Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT, made effective as of the 30th day of March, 2005, is between
CARRIAGE SERVICES, INC., a Delaware corporation (the “Company”), and GEORGE J.
KLUG, a resident of Kingwood, Texas (the “Employee”).

 

1.             Employment Term.  The Company hereby continues the employment of
the Employee for a term commencing effective on the date first above written
and, subject to earlier termination as provided in Section 7 hereof, continuing
until December 31, 2007 (such term being herein referred to as the “term of this
Agreement”).  The Employee agrees to accept such employment and to perform the
services specified herein, all upon the terms and conditions hereinafter stated.

 

2.             Duties.  The Employee shall serve the Company and shall report
to, and be subject to the general direction and control of the Chief Executive
Officer of the Company or any other officer designated by him.  The Employee
shall perform the management and administrative duties of Senior Vice President
of Information Systems and Chief Information Officer of the Company.  In such
capacity, the Employee shall be responsible for the operation and management of
Company’s information systems, networks and communications infrastructure.  The
Employee shall also serve as Senior Vice President of Information Systems and
Chief Information Officer 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 $15,833.33 per full calendar month of service
completed, appropriately prorated for partial months at the commencement and end
of the term of this Agreement.  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:

 

(a)           Consideration for an annual performance-based bonus within the
sole discretion of the Company, as may be recommended by the Chief Executive
Officer and, if applicable, approved by the Compensation Committee of the
Company’s Board of Directors.

 

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(b)           Eligibility for consideration of incentive stock options or
restricted stock grants under the terms of one or more of the Company’s stock
incentive plans.

 

(c)           Five days of vacation accrued in each calendar year of service in
addition to that provided to the Employee under the Company’s employee policy.

 

(d)           Such other employee benefits as are available generally to
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.

 

(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 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

 

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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 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 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.  In such case this Agreement
shall automatically terminate and the Company shall have no further obligation
to the Employee or his estate, except that the Company shall continue to pay to
the Employee (or his estate in the event of his subsequent death) 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 18 months
following the date of discharge.  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.

 

(e)           Corporate Change.  If there occurs a Corporate Change (as defined
in the Company’s 1996 Stock Incentive Plan), during the term of this Agreement,
and if the Employee is terminated without Cause or resigns his employment
hereunder for Good Cause (as hereafter defined) within twelve months thereafter,
then this Agreement shall automatically terminate (if then still in effect), in
which event Company shall have no further obligation to the Employee or his
estate, except that the Company shall continue to pay to the Employee (or his
estate in the event of his subsequent death) 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 18 months following the date
of discharge, or until expiration of the term of this Agreement (whichever is
longer).  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 resigned or been discharged.  For purposes hereof, “Good Cause” means
(i) the Company has assigned to Employee any duties inconsistent with his
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities hereunder, or taken any other action which
results in a diminution in such position, authority, duties or responsibilities,
excluding any isolated, insubstantial or inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Employee; or (ii) the Company requires the Employee to be
based at any office or location outside of the Greater Houston Metropolitan
Area.

 

(f)            No resignation with or without Good Cause, nor any discharge
hereunder, whether or not following a Corporate Change, will relieve the
Employee of his obligations under Sections 6, 8 and 9 hereunder.

 

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

 

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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 two (2) years
thereafter, the Employee shall not, directly or indirectly:

 

  (i)          alone or for his own account, or as a officer, director,
shareholder, partner, member, trustee, employee, consultant, advisor, agent or
any other capacity of any corporation, partnership, joint venture, trust, or
other business organization or entity, encourage, support, finance, be engaged
in, interested in, or concerned with (x) any of the companies and entities
described on Schedule I hereto, except to the extent that any activities in
connection therewith are confined exclusively outside the Continental United
States, or (y) any other business within the death care industry having an
office or being conducted within a radius of fifty (50) miles of any funeral
home, cemetery or other death care business owned or operated by the Company or
any of its subsidiaries at the time of such termination;

 

 (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 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, lists of customers, 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

 

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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. George J. Klug

5918 Spring Lodge

Kingwood, Texas  77345

 

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.

 

102.         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.

 

113.         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

 

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payments hereunder, it being agreed that such payments and the right thereto are
nonassignable and nontransferable.

 

124.         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.

 

135.         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.

 

146.         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.

 

157.         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.

 

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/ George J. Klug

 

GEORGE J. KLUG

 

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SCHEDULE I

TO

EMPLOYMENT AGREEMENT

(GEORGE J. KLUG)

 

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.

StoneMor Partners

Hamilton Group, Inc.

Century Group

Saber Group

Thomas Pierce & Co.

Graystone Associates

 

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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