CARRIAGE SERVICES, INC.
1996 DIRECTORS' STOCK OPTION PLAN
AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 7, 1997
(1) PURPOSE OF THE PLAN
The CARRIAGE SERVICES, INC. 1996 DIRECTORS' STOCK OPTION PLAN (the "Plan")
is intended to promote the interests of CARRIAGE SERVICES, INC., a Delaware
corporation (the "Company"), and its stockholders by helping to award and retain
highly-qualified independent directors, and allowing them to develop a sense of
proprietorship and personal involvement in the development and financial success
of the Company. Accordingly, the Company shall grant to directors of the Company
who are not executive officers of the Company ("Eligible Directors") the option
("Option") to purchase shares of the Class A common stock of the Company
("Stock"), as hereinafter set forth. Options granted under the Plan shall be
options which do not constitute incentive stock options, within the meaning of
section 422(b) of the Internal Revenue Code of 1986, as amended.
The Plan as set forth herein constitutes an amendment and restatement,
effective as of the date this amendment and restatement of the Plan is approved
by stockholders of the Company (the "Restatement Effective Date"), of the
Carriage Services, Inc. 1996 Nonemployee Directors' Stock Option Plan, as
previously approved by the stockholders of the Company, and shall supersede and
replace in its entirety such plan.
(2) OPTION AGREEMENTS
Each Option shall be evidenced by a written agreement (an "Option
Agreement"). Options shall not be exercisable after the expiration of ten years
from the date of grant thereof unless otherwise specified in an Option
Agreement. Each Option Agreement shall provide that an Option and all rights
granted thereunder shall not be transferable otherwise than (i) by will or the
laws of descent and distribution, (ii) pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended or (iii) with the consent of the Board
of Directors of the Company (the "Board").
1. ELIGIBILITY OF OPTIONEE; OPTION AWARDS
A. Options may be granted only to individuals who are Eligible Directors
of the Company and who do not currently participate in any other stock incentive
plan of the Company.
A director who had previously received options under another stock
incentive plan of the Company which are still outstanding, but who does not
receive options during the current calendar year under
any other stock incentive plan of the Company, shall be eligible to participate
in the Plan during the current calendar year.
B. Each Eligible Director who is elected or appointed to the Board for the
first time after the Restatement Effective Date of the Plan shall receive, as of
the date of his or her election or appointment and without the exercise of the
discretion of any person or persons, an Option exercisable for (i) 15,000 shares
of Stock (subject to adjustment in the same manner as provided in Paragraph VII
hereof with respect to shares of Stock subject to Options then outstanding) if
such Eligible Director is not also appointed to the Company's Executive
Committee on such date or (ii) 25,000 shares of Stock (subject to adjustment in
the same manner as provided in Paragraph VII hereof with respect to shares of
Stock subject to Options then outstanding) if such Eligible Director is also
appointed to the Company's Executive Committee on such date.
C. As of the date of the annual meeting of the stockholders of the Company
in each year that the Plan is in effect as provided in Paragraph VI hereof, each
Eligible Director then in office or elected to the Board on such date shall
receive, without the exercise of the discretion of any person or persons, an
Option exercisable for 6,000 shares of Stock (subject to adjustment in the same
manner as provided in Paragraph VII hereof with respect to shares of Stock
subject to Options then outstanding).
D. If, as of any date that the Plan is in effect, there are not sufficient
shares of Stock available under the Plan to allow for the grant to each Eligible
Director of an Option for the number of shares provided herein, each Eligible
Director shall receive an Option for his or her pro-rata share of the total
number of shares of Stock then available under the Plan. All Options granted
under the Plan shall be at the Option price set forth in Paragraph V hereof and
shall be subject to adjustment as provided in Paragraph VII hereof.
a. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options granted
under the Plan shall not exceed 200,000 shares of Stock. Such shares may consist
of authorized but unissued shares of Stock or previously issued shares of Stock
reacquired by the Company. Any of such shares which remain unissued and which
are not subject to outstanding Options at the termination of the Plan shall
cease to be subject to the Plan, but, until termination of the Plan, the Company
shall at all times make available a sufficient number of shares to meet the
requirements of the Plan. Should any Option hereunder expire or terminate prior
to its exercise in full, the shares theretofore subject to such Option may again
be subject to an Option granted under the Plan. Exercise of an Option shall
result in a decrease in the number of shares of Stock which may thereafter be
available, both for purposes of the Plan and for sale to any one individual, by
the number of shares as to which the Option is exercised.
(a) OPTION PRICE
The purchase price of Stock issued under each Option described in
Paragraphs IIIB and IIIC hereof after the Restatement Effective Date of the Plan
shall be the fair market value of the Stock
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subject to the Option as of the date the Option is granted. For all purposes
under the Plan, the fair market value of a share of Stock on a particular date
shall be equal to the mean of the high and low sales prices of the Stock (i)
reported by the National Market System of NASDAQ on that date or (ii) if the
Stock is listed on a national stock exchange, reported on the stock exchange
composite tape on that date; or, in either case, if no prices are reported on
that date, on the last preceding date on which such prices of the Stock are so
reported. If the Stock is traded over the counter at the time a determination of
its fair market value is required to be made hereunder, its fair market value
shall be deemed to be equal to the average between the reported high and low or
closing bid and asked prices of Stock on the most recent date on which Stock was
publicly traded. In the event Stock is not publicly traded at the time a
determination of its value is required to be made hereunder, the determination
of its fair market value shall be made by the Board in such manner as it deems
appropriate.
(1) TERM OF PLAN
The Plan originally became effective on July 18, 1996. This amendment and
restatement of the Plan shall be effective on the Restatement Effective Date.
Except with respect to Options then outstanding, if not sooner terminated under
the provisions of Paragraph VIII, the Plan shall terminate upon and no further
Options shall be granted after July 18, 2006.
b. RECAPITALIZATION OR REORGANIZATION
A. The existence of the Plan and the Options granted hereunder shall not
affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
B. The shares with respect to which Options may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the expiration of
an Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Option may thereafter be exercised (i) in the event
of an increase in the number of outstanding shares shall be proportionately
increased, and the purchase price per share shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares shall
be proportionately reduced, and the purchase price per share shall be
proportionately increased.
C. If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the optionee would have been entitled
pursuant to the terms
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of the recapitalization if, immediately prior to the recapitalization, the
optionee had been the holder of record of the number of shares of Stock then
covered by such Option.
D. Any adjustment provided for in Subparagraphs B or C above shall be
subject to any required stockholder action.
E. Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Options theretofore granted or the purchase price per
share.
F. For purposes of the Plan, a "Corporate Change" shall occur if (i) the
Company is to be dissolved or liquidated, (ii) the Company shall not be the
surviving entity in any merger, consolidation or other reorganization, (iii) the
Company sells, leases, or exchanges, or agrees to sell, lease, or exchange, all
or substantially all of its assets, (iv) any person or entity, including a
"group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), acquires or gains ownership or control
(including, without limitation, power to vote) of more than 50% of the
outstanding shares of the Company's voting stock (based upon voting power), or
(v) as a result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall cease to
constitute a majority of the Board.
1. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Options have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time; provided, that no change in any Option theretofore granted may be
made which would impair the rights of the optionee without the consent of such
optionee.
(1) SECURITIES LAWS
F. The Company shall not be obligated to issue any Stock pursuant to any
Option granted under the Plan at any time when the offering of the shares
covered by such Option have not been registered under the Securities Act of
1933, as amended, and such other state and federal laws, rules or regulations as
the Company deems applicable and, in the opinion of legal counsel for the
Company, there is no exemption from the registration requirements of such laws,
rules or regulations available for the offering and sale of such shares.
G. It is intended that the Plan and any grant of an Option made to a
person subject to Section 16 of the 1934 Act, meet all of the requirements of
Rule 16b-3, as currently in effect or as
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hereinafter modified or amended ("Rule 16b-3"), promulgated under the 1934 Act.
If any provision of the Plan or any such Option would disqualify the Plan or
such Option under, or would otherwise not comply with, Rule 16b-3, such
provision or Option shall be construed or deemed amended to conform to Rule
16b-3.
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