Document:

Exhibit 10.4

 

INDEMNITY AGREEMENT

 

This Indemnity Agreement (“Agreement”) is
made effective as of the 13th day of May, 2003 by and between Carriage
Services, Inc., a Delaware corporation (the “Company”), and Mark Groeneman
(“Indemnitee”).

 

RECITALS

 

WHEREAS, highly competent persons have become
more reluctant to serve publicly held corporations as directors or in other
capacities unless they are provided with adequate protection through insurance
or adequate indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on behalf of the
corporation.

 

WHEREAS, the Board of Directors of the
Company (the “Board”) has determined that, in order to attract and retain
qualified individuals, the Company will attempt to maintain on an ongoing
basis, at its sole expense, liability insurance to protect persons serving the
Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has
been a customary and widespread practice among United States based corporations
and other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future at
higher premiums and with more exclusions. 
At the same time, directors, officers, and other persons in service to
corporations or business enterprises are being increasingly subjected to
expensive and time-consuming litigation relating to, among other things,
matters that traditionally would have been brought only against the corporation
or business enterprise itself.  The
Amended and Restated Bylaws of the Company (“Bylaws”) require indemnification
of the officers and directors of the Company. 
Indemnitee may also be entitled to indemnification pursuant to the Delaware
General Corporation Law (“DGCL”).  The
Bylaws and the DGCL expressly provide that the indemnification provisions set
forth therein are not exclusive, and thereby contemplate that contracts may be
entered into between the Company and members of the Board, officers and other
persons with respect to indemnification.

 

WHEREAS, the uncertainties relating to such
insurance and to indemnification have increased the difficulty of attracting
and retaining such persons.

 

WHEREAS, the Board has determined that the
Company should act to assure such persons that there will be increased
certainty of such protection in the future.

 

WHEREAS, it is reasonable, prudent and
necessary for the Company contractually to obligate itself to indemnify, and to
advance expenses on behalf of, such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified.

 

WHEREAS. 
this Agreement is a supplement to and in furtherance of the Bylaws and
any resolutions adopted pursuant thereto, and shall not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

 

NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:

 

1.             Services
to the Company.  Indemnitee
will serve or continue to serve, at the will of the Company, as an officer,
director or key employee of the Company for so long, as Indemnitee is duly
elected or appointed or until Indemnitee tenders his or her resignation.

 

2.             Definitions.  As used in this Agreement:

 

(a)           A
“Change in Control” shall be deemed to occur upon the earliest to occur after
the date of this Agreement of any of the following events:

 

(i)            Acquisition
of Stock by Third Party.  Any Person (as
defined below) is or becomes the Beneficial Owner (as defined below), directly
or indirectly, of securities of the Company representing twenty percent (20%)
or more of the combined voting power of the Company’s then outstanding
securities;

 

(ii)           Change
in Board of Directors.  During any
period of two (2) consecutive years (not including any period prior to the
execution of this Agreement), individuals who at the beginning, of such period
constitute the Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a least a majority of the members of the Board;

 

(iii)          Corporate
Transactions.  The effective date of a
merger or consolidation of the Company with any other entity, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 51% of the combined
voting power of the voting securities of the surviving entity outstanding
immediately after such merger or consolidation and with the power to elect at
least a majority of the board of directors or other governing body of such
surviving entity;

 

(iv)          Liquidation.  The approval by the stockholders of the
Company of a complete liquidation of the Company or an agreement or series of
agreements for the sale or disposition by the Company of all or substantially
all of the Company’s assets; or

 

(v)           Other
Events.  There occurs any other event of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or a response to any similar schedule or form)
promulgated under the Exchange Act (as defined below), whether or not the
Company is then subject to such reporting requirement.

 

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(b)           Certain
Definitions.  For purposes of this
Agreement, the following terms shall have the following meanings:

 

(i)            “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(ii)           “Person”
shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange
Act; provided, however, that Person shall exclude (i) the Company, (ii) any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, and (iii) any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

 

(iii)          “Beneficial
Owner” shall have the meaning given to such term in Rule l3d-3 under the
Exchange Act; provided, however, that Beneficial Owner shall exclude any Person
otherwise becoming a Beneficial Owner by reason of the stockholders of the
Company approving a merger of the Company with another entity.

 

(iv)          “Corporate
Status” describes the status of a person who is or was a director, officer,
trustee, general partner, managing member, fiduciary, employee or agent of the
Company or of any other Enterprise (as defined below) which such person is or
was serving at the request of the Company.

 

(v)           “Disinterested
Director” means a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification is sought by Indemnitee.

 

(vi)          “Enterprise”
shall mean the Company and any other corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the request of the Company as a director,
officer, trustee, general partner, managing member, fiduciary, employee or
agent.

 

(vii)         “Expenses”
shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding. 
Expenses also shall include Expenses incurred in connection with any
appeal resulting from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond, supersede as bond, or
other appeal bond or its equivalent. 
Expenses, however, shall not include amounts paid in settlement by
Indemnitee or the amount of judgments or fines against Indemnitee.

 

(viii)        Reference
to “other enterprise” shall include employee benefit plans; references to
“fines” shall include any excise tax assessed with respect to any employee
benefit plan; references to “serving at the request of the Company” shall
include any service as a director, officer, which imposes duties on, or
involves services by, such director, employee or agent of the Company which
imposes duties on, or involves services by, such director, officer, employee or
agent with 

 

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respect to an employee benefit plan, its participants or beneficiaries;
and a person who acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a manner “not opposed
to the best interests of the Company” as referred to in this Agreement.

 

(ix)           The
term “Proceeding” shall include any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed
proceeding whether brought in the right of the Company or otherwise and whether
of a civil, criminal, administrative or investigative nature, in which
Indemnitee was, is or will be involved as a party or otherwise by reason of the
fact that Indemnitee is or was a director or officer of the Company, by reason
of any action taken by him or of any action on his part while acting as
director or officer of the Company, or by reason of the fact that he is or was
serving, at the request of the Company as a director, officer, trustee, general
partner, managing member, fiduciary, employee or agent of any other Enterprise,
in each case whether or not serving in such capacity at the time any liability
or expense is incurred for which indemnification, reimbursement, or advancement
of expenses can be provided under this Agreement.

 

(x)            “Independent
Counsel” means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past five years
has been, retained to represent (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning
the Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving,
rise to a claim for indemnification hereunder. 
Notwithstanding the foregoing, the term “Independent Counsel” shall not
include any person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s rights under this
Agreement.  The Company agrees to pay
the reasonable fees and expenses of the Independent Counsel referred to above
and to fully indemnify such counsel against any and all Expenses, claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.

 

3.             Indemnity in Third-Party Proceedings.  The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 3 if Indemnitee is, or is
threatened to be made, a party to or a participant (as a witness or otherwise)
in any Proceeding, other than a Proceeding by or in the right of the Company to
procure a judgment in its favor. 
Pursuant to this Section 3, Indemnitee shall be indemnified against all
Expenses, Judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection with
or in respect of such Expenses, Judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee or on his behalf in
connection with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company and, in the case of a
criminal proceeding had no reasonable cause to believe that his conduct was
unlawful.

 

4.             Indemnity in Proceedings by or in the Right of the
Company.  The Company shall
indemnify Indemnitee in accordance with the provisions of this Section 4 if
Indemnitee is, or is threatened to be made, a party to or a participant (as a
witness or otherwise) in any Proceeding by or 

 

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in the right of the Company to procure a judgment in its favor.
Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred by him or on his behalf in connection with
such Proceeding or any claim, issue or matter therein, if Indemnitee acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company.  No
indemnification for Expenses shall be made under this Section 4 in respect of
any claim, issue or matter as to which Indemnitee shall have been finally
adjudged by a court to be liable to the Company, unless and only to the extent
that any court in which the Proceeding was brought or the Delaware Court of
Chancery shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnification.

 

5.             Indemnification for Expenses of a Party Who is Wholly
or Partly Successful. 
Notwithstanding any other provisions of this Agreement, to the extent
that Indemnitee is a party to (or a participant in) and is successful, on the
merits or otherwise, in any Proceeding, or in defense of any claim, issue or
matter therein, in whole or in part, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by him in connection
therewith.  If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. 
If the Indemnitee is not wholly successful in such Proceeding, the
Company also shall indemnify Indemnitee against all Expenses reasonably
incurred in connection with a claim, issue or matter related to any claim,
issue, or matter on which the Indemnitee was successful.  For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding,
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.

 

6              Indemnification For Expenses of a Witness.  Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate Status,
a witness in any Proceeding to which Indemnitee is not a party, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.

 

7.             Additional Indemnification.

 

(a)           Notwithstanding
any limitation in Sections 3, 4, or 5, the Company shall indemnify Indemnitee
to the fullest extent permitted by law if Indemnitee is a party to or
threatened to be made a party to any Proceeding (including a Proceeding by or
in the right of the Company to procure a judgment in its favor) against all
Expenses, judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection with
or in respect of such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in connection with
the Proceeding.  No indemnity shall be
made under this Section 7(a) on account of Indemnitee’s conduct which constitutes
a breach of Indemnitee’s duty of loyalty to the Company or its stockholders or
is an act or omission not in good faith or which involves intentional
misconduct or a knowing violation of the law.

 

(b)           Notwithstanding
any limitation in Sections 3, 4, 5 or 7(a), the Company shall indemnify Indemnitee
to the fullest extent permitted by law if Indemnitee is a party to or
threatened 

 

5

 

to be made a party to any Proceeding (including a Proceeding by or in
the right of the Company to procure a judgment in its favor) against all
Expenses, Judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection with
or in respect of such Expenses, Judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in connection with
the Proceeding.

 

(c)           For
purposes of Sections 7(a) and 7(b), the meaning, of the phrase “to the fullest
extent permitted by law” shall include, but not be limited to:

 

(i)            to
the fullest extent permitted by the provision of the DGCL that authorizes or
contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL; and

 

(ii)           to
the fullest extent authorized or permitted by any amendments to or replacements
of the DGCL adopted after the date of this Agreement that increase the extent
to which on may indemnify its officers and directors.

 

8.             Exclusions.  Notwithstanding any provision in this Agreement, the Company
shall not be obligated under this Agreement to make any indemnity in connection
with any claim made against Indemnitee:

 

(a)           for
which payment has actually been received by or on behalf of Indemnitee under
any insurance policy or other indemnity provision, except with respect to any
excess beyond the amount actually received under any insurance policy or other
indemnity provision;

 

(b)           for
an accounting of profits made from the purchase and sale (or sale and purchase)
by Indemnitee of securities of the Company within the meaning of Section 16(b)
of the Exchange Act or similar provisions of state statutory law or common law;
or

 

(c)           except
as otherwise provided in Sections 13 (d)-(f) hereof, prior to a Change in
Control, in connection with any Proceeding (or any part of any Proceeding)
initiated by Indemnitee, including any Proceeding (or any part of any
Proceeding) initiated by Indemnitee against the Company or its directors,
officers, employees or other indemnitees, unless (i) the Board of Directors of
the Company authorized the Proceeding (or any part of any Proceeding) prior to
its initiation or (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable law.

 

9.             Advances of Expenses; Defense of Claim.

 

(a)           Notwithstanding
any provision of this Agreement to the contrary, the Company shall advance the
expenses incurred by Indemnitee in connection with any Proceeding within ten
(10) days after the receipt by the Company of a statement or statements
requesting such advances from time to time, whether prior to or after final
disposition of any Proceeding.  Advances
shall be unsecured and interest-free.  Advances
shall be made without regard to Indemnitee’s ability to repay the expenses and
without regard to Indemnitee’s ultimate entitlement to indemnification under
the other provisions of this Agreement. 
Advances shall include any and all reasonable 

 

6

 

Expenses incurred pursuing, an action to enforce this right of
advancement, including, Expenses incurred preparing and forwarding statements
to the Company to support the advances claimed.  The Indemnitee shall qualify for advances solely upon the
execution and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the extent that it is ultimately
determined that Indemnitee is not entitled to be indemnified by the
Company.  This Section 9(a) shall not
apply to any claim made by Indemnitee for which indemnity is excluded pursuant
to Section 8.

 

(b)           The
Company will be entitled to participate in the Proceeding at its own expense.

 

(c)           The
Company shall not settle any action, claim or Proceeding (in whole or in part)
which would impose any expense, judgment, fine, penalty or limitation on the
Indemnitee without the Indemnitee’s prior written consent.

 

10.           Procedure for Notification and Application for
Indemnification.

 

(a)           Within
sixty (60) days after the actual receipt by Indemnitee of notice that he or she
is a party to or a participant (as a witness or otherwise) in any Proceeding,
Indemnitee shall submit to the Company a written notice identifying the
Proceeding.  The omission by the
Indemnitee to notify the Company will not relieve the Company from any
liability which it may have to Indemnitee (i) otherwise than under this
Agreement, and (ii) under this Agreement only to the extent the Company can
establish that such omission to notify resulted in actual prejudice to the
Company.

 

(b)           Indemnitee
shall thereafter deliver to the Company a written application to indemnify
Indemnitee in accordance with this Agreement. 
Such application(s) may be delivered from time to time and at such
time(s) as Indemnitee deems appropriate in his or her sole discretion.  Following such a written application for
indemnification by Indemnitee, the Indemnitee’s entitlement to indemnification
shall be determined according to Section 11(a) of this Agreement.

 

11.           Procedure Upon Application for Indemnification.

 

(a)           Upon
written request by Indemnitee for indemnification pursuant to Section 10(b), a
determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall be made in the specific case: (i) by a majority vote
of the Disinterested Directors, even though less than a quorum of the Board; or
(ii) if so requested by the Indemnitee in his or her sole discretion, by
Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee.  If it is so determined
that Indemnitee is entitled to indemnification, payment to Indemnitee shall be
made within ten (10) days after such determination.  Indemnitee shall reasonably cooperate with the person, persons or
entity making such determination with respect to Indemnitee’s entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably available
to Indemnitee and reasonably necessary to such determination.  Any costs or expenses (including attorneys’
fees and disbursements) incurred by Indemnitee in so cooperating with the
person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee’s entitlement to 

 

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indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.

 

(b)           In
the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel
shall be selected as provided in this Section 11(b).  If a Change in Control shall not have occurred, the Independent
Counsel shall be selected by the Board of Directors, and the, Company shall
give written notice to Indemnitee advising him of the identity of the
Independent Counsel so selected.  If a
Change in Control shall have occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be
made by the Board of Directors, in which event the preceding sentence shall
apply), and Indemnitee shall give written notice to the Company advising it of
the identity of the Independent Counsel so selected.  In either event, Indemnitee or the Company, as the case may be,
may, within 10 days after such written notice of selection shall have been
received, deliver to the Company or to Indemnitee, as the case may be, a written
objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of “Independent Counsel” as defined in
Section 2 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected
shall act as Independent Counsel.  If
such written objection is so made and substantiated, the Independent Counsel so
selected may not serve as Independent Counsel unless and until such objection
is withdrawn or a court of competent jurisdiction has determined that such
objection is without merit.  If, within
20 days after submission by Indemnitee of a written request for indemnification
pursuant to Section 10(a) hereof, no Independent Counsel shall have been
selected and not objected to, either the Company or Indemnitee may petition a
court of competent jurisdiction for resolution of any objection which shall have
been made by the Company or Indemnitee to the other’s selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the Court or by such other person as the Court shall designate, and the
person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 11(a) hereof.  Upon the due commencement of any judicial
proceeding or arbitration pursuant to Section 13(a) of this Agreement,
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).

 

(c)           The
Company agrees to pay the reasonable fees of Independent Counsel and to fully
indemnify such Independent Counsel against any and all Expenses, claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.

 

12.           Presumptions and Effect of Certain Proceedings.

 

(a)           In
making a determination with respect to entitlement to indemnification
hereunder, the person or persons or entity making such determination shall
presume that Indemnitee is entitled to indemnification under this Agreement if
Indemnitee has submitted a request for indemnification in accordance with
Section 10(b) of this Agreement, and the Company shall have the burden of proof
to overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to that presumption.  Neither the failure of the Company
(including by its directors or independent legal counsel) to have made a
determination prior to the 

 

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commencement of any action pursuant to this Agreement that
indemnification is proper in the circumstances because Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Company
(including by its directors or independent legal counsel) that Indemnitee has
not met such applicable standard of conduct, shall be a defense to the action
or create a presumption that Indemnitee has not met the applicable standard of
conduct.

 

(b)           If
the person, persons or entity empowered or selected under Section 11 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within sixty (60) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be entitled
to such indemnification, absent (i) a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law; provided, however, that such 60-day period may be extended for a
reasonable time, not to exceed an additional thirty (30) days, if the person,
persons or entity making the determination with respect to entitlement to
indemnification in good faith requires such additional time for the obtaining,
or evaluating, of documentation and/or information relating thereto.

 

(c)           The
termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

(d)           Reliance
as Safe Harbor.  For purposes of any
determination of good faith, Indemnitee shall be deemed to have acted in good
faith if Indemnitee’s action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected by the Enterprise.  The provisions of this Section 12(d) shall
not be deemed to be exclusive or to limit in any way the other circumstances in
which the Indemnitee may be deemed or found to have met the applicable standard
of conduct set forth in this Agreement.

 

(e)           Actions
of Others.  The knowledge and/or
actions, or failure to act, of any other director, trustee, partner, managing
member, fiduciary, officer, agent or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.

 

13.           Remedies of Indemnitee.

 

(a)           In
the event that (i) a determination is made pursuant to Section 11 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement 

 

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of Expenses is not timely made pursuant to Section 9 of this Agreement,
(iii) no determination of entitlement to indemnification shall have been made
pursuant to Section 11(a) of this Agreement within 45 days after receipt by the
Company of the request for indemnification, (iv) payment of indemnification is
not made pursuant to Section 5, 6, 7 or the last sentence of Section 11(a) of
this Agreement within ten (10) days after receipt by the Company of a written
request therefor, or (v) payment of indemnification pursuant to Section 3 or 4
of this Agreement is not made within ten (10) days after a determination has
been made that Indemnitee is entitled to indemnification, Indemnitee shall be
entitled to an adjudication by a court of his entitlement to such
indemnification or advancement of Expenses. 
Alternatively, Indemnitee, at his option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association.  The Company shall not oppose Indemnitee’s
right to seek any such adjudication or award in arbitration.

 

(b)           In
the event that a determination shall have been made pursuant to Section 11(a)
of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 13 shall
be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination.  In any judicial
proceeding or arbitration commenced pursuant to this Section 1.3 the Company
shall have the burden of proving Indemnitee is not entitled to indemnification
or advancement of Expenses, as the case may be, and the Company may not refer
to or introduce into evidence any determination pursuant to Section 11(a) of
this Agreement adverse to Indemnitee for any purpose.  If Indemnitee commences a judicial proceeding or arbitration
pursuant to this Section 13, Indemnitee shall not be required to reimburse the
Company for any advances pursuant to Section 9 until a final determination is
made with respect to Indemnitee’s entitlement to indemnification (as to which
all rights of appeal have been exhausted or lapsed).

 

(c)           If
a determination shall have been made pursuant to Section 11(a) of this
Agreement that Indemnitee is entitled to indemnification, the Company shall be
bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 13, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law.

 

(d)           In
the event that Indemnitee, pursuant to this Section 13, seeks a judicial
adjudication of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be entitled to
recover from the Company, and shall be indemnified by the Company against, any
and all Expenses actually and reasonably incurred by him in such judicial
adjudication or arbitration.  If it
shall be determined in said judicial adjudication or arbitration that
Indemnitee is entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the Indemnitee shall be entitled to recover
from the Company, and shall be indemnified by the Company against, any and all
Expenses reasonably incurred by Indemnitee in connection with such judicial
adjudication or arbitration.

 

(e)           The
Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 13 that the procedures and
presumptions of this 

 

10

 

Agreement are not valid, binding and enforceable and shall stipulate in
any such court or before any such arbitrator that the Company is bound by all
the provisions of this Agreement.

 

(f)            The
Company shall indemnify Indemnitee to the fullest extent permitted by law
against all Expenses and, if requested by Indemnitee, shall (within ten (10)
days after the Company’s receipt of such written request) advance such Expenses
to Indemnitee, which are incurred by Indemnitee in connection with any judicial
proceeding or arbitration brought by Indemnitee for (i) indemnification or
advances of Expenses by the Company under the Agreement or any other agreement
or provision of the Company’s Certificate of Incorporation or Bylaws now or
hereafter in effect or (ii) recovery or advances under any insurance policy
maintained by any person for the benefit of Indemnitee, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification,
advance or insurance recovery, as the case may be.

 

14.           Non-exclusivity; Survival of Rights, Insurance;
Subrogation.

 

(a)           The
rights of indemnification and to receive advancement of Expenses as provided by
this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Company’s
Certificate of Incorporation, the Company’s Bylaws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit
or restrict any right of Indemnitee under this Agreement in respect of any
action taken or omitted by such Indemnitee in his Corporate Status prior to
such amendment, alteration or repeal. 
To the extent that a change in Delaware law, whether by statute or
judicial decision, permits greater indemnification or advancement of Expenses
than would be afforded currently under the Company’s Bylaws and this Agreement,
it is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every other right
and remedy shall be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.

 

(b)           To
the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, trustees, partners, managing
members, fiduciaries, employees, or agents of the Company or of any other
Enterprise which such person serves at the request of the Company.  Indemnitee shall be covered by such policy or
policies in accordance with its or their terms to the maximum extent of the
coverage available for any such director, trustee, partner, managing member,
fiduciary, officer, employee or agent under such policy or policies.  If, at the time the Company receives notice
from any source of a Proceeding as to which Indemnitee is a party or a
participant (as a witness or otherwise), the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of such
Proceeding to the insurers in accordance with the procedures set forth in the
respective policies.  The Company shall
thereafter take all necessary or desirable action to cause such insurers to
pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding
in accordance with the terms of such policies.

 

11

 

(c)           In
the event of any payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of Indemnitee,
who shall execute all papers required and take all action necessary to secure
such rights, including execution of such documents as are necessary to enable
the Company to bring suit to enforce such rights.

 

(d)           The
Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder)
hereunder if and to the extent that Indemnitee has otherwise actually received
such payment under any insurance policy, contract, agreement or otherwise.

 

(e)           The
Company’s obligation to indemnification, or advance Expenses hereunder to
Indemnitee who is or was serving at the request of the Company as a director,
officer, trustee, partner.  managing
member.  fiduciary, employee or agent of
any other Enterprise shall be reduced by any amount Indemnitee has actually
received as indemnification or advancement of expenses from such Enterprise.

 

15.           Duration of Agreement.  This Agreement shall continue until and
terminate upon the later of: (a) ten (10) years after the date that Indemnitee
shall have ceased to serve as a director or officer of the Company or as a
director, officer, trustee, partner, managing, member, fiduciary, employee or
agent of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which Indemnitee served at the request of the
Company, or (b) one (1) year after the final termination of any Proceeding
(including any rights of appeal thereto) then pending in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13
of this Agreement relating thereto (including any rights of appeal of any
Section 13 Proceeding).

 

16.           Severability.  If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law, (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable law and to
give the maximum effect to the intent of the parties hereto, and (c) to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of any  Section
of this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.

 

17.           Enforcement and Binding Effect.

 

(a)           The
Company expressly confirms and agrees that it has entered into this Agreement
and assumed the obligations imposed on it hereby in order to induce Indemnitee
to serve as a director or officer of the Company, and the Company acknowledges
that Indemnitee is relying upon this Agreement in serving as a director or
officer of the Company.

 

12

 

(b)           This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with
respect to the subject matter hereof.

 

(c)           The
indemnification and advancement of expenses provided by, or granted pursuant to
this Agreement shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

 

18.           Modification and Waiver.  No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the parties
hereto.  No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions of this Agreement nor shall any waiver constitute a
continuing waiver.

 

19.           Notice by Indemnitee.  Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any
Proceeding, or matter which may be subject to indemnification or advancement of
Expenses covered hereunder.  The failure
of Indemnitee to so notify, the Company shall not relieve the Company of any obligation
which it may have to the Indemnitee under this Agreement or otherwise.

 

20.           Notices. 
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duty given (a)
if delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, or (b) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:

 

(a)           If
to Indemnitee, at the address indicated on the signature page of this
Agreement, or such other address as Indemnitee shall provide in writing to the
Company.

 

(b)           If to the Company to:

 

Carriage
Services, Inc.

1900 St. James
Place - 4th Floor

Houston,
Texas   77056

Attn:  President

 

or to any other address as may have been
furnished to Indemnitee in writing by the Company.

 

21.           Contribution.  To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to Indemnitee for
any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall
contribute to the amount incurred by Indemnitee, whether for judgments, fines,
penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses,
in connection with any claim relating to an indemnifiable event under this
Agreement, in such proportion as is deemed fair and reasonable in light of all
of the circumstances of such Proceeding in order to reflect (i) the relative
benefits received by the Company 

 

13

 

and Indemnitee as a result of the event(s) and/or transaction(s) giving
cause to such Proceeding; and/or (ii) the relative fault of the Company (and
its directors, officers, employees and agents) and Indemnitee in connection
with such event(s) and/or transaction(s).

 

22.           Applicable Law and Consent to Jurisdiction.  This Agreement and the legal relations among
the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws
rules.  Except with respect to any
arbitration commenced by Indemnitee pursuant to Section 10(a) of this
Agreement, the Company and Indemnitee hereby irrevocably and unconditionally
(i) agree that any action or proceeding arising out of or in connection with
this Agreement shall be brought only in the Chancery Court of the State of
Delaware (the “Delaware Court”), and not in any other state or federal court in
the United States of America or any court in any other country, (ii) consent to
submit to the exclusive jurisdiction of the Delaware Court for purposes of any
action or proceeding arising out of or in connection with this Agreement, (iii)
irrevocably appoint, to the extent such party is not a resident of the State of
Delaware, The Corporation Trust Company as its agent in the State of Delaware
as such party’s agent for acceptance of legal process in connection with any
such action or proceeding, against such party with the same legal force and
validity as if served upon such party personally within the State of Delaware,
(iv) waive any objection to the laying of venue of any such action or
proceeding in the Delaware Court, and (v) waive, and agree not to plead or to
make, any claim that any such action or proceeding brought in the Delaware
Court has been brought in an improper or inconvenient forum.

 

23.           Identical Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same
Agreement.  Only one such counterpart
signed by the party against whom enforceability is sought needs to be produced
to evidence the existence of this Agreement.

 

24.           Miscellaneous.  Use of the masculine pronoun shall be deemed to include usage of
the feminine pronoun where appropriate. 
The headings of the paragraphs of this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement or to affect
the construction thereof

 

IN WITNESS WHEREOF, the parties have entered
into this Agreement on the dates set forth below their signatures but made
effective for all purposes as of the day and year first above written.

 

	
  CARRIAGE SERVICES, INC.

  	
  INDEMNITEE

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Melvin C. Payne

  	
   

  	
  /s/ Mark Groeneman

  
	
   

  	
  Melvin C. Payne,

  	
  Mark Groeneman

  
	
   

  	
  Chief Executive Officer

  	
  Address:

  	
  3906 Valley Green Ct 

  
	
   

  	
   

  	
  Houston, Texas  77059

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  August 13, 2003

  	
   

  	
  Date

  	
  August 13, 2003

  	
   

  
									

 

14Exhibit 10.5

 

INDEMNITY AGREEMENT

 

This Indemnity Agreement (“Agreement”) is
made effective as of the 13th day of May, 2003 by and between Carriage
Services, Inc., a Delaware corporation (the “Company”), and George J. Klug
(“Indemnitee”).

 

RECITALS

 

WHEREAS, highly competent persons have become
more reluctant to serve publicly held corporations as directors or in other
capacities unless they are provided with adequate protection through insurance
or adequate indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on behalf of the
corporation.

 

WHEREAS, the Board of Directors of the
Company (the “Board”) has determined that, in order to attract and retain
qualified individuals, the Company will attempt to maintain on an ongoing
basis, at its sole expense, liability insurance to protect persons serving the
Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has
been a customary and widespread practice among United States based corporations
and other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future at
higher premiums and with more exclusions. 
At the same time, directors, officers, and other persons in service to
corporations or business enterprises are being increasingly subjected to
expensive and time-consuming litigation relating to, among other things,
matters that traditionally would have been brought only against the corporation
or business enterprise itself.  The
Amended and Restated Bylaws of the Company (“Bylaws”) require indemnification
of the officers and directors of the Company. 
Indemnitee may also be entitled to indemnification pursuant to the Delaware
General Corporation Law (“DGCL”).  The
Bylaws and the DGCL expressly provide that the indemnification provisions set
forth therein are not exclusive, and thereby contemplate that contracts may be
entered into between the Company and members of the Board, officers and other
persons with respect to indemnification.

 

WHEREAS, the uncertainties relating to such
insurance and to indemnification have increased the difficulty of attracting
and retaining such persons.

 

WHEREAS, the Board has determined that the
Company should act to assure such persons that there will be increased
certainty of such protection in the future.

 

WHEREAS, it is reasonable, prudent and
necessary for the Company contractually to obligate itself to indemnify, and to
advance expenses on behalf of, such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified.

 

WHEREAS. 
this Agreement is a supplement to and in furtherance of the Bylaws and
any resolutions adopted pursuant thereto, and shall not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

 

NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:

 

1.             Services
to the Company.  Indemnitee
will serve or continue to serve, at the will of the Company, as an officer,
director or key employee of the Company for so long, as Indemnitee is duly
elected or appointed or until Indemnitee tenders his or her resignation.

 

2.             Definitions.  As used in this Agreement:

 

(a)           A
“Change in Control” shall be deemed to occur upon the earliest to occur after
the date of this Agreement of any of the following events:

 

(i)            Acquisition
of Stock by Third Party.  Any Person (as
defined below) is or becomes the Beneficial Owner (as defined below), directly
or indirectly, of securities of the Company representing twenty percent (20%)
or more of the combined voting power of the Company’s then outstanding
securities;

 

(ii)           Change
in Board of Directors.  During any
period of two (2) consecutive years (not including any period prior to the
execution of this Agreement), individuals who at the beginning, of such period
constitute the Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a least a majority of the members of the Board;

 

(iii)          Corporate
Transactions.  The effective date of a
merger or consolidation of the Company with any other entity, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 51% of the combined
voting power of the voting securities of the surviving entity outstanding
immediately after such merger or consolidation and with the power to elect at
least a majority of the board of directors or other governing body of such
surviving entity;

 

(iv)          Liquidation.  The approval by the stockholders of the
Company of a complete liquidation of the Company or an agreement or series of
agreements for the sale or disposition by the Company of all or substantially
all of the Company’s assets; or

 

(v)           Other
Events.  There occurs any other event of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or a response to any similar schedule or form)
promulgated under the Exchange Act (as defined below), whether or not the
Company is then subject to such reporting requirement.

 

2

 

(b)           Certain
Definitions.  For purposes of this
Agreement, the following terms shall have the following meanings:

 

(i)            “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(ii)           “Person”
shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange
Act; provided, however, that Person shall exclude (i) the Company, (ii) any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, and (iii) any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

 

(iii)          “Beneficial
Owner” shall have the meaning given to such term in Rule l3d-3 under the
Exchange Act; provided, however, that Beneficial Owner shall exclude any Person
otherwise becoming a Beneficial Owner by reason of the stockholders of the
Company approving a merger of the Company with another entity.

 

(iv)          “Corporate
Status” describes the status of a person who is or was a director, officer,
trustee, general partner, managing member, fiduciary, employee or agent of the
Company or of any other Enterprise (as defined below) which such person is or
was serving at the request of the Company.

 

(v)           “Disinterested
Director” means a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification is sought by Indemnitee.

 

(vi)          “Enterprise”
shall mean the Company and any other corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the request of the Company as a director,
officer, trustee, general partner, managing member, fiduciary, employee or
agent.

 

(vii)         “Expenses”
shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding. 
Expenses also shall include Expenses incurred in connection with any
appeal resulting from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond, supersede as bond, or
other appeal bond or its equivalent. 
Expenses, however, shall not include amounts paid in settlement by
Indemnitee or the amount of judgments or fines against Indemnitee.

 

(viii)        Reference
to “other enterprise” shall include employee benefit plans; references to
“fines” shall include any excise tax assessed with respect to any employee
benefit plan; references to “serving at the request of the Company” shall
include any service as a director, officer, which imposes duties on, or
involves services by, such director, employee or agent of the Company which
imposes duties on, or involves services by, such director, officer, employee or
agent with 

 

3

 

respect to an employee benefit plan, its participants or beneficiaries;
and a person who acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a manner “not opposed
to the best interests of the Company” as referred to in this Agreement.

 

(ix)           The
term “Proceeding” shall include any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed
proceeding whether brought in the right of the Company or otherwise and whether
of a civil, criminal, administrative or investigative nature, in which
Indemnitee was, is or will be involved as a party or otherwise by reason of the
fact that Indemnitee is or was a director or officer of the Company, by reason
of any action taken by him or of any action on his part while acting as
director or officer of the Company, or by reason of the fact that he is or was
serving, at the request of the Company as a director, officer, trustee, general
partner, managing member, fiduciary, employee or agent of any other Enterprise,
in each case whether or not serving in such capacity at the time any liability
or expense is incurred for which indemnification, reimbursement, or advancement
of expenses can be provided under this Agreement.

 

(x)            “Independent
Counsel” means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past five years
has been, retained to represent (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning
the Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving,
rise to a claim for indemnification hereunder. 
Notwithstanding the foregoing, the term “Independent Counsel” shall not
include any person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s rights under this
Agreement.  The Company agrees to pay
the reasonable fees and expenses of the Independent Counsel referred to above
and to fully indemnify such counsel against any and all Expenses, claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.

 

3.             Indemnity in Third-Party Proceedings.  The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 3 if Indemnitee is, or is
threatened to be made, a party to or a participant (as a witness or otherwise)
in any Proceeding, other than a Proceeding by or in the right of the Company to
procure a judgment in its favor. 
Pursuant to this Section 3, Indemnitee shall be indemnified against all
Expenses, Judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection with
or in respect of such Expenses, Judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee or on his behalf in
connection with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company and, in the case of a
criminal proceeding had no reasonable cause to believe that his conduct was
unlawful.

 

4.             Indemnity in Proceedings by or in the Right of the
Company.  The Company shall
indemnify Indemnitee in accordance with the provisions of this Section 4 if
Indemnitee is, or is threatened to be made, a party to or a participant (as a
witness or otherwise) in any Proceeding by or 

 

4

 

in the right of the Company to procure a judgment in its favor.
Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred by him or on his behalf in connection with
such Proceeding or any claim, issue or matter therein, if Indemnitee acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company.  No
indemnification for Expenses shall be made under this Section 4 in respect of
any claim, issue or matter as to which Indemnitee shall have been finally
adjudged by a court to be liable to the Company, unless and only to the extent
that any court in which the Proceeding was brought or the Delaware Court of
Chancery shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnification.

 

5.             Indemnification for Expenses of a Party Who is Wholly
or Partly Successful. 
Notwithstanding any other provisions of this Agreement, to the extent
that Indemnitee is a party to (or a participant in) and is successful, on the
merits or otherwise, in any Proceeding, or in defense of any claim, issue or
matter therein, in whole or in part, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by him in connection
therewith.  If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. 
If the Indemnitee is not wholly successful in such Proceeding, the
Company also shall indemnify Indemnitee against all Expenses reasonably
incurred in connection with a claim, issue or matter related to any claim,
issue, or matter on which the Indemnitee was successful.  For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding,
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.

 

6              Indemnification For Expenses of a Witness.  Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate Status,
a witness in any Proceeding to which Indemnitee is not a party, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.

 

7.             Additional Indemnification.

 

(a)           Notwithstanding
any limitation in Sections 3, 4, or 5, the Company shall indemnify Indemnitee
to the fullest extent permitted by law if Indemnitee is a party to or
threatened to be made a party to any Proceeding (including a Proceeding by or
in the right of the Company to procure a judgment in its favor) against all
Expenses, judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection with
or in respect of such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in connection with
the Proceeding.  No indemnity shall be
made under this Section 7(a) on account of Indemnitee’s conduct which constitutes
a breach of Indemnitee’s duty of loyalty to the Company or its stockholders or
is an act or omission not in good faith or which involves intentional
misconduct or a knowing violation of the law.

 

(b)           Notwithstanding
any limitation in Sections 3, 4, 5 or 7(a), the Company shall indemnify Indemnitee
to the fullest extent permitted by law if Indemnitee is a party to or
threatened 

 

5

 

to be made a party to any Proceeding (including a Proceeding by or in
the right of the Company to procure a judgment in its favor) against all
Expenses, Judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection with
or in respect of such Expenses, Judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in connection with
the Proceeding.

 

(c)           For
purposes of Sections 7(a) and 7(b), the meaning, of the phrase “to the fullest
extent permitted by law” shall include, but not be limited to:

 

(i)            to
the fullest extent permitted by the provision of the DGCL that authorizes or
contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL; and

 

(ii)           to
the fullest extent authorized or permitted by any amendments to or replacements
of the DGCL adopted after the date of this Agreement that increase the extent
to which on may indemnify its officers and directors.

 

8.             Exclusions.  Notwithstanding any provision in this Agreement, the Company
shall not be obligated under this Agreement to make any indemnity in connection
with any claim made against Indemnitee:

 

(a)           for
which payment has actually been received by or on behalf of Indemnitee under
any insurance policy or other indemnity provision, except with respect to any
excess beyond the amount actually received under any insurance policy or other
indemnity provision;

 

(b)           for
an accounting of profits made from the purchase and sale (or sale and purchase)
by Indemnitee of securities of the Company within the meaning of Section 16(b)
of the Exchange Act or similar provisions of state statutory law or common law;
or

 

(c)           except
as otherwise provided in Sections 13 (d)-(f) hereof, prior to a Change in
Control, in connection with any Proceeding (or any part of any Proceeding)
initiated by Indemnitee, including any Proceeding (or any part of any
Proceeding) initiated by Indemnitee against the Company or its directors,
officers, employees or other indemnitees, unless (i) the Board of Directors of
the Company authorized the Proceeding (or any part of any Proceeding) prior to
its initiation or (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable law.

 

9.             Advances of Expenses; Defense of Claim.

 

(a)           Notwithstanding
any provision of this Agreement to the contrary, the Company shall advance the
expenses incurred by Indemnitee in connection with any Proceeding within ten
(10) days after the receipt by the Company of a statement or statements
requesting such advances from time to time, whether prior to or after final
disposition of any Proceeding.  Advances
shall be unsecured and interest-free.  Advances
shall be made without regard to Indemnitee’s ability to repay the expenses and
without regard to Indemnitee’s ultimate entitlement to indemnification under
the other provisions of this Agreement. 
Advances shall include any and all reasonable 

 

6

 

Expenses incurred pursuing, an action to enforce this right of
advancement, including, Expenses incurred preparing and forwarding statements
to the Company to support the advances claimed.  The Indemnitee shall qualify for advances solely upon the
execution and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the extent that it is ultimately
determined that Indemnitee is not entitled to be indemnified by the
Company.  This Section 9(a) shall not
apply to any claim made by Indemnitee for which indemnity is excluded pursuant
to Section 8.

 

(b)           The
Company will be entitled to participate in the Proceeding at its own expense.

 

(c)           The
Company shall not settle any action, claim or Proceeding (in whole or in part)
which would impose any expense, judgment, fine, penalty or limitation on the
Indemnitee without the Indemnitee’s prior written consent.

 

10.           Procedure for Notification and Application for
Indemnification.

 

(a)           Within
sixty (60) days after the actual receipt by Indemnitee of notice that he or she
is a party to or a participant (as a witness or otherwise) in any Proceeding,
Indemnitee shall submit to the Company a written notice identifying the
Proceeding.  The omission by the
Indemnitee to notify the Company will not relieve the Company from any
liability which it may have to Indemnitee (i) otherwise than under this
Agreement, and (ii) under this Agreement only to the extent the Company can
establish that such omission to notify resulted in actual prejudice to the
Company.

 

(b)           Indemnitee
shall thereafter deliver to the Company a written application to indemnify
Indemnitee in accordance with this Agreement. 
Such application(s) may be delivered from time to time and at such
time(s) as Indemnitee deems appropriate in his or her sole discretion.  Following such a written application for
indemnification by Indemnitee, the Indemnitee’s entitlement to indemnification
shall be determined according to Section 11(a) of this Agreement.

 

11.           Procedure Upon Application for Indemnification.

 

(a)           Upon
written request by Indemnitee for indemnification pursuant to Section 10(b), a
determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall be made in the specific case: (i) by a majority vote
of the Disinterested Directors, even though less than a quorum of the Board; or
(ii) if so requested by the Indemnitee in his or her sole discretion, by
Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee.  If it is so determined
that Indemnitee is entitled to indemnification, payment to Indemnitee shall be
made within ten (10) days after such determination.  Indemnitee shall reasonably cooperate with the person, persons or
entity making such determination with respect to Indemnitee’s entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably available
to Indemnitee and reasonably necessary to such determination.  Any costs or expenses (including attorneys’
fees and disbursements) incurred by Indemnitee in so cooperating with the
person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee’s entitlement to 

 

7

 

indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.

 

(b)           In
the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel
shall be selected as provided in this Section 11(b).  If a Change in Control shall not have occurred, the Independent
Counsel shall be selected by the Board of Directors, and the, Company shall
give written notice to Indemnitee advising him of the identity of the
Independent Counsel so selected.  If a
Change in Control shall have occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be
made by the Board of Directors, in which event the preceding sentence shall
apply), and Indemnitee shall give written notice to the Company advising it of
the identity of the Independent Counsel so selected.  In either event, Indemnitee or the Company, as the case may be,
may, within 10 days after such written notice of selection shall have been
received, deliver to the Company or to Indemnitee, as the case may be, a written
objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of “Independent Counsel” as defined in
Section 2 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected
shall act as Independent Counsel.  If
such written objection is so made and substantiated, the Independent Counsel so
selected may not serve as Independent Counsel unless and until such objection
is withdrawn or a court of competent jurisdiction has determined that such
objection is without merit.  If, within
20 days after submission by Indemnitee of a written request for indemnification
pursuant to Section 10(a) hereof, no Independent Counsel shall have been
selected and not objected to, either the Company or Indemnitee may petition a
court of competent jurisdiction for resolution of any objection which shall have
been made by the Company or Indemnitee to the other’s selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the Court or by such other person as the Court shall designate, and the
person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 11(a) hereof.  Upon the due commencement of any judicial
proceeding or arbitration pursuant to Section 13(a) of this Agreement,
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).

 

(c)           The
Company agrees to pay the reasonable fees of Independent Counsel and to fully
indemnify such Independent Counsel against any and all Expenses, claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.

 

12.           Presumptions and Effect of Certain Proceedings.

 

(a)           In
making a determination with respect to entitlement to indemnification
hereunder, the person or persons or entity making such determination shall
presume that Indemnitee is entitled to indemnification under this Agreement if
Indemnitee has submitted a request for indemnification in accordance with
Section 10(b) of this Agreement, and the Company shall have the burden of proof
to overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to that presumption.  Neither the failure of the Company
(including by its directors or independent legal counsel) to have made a
determination prior to the 

 

8

 

commencement of any action pursuant to this Agreement that
indemnification is proper in the circumstances because Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Company
(including by its directors or independent legal counsel) that Indemnitee has
not met such applicable standard of conduct, shall be a defense to the action
or create a presumption that Indemnitee has not met the applicable standard of
conduct.

 

(b)           If
the person, persons or entity empowered or selected under Section 11 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within sixty (60) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be entitled
to such indemnification, absent (i) a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law; provided, however, that such 60-day period may be extended for a
reasonable time, not to exceed an additional thirty (30) days, if the person,
persons or entity making the determination with respect to entitlement to
indemnification in good faith requires such additional time for the obtaining,
or evaluating, of documentation and/or information relating thereto.

 

(c)           The
termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

(d)           Reliance
as Safe Harbor.  For purposes of any
determination of good faith, Indemnitee shall be deemed to have acted in good
faith if Indemnitee’s action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected by the Enterprise.  The provisions of this Section 12(d) shall
not be deemed to be exclusive or to limit in any way the other circumstances in
which the Indemnitee may be deemed or found to have met the applicable standard
of conduct set forth in this Agreement.

 

(e)           Actions
of Others.  The knowledge and/or
actions, or failure to act, of any other director, trustee, partner, managing
member, fiduciary, officer, agent or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.

 

13.           Remedies of Indemnitee.

 

(a)           In
the event that (i) a determination is made pursuant to Section 11 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement 

 

9

 

of Expenses is not timely made pursuant to Section 9 of this Agreement,
(iii) no determination of entitlement to indemnification shall have been made
pursuant to Section 11(a) of this Agreement within 45 days after receipt by the
Company of the request for indemnification, (iv) payment of indemnification is
not made pursuant to Section 5, 6, 7 or the last sentence of Section 11(a) of
this Agreement within ten (10) days after receipt by the Company of a written
request therefor, or (v) payment of indemnification pursuant to Section 3 or 4
of this Agreement is not made within ten (10) days after a determination has
been made that Indemnitee is entitled to indemnification, Indemnitee shall be
entitled to an adjudication by a court of his entitlement to such
indemnification or advancement of Expenses. 
Alternatively, Indemnitee, at his option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association.  The Company shall not oppose Indemnitee’s
right to seek any such adjudication or award in arbitration.

 

(b)           In
the event that a determination shall have been made pursuant to Section 11(a)
of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 13 shall
be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination.  In any judicial
proceeding or arbitration commenced pursuant to this Section 1.3 the Company
shall have the burden of proving Indemnitee is not entitled to indemnification
or advancement of Expenses, as the case may be, and the Company may not refer
to or introduce into evidence any determination pursuant to Section 11(a) of
this Agreement adverse to Indemnitee for any purpose.  If Indemnitee commences a judicial proceeding or arbitration
pursuant to this Section 13, Indemnitee shall not be required to reimburse the
Company for any advances pursuant to Section 9 until a final determination is
made with respect to Indemnitee’s entitlement to indemnification (as to which
all rights of appeal have been exhausted or lapsed).

 

(c)           If
a determination shall have been made pursuant to Section 11(a) of this
Agreement that Indemnitee is entitled to indemnification, the Company shall be
bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 13, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law.

 

(d)           In
the event that Indemnitee, pursuant to this Section 13, seeks a judicial
adjudication of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be entitled to
recover from the Company, and shall be indemnified by the Company against, any
and all Expenses actually and reasonably incurred by him in such judicial
adjudication or arbitration.  If it
shall be determined in said judicial adjudication or arbitration that
Indemnitee is entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the Indemnitee shall be entitled to recover
from the Company, and shall be indemnified by the Company against, any and all
Expenses reasonably incurred by Indemnitee in connection with such judicial
adjudication or arbitration.

 

(e)           The
Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 13 that the procedures and
presumptions of this 

 

10

 

Agreement are not valid, binding and enforceable and shall stipulate in
any such court or before any such arbitrator that the Company is bound by all
the provisions of this Agreement.

 

(f)            The
Company shall indemnify Indemnitee to the fullest extent permitted by law
against all Expenses and, if requested by Indemnitee, shall (within ten (10)
days after the Company’s receipt of such written request) advance such Expenses
to Indemnitee, which are incurred by Indemnitee in connection with any judicial
proceeding or arbitration brought by Indemnitee for (i) indemnification or
advances of Expenses by the Company under the Agreement or any other agreement
or provision of the Company’s Certificate of Incorporation or Bylaws now or
hereafter in effect or (ii) recovery or advances under any insurance policy
maintained by any person for the benefit of Indemnitee, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification,
advance or insurance recovery, as the case may be.

 

14.           Non-exclusivity; Survival of Rights, Insurance;
Subrogation.

 

(a)           The
rights of indemnification and to receive advancement of Expenses as provided by
this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Company’s
Certificate of Incorporation, the Company’s Bylaws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit
or restrict any right of Indemnitee under this Agreement in respect of any
action taken or omitted by such Indemnitee in his Corporate Status prior to
such amendment, alteration or repeal. 
To the extent that a change in Delaware law, whether by statute or
judicial decision, permits greater indemnification or advancement of Expenses
than would be afforded currently under the Company’s Bylaws and this Agreement,
it is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every other right
and remedy shall be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.

 

(b)           To
the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, trustees, partners, managing
members, fiduciaries, employees, or agents of the Company or of any other
Enterprise which such person serves at the request of the Company.  Indemnitee shall be covered by such policy or
policies in accordance with its or their terms to the maximum extent of the
coverage available for any such director, trustee, partner, managing member,
fiduciary, officer, employee or agent under such policy or policies.  If, at the time the Company receives notice
from any source of a Proceeding as to which Indemnitee is a party or a
participant (as a witness or otherwise), the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of such
Proceeding to the insurers in accordance with the procedures set forth in the
respective policies.  The Company shall
thereafter take all necessary or desirable action to cause such insurers to
pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding
in accordance with the terms of such policies.

 

11

 

(c)           In
the event of any payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of Indemnitee,
who shall execute all papers required and take all action necessary to secure
such rights, including execution of such documents as are necessary to enable
the Company to bring suit to enforce such rights.

 

(d)           The
Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder)
hereunder if and to the extent that Indemnitee has otherwise actually received
such payment under any insurance policy, contract, agreement or otherwise.

 

(e)           The
Company’s obligation to indemnification, or advance Expenses hereunder to
Indemnitee who is or was serving at the request of the Company as a director,
officer, trustee, partner.  managing
member.  fiduciary, employee or agent of
any other Enterprise shall be reduced by any amount Indemnitee has actually
received as indemnification or advancement of expenses from such Enterprise.

 

15.           Duration of Agreement.  This Agreement shall continue until and
terminate upon the later of: (a) ten (10) years after the date that Indemnitee
shall have ceased to serve as a director or officer of the Company or as a
director, officer, trustee, partner, managing, member, fiduciary, employee or
agent of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which Indemnitee served at the request of the
Company, or (b) one (1) year after the final termination of any Proceeding
(including any rights of appeal thereto) then pending in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13
of this Agreement relating thereto (including any rights of appeal of any
Section 13 Proceeding).

 

16.           Severability.  If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law, (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable law and to
give the maximum effect to the intent of the parties hereto, and (c) to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of any  Section
of this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.

 

17.           Enforcement and Binding Effect.

 

(a)           The
Company expressly confirms and agrees that it has entered into this Agreement
and assumed the obligations imposed on it hereby in order to induce Indemnitee
to serve as a director or officer of the Company, and the Company acknowledges
that Indemnitee is relying upon this Agreement in serving as a director or
officer of the Company.

 

12

 

(b)           This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with
respect to the subject matter hereof.

 

(c)           The
indemnification and advancement of expenses provided by, or granted pursuant to
this Agreement shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

 

18.           Modification and Waiver.  No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the parties
hereto.  No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions of this Agreement nor shall any waiver constitute a
continuing waiver.

 

19.           Notice by Indemnitee.  Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any
Proceeding, or matter which may be subject to indemnification or advancement of
Expenses covered hereunder.  The failure
of Indemnitee to so notify, the Company shall not relieve the Company of any obligation
which it may have to the Indemnitee under this Agreement or otherwise.

 

20.           Notices. 
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duty given (a)
if delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, or (b) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:

 

(a)           If
to Indemnitee, at the address indicated on the signature page of this
Agreement, or such other address as Indemnitee shall provide in writing to the
Company.

 

(b)           If to the Company to:

 

Carriage
Services, Inc.

1900 St. James
Place - 4th Floor

Houston,
Texas   77056

Attn:  President

 

or to any other address as may have been
furnished to Indemnitee in writing by the Company.

 

21.           Contribution.  To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to Indemnitee for
any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall
contribute to the amount incurred by Indemnitee, whether for judgments, fines,
penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses,
in connection with any claim relating to an indemnifiable event under this
Agreement, in such proportion as is deemed fair and reasonable in light of all
of the circumstances of such Proceeding in order to reflect (i) the relative
benefits received by the Company 

 

13

 

and Indemnitee as a result of the event(s) and/or transaction(s) giving
cause to such Proceeding; and/or (ii) the relative fault of the Company (and
its directors, officers, employees and agents) and Indemnitee in connection
with such event(s) and/or transaction(s).

 

22.           Applicable Law and Consent to Jurisdiction.  This Agreement and the legal relations among
the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws
rules.  Except with respect to any
arbitration commenced by Indemnitee pursuant to Section 10(a) of this
Agreement, the Company and Indemnitee hereby irrevocably and unconditionally
(i) agree that any action or proceeding arising out of or in connection with
this Agreement shall be brought only in the Chancery Court of the State of
Delaware (the “Delaware Court”), and not in any other state or federal court in
the United States of America or any court in any other country, (ii) consent to
submit to the exclusive jurisdiction of the Delaware Court for purposes of any
action or proceeding arising out of or in connection with this Agreement, (iii)
irrevocably appoint, to the extent such party is not a resident of the State of
Delaware, The Corporation Trust Company as its agent in the State of Delaware
as such party’s agent for acceptance of legal process in connection with any
such action or proceeding, against such party with the same legal force and
validity as if served upon such party personally within the State of Delaware,
(iv) waive any objection to the laying of venue of any such action or
proceeding in the Delaware Court, and (v) waive, and agree not to plead or to
make, any claim that any such action or proceeding brought in the Delaware
Court has been brought in an improper or inconvenient forum.

 

23.           Identical Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same
Agreement.  Only one such counterpart
signed by the party against whom enforceability is sought needs to be produced
to evidence the existence of this Agreement.

 

24.           Miscellaneous.  Use of the masculine pronoun shall be deemed to include usage of
the feminine pronoun where appropriate. 
The headings of the paragraphs of this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement or to affect
the construction thereof

 

IN WITNESS WHEREOF, the parties have entered
into this Agreement on the dates set forth below their signatures but made
effective for all purposes as of the day and year first above written.

 

	
  CARRIAGE SERVICES, INC.

  	
  INDEMNITEE

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Melvin C. Payne

  	
   

  	
  /s/ George J. Klug

  
	
   

  	
  Melvin C. Payne,

  	
  George J. Klug

  
	
   

  	
  Chief Executive Officer

  	
  Address:

  	
  5918 Spring Lodge

  
	
   

  	
   

  	
  Kingwood, Texas  77345

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  August 13, 2003

  	
   

  	
  Date

  	
  August 13, 2003

  	
   

  
									

 

14

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