Exhibit 10.11
CARRIAGE SERVICES, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated effective as of November 8, 1999, by and between
CARRIAGE SERVICES, INC., a Delaware corporation (hereinafter called the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a resident of Houston, Texas (hereinafter
called the "Executive");
W I T N E S S E T H:
That for and in consideration of TEN and NO/100 DOLLARS ($10.00) and other
good and valuable consideration the receipt and sufficiency of which are hereby
confessed and acknowledged by the Executive, the Company does hereby agree to
continue to employ, and the Executive hereby agrees to continue to be an
employee of the Company, under the following terms and conditions, to-wit:
1. DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
meanings specified in this Paragraph 1:
A. "Company" means Carriage Services, Inc.
B. "Affiliate" means any corporation, general or limited
partnership, limited liability company joint venture or other business
entity that (i) is owned by or (ii) owns the Company. For the purposes of
this definition, ownership, directly or indirectly, of 50% or more of the
capital stock having the right to vote for directors of a corporation, or
50% or more of the equity interest of a general or limited partnership,
joint venture or other business entity, shall constitute ownership
thereof.
C. Confidential Information" means trade secrets and business
information of the Company or any Affiliate which is not generally known
by others, including, by way of illustration and not limitation, all such
information relating to corporate 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 contracts within the customer's
organization or within the organization of acquisition prospects, or
marketing and merchandising techniques, prospective names and marks,
whether or not such information has been reduced to documentary form.
D. "Conflicting Product or Service" means any product or service
which competes with or is designed to compete with a product or service
sold by the Company or any Affiliate, about which Executive has acquired
or acquires Confidential Information.
E. "Conflicting Organization" means any person, firm, association or
corporation which is engaged in or is about to become engaged in
development, production, marketing or selling of, a Conflicting Product or
Service in a market or territory in which the Company or any Affiliate
offers or intends to offer products or services that would compete with
the Conflicting Product or Service.
F. "Cause" shall mean that the Executive has
(a) failed to cure, after reasonable notice of not less than
thirty (30) days, a material breach of any of the terms of this
Agreement;
(b) been convicted of a felony involving moral turpitude,
fraud, theft, embezzlement, assault, battery, rape or other violent
act or another crime; or
(c) engaged in willful misconduct in the performance of the
duties and services required of the Executive pursuant to this
Agreement that has a material adverse effect on the Company;
provided, however, no act or failure to act shall be deemed
"willful" if due primarily to an error in judgment or negligence or
if made in good faith and with reasonable belief that such act is in
the best interest of the Company.
G. "Board of Directors" means the board of directors of the Company.
H. "Monthly Severance Payment" with respect to the Executive shall
be equal the quotient resulting from dividing (a) the aggregate sum of all
salary paid to, and incentive bonuses earned by, the Executive pursuant to
this Agreement and prior employment with the Company during the three year
period ended December 31 of the year prior to the date of termination of
the Executive's employment by (b) 36. For purposes hereof, (i) the Special
Compensation Bonus under Paragraph 3E shall be excluded in calculating the
"incentive bonus" component in clause (a) above; (ii) the amount of the
incentive bonus in said clause (a) shall be deemed to be $66,700 for 1997,
$160,000 for 1998 and $360,000 for 1999; and (iii) in the event any
non-cash consideration is included in any such incentive bonus in 2000 or
thereafter, such non-cash consideration shall be included at the value
reasonably assigned by the Board of Directors or the Compensation
Committee thereof at the time such bonus is awarded or, in the absence of
any such value determination, at the fair market value determined by
independent appraisal.
I. "Expiration Date" shall initially be November 30, 2004, provided
that commencing on December 31, 2002 and at the end of each calendar month
thereafter during which the Executive performs services hereunder, the
Expiration Date shall automatically be extended for an additional month
unless, not later than 90 calendar days prior to the end of any calendar
month commencing with December 2002, the Company or the Executive shall
have given written notice that it or he, as the case may be, does not wish
to have the term extended. If the Executive's employment hereunder is
terminated by either party at any time for any reason, the Expiration Date
shall thereupon no longer be automatically extended.
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2. TERM AND TERMINATION
A. Subject to the termination provisions herein contained, the employment
of Executive by the Company pursuant to this Agreement commenced as of the 4th
day of November, 1999, and continue thereafter until terminated in accordance
with this paragraph 2 or, if not earlier so terminated, until the Expiration
Date (the "Employment Term").
B. If the Executive dies during the term of the Agreement and while in the
employ of the Company, this Agreement shall automatically terminate and the
Company shall have no further obligation to the Executive or his estate except
that the Company shall pay to the Executive's estate (i) on the next regular
payroll payment date the unpaid salary through the date of death, and (ii) on or
before April 15 of the next succeeding year a proportionate part of the
incentive bonus as provided in paragraph 3B hereof as is in the same ratio to
the full bonus as the number of days in the year until the date of death is to
365.
C. If, during the term of this Agreement, the Executive, by reason of a
disability, (I.E., a physical or mental impairment), cannot perform each of the
essential functions of his position, with reasonable accommodation, for a period
of one hundred eighty consecutive days, the Company, on thirty days prior
written notice to the Executive, may terminate this Agreement as of the date
specified in the notice. In the event of a termination pursuant to this
paragraph 2C, the Company shall be relieved of all of its obligations under this
Agreement, except that the Company shall pay to the Executive, or his estate in
the event of his subsequent death: (i) that portion of the Executive's salary
through the 30th day after notice of termination and (ii) on or before April 15
of the next succeeding year, the Company shall pay to the Executive a
proportionate part of the incentive bonus as provided in paragraph 3B hereof as
is in the same ratio to the full bonus as the number of days in the year until
the date of termination is to 365.
D. At any time prior to the Expiration Date of this Agreement the Company
may terminate this Agreement for Cause (as herein defined) without further
obligation or liability hereunder to the Executive, his spouse, estate, heirs or
assignees except for the obligation of the Company to pay to the Executive his
salary earned through the date of discharge.
E. The Executive may give written notice of voluntary termination of
employment at any time, and upon giving of the notice, the employment shall
terminate on the earlier of the date set forth in the notice or 30 days after
the notice is received by the Company ("Voluntary Termination Date"). Upon the
Voluntary Termination Date, the Company shall have no further obligation or
liability hereunder to the Executive, his spouse, heirs or estate, except to pay
to the Executive any unpaid salary earned through the Voluntary Termination Date
(subject to the terms of any other employee benefit plan of the Company in which
the Executive participates).
F. The Company may terminate the employment of the Executive at any time
WITHOUT CAUSE upon written notice to the Executive of such termination, which
notice shall set forth the date of termination ("Without Cause Termination
Date"). Upon the Without Cause Termination Date, the Company shall have no
further obligation or liability hereunder to the
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Executive or his spouse, heirs or estate, except that (i) after the Without
Cause Termination Date and continuing monthly until the later of the Expiration
Date or two years after the termination date, or if earlier the last day of the
month following the date of death of the Executive, the Company shall pay to the
Executive each month, in accordance with the Company's payroll policies then in
effect, an amount equal to the Monthly Severance Payment, (ii) on or before
April 15 of the next succeeding year following the Without Cause Termination
Date the Company shall pay to the Executive a proportionate part of the
incentive bonus as provided in paragraph 3B hereof as is in the same ratio to
the full bonus as the number of days in the calendar year up to the Without
Cause Termination Date is to 365 and (iii) after the Without Cause Termination
Date and continuing monthly during the period the Executive is receiving the
Monthly Severance Payments specified in subparagraph F(i) above, Executive and
his family shall be entitled to participate in any welfare benefit plans,
programs, or policies in which Executive and his family were participating at
the time of his termination of employment for group and/or executive life,
accident, health, dental, or medical/hospital insurance (whether funded by
actual insurance or self insured by the Company); provided, however, that the
rights of the Executive and his family thereunder shall be governed by the terms
thereof and shall not be enlarged hereunder.
G. Any termination of the employment relationship, whether termination is
effected by the Company or the Executive, shall be without prejudice to or
waiver of the obligations of the Executive to maintain in secrecy and confidence
all Confidential Information, pursuant to paragraph 5 hereof and not to render
prohibited services to any Conflicting Organization, pursuant to paragraph 6
hereof.
3. EMPLOYMENT AND SALARY
A. During the Employment Term, the Company shall employ the Executive and
the Executive shall serve in the employ of the Company at a continuing salary of
Two Hundred Seventy-Five Thousand Dollars ($275,000.00) per year, subject to
increases as provided below (the "Annual Base Salary"), payable in accordance
with the Company's payroll policies applicable to executives as established by
the Company from time to time. The Board of Directors shall review and in its
sole discretion may increase Executive's Annual Base Salary annually commencing
for 2000. Once established at a specified increased rate, the Annual Base Salary
shall not thereafter be reduced.
B. During the Employment Term, the Executive shall also be entitled to be
paid an incentive bonus in an amount, if any, as shall be determined by the
Board of Directors (or the Compensation Committee thereof) in its sole
discretion. The incentive bonus, if any, shall be paid prior to the close of
business on April 15 of each year. Except for termination by reason of death or
disability or termination WITHOUT CAUSE, the incentive bonus shall not be earned
in whole or in part, until the close of business on December 31 of each year
("Bonus Entitlement Date") and shall be paid annually prior of the close of
business on April 15 following the Bonus Entitlement Date. Termination for Cause
pursuant to paragraph 2D or voluntary termination pursuant to paragraph 2E shall
terminate the right of the Executive to receive any incentive bonus under this
paragraph 3B that has not yet been earned; provided that any termination of
employment after the incentive bonus has been earned, but prior to its payment,
shall not terminate the Executive's right to receive such incentive bonus.
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C. The Executive shall receive such further benefits as may be accorded
other executives under the established plans and programs of the Company to the
extent the executive is eligible for participation therein based on the
eligibility criteria applicable to other Executives, all as determined by the
Company from time to time in its sole discretion.
D. The Executive shall be entitled to receive reimbursement for, or seek
payment directly by the Company of, all reasonable expenses incurred by the
Executive in the performance of his duties under this Agreement. The Executive
shall use his best efforts to obtain approval prior to incurring any expenses.
Unreasonable expenses or expenses out of the ordinary course of business not
approved in advance shall not be reimbursed by the Company. Neither shall the
Company be obligated to reimburse expenses if reimbursement is not sought on a
timely basis.
E. Effective as of November 8, 1999, the Company shall pay the Executive a
special compensation bonus of $1,800,000.00 (the "Special Compensation Bonus").
Of the Special Compensation Bonus, (i) the sum of $725,000.00, after deducting
applicable withholdings, shall be applied against first, interest, then
principal, outstanding under the Executive's Promissory Note dated October 1,
1999 payable to the order of the Company in the original principal amount of
$1,800,000.00, of which $1,200,000.00 has been advanced (the "Advance Note"),
and (ii) the balance of $1,075,000.00 shall be represented by the Company's
unsecured promissory note dated November 8, 1999 payable to the Executive in the
original principal amount of $1,075,000.00, bearing interest at the rate of 12%
per annum and otherwise in form and substance mutually acceptable to the Company
and the Executive (the "Company Note").
The Company Note will be payable in two installments. The first
installment shall be in the amount of $600,000.00 and shall be due between March
16, 2000 and March 31, 2000, and the second installment shall be in the amount
of $475,000.00 and shall be due between March 16, 2001 and March 31, 2001.
Interest shall be payable concurrently with installments of principal. Executive
acknowledges that the Company shall be authorized to deduct applicable
withholdings from each such installment.
The Company and Executive agree that Executive shall repay the full
remaining balance of all principal and interest due under the Advance Note on or
before December 31, 1999, and that Executive's failure to so repay such
remaining balance by such date shall constitute an "event of default" within the
meaning of the Advance Note.
If the employment of Executive is terminated as a result of voluntary
termination pursuant to paragraph 2E hereof at any time during the five-year
period commencing on November 4, 1999 and ending November 3, 2004 (the
"Recoupment Period"), then upon such termination the Executive shall pay to the
Company an amount in cash equal to the product of the amount of the Special
Compensation Bonus multiplied by a fraction, the numerator of which is the
number of whole months which remain after the month in which such termination
occurs through the balance of the Recoupment Period, and the denominator of
which is 60. Any termination by reason of the Executive's death under paragraph
2B, his disability under paragraph 2C, or a discharge with or
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without Cause under paragraphs 2D or 2F, shall not affect Executive's
entitlement to retain the Special Compensation Bonus.
The parties acknowledge that the Special Compensation Bonus (including
installments under the Company Note) shall be paid to the Executive net of any
applicable withholdings, including withholding for federal income taxes. If the
Executive is required to pay a portion of the Special Compensation Bonus back to
the Company as aforesaid, that portion of the Special Compensation Bonus shall
be calculated on a net basis after giving effect to such withholdings; provided,
however, that if the Executive actually realizes a federal income tax benefit
attributable to the disgorgement of a portion of the Special Compensation Bonus
as aforesaid, then upon such realization the Executive shall additionally pay to
the Company the amount of such federal income tax benefit.
If, at the time the Executive becomes obligated to return a portion of the
Special Compensation Bonus as aforesaid, there remains any outstanding principal
or interest under the Company Note, the Company is specifically authorized to
offset the amount of the Executive's disgorgement obligation against first,
accrued interest under the Company Note, and then the principal installments
thereunder in inverse order of maturity.
4. DUTIES
The Executive shall serve the Company in an executive capacity and shall
report to, and be subject to the general direction and control of, the Board of
Directors of the Company. The Executive shall perform such duties and
responsibilities and in such capacities as may be established by the Board of
Directors from time to time. The Executive shall perform his duties and
discharge his obligations well and faithfully and to the utmost of his ability,
and shall use his best efforts to promote the success, reputation and good will
of the Company and its Affiliates. The Executive also agrees to perform, without
additional compensation, such services for any Affiliate as the Board of
Directors may designate; provided that the Executive's performance of duties and
services for any Affiliate shall not unreasonably be added to the time required
for performance of his assigned duties and services for the Company. The Company
agrees that it will assign to the Executive only those duties and
responsibilities of the type, nature and dignity normally assigned to an
executive employee of his position in an enterprise of the size, stature and
nature of the Company. In performing his duties hereunder, the Executive shall
not be required to relocate outside the Houston, Texas area. The Executive
agrees to devote his full business time, attention, skill and effort exclusively
to the performance of his duties and responsibilities hereunder during the term
of his employment and any extension or renewal thereof. In addition, except for
such personal and business investment activities as are essentially passive in
nature and do not involve any breach of fiduciary duty or duty of loyalty to the
Company or its Affiliates, the Executive shall not, during the term of his
employment hereunder, engage in any other activity, whether or not such activity
is conducted or pursued for gain, profit or other pecuniary advantage, if it
conflicts or interferes with or adversely affects in any material respect the
performance or discharge of Executive's duties and responsibilities hereunder.
Without the prior written consent of the Company the Executive shall not, during
the term of his employment hereunder, serve as a principal, partner, employee,
officer, consultant, advisor or director of any other business concern
conducting business for profit except for such personal and business investment
activities as are essentially passive in nature.
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The Executive acknowledges that the Executive is employed in an executive
and administrative position that is not subject to overtime pay under the
federal wage and hour law.
5. COVENANT OF SECRECY
The Executive agrees that, except as required by his duties to the
Company, he will not:
A. disclose or use for himself or others Confidential Information
during or after his employment with the Company, except as required by law
(provided that the Executive shall first advise the Company of any
proposed disclosure to afford the Company the opportunity to take any
protective measures); or
B. except as is necessary in the performance of his duties, take any
documents or physical objects constituting or containing Confidential
Information from facilities of the Company or its Affiliates, without
first obtaining written authorization from the Company. The Executive
agrees to return to the Company all documents or other physical objects
constituting or containing Confidential Information and all reproductions
thereof upon request, and in any event immediately upon termination by
either party for any reason of his employment with the Company.
6. RESTRICTIVE COVENANT
A. In consideration for the agreement to employ the Executive and to
provide Monthly Severance Payments under the conditions described in paragraph
2F, and the other valuable consideration provided to the Executive hereunder:
(1) during the term hereof, the Executive shall not: (i) either directly or
indirectly, for himself or any third party, divert or attempt to divert any
existing business of the Company, or (ii) either directly or indirectly, for
himself or any third party, cause or induce any present or future employee of
the Company to accept employment with another employer; or (2) during the
two-year period commencing upon the termination of the Executive's employment
hereunder by either party for any reason and during the period the Executive is
to receive the Monthly Severance Payments the Executive shall not, within 50
miles of any facility owned or operated by the Company or any Affiliate, render
advice or service to, or otherwise assist a Conflicting Organization. The
Company and Executive expressly agree that in the event that Executive is
entitled to receive Monthly Severance Payments pursuant to ▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇▇ in his sole discretion may irrevocably elect to forego such payments
and thereafter shall not be prevented from rendering advice or service to, or
otherwise assist a Conflicting Organization following Executive's termination of
employment; provided, however, Executive shall not be relieved his obligations
contained in paragraph 5.
B. Both parties recognize that the services to be rendered under this
Agreement by the Executive are special, unique, and of extraordinary character,
and that in the event of the breach by the Executive of the terms and conditions
of the covenants contained in paragraphs 5 and/or 6, the Company shall be
entitled, if it so elects, to suspend (if applicable) salary payments, Monthly
Severance Payments and bonus payments and/or to institute and prosecute
proceedings in any court
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of competent jurisdiction to enforce through injunctive relief such covenants.
The Executive acknowledges and agrees that there is no adequate remedy at law
for his violation of such covenants and that in light of the numerous years and
the scope of his Executive-level responsibilities with the Company, the
restrictions as to time, geographic scope and scope of activities restrained in
paragraph 6A and 6C are both reasonable and necessary to protect the goodwill
and other legitimate business interests of the Company. Indeed, the Executive
acknowledges that the term of his employment hereunder, the post employment
Monthly Severance Payments and bonus payments and the amount of salary and bonus
provided by the Company hereunder are in significant part provided by the
Company to secure the Executive's agreement to such covenants. The Executive
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.
C. Both parties recognize that the covenants set forth in paragraph 6
constitute a restraint on the future employment opportunities of the Executive
and as such are enforceable only to the extent necessary to protect and preserve
to the Company its valuable goodwill and other legitimate business interests
including but not limited to Confidential Information ("Protectable Interests"),
as they now exist and may be developed and expanded prior to the termination of
the Executive's employment hereunder. The Company and the Executive recognize
that the business of the Company and its Protectable Interests are not
restricted to a single market or geographic area but extend to many different
markets and geographic areas and that the duties and the executive-level
activities of the Executive are applicable to all such markets and geographic
areas. The Company and the Executive have entered into this Agreement with the
expectation that as the business of the Company and the duties and activities of
the Executive continue to expand, the Executive may acquire relationships and
Confidential Information that will constitute a part of the evolving Protectable
Interests of the Company. It is the parties' mutual intent that the covenants
contained in paragraph 6 be limited to only those time, geographic and activity
restrictions that are necessary to protect the Protectable Interests of the
Company.
D. During the period that Executive may not render advice or service to,
or otherwise assist a Conflicting Organization, Executive shall refrain from
making any statement, except for an isolated idle comment made in a non-business
contact, which has the effect of demeaning the name or business reputation of
the Company or any Affiliate, or which materially adversely affects the best
interests (economic or otherwise) of the Company or any Affiliate.
7. NOTICE
Any notice or communication to the parties to this contract shall be
deemed to have been sufficiently given for all purposes hereof if mailed by
United States Mail, postage prepaid, Return Receipt Requested, addressed as
follows, to-wit:
To the Executive: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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To the Company: Carriage Services, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
or such other address as may be set forth in a notice given in accordance with
the provisions hereof.
8. MISCELLANEOUS
A. This Agreement supersedes all prior agreements and understandings
between the Company and the Executive with respect to the subject matter hereof
and may not be changed or terminated except by an instrument in writing duly
authorized by the Board of Directors and executed by the Executive and the
President of the Company. Without limiting the generality of the foregoing, this
Agreement supersedes and replaces the Executive Employment Agreement dated
effective July 1, 1996 between the Executive and the Company.
B. This Agreement shall be interpreted and construed in accordance with
the laws of the State of Texas or any other jurisdiction in which the Company
seeks to enforce paragraph 5 or 6 hereof. Should any portion of this Agreement
be adjudged or held to be invalid, unenforceable or void, such holdings shall
not have the effect of invalidating or voiding the remainder of this Agreement,
and the parties hereto agree that the portion so held invalid, unenforceable or
void shall, if possible, be deemed amended or reduced in scope, or to otherwise
be stricken from this Agreement to the extent required for the purposes of
validity and enforcement thereof.
C. This Agreement may not be assigned by the Executive and the Executive
and his spouse, heirs and estate shall not 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;
provided, however, that the Company Note may be assigned by the Executive.
Subject to the limitation in the immediate preceding sentence, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, the
Executive's spouse, heirs and estate, and the successors and assigns of the
Company. It is specifically agreed that in the event that the Company's business
or any part thereof should be sold in any fashion and this Agreement is assigned
to the purchaser, the purchaser shall be entitled to specifically enforce the
terms and provisions of this Agreement.
D. The Executive represents and warrants to the Company that (i) he has
fulfilled all of the terms and conditions of all prior employment agreements to
which he was or has been a party and that he is not violating and will not
violate any term or provision of any employment agreement or confidentiality
agreement to which he is or has been a party by entering into or performing his
obligations under this Agreement and (ii) he is not violating and will not
violate his fiduciary duty to any prior employer by entering into or performing
his obligations under this Agreement.
E. The waiver by the Company of the breach of any provision of this
Agreement by the Executive shall not operate or be construed as a waiver of any
subsequent or continuing breach of this Agreement by the Executive.
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F. Except for disputes regarding the Executive's failure to comply with
paragraph 5 or 6 hereof, if a dispute arises out of or relates to this Agreement
or its breach, and if the dispute cannot be settled through direct discussions,
then the Company and the Executive agree first to endeavor to settle the dispute
in an amicable manner by mediation, under the applicable provisions of Section
154.002, ET SEQ., Texas Civil Practices and Remedies Code, as supplemented by
the rules of the American Arbitration Association, before having recourse to any
other proceeding or forum.
G. This Agreement has been entered into by the parties in ▇▇▇▇▇▇ County,
Texas where the parties agree venue will lie for any action brought to enforce
or interpret the provisions hereof.
H. 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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in Houston, Texas, effective for all purposes as of the date first
above written.
THE COMPANY:
CARRIAGE SERVICES, INC.
By__________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
EXECUTIVE:
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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