Exhibit 10.3
INDEMNITY AGREEMENT
This Indemnity Agreement
(“Agreement”) is made effective as of the 7 th day of August,
2007 by and between Carriage Services, Inc., a Delaware corporation
(the “Company”), and Gary Forbes
(“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.
(b) Certain
Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
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(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 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.
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(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 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
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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 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:
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(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 Proc
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