Vice President-finance Employment Agreement

EMPLOYMENT AGREEMENT


This Employment Agreement ("Agreement") between Stewart Enterprises, Inc., a Louisiana corporation (the "Company"), and Kenneth C. Budde (the "Employee") is dated as of August 1, 1995 (the "Agreement Date").


W I T N E S S E T H:


WHEREAS, Employee currently is employed by the Company;


WHEREAS, the Company desires to retain the services of Employee pursuant to the terms of this Agreement, subject to Employee's acceptance of the conditions stated herein;


WHEREAS, during the course of his employment with the Company, Employee has or will have received extensive and unique knowledge, training and education in, and access to resources involving, the Death Care Business (as defined below) at a substantial cost to the Company, which Employee acknowledges has enhanced or substantially will enhance Employee's skills and knowledge in such business;


WHEREAS, during the course of his employment with the Company, Employee has had and will continue to have access to certain valuable oral and written information, knowledge and data relating to the business and operations of the Company and its subsidiaries that is non-public, confidential or proprietary in nature and is particularly useful in the Death Care Business; and


WHEREAS, in view of the training provided by the Company to Employee, its cost to the Company, the need for the Company to be protected against disclosures by Employee of the Company's and its subsidiaries' trade secrets and other non-public, confidential or proprietary information, the Company and Employee desire, among other things, to prohibit Employee from disclosing or utilizing, outside the scope and term of his employment, any non-public, confidential or proprietary information, knowledge and data relating to the business and operations of the Company or its subsidiaries received by Employee during the course of his employment, and to restrict the ability of Employee to compete with the Company or its subsidiaries for a limited period of time.


NOW, THEREFORE, for and in consideration of the continued employment of Employee by the Company and the payment of wages, salary and other compensation to Employee by the Company, the parties hereto agree as follows:


ARTICLE I
EMPLOYMENT CAPACITY AND TERM


1. Prior Employment Agreement. Effective as of the Agreement Date, this Agreement supersedes the Employment Agreement dated November 1, 1992 between the Company and the Employee (the "Prior Agreement").
Capacity and Duties of Employee. The Employee is employed by the Company to render services on behalf of the Company as Senior Vice President-Finance, Chief Accounting Officer, Secretary and Treasurer. As the Senior Vice President-Finance, Chief Accounting Officer, Secretary and Treasurer, the Employee shall perform such duties as are assigned to the individual holding such title by the Company's Bylaws and such other duties, consistent with the Employee's job title, as may be prescribed from time to time by the Board of Directors of the Company (the "Board") and/or the Company's Chief Executive Officer and/or the Company's Chief Financial Officer.


2. Employment Term. The term of this Agreement (the "Employment Term") shall commence on the Agreement Date and shall continue through October 31, 2000, subject to any earlier termination of Employee's status as an employee pursuant to this Agreement.


3. Devotion to Responsibilities.


During the Employment Term, the Employee shall devote all of his business time to the business of the Company, shall use his reasonable best efforts to perform faithfully and efficiently his duties under this Agreement, and shall not engage in or be employed by any other business; provided, however, that nothing contained herein shall prohibit the Employee from (a) serving as a member of the board of directors, board of trustees or the like of any for-profit or non-profit entity that does not compete with the Company, or performing services of any type for any civic or community entity, whether or not the Employee receives compensation therefor, (b) investing his assets in such form or manner as shall require no more than nominal services on the part of the Employee in the operation of the business of the entity in which such investment is made, or (c) serving in various capacities with, and attending meetings of, industry or trade groups and associations, as long as the Employee's engaging in any activities permitted by virtue of clauses (a), (b) and (c) above does not materially and unreasonably interfere with the ability of the Employee to perform the services and discharge the responsibilities required of him under this Agreement. Notwithstanding clause (b) above, during the Employment Term, the Employee may not beneficially own more than 2% of the equity interests of a business organization required to file periodic reports with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Exchange Act") and may not beneficially own more than 2% of the equity interests of a business organization that competes with the Company. For purposes of this paragraph, "beneficially own" shall have the same meaning ascribed to that term in Rule 13d-3 under the Exchange Act.


ARTICLE II
COMPENSATION AND BENEFITS


During the Employment Term, the Company shall provide the Employee with the compensation and benefits described below:


1. Salary. A salary ("Base Salary") at the rate of $155,000 per fiscal year of the Company ("Fiscal Year"), payable to the Employee at such intervals as other salaried employees of the Company are paid.


2. Bonus. For the period ending October 31, 1995, the Employee shall be eligible to receive an incentive bonus, the amount of which shall be determined pursuant to Paragraph 4 of the Prior Agreement. This incentive bonus shall be paid in cash no later than 30 days following the filing of the Company's annual report on Form 10-K for the Fiscal Year ending October 31, 1995. For the period beginning November 1, 1995, the employee shall be eligible to receive a bonus (the "Bonus") of up to $75,000 per Fiscal Year. Such Bonus shall be comprised of two elements, the quantitative element and the qualitative element:


(a) The quantitative element shall be equal to 75% of the maximum Bonus of $75,000 and shall be based on the attainment of certain goals to be established by the Company's Compensation Committee and Employee.


(b) The qualitative element shall be 25% of the maximum Bonus of $75,000 and shall be awarded at the discretion of the Chief Financial Officer. The Chief Financial Officer and Employee shall establish incentive goals and other criteria for the award of the qualitative element.


The Bonus shall be paid in cash no later than 30 days following the filing of the Company's annual report on Form 10-K for the Fiscal Year in which the Bonus has been earned.


3. Benefits. The Company shall provide the Employee with the following fringe benefits and perquisites:


(a) At Employee's election, either a Company furnished automobile or an automobile allowance of $600 per month (in which case the Company will reimburse the Employee for all gasoline, maintenance, repairs and insurance for Employee's personal car as if it were a Company-owned vehicle);


(b) Reimbursement for membership dues, including assessments and similar charges, in one or more clubs deemed useful for business purposes in an amount not to exceed $8,000 or such additional amounts as may be approved by the Chief Financial Officer;


(c) First class air travel;


(d) Fully-paid insurance benefit package available to all employees; and


(e) All other benefit programs similar to those provided other employees of the Company.


4. 1995 Incentive Compensation Plan. The Employee shall be eligible to receive awards under the Company's 1995 Incentive Compensation Plan (the "1995 Plan").


5. Expenses. The Employee shall be reimbursed for reasonable out-of-pocket expenses incurred from time to time on behalf of the Company or any subsidiary in the performance of his duties under this Agreement, upon the presentation of such supporting invoices, documents and forms as the Company reasonably requests.


ARTICLE III
TERMINATION OF EMPLOYMENT


1. Death. The Employee's status as an employee shall terminate immediately and automatically upon the Employee's death during the Employment Term.


2. Disability. The Employee's status as an employee may be terminated for "Disability" as follows:


(a) The Employee's status as an employee shall terminate if the Employee has a disability that would entitle him to receive benefits under the Company's long- term disability insurance policy in effect at the time either because he is Totally Disabled or Partially Disabled, as such terms are defined in the Company's policy in effect as of the Agreement Date or as similar terms are defined in any successor policy. Any such termination shall become effective on the first day on which the Employee is eligible to receive payments under such policy (or on the first day that he would be so eligible, if he had applied timely for such payments).


(b) If the Company has no long-term disability plan in effect, if (i) the Employee is rendered incapable because of physical or mental illness of satisfactorily discharging his duties and responsibilities under this Agreement for a period of 90 consecutive days and (ii) a duly qualified physician chosen by the Company and acceptable to the Employee or his legal representatives so certifies in writing, the Board shall have the power to determine that the Employee has become disabled. If the Board makes such a determination, the Company shall have the continuing right and option, during the period that such disability continues, and by notice given in the manner provided in this Agreement, to terminate the status of Employee as an employee. Any such termination shall become effective 30 days after such notice of termination is given, unless within such 30-day period, the Employee becomes capable of rendering services of the character contemplated hereby (and a physician chosen by the Company and acceptable to the Employee or his legal representatives so certifies in writing) and the Employee in fact resumes such services.


(c) The "Disability Effective Date" shall mean the date on which termination of employment becomes effective due to Disability.


3. Cause. The Company may terminate the Employee's status as an employee for Cause. As used herein, termination by the Company of the Employee's status as an employee for "Cause" shall mean termination as a result of (a) the Employee's breach of this Agreement, or (b) the willful engaging by the Employee in gross misconduct injurious to the Company, which in either case is not remedied within 10 days after the Company provides written notice to the Employee of such breach or willful misconduct.


4. Good Reason. The Employee may terminate his status as an employee for Good Reason. As used herein, the term "Good Reason" shall mean:


(a) The occurrence of any of the following during the Employment Term:


(i) the assignment to the Employee of any duties or responsibilities that are inconsistent with the Employee's status, title and position as Senior Vice President-Finance, Chief Accounting Officer, Secretary and Treasurer;


(ii) any removal of the Employee from, or any failure to reappoint or reelect the Employee to, the position of Senior Vice President-Finance, Chief Accounting Officer, Secretary and Treasurer of the Company, except in connection with a termination of Employee's status as an employee as permitted by this Agreement;


(iii) the Company's requiring the Employee to be based anywhere other than in the New Orleans, Louisiana metropolitan area, except for required travel in the ordinary course of the Company's business;


(b) any breach of this Agreement by the Company that continues for a period of 10 days after written notice thereof is given by the Employee to the Company;


(c) the failure by the Company to obtain the assumption of its obligations under this Agreement by any successor or assign as contemplated in this Agreement; or


(d) any purported termination by the Company of the Employee's status as an employee for Cause that is not effected pursuant to a Notice of Termination satisfying the requirements of this Agreement.


5. Voluntary Termination by the Company. The Company may terminate the Employee's status as employee for other than death, Disability or Cause.


6. Voluntary Termination by the Employee. The Employee may terminate the Employee's status as employee for other than Good Reason.


7. Notice of Termination. Any termination by the Company for Disability or Cause, or by the Employee for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Article VI Section 2 of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice that (a) indicates the specific termination provision in this Agreement relied upon (b) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee's employment under the provisions so indicated and (c) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by the Employee or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason, Disability or Cause shall not negate the effect of the notice nor waive any right of the Employee or the Company, respectively, hereunder or preclude the Employee or the Company, respectively, from asserting such fact or circumstance in enforcing the Employee's or the Company's rights hereunder.


8. Date of Termination. "Date of Termination" means (a) if Employee's employment is terminated by reason of his death or Disability, the Date of Termination shall be the date of death of Employee or the Disability Effective Date, as the case may be, (b) if Employee's employment is terminated by the Company for Cause, or by Employee for Good Reason, the date of delivery of the Notice of Termination or any later date specified therein, (which date shall not be more than 30 days after the giving of such notice) as the case may be, (c) if the Employee's employment is terminated by the Company for reasons other than death, Disability or Cause, the Date of Termination shall be the date on which the Company notifies the Employee of such termination, and (d) if the Employee's employment is terminated by the Employee for reasons other than Good Reason, the Date of Termination shall be the date on which the Employee notifies the Company of such termination.


ARTICLE IV
OBLIGATIONS UPON TERMINATION


1. Death. If the Employee's status as an employee is terminated by reason of the Employee's death, this Agreement shall terminate without further obligations to the Employee's legal representatives under this Agreement, other than the obligation to make any payments due pursuant to employee benefit plans maintained by the Company or its subsidiaries.


2. Disability. If Employee's status as an employee is terminated by reason of Employee's Disability, this Agreement shall terminate without further obligation to the Employee, other than the obligation to make any payments due pursuant to employee benefit plans maintained by the Company or its subsidiaries.


3. Termination by Company for Reasons other than Death, Disability or Cause; Termination by Employee for Good Reason. If the Company terminates the Employee's status as an employee for reasons other than death, Disability or Cause, or the Employee terminates his employment for Good Reason, then


(a) 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; and


(b) with respect to all performance-based options granted to the Employee pursuant to the 1995 Plan,


(i) if the performance goals have been met as
of the Date of Termination, then such options
shall become exercisable as of the Date of
Termination (if not already exercisable) and shall
expire on the date that is the later of:


(A) 30 days after the Date of
Termination or


(B) 30 days after the first date on
which the exercise of the options and sale of
the underlying securities will not (1) be
matched with purchases or sales of the
Company's common stock prior to such Date of
Termination such as to cause the Employee to
incur a liability to the Company under
Section 16 of the Exchange Act and (2)
destroy the Section 16 exemption for the
grant of the options.
(ii) if the performance goals have not been
met as of the Date of Termination, then


(A) if the performance goals are not met
by the close of business on the day that is
180 days after the Date of Termination, then
the options shall expire on such day; and


(B) if the performance goals are met by
the close of business on the day that is 180
days after the Date of Termination, then the
options shall become exercisable as of the
date such performance goals are met (the
"Vesting Date") and shall expire on the date
that is the later of:


(1) 30 days after the Vesting Date
or


(2) 30 days after the first date on
which the exercise of the options and
sale of the underlying securities will
not (I) be matched with purchases or
sales of the Company's common stock
prior to such Date of Termination such
as to cause the Employee to incur a
liability to the Company under Section
16 of the Exchange Act and (II) destroy
the Section 16 exemption for the grant
of the options.


4. Cause. If the Employee's status as an employee is terminated by the Company 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 subsidiaries.


5. Termination by Employee for Reasons other than Good Reason. If 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 one-half of 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.


6. Resignation. If Employee is a director of the Company and his employment is terminated for any reason other than death, the Employee shall, if requested by the Company, immediately resign as a director of the Company. If such resignation is not received when so requested, the Employee shall forfeit any right to receive any payme ...