This Retirement
Agreement (the “ Agreement ”) is made and
entered into as of March 13, 2009 (the “ Agreement
Date ”), by and between Stewart Enterprises, Inc., a
Louisiana corporation (the “ Company ”), and
Brent F. Heffron (“ Employee ”).
WHEREAS, the
Employee and the Company have agreed that Employee will retire from
his employment with the Company and that Employee will assist the
Company with an orderly transition, as provided herein;
and
WHEREAS, Employee
and the Company wish to confirm their mutual understanding
regarding the benefits payable to Employee as a result of his
retirement and have agreed in certain cases on benefits that vary
from those that might otherwise be provided under existing
agreements or plans relating to Employee’s
employment;
NOW THEREFORE, in
consideration of the mutual promises herein contained and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1.
Employment . Employee shall continue to be employed by the
Company on a full-time basis, and shall continue to hold the title
of Executive Vice President through midnight on April 30, 2009 (the
“ Retirement Date ”). Thereafter, commencing at
12:01 a.m. on May 1, 2009, Employee shall be fully
retired. More specifically, effective at midnight on the Retirement
Date, Employee hereby resigns and retires from all positions with
the Company and its subsidiaries. Up to and including the
Retirement Date, Employee’s duties shall be to assist the
Company in effecting an orderly transition and to perform such
other duties as may be reasonably requested by the Company’s
Chief Executive Officer.
2.
Pre-Retirement Compensation and Benefits . Employee’s
compensation and benefits shall remain unchanged through the
Retirement Date, except that Employee shall not be eligible to
receive any bonus for the fiscal year ending October 31, 2009.
In particular, Employee shall continue to receive his salary at the
rate in effect as of the Agreement Date (the “ Base
Salary ”) through the Retirement Date. In addition,
Employee shall be paid for his accrued and unused vacation time, up
to a maximum of 240 hours (or six weeks), pursuant to the
Company’s vacation policy.
3.
Post-Retirement Payments and Health Insurance .
1.
The Company shall pay to Employee an amount equal to one-half
year’s Base Salary, which amount is agreed to be $175,000.
Such amount shall be payable in equal installments over a one-year
period beginning on the first regular bi-weekly payroll date of the
Company after the Retirement Date but no earlier than the
expiration date of the revocation period described in paragraph 19
hereof, and continuing thereafter at such intervals as other
salaried employees of the Company are paid.
2.
Employee shall be entitled to continue to participate in the
Company’s group health insurance program through the
Retirement Date on the same terms as are applicable to the
Company’s executive officers. Employee shall be offered COBRA
continuation coverage with the COBRA continuation coverage period
beginning on May 1, 2009. If Employee elects continued
coverage under COBRA, the Company shall pay on a monthly basis the
portion of the premiums which as of the Retirement Date were paid
by the Company, payable for the first 12 months following the
Retirement Date or until Employee obtains other employment offering
group health insurance coverage, whichever occurs first. Such
payments of premiums by the Company shall be reported by the
Company as taxable income to the Employee. Employee agrees to
promptly notify the Company if he obtains other employment offering
group health insurance coverage. Employee shall pay the premiums
for any coverage that he elects to continue after his eligibility
for Company payment of premiums under this paragraph 3(b) has
lapsed.
3.
The benefits provided to Employee under this paragraph 3 are
intended to be exempt from Section 409A of the Internal
Revenue Code of 1986, as amended (“ Section 409A
”), to the maximum extent possible, under Treasury
Regulations § 1.409A-1(b)(9)(iii) (separation pay exemption)
and §1.409A-1(b)(9)(v)(B) (medical benefits
exemption).
4.
The consideration set forth in this paragraph 3 is being provided
to Employee in exchange for his promises herein, and such
consideration would not otherwise have been provided to him had he
not entered into this Agreement.
4.
Options and Restricted Stock . Employee’s stock
options and restricted stock shall remain in effect in accordance
with their terms, it being acknowledged that those options and
restricted stock not vested on or before the Retirement Date shall
be forfeited.
5.
Post-Employment Benefits . Upon his retirement on the
Retirement Date, Employee shall be entitled to the benefits under
other Company benefit plans in which he is a participant that are
applicable to a retirement on such date in accordance with the
terms and conditions of such plans, including such benefits as he
may be entitled to receive under the Company’s Supplemental
Executive Retirement Plan (the “ SERP ”),
Supplemental Retirement and Deferred Compensation Plan (the “
Deferred Compensation Plan ”) and 401(k) plan, except
that:
1.
for purposes of calculating Employee’s retirement benefits
under the SERP, Employee shall be credited with an additional year
in age such that the benefit, as a percentage of Final Average Pay,
as defined in the SERP, shall be 31.08%; and
2.
in order that Employee may avoid the imposition of interest and
additional tax under Section 409A, no payments shall be made to
Employee under the SERP or the Deferred Compensation Plan (with the
exception of the portion of the Deferred Compensation Plan that is
not subject to Section 409A) until the Company’s first
regular bi-weekly payroll date that is more than six months after
the Retirement Date. The first payment made to the Employee under
the SERP shall be equal to the total payments that Employee would
have been entitled to receive under the terms of such plan and the
Employee’s election as to form of payment, if any, from the
Retirement Date through the first regular bi-weekly payroll date
that is more than six months
after the
Retirement Date. With respect to the Deferred Compensation Plan,
for avoidance of doubt and assuming Employee remains employed
through the Retirement Date as provided herein, (a) Employee shall
receive the Company matching contribution for calendar year 2008,
and (b) interest shall continue to accrue for so long as
Employee has a balance in the plan through the date immediately
preceding the date of the final distribution of his
account.
The additional
SERP benefits provided in paragraph 5(a) above shall be treated as
an additional deferral of compensation and shall be subject to
Section 409A. The additional benefit described in paragraph
5(a) above shall be forfeited by Employee, along with the SERP
benefits, if Employee engages in certain restricted activities in
certain areas as provided in Article 9 of the SERP.
6. Other
Benefits . All compensation, fringe benefits, perquisites, and
participation in any bonus, incentive, or retention plan shall
cease as of the close of business on the Retirement Date, unless
otherwise specifically provided herein.
7.
Confidentiality Agreement .
1.
During and after his employment by the Company, Employee agrees
(i) not to communicate, divulge, or make available to any
person or entity (other than the Company) any Confidential
Information (as defined in paragraph 7(b)), except upon the prior
written authorization of the Company or as may be required by law
or legal process, and (ii) to deliver promptly to the Company
any Confidential Information in his possession, including any
duplicates thereof and any notes or other records Employee has
prepared with respect thereto. In the event that the provisions of
any applicable law or the order of any court would require Employee
to disclose or otherwise make available any Confidential
Information, Employee shall give the Company prompt prior written
notice of such required disclosure and an opportunity to contest
the requirement of such disclosure or apply for a protective order
with respect to such Confidential Information by appropriate
proceedings.
2.
For purposes of this Agreement, “ Confidential
Information ” means any information, knowledge, or data
of any nature and in any form (including information that is
electronically transmitted or stored on any form of magnetic or
electronic storage media) relating to the past, current, or
prospective business or operations of the Company and its
subsidiaries, that at the time or times concerned is not generally
known to persons engaged in businesses similar to those conducted
or contemplated by the Company and its subsidiaries (other than
information known by such persons through a violation of an
obligation of confidentiality to the Company), whether produced by
the Company and its subsidiaries or any of their consultants,
agents, independent contractors, or by Employee, and whether or not
marked confidential, including without limitation information
relating to the Company’s or its subsidiaries’ products
and services, business plans, business acquisitions, joint
ventures, processes, product or service research and development
ideas, methods or techniques, training methods and materials, and
other operational methods or techniques, quality assurance
procedures or standards, operating procedures, files, plans,
specifications, proposals, drawings, charts, graphs, support data,
trade secrets, supplier lists, supplier information, purchasing
methods or practices, distribution and selling activities,
consultants’ reports, marketing and engineering or other
technical studies, maintenance records, employment or personnel
data, marketing data, strategies or techniques,
financial
reports, budgets, projections, cost analyses, price lists, formulae
and analyses, employee lists, customer records, customer lists,
customer source lists, proprietary computer software, and internal
notes and memoranda relating to any of the foregoing.
8.
Limited Covenant Not to Compete and Non-Solicitation
Agreement .
1.
During his employment and for a period of one year thereafter,
commencing with the Retirement Date, Employee agrees that, with
respect to each State of the United States or other jurisdiction,
or specified portions thereof as set forth in Appendix A
attached hereto and forming part of this Agreement, in which the
Employee regularly (1) makes contact with customers of the
Company or any of its subsidiaries, (2) conducts the business
of the Company or any of its subsidiaries, or (3) supervises
the activities of other employees of the Company or any of its
subsidiaries, as identified in Appendix A, and in which the
Company or any of its subsidiaries engages in the Death Care
Business (as defined in paragraph 8(c)) on the Retirement Date
(collectively, the “ Subject Areas ”), Employee
will restrict his activities within the Subject Areas as
follows:
I.
Employee will not, directly or indirectly, for himself or others,
own, manage, operate, control, be employed in an executive,
managerial or supervisory capacity by, consult with, or otherwise
engage or participate in or allow his skill, knowledge, experience
or reputation to be used in connection with, the ownership,
management, operation or control of, any company or other business
enterprise engaged in the Death Care Business within any of the
Subject Areas; provided, however, that nothing contained herein
shall prohibit Employee from making passive investments as long as
Employee does not beneficially own more than 2% of the equity
interests of a business enterprise engaged in the Death Care
Business within any of the Subject Areas. For purposes of this
paragraph, “beneficially own” shall have the same
meaning ascribed to that term in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
II.
Employee will not call upon any customer of the Company or its
subsidiaries for the purpose of soliciting, diverting, or enticing
away the business of such person or entity, or otherwise disrupting
any previously established relationship existing between such
person or entity and the Company or its subsidiaries.
III.
Employee will not solicit, induce, influence, or attempt to
influence any supplier, lessor, lessee, licensor, partner, joint
venturer, potential acquiree, or any other person who has a
business relationship with the Company or its subsidiaries, or who
on the Retirement Date is engaged in discussions or negotiations to
enter into a business relationship with the Company or its
subsidiaries, to discontinue or reduce or limit the extent of such
relationship with the Company or its subsidiaries.
IV.
Employee will not make contact with any of the employees of the
Company or its subsidiaries with whom he had contact during the
course of his employment with the Company for the purpose of
soliciting such employee for hire, whether as an employee or
independent contractor, or otherwise disrupting such
employee’s relationship with the Company or its
subsidiaries.
2.
Employee further agrees that, for a period of one year from and
after the Retirement Date, Employee will not hire, on behalf of
himself or any person or entity engaged in the Death Care Business
with which Employee is associated, any employee of the Company or
its subsidiaries as an employee or independent contractor, whether
or not such engagement is solicited by Employee; provided, however,
that the restriction contained in this paragraph 8(b) shall not
apply to Company employees who reside in, or are hired by Employee
to perform work in, any of the Subject Areas located within the
States of Virginia or Georgia.
3.
For purposes of this Agreement, “ Death Care Business
” means (i) the owning and operating of funeral homes
and cemeteries, including combined funeral home and cemetery
facilities; (ii) the offering of services and products to meet
families’ funeral needs, including prearrangement, family
consultation, the sale of caskets and related funeral and cemetery
products and merchandise (whether at physical locations or by means
of the Internet), the removal, preparation, and transportation of
remains, cremation, the use of funeral home facilities for
visitation and worship, and related transportation services;
(iii) the marketing and sale of funeral services and cemetery
property or merchandise on an at-need or prearranged basis; (iv)
providing, managing, and administering financing arrangements
(including trust funds, escrow accounts, insurance and installment
sales contracts) for prearranged funeral plans and cemetery
property and merchandise; (v) providing interment services,
the sale (on an at-need or prearranged basis) of cemetery property
including lots, lawn crypts, family and community mausoleums and
related cemetery merchandise such as monuments, memorials and
burial vaults; (vi) the maintenance of cemetery grounds
pursuant to perpetual care contracts and laws or on a voluntary
basis; and (vii) offering mausoleum design, construction, and
sales services.
4.
In the event that Employee should find any of the limitations of
this paragraph 8 (including without limitation the geographic
restrictions of Appendix A) to impose a severe hardship on
Employee’s ability to secure other employment, Employee may
make a request to the Company for a waiver of the designated
limitations before accepting employment that otherwise would be a
breach of Employee’s promises and obligations under this
Agreement. Such request must be in writing and clearly set forth
the name and address of the organization with which employment is
sought and the location, position, and duties that Employee will be
performing. The Company will consider the request and, in its sole
discretion, decide whether and on what conditions to grant such
waiver.
9.
Injunctive Relief; Other Remedies . Employee acknowledges
that a breach by Employee of paragraphs 7 or 8 of this Agreement
would cause immediate and irreparable harm to the Company for which
an adequate monetary remedy does not exist; hence, Employee agrees
that, in the event of a breach or threatened breach by Employee of
the provisions of paragraphs 7 or 8, the Company shall be entitled
to injunctive relief restraining Employee from such violation
without the necessity of proof of actual damage or the posting of
any bond, except as required by non-waivable, applicable law.
Nothing herein, however, shall be construed as prohibiting the
Company from pursuing any other remedy at law or in equity to which
the Company may be entitled under applicable law in the event of a
breach or threatened breach of this Agreement by Employee,
including without limitation the recovery of damag
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