EMPLOYMENT AGREEMENT
This Agreement is made this 3rd day of November 1998 by and between Rose Hills
Company ("the Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
WHEREAS, it is the mutual intent of the parties hereto that ▇▇▇▇▇ be employed as
Senior Vice President and Chief Financial Officer of the Company, and
WHEREAS, it is the intent to set forth in this Agreement the terms and
conditions of said employment.
In consideration of these premises and other good and valuable consideration,
the receipt
and sufficiency of which are hereby acknowledged, the parties hereby covenant
and agree as follows:
1. EMPLOYMENT
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1.1 During the term of this Agreement and subject to its terms and conditions,
▇▇▇▇▇ shall be employed as Senior Vice President and Chief Financial
Officer of the Company. In said capacity, ▇▇▇▇▇ shall report to the Chief
Executive Officer of the Company or to such person(s) as the Board of
Directors of the Company ("the Board") may, from time to time direct, and
shall have such powers, responsibilities and authorities as may be, from
time to time, assigned to him by the Board.
1.2 This Agreement shall continue in effect without interruption until
terminated according to its terms.
1.3 During the term hereof, ▇▇▇▇▇ shall devote his full working time and
efforts, to the best of his ability, experience and talent, to the
performance of services, duties and responsibilities as an Officer of the
Company.
2. COMPENSATION
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2.1 During the term hereof, ▇▇▇▇▇ shall be paid by the Company a base salary
("Base Salary") at the rate of $155,182 per annum, provided that said Base
Salary shall be reviewed annually. Any increase in the Base Salary shall be
at the sole discretion of the Company. In the event that the Company, in
the exercise of said discretion, increases the Base Salary, the Base
Salary, as so increased, shall thereafter be the "Base Salary" for the
purposes of this Agreement.
2.2 In addition to his Base Salary, ▇▇▇▇▇ shall be paid an annual bonus ("the
Bonus") based upon the Company's performance in each fiscal year as
measured against EBITDA targets established for the Company. The amount of
Bonus will be in the range of 0% -50% of the Base Salary according to the
schedule set forth in Exhibit A. The EBITDA target for 1998 shall be $32.7
Million. EBlTDA targets for years after 1998 shall be determined by the
Board, in its sole discretion. For the purposes of this Agreement the term
"EBITDA" shall be defined as in the Put/Call
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Agreement dated November 19, 1996 ("the Put/Call Agreement"), among
Blackstone Capital Partners II Merchant Banking Fund L.P., ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Hills Offshore Capital Partners 11 L.P., and Blackstone Family Investment
Partnership 11 L.P. (collectively "Blackstone") ▇▇▇▇▇▇ Group International
Inc, and The ▇▇▇▇▇▇ Group Inc. (collectively "▇▇▇▇▇▇"), Roses Delaware,
Inc. and RHI Management Direct L.P.
3. EMPLOYEE BENEFITS
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3.1 The Company shall provide ▇▇▇▇▇, during the term of this Agreement,
coverage under employee pension and welfare benefit programs, plans and
practices consistent with such benefits as are made available from time to
time to other senior executives of the Company ("Benefits").
3.2 ▇▇▇▇▇ shall be entitled to no less than fifteen business days paid vacation
in each calendar year, which shall be taken at such time as Is consistent
with ▇▇▇▇▇' responsibilities hereunder. Unless otherwise approved by the
Company, any vacation days not taken in any calendar year shall be
forfeited without pay therefor.
4. TERMINATION
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4.1 ▇▇▇▇▇ shall have the right to terminate this Agreement at any time at upon
90 days notice to the Company. In the event that ▇▇▇▇▇ so terminates, he
shall be entitled, at the time the termination becomes effective, to a lump
sum payment from the Company,-(i) in respect of vacation accrued, but not
used ("Vacation Payment") and (ii) for compensation earned under the terms
of paragraph 2.1 hereof, but not paid ("Compensation Payment") as of the
effective date of the termination. Said Compensation Payment shall not
include all or any part of any Bonus in respect of the year in which said
termination occurs. If ▇▇▇▇▇ terminates this Agreement, he shall not be
entitled to receive any payment, benefit, or compensation from the Company,
by way of Base salary, Bonus, benefits, severance payment or otherwise,
except as expressly set forth in this paragraph.
4.2 The Company shall have the right to terminate this Agreement and ▇▇▇▇▇'
employment with the Company for cause at any time. As used herein, the term
"Cause" shall include (I) willful malfeasance or willful misconduct by
▇▇▇▇▇ in connection with his employment, (ii) any failure or refusal by
▇▇▇▇▇ to perform his duties hereunder or to follow any lawful direction
from the Company which refusal or failure continues after ▇▇▇▇▇ has been
given notice by the Company that it deems that such failure or refusal has
occurred, (iii) any breach by ▇▇▇▇▇ of Section 5 herein or any other
material breach of this Agreement, or (iv) the commission by ▇▇▇▇▇ of any
violation of law in connection with the performance of his duties
hereunder, any misdemeanor involving moral turpitude or any felony. Except
as explicitly provided in this paragraph, the Company shall not be required
to provide ▇▇▇▇▇ with advance notice of termination for cause.
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4.3 In the event that ▇▇▇▇▇ is terminated for cause under the terms of
paragraph 4.2, he shall be entitled to receive a lump sum payment from the
Company in respect of the Vacation Payment and the Compensation Payment.
Said Compensation Payment shall not include all or any part of the Bonus in
respect of the year in which said termination occurs. If ▇▇▇▇▇ is
terminated for cause under paragraph 4.2, he shall not be entitled to
receive any payment, benefit, or compensation from the Company, by way of
Base salary, Bonus, benefits, severance payment or otherwise, except as
expressly set forth in this paragraph 4.3.
4.4 The Company shall have the right to terminate this Agreement at any time,
with or without reason, or for any reason, upon 12 months notice to ▇▇▇▇▇.
In the event of a termination under this paragraph, ▇▇▇▇▇ shall be entitled
to receive:
(a) his Base Salary through the effective date of the termination
("the Termination Date"),
(b) Benefits, as defined in paragraph 3.1 hereof, through the Termination
Date,
(c) Bonus, to the extent payable under paragraph 2.2 hereof, in respect
of any year completed prior to the Termination Date,
(d) if the termination becomes effective at any time in a year ("the
Termination Year") other than at year-end, a pro rated portion of the
Bonus in respect of the Termination Year, based upon the number of
months completed in the Termination Year as of the Termination Date
(the "Termination Bonus"). Said Termination Bonus shall be
calculated, after the close of the Termination Year, by multiplying
(I) the Bonus to which ▇▇▇▇▇ would have been entitled for the entire
year, as if he had not been terminated before the end of the year, by
(ii) 0.083 for each complete calendar month during which ▇▇▇▇▇ was
employed by the Company during that year. For example, if this
Agreement were to be terminated during the sixth month of a year, the
Termination Bonus payable to ▇▇▇▇▇ for that year would be calculated
as:
TB B x 5(.083)
where TB = The Termination Bonus to be paid,
B = The Bonus that Would have been payable if
this Agreement had not been terminated
before year-end, and
5 = The number of complete months of employment
prior to termination, and
If this Agreement is terminated by the Company other than for
cause, ▇▇▇▇▇ shall not be entitled to receive any payment,
benefit, or compensation from the Company, by way of Base salary,
Bonus, benefits, severance payment or otherwise, except as
expressly set forth in this paragraph 4.4.
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5. CONFIDENTIAL INFORMATION NON-COMPETITION
----------------------------------------
5.1 ▇▇▇▇▇ shall not, without the prior written consent of the Company,
use, divulge, disclose or make accessible to any other person, firm,
partnership, corporation or other entity any Confidential Information
pertaining to the business of the Company, Loewen, Blackstone, or any
of their respective affiliates, except (I) while employed by the
Company, in the business of and for the benefit of the Company, or
(ii) when required to do so by a court of competent jurisdiction, by
any governmental agency having supervisory authority over the business
of the Company, or by any administrative agency or legislative body
(including a committee thereof) with jurisdiction to order ▇▇▇▇▇ or
the Company to divulge, disclose or make accessible such information.
For the purposes of this paragraph 5.1, "Confidential Information"
shall mean all non-public information concerning the financial data,
strategic business plans, product development (or other proprietary
product data), customer lists, marketing plans and other non public,
proprietary and confidential information of the Company, Blackstone,
Loewen, or any of their parent, subsidiary or affiliated companies, or
customers that is not otherwise available to the public (other than by
▇▇▇▇▇' breach of this Agreement).
5.2 During the period of his employment hereunder and for two years
thereafter, ▇▇▇▇▇ agrees that, without the prior written consent of
the Company, (a) he will not, either directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner,
investor, lender, or employee, or in any other capacity, carry on, be
engaged in or have any financial interest in, any business which is in
competition with the business of the Company or ▇▇▇▇▇▇ or any of their
parent, subsidiary or affiliated companies, and (b) he will not, on
his own behalf or on behalf of any person, firm or company other than
the Company, directly or indirectly, solicit or offer employment to
any person who has been employed by the Company, ▇▇▇▇▇▇, Blackstone or
any of their parent, subsidiary or affiliated companies at any time
during the 12 months immediately preceding such solicitation.
5.3 For the purposes of paragraph 5.2, a business shall be deemed to be in
competition with the Company or ▇▇▇▇▇▇ if it owns, operates or manages
a funeral home or cemetery property that is located within 25 miles of
any funeral home or cemetery property owned, operated or managed by
the Company or ▇▇▇▇▇▇ within Los Angeles or Orange counties, or if it
is engaged as the material part of its business in the consolidation
of funeral home or cemetery properties as a national or North America
wide basis. Nothing in this Agreement shall be construed to ▇▇▇ ▇▇▇▇▇
from accepting employment with a funeral home or cemetery property or
in any other geographic region.
5.4 ▇▇▇▇▇ and the Company agree that the covenant of paragraphs 5.2 and
5.3 are reasonable under the circumstances, and farther agree that if
in the opinion of any court of competent jurisdiction such restraint
is not reasonable in any respect, that, without further action by the
parties, said covenant shall be deemed modified so as to have the
broadest possible scope, consistent with the opinion of said court,
and shall be enforceable as so modified.
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5.5 ▇▇▇▇▇ agrees that any breach of the covenants of this section 5 would
cause irreparable injury to the Company, ▇▇▇▇▇▇ and Blackstone for
which monetary damages would not be an adequate remedy. Accordingly,
▇▇▇▇▇ agrees that, in the event of such breach, the Company, ▇▇▇▇▇▇ or
Blackstone, in addition to pursuing any other remedies that they may
have in law or in equity, (i) may cease making any payments otherwise
required by this Agreement, and (ii) shall be entitled to a temporary
injunction and permanent injunction restraining any further violation
of this Agreement by ▇▇▇▇▇.
6. ARBITRATION
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6.1 Any and all disputes and claims arising from or in relation to this
Agreement, with the exception of (i) an action by the Company, ▇▇▇▇▇▇
or Blackstone for injunctive relief under section 5 of this Agreement,
or (ii) an action by ▇▇▇▇▇ under federal or state laws against
discrimination in employment, shall be resolved through arbitration in
Los Angeles, California under the auspices and rules of the American
Arbitration Association Any action for injunctive relief under section
5 hereof or under federal or state anti-discrimination laws may be
brought in any court of competent jurisdiction.
6.2 In the event that either party to this Agreement, or ▇▇▇▇▇▇ or
Blackstone brings a claim or action for enforcement of this Agreement,
or otherwise relating to or arising from this Agreement, the
prevailing party shall be entitled to recover his or its costs of suit
including a reasonable attorney's fee.
7. SUCCESSORS AND ASSIGNS
----------------------
7.1 This Agreement shall inure to the benefit of and be binding upon the
undersigned parties hereto and their respective successors and
assigns.
7.2 ▇▇▇▇▇ may not assign his performance of this Agreement without the
prior, expressed written, consent of the Company,
8. SURVIVAL OF COVENANTS
---------------------
8.1 The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to
the intended preservation of such rights and obligations. Without
limiting the generality of the foregoing, the provisions of section 5
hereof shall remain in effect as long as necessary to give effect
thereto, notwithstanding the termination of this Agreement.
9. GOVERNING LAW
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9.1 This Agreement shall be construed, interpreted and governed in
accordance with the laws of the State of California without reference
to rules relating to conflicts of laws.
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10. EFFECT ON PRIOR AGREEMENTS
--------------------------
10.1 This Agreement contains the entire understanding between the parties
relating to the subject matter hereof and supersedes in all respects
any prior or other agreement or understanding between the Company,
Blackstone, ▇▇▇▇▇▇ or any of their affiliates and ▇▇▇▇▇ relating to
the subject matter.
11. COUNTERPARTS
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11.1 This Agreement may be executed in two or more counterparts, each of
which will be deemed an original.
ROSE HILLS COMPANY
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ Signed:
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▇▇▇▇▇▇ ▇. ▇▇▇▇
President and CEO
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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SCHEDULE A
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ANNUAL INCENTIVE BONUS
----------------------
For the fiscal year ended December 31, 1998, and, for each succeeding year
during the term of the Employment Agreement, a bonus payment will be made based
on the relationship between the audited EBITDA (as defined in title Put/Call
Agreement) for the, year in question and the Projected EBITDA (as described
below) for that year. For the purposes of this comparison, the audited EBITDA
will be adjusted to take into account an accrual for these bonus payments.
Projected EBITDA for the year ended December 31, 1998 (before adjustments for
acquisitions) shall be $32.7 million. EBITDA targets for 1999 and later years,
will be set by the Board of Directors, on or before February 1 of the bonus
year. For the purposes of determining the amount of any annual bonus, the
Projected EBITDA for the year will be adjusted by adding, to the Projected
EBITDA initially established by the Board of Directors, the budgeted EBITDA for
any acquisition during the year.
The realization matrix for the annual bonus will be:
Percent Projected Percent Salary
EBITDA Attained Paid as Bonus
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Less than 90% .00%
90% 12.50%
91% 13.75%
92% 15.00%
93% 16.25%
94% 17.50%
95% 18.75%
96% 20.00%
97% 21.25%
98% 22.50%
99% 23.75%
100% 25.00%
101% 27.50%
102% 30.00%
103% 32.50%
104% 35.00%
105% 47.50%
106% 40.00%
107% 42.50%
108% 45.00%
109% 47.50%
110% or greater 50.00%
