Exhibit 10.1
CARRIAGE SERVICES, INC.
PERFORMANCE UNIT AWARD AGREEMENT
Name

 
Grantee

             
 
  Award Date:   August 7, 2007
 
  Performance Unit Value:   $ 1.00    
 
  Number of Performance Units Awarded:  
                                                            

AWARD OF PERFORMANCE UNITS
     The Compensation Committee (the “Committee”) of the Board of Directors of
Carriage Services, Inc., a Delaware corporation (the “Company”), pursuant to the
Carriage Services, Inc. 2006 Long-Term Incentive Plan (the “Plan”), hereby
awards to you, the above-named Grantee, effective as of the Award Date set forth
above, that number of Performance Units set forth above (each, a "Performance
Unit”, and collectively, the “Performance Units”), on the terms and conditions
set forth in this Performance Unit Award Agreement (this “Agreement”).
     One-half of the Performance Units awarded under this Agreement (the “Peer
Group 1 Performance Units”) provide you an opportunity to earn a cash payment
based upon the Total Shareholder Return achieved by the Company for the period
beginning August 7, 2007, and ending December 31, 2009 (the "Performance
Period”) as compared with the Total Shareholder Return achieved by the companies
constituting the Russell Microcap Index as reported by Russell Investment Group
(Russell). The Russell Microcap Index is reconstituted annually to add or
eliminate stocks according to Russell’s microcap segment criteria. For purposes
of the Plan, the Shareholder Return reported by Russell for each period shall be
used to calculate cash payments without adjustment for changes in the companies
constituting the Microcap Index. The other one-half of the Performance Units
awarded under this Agreement (the “Peer Group 2 Performance Units”) provide you
an opportunity to earn a cash payment based upon the Total Shareholder Return
achieved by the Company for the Performance Period as compared with the Total
Shareholder Return achieved by Service Corporation International and Stewart
Enterprises, Inc. The Committee may not increase the amount payable under this
Agreement.
     “Total Shareholder Return” shall mean the difference between (i) the per
share closing price on the last trading day of the Performance Period of the
common stock of the entity with respect to which such computation is being made
as reported by the principal stock exchange on which such entity’s common stock
is traded, and (ii) the per share closing price of such common stock on
August 7, 2007, as reported by the principal stock exchange on which the
entity’s common stock is traded, calculated assuming all cash and other
dividends paid on such common stock during the Performance Period are
immediately reinvested in shares of such common stock.

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     As soon as reasonably practicable after the end of the Performance Period,
the Committee will calculate the Total Shareholder Returns for the Performance
Period of the Company and each of the members of Performance Peer Group 1 and
Performance Peer Group 2. If the following conditions exist with respect to the
Performance Period:
               (1) your employment with the Company and all of its Affiliates
has not terminated on or before the last day of the Performance Period; and
               (2) a Corporate Change does not occur on or before the last day
of the Performance Period;
then you shall receive a cash payment under this Agreement equal to the sum of
(i) the Peer Group 1 Performance Payment and (ii) the Peer Group 2 Performance
Payment.
     The Peer Group 1 Performance Payment shall be equal to:
               (A) multiplied by (B) multiplied by (C)
where (A) is the number of Peer Group 1 Performance Units, (B) is the Peer Group
1 Earned Award Factor (as that term has been defined by the attached table) and
(C) the Performance Unit Value set forth above.
     The Peer Group 2 Performance Payment shall be equal to:
               (X) multiplied by (Y) multiplied by (Z)
where (X) is the number of Peer Group 2 Performance Units, (Y) is the Peer Group
2 Earned Award Factor (as that term has been defined by the attached table) and
(Z) is the Performance Unit Value set forth above.
     If the Peer Group 1 Earned Award Factor and the Peer Group 2 Earned Award
Factor for the Performance Period are both zero and a Corporate Change of the
Company has not occurred on or before the last day of the Performance Period,
then the award pursuant to this Agreement shall lapse and be forfeited as of
December 31, 2009.
     The Committee’s determination of Total Shareholder Return for the Company
and each member of Performance Peer Group 1 and Performance Peer Group 2 for the
Performance Period for purposes of this Agreement shall be binding upon all
persons.
     Any amount payable to you pursuant to this Agreement will be paid to you by
the Company on March 15, 2010, unless otherwise provided as hereinafter
otherwise set out. Such payment will be made to you in exchange for the
Performance Units and thereafter you shall have no further rights with respect
to such Performance Units or this Agreement.

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     The following provisions 1.1 to 1.5 will apply in the event a Corporate
Change of the Company occurs, or your employment with the Company and all
Affiliates (collectively, the “Company Group”) terminates, before the last day
of the Performance Period.
1.1 Termination Generally. If your employment with the Company Group terminates
on or before the last day of the Performance Period for any reason other than
one of the reasons described in Sections 1.2 through 1.5 below, all of your
rights in this Agreement, including all rights to the Performance Units awarded
to you, will lapse and be completely forfeited on the date your employment
terminates.
1.2 Potential or Actual Corporate Change.
(i) Termination Without Cause or for Good Reason in Connection With a Potential
Corporate Change on or Before the Last Day of the Performance Period. If (a) the
Company Group terminates your employment without Cause on or before the last day
of the Performance Period prior to a Corporate Change of the Company (whether or
not a Corporate Change ever occurs) and such termination is at the request or
direction of a person who has entered into an agreement with the Company the
consummation of which would constitute a Corporate Change of the Company or is
otherwise in connection with or in anticipation of a Corporate Change of the
Company (whether or not a Corporate Change ever occurs) or (b) you terminate
your employment with the Company Group for Good Reason on or before the last day
of the Performance Period prior to a Corporate Change of the Company (whether or
not a Corporate Change ever occurs) and such termination or the circumstance or
event which constitutes Good Reason occurs at the request or direction of a
person who has entered into an agreement with the Company the consummation of
which would constitute a Corporate Change of the Company or is otherwise in
connection with or in anticipation of a Corporate Change of the Employer
(whether or not a Corporate Change ever occurs), then the Company will pay to
you in cash an amount determined under the following formula in lieu of any
other amounts under this Agreement:
(1) multiplied by (2)
where (1) is the Performance Unit Value set forth in this Agreement and (2) is
the number of Performance Units that were awarded to you under this Agreement.
Any amount payable to you pursuant to this Section 1.2(i) will be paid by the
Company to you ten (10) business days after the date of your Separation From
Service if you are not a Specified Employee or on the date that is six months
following your Separation From Service if you are a Specified Employee. Such
payment will be made to you in exchange for the Performance Units and thereafter
you shall have no further rights with respect to such Performance Units or this
Agreement and the Company Group will have no further obligations to you pursuant
to the Performance Units or this Agreement. For purposes of this Agreement,
“Separation From Service” has the meaning ascribed to that term in Section 409A
and “Specified Employee” means a person who is, as of the date of the person’s
Separation From Service, a “specified employee” within the meaning of
Section 409A, taking into account the elections made and procedures

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established in resolutions adopted by the Board of Directors of the Company. For
purposes of this Agreement, “Section 409A” means section 409A of the Internal
Revenue Code of 1986, as amended and the Department of Treasury rules and
regulations issued thereunder.
(ii) Employment Not Terminated Before a Corporate Change on or Before the Last
Day of the Performance Period. If a Corporate Change of the Company occurs on or
before the last day of the Performance Period and your employment with the
Company Group does not terminate before the date the Corporate Change of the
Company occurs, then the Company will pay to you in cash an amount determined
under the following formula in lieu of any other amounts under this Agreement:
(1) multiplied by (2)
where (1) is the Performance Unit Value set forth in this Agreement and (2) is
the number of Performance Units that were awarded to you under this Agreement.
Any amount payable to you pursuant to this Section 1.2(ii) will be paid by the
Company to you (a) ten (10) business days after the date the Corporate Change of
the Company occurs if the Corporate Change of the Company qualifies as a change
in the ownership or effective control of the corporation, or in the ownership of
a substantial portion of the assets of the corporation, within the meaning of
Section 409A, or (b) on March 15, 2010, if the Corporate Change of the Company
does not so qualify. Such payment will be made to you in exchange for the
Performance Units and thereafter you shall have no further rights with respect
to such Performance Units or this Agreement and the Company Group will have no
further obligations to you pursuant to the Performance Units or this Agreement.
1.3 Disability. Notwithstanding any other provision of this Agreement to the
contrary, if you become permanently disabled on or after the date that is one
month after the Award Date and is before the last day of the Performance Period,
while in the active employ of one or more members of the Company Group, then the
Employer will pay to you in cash an amount determined under the following
formula in lieu of any other amounts under this Agreement:
(1) multiplied by (2) multiplied by (3) divided by (4)
where (1) is the Performance Unit Value set forth in this Agreement, (2) is the
number of Performance Units that were awarded to you under this Agreement,
(3) is the number of days from (and including) the first day of the Performance
Period to (and including) the day you become permanently disabled, and (4) is
the number of days during the Performance Period. Any amount payable to you
pursuant to this Section 1.3 will be paid by the Company to you ten
(10) business days after the date you become permanently disabled. Such payment
will be made to you in exchange for the Performance Units and thereafter you
shall have no further rights with respect to such Performance Units or this
Agreement and the Company Group will have no further obligations to you pursuant
to the Performance Units or this Agreement. For purposes of this Section 1.3,
you will be “permanently disabled” if you (a) are unable to engage in any
substantial gainful activity

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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, or (b) are, 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, receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering employees of the
Company Group.
1.4 Death. Notwithstanding any other provision of this Agreement to the
contrary, if you die before the last day of the Performance Period and while in
the active employ of one or more members of the Company Group, then the Employer
will pay to your estate in cash an amount determined under the following formula
in lieu of any other amounts under this Agreement:
(1) multiplied by (2) multiplied by (3) divided by (4)
where (1) is the Performance Unit Value set forth in this Agreement, (2) is the
number of Performance Units that were awarded to you under this Agreement,
(3) is the number of days from (and including) the first day of the Performance
Period to (and including) the date of your death, and (4) is the number of days
during the Performance Period. Any amount payable to your estate pursuant to
this Section 1.4 will be paid to your estate by the Employer ten (10) business
days after the date of your death. Such payment will be made in exchange for the
Performance Units and thereafter your estate and heirs, executors, and
administrators shall have no further rights with respect to such Performance
Units or this Agreement and the Company Group will have no further obligations
pursuant to the Performance Units or this Agreement.
1.5 Retirement. Notwithstanding any other provision of this Agreement to the
contrary, if your employment with the Company Group terminates as a result of
your Retirement before the last day of the Performance Period, then the number
of Performance Units issued to you under this Agreement shall automatically be
reduced (without further action by you and/or the Company) on the date your
employment relationship with the Company Group terminates to that number of
Performance Units determined under the following formula (the “Retirement
Adjusted Performance Units”):
(1) multiplied by (2) divided by (3)
where (1) is the number of Performance Units that were originally awarded to you
under this Agreement, (2) is the number of days from (and including) the first
day of the Performance Period to (and including) the day before the date your
employment relationship with the Company Group terminates due to Retirement, and
(3) is the number of days during the Performance Period. Your Peer Group 1
Performance Units and Peer Group 2 Performance Units under this Agreement shall
be reduced accordingly to reflect the Retirement Adjusted Performance Units and
the excess of the Performance Units that were originally awarded to you under
this Agreement over the Retirement Adjusted Performance Units shall be
immediately forfeited on the date of the termination of your employment
relationship with the Company Group due to Retirement. Any amount payable to you
pursuant to this Agreement will be paid on March 15, 2010. For purposes of this
Section 1.5, the term “Retirement” means the voluntary termination of your
employment relationship with the Company Group on or after the date on which the
sum of your age and years of service with the Company Group equals 65.

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     PROHIBITED ACTIVITY. Notwithstanding any other provision of this Agreement,
if you engage in a “Prohibited Activity,” as described below, while employed by
one or more members of the Company Group, during the Performance Period or
within two years after the date your employment with the Company Group
terminates, then your right to receive payment under this Agreement, to the
extent still outstanding at that time, shall be completely forfeited. A
“Prohibited Activity” shall be deemed to have occurred, as determined by the
Committee in its sole and absolute discretion, if you divulge any non-public,
confidential or proprietary information of the Company or of its past, present
or future affiliates (collectively, the “Carriage Services Inc. Group”), but
excluding information that (a) becomes generally available to the public other
than as a result of your public use, disclosure, or fault, or (b) becomes
available to you on a non-confidential basis after your employment termination
date from a source other than a member of the Carriage Services Inc. Group prior
to the public use or disclosure by you, provided that such source is not bound
by a confidentiality agreement or otherwise prohibited from transmitting the
information by a contractual, legal or fiduciary obligation.
     TAX WITHHOLDING. To the extent that the receipt of the Performance Units or
any payment pursuant to this Agreement results in income, wages or other
compensation to you for any income, employment or other tax purposes with
respect to which the Company or any other member of the Company Group has a
withholding obligation, you shall deliver to the Company at the time of such
receipt or payment, as the case may be, such amount of money as the Company
Group may require to meet its obligation under applicable tax laws or
regulations, and, if you fail to do so, the Company is authorized to withhold
from any payment under this Agreement or from any cash or stock remuneration or
other payment then or thereafter payable to you any tax required to be withheld
by reason of such taxable income, wages or compensation.
     NONTRANSFERABILITY. This Agreement is not transferable by you otherwise
than by will or by the laws of descent and distribution.
     CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the Performance
Units shall not affect in any way the right or power of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change in
its capital structure or its business, engage in any merger or consolidation,
issue any debt or equity securities, dissolve or liquidate, or sell, lease,
exchange or otherwise dispose of all or any part of its assets or business, or
engage in any other corporate act or proceeding.
     PERFORMANCE UNITS DO NOT AWARD ANY RIGHTS OF A STOCKHOLDER. You shall not
have the voting rights or any of the other rights, powers or privileges of a
holder of the stock of the Company with respect to the Performance Units that
are awarded hereby.
     EMPLOYMENT RELATIONSHIP. For purposes of this Agreement, you shall be
considered to be in the employment of the Company Group as long as you have an
employment relationship with the Company Group. The Committee shall determine
any questions as to whether and when there has been a termination of such
employment relationship, and the cause of such termination, under the Plan and
the Committee’s determination shall be final and binding on all persons.
     NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment agreement,
and no provision of this Agreement shall be construed or interpreted to create
an employment relationship between you and the Company or any Affiliate or
guarantee the right to remain employed by the Company or any Affiliate for any
specified term.

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     LIMIT OF LIABILITY. Under no circumstances will the Company or an Affiliate
be liable for any indirect, incidental, consequential or special damages
(including lost profits) of any form incurred by any person, whether or not
foreseeable and regardless of the form of the act in which such a claim may be
brought, with respect to the Plan.
     EMPLOYER LIABLE FOR PAYMENT. Except as specified in Section 1.2, the legal
entity that is a member of the Company Group and that is classified by the
Company Group as your employer (the “Employer”) is liable for the payment of any
amounts that become due under this Agreement.
     MISCELLANEOUS. This Agreement is awarded pursuant to and is subject to all
of the provisions of the Plan, including amendments to the Plan, if any. In the
event of a conflict between this Agreement and the Plan provisions, the Plan
provisions will control. The term “you” and “your” refer to the Grantee named in
this Agreement. Capitalized terms that are not defined herein shall have the
meanings ascribed to such terms in the Plan.
     The Performance Units that are hereby awarded to you shall be subject to
the prohibitions and restrictions set forth herein with respect to the sale or
other disposition of such Performance Units and the obligation to forfeit and
surrender such Performance Units.
     The Performance Units and your rights under this Agreement may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
or disposed of (other than by will or the applicable laws of descent and
distribution). Any such attempted sale, assignment, pledge, exchange,
hypothecation, transfer, encumbrance or disposition in violation of this
Agreement shall be void and the Company Group shall not be bound thereby.
     In accepting the award of Performance Units set forth in this Agreement you
accept and agree to be bound by all the terms and conditions of the Plan, and
this Agreement.

                  CARRIAGE SERVICES, INC.    
 
                 
 
  Name:        
 
           
 
  Title:        
 
           

Tables to follow:

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PERFORMANCE GOALS
FOR PERFORMANCE UNIT AWARDS GRANTED IN 2007 UNDER
THE CARRIAGE SERVICES, INC. 2006 LONG-TERM INCENTIVE PLAN
     Peer Group 1 Earned Award Factor
     For Performance Units granted by the Company under the Plan, the Peer Group
1 Earned Award Factor shall be the factor specified in the table below;
provided, however, that if the Company’s Total Shareholder Return for the
Performance Period is zero or less than zero the Peer Group 1 Earned Award
Factor for the Performance Period shall be zero.

      Percentile Rank of the Company’s Total Shareholder Return for     the
Performance Period as Compared to the Total Shareholder   Peer Group 1 Returns
of the Other Members of Performance Peer Group 1 for
the Performance Period.   Earned Award
Factor
Less than 50th
  0.0%
50th
  50.0%
51st
  55.0%
52nd
  60.0%
53rd
  65.0%
54th
  70.0%
55th
  75.0%
56th
  80.0%
57th
  85.0%
58th
  90.0%
59th
  95.0%
60th
  100.0%
61st
  102.5%
62nd
  105.0%
63rd
  107.5%
64th
  110.0%
65th
  112.5%
66th
  115.0%
67th
  117.5%
68th
  120.0%
69th
  122.5%
70th
  125.0%
71st
  127.5%
72nd
  130.0%
73rd
  132.5%
74th
  135.0%
75th
  137.5%
76th
  140.0%
77th
  142.5%
78th
  145.0%
79th
  147.5%
80th and above
  150.0%

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     The Committee shall have the discretion to calculate Total Shareholder
Returns for the Company and each company included in Performance Peer Group 1
and to determine the formula to achieve such calculations.
     1. Peer Group 2 Earned Award Factor
     For Performance Units granted by the Company under the Plan, if the common
stock of both of the members of Performance Peer Group 2 Earned Award Factor
shall be the factor specified in the table below; provided, however, that (a) if
the Company’s Total Shareholder Return for the Performance Period is zero or
less than zero then the Peer Group 2 Earned Award Factor for the Performance
Period shall be zero and (b) if the common stock of either or both of the
members of Performance Peer Group 2 is not publicly traded on the last day of
the Performance Period then the Peer Group 2 Earned Award Factor shall be the
amount of the Peer Group 1 Earned Award Factor for such Performance Period.

      Rank of the Company’s Total Shareholder Return for the     Performance
Period as Compared to the Total Shareholder   Peer Group 2 Returns of the Other
Members of the Performance Peer   Earned Award Group 2 for the Performance
Period   Factor
First
  150.0%
Second
  100.0%
Less than Second
      0.0%

     The Committee shall have the discretion to calculate Total Shareholder
Returns for the Company and each company included in Performance Peer Group 2
and to determine the formula to achieve such calculations.

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