EXHIBIT 10.6
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("Agreement") between Stewart
Enterprises, Inc., a Louisiana corporation (the "Company"), and William E. Rowe
(the "Employee") is dated as of November 1, 2001 (the "Change of Control
Agreement Date").
ARTICLE I
DEFINITIONS
1.1 EMPLOYMENT AGREEMENT. After a Change of Control (defined below),
this Agreement supersedes the Employment Agreement dated as of November 1, 2001
between Employee and the Company (the "Employment Agreement") except to the
extent that certain provisions of the Employment Agreement are expressly
incorporated by reference herein. After a Change of Control, the definitions in
this Agreement supersede definitions in the Employment Agreement, but
capitalized terms used herein that are not defined in this Agreement have the
meanings given to them in the Employment Agreement.
1.2 DEFINITION OF "COMPANY." As used in this Agreement, "Company" shall
mean the Company as defined above and any successor to or assignee of (whether
direct or indirect, by purchase, merger, consolidation or otherwise) all or
substantially all of the assets or business of the Company.
1.3 CHANGE OF CONTROL DEFINED. "Change of Control" shall mean:
(a) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 30% of the outstanding shares of
the Company's Class A Common Stock, no par value per share (the "Common
Stock"); provided, however, that for purposes of this subsection (a),
the following acquisitions shall not constitute a Change of Control:
(i) any acquisition of Common Stock directly from the
Company,
(ii) any acquisition of Common Stock by the Company,
(iii) any acquisition of Common Stock by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or
(iv) any acquisition of Common Stock by any
corporation pursuant to a transaction that complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section
1.3; or
(b) individuals who, as of the Change of Control Agreement
Date, constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the Change of Control
Agreement Date whose election, or nomination for election by the
Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered a
member of the Incumbent Board, unless such individual's initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or
on behalf of a person other than the Incumbent Board; or
(c) consummation of a reorganization, merger or consolidation,
or sale or other disposition of all of substantially all of the assets
of the Company (a "Business Combination"), in each case, unless,
following such Business Combination,
(i) all or substantially all of the individuals and
entities who were the beneficial owners of the Company's
outstanding common stock and the Company's voting securities
entitled to vote generally in the election of directors
immediately prior to such Business Combination have direct or
indirect beneficial ownership, respectively, of more than 50%
of the then outstanding shares of common stock, and more than
50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election
of directors, of the corporation resulting from such Business
Combination (which, for purposes of this paragraph (i) and
paragraphs (ii) and (iii), shall include a corporation which
as a result of such transaction controls the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries), and
(ii) except to the extent that such ownership existed
prior to the Business Combination, no person (excluding any
corporation resulting from such Business Combination or any
employee benefit plan or related trust of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or 20% or more of the
combined voting power of the then outstanding voting
securities of such corporation, and
(iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
1.4 AFFILIATE. "Affiliate" or "affiliated companies" shall mean any
company controlled by, controlling, or under common control with, the Company.
1.5 CAUSE. "Cause" shall mean:
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(a) the willful and continued failure of the Employee
to perform substantially the Employee's duties with the
Company or its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is
delivered to the Employee by the Board of the Company which
specifically identifies the manner in which the Board believes
that the Employee has not substantially performed the
Employee's duties, or
(b) the willful engaging by the Employee in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company or its affiliates.
For purposes of this provision, no act or failure to act, on the part of the
Employee, shall be considered "willful" unless it is done, or omitted to be
done, by the Employee in bad faith or without reasonable belief that the
Employee's action or omission was in the best interests of the Company or its
affiliates. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of a senior
officer of the Company or based upon the advice of counsel for the Company or
its affiliates shall be conclusively presumed to be done, or omitted to be done,
by the Employee in good faith and in the best interests of the Company or its
affiliates. The cessation of employment of the Employee shall not be deemed to
be for Cause unless and until there shall have been delivered to the Employee a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Employee and the Employee is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
the Employee is guilty of the conduct described in subparagraph (a) or (b)
above, and specifying the particulars thereof in detail.
1.6 GOOD REASON. "Good Reason" shall mean:
(a) Any failure of the Company or its affiliates to provide
the Employee with the position, authority, duties and responsibilities
at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during
the 120- day period immediately preceding the Change of Control.
Employee's position, authority, duties and responsibilities after a
Change of Control shall not be considered commensurate in all material
respects with Employee's position, authority, duties and
responsibilities prior to a Change of Control unless after the Change
of Control Employee holds (i) an equivalent position in the Company or,
(ii) if the Company is controlled or will after the transaction be
controlled by another company (directly or indirectly), an equivalent
position in the ultimate parent company.
(b) The assignment to the Employee of any duties inconsistent
in any material respect with Employee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2.1(b) of this Agreement,
or any other action that results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action
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not taken in bad faith that is remedied within 10 days after receipt of
written notice thereof from the Employee to the Company;
(c) Any failure by the Company or its affiliates to comply
with any of the provisions of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith that
is remedied within 10 days after receipt of written notice thereof from
the Employee to the Company;
(d) The Company or its affiliates requiring the Employee to be
based at any office or location other than as provided in Section
2.1(b)(ii) hereof or requiring the Employee to travel on business to a
substantially greater extent than required immediately prior to the
Change of Control;
(e) Any purported termination of the Employee's employment
otherwise than as expressly permitted by this Agreement; or
(f) Any failure by the Company to comply with and satisfy
Sections 3.1(c) and (d) of this Agreement.
For purposes of this Section 1.6, any good faith determination of "Good Reason"
made by the Employee shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Employee for any reason during
the 30-day period immediately following the first anniversary of the Change of
Control shall be deemed to be a termination for Good Reason.
ARTICLE II
CHANGE OF CONTROL BENEFIT
2.1 EMPLOYMENT TERM AND CAPACITY AFTER CHANGE OF CONTROL. (a) If a
Change of Control occurs on or before October 31, 2004, then the Employee's
employment term (the "Employment Term") shall continue through the later of (i)
the second anniversary of the Change of Control or (ii) October 31, 2004,
subject to any earlier termination of Employee's status as an employee pursuant
to this Agreement.
(b) After a Change of Control and during the Employment Term, (i) the
Employee's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Change of Control and (ii) the Employee's service shall be
performed at the location where the Employee was employed immediately preceding
the Change of Control or any office or location less than 35 miles from such
location. Employee's position, authority, duties and responsibilities after a
Change of Control shall not be considered commensurate in all material respects
with Employee's position, authority, duties and responsibilities prior to a
Change of Control unless after the Change of Control Employee holds (x) an
equivalent position in the Company or, (y) if the Company is controlled or will
after the transaction be controlled by another company (directly or indirectly),
an equivalent position in the ultimate parent company. Employee shall devote
himself to his
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employment responsibilities with the Company (or, if applicable, the ultimate
parent entity) as provided in Article I Section 3 of the Employment Agreement.
2.2 COMPENSATION AND BENEFITS. During the Employment Term, Employee
shall be entitled to the following compensation and benefits:
(a) Salary. A salary ("Base Salary") at the highest rate
provided for under the Employment Agreement at any time during the
120-day period immediately preceding the Change of Control, payable to
the Employee at such intervals no less frequent than the most frequent
intervals in effect at any time during the 120-day period immediately
preceding the Change of Control or, if more favorable to the Employee,
the intervals in effect at any time after the Change of Control for
other peer employees of the Company and its affiliated companies.
(b) Bonus. An annual incentive bonus (the "Bonus") equal to
the maximum annual amount that the Employee was eligible to receive at
any time during the 120-day period immediately preceding the Change of
Control. The Bonus shall be paid in cash (1) no later than thirty (30)
days following the close of the fiscal year in which it is earned, or
(2) if the Employee so elects, between January 1 and January 15 of the
succeeding calendar year.
(c) Fringe Benefits. The Employee shall be entitled to fringe
benefits (including, but not limited to, automobile allowance,
reimbursement for membership dues, and first class air travel) in
accordance with the most favorable agreements, plans, practices,
programs and policies of the Company and its affiliated companies in
effect for the Employee at any time during the 120-day period
immediately preceding the Change of Control or, if more favorable to
the Employee, as in effect generally at any time thereafter with
respect to other peer employees of the Company and its affiliated
companies.
(d) Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in
accordance with the most favorable agreements, policies, practices and
procedures of the Company and its affiliated companies in effect for
the Employee at any time during the 120-day period immediately
preceding the Change of Control or, if more favorable to the Employee,
as in effect generally at any time thereafter with respect to other
peer employees of the Company and its affiliated companies.
(e) Incentive, Savings and Retirement Plans. The Employee
shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs applicable generally
to other peer employees of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs
provide the Employee with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), savings
opportunities and retirement benefit opportunities, in each case, less
favorable than the most favorable of those provided by the Company and
its affiliated companies for the Employee under any agreements, plans,
practices, policies and programs as in effect at any time during the
120- day period immediately preceding the Change of Control or, if more
favorable to the
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Employee, those provided generally at any time after the Change of
Control to other peer employees of the Company and its affiliated
companies.
(f) Welfare Benefit Plans. The Employee and/or the Employee's
family, as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable
generally to other peer employees of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide the Employee with benefits, in each case, less
favorable than the most favorable of any agreements, plans, practices,
policies and programs in effect for the Employee at any time during the
120-day period immediately preceding the Change of Control or, if more
favorable to the Employee, those provided generally at any time after
the Change of Control to other peer employees of the Company and its
affiliated companies.
(g) Office and Support Staff. The Employee shall be entitled
to an office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other
assistance, at least equal to the most favorable of the foregoing
provided to the Employee by the Company and its affiliated companies at
any time during the 120-day period immediately preceding the Change of
Control or, if more favorable to the Employee, as provided generally at
any time thereafter with respect to other peer employees of the Company
and its affiliated companies.
(h) Vacation. The Employee shall be entitled to paid vacation
in accordance with the most favorable agreements, plans, policies,
programs and practices of the Company and its affiliated companies as
in effect for the Employee at any time during the 120-day period
immediately preceding the Change of Control or, if more favorable to
the Employee, as in effect generally at any time thereafter with
respect to other peer employees of the Company and its affiliated
companies.
2.3 TERMINATION OF EMPLOYMENT AFTER A CHANGE OF CONTROL. After a Change
of Control and during the Employment Term, the Employee's status as an employee
shall terminate or may be terminated by the Employee, the Company (or, if
applicable, the ultimate parent company), as provided in Article III of the
Employment Agreement (provided, however, that the definitions of "Cause" and
"Good Reason" in this Agreement shall supersede those definitions in the
Employment Agreement).
2.4 OBLIGATIONS UPON TERMINATION AFTER A CHANGE OF CONTROL.
(a) Termination by Company for Reasons other than Death,
Disability or Cause; by Employee for Good Reason. If, after a Change of
Control and during the Employment Term, the Company (or, if applicable
the ultimate parent company), terminates the Employee's employment
other than for Cause, death or Disability, or the Employee terminates
employment for Good Reason, the Company shall pay to the Employee in a
lump sum in cash within 30 days of the Date of Termination an amount
equal to three times the
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sum of (i) the amount of Base Salary in effect at the Date of
Termination, plus (ii) the maximum Bonus for which the Employee is
eligible for the 12-month period in which the Date of Termination
occurs.
(b) Death. If, after a Change of Control and during the
Employment Term, the Employee's status as an employee is terminated by
reason of the Employee's death, this Agreement shall terminate without
further obligation to the Employee's legal representatives (other than
those already accrued to the Employee), other than the obligation to
make any payments due pursuant to employee benefit plans maintained by
the Company or its affiliated companies.
(c) Disability. If, after a Change of Control and during the
Employment Term, Employee's status as an employee is terminated by
reason of Employee's Disability (as defined in the Employment
Agreement), this Agreement shall terminate without further obligation
to the Employee (other than those already accrued to the Employee),
other than the obligation to make any payments due pursuant to employee
benefit plans maintained by the Company or its affiliated companies.
(d) Cause. If, after a Change of Control and during the
Employment Term, the Employee's status as an employee is terminated by
the Company (or, if applicable, the ultimate parent entity) for Cause,
this Agreement shall terminate without further obligation to the
Employee other than for obligations imposed by law and obligations
imposed pursuant to any employee benefit plan maintained by the Company
or its affiliated companies.
(e) Termination by Employee for Reasons other than Good
Reason. If, after a Change of Control and during the Employment Term,
the Employee's status as an employee is terminated by the Employee for
reasons other than Good Reason, then the Company shall pay to the
Employee an amount equal to a single year's Base Salary in effect at
the Date of Termination, payable in equal installments over a two-year
period at such intervals as other salaried employees of the Company are
paid.
(f) Nondisclosure, Noncompetition and Proprietary Rights. The
rights and obligations of the Company and Employee contained in Article
V ("Nondisclosure, Noncompetition and Proprietary Rights") of the
Employment Agreement shall continue to apply after a Change of Control,
except as provided in Section 2.10 of this Agreement.
2.5 ACCRUED OBLIGATIONS AND OTHER BENEFITS. It is the intent of the
Employment Agreement and this Agreement that upon termination of employment for
any reason the Employee be entitled to receive promptly, and in addition to any
other benefits specifically provided, (a) the Employee's Base Salary through the
Date of Termination to the extent not theretofore paid, (b) any accrued vacation
pay, to the extent not theretofore paid, and (c) any other amounts or benefits
required to be paid or provided or which the Employee is entitled to receive
under any plan, program, policy practice or agreement of the Company.
2.6 STOCK OPTIONS. The foregoing benefits are intended to be in
addition to the value of any options to acquire Common Stock of the Company the
exercisability of which is accelerated
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pursuant to the terms of any stock option, incentive or other similar plan
heretofore or hereafter adopted by the Company.
2.7 PROTECTION OF BENEFITS. To the extent permitted by applicable law,
the Company shall take all reasonable steps to ensure that the Employee is not,
by reason of a Change of Control, deprived of the economic value (including any
value attributable to the Change of Control transaction) of (a) any options to
acquire Common Stock of the Company or (b) any Common Stock of the Company
beneficially owned by the Employee.
2.8 CERTAIN ADDITIONAL PAYMENTS. If after a Change of Control Employee
is subjected to an excise tax as a result of the "excess parachute payment"
provisions of section 4999 of the Internal Revenue Code of 1986, as amended,
whether by virtue of the benefits of this Agreement or by virtue of any other
benefits provided to Employee in connection with a Change of Control pursuant to
Company plans, policies or agreements (including the value of any options to
acquire Common Stock of the Company the exercisability of which is accelerated
pursuant to the terms of any stock option, incentive or similar plan heretofore
or hereafter adopted by the Company), the Company shall pay to Employee (whether
or not his employment has terminated) such amounts as are necessary to place
Employee in the same position after payment of federal income and excise taxes
as he would have been if such provisions had not been applicable to him.
2.9 LEGAL FEES. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Employee or others of the validity or enforceability of, or
liability under, any provision of this Agreement (including as a result of any
contest by the Employee about the amount or timing of any payment pursuant to
this Agreement.)
2.10 SET-OFF; MITIGATION. After a Change of Control, the Company's and
its affiliates' obligations to make the payments provided for in this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company or its affiliates may have against the Employee or others. After a
Change of Control, an asserted violation of the provisions of Article V
("Nondisclosure, Noncompetition and Proprietary Rights") of the Employment
Agreement shall not constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee; specifically, the third through sixth
sentences of Article V Section 4 shall not apply after a Change of Control. It
is the intent of the Employment Agreement and this Agreement that in no event
shall the Employee be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Employee under any of
the provisions of this Agreement or the Employment Agreement.
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ARTICLE III
MISCELLANEOUS
3.1 BINDING EFFECT; SUCCESSORS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any of its successors or assigns.
(b) This Agreement is personal to the Employee and shall not
be assignable by the Employee without the consent of the Company (there being no
obligation to give such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
(c) The Company shall require any successor to or assignee of
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
all or substantially all of the assets or businesses of the Company (i) to
assume unconditionally and expressly this Agreement and (ii) to agree to perform
or to cause to be performed all of the obligations under this Agreement in the
same manner and to the same extent as would have been required of the Company
had no assignment or succession occurred, such assumption to be set forth in a
writing reasonably satisfactory to the Employee.
(d) The Company shall also require all entities that control
or that after the transaction will control (directly or indirectly) the Company
or any such successor or assignee to agree to cause to be performed all of the
obligations under this Agreement, such agreement to be set forth in a writing
reasonably satisfactory to the Employee.
3.2 NOTICES. All notices hereunder must be in writing and shall be
deemed to have given upon receipt of delivery by: (a) hand (against a receipt
therefor), (b) certified or registered mail, postage prepaid, return receipt
requested, (c) a nationally recognized overnight courier service (against a
receipt therefor) or (d) telecopy transmission with confirmation of receipt. All
such notices must be addressed as follows:
If to the Company, to:
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
Attn: Chief Executive Officer
If to the Employee, to:
William E. Rowe
120 N. Livingston Place
Metairie, Louisiana 70005
or such other address as to which any party hereto may have notified the other
in writing.
3.3 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the State of Louisiana
without regard to principles of conflict of laws, except as expressly provided
in Article V Section 6 of the Employment Agreement with respect to the
resolution of disputes arising under, or the Company's enforcement of, such
Article V.
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3.4 WITHHOLDING. The Employee agrees that the Company has the right to
withhold, from the amounts payable pursuant to this Agreement, all amounts
required to be withheld under applicable income and/or employment tax laws, or
as otherwise stated in documents granting rights that are affected by this
Agreement.
3.5 AMENDMENT, WAIVER. No provision of this Agreement may be modified,
amended or waived except by an instrument in writing signed by both parties.
3.6 SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall at any time or to any
extent be invalid, illegal or unenforceable in any respect as written, Employee
and the Company intend for any court construing this Agreement to modify or
limit such provision so as to render it valid and enforceable to the fullest
extent allowed by law. Any such provision that is not susceptible of such
reformation shall be ignored so as to not affect any other term or provision
hereof, and the remainder of this Agreement, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid, illegal or unenforceable, shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
3.7 WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
3.8 REMEDIES NOT EXCLUSIVE. No remedy specified herein shall be deemed
to be such party's exclusive remedy, and accordingly, in addition to all of the
rights and remedies provided for in this Agreement, the parties shall have all
other rights and remedies provided to them by applicable law, rule or
regulation.
3.9 COMPANY'S RESERVATION OF RIGHTS. Employee acknowledges and
understands that the Employee serves at the pleasure of the Board and that the
Company has the right at any time to terminate Employee's status as an employee
of the Company, or to change or diminish his status during the Employment Term,
subject to the rights of the Employee to claim the benefits conferred by this
Agreement.
3.10 PRIOR CHANGE OF CONTROL AGREEMENT. Effective as of the Change of
Control Agreement Date, this Agreement supersedes any prior change of control
agreement between the Employee and the Company.
3.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and the Employee have caused this
Agreement to be executed as of the Change of Control Agreement Date.
STEWART ENTERPRISES, INC.
By:
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James W. McFarland
Compensation Committee Chairman
EMPLOYEE:
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William E. Rowe
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