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Item 15.
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Indemnification of Directors and Officers.
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The following summaries
are qualified in their entirety by reference to the complete text of any statutes referred to below and the organizational documents of Carriage.
I
NDEMNIFICATION
OF
D
IRECTORS
AND
O
FFICERS
OF
C
ARRIAGE
S
ERVICES
, I
NC
.
Section 145 of the Delaware General Corporation Law (the
“DGCL”) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that the person is or was a director, officer, employee or other agent of the corporation (an “officer or director”), if the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. Indemnification may be made against expenses, including
attorneys’ fees, judgments, fines and settlements paid in settlement actually and reasonably incurred by the person in connection with the proceeding; except, in an action by or in the right of the corporation, indemnification is limited to
expenses, including attorneys’ fees, actually and reasonably incurred in the defense or settlement of the action. Additionally, no indemnification may be made without court order with respect to any claim, issue, or matter as to which the
person shall have been adjudged to be liable to the corporation in the performance of that person’s duty to the corporation and its shareholders, or with respect to any settlement or expenses incurred in defending a pending action which settled
without court approval. The termination of any action, suit or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent does not, of itself, create a presumption that the person did not meet the
standard of conduct required by the DGCL.
Section 145(c) provides that, to the extent that a present or former officer or director
of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses, including attorneys’ fees,
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actually and reasonably incurred by such person in connection therewith. Section 145(b) adds that a court may also order indemnification if it determines that the person is fairly and
reasonably entitled to indemnification in view of all the relevant circumstances.
Under Section 145(d) of the DGCL, unless ordered
by a court, a corporation may not indemnify an officer or director if the person’s conduct did not satisfy the standards set forth above. The determination as to whether indemnification is permissible must be made as follows: (1) by a
majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum; (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum;
(3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion; or (4) by the stockholders.
Section 145(g) provides that a corporation may purchase and maintain insurance on behalf of a person who is or was an officer or director
of the corporation against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person
against such liability under the DGCL. Section 145(f) adds that the indemnification provided by, or granted pursuant to, the DGCL is not exclusive of any other rights to which those seeking indemnification may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (i) for any breach of the
director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or
(iv) for any transaction from which the director derived an improper personal benefit.
Article X of our Amended and Restated
Certificate of Incorporation (the “Charter”) provides that we will indemnify and hold harmless any person who was, is, or is threatened to be made a party to a proceeding by reason of the fact that he or she: (1) is or was a director
or officer of the Company; or (2) while a director or officer of the Company, is or was serving at the request of the Company as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another
foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise, to the fullest extent permitted under the DGCL. Article X further provides that we may also indemnify any employee
or agent to the fullest extent permitted under the DGCL. The right to indemnification under Article X of the Charter is a contract right which includes, with respect to directors and officers, the right to be paid by the Company the expenses
incurred in defending any such proceeding in advance of its disposition to the maximum extent permitted under the DGCL.
Article 8.0 of
our Amended and Restated By-Laws, as amended (the “By-Laws”), also provides that we will indemnify our directors and officers, and are authorized to indemnify employees and agents, to the fullest extent permitted by the DGCL, except:
(1) for any breach of their duty of loyalty to the Company or the Company’s stockholders; (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; or (3) for any
transaction from which such director or officer derived an improper benefit. The By-Laws also permit our Board of Directors to authorize the advancement of expenses to any director or officer of the Company, subject to a written undertaking to repay
such advance if it is later determined that the indemnitee does not satisfy the standard of conduct required for indemnification. Additionally, pursuant to the By-Laws, the Chairman of our Board of Directors is authorized to enter into
indemnification contracts with each director and officer of the Company.
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I
NDEMNIFICATION
OF
D
IRECTORS
AND
O
FFICERS
OF
A
DDITIONAL
R
EGISTRANTS
The following summarizes the
indemnification of the directors and officers of subsidiaries of Carriage Services, Inc. that are additional registrants under this registration statement.
Delaware Additional Registrants
Carriage Funeral Holdings, Inc., CFS Funeral Services, Inc., Carriage Holding Company, Inc., Carriage Internet Strategies, Inc., Carriage
Management, Inc., Carriage Life Events, Inc., Carriage Pennsylvania Holdings, Inc., Carriage Funeral Management, Inc., Carriage Florida Holdings, Inc., Carriage Services Investment Advisors, Inc., Carriage Merger VI, Inc., CRSE Holdings, Inc., PNCA,
Inc., Carriage Operations, Inc., Carriage Services of Tennessee, Inc., each a Delaware corporation (each a “Delaware Corporate Subsidiary”)
.
The indemnification provisions of the DGCL described in “
Indemnification of Directors and Officers of Carriage Services,
Inc.
” above also relate to the directors and officers of each Delaware Corporate Subsidiary.
The bylaws of each Delaware
Corporate Subsidiary contain indemnification provisions that provide for the indemnification of its directors and officers to the fullest extent permitted by the DGCL, as amended. In addition, the bylaws of each Delaware Corporate Subsidiary
specifically authorize each corporation to purchase and maintain insurance to protect itself and its directors and officers against any expense, liability or loss, whether or not the corporation would have the power to indemnify such persons against
such expense, liability or loss under its bylaws. The bylaws of each Delaware Corporate Subsidiary also permit the corporation to authorize the advancement or reimbursement of expenses to any of its director or officer, subject to a written
undertaking by such person to repay such amounts if it is later determined that the indemnitee is not entitled to indemnification.
The
certificate of incorporation of each Delaware Corporate Subsidiary contains provisions eliminating a director’s personal liability for monetary damages for breach of fiduciary duty as a director, except in circumstances involving: (i) a
breach of a director’s duty of loyalty to the corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or knowing violations of law, (iii) the unlawful payment of dividends or
stock purchase or redemption, or (iv) transactions from which a director derived an improper personal benefit.
Carriage Team
California (Cemetery), LLC, Carriage Team California (Funeral), LLC, Carriage Team Florida (Cemetery), LLC, Carriage Team Florida (Funeral), LLC, Carriage Services of Ohio, LLC, Carriage Team Kansas, LLC, each a Delaware limited liability company
(each, a “Delaware LLC Subsidiary”)
.
Section 18-108 of the Delaware Limited Liability Company Act
(“DLLCA”), provides that, subject to such standards and restrictions, if any, as are set forth in its limited liability company agreement, a limited liability company may, and shall have the power to, indemnify and hold harmless any
member, manager or other person from and against any and all claims and demands whatsoever.
The limited liability company agreement of
each Delaware LLC Subsidiary contains indemnification provisions that provide for the indemnification of its managers, and authorize the indemnification of its officers, to the fullest extent permitted by the DLLCA, as amended. Each limited
liability company agreement expressly acknowledges that such indemnification could involve indemnification for negligence or under theories of strict liability. In addition, the limited liability company agreement of each Delaware LLC Subsidiary
specifically authorizes the company to purchase and maintain insurance to protect itself and its managers and officers against any expense, liability or loss, whether or not the company would have the power to indemnify such persons against such
expense, liability or loss under its limited liability company agreement. The limited liability company agreement of each Delaware LLC Subsidiary also permits the company to authorize the advancement or reimbursement of expenses to any of its
managers, subject to a written undertaking by such person to repay such amounts if it is later determined that the indemnitee is not entitled to indemnification.
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The certificate of formation of each Delaware LLC Subsidiary provides that, to the fullest extent
permitted by Delaware law, a manager of the company shall not be liable to the company or its members for monetary damages for an act or omission in such manager’s capacity as a manager.
California Additional Registrants
Wilson & Kratzer Mortuaries (“WKM”), Rolling Hills Memorial Park (“RHMP”), Carriage Funeral Services of
California, Inc., Carriage Cemetery Services of California, Inc., Cochrane’s Chapel of the Roses, Inc., Horizon Cremation Society, Inc., each a California corporation (each a “California Subsidiary”)
.
Section 317 of the California Corporations Code (“CCC”) provides that a corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor) by reason of the fact that the person is or was an agent of the corporation,
against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with the proceeding, if that person acted in good faith and in a manner the person reasonably believed to be in the best interests of
the corporation, and in the case of a criminal proceeding, had no reasonable cause to believe the conduct of the person was unlawful. The decision to indemnify a person could be made by a majority of the directors who are nor involved in the
proceeding, or if such quorum is not obtainable, by approval from independent counsel in a written legal opinion, or by the court in which the proceeding is or was pending. Section 317 of the CCC also provides for certain number of votes in
case of stockholder approval of indemnification and excludes the vote of the potentially indemnified person.
Section 317 of the CCC
is not exclusive of other indemnification that may be granted by a corporation’s articles of incorporation, bylaws, disinterested director vote, stockholders vote, agreement or otherwise, subject in each case to the applicable limits set forth
in Section 204 of the CCC.
Neither the bylaws nor the articles of incorporation of any California Subsidiary, other than WKM,
contain provisions regarding the indemnification of directors and officers. The bylaws of WKM contain indemnification provisions providing for the indemnification of its officers and directors to the fullest extent permitted by the CCC.
The articles of incorporation of each California Subsidiary, other than RHMP, provide that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permitted by California law.
Connecticut Additional Registrant
Carriage Services of Connecticut, Inc., a Connecticut corporation (the “Connecticut Subsidiary”)
.
Section 33-756 of the Connecticut Business Corporation Act (the “CBCA”) provides that a director is not liable for action taken
as a director, or any failure to take any action, if (1) he acted in good faith, (2) he acted with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and (3) in a manner he reasonably
believes to be in the best interests of the corporation.
Section 33-779 of the CBCA provides that a corporation may provide
indemnification of or advance expenses to a director, officer, employee or agent only as permitted by Section 33-770 to 33-778, inclusive of the CBCA.
Section 33-771of the CBCA further provides that a corporation incorporated prior to January 1, 1997 shall, except to the extent that
the certificate of incorporation expressly provides otherwise, indemnify any director, officer, employee or agent who is made a party to any proceeding, other than an action by or in the right of the corporation or any proceeding with respect to
which he was adjudged liable on the basis that he received financial benefit to which he was not entitled, whether or not involving action in his official capacity, against
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liability incurred in the proceeding if (1) (A) he conducted himself in good faith, and (B) he reasonably believed (i) in the case of conduct in his official capacity with the
corporation, that his conduct was in the best interests of the corporation, and (ii) in all other cases, that his conduct was at least not opposed to the best interests of the corporation, and (C) in the case of any criminal proceeding, he
had no reasonable cause to believe his or her conduct was unlawful or (2) he engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the certificate of incorporation as authorized by
subdivision (5) of subsection (b) of Section 33-636 of the CBCA. Termination of a proceeding by judgment, order, settlement or conviction or a plea of nolo contendere or its equivalent is not, of itself, determinative that the
director or officer did not meet the standard of conduct required by the CBCA.
Section 33-772 of the CBCA provides that a
corporation shall indemnify a director or an officer who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he was a director of the corporation against reasonable expenses incurred by
him in connection with the proceeding.
Section 33-773 permits a corporation to pay expenses incurred by the indemnified party in
defending an action, suit or proceeding in advance of final disposition if approved by the board of directors or shareholders and accompanied by (1) a signed written affirmation that the director in good faith believes he complied with the
standard of conduct in 33-771(a) and (2) an undertaking by the indemnified party to repay such amounts if it later determined that he is not entitled to indemnification
Unless ordered by a court under Section 33-774 of the CBCA, a corporation may not indemnify a director under Section 33-771 of the
CBC (1) in connection with a proceeding by or in the right of the corporation except for reasonable expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under
subsection (a) of Section 33-771 of the CBCA or (2) in connection with any proceeding with respect to conduct for which the director was adjudged liable on the basis that he received a financial benefit to which he was not entitled,
whether or not involving action in his official capacity.
Section 33-777 of the CBCA provides that a corporation may purchase and
maintain insurance on behalf of directors, officers, employees or agents of the corporation, or who, while a director, officer, employee or agent of the corporation serves at the corporation’s request as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other entity, against liability asserted against or incurred by him in that capacity, or arising from his status as a director, officer, employee
or agent, whether or not the corporation would have the power to indemnify or advance expenses to him against the same liabilities under the CBCA.
Section 33-778 permits a corporation by a provision in its certificate of incorporation or bylaws or in a resolution adopted by its
shareholder or directors to obligate itself to provide indemnification in accordance with these provisions or advance funds to pay or reimburse expenses.
Neither the bylaws or certificate of incorporation of the Connecticut Subsidiary contain provisions regarding the indemnification of directors
and officers or limitations on the liability of directors.
Idaho Additional Registrants
Carriage Cemetery Services of Idaho, Inc. (“CCS Idaho”) and Cloverdale Park, Inc. (“Cloverdale Park”), Idaho
corporations (the “Idaho Subsidiaries”)
.
Section 851 of the Idaho Business Corporation Act (the
“IBCA”) provides that a corporation may indemnify any individual who is a party to a proceeding because he is a director, as long as such individual conducted himself in good faith and reasonably believed that his conduct in his official
capacity was in the best interest of the corporation, or in all other cases, his conduct was not opposed to the best interests of the corporation, or (in the case of criminal proceedings) he had no reasonable cause to believe his conduct was
unlawful. Unless
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ordered by a court, an Idaho corporation may not indemnify a director in connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred, if it is
determined that the director has met the relevant standard of conduct as outlined in the preceding sentence, or in connection with a proceeding with respect to which he was adjudged liable on the basis that he received a financial benefit to which
he was not entitled, whether or not involving action in his official capacity. Section 856 of the IBCA provides that an Idaho corporation may indemnify an officer to the same extent as a director, and if the person seeking indemnification is an
officer and not a director, he or she may be indemnified to such further extent as may be provided by the articles of incorporation, the bylaws, a resolution of the board of directors, or contract, except for (a) liability in connection with
proceeding by or in the right of the corporation other than for reasonable expenses incurred in the proceeding, (b) liability arising out of conduct that constitutes receipt of financial benefit to which he is not entitled, intentional
infliction of harm to the corporation or the shareholders, or intentional violation of criminal law.
The bylaws of CCS Idaho expressly
adopt Title 30 of the Idaho Code. Neither the articles of incorporation nor the bylaws of Cloverdale Park contain indemnification provisions.
Kentucky Additional Registrant
Carriage Funeral Services of Kentucky, Inc., a Kentucky corporation (the “Kentucky Subsidiary”)
.
Sections 271B.8-500 through 271B.8-580 of the Kentucky Business Corporation Act (the “KBCA”) govern indemnification of corporate
directors and officers. Under the KBCA, a person may be indemnified by a corporation against judgments, fines, amounts paid in settlement and reasonable expenses (included attorneys’ fees) in connection with any threatened or pending suit or
proceeding, whether civil or criminal, by reason of the fact that he is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director or officer, employee or agent of another entity, if such
director or officer acted in good faith and he reasonably believed (a) in the case of conduct in his official capacity with the corporation, the his conduct was in the corporation’s best interest, and (b) in all other cases, that his
conduct was at least not opposed to the corporation’s best interest, and, (c) in case of criminal proceeding, he had no reasonable cause to believe that his conduct was unlawful. A Kentucky corporation may not indemnify a director in a
suit by or in the right of the corporation in which the director was adjudged liable to the corporation, or in connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity,
in which he was adjudged liable on the basis that personal benefit was improperly received by him. The KBCA provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be
entitled under any bylaw, agreement, vote of shareholders or disinterested directors, or otherwise.
The articles of incorporation of the
Kentucky Subsidiary provides that, to the fullest extent permitted by Kentucky law, a director of the company shall not be liable to the company or its shareholders for monetary damages for breach of fiduciary duty as a director of the company. The
bylaws of each Kentucky Subsidiary do not contain indemnification provisions.
Louisiana Additional Registrant
Carriage Services of Louisiana, Inc., a Louisiana corporation (the “Louisiana subsidiary”)
.
Under Section 83 of the Louisiana Business Corporation Law (the “LBCL”), a Louisiana corporation may indemnify any person who
was or is a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another business, foreign or nonprofit corporation, partnership, joint venture or other
enterprise. Indemnified expenses include attorney fees,
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judgments, fines, amounts paid in settlement and other expenses actually and reasonably incurred by the indemnified party in connection with the action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In the case of
actions by or in the right of the corporation, no indemnity is permitted under Section 83 of the LBCL if the relevant person is determined, in a final non-appealable judgment, to be liable for willful or intentional misconduct in the
performance of his duty to the corporation, unless a court determines otherwise.
If a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any action referred to in the previous paragraph or any claim therein, the corporation must indemnify him against expenses actually and reasonably incurred in connection with
such matter. Section 83 of the LBCL permits a corporation to pay expenses incurred by the indemnified party in defending an action, suit or proceeding in advance of the final disposition if approved by the board of directors and accompanied by
an undertaking by the indemnified party to repay such amounts if it is later determined that he is not entitled to indemnification. Section 83 of the LBCL also authorizes Louisiana corporations to buy liability insurance on behalf of any
current or former director, officer, agent or employee. The indemnification and expense advancement provisions contained in Section 83 of the LBCL are not exclusive of any other rights to which those indemnified may be entitled under any bylaw,
agreement, shareholder or director authorization or otherwise.
The articles of incorporation of the Louisiana Subsidiary do not contain
indemnification provisions. The bylaws of the Louisiana Subsidiary contain indemnification provisions that provide for the indemnification of its directors and officers to the fullest extent permitted by the LBCL.
Maryland Additional Registrant
Hubbard Funeral Home, Inc., a Maryland corporation (the “Maryland Subsidiary”)
.
Section 2-418 of the Maryland General Corporation Law (“MGCL”) permits indemnification of any officer or director made a party
to any proceeding by reason of service as an officer or director unless it is established that: (i) the act or omission of such person was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of
active and deliberate dishonesty; (ii) such person actually received an improper personal benefit in money, property or services; or (iii) in the case of any criminal proceedings, such person had reasonable cause to believe that the act or
omission was unlawful.
The indemnity may be against judgments, penalties, fines, settlements and reasonable expenses (including
attorneys’ fees) actually incurred by the director or officer in connection with the proceeding; but, if the proceeding is one by, or in the right of, the corporation, indemnification is not permitted with respect to any proceeding in which the
director or officer has been adjudged to be liable to the corporation. If the proceeding is one charging improper personal benefit to the director or officer, whether or not involving action in the director’s or officer’s official
capacity, indemnification of the director or officer is not permitted if the director or officer was adjudged to be liable on the basis that personal benefit was improperly received. Under Section 2-418 of the MGCL, the corporation is required
to indemnify a director for reasonable expenses incurred if such individual has been successful, on the merits or otherwise, in defense of any proceeding arising out of such individual’s official capacity. Indemnification under the provisions
of Maryland law is not deemed exclusive of any other rights, by indemnification or otherwise, to which a director may be entitled under the charter, bylaws, any resolution of stockholders or directors, any agreement or otherwise.
The bylaws of the Maryland Subsidiary contain provisions providing for the indemnification of officers and directors if the officer or
director acted in good faith and in a manner reasonably believed to be in the best interest of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In addition, the
bylaws specifically authorize the corporation to purchase and maintain insurance to protect itself and its directors and officers against any expense, liability or loss, whether or
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not the corporation would have the power to indemnify such persons against such expense, liability or loss under the MGCL.
Massachusetts Additional Registrants
CSI Funeral Services of Massachusetts, Inc., Forastiere Family Funeral Service, Inc., Carriage Insurance Agency of Massachusetts, Inc.,
Cataudella Funeral Home, Inc. (“Cataudella”), each a Massachusetts corporation (each a “Massachusetts Subsidiary”).
Section 8.51of the Massachusetts Business Corporation Act (“MBCA”) provides that a corporation may indemnify its directors
against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement reasonably incurred in connection with any litigation or other legal proceeding brought against any director by virtue of his position as a director
of the corporation unless he is deemed to have not acted in good faith in the reasonable belief that his action was in the best interest of the corporation.
Section 8.52 of the MBCA provides that a corporation must indemnify a director who is wholly successful, on the merits or otherwise, in
the defense of any proceeding to which the director was a party because he was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding.
Section 8.56 of the MBCA provides that a corporation may indemnify its officers to the same extent as its directors and, for officers
that are not directors, to the extent provided by (i) the articles of organization, (ii) the bylaws, (iii) a vote of the board of directors or (iv) a contract. In all instances, the extent to which a corporation provides
indemnification to its officers under Section 8.56 of the MBCA is optional.
Section 8.57 of the MBCA authorizes a corporation
to purchase and maintain insurance on behalf of an individual who is a director or officer of the corporation, or who, while a director or officer of the corporation, serves at the corporation’s request as a director, officer, partner, trustee,
employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan, or other entity, against liability asserted against or incurred by him in that capacity or arising from his status as a director
or officer, whether or not the corporation would have power to indemnify or advance expenses to him against such liability.
The articles
of organization of each Massachusetts Subsidiary, except Cataudella, contain indemnification provisions that provide for the indemnification of its directors and officers to the fullest extent permitted by the MBCA. The bylaws of Cataudella contain
indemnification provisions that provide for the indemnification of its directors and officers to the fullest extent permitted by the MBCA if: (1)(i) he or she conducted himself or herself in good faith; and (ii) he or she reasonably
believed that his or her conduct was in the best interests of the corporation or that his or her conduct was at least not opposed to the best interests of the corporation; and (iii) in the case of any criminal proceeding, he or she had no
reasonable cause to believe his or her conduct was unlawful; or (2) he or she engaged in conduct for which he or she shall not be liable under a provision of the articles of organization authorized by Section 2.03(b)(4) of the MBCA. In
addition, the articles of organization of each Massachusetts Subsidiary provide that, to the fullest extent permitted by the MBCA, a director of the company shall not be liable to the company or its shareholders for monetary damages for breach of
fiduciary duty as a director of the company.
Michigan Additional Registrant
Carriage Funeral Services of Michigan, Inc., a Michigan corporation (the “Michigan Subsidiary”).
Section 450.1561 of the Michigan Business Corporation Act (“MIBCA”) provides that a Michigan corporation shall have power to
indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, including
an action by or in the right of the corporation to procure
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judgment in its favor, by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, whether for profit or not, against expenses, including attorneys’ fees, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if the person acted in good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation or its shareholders, and, with respect to any criminal action or proceeding, if the person had no reasonable cause to believe his conduct was unlawful. In connection with an action by or in the right of the
corporation, indemnification may only be made for expenses, including attorney’s fees, actually and reasonably incurred, and for judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred. Section 450.1563
of the MIBCA states that, to the extent that a director, officer, employee, or agent of a corporation has been successful on the merits or other in defense of an action, suit, or proceeding, or in defense of a claim, issue, or matter in the action,
suit, or proceeding, he or she shall be indemnified against actual and reasonable expenses, including attorneys’ fee, incurred by him or her in connection with the action, suit or proceeding and an action, suit, or proceeding brought to enforce
the mandatory indemnification provided in this section. Section 450.1567 of the MIBCA allows Michigan corporations to purchase and maintain insurance on behalf of any of the persons described above, whether or not the corporation would have the
power to indemnify such persons against liability under Sections 561 to 565 of the MIBCA.
The certificate of incorporation and bylaws of
the Michigan Subsidiary contain provisions eliminating a director’s personal liability for monetary damages for breach of fiduciary duty as a director, except in circumstances involving: (i) a breach of a director’s duty of loyalty to
the corporation or its shareholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or knowing violations of law, (iii) the unlawful payment of dividends or stock purchase or redemption, or
(iv) transactions from which a director derived an improper personal benefit.
The bylaws of the Michigan Subsidiary contain
provisions providing for the indemnification of officers and directors if the officer or director (i) acted in good faith, (ii) acted in a manner he or she reasonably believed to be in the best interest of the corporation or its
shareholders, and (iii) submits a written claim for indemnification. In addition, the bylaws specifically authorize the corporation to purchase and maintain insurance to protect itself and its directors and officers against any expense,
liability or loss, whether or not the corporation would have the power to indemnify such persons against such expense, liability or loss under its bylaws or the MIBCA.
Nevada Additional Registrants
Carriage Services of Nevada, Inc., Carriage Municipal Cemetery Services of Nevada, Inc., each a Nevada corporation (each a “Nevada
Subsidiary”).
Section 78.7502 of the Nevada Revised Statutes provides that a corporation may indemnify directors or
officers who were, are, or are threatened to be made a party in a completed, pending or threatened proceeding, whether civil, criminal, administrative or investigative, by reason of the person’s being or having been an officer or director of
the corporation or serving in certain capacities at the request of the corporation. The person to be indemnified must have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action, such person must have had no reasonable cause to believe his or her conduct was unlawful. With respect to actions by or in the right of the corporation, indemnification may not be made for any
claim, issue or matter as to which such a person has been finally adjudged by a court of competent jurisdiction to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in
which the action was brought or other court of competent jurisdiction determines upon application that in view of all circumstances the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
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Neither the bylaws or articles of incorporation of the Nevada Subsidiaries contain provisions
regarding the indemnification of directors and officers or limitations on the liability of directors.
New Mexico Additional Registrant
Carriage Services of New Mexico, Inc., a New Mexico corporation (the “New Mexico Subsidiary”).
Section 53-11-4.1 of the New Mexico Business Corporation Act (“NMBCA”) empowers a corporation to indemnify any officer or
director against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the person in connection with any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, if the person acted in good faith and (a) in the case of conduct in the person’s official capacity, that the person’s conduct was in the best interest of the corporation, and (b) in all other cases, the
person’s conduct was at least not opposed to the corporation’s best interest, and (c) with respect to a criminal proceeding, the person had no reasonable cause to believe that his conduct was unlawful. Indemnification may be made
against judgments, penalties, fines, settlements and reasonable expenses actually incurred by the person in connection with the proceeding, but may be limited or unavailable with respect to certain proceedings. In some instances, indemnification of
a director may be mandatory or, upon the application of a director, may be ordered by a court. Reasonable expenses incurred by a director may, under certain circumstances, be paid or reimbursed in advance of a final disposition of a proceeding.
Unless limited by its articles of incorporation, a corporation may (or, as the case may be, shall) indemnify and advance expenses to an officer of the corporation to the same extent as to a director under Section 53-11-4.1 of the NMBCA. Such
section empowers a corporation to maintain insurance or furnish similar protection on behalf of any officer of director against any liability asserted against the person in such capacity whether or not the corporation would have the power to
indemnify the person against such liability under the provisions described above. The indemnification provisions described above are not exclusive of any other rights to which an officer of director may be entitled under the articles of
incorporation, the bylaws, an agreement, a resolution of shareholders or directors or otherwise.
Neither the bylaws or articles of
incorporation of the New Mexico Subsidiary contain provisions regarding the indemnification of directors and officers or limitations on the liability of directors.
Ohio Additional Registrant
CHC Insurance Agency of Ohio, Inc., an Ohio corporation (the “Ohio Subsidiary”).
Section 1701.13(E)(1) of the Ohio General Corporation Law (“OGCL”) provides that a corporation may indemnify or agree to
indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed proceeding (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a
director or officer of the corporation, against expenses and liability reasonably incurred by the director or officer in connection with such proceeding if the director or officer acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that this conduct was unlawful. In connection with any threatened, pending, or completed
proceeding, by or in the right of the corporation to procure a judgment in its favor, no indemnification shall be made (subject to certain exceptions) if: (a) such person shall have been adjudged to be liable for negligence or misconduct in the
performance of the person’s duty to the corporation unless and only to the extent that the court in which the proceeding was brought shall determine upon application that, despite the adjudication of liability, in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper; or (b) the only liability asserted against a director in a proceeding is for the director voting for or assenting to the
following: the payment of a dividend or distribution, the making of a distribution of assets to shareholders, or the purchase or redemption of the corporation’s own shares in violation of Ohio law or the corporation’s articles of
incorporation; a distribution of assets to shareholders during the winding up of the
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affairs of the corporation, or on dissolution or otherwise, without the payment of all known obligations of the corporation or without making adequate provision for their payment; or the making
of a loan, other than in the usual course of business, to an officer, director or shareholder of the corporation other than in the case of at the time of the making of the loan, a majority of the disinterested directors of the corporation voted for
the loan and, taking into account the terms and provisions of the loan and other relevant factors, determined that the making of the loan could reasonably be expected to benefit the corporation.
Section 1701.13(E) of the OGCL permits a corporation to pay expenses (including attorneys’ fees) incurred by a director, officer,
employee or agent as they are incurred, in advance of the final disposition of the action, suit or proceeding, as authorized by the corporation’s directors and upon receipt of an undertaking by such person to repay such amount if it is
ultimately determined that such person is not entitled to indemnification.
Section 1701.13(E) of the OGCL states that the
indemnification provided thereby is not exclusive of, and is in addition to, any other rights granted to persons seeking indemnification under a corporation’s articles or regulations, any agreement, a vote of the corporation’s shareholders
or disinterested directors, or otherwise. In addition, Section 1701.13(E) of the OGCL grants express power to a corporation to purchase and maintain insurance or furnish similar protection, including trust funds, letters of credit and
self-insurance, for director, officer, employee or agent liability, regardless of whether that individual is otherwise eligible for indemnification by the corporation
The regulations of the Ohio Subsidiary contain indemnification provisions that provide for the indemnification of its directors and officers
if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In
addition, the regulations specifically authorize the corporation to purchase and maintain insurance to protect itself and its directors and officers against any expense, liability or loss, whether or not the corporation would have the power to
indemnify such persons against such expense, liability or loss under its regulations.
Oklahoma Additional Registrant
Carriage Services of Oklahoma, L.L.C., an Oklahoma limited liability company (the “Oklahoma Subsidiary”).
Section 2003 of the Oklahoma Limited Liability Company Act (“OLLCA”) provides that an Oklahoma limited liability company may
indemnify and hold harmless any member, agent, or employee from and against any and all claims and demands whatsoever, except in the case of action or failure to act by the member, agent, or employee which constitutes willful misconduct or
recklessness, and subject to the standards and restrictions, if any, set forth in the articles of organization or operating agreement.
Section 2017 of the Oklahoma Limited Liability Company Act (“OLLCA”) provides that the articles of organization or operating
agreement of a limited liability company may provide for the indemnification of members or managers of the company. Under the OLLCA, the articles of organization or operating agreement may also eliminate or limit the liability of a member or manager
for monetary damages for breach of fiduciary duty, except in circumstances involving (i) a manager’s breach of the duty of loyalty to the company or its members, (ii) acts or omissions not in good faith or which involve intentional
misconduct or knowing violations of the law, or (iii) any transaction from which the manager derived an improper personal benefit.
The operating agreement of the Oklahoma Subsidiary contains indemnification provisions that provide for the indemnification of its managers
and officers to the fullest extent permitted by the OLLCA. In addition, the operating agreement specifically authorizes the company to purchase and maintain insurance to protect itself and its managers and officers against any expense, liability or
loss, whether or not the company would have the power to indemnify such persons against such expense, liability or loss under its operating agreement.
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Texas Additional Registrant
Carriage Cemetery Services, Inc., a Texas corporation (the “Texas Subsidiary”)
Chapter 8 of the Texas Business Organizations Code (the “TBOC”) permits a corporation to indemnify a director who was, is or is
threatened to be a named defendant or respondent in a proceeding as a result of the performance of his duties if such person acted in good faith and, in the case of conduct in the person’s official capacity as a director, in a manner he
reasonably believed to be in the best interests of the corporation and, in all other cases, that the person’s conduct was not opposed to the best interests of the corporation and with respect to any criminal action or proceeding, that such
person had no reasonable cause to believe his conduct was unlawful. The TBOC further permits a corporation to eliminate in its charter all monetary liability of the corporation’s directors to the corporation or its stockholders for conduct in
performance of such director’s duties.
Sections 8.101 and 8.103 of the TBOC provide that a corporation may indemnify a person who
was, is or is threatened to be a named defendant or respondent in a proceeding because the person is or was a director only if a determination is made that such indemnification is permissible under the TBOC: (i) by a majority vote of the
directors who at the time of the vote are disinterested and independent, regardless of whether such directors constitute a quorum, (ii) by a majority vote of a board committee designated by a majority of disinterested and independent directors
and consisting solely of disinterested and independent directors, (iii) by special legal counsel selected by the board of directors or a committee of the board of directors as set forth in (i) or (ii), (iv) by the stockholders in a
vote that excludes the shares held by directors who are not disinterested and independent, or (v) by a unanimous vote of the stockholders.
Section 8.104 of the TBOC provides that the corporation may pay or reimburse, in advance of the final disposition of the proceeding,
reasonable expenses incurred by a present director who was, is or is threatened to be made a named defendant or respondent in a proceeding after the corporation receives a written affirmation by the director of his good faith belief that he has met
the standard of conduct necessary for indemnification under Section 8.101 and a written undertaking by or on behalf of the director to repay the amount paid or reimbursed if it is ultimately determined that he has not met that standard or if it
is ultimately determined that indemnification of the director is not otherwise permitted under the TBOC. Section 8.105 also provides that reasonable expenses incurred by a former director or officer, or a present or former employee or agent of
the corporation, who was, is or is threatened to be made a named defendant or respondent in a proceeding may be paid or reimbursed by the corporation, in advance of the final disposition of the action, as the corporation considers appropriate.
Section 8.105 of the TBOC provides that a corporation may indemnify and advance expenses to a person who is not a director, including an
officer, employee or agent of the corporation as provided by: (i) the corporation’s governing documents, (ii) an action by the corporation’s governing authority, (iii) resolution by the stockholders, (iv) contract, or
(v) common law. As consistent with Section 8.105, a corporation may indemnify and advance expenses to persons who are not directors to the same extent that a corporation may indemnify and advance expenses to directors.
The bylaws of the Texas Subsidiary contain indemnification provisions providing for the indemnification of directors only if it is determined
that the director (i) conducted himself in good faith, (ii) reasonably believed that, in the case of conduct in his official capacity as a director or officer of the corporation, such conduct was in the corporation’s best interests;
and, in all other cases, that such conduct was at least not opposed to the corporation’s best interests, and (iii) in the case of a criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. If a director is
wholly successful, on the merits or otherwise, in connection with such a proceeding, such indemnification is mandatory. The bylaws also provide that a court may order the indemnification of a director if the court, upon application of the director,
determines that such director is fairly and reasonably entitled to indemnification in view of the relevant circumstances. An officer of the corporation may be indemnified to the same extent as a director who is successful in a proceeding or who
applies to a court for indemnification. The bylaws specifically authorize the corporation to purchase and maintain insurance to
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protect itself and its directors and officers against any expense, liability or loss, whether or not the corporation would have the power to indemnify such persons against such expense, liability
or loss under its bylaws or the TBOC.
The articles of incorporation of the Texas Subsidiary provide that, to the fullest extent permitted
by Texas law, a director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director of the corporation.