EXHIBIT 10.4
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of December 23, 1997 by and
between Stewart Enterprises, Inc., a Louisiana corporation
("SEI"), and Raymond C. Knopke, Jr. ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI considers
it desirable and in its best interest that Optionee be given an
inducement to acquire a proprietary interest in SEI and an added
incentive to advance the interests of SEI by possessing an option
to purchase shares of the Class A common stock of SEI, no par
value per share (the "Common Stock") in accordance with the
Stewart Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on August
24, 1995 and approved by the shareholders on March 7, 1996.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective December 23, 1997
(the "Date of Grant"), the right, privilege and option to
purchase 18,335 shares of Common Stock (the "Option") at an
exercise price of $42.9375 per share (the "Exercise Price"). The
Option shall be exercisable at the time specified in Section II.
below. The Option is a non-qualified stock option and shall not
be treated as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the other
provisions of this Agreement, the Option shall become exercisable
in full on the first day between December 23, 1997 and August 31,
2000 that the average of the "Closing Sale Prices" of a share of
Common Stock for the 20 preceding consecutive trading days equals
or exceeds $52.87.
If the conditions described in this Section 2.1 are not met
by August 31, 2000, the Option may not be exercised and shall
terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on the
applicable date for shares of the Common Stock on an established
stock exchange or any automated quotation system that provides
sale quotations.
2.3 The Option shall expire and may not be exercised later
than October 31, 2001.
2.4 If Optionee's employment is terminated, other than as a
result of death, disability or retirement on or after reaching
age 65 or early retirement with the approval of the Board of
Directors, the Option must be exercised, to the extent
exercisable at the time of termination of employment, within 30
days after the date on which Optionee ceases to be an employee,
except that the Committee may upon request extend the period
after termination of employment during which the Option may be
exercised, but in no event later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability within the
meaning of Section 22(e)(3) of the Code, the Option must be
exercised, to the extent exercisable at the time of termination
of employment, within one year from the date on which Optionee
ceases to be an employee, but in no event later than October 31,
2001.
2.6 In the event of Optionee's death, the Option must be
exercised by his estate, or by the person to whom such right
evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the date
of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention to
exercise the Option, specifying therein the number of shares to
be purchased. Upon receiving such notice, and after SEI has
received payment of the Exercise Price as provided in the Plan,
the appropriate officer of SEI shall cause the transfer of title
of the shares purchased to Optionee on SEI's stock records and
cause to be issued to Optionee a stock certificate for the number
of shares being acquired. Optionee shall not have any rights as
a shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.11(a)(iii) and (iv) of the Plan, and no later than 30 days
after a Change of Control of the type described in Sections
12.11(a)(i) and (ii) of the Plan, the Committee (as the Committee
was composed immediately prior to such Change of Control and
notwithstanding any removal or attempted removal of some or all
of the members thereof as directors or Committee members), acting
in its sole discretion without the consent or approval of any
participant, may act to effect one or more of the alternatives
listed below and such act by the Committee may not be revoked or
rescinded by persons not members of the Committee immediately
prior to the Change of Control:
(a) require that all outstanding options and/or SARs be
exercised on or before a specified date (before or after
such Change of Control) fixed by the Committee, after which
specified date all unexercised options and SARs shall
terminate,
(b) provide for mandatory conversion of some or all of
the outstanding options and SARs held by some or all
participants as of a date, before or after such Change of
Control, specified by the Committee, in which event such
options and SARs shall be deemed automatically cancelled and
SEI shall pay, or cause to be paid, to each such participant
an amount of cash per share equal to the excess, if any, of
the Change of Control Value of the shares subject to such
option or SAR, as defined and calculated below, over the
exercise price(s) of such options or SARs, or, in lieu of
such cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market Value
equal to such excess,
(c) make such equitable adjustments to Incentives then
outstanding as the Committee deems appropriate to reflect
such Change of Control (provided, however, that the
Committee may determine in its sole discretion that no
adjustment is necessary), or
(d) provide that thereafter upon any exercise of an
option or SAR the participant shall be entitled to purchase
under such option or SAR, in lieu of the number of shares of
Common Stock then covered by such option, the number and
class of shares of stock or other securities or property
(including, without limitation, cash) to which the
participant would have been entitled pursuant to the terms
of the agreement providing for the merger, consolidation,
asset sale, dissolution or other Change of Control of the
type described in Sections 12.11(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control, the
participant had been the holder of record of the number of
shares of Common Stock then covered by such options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined by
whichever of the following items is applicable:
(a) the per share price to be paid to shareholders of
SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of SEI
in any tender offer or exchange offer whereby a Change of
Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs being
converted are exercisable, as determined by the Committee as
of the date determined by the Committee to be the date of
conversion of such options or SARs.
(d) in the event that the consideration offered to
shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Nothing in this Agreement shall confer upon Optionee any
right to continue in the employment of SEI or any of its
subsidiaries, or to interfere in any way with the right of SEI or
any of its subsidiaries to terminate Optionee's employment
relationship with SEI or any of its subsidiaries at any time.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors,
administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred, assigned,
pledged or hypothecated in any manner, by operation of law or
otherwise, other than by will or by the laws of descent and
distribution and shall not be subject to execution, attachment or
similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions of
the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement conflicts
with such a provision of the Plan, the Plan provision shall
control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: /S/ James W. McFarland
--------------------------------
James W. McFarland
Compensation Committee Chairman
/s/ Raymond C. Knopke, Jr.
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Raymond C. Knopke, Jr.
Optionee