STEWART ENTERPRISES, INC.
110 VETERANS MEMORIAL BOULEVARD
METAIRIE, LOUISIANA 70005
June 20, 2003
Frank B. Stewart, Jr.
Chairman of the Board of Directors
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
Re: Retirement Benefits Agreement
Dear Frank:
In response to your notification to the Board of Directors of your
desire to retire from your position as Chairman of the Board and our subsequent
discussions with you regarding your retirement benefits, and in recognition of
your many years of faithful and tireless service to Stewart Enterprises, Inc.
(the "Company"), the Board of Directors has agreed with you on the following
retirement arrangements:
1. You will publicly announce your retirement on or before July 21,
2003.
2. The effective date of your retirement will be September 17, 2003,
which we understand coincides with your 68th birthday.
3. In consideration of your many years of service and your agreement
not to compete with the Company through October 31, 2006, as specifically set
forth in Appendix 1 hereto, you will receive a retirement benefit of $1.65
million, payable in three installments of $550,000 each. The first such payment
will be made within five business days after the announcement of your
retirement, and the second and third such payments will be made on the first and
second anniversaries of the execution of this agreement (i.e., June 20, 2004 and
2005).
4. Effective September 17, 2003, the Company will grant to you such
ownership interests (or, at your election and subject to your assumption of the
remaining rental and other obligations, such leasehold interests) as it holds in
all furniture, fixtures, equipment and machines (including without limitation
computer, software, fax and copy machines) currently used primarily by you or
your staff or located in your offices, as well as the automobile currently used
by you and provided by the Company.
5. You will continue to receive your current salary until the effective
date of your retirement (September 17, 2003).
6. Following the effective date of your retirement you will be eligible
to receive board and board committee fees on the same basis as other
non-employee directors.
7. You will be permitted to withdraw upon request all amounts owed to
you under the senior executive deferred compensation plan in accordance with the
terms of that plan.
8. Because you will no longer be employed by the Company following your
retirement, you will no longer be eligible to participate in the Company's group
health plan, but if you elect to continue
that coverage for you and your spouse in accordance with your rights under
COBRA, the Company will reimburse you for your premium cost for the full period
of COBRA eligibility.
9. You have advised us that you and your staff wish to relocate and
make your office space available to the Company. Accordingly, you have agreed
that you and your staff will vacate your current office spaces on or prior to
August 1, 2003, at which time the Company will pay you $30,000 to help defray
your expenses.
10. Your assistants, Helen Prine and Denise Jochum, and your driver,
Wayde Dubroc, will remain employees of the Company at their current rates of pay
from the Company through the effective date of your retirement (September 17,
2003), at which time they will be available for employment by you or one of your
affiliated companies. Upon their separation from the Company, they will be
entitled to severance pay of one week for each year of service in accordance
with the Company's standard practice. Notwithstanding the foregoing, Ms. Prine's
review is scheduled for July 1, 2003 and will occur as scheduled, and she will
receive the Company-standard 3%-7% salary increase if her performance is deemed
satisfactory.
11. Upon the effective date of your retirement, the Nominating and
Governance Committee will appoint you as Chairman Emeritus of the Board, which
is an honorary title carrying no burdens or benefits other than those attendant
to Board membership.
12. At the appropriate time, the Nominating and Governance Committee
will nominate you to serve an additional three-year term on the Board of
Directors commencing at the 2004 annual meeting of shareholders.
If the foregoing accurately describes our agreement, please so indicate
by signing and returning the enclosed copy of this letter, whereupon it will
become a binding and enforceable agreement between you and the Company.
Yours truly,
STEWART ENTERPRISES, INC.
By: /s/ JOHN P. LABORDE
--------------------------
John P. Laborde,
Lead Independent Director
/s/JAMES W. MCFARLAND
--------------------------
James W. McFarland,
Chairman of the
Compensation Committee
Agreed to and accepted
this 20th day of June, 2003
/s/FRANK B. STEWART, JR.
- ------------------------
Frank B. Stewart, Jr.
Appendix 1: Non-competition Covenant
NON-COMPETITION COVENANT. Commencing with the date of this agreement
and continuing through October 31, 2006, Frank B. Stewart, Jr. (the "Retiree"),
agrees that, with respect to each State of the United States or other
jurisdiction, or specified portions thereof, in which the Retiree has regularly
(a) made contact with customers of the Company or any of its subsidiaries, (b)
conducted the business of the Company or any of its subsidiaries or (c)
supervised the activities of other employees of the Company or any of its
subsidiaries, and in which the Company or any of its subsidiaries engages in the
Death Care Business (as defined below) on the date of this Agreement
(collectively, the "Subject Areas"), Employee will restrict his activities
within the Subject Areas as follows:
Retiree 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 Retiree from
making passive investments as long as Retiree 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.
Retiree 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.
Retiree 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 date of this agreement 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.
Retiree will not make contact with any of the officers or 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.
"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.
INJUNCTIVE RELIEF; OTHER REMEDIES. Retiree acknowledges that a breach
by Retiree of the foregoing covenant would cause immediate and irreparable harm
to the Company for which an adequate monetary remedy does not exist; hence,
Retiree agrees that, in the event of a breach by Retiree of the provisions
thereof, the Company shall be entitled to injunctive relief restraining Retiree
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 of this agreement by Retiree, including
without limitation the recovery of damages and/or costs and expenses, such as
reasonable attorneys' fees, incurred by the Company as a result of any such
breach. In addition to the exercise of the foregoing remedies, the Company shall
have the right upon the occurrence of any such breach to cancel any unpaid
amounts otherwise outstanding. Retiree acknowledges that any such cancellation
would not constitute, and should not be characterized as, the imposition of
liquidated damages.
GOVERNING LAW; CONSENT TO JURISDICTION. Any dispute regarding the
reasonableness of the covenants and agreements set forth herein, or the
territorial scope or duration thereof, or the remedies available to the Company
upon any breach of such covenants and agreements, shall be governed by and
interpreted in accordance with the laws of the State of the United States or
other jurisdiction in which the alleged prohibited competing activity occurs,
and, with respect to each such dispute, the Company and Retiree each hereby
irrevocably consent to the exclusive jurisdiction of the 24th Judicial District
Court of Louisiana or the United States District Court for the Eastern District
of Louisiana for resolution of such dispute, and agree to be irrevocably bound
by any judgment rendered thereby in connection with such dispute, and further
agree that service of process may be made upon him or it in any legal proceeding
relating to this agreement by any means allowed under the laws of such
jurisdiction. Each party irrevocably waives any objection he or it may have as
to the venue of any such suit, action or proceeding brought in either such court
or that such court is an inconvenient forum.