Exhibit 10.26

 

EMPLOYMENT AGREEMENT

 

 

THIS AGREEMENT, made effective as of the 10th day of December, 2004, is between
CARRIAGE SERVICES, INC., a Delaware corporation (the “Company”), and CHARLES D.
SIDUN, a resident of Monmouth County, New Jersey (the “Employee”).

 

1.                                       Employment Term.  The Company hereby
continues the employment of the Employee for a term, subject to earlier
termination as provided in Section 7 hereof, continuing until December 31, 2009
(such term being herein referred to as the “term of this Agreement”).  The
Employee agrees to accept such continued 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.  The Employee shall perform the
management and administrative duties of Senior Vice President of Funeral
Operations of the Company.  The Employee shall also serve as Senior Vice
President of Funeral 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 as are not inconsistent
with the provisions hereof.

 

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 from making passive
investments in other businesses or enterprises, provided, however, that such
investments 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 a salary of $8,653.85 per full
bi-weekly payroll period of service completed, appropriately prorated for
partial periods at the commencement and end of the term of this Agreement.  The
Employee’s base salary will be subject to annual review, but any increase in
salary will be subject to recommendation of the Chief Executive Officer and
approval of the Company’s Compensation Committee, in each case in their sole
discretion.  The salary set forth herein 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 under Section 4, 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 of up to 40% of annual base salary (subject to
achievement of performance measures to be set upon recommendation

 

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of the Chief Executive Officer and approval of the Company’s Compensation
Committee), the determination of achievement of such measures and the amount of
such bonus to remain within the sole discretion of the Company, upon
recommendation of the Chief Executive Officer and approval by the Compensation
Committee.

 

(ii)                                  Eligibility for consideration of stock
options, stock grants or other incentive compensation under the terms of one or
more of the Company’s incentive plans 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.  There will be an
initial grant of options for 30,000 shares of the Company’s Common Stock in
connection with the Company’s 2005 grant program, subject to standard four-year
vesting requirements.

 

(iii)                               Vacation accruing at the rate of 2.5 days
per month of service completed.

 

(iv)                              Use of a Company vehicle and temporary housing
near the Company’s headquarters office in Houston, Texas, subject to Company
policy respecting such matters.

 

(v)                                 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.

 

6.                                       Certain Additional Matters.  The
Employee agrees that at all times during the term of this Agreement and for the
two-year period specified in Section 8:

 

(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 of its suppliers, employees,
patrons, customers and others who may at any time have or have had business
relations with the Company.

 

(b)                                 The Employee will not reveal to any third
person any difference of opinion, if there be such at any time, between him and
the management of the Company as to its personnel, policies or practices, except
as may be required under applicable law provided that the Employee first
notifies the Company’s Chief Executive Officer of any statements he intends to
make which may be covered by this paragraph (b), except under privilege to his
legal counsel.

 

(c)                                  The Employee will not knowingly or
intentionally do any act or thing detrimental to the Company or its business.

 

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

 

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pay the Employee’s estate that portion of the Employee’s base salary under
Section 4 accrued through the date on which the Employee’s death occurred.  Such
payment of base salary 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 has
become physically or mentally incapable (excluding infrequent and temporary
absences due to ordinary illness) of performing his duties under this
Agreement.  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) the Employee’s base salary under Section 4 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.  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.

 

(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 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 commission of any felony or any other crime involving moral
turpitude, (ii) the Employee’s willful 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 Company, (iii) the
Employee’s commission of acts amounting to gross negligence or willful
misconduct to the material detriment of the Company, or (iv) the Employee’s
breach of any provision of this Agreement or uniformly applied provisions of the
Company’s employee handbook.

 

(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.  The
Employee will also have the right to resign his employment by written notice to
the Company, with such resignation treated as a discharge without Cause under
this paragraph (d), if the Company significantly reduces the Employee’s position
and responsibilities without his consent to those not normally associated with
the position and duties described in Section 2.  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

 

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his subsequent death) the Employee’s base salary under Section 4, and shall
continue to include the Employee in any group health and hospitalization
insurance program, for a period of 12 months following the date of discharge (or
the date of reduction in responsibilities, if applicable), or until expiration
of the term of this Agreement (whichever is shorter).  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 (or
resigned, if applicable).

 

8.                                       Restrictive Covenants.  The Employee
acknowledges that in the course of his employment with the Company as a member
of the Company’s senior executive and management team, he has had and will
continue to have access to confidential and proprietary business information of
the Company and its affiliates, and will develop through such employment
business systems, methods of doing 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.  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 eighteen (18) months thereafter,
the Employee shall not, directly or indirectly, without the prior written
consent of the Company in each instance:

 

(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;

 

(ii)                                  induce or assist anyone in inducing in any
way any employee of the Company or any of its subsidiaries to resign or sever
his 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.

 

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

 

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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.

 

9.                                       Confidential Information.  The Employee
acknowledges that in the course of his employment by the Company he has received
and will continue to receive 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 and dispositions, 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 “Information”) which the
Company desires to protect.  The Employee understands that the Information is
confidential and he agrees not to reveal the Information to anyone outside the
Company so long as the confidential or secret nature of the Information shall
continue.  The Employee further agrees that he will at no time use the
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 his or coming into his possession by or through his
employment or relating to the Information and the Employee agrees that all such
materials will at all times remain the property of the Company.

 

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 telex or telecopy and receipt is confirmed, if
addressed to the respective parties as follows:

 

If to the Employee:

 

Mr. Charles D. Sidun

 

 

25 Alwin Terrace

 

 

Little Silver, New Jersey 07739

 

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If to the Company:

 

Carriage Services, Inc.

 

 

1900 St. James Place, 4th Floor

 

 

Houston, Texas 77056

 

 

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 Harris 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.

 

18.                               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.

 

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

 

 

CARRIAGE SERVICES, INC.

 

 

 

 

 

By:

/s/ Melvin C. Payne

 

 

MELVIN C. PAYNE, Chief Executive Officer

 

 

 

 

 

/s/ Charles D. Sidun

 

CHARLES D. SIDUN

 

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SCHEDULE I

TO

EMPLOYMENT AGREEMENT

(CHARLES D. SIDUN)

 

 

1.                                       The following entities, together with
all Affiliates thereof:

 

Service Corporation International

Alderwoods Group, Inc.

Stewart Enterprises, Inc.

Keystone Group Holdings, Inc.

Meridian Mortuary Group, Inc.

Cornerstone Family Services, Inc.

Hamilton Group, Inc.

Century Group

Saber Group

Thomas Pierce & Co.

 

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.

 

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