Exhibit 10.5

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made
by and between Carriage Services, Inc., a Delaware corporation (the “Company”)
and L. William Heiligbrodt, a resident of Harris County, Texas (“Employee”).
Employee and the Company are referred to individually herein as a “Party” and
collectively as the “Parties.”
W I T N E S S E T H:
WHEREAS, Employee is employed by the Company pursuant to that certain First
Amended and Restated Employment Agreement dated March 14, 2012 (the “Prior
Agreement”);
WHEREAS, the Parties wish to amend and restate the terms of Employee’s
employment with the Company and enter into this Agreement, which shall supersede
and replace the Prior Agreement in its entirety; and
WHEREAS the Company desires to continue to employ Employee, and Employee desires
to continue to be employed by the Company, on the terms and conditions, and for
the consideration, set forth herein.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, the Company and Employee agree as follows:
ARTICLE I
EMPLOYMENT AND DUTIES
1.1    Employment; Effective Date. The Company agrees to employ Employee and
Employee agrees to be employed by the Company, on the terms herein, beginning as
of March 3, 2014 (the “Effective Date”) and continuing for the period of time
set forth in Article II of this Agreement, subject to the terms and conditions
of this Agreement.
1.2    Positions. From and after the Effective Date, Employee shall be employed
in the position of Executive Vice President and Secretary or in such other
position or positions as the Parties mutually may agree, and Employee shall
report to the Company’s Chief Executive Officer.
1.3    Duties and Services. Employee agrees to serve in the position(s) referred
to in Section 1.2 and to perform diligently and to the best of Employee’s
abilities the duties and services appertaining to such positions, as well as
such additional duties and services appropriate to such positions which the
Parties mutually may agree upon from time to time. Employee’s employment shall
also be subject to the policies maintained and established by the Company, as
such policies may be amended from time to time.
1.4    Other Interests. Employee agrees, during the period of his employment by
the Company, to devote his full business time, energy and attention to the
business and affairs of the Company and its Affiliates, if applicable. Employee
may serve on corporate, industry, civic, religious or charitable boards or
committees without violating this Section 1.4 so long as such

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activities do not violate the terms of Articles IV or VI of this Agreement,
present a conflict of interest, or interfere in any material respect with the
performance of Employee’s duties and responsibilities pursuant to this
Agreement; provided, further that any service by Employee on a board or
committee of a for-profit entity shall be subject to the prior approval of the
Board of Directors of the Company (the “Board”).
1.5    Duty of Loyalty. Employee acknowledges that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act in the best interests of the
Company and to do no act that would injure the business, interests, or
reputation of the Company or its Affiliates. Consistent with those duties,
Employee agrees to disclose to the Company all business opportunities pertaining
to the Company’s business and shall not appropriate (directly or indirectly) for
Employee’s own benefit business opportunities concerning the Company’s business.
If Employee’s other business interests present a conflict of interest with the
Company’s business, Employee shall fully disclose the conflict.
ARTICLE II    
TERM AND TERMINATION OF EMPLOYMENT
2.1    Term. Unless sooner terminated pursuant to other provisions hereof, the
Company agrees to employ Employee for the period beginning on the Effective Date
and ending on the fourth anniversary of the Effective Date (the “Employment
Period”); provided, however, that on each anniversary of the Effective Date, so
long as this Agreement has not been earlier terminated, the Employment Period
shall be extended for another year so that, so long as this Agreement has not
been terminated or a notice of non-extension has not been given pursuant to the
following sentence, there shall be between three and four years remaining in the
then-existing Employment Period. Notwithstanding the foregoing, at least sixty
(60) days prior to each anniversary of the Effective Date, either the Company or
Employee may provide the other party notice that it does not intend for the
automatic extension referenced in the previous sentence to occur. In the event
that such a notice of non-extension is provided, no future extensions shall
occur and, unless Employee’s employment hereunder is sooner terminated pursuant
to the other provisions hereof, the Employment Period shall terminate as of the
expiration of the Employment Period that existed on the date that such notice of
non-extension was provided.
2.2    Company’s Right to Terminate. Notwithstanding the provisions of
Section 2.1, Employee’s employment by the Company shall automatically terminate
upon the death of Employee, and the Company shall have the right to terminate
Employee’s employment under this Agreement at any time for any of the following
reasons:
(a)    upon Employee’s becoming incapacitated by accident, sickness or other
circumstance which has rendered him mentally or physically incapable of
performing the duties and services required of him hereunder on a full‑time
basis for a period of at least 180 consecutive days (Employee’s “Disability”);
(b)    for “Cause,” which for purposes of this Agreement shall mean:
(i) Employee’s conviction of, or plea of no contest to, a misdemeanor involving
moral turpitude or a felony, (ii) Employee’s repeated failure or refusal to
perform all of his duties, obligations and agreements herein contained or
imposed by law, including his

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fiduciary duties, to the reasonable satisfaction of the Board; (iii) Employee’s
commission of acts amounting to gross negligence or willful misconduct to the
material detriment of the Company; or (iv) Employee’s material breach of any
provision of this Agreement or uniformly applied provision 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 Board and, in the event of circumstances described in (ii) or (iv), the
Board shall give written notice to Employee specifying such circumstances and
providing a period of 30 days in which Employee shall be allowed to cure such
circumstances if capable of cure; or
(c)    at any time for any other reason whatsoever or for no reason at all, in
the sole discretion of the Company.
2.3    Employee’s Right to Terminate. Notwithstanding the provisions of
Section 2.1, Employee shall have the right to terminate his employment under
this Agreement at any time for any reason whatsoever or for no reason at all. If
Employee terminates his employment under this Agreement after the second
anniversary of the Effective Date, then such termination shall be treated as
Employee’s “Retirement” for purposes of this Agreement so long as Employee
provides written notice to the Company of his intent to terminate his employment
at least six months prior to the effective date of such termination.
2.4    Notice of Termination and Effective Date of Termination.
(a)    Notice of Termination. If the Company or Employee desires to terminate
Employee’s employment hereunder, the Company or Employee shall do so by giving
written notice to the other Party that it or he has elected to terminate
Employee’s employment hereunder and stating the effective date of the
termination and reason for such termination; provided, however, that in the
event that Employee has provided notice to the Company of his termination of
employment, the Company may determine, in its sole discretion, that such
termination shall be effective on any date prior to the effective date of
termination provided in such notice (and, if such earlier date is so required,
then it shall not change the basis for Employee’s termination of employment nor
be construed or interpreted as a termination of employment pursuant to Section
2.2). No action by either Party pursuant to this Section 2.4(a) shall alter or
amend any other provisions hereof or rights arising hereunder, including,
without limitation, the provisions of Articles IV, V and VI hereof.
(b)    Date of Termination. The effective date of Employee’s termination will be
as follows: (i) if Employee’s employment is terminated by his death, the date of
his death; (ii) if Employee’s employment is terminated by the Company for any
reason, then the date specified in the notice of termination delivered to
Employee by the Company; (iii) if Employee’s employment is terminated by
Employee pursuant to Section 2.3 above, then, unless the Company exercises its
right pursuant to Section 2.4(a) above to specify an earlier date, the date
specified in the notice of such termination delivered to the Company by
Employee; or (iv) Employee’s employment is terminated upon the expiration of the
Employment Period after the issuance of a notice of non-extension pursuant to
Section 2.1 above, then the date on which the Employment Period expires.

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2.5    Deemed Resignations. Unless otherwise agreed to in writing by the Parties
prior to the termination of Employee’s employment, any termination of Employee’s
employment shall constitute an automatic resignation of Employee (i) as an
officer of the Company and each of the Company’s Affiliates (if applicable),
(ii) from the Board (if applicable) and from the board of directors (or similar
governing body) of each of the Company’s Affiliates (if applicable), and (iii)
from the board of directors (or similar governing body) of any corporation,
limited liability company or other entity in which the Company holds an equity
interest and with respect to which board (or similar governing body) Employee
serves as a designee or other representative of the Company.
2.6    Separation from Service. For purposes of this Agreement, references to
Employee’s termination of employment shall mean, and be interpreted in
accordance with, Employee’s “separation from service” from the Company within
the meaning of Treasury Regulation § 1.409A-1(h)(1)(ii).
ARTICLE III    
COMPENSATION AND BENEFITS
3.1    Base Salary. During the period that he is employed hereunder, Employee
shall receive an annualized base salary of $545,000 (the “Base Salary”).
Employee’s Base Salary will be reviewed annually, and any increase therein shall
remain in the sole discretion of the Board, acting through its Compensation
Committee (the “Compensation Committee”). Employee’s Base Salary shall be paid
in equal installments in accordance with the Company’s standard policy regarding
payment of compensation to similarly situated employees, but no less frequently
than monthly.
3.2    Annual Bonuses. For each complete calendar year that he is employed
hereunder, Employee shall be eligible to receive such annual bonus as may be
determined in the Company’s discretion (each an “Annual Bonus”) after
considering specified corporate and individual performance goals established by
the Compensation Committee at its first meeting of the fiscal year. The goals
for the Annual Bonus will be established at three levels: (i) threshold; (ii)
target; and (iii) maximum. If the Compensation Committee determines that
performance is achieved (i) at the threshold level, the Annual Bonus shall be
40% of the Base Salary; (ii) at the target level, the Annual Bonus shall be 80%
of the Base Salary; and (iii) at the maximum level, the Annual Bonus shall be
160% of the Base Salary. In the discretion of the Compensation Committee, Annual
Bonuses for performance falling between threshold, target and maximum goals may
be ratably scaled above and below the goal levels. The Annual Bonus shall be
payable before March 15 of the year following the calendar year to which the
Annual Bonus relates, following the certification of applicable year-end
financial results. Employee must be employed by the Company on the payment date
in order to earn and receive an Annual Bonus.
3.3    Expenses. The Company shall promptly reimburse Employee for all
reasonable business expenses incurred by Employee in performing services
hereunder, including all expenses of travel and lodging expenses while away from
home on business or at the request of the Company; provided, in each case, that
such expenses are incurred and accounted for in accordance with the policies and
procedures established by the Company from time to time. Any such reimbursement
of expenses shall be made by the Company upon or as soon as practicable

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following receipt of supporting documentation reasonably satisfactory to the
Company (but in any event not later than the close of Employee’s taxable year
following the taxable year in which the expense is incurred by Employee). In no
event shall (i) any reimbursement under this Section 3.3 be made to Employee for
such expenses incurred after the date of Employee’s termination of employment
with the Company, (ii) Employee be permitted to receive a payment or other
benefit in lieu of reimbursement, or (iii) the amount of expenses for which
Employee is eligible to receive reimbursement during any calendar year effect
the amount of expenses for which Employee is eligible to receive reimbursement
during any other calendar year within the term of this Agreement.
3.4    Vacation. During Employee’s employment hereunder, Employee shall be
entitled to four (4) weeks paid vacation each calendar year, subject to the
Company’s vacation policies as may exist from time to time.
3.5    Special One-Time Bonus. The Company shall pay Employee a one-time special
bonus equal to $1,000,000 on the Company’s first regularly scheduled pay date
coincident with or next following the Effective Date.
3.6    Equity-Based Compensation. Employee shall be eligible to receive
equity-based compensation awards under the terms of the Company’s Second Amended
and Restated 2006 Long Term Incentive Plan or one or more of the Company’s other
equity incentive plans in effect from time to time, as determined by the
Compensation Committee of the Board in its sole discretion.
3.7    Other Benefits and Perquisites. During Employee’s employment hereunder,
and subject to the terms and conditions of the applicable plans and programs,
Employee and, to the extent applicable, Employee’s spouse, dependents and
beneficiaries, shall be eligible to participate in all benefit plans and
programs of the Company, including improvements or modifications of the same,
which are now, or may hereafter be, available to similarly situated employees of
the Company. The Company shall not, however, by reason of this Section 3.7, be
obligated to institute, maintain, or refrain from changing, amending, or
discontinuing, any such plan or program.
ARTICLE IV    
PROTECTION OF INFORMATION
4.1    Access to Information. The Company shall, during the time that Employee
is employed by the Company, (a) disclose or entrust to Employee, and provide
Employee access to, or place Employee in a position to create or develop, trade
secrets or Confidential Information belonging to the Company, (b) place Employee
in a position to develop business goodwill belonging to the Company and
(c) disclose or entrust to Employee business opportunities to be developed for
the Company.
4.2    Disclosure to and Property of the Company. All information, trade
secrets, designs, ideas, concepts, improvements, product developments,
discoveries and inventions, whether patentable or not, that are conceived, made,
developed or acquired by, or disclosed to, Employee, individually or in
conjunction with other employees or agents of the Company during

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the term and in the scope of his employment that relate to the Company’s
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial, accounting
and sales data, pricing terms, evaluations, opinions, interpretations, analyses,
reports, operating techniques, employee lists, training methods and procedures,
personnel evaluation procedures, acquisition prospects, the identity of
customers or their requirements, the identity of key contacts within the
customer’s organizations or within the organization of acquisition prospects, or
marketing and merchandising techniques, prospective names and marks) and all
writings or materials of any type embodying any of such information, ideas,
concepts, improvements, discoveries, inventions and other similar forms of
expression (collectively, “Confidential Information”) shall be disclosed to the
Company, and are and shall be the sole and exclusive property of the Company.
Employee agrees to perform all actions reasonably requested by the Company to
establish and confirm such exclusive ownership. Upon termination of Employee’s
employment by the Company, for any reason, Employee promptly shall deliver such
Confidential Information and work product, and all copies thereof, to the
Company. “Confidential Information” does not, however, include any information
that, at the time of disclosure by Employee, is available to the public other
than as a result of any act of Employee in breach of this Agreement.
4.3    No Unauthorized Use or Disclosure. Employee agrees that Employee will
preserve and protect the confidentiality of all Confidential Information and
work product of the Company, and will not, at any time during or after the
termination of Employee’s employment with the Company, make any unauthorized
disclosure of, and shall not remove from Company premises, and will use his best
efforts to prevent the removal from Company premises of, Confidential
Information, or make any use thereof, in each case, except in the carrying out
of Employee’s responsibilities hereunder. Employee shall inform all persons or
entities to whom or to which any Confidential Information shall be disclosed by
him in accordance with this Agreement about the confidential nature of such
Confidential Information, and Employee shall ensure that such Confidential
Information is identified as being confidential, and shall call such identifying
mark to such recipient’s attention. Employee shall have no obligation hereunder
to keep confidential any Confidential Information if and to the extent
disclosure thereof is specifically required by law; provided, however, that in
the event disclosure is required by applicable law and Employee is making such
disclosure, Employee shall provide the Company with prompt notice of such
requirement, and shall use his commercially reasonable efforts to give such
notice prior to making any disclosure, so that the Company may seek an
appropriate protective order. At the request of the Company, Employee agrees to
deliver to the Company, at any time during the term of employment, or
thereafter, all Confidential Information that he may possess or control.
4.4    Ownership by the Company. If, during Employee’s employment by the
Company, Employee creates any original work of authorship fixed in any tangible
medium of expression which is the subject matter of copyright relating to the
business, products, or services of the Company, whether such work is created
solely by Employee or jointly with others (whether during business hours or
otherwise and whether on the Company’s premises or otherwise), Employee shall
disclose such work to the Company. The Company shall be deemed the author of
such work if the work is prepared by Employee in the scope of Employee’s
employment; or, if the work is not prepared by Employee within the scope of
Employee’s employment but is specially ordered by the Company as a contribution
to a collective work, then

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the work shall be considered to be work made for hire and the Company shall be
the author of the work. If such work is neither prepared by Employee within the
scope of Employee’s employment nor a work specially ordered and is deemed to be
a work made for hire, then Employee hereby agrees to assign, and hereby does
assign, to the Company all of Employee’s worldwide rights, titles, and interests
in and to such work and all rights of copyright therein.
4.5    Assistance by Employee. During the period of Employee’s employment by the
Company, Employee shall assist the Company and its nominee, at any time, in the
protection of the Company’s and its nominee’s worldwide right, title and
interest in and to Confidential Information and shall execute all formal
assignment documents and all lawful oaths and applications for patents and
registration of copyrights in the United States and foreign countries as
requested by the Company or its nominee. After Employee’s employment with the
Company terminates, at the request and cost of the Company, Employee shall
reasonably assist the Company and its nominee, at reasonable times and for
reasonable periods and for reasonable compensation, in the protection of the
Company’s or its nominee’s worldwide right, title and interest in and to
Confidential Information and the execution of all formal assignment documents
requested by the Company or its nominee and the execution of all lawful oaths
and applications for patents and registration of copyright in the United States
and foreign countries, all as may be requested by the Company from time to time.
4.6    Remedies. Employee acknowledges that money damages would not be
sufficient remedy for any breach of this Article IV by Employee, and the Company
shall be entitled to enforce the provisions of this Article IV by obtaining
specific performance and injunctive relief as remedies for such breach or any
threatened breach, which such remedies shall be in addition to all other
remedies available to the Company at law and equity. Each affiliate of the
Company shall be a third party beneficiary of Employee’s obligations under this
Article IV and, for purposes of this Article IV, the term “Company” shall be
deemed to also include the Company’s Affiliates.
ARTICLE V    
EFFECT OF TERMINATION ON COMPENSATION
5.1    Due to Employee’s Death. If Employee’s employment hereunder shall
terminate due to Employee’s death, then all compensation and all benefits to
Employee hereunder shall terminate contemporaneously with the effective date of
the termination of his employment, except that the Company shall pay to
Employee’s estate: (a) that portion of Employee’s Base Salary accrued through
the date on which Employee’s death occurred and all benefits payable under the
governing provisions of any benefit plan or program of the Company in which
Employee participated; (b) a pro rata amount of the Annual Bonus for the year in
which the death occurred, which such pro rata bonus shall be at the target level
described in Section 3.2 above and based on the number of days Employee was
employed in the applicable calendar year in comparison to 365; and (c) all of
the consulting fee payments Employee could have received during the term of the
Consulting Agreement (as defined below) and all of the non-compete payments
Employee could have received under the Consulting Agreement if the Prohibited
Period continued for five years following the termination of Employee’s
employment (collectively, the “Consulting and Non-Compete Payments”). All
payments pursuant to this

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Section 5.1 shall be made in the same manner and at the same times as they would
have been paid to Employee.
5.2    Due to Employee’s Disability. If Employee’s employment hereunder shall
terminate due to Employee’s Disability as set forth in Section 2.2(a) above,
then all compensation and all benefits to Employee hereunder shall terminate
contemporaneously with the effective date of the termination of his employment,
except that the Company shall pay to Employee: (a) that portion of Employee’s
Base Salary accrued through the date on which Employee’s employment terminated
and all benefits payable under the governing provisions of any benefit plan or
program of the Company in which Employee participated; and (b) subject to
Section 5.7 below, a pro rata amount of the Annual Bonus for the year in which
the termination of employment occurred, which such pro rata bonus shall be at
the target level described in Section 3.2 above and based on the number of days
Employee was employed in the applicable calendar year in comparison to 365,
which such pro rata amount of the Annual Bonus shall be provided on the later of
the first business day after the Release (as defined in Section 5.7 below) is no
longer revocable or the payment date that an Annual Bonus for the year of
termination otherwise would have been payable pursuant to Section 3.2 above had
Employee’s employment not terminated (provided, that, in no event shall such
payment occur later than the date necessary to qualify such payment as a
“short-term deferral” within the meaning of Treas. Reg. § 1.409A-1(b)(4)).
5.3    Termination by the Company for Cause; Resignation by Employee (other than
due to Employee’s Retirement) and Not Within a Corporate Change Period. If
Employee’s employment hereunder is terminated: (i) by the Company for Cause
pursuant to Section 2.2(b) above; or (ii) is terminated by Employee pursuant to
Section 2.3 above (other than due to Employee’s Retirement) and, with respect to
the applicable circumstances set forth in part (i) or (ii) of this sentence, the
date of such termination occurs at any time other than during a Corporate Change
Period (as defined below), then all compensation and all benefits to Employee
hereunder shall terminate contemporaneously with the effective date of the
termination of his employment, except that the Company shall pay to Employee
that portion of Employee’s Base Salary accrued through the date on which
Employee’s employment terminated and all benefits payable under the governing
provisions of any benefit plan or program of the Company in which Employee
participated.
5.4    Termination by the Company without Cause (other than due to Disability)
or due to Employee’s Retirement and Not Within a Corporate Change Period. If
Employee’s employment hereunder is terminated (i) by the Company pursuant to
Section 2.2(c) above or (ii) by Employee pursuant to Section 2.3 above due to
Employee’s Retirement and, with respect to the applicable circumstances set
forth in part (i) or (ii) of this sentence, the date of such termination occurs
at any time other than during a Corporate Change Period, then all compensation
and all benefits to Employee hereunder shall terminate contemporaneously with
the effective date of the termination of his employment, except that (A) the
Company shall pay to Employee that portion of Employee’s Base Salary accrued
through the date on which Employee’s employment terminated and all benefits
payable under the governing provisions of any benefit plan or program of the
Company in which Employee participated and (B) Employee and the Company shall
enter into a consulting agreement in a form mutually acceptable to Employee and
the Company that includes the terms set forth on Exhibit A attached hereto and

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such other terms, if any, that are agreed to by Employee and the Company
(the “Consulting Agreement”); provided, however, that the level of consulting
services to be performed pursuant to the Consulting Agreement shall not exceed a
level equal to 20% of the average level of services performed by Employee in his
capacity as an employee of the Company during the 36-month period ending on the
termination of his employment, except for any deviations that may be permitted
in accordance with the Nonqualified Deferred Compensation Rules and,
accordingly, Employee’s transition from an employee of the Company to a
consultant of the Company shall give rise to a “separation from service” within
the meaning of the Nonqualified Deferred Compensation Rules.
5.5    Termination By the Company Without Cause or Resignation By Employee and
Within a Corporate Change Period. If, within the period that begins on the date
of a Corporate Change (as defined below) and ends on the date that is 24 months
after the date of a Corporate Change (the “Corporate Change Period”), Employee’s
employment is terminated: (i) by the Company for any reason (other than Cause or
Employee’s death or Disability or due to the issuance of a notice of non-renewal
by the Company pursuant to Section 2.1); or (ii) by Employee pursuant to Section
2.3 above, then all compensation and all benefits to Employee hereunder shall
terminate contemporaneously with the effective date of the termination of his
employment, except that the Company shall pay to Employee that portion of
Employee’s Base Salary accrued through the date on which Employee’s employment
terminated and all benefits payable under the governing provisions of any
benefit plan or program of the Company in which Employee participated. In
addition, subject to Section 5.7 below, the Company shall provide Employee:
(a)     a lump sum payment equal to the sum of (i) three times the sum of
(x) Employee’s then-current annual Base Salary, plus (y) Employee’s then-current
target Annual Bonus and (ii) the Consulting and Non-Compete Payments (regardless
of whether Employee is engaged to provide any post-termination consulting
services to the Company, its successor or any of their respective Affiliates),
which such payment shall be paid to Employee on the Company’s first regularly
scheduled pay date that occurs after the Release is no longer revocable; and
(b)    for that period beginning on the date of the termination of Employee’s
employment and for so long during the 36-month period following the date of
termination that Employee remains eligible to receive, and elects to receive,
continuation of coverage under a Company group health plan under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Company shall provide reimbursement of the premiums paid by Employee, if
any, for such continuation coverage; provided, however, that to receive such
reimbursement, Employee must not be eligible to receive health insurance
benefits under any other employer’s group health plan and Employee must provide
Company with documentation evidencing his payment of the applicable premiums
within thirty (30) days of their payment. The Company’s payments of COBRA
reimbursements shall be made within thirty (30) days of its receipt of such
documentation; provided, however, the Company will provide the first COBRA
reimbursement referenced in this Section 5.5(b) after the Release has been
executed by Employee and become irrevocable, and the first such reimbursement
payment shall include all payments, without interest, that otherwise would have
been made pursuant to

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this Section 5.5(b) between the date of Employee’s termination of employment and
the date that the Release became irrevocable.
As used herein, a “Corporate Change” means: (a) the dissolution or liquidation
of the Company; (b) a reorganization, merger or consolidation of the Company
with one or more corporations (other than a merger or consolidation effecting a
reincorporation of the Company in another state or any other merger or
consolidation in which the stockholders of the surviving corporation and their
proportionate interests therein immediately after the merger or consolidation
are substantially identical to the stockholders of the Company and their
proportionate interests therein immediately prior to the merger or
consolidation) (collectively, a “Corporate Change Merger”); (c) the sale of all
or substantially all of the assets of the Company; or (d) the occurrence of a
Change in Control. A “Change in Control” shall be deemed to have occurred if (a)
individuals who were directors of the Company immediately prior to a Control
Transaction shall cease, within two years of such Control Transaction to
constitute a majority of the Board (or of the board of directors of any
successor to the Company or to a company which has acquired all or substantially
all its assets) other than by reason of an increase in the size of the
membership of the applicable board that is approved by at least a majority of
the individuals who were directors of the Company immediately prior to such
Control Transaction; or (b) any entity, person or Group acquires shares of the
Company in a transaction or series of transactions that result in such entity,
person or Group directly or indirectly owning beneficially 50% or more of the
outstanding shares of Common Stock. As used herein, “Control Transaction” means
(a) any tender offer for or acquisition of capital stock of the Company pursuant
to which any person, entity, or Group directly or indirectly acquires beneficial
ownership of 20% or more of the outstanding shares of Common Stock; (b) any
Corporate Change Merger of the Company; (c) any contested election of directors
of the Company; or (d) any combination of the foregoing, any one of which
results in a change in voting power sufficient to elect a majority of the Board.
As used herein, “Group” means persons who act “in concert” as described in
Sections 13(d)(3) and/or 14(d)(2) of the Securities Exchange Act of 1934, as
amended. As used herein, “Common Stock” means the common stock of the Company,
$.01 par value per share, or any stock or other securities hereafter issued or
issuable in substitution or exchange for the Common Stock.
5.6    Consequences to Equity Awards. The impact of a Corporate Change and/or
Employee’s termination from employment with the Company on stock option,
restricted stock and other share-based awards made pursuant to a Company
incentive plan shall be governed by the terms of such plan. Where, in the
discretion of the Company, the applicable plan(s) is/are silent about the impact
of a Corporate Change and/or Employee’s termination from employment on the
vesting of Employee’s stock option, restricted stock and other share-based
awards, then the following terms shall apply with respect to the applicable
vested and unvested stock options, restricted stock and other share-based awards
awarded to Employee:
Reason for Termination
Stock Options
Restricted Stock
Other share-based awards

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Reason for Termination
Stock Options
Restricted Stock
Other share-based awards
Termination by the Company for Cause pursuant to Section 2.2(b) above
Forfeit all unvested awards
Forfeit all unvested awards
Forfeit all unvested awards
Voluntary termination by Employee pursuant to Section 2.3 above (other than due
to Employee’s Retirement and not during a Corporate Change Period)
Forfeit all unvested awards; Employee has 3 months from the date of termination
to exercise all vested awards*
Forfeit all unvested awards
Forfeit all unvested awards
Involuntary termination by the Company without Cause (and not due to death or
Disability) pursuant to Section 2.2(c) above (other than during a Corporate
Change Period)
Immediate vesting of all unvested awards; Employee has five years from the date
of termination to exercise all vested awards*
Immediate vesting of all unvested awards
Immediate vesting of all unvested awards
Voluntary termination by Employee due to his Retirement (other than during a
Corporate Change Period)
Immediate vesting of all unvested awards; Employee has five years from the date
of termination to exercise all vested awards*
Immediate vesting of all unvested awards granted prior to the Effective Date;
forfeit all unvested awards granted on or after the Effective Date
Immediate vesting of all unvested awards granted prior to the Effective Date;
forfeit all unvested awards granted on or after the Effective Date
Termination during a Corporate Change Period for one of the reasons specified in
Section 5.5 above
Immediate vesting of all unvested awards; Employee has 3 months from the date of
termination to exercise all vested awards*
Immediate vesting of all unvested awards
Payouts made within 60 days following the end of the performance period as if
Employee had been employed during the entirety of the period, provided that
applicable performance targets have been met 

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Reason for Termination
Stock Options
Restricted Stock
Other share-based awards
Death
Immediate vesting of all unvested awards; Employee’s estate has 12 months to
exercise all vested awards*
Immediate vesting of all unvested awards
Awards will be prorated based on termination date and prorated payouts will be
made within 60 days following the end of the performance period, provided that
applicable performance targets have been met
Disability
Immediate vesting of all unvested awards; Employee has 12 months to exercise all
vested awards*
Immediate vesting of all unvested awards
Awards will be prorated based on termination date and prorated payouts will be
made within 60 days following the end of the performance period, provided that
applicable performance targets have been met

* Notwithstanding anything herein to the contrary, in no event will any vested
stock options be exercisable after the expiration of the original terms of such
options.

5.7    Release and Full Settlement. Anything to the contrary herein
notwithstanding, as a condition to the receipt of any payment or benefit under
Section 5.2(b) or 5.5(a)-(b), Employee shall first execute (and not revoke
within 7 days of execution) a release of all claims in a form acceptable to the
Company (the “Release”), which such Release shall release the Company, its
affiliates and their respective shareholders, members, partners, Board members,
officers, directors, employees and agents from any and all claims, including
without limitation any and all causes of action arising out of Employee’s
employment with the Company and the termination of such employment, but
excluding (a) all claims to severance payments Employee may have under Sections
5.2(b) or 5.5(a)-(b) above, and (b) all vested benefits to which Employee is
entitled under the Company’s employee benefit plans. The performance of the
Company’s obligations hereunder and Employee’s receipt of any payments or
benefits provided to Employee hereunder shall constitute full settlement of all
such claims and causes of action. The Release must be executed by Employee no
later than 50 days following the date of termination of his employment (or
earlier if requested by the Company and permitted by applicable law). Employee
acknowledges Employee’s understanding that if the applicable

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Release is not timely executed, and the required revocation period has not fully
expired, Employee shall not be entitled to any payment under Sections 5.2(b) or
5.5(a)-(b) above. Notwithstanding anything to the contrary in this Section 5, in
the event the time period (including any applicable revocation period)
prescribed by the Company for Employee’s execution of the Release begins in one
taxable year and ends in a second taxable year, payments under Section 5.5 will
not commence until the second taxable year, irrespective of when the Release
actually becomes irrevocable.
5.8    Reduction of Payments. Notwithstanding anything to the contrary in this
Agreement, if Employee is a “disqualified individual” (as defined in Section
280G(c) of the Internal Revenue Code of 1986, as amended (the “Code”)), and the
payments and benefits provided for in this Agreement, together with any other
payments and benefits which Employee has the right to receive from the Company
or any of its affiliates, would constitute a “parachute payment” (as defined in
Section 280G(b)(2) of the Code), then the payments and benefits provided for in
this Agreement shall be reduced (but not below zero) so that the present value
of such total amounts and benefits received by Employee from the Company and its
affiliates will be one dollar ($1.00) less than three times Employee’s “base
amount” (as defined in Section 280G(b)(3) of the Code) and so that no portion of
such amounts and benefits received by Employee shall be subject to the excise
tax imposed by Section 4999 of the Code. The reduction of payments and benefits
hereunder, if applicable, shall be made by reducing, first, payments or benefits
to be paid in cash hereunder in the order in which such payment or benefit would
be paid or provided (beginning with such payment or benefit that would be made
last in time and continuing, to the extent necessary, through to such payment or
benefit that would be made first in time) and, then, reducing any benefit to be
provided in-kind hereunder in a similar order. The determination as to the
extent of any such reduction in the amount of the payments and benefits provided
hereunder shall be made by the Company in good faith. If a reduced payment or
benefit is made or provided and through error or otherwise that payment or
benefit, when aggregated with other payments and benefits from the Company (or
its affiliates) used in determining if a “parachute payment” exists, exceeds one
dollar ($1.00) less than three times Employee’s base amount, then Employee shall
immediately repay such excess to the Company upon notification that an
overpayment has been made. Nothing in this Section 5.8 shall require the Company
to be responsible for, or have any liability or obligation with respect to,
Employee’s excise tax liabilities under Section 4999 of the Code, if any.
ARTICLE VI    
NON-COMPETITION AGREEMENT
6.1    Restrictive Covenants. The Company has provided and shall provide in the
future to Employee, Confidential Information. 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 been given, and in the future shall be
given, possession of and access to Confidential Information of the Company.
Employee further acknowledges that, in the course of his employment with the
Company, he has been given contacts within the death care industry, and he has
been and shall be identified 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
Employee in the future, the sufficiency of which is

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hereby acknowledged by Employee, and in order to protect the Company’s
legitimate business interests, including the preservation of its Confidential
Information and goodwill, Employee agrees to enter into the covenants contained
in this Article VI. The Parties therefore agree that during the Prohibited
Period (as defined below), the Employee shall not, directly or indirectly:
(a)    alone or for his own account, or as an 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 (i) 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
(ii) 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
Affiliates at the time of such termination;
(b)    induce or assist anyone in inducing in any way any employee of the
Company or any of its Affiliates to resign or sever his or her employment or to
breach an employment contract with the Company or any Affiliate; or
(c)    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 (i) as part of any of the companies or entities listed on
Schedule I, or (ii) 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 Affiliates 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 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.
As used herein, the “Prohibited Period” means the period during which Employee
is employed by the Company and continuing through the date that is two (2) years
following the date on which Employee is no longer employed by the Company;
provided, however, that in the event that Employee’s employment hereunder is
terminated (i) by the Company pursuant to Section 2.2(c) above or (ii) by
Employee due to his Retirement, the Prohibited Period shall continue until the
date that is five (5) years following such termination.
6.2    Relief. Employee and the Company agree and acknowledge that the
limitations as to time, geographic area and scope of activity to be restrained
as set forth in Section 6.1 are reasonable and do not impose any greater
restraint than is necessary to protect the legitimate

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business interests of the Company. Employee and the Company further agree and
acknowledge that money damages would not be sufficient remedy for any breach of
this Article VI by Employee, and the Company shall be entitled to enforce the
provisions of this Article VI by terminating payments then owing to Employee
under this Agreement or otherwise and to obtain specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this
Article VI but shall be in addition to all remedies available, at law or in
equity, including the recovery of damages from Employee and his agents.
6.3    Reasonableness; Enforcement. Employee hereby represents to the Company
that Employee has read and understands, and agrees to be bound by, the terms of
this Article VI. Employee acknowledges that the geographic scope and duration of
the covenants contained in this Article VI are the result of arm’s-length
bargaining and are fair and reasonable in light of (a) the nature and wide
geographic scope of the operations of the Business, (b) Employee’s level of
control over and contact with and association with the goodwill of the Business
in all jurisdictions in which it is conducted, (c) the fact that the Business is
conducted throughout the restricted area and (d) the Confidential Information
that Employee is receiving in connection with the performance of Employee’s
duties hereunder. It is the desire and intent of the Parties that the provisions
of this Article VI be enforced to the fullest extent permitted under applicable
law, whether now or hereafter in effect and therefore, to the extent permitted
by applicable law, Employee and the Company hereby waive any provision of
applicable law that would render any provision of this Article VI invalid or
unenforceable.
6.4    Reformation. The Company and Employee agree that the foregoing
restrictions are reasonable under the circumstances and that any breach of the
covenants contained in this Article VI may cause irreparable injury to the
Company. Employee understands that the foregoing restrictions may limit
Employee’s ability to engage in certain businesses in the restricted area and on
behalf of certain entities during the Prohibited Period, but acknowledges that
such restrictions will not prevent Employee from earning a living. Nevertheless,
if any of the aforesaid restrictions are found by a court of competent
jurisdiction to be unreasonable, or overly broad as to geographic area or time,
or otherwise unenforceable, the Parties intend for the restrictions therein set
forth to be modified by the court making such determination so as to be
reasonable and enforceable and, as so modified, to be fully enforced. By
agreeing to this contractual modification prospectively at this time, the
Company and Employee intend to make this provision enforceable under the law or
laws of all applicable States and other applicable jurisdictions so that the
entire agreement not to compete or to solicit other employees or customers and
this Agreement as prospectively modified shall remain in full force and effect
and shall not be rendered void or illegal. Such modification shall not affect
the payments made to Employee under this Agreement.
ARTICLE VII    
DISPUTE RESOLUTION
7.1    Choice of Law. The Parties stipulate that this Agreement has been entered
into in the State of Texas and this Agreement shall be construed and interpreted
and the rights of the Parties governed by the internal laws of the State of
Texas, without regard to the conflict of law principles thereof.

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7.2    Venue. The Parties submit to the exclusive jurisdiction of the state and
federal courts, as applicable, located in Houston, Texas, and appropriate
appellate courts therefrom, over any dispute, controversy or claim between
Employee and the Company arising out of or relating to this Agreement or
Employee’s employment with the Company. Each Party submits to the jurisdiction
of such courts and agrees not to raise any objections to such jurisdiction.
ARTICLE VIII    
MISCELLANEOUS
8.1    Successors; Assigns. This Agreement is personal to Employee, and neither
this Agreement nor any rights or obligations hereunder shall be assignable or
otherwise transferred by Employee. With Employee’s consent, the Company may
assign this Agreement to any Affiliate or successor (whether by merger, purchase
or otherwise) to all or substantially all of the equity, assets or businesses of
the Company. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and assigns.
8.2    Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (a) when received if delivered personally or by courier,
(b) on the date receipt is acknowledged if delivered by certified mail, postage
prepaid, return receipt requested, as follows:
If to Employee, addressed to:
L. William Heiligbrodt
11015 Landon Lane
Houston, TX 77024

If to the Company, addressed to:
Carriage Funeral Services, Inc.
3040 Post Oak Blvd., Suite 300

Houston, TX 77056
    Attn: Chief Executive Officer
or to such other address as either Party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
8.3    No Waiver. No failure by either Party hereto at any time to give notice
of any breach by the other Party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
8.4    Severability. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
8.5    Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.

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8.6    Withholding of Taxes and Other Employee Deductions. 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 employee deductions made with
respect to the Company’s employees generally.
8.7    Headings. The Article and Section headings have been inserted for
purposes of convenience and shall not be used for interpretive purposes.
8.8    Effect of Termination of Employment or Service Relationship. The
provisions of Articles IV, V, VI, VII, and VIII, and those provisions necessary
to interpret and apply them, shall survive any termination of this Agreement and
any termination of the employment or other service relationship between the
Company and Employee.
8.9    Entire Agreement. Except as provided in the written plans and programs
referenced in Section 3.6 and 3.7, this Agreement constitutes the entire
agreement of the Parties with regard to the subject matter hereof and contains
all the covenants, promises, representations, warranties and agreements between
the Parties with respect to the employment of Employee by the Company. Without
limiting the scope of the preceding sentence, all understandings and agreements
preceding the date of execution of this Agreement and relating to the subject
matter hereof, including, without limitation, the Prior Agreement, are hereby
null and void and of no further force and effect, and this Agreement shall
supersede all other agreements, written or oral, that purport to govern the
terms of Employee’s employment (including Employee’s compensation) with the
Company or any of its Affiliates. In entering into this Agreement, Employee
expressly acknowledges and agrees that Employee has received all sums and
compensation that Employee has been owed, is owed, or ever could be owed
pursuant to the agreement(s) referenced in the previous sentence.
Notwithstanding anything in the preceding provisions of this Section 8.9 to the
contrary, the Parties expressly acknowledge and agree that this Agreement does
not supersede or replace, but instead complements and is in addition to, all
agreements and obligations that Employee has to the Company and its Affiliates
(whether contained in a prior written agreement or otherwise) with regard to:
(a) confidentiality and the non-use, non-disclosure, return and protection of
trade secrets, confidential and proprietary information and materials
(including, without limitation, those covenants set forth in Sections 8, 9 and
10 of the Employment Agreement dated September 1, 2011 entered into between
Employee and the Company, which survived the termination of such agreement, as
memorialized in the Prior Agreement, and Articles IV and VI of the Prior
Agreement); (b) non-competition and non-solicitation; and (c) the assignment of
intellectual property rights.
8.10    Modification; Waiver. Any modification to or waiver of this Agreement
will be effective only if it is in writing and signed by the Party to be
charged.
8.11    Advice of Counsel. Employee acknowledges that Employee has been
instructed to, and has had adequate opportunity to obtain, the advice of his own
counsel in connection with this Agreement.
8.12    Section 409A of the Code. Notwithstanding any provision of this
Agreement to the contrary, if Employee is considered a “specified employee” upon
his termination from employment under such procedures as established by the
Company in accordance with the

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limitations and requirements set forth in Section 409A of the Code, the
regulations promulgated thereunder, and any additional guidance issued by the
Internal Revenue Service related thereto (the “Nonqualified Deferred
Compensation Rules”), then any portion of a cash payment or benefit distribution
made upon such a termination from employment under Section 5.5 or otherwise that
would cause the acceleration of, or an addition to, any taxes pursuant to the
Nonqualified Deferred Compensation Rules may not commence earlier than six
months after the date of such termination from employment; except to the extent
any such payments or benefits would be exempt from the Nonqualified Deferred
Compensation Rules, which such payments and benefits shall be paid in accordance
with the original schedules noted in other sections of this Agreement.
Therefore, in the event this Section 8.12 is applicable to Employee, any payment
or distribution under Section 5.5 or otherwise that would cause the acceleration
of, or an addition to, any taxes pursuant to the Nonqualified Deferred
Compensation Rules that would otherwise have been paid to Employee within the
first six months following Employee’s termination from employment shall be
accumulated and paid to Employee, without interest, in a lump sum on the first
day of the seventh month following his termination from employment (except to
the extent exempt from the Nonqualified Deferred Compensation Rules). If any
provision of this Agreement does not satisfy the requirements of Section 409A of
the Code, then such provision shall nevertheless be applied in a manner
consistent with those requirements. In no event whatsoever shall the Company be
liable for any tax, interest or penalties that may be imposed on Employee under
Section 409A of the Code. Each payment under this Agreement is intended to be a
“separate payment” and not a series of payments for purposes of Section 409A of
the Code. Any payments or reimbursements of any expenses provided for under this
Agreement shall be made in accordance with Treas. Reg. §1.409A-3(i)(1)(iv).
8.13    Affiliates. For purposes of this Agreement (including Schedule I
hereto), an “Affiliate” of an entity is an entity that directly or indirectly
controls, is under the control of, or is under common control with, such entity.

[Remainder of Page Intentionally Blank;
Signature Page Follows]

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[a105secondamendedandr_image1.gif]

Signature Page to
Employment Agreement

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SCHEDULE I

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

Service Corporation International
Keystone North America, Inc.
Meridian Mortuary Group, Inc.
StoneMor Partners LP
Saber Management LLC
Thomas Pierce & Co.
Legacy Funeral Holdings, LLC
Northstar Memorial Group, LLC
Foundation Partners
The Signature Group

2.
Any new entity which may hereafter be established which acquires any combination
of five or more funeral homes and/or cemeteries.

3.
Any funeral home, cemetery or other death care enterprise which is managed by
any entity described in 1 or 2 above.

Schedule I

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EXHIBIT A

CONSULTING AGREEMENT TERM SHEET

Parties:
A consulting agreement (the “Agreement”) will be entered into by and between
Carriage Services, Inc. (the “Company”) and L. William Heiligbrodt
(“Consultant”).
Term:
24-month period commencing on the termination of Consultant’s employment with
the Company without Cause or due to Employee’s Retirement (as such capitalized
terms are defined in the Employment Agreement to which this Term Sheet is
attached) unless extended by mutual written agreement of the parties
(the “Term”).
Services:
Consultant shall make himself available to the Company upon the request of the
Company’s chief executive officer to perform consulting and advisory services on
special projects, including, without limitation, capital structure matters
(including those relating to the Company’s banking group), investor relations,
strategic acquisitions, field operations and collaborative development matters.
Consulting Fee:
At the rate of $25,000 per complete calendar month during the Term
Non-Compete Payments:
At the rate of $15,000 per complete calendar month during the portion of the
Prohibited Period (as defined in the Employment Agreement to which this Term
Sheet is attached) following the termination of Consultant’s employment with the
Company (the “Post-Employment Prohibited Period”)
Non-Competition/Non-Solicitation/Confidentiality Covenants:
Consultant will reaffirm his obligation to comply with the non-competition,
non-solicitation and confidentiality covenants set forth in his Employment
Agreement during the five-year period commencing on the first day of the Term.
Benefits:
For each month during the Post-Employment Prohibited Period, the Company shall
pay Consultant a lump sum cash amount equal to the cost of premiums he pays for
health care coverage (as a supplement to Medicare benefits) under an individual
policy obtained from a third party insurer; provided, however, that the amount
of the Company’s reimbursement obligation shall not exceed $800 in any single
month.
Consultant shall be an independent contractor and not a common-law employee of
the Company. Therefore, Consultant shall not, during the Term, be entitled to
participate in any of the Company’s benefit plans and programs maintained for
its employees.
Office/Secretary:
During the Term, the Company will provide Consultant with an office and a
secretary whose sole job responsibilities will consist of providing support to
Consultant. Such secretary will be Donna Cowart (“Cowart”) for so long as she is
employed by the Company. The Company will continue to pay Cowart her base salary
in effect at the commencement of the Term, subject to adjustment from time to
time in the ordinary course of business. For so long as she remains employed by
the Company during the Term, Cowart will be eligible to participate in the
Company’s benefit plans and programs made available to similarly situated
employees of the Company, subject to the terms and conditions of such plans and
programs as in effect from time to time; provided, however, that in no event
will the Company be required to provide Cowart with any incentive compensation
opportunities or long-term incentive plan awards in respect of her employment

 
during the term.
Release:
The Agreement will include a release of all claims, in a form acceptable to the
Company, that releases the Company, its affiliates and their respective
shareholders, members, partners, board members, officers, directors, employees
and agents from any and all claims, including, without limitation, any and all
causes of action arising out of Consultant’s employment with the Company and the
termination of such employment.
Governing Law:
The Agreement shall be governed by the laws of the State of Texas, without
regard to the conflicts of laws principles thereof.

Exhibit A-1

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Exhibit A-2