Document:

exv10w1

EXHIBIT 10.1

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of September 18, 2008,
is by and between 1236929 Alberta Ltd. (the “Shareholder”) and ION Geophysical Corporation,
a Delaware corporation (the “Company”). Certain capitalized terms used herein are defined
in Section 6 below. Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them in the Share Purchase Agreement (as hereinafter defined).

RECITALS:

     WHEREAS, the Shareholder, ARAM Systems Ltd., an Alberta corporation (“ARAM”), and
Canadian Seismic Rentals Inc., an Alberta corporation (“CSRI” and, together with ARAM, the
“Acquired Entities”), certain other shareholders of the Acquired Entities and the Company
entered into that certain Share Purchase Agreement dated as of July 8, 2008, and entered into that
certain Amended and Restated Share Purchase Agreement dated September 17, 2008 (as such Amended and
Restated Share Purchase Agreement may be further amended, restated, modified or supplemented, the
“Share Purchase Agreement”), that provides, subject to the terms and conditions thereof,
for the purchase by the Company of 100% of the issued and outstanding shares of the Acquired
Entities held by the Shareholder and such other shareholders (the “Share Purchase”);

     WHEREAS, the Buyer Common Stock is listed on the NYSE;

     WHEREAS, as part of the consideration to be paid in the Share Purchase, the Shareholder has
acquired the Share Consideration, consisting in the aggregate, of 3,629,211 shares of Common Stock;

     WHEREAS, in order to induce the Shareholder to consummate the transactions under the Share
Purchase Agreement, the Company has agreed to provide certain registration rights on the terms and
subject to the conditions set forth herein;

     WHEREAS, in order to induce the Company to consummate the transactions under the Share
Purchase Agreement, the Shareholder has agreed to be bound by the terms and conditions set forth
herein; and

     WHEREAS, it is a condition to the closing of the transactions under the Share Purchase
Agreement that the Shareholder and the Company enter into this Agreement.

     NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as
follows:

SECTION 1. REGISTRATION UNDER THE SECURITIES ACT.

     1.1 Registration.

     As soon as practicable after the Financial Statements Delivery Date, the Company shall prepare
and file with the Securities and Exchange Commission (the “SEC”) a registration statement
on the appropriate form for the purpose of registering under the Securities Act (as hereinafter
defined) all of the Registrable Shares (as hereinafter defined) for distribution by the Shareholder
(the “Registration Statement”). The Company agrees to use its Best Efforts to cause the
Registration Statement to be declared effective by the SEC as soon as practicable after the filing
thereof with the SEC.

 

 

The registration of such Registrable Shares to be effected pursuant to this Agreement is
referred to herein as the “Registration.” The Company shall keep the Registration Statement
effective (including through the filing of any required post-effective amendments) until the
earlier to occur of (i) the date after which all of the Registrable Shares registered thereunder
shall have been distributed by the Shareholder and (ii) the date that is the first anniversary of
the effective date of the Registration Statement; provided, that such date shall be
extended by the amount of time of any period during which the Shareholder may not use the
Registration Statement pursuant to the terms of Section 1.2(e) or Section 2 below,
or as a result of a breach by the Company of its obligations hereunder. Thereafter, the Company
shall be entitled to withdraw the Registration Statement and, upon such withdrawal, the Shareholder
shall have no further right to distribute any of the Registrable Shares pursuant to the
Registration Statement (or any prospectus relating thereto).

     1.2 Registration Procedures. Subject to the terms and conditions hereof, the Company
shall use its Best Efforts to effect the registration of such Registrable Securities for resale or
distribution by the Shareholder in accordance with the intended method of disposition thereof, and
pursuant thereto the Company shall as expeditiously as practicable:

	 	(a)	 	prepare and file with the SEC the Registration Statement with respect to such
Registrable Securities (and any amendment, including any post-effective amendment, to
the Registration Statement that the Company deems to be necessary) and use its Best
Efforts to cause the Registration Statement to become effective within sixty (60) days
after the Financial Statements Delivery Date and to comply with the provisions of the
Securities Act applicable to it (provided that before filing the Registration Statement
or prospectus or any amendments or supplements thereto, the Company shall furnish to the
Shareholder copies of all such documents proposed to be filed so as to provide the
Shareholder and its counsel a reasonable opportunity to review and comment on such
documents);
	 
	 	(b)	 	furnish to the Shareholder such number of copies of the Registration Statement,
each amendment and supplement thereto, the prospectus included in such Registration
Statement (including each preliminary prospectus) and such other documents as the
Shareholder may reasonably request in order to facilitate the distribution of the
Registrable Securities owned by the Shareholder;
	 
	 	(c)	 	make such filings of the prospectus, and any amended or supplemented prospectus,
as may be required under Rule 424 and keep the Registration Statement with respect to
such Registrable Securities effective for the time periods specified in Section
1.1 in order to permit the prospectus forming a part thereof to be usable for the
offer and sale or distribution of the Registrable Securities owned by the Shareholder;
	 
	 	(d)	 	use its Best Efforts to register or qualify such Registrable Securities under
such other securities or blue sky laws of such jurisdictions as the Shareholder
reasonably requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable the Shareholder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by the Shareholder (provided that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subsection, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to
general service of process in any such jurisdiction);
	 
	 	(e)	 	notify the Shareholder (i) when the Registration Statement or any post-effective
amendment has become effective under the Securities Act, (ii) of the happening of any
event as a result of which the prospectus included in the Registration Statement
contains an untrue statement of a material

 

 

	 	 	 	fact or omits any fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (whereupon the Shareholder
shall immediately cease any offers, sales or other distribution of Registrable
Securities thereunder), and, at the request of the Shareholder, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter delivered
to the Shareholder in connection with the distribution of such Registrable Securities,
such prospectus shall not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading and (iii) of the issuance of any stop order
suspending the effectiveness of the Registration Statement, or of any order suspending
or preventing the use of any related prospectus or suspending the qualification of any
of the Registrable Securities included in the Registration Statement for sale or
distribution in any jurisdiction;
	 
	 	(f)	 	cause all such Registrable Securities to be listed on the NYSE and on each
securities exchange on which similar securities issued by the Company are then listed;
	 
	 	(g)	 	in the event of the issuance of any stop order suspending the effectiveness of
the Registration Statement, or of any order suspending or preventing the use of any
related prospectus or suspending the qualification of any Registrable Securities
included in the Registration Statement for sale or distribution in any jurisdiction, the
Company shall use its Best Efforts promptly to obtain the withdrawal of such order and
shall prepare and file an amended or supplemented prospectus, if required; and
	 
	 	(h)	 	use its Best Efforts to cause such Registrable Securities covered by the
Registration Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the Shareholder to consummate the
resale and distribution of such Registrable Securities.

     1.3 Expenses.

	 	(a)	 	Registration Expenses. All Registration Expenses (as hereinafter
defined) shall be borne by the Company.
	 
	 	(b)	 	Selling Expenses. All fees and expenses of counsel for the Shareholder,
state securities or blue sky fees and expenses and broker or dealer discounts or
commissions attributable to the sale or distribution of the Registrable Securities shall
be borne solely by the Shareholder.

 

 

SECTION 2. LOCKUP AGREEMENT.

     2.1 The Shareholder hereby agrees to not effect any public sale or distribution (including any
sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into
or exchangeable or exercisable for such securities, during the seven (7) days prior to, and the
ninety (90) day period beginning on, the effective date of any underwritten registered public
offering of equity securities of the Company or securities convertible or exchangeable into or
exercisable for equity securities of the Company, unless the underwriters managing the registered
public offering otherwise agree, and the Shareholder will deliver an undertaking to the managing
underwriters (if requested) consistent with this covenant. The Company will give the Shareholder at
least ten (10) days prior notice of any such effective date. The Shareholder shall not be obligated
to comply with the provisions of this Section 2.1 more than two (2) times in any 12-month
period.

SECTION 3. INDEMNIFICATION.

     3.1 Indemnification by the Company. The Company agrees to indemnify, to the extent
permitted by law, the Shareholder against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in any registration
statement or prospectus, or any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in any information
furnished in writing to the Company by the Shareholder expressly for use therein or by the failure
of the Shareholder to deliver a copy of the Registration Statement or prospectus or any amendments
or supplements thereto after the Company has furnished the Shareholder with a sufficient number of
copies of the same.

     3.2 Indemnification by the Shareholder. The Shareholder shall furnish to the Company
in writing such information as the Company reasonably requests for use in connection with the
Registration Statement or prospectus and, to the extent permitted by law, shall indemnify the
Company, its directors and officers and each Person (as hereinafter defined) who controls the
Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material fact contained in
the Registration Statement or prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only to the extent that any information so furnished in
writing by the Shareholder contains such untrue statement or omits a material fact required to be
stated therein necessary to make the statements therein not misleading; provided,
however, that any such obligation of the Shareholder to indemnify the Company hereunder
shall be limited to the aggregate value of the Acquired Shares at the effective date of the
Registration Statement.

     3.3 Indemnification Procedures. Any Person entitled to indemnification hereunder
shall (i) give prompt written notice to the indemnifying party of any claim with respect to which
it seeks indemnification (provided that the failure to give prompt notice shall not impair any
Person’s right to indemnification hereunder to the extent such failure has not prejudiced the
indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not
be subject to any liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel (in addition to

 

 

local counsel) for all parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with respect to such
claim.

     3.4 Investigation; Contribution. The indemnification provided for under this
Agreement shall remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person of such indemnified
party and shall survive the transfer of securities. If the indemnification provided under
Section 3.1 or Section 3.2 of this Agreement is for any reason unavailable to, or
insufficient to hold harmless, an indemnified party, then each indemnifying party shall contribute
to the amount paid or payable to the indemnified party or parties an amount that is proportionate
to reflect the relative fault of such indemnifying party on the one hand and the indemnified party
or parties on the other.

SECTION 4. RULE 144 TRANSACTIONS.

     4.1 Undertaking to File Reports and Cooperate in Rule 144 Transactions. For as long
as the Shareholder continues to hold any Common Stock, the Company shall use its Best Efforts to
file with the SEC, on a timely basis, all annual, quarterly and other periodic reports required to
be filed by it under Sections 13 and 15(d) of the Exchange Act, and the rules and regulations
thereunder; provided, however, that the foregoing shall not be construed to require
the Company to prepare and file periodic reports if it is not required to do so under the Exchange
Act. In the event of any proposed sale by the Shareholder of Common Stock pursuant to Rule 144
under the Securities Act or otherwise as provided herein, which sale is to be made in accordance
with the terms of Section 5.1(b) hereof, the Company shall cooperate with the Shareholder
so as to enable such sales to be made in accordance with applicable laws, rules and regulations,
the requirements of the transfer agent of the Company and the reasonable requirements of the broker
through which the sales are proposed to be executed.

SECTION 5. RESTRICTIONS ON TRANSFER.

     5.1 Permitted Transfers. The Shareholder hereby agrees that, until it and any
permitted transferees under Section 5.1(b) or (c) hereunder have disposed of all of
the Registrable Securities, it will not, directly or indirectly, without the prior written consent
of the Company, sell, distribute, transfer or otherwise dispose of any shares of Common Stock
except:

	 	(a)	 	sales of Common Stock pursuant to Rule 144 under the Securities Act;
	 
	 	(b)	 	a bona fide pledge of or the granting of a security interest in the shares of
Common Stock to an institutional lender for money borrowed, provided that such
lender acknowledges in writing that it has received a copy of this Agreement and agrees,
upon its becoming the owner of, or obtaining dispositive authority with respect to or in
connection with any disposition of, any such shares of Common Stock, to be bound by the
provisions of this Agreement in connection with any right it may have to dispose of or
vote any such shares of Common Stock (and, upon agreeing so to be bound, the provisions
of this Agreement shall inure to the benefit of such party);
	 
	 	(c)	 	dispositions of Common Stock by the Shareholder to Donald G. Chamberlain as
controlling equity owner of Shareholder, or to any Family Member (as hereinafter
defined) of Mr. Chamberlain; provided, however, that each such
transferee shall receive and hold such Common Stock subject to, and such transferee and
all of the transferees’ Affiliates (as hereinafter defined) shall agree to be bound by,
all the terms of this Agreement, which terms shall also inure to the

 

 

	 	 	 	benefit of such transferees, and there shall be no further transfer of such shares
except in accordance with the provisions of this Section 5.1; or
	 
	 	(d)	 	dispositions pursuant to any merger, consolidation, reorganization or
recapitalization to which the Company is a party or in connection with any
reclassification of the Common Stock.

SECTION 6. DEFINITIONS.

     “Affiliate” means, with respect to any specified Person, any other Person that,
directly or indirectly or through one or more intermediaries, controls, is controlled by or is
under common control with such specified Person.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, or any successor statute.

     “Family Member” means (a) with respect to any individual, such individual’s spouse,
any descendants (whether natural or adopted), any trust (all of the beneficial interests of which
are owned by any of such individuals or by any of such individuals together with any organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended), the estate of any
such individual, and any corporation, association, partnership or limited liability company all of
the equity interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial interests of such
trust.

     “Person” means any individual, firm, partnership, corporation, trust, joint venture,
limited liability company, association, joint stock company, unincorporated organization or any
other entity or organization, including a governmental entity or any department, agency or
political subdivision thereof.

     “Registrable Securities” means (i) the Share Consideration, (ii) any other Buyer
Common Stock issued as a dividend or other distribution on or as a result of a subdivision,
combination or reclassification of any Share Consideration and (iii) any Common Stock issued to the
Shareholder in any merger, consolidation or business combination involving the Company.

     “Registration Expenses” means all expenses incident to the Company’s performance of or
compliance with this Agreement, including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, any fees with respect to filings
required to be made with the NASD, printing expenses, messenger and delivery and mailing expenses,
fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all
registered public accounting firms retained by the Company and other Persons retained by the
Company.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any successor statute.

SECTION 7. MISCELLANEOUS.

     7.1 Legends and Stop Transfer Orders.

	 	(a)	 	The Shareholder hereby agrees that all certificates representing Registrable
Securities shall have the following legend (or other legend to the same effect): “The
shares represented by this certificate are subject to certain restrictions on transfer
and other restrictions pursuant to the provisions of a Registration Rights Agreement,
dated September 18, 2008, between the Shareholder and the Company, a copy of which is on
file at the office of the corporate secretary of the Company.”

 

 

	 	(b)	 	The Shareholder hereby agrees to the entry of stop transfer orders with the
transfer agent and registrar of the Common Stock against the transfer (other than in
compliance with this Agreement) of legended securities held by the Shareholder (or their
permitted transferees under Section 5.1(b) or (c) hereof).
	 
	 	(c)	 	The Company agrees to remove any stop transfer orders provided in Section
7.1(b) in sufficient time to permit any party to make any transfer permitted by the
terms of this Agreement.

     7.2 No Inconsistent Agreements. The Company shall not hereafter enter into any
agreement with respect to its securities which violates the rights granted to the Shareholder in
this Agreement.

     7.3 Specific Performance. The parties hereto acknowledge and agree that in the event
of any breach of this Agreement, the non-breaching parties would be irreparably harmed and could
not be made whole by monetary damages. It is accordingly agreed that the parties hereto shall and
do hereby waive the defense in any action for specific performance that a remedy at law would be
adequate and that the parties hereto, in addition to any other remedy to which they may be entitled
at law or in equity, shall be entitled to compel specific performance of this Agreement in any
action instituted hereunder.

     7.4 Amendments and Waivers. The failure of any party to enforce any of the provisions
of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect
the right of such party thereafter to enforce each and every provision of this Agreement in
accordance with its terms. No modification, amendment or waiver of any provision of this Agreement
shall be effective against the Company or the Shareholder except by a written agreement signed by
the Company and the Shareholder.

     7.5 Successors and Assigns. All covenants and agreements in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the respective heirs,
legal representatives, successors and permitted assigns of the parties hereto, whether so expressed
or not (including, without limitation, any Person that is a legal representative or permitted
assignee of, or the successor to, the Company or the Shareholder).

     7.6 Severability. If any term, provision, covenant or restriction of this Agreement,
or any part thereof, is held by a court of competent jurisdiction or any foreign federal, state,
county or local government or any other governmental, regulatory or administrative agency or
authority to be invalid, void, unenforceable or against public policy for any reason, the remainder
of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired, or invalidated.

     7.7 Entire Agreement. Except as otherwise expressly set forth herein, this document
embodies the complete agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.

     7.8 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the same instrument,
and it shall not be necessary in making proof of this Agreement to produce or account for more than
one such counterpart.

     7.9 Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning of terms contained herein.

 

 

     7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE INTERNAL
LAWS OF THE STATE OF DELAWARE.

     7.11 Notices. All notices, requests, demands, claims, instructions and other
communications hereunder shall be in writing. Any notice, request, demand, claim, instruction or
other communication to be given hereunder by any party to the other parties shall be sent by
facsimile (with confirmation received of the recipient’s number) to the number stated below or
shall be delivered personally or sent by registered or certified mail (postage prepaid and return
receipt requested) to the address stated below.

If to the Company:

ION Geophysical Corporation

2105 City West Blvd., Suite 400

Houston, Texas 77042

Attention: Brian Hanson

Facsimile: 281-879-3674

Copy to (which shall not constitute notice):

ION Geophysical Corporation

2105 City West Blvd., Suite 400

Houston, Texas 77042

Attention: David L. Roland, Esq.

Facsimile: 281-879-3600

And:

Mayer Brown LLP

700 Louisiana Street, Suite 3400

Houston, Texas 77002

Attention: Marc H. Folladori

Facsimile: 713-238-4696

If to the Shareholder:

1236929 Alberta Ltd.

161 Lochend Drive

Cochrane, Alberta T4C 2H2

Attention: Donald G. Chamberlain

Facsimile: 403-932-2438

Copy to (which shall not constitute notice):

Borden Ladner Gervais LLP

1000 Canterra Tower

400 Third Avenue S.W.

Calgary, Alberta T2P 4H2

Attention: David C. Whelan

Facsimile: 403-266-1395

 

 

or at such other facsimile number or address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be deemed to have been
duly given to the party to whom it is directed upon actual receipt by such party. Any notice which
is sent by facsimile or addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed on the date indicated on the
facsimile confirmation or the postal receipt. Any party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered by giving the
other parties notice in the manner herein set forth.

[Signature Page Follows]

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

	 	 	 	 	 	 	 
	 	 	ION GEOPHYSICAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David L. Roland	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	David L. Roland	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Senior Vice President and General Counsel	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	1236929 ALBERTA LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Donald Chamberlain	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	DONALD CHAMBERLAIN	 	 
	 

	 	Title:
	 	Presidentexv10w1

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS AGREEMENT, dated August 7, 2007, is between CARRIAGE SERVICES, INC., a Delaware
corporation (the “Company”), and Jay D. Dodds, a resident of Harris County, Texas (the
“Employee”).

     1. Employment Term. The Company hereby continues the employment of the
Employee for a term commencing as of the date first above written and, subject to earlier
termination or extension as provided in Section 7 hereof, continuing until August 6, 2010
(such
term being herein referred to as the “term of this Agreement”). The term of this Agreement
shall
automatically be renewed on an annual basis thereafter, unless terminated by either party upon
sixty (60) days’ written notice prior to the end of the term then in effect. 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
executive officer designated by him. The Employee shall faithfully, diligently, competently,
and
to the best of Employee’s ability, perform the management and administrative duties of
Regional
Managing Partner and Regional Vice President of Operations. The Employee shall also serve as
Regional Managing Partner and Regional Vice President of 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 or any other executive
officer
designated by him as are not inconsistent with the provisions hereof. The Employee represents
and warrants to the Company that Employee is not subject to any obligation to any third party
that would restrict or interfere with Employee’s ability to perform hereunder.

     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 (i) from making passive
investments in other businesses or enterprises, and (ii) from engaging in other civic,
charitable
and business activities, provided, however, that such investments and activities 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 an annual salary of not less than $230,000 per full calendar year of service
completed
(“Base Salary”), appropriately prorated for partial months at the commencement and end of the
term of this Agreement. The Employee’s salary and benefits will be reviewed annually, and any
increase therein shall remain in the sole discretion of the Company, acting through the
Compensation Committee of its Board of Directors if required. The salary set forth herein
shall
not be subject to reduction and 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, 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 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. A target bonus will be set by
the Company, and approved by the Compensation Committee of the Company’s Board of
Directors, on an annual basis.

     (ii) Eligibility for consideration of Awards of Restricted Stock or other
incentive-based compensation under the terms of the Company’s 2006 Long Term Incentive Plan
or one or more of the Company’s other incentive plans, as the Chief Executive Officer in his
sole discretion may determine and subject to approval of the Company’s Compensation
Committee.

     (iii) Four weeks of paid vacation in each calendar year, subject to the Company’s
personnel policies respecting such matters.

     (iv) 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.

     (v) Reimbursement for travel, lodging and other out-of-pocket expenses reasonably
incurred by Employee in the exercise of Employee’s duties under this Agreement which are
approved by the Company in advance and are duly substantiated in accordance with the
Company’s policies as to reimbursement. In order to assure compliance with Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”), such reimbursements shall be
made as soon as practicable, but in no event later than the last day of the calendar year
following the calendar year in which the expense was incurred.

     6. Certain Additional Matters. The Employee agrees that at all times during the term

of this Agreement and for a period of two years following any cessation of employment with the

Company:

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

-2-

 

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

     Nothing herein shall be construed to prevent the Employee from complying with any requirements
of law or legal process or taking such actions as the Company may consent to in writing.

     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 (i) that portion of the Employee’s Base Salary
accrued through the date on which the Employee’s death occurred, (ii) a pro rata amount
of the annual bonus described in Section 5(i) above, based on the number of days the
Employee was employed in the year in comparison to 365, and (iii) all benefits payable
under the governing provisions of any benefit plan or program of the Company. Such
payment of Base Salary and bonus 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 is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months. 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), (i) the Employee’s Base Salary 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, (ii) a pro rata amount of the annual bonus described in Section 5(i) above,
based on the number of days the Employee was employed in the year in comparison to
365, and (iii) all benefits payable under the governing provisions of any benefit plan or
program of 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. No such termination pursuant to this paragraph (b) will
relieve the Employee of his obligations under Sections 6, 8 and 9 hereunder.

     (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

-3-

 

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

     Any such termination by virtue of this paragraph (c) shall not prejudice any remedy that the
Company may have at law, in equity, or under this Agreement, for breach hereof by Employee. No
such termination pursuant to this paragraph (c) will relieve the Employee of his obligations under
Sections 6, 8 and 9 hereunder.

     (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), (i) the Employee’s
Base Salary for a period of 18 months following the date of discharge, (ii) 50% of the annual
target bonus described in Section 5(i) above for the year of termination, and (iii) all benefits
payable under the governing provisions of any benefit plan or program of the Company, In addition,
if following the date of such discharge, the Employee becomes eligible to elect continuation
coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) and properly elects
such coverage, the Company shall reimburse the Employee or pay on the Employee’s behalf 100% of
applicable medical continuation premiums for the benefit of the Employee (and his covered
dependents as of the date of his termination, if any) under the Employee’s then-current plan
election, with such coverage to be provided under the closest comparable plan as offered by the
Company from time to time, for so long during the 18-month period following termination as he
remains eligible for and elects COBRA coverage, except as otherwise provided in paragraph (e)
below. 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. No such
termination pursuant to this paragraph (d) will relieve the Employee of his obligations under
Sections 6, 8 and 9 hereunder.

-4-

 

     (e) Corporate Change. If following a Corporate Change (as defined in the
Company’s 2006 Long-Term Incentive Plan), the Employee voluntarily terminates his
employment for Good Reason (as defined below) or the Employee is discharged without
Cause, in either case within 24 months following the Corporate Change, then 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 to the
Employee (or his estate in the event of his subsequent death), (i) a lump sum payment
payable following such termination equal to one and one-half times the Employee’s Base
Salary, (ii) 50% of the annual target bonus described in Section 5(i) above for the
year of
termination and (iii) all benefits payable under the governing provisions of any
benefit
plan or program of the Company, In addition, if following the date of such resignation
or
discharge, the Employee becomes eligible to elect continuation coverage under COBRA
and properly elects such coverage, the Company shall reimburse the Employee or pay on
the Employee’s behalf 100% of applicable medical continuation premiums for the benefit
of the Employee (and his covered dependents as of the date of his termination, if any)
under the Employee’s then-current plan election, with such coverage to be provided
under
the closest comparable plan as offered by the Company from time to time, for so long
during the 18-month period following the date of resignation or discharge as he remains
eligible for and elects COBRA coverage. No such termination pursuant to this paragraph
(e) will relieve the Employee of his obligations under Sections 6 and 9 hereunder.

          “Good Reason” means any of the following actions if taken without the Employee’s prior
written consent: (A) any material breach by the Company to comply with its obligations
under the terms of the Agreement; (B) any material diminution in the Employee’s
responsibilities, authority or duties, (C) a material diminution in the Employee’s Base
Salary; or (D) any material change in the permanent location at which the Employee performs
services for the Company. The Employee shall give written notice to the Board specifying
such actions within 90 days of the existence of such action and providing a period of 30
days in which the Company shall be allowed to cure such circumstances.

     (f) Notice. Prior to the end of the term of this Agreement, the Employee may
terminate this Agreement upon ninety (90) days written notice. This Agreement shall
automatically terminate at the end of the notice period, and the Company shall have no
further obligation to the Employee other than to pay to the Employee that portion of
the
Employee’s salary accrued through the date of termination. No such termination pursuant
to this paragraph (f) will relieve the Employee of his obligations under Sections 6, 8
and 9
hereunder.

     8. Restrictive Covenants. The Company has provided and shall provide in the future to
the Employee, confidential and proprietary information as that term is defined in Section 9 of
this Agreement (“Confidential Information”). The Employee acknowledges that in the course of his
employment with the Company as a member of the Company’s senior management team, he shall be given
possession of and access to Confidential Information of the Company and its affiliates, and will
develop through such employment business systems, methods of doing

-5-

 

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. In consideration of the
Confidential Information that has been received and that the Company covenants to provide the
Employee in the future, the sufficiency of which is hereby acknowledged by the Employee, the
Employee agrees to enter into the covenants contained in this Agreement. 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, if the Employee had management responsibility, either directly or
indirectly, over that funeral home, cemetery, or other death care business at any time
during the previous 12 months;

     (ii) induce or assist anyone in inducing in any way any employee of the Company or any
of its subsidiaries to resign or sever 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, if the Employee had
management responsibility, either directly or indirectly, over that funeral home, cemetery,
or other death care business at any time during the previous 12 months.

     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.

-6-

 

     Upon termination of employment, whether voluntary or involuntary, the above covenants shall
not prohibit Employee from being employed directly by Aria Cremation Services, LLC or Homestead
Funeral Home, 29515 Belt Line Road, Grand Prairie, Texas 75052.

     9. Confidential Information; Copyrightable Material. The Employee acknowledges
that in the course of his employment by the Company he shall receive and access 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, 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
“Confidential
Information”) which the Company desires to protect. The Employee understands that the
Confidential Information is confidential and he agrees not to reveal the Confidential
Information
to anyone outside the Company so long as the confidential or secret nature of the Confidential
Information shall continue, except as required by law or legal process. The Employee further
agrees that he will at no time use the Confidential 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 him or coming into his possession by or
through his employment or relating to the Confidential Information and the Employee agrees
that
all such materials will at all times remain the property of the Company. The Employee
acknowledges that all materials and other copyrightable works and subject matter (regardless
of
whether or not constituting “Confidential Information”) produced by the Employee within the
scope of his employment (regardless of whether or not denoted as copyrighted material) shall
be
deemed “works made for hire” and shall be owned by and proprietary to the Company and may
not be used or reproduced in whole or in part without the Company’s prior written consent.

     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 electronic means or facsimile and receipt is confirmed, if
addressed to the respective parties as follows:

-7-

 

	 	 	 	 	 
	 

	 	If to the Employee:
	 	Jay D. Dodds
	 

	 	 	 	8515 Atascocita Lake Way
	 

	 	 	 	Humble, Texas 77346
	 
	 	 	 	 
	 

	 	If to the Company:
	 	Carriage Services, Inc.
	 

	 	 	 	3040 Post Oak Blvd, Suite 300
	 

	 	 	 	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.

-8-

 

     18. Survival. The provisions of Sections 6, 8 and 9 shall survive any termination of
this Agreement or the employment relationship of the Company and Employee; provided,
however, if such termination is the result of Corporate Change as provided in Section 7(e)
hereof,
Employee shall not thereafter be bound by the provisions of Section 8 hereof.

     19. 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.

     20. Time of Payments. All amounts payable under Sections 7(d) and (e) of this
Agreement shall be paid within 10 days after the Employee’s execution without revocation of a
release in a form satisfactory to the Company and within the time period prescribed by the
Company (which may not be less than 21 days after the date of termination of employment). If
the Employee is a “specified employee,” as such term is
defined in Section 409A of the Code
and
related regulations and Treasury pronouncements (“Section 409A”) and determined as described
below in this Section 20, any payments payable as a result of the Employee’s termination
(other
than death) shall not be payable before the earliest of (i) the date that is six months after
the
Employee’s termination, (ii) the date of the Employee’s death, or (iii) the date that
otherwise
complies with the requirements of Section 409A. This Section 20 shall be applied by
accumulating all payments that otherwise would have been paid within six months of the
Employee’s termination and paying such accumulated amounts at the earliest date which
complies with the requirements of Section 409A. The Employee shall be a “specified employee”
for the twelve-month period beginning on April 1 of a year if the Employee is a “key employee”
as defined in Section 416(i) of the Code (without regard to Section 416(i)(5)) as of December
31
of the preceding year or using such dates as designated by the Company in accordance with
Section 409A and in a manner that is consistent with respect to all of the Company’s
nonqualified deferred compensation plans. For purposes of determining the identity of
specified
employees, the Company may establish procedures as it deems appropriate in accordance with
Section 409A.

     21. Income, Excise or Other Tax Liability. 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 normal
employee deductions made with respect to the Company’s employees generally. Notwithstanding
anything in this Agreement to the contrary, in the event it shall be determined that any
payment
or distribution by the Company to the Employee or for his benefit, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise (a
“Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or
penalties with respect to such excise tax (such excise tax, together with any such interest or
penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall
pay to
the Employee an additional payment (a “Gross-up Payment” ) in an amount such that after
payment by the Employee of all taxes (including any interest or penalties imposed with respect
to
such taxes), including any Excise Tax imposed on any Gross-up Payment, the Employee retains
an amount of the Gross-up Payment equal to the Excise Tax imposed upon the Payments. All
determinations required to be made under this Section 21 shall be made by the Company’s

-9-

 

accounting
firm (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Employee. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Absent manifest error, any determination by the Accounting
Firm shall be binding upon the Company and the Employee.

     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/ Jay D. Dodds
 	 
	 	Jay D. Dodds 	 
	 	 	 

-10-

 

	 	 	 	 	 

SCHEDULE I

TO

EMPLOYMENT AGREEMENT

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

Service Corporation International

Alderwoods Group, Inc. Stewart

Enterprises, Inc. 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

	 	 	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.

-11-

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