,” as such term is
defined in Section 409A of the Code
and
related regulations and Treasury pronouncements (“Section 409A”) and determined as described
below in this Section 20, any payments payable as a result of the Employee’s termination
(other
than death) shall not be payable before the earliest of (i) the date that is six months after
the
Employee’s termination, (ii) the date of the Employee’s death, or (iii) the date that
otherwise
complies with the requirements of Section 409A. This Section 20 shall be applied by
accumulating all payments that otherwise would have been paid within six months of the
Employee’s termination and paying such accumulated amounts at the earliest date which
complies with the requirements of Section 409A. The Employee shall be a “specified employee”
for the twelve-month period beginning on April 1 of a year if the Employee is a “key employee”
as defined in Section 416(i) of the Code (without regard to Section 416(i)(5)) as of December
31
of the preceding year or using such dates as designated by the Company in accordance with
Section 409A and in a manner that is consistent with respect to all of the Company’s
nonqualified deferred compensation plans. For purposes of determining the identity of
specified
employees, the Company may establish procedures as it deems appropriate in accordance with
Section 409A.
21. Income, Excise or Other Tax Liability. The Company may withhold from any
benefits and payments made pursuant to this Agreement all federal, state, city and other taxes
as
may be required pursuant to any law or governmental regulation or ruling and all other normal
employee deductions made with respect to the Company’s employees generally. Notwithstanding
anything in this Agreement to the contrary, in the event it shall be determined that any
payment
or distribution by the Company to the Employee or for his benefit, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise (a
“Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or
penalties with respect to such excise tax (such excise tax, together with any such interest or
penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall
pay to
the Employee an additional payment (a “Gross-up Payment” ) in an amount such that after
payment by the Employee of all taxes (including any interest or penalties imposed with respect
to
such taxes), including any Excise Tax imposed on any Gross-up Payment, the Employee retains
an amount of the Gross-up Payment equal to the Excise Tax imposed upon the Payments. All
determinations required to be made under this Section 21 shall be made by the Company’s
-9-
accounting
firm (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Employee. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Absent manifest error, any determination by the Accounting
Firm shall be binding upon the Company and the Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
| CARRIAGE SERVICES, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| XXXXXX X. XXXXX, Chief Executive Officer | ||||
| /s/ Xxx X. Xxxxx | ||||
| Xxx X. Xxxxx | ||||
-10-
| 1. | The following entities, together with all Affiliates thereof: |
Service Corporation International
Alderwoods Group, Inc. Xxxxxxx
Enterprises, Inc. Keystone North
America, Inc. Meridian Mortuary
Group, Inc. StoneMor Partners LP
Saber Management LLC
Xxxxxx Xxxxxx & Co.
Legacy Funeral Holdings, LLC
Northstar Memorial Group, LLC
Alderwoods Group, Inc. Xxxxxxx
Enterprises, Inc. Keystone North
America, Inc. Meridian Mortuary
Group, Inc. StoneMor Partners LP
Saber Management LLC
Xxxxxx Xxxxxx & Co.
Legacy Funeral Holdings, LLC
Northstar Memorial Group, LLC
| For purposes of the foregoing, an “Affiliate” of an entity is a person that directly or indirectly controls, is under the control of or is under common control with such entity. | ||
| 2. | Any new entity which may hereafter be established which acquires any combination of ten or more funeral homes and/or cemeteries from any of the entities described in 1 above. | |
| 3. | Any funeral home, cemetery or other death care enterprise which is managed by any entity described in 1 or 2 above. |
-11-
