Document:

Exhibit
10.26

 

EMPLOYMENT
AGREEMENT

 

 

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

 

1.                                       Employment Term.  The Company hereby continues the employment
of the Employee for a term, subject to earlier termination as provided in
Section 7 hereof, continuing until December 31, 2009 (such term being herein
referred to as the “term of this Agreement”). 
The Employee agrees to accept such continued employment and to perform
the services specified herein, all upon the terms and conditions hereinafter
stated.

 

2.                                       Duties.  The Employee shall serve the Company and
shall report to, and be subject to the general direction and control of the
Chief Executive Officer of the Company. 
The Employee shall perform the management and administrative duties of
Senior Vice President of Funeral Operations of the Company.  The Employee shall also serve as Senior Vice
President of Funeral Operations of any subsidiary of the Company as requested
by the Company, and the Employee shall perform such other duties as are from
time to time assigned to him by the Chief Executive Officer as are not
inconsistent with the provisions hereof.

 

3.                                       Extent of
Service.  The Employee shall devote his
full business time and attention to the business of the Company, and, except as
may be specifically permitted by the Company, shall not be engaged in any other
business activity during the term of this Agreement.  The foregoing shall not be construed as
preventing the Employee from making passive investments in other businesses or
enterprises, provided, however, that such investments will not require services
on the part of the Employee which would in any way impair the performance of
his duties under this Agreement.

 

4.                                       Compensation.  During the term of this Agreement, the
Company shall pay the Employee a salary of $8,653.85 per full bi-weekly payroll
period of service completed, appropriately prorated for partial periods at the
commencement and end of the term of this Agreement.  The Employee’s base salary will be subject to
annual review, but any increase in salary will be subject to recommendation of
the Chief Executive Officer and approval of the Company’s Compensation
Committee, in each case in their sole discretion.  The salary set forth herein shall be payable
in bi-weekly installments in accordance with the payroll policies of the
Company in effect from time to time during the term of this Agreement.  The Company shall have the right to deduct
from any payment of all compensation to the Employee hereunder (x) any federal,
state or local taxes required by law to be withheld with respect to such
payments, and (y) any other amounts specifically authorized to be withheld or
deducted by the Employee.

 

5.                                       Benefits.  In addition to the base salary under Section
4, the Employee shall be entitled to participate in the following benefits
during the term of this Agreement:

 

(i)                                     Consideration
for an annual performance-based bonus of up to 40% of annual base salary
(subject to achievement of performance measures to be set upon recommendation

 

 

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

 

(ii)                                  Eligibility for
consideration of stock options, stock grants or other incentive compensation
under the terms of one or more of the Company’s incentive plans within the sole
discretion of the Company, as may be recommended by the Chief Executive Officer
and approved by the Compensation Committee of the Company’s Board of
Directors.  There will be an initial
grant of options for 30,000 shares of the Company’s Common Stock in connection
with the Company’s 2005 grant program, subject to standard four-year vesting
requirements.

 

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

 

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

 

(v)                                 Participation
in the Company’s group health and hospitalization program, and inclusion in
such other employee benefits, as are available generally to executive-level
employees of the Company.

 

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

 

(a)                                  The Employee
will not knowingly or intentionally do or say any act or thing which will or
may impair, damage or destroy the goodwill and esteem for the Company of its
suppliers, employees, patrons, customers and others who may at any time have or
have had business relations with the Company.

 

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

 

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

 

7.                                       Termination.

 

(a)                                  Death.  If the Employee dies during the term of this
Agreement and while in the employ of the Company, this Agreement shall
automatically terminate and the Company shall have no further obligation to the
Employee or his estate except that the Company shall

 

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pay the Employee’s estate
that portion of the Employee’s base salary under Section 4 accrued through the
date on which the Employee’s death occurred. 
Such payment of base salary to the Employee’s estate shall be made in
the same manner and at the same times as they would have been paid to the
Employee had he not died.

 

(b)                                 Disability.  If during the term of this Agreement, the
Employee shall be prevented from performing his duties hereunder by reason of
disability, and such disability shall continue for a period of six months, then
the Company may terminate this Agreement at any time after the expiration of
such six-month period.  For purposes of
this Agreement, the Employee shall be deemed to have become disabled when the
Company, upon the advice of a qualified physician, shall have determined that
the Employee has become physically or mentally incapable (excluding infrequent
and temporary absences due to ordinary illness) of performing his duties under
this Agreement.  In the event of a
termination pursuant to this paragraph (b), the Company shall be relieved of
all its obligations under this Agreement, except that the Company shall pay to
the Employee (or his estate in the event of his subsequent death) the
Employee’s base salary under Section 4 through the date on which such
termination shall have occurred, reduced during such period by the amount of
any benefits received under any disability policy maintained by the
Company.  All such payments to the
Employee or his estate shall be made in the same manner and at the same times
as they would have been paid to the Employee had he not become disabled.

 

(c)                                  Discharge for
Cause.  Prior to the end of the term
of this Agreement, the Company may discharge the Employee for Cause and
terminate this Agreement.  In such case
this Agreement shall automatically terminate and the Company shall have no
further obligation to the Employee or his estate other than to pay to the
Employee (or his estate in the event of his subsequent death) that portion of
the Employee’s salary accrued through the date of termination.  For purposes of this Agreement, the Company
shall have “Cause” to discharge the Employee or terminate the Employee’s
employment hereunder upon (i) the Employee’s commission of any felony or any
other crime involving moral turpitude, (ii) the Employee’s willful failure or
refusal to perform all of his duties, obligations and agreements herein
contained or imposed by law, including his fiduciary duties, to the reasonable
satisfaction of the Company, (iii) the Employee’s commission of acts amounting
to gross negligence or willful misconduct to the material detriment of the
Company, or (iv) the Employee’s breach of any provision of this Agreement or
uniformly applied provisions of the Company’s employee handbook.

 

(d)                                 Discharge Without
Cause.  Prior to the end of the term
of this Agreement, the Company may discharge the Employee without Cause (as
defined in paragraph (c) above) and terminate this Agreement.  The Employee will also have the right to
resign his employment by written notice to the Company, with such resignation
treated as a discharge without Cause under this paragraph (d), if the Company
significantly reduces the Employee’s position and responsibilities without his
consent to those not normally associated with the position and duties described
in Section 2.  In such case this
Agreement shall automatically terminate and the Company shall have no further
obligation to the Employee or his estate, except that the Company shall continue
to pay to the Employee (or his estate in the event of

 

3

 

his subsequent death) the
Employee’s base salary under Section 4, and shall continue to include the
Employee in any group health and hospitalization insurance program, for a
period of 12 months following the date of discharge (or the date of reduction
in responsibilities, if applicable), or until expiration of the term of this
Agreement (whichever is shorter).  All
such payments to the Employee or his estate shall be made in the same manner
and at the same times as they would have been paid to the Employee had he not
been discharged (or resigned, if applicable).

 

8.                                       Restrictive
Covenants.  The
Employee acknowledges that in the course of his employment with the Company as
a member of the Company’s senior executive and management team, he has had and
will continue to have access to confidential and proprietary business
information of the Company and its affiliates, and will develop through such
employment business systems, methods of doing business, and contacts within the
death care industry, all of which will help to identify him with the business
and goodwill of the Company. 
Consequently, it is important that the Company protect its interests in
regard to such matters from unfair competition. 
The parties therefore agree that for so long as the Employee shall
remain employed by the Company and, if the employment of the Employee ceases
for any reason (including voluntary resignation), then for a period of eighteen
(18) months thereafter, the Employee shall not, directly or indirectly, without
the prior written consent of the Company in each instance:

 

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

 

(ii)                                  induce or
assist anyone in inducing in any way any employee of the Company or any of its
subsidiaries to resign or sever his or her employment or to breach an
employment contract with the Company or any such subsidiary; or

 

(iii)                               own, manage,
advise, encourage, support, finance, operate, join, control, or participate in
the ownership, management, operation, or control of or be connected in any
manner with any business which is or may be in the funeral, mortuary,
crematory, cemetery or burial insurance business or in any business related
thereto (x) as part of any of the companies or entities listed on Schedule I,
or (y) otherwise within a radius of fifty (50) miles of any funeral home,
cemetery or other death care business owned or operated by the Company or any
of its subsidiaries at the time of such termination.

 

Notwithstanding the
foregoing, the above covenants shall not prohibit the passive ownership of not
more than one percent (1%) of the outstanding voting securities of any entity
within the death care industry. The foregoing covenants shall not be held
invalid or unenforceable because of the

 

4

 

scope of the territory or actions subject
hereto or restricted hereby, or the period of time within which such covenants
respectively are operative, but the maximum territory, the action subject to
such covenants and the period of time they are enforceable are subject to any
determination by a final judgment of any court which has jurisdiction over the
parties and subject matter.

 

9.                                       Confidential
Information.  The
Employee acknowledges that in the course of his employment by the Company he
has received and will continue to receive certain trade secrets, management
methods, financial and accounting data (including but not limited to reports,
studies, analyses, spreadsheets and other materials and information), operating
techniques, prospective acquisitions and dispositions, employee lists, training
manuals and procedures, personnel evaluation procedures, and other confidential
information and knowledge concerning the business of the Company and its
affiliates (hereinafter collectively referred to as “Information”) which the
Company desires to protect.  The Employee
understands that the Information is confidential and he agrees not to reveal
the Information to anyone outside the Company so long as the confidential or
secret nature of the Information shall continue.  The Employee further agrees that he will at
no time use the Information in competing with the Company.  Upon termination of this Agreement, the
Employee shall surrender to the Company all papers, documents, writings and
other property produced by his or coming into his possession by or through his
employment or relating to the Information and the Employee agrees that all such
materials will at all times remain the property of the Company.

 

10.                                 Remedies.  The parties recognize that the services to be
rendered under this Agreement by the Employee are special, unique, and of
extraordinary character, and that in the event of the breach by the Employee of
the covenants contained in Section 8 or Section 9 hereof, the Company may
suffer irreparable harm as a result.  The
parties therefore agree that, in the event of any breach or threatened breach
of any of such covenants, the Company shall be entitled to specific performance
or injunctive relief, or both, and may, in addition to and not in lieu of any
claim or proceeding for damages, institute and prosecute proceedings in any
court of competent jurisdiction to enforce through injunctive relief such
covenants.  In addition, the Company may,
if it so elects, suspend (if applicable) any payments due under this Agreement
pending any such breach and offset against any future payments the amount of
the Company’s damages arising from any such breach.  The Employee agrees to waive and hereby
waives any requirement for the Company to secure any bond in connection with
the obtaining of such injunction or other equitable relief.

 

11.                                 Notices.  All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be deemed to
have been delivered on the date personally delivered or three business days
after the date mailed, postage prepaid, by certified mail, return receipt
requested, or when sent by telex or telecopy and receipt is confirmed, if
addressed to the respective parties as follows:

 

	
  If to the Employee:

  	
   

  	
  Mr. Charles D. Sidun

  
	
   

  	
   

  	
  25 Alwin Terrace

  
	
   

  	
   

  	
  Little Silver, New Jersey
  07739

  

 

5

 

	
  If to the Company:

  	
   

  	
  Carriage
  Services, Inc.

  
	
   

  	
   

  	
  1900
  St. James Place, 4th Floor

  
	
   

  	
   

  	
  Houston,
  Texas 77056

  
	
   

  	
   

  	
  Attn:
  Chief Executive Officer

  

 

Either party hereto may designate a different
address by providing written notice of such new address to the other party
hereto.

 

12.                               Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such provision or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

 

13.                                Assignment.  This Agreement may not be assigned by the
Employee.  Neither the Employee nor his
estate shall have any right to commute, encumber or dispose of any right to
receive payments hereunder, it being agreed that such payments and the right
thereto are nonassignable and nontransferable.

 

14.                               Binding Effect.  Subject to the provisions of Section 13 of
this Agreement, this Agreement shall be binding upon and inure to the benefit
of the parties hereto, the Employee’s heirs and personal representatives, and
the successors and assigns of the Company.

 

15.                               Captions.  The section and paragraph headings in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

16.                               Complete
Agreement.  This
Agreement represents the entire agreement between the parties concerning the
subject hereof and supersedes all prior agreements and arrangements between the
parties concerning the subject thereof.

 

17.                               Governing Law;
Venue.  A substantial portion of the
Employee’s duties under this Agreement shall be performed at the Company’s
corporate headquarters in Houston, Texas, and this Agreement has been substantially
negotiated and is being executed and delivered in the State of Texas.  This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Texas.  Any suit, claim or proceeding arising under
or in connection with this Agreement or the employment relationship evidenced
hereby must be brought, if at all, in a state district court in Harris County,
Texas or federal district court in the Southern District of Texas, Houston
Division.  Each party submits to the jurisdiction
of such courts and agrees not to raise any objection to such jurisdiction.

 

18.                               Counterparts.  This Agreement may be executed in multiple
original counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

6

 

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

 

	
   

  	
  CARRIAGE SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Melvin C. Payne

  
	
   

  	
   

  	
  MELVIN C. PAYNE, Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Charles D. Sidun

  
	
   

  	
  CHARLES D. SIDUN

  

 

7

 

SCHEDULE
I

TO

EMPLOYMENT
AGREEMENT

(CHARLES
D. SIDUN)

 

 

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

 

Service Corporation
International

Alderwoods Group, Inc.

Stewart Enterprises, Inc.

Keystone Group Holdings,
Inc.

Meridian Mortuary Group,
Inc.

Cornerstone Family Services,
Inc.

Hamilton Group, Inc.

Century Group

Saber Group

Thomas Pierce & Co.

 

For purposes of the
foregoing, an “Affiliate” of an entity is a person that directly or indirectly
controls, is under the control of or is under common control with such entity.

 

2.                                       Any new entity
which may hereafter be established which acquires any combination of ten or
more funeral homes and/or cemeteries from any of the entities described in 1
above.

 

3.                                       Any funeral
home, cemetery or other death care enterprise which is managed by any entity
described in 1 or 2 above.Exhibit 10.5

 

FIRST NATIONAL BANK OF OTTAWA

&

FIRST OTTAWA BANCSHARES, INC.

 

 

 

JOINT POLICY ON DIRECTOR
COMPENSATION

 

It is the policy
of First National Bank of Ottawa and First Ottawa Bancshares, Inc. to attract
and retain the highest quality individuals to serve as directors.  Those individuals will be required to devote
their time, skills, business development efforts, and judgement to serving the
long-term needs of our shareholders.  We
recognize that those directors be compensated for each of those components.  Accordingly, we adopt the following schedule
of compensation for directors.

 

	
  ANNUAL RETAINER
  – Bank

  	
   

  	
  $

  	
  6,000.00

  	
   

  
	
  ANNUAL RETAINER –
  Holding Company

  	
   

  	
  None

  	
   

  
	
  ANNUAL MEETING
  OF SHAREHOLDERS – Bank

  	
   

  	
  None

  	
   

  
	
  ANNUAL MEETING
  OF SHAREHOLDERS – Holding Company

  	
   

  	
  $

  	
  500.00

  	
   

  
	
  ANNUAL
  ORGANIZATIONAL MEETING – Holding Company

  	
   

  	
  $

  	
  500.00

  	
   

  
	
  MONTHLY
  COMMITTEE MEETINGS

  	
   

  	
  None

  	
   

  
	
  MONTHLY BOARD
  MEETINGS (includes 1 excused absence/year)

  	
   

  	
  $

  	
  500.00

  	
   

  
	
  SPECIAL BOARD
  MEETINGS

  	
   

  	
  None

  	
   

  

 

Payment schedule
will be semi-annual.

 

Annual retainer
will be paid right after annual meeting when directors are elected.

 

The directors may also be awarded stock options under
First Ottawa Bancshares, Inc. 2002 Stock Incentive Plan.

 

The directors shall also be eligible for each of the
benefits and privilege as may be available to them by Board resolution duly
adopted.

 

1

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