Exhibit 10.12
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EMPLOYMENT AGREEMENT
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This Agreement is made this 1st day of December 1998 by and between Rose Hills
Company ("the Company") and Xxxxxx X. Xxxxx.
WHEREAS, it is the mutual intent of the parties hereto that Xxxxx 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, Xxxxx shall be employed as Senior Vice President and Chief
Financial Officer of the Company. In said capacity, Xxxxx 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, Xxxxx 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, Xxxxx 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, Xxxxx 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% - 100% of the Base
Salary according to the schedule set forth in Exhibit A, however, for
1998 the maximum bonus shall be 50%. EBITDA target for 1998 shall be
$30.0 million. EBITDA 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
Agreement dated November 19, 1996 ("the Put/Call Agreement"), among
Blackstone Capital Partners II Merchant Banking Fund L.P., Xxxxxxxxxx
Xxxx Hills Offshore Capital Partners 11 L.P., and Blackstone Family
Investment Partnership 11 L.P. (collectively "Blackstone") Xxxxxx
Group International Inc., and The Xxxxxx Group Inc. (collectively
"Xxxxxx"), Roses Delaware, Inc. and RHI Management Direct L.P.
3. Employee Benefits
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3.1 The Company shall provide Xxxxx, 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 Xxxxx shall be entitled to no less than twenty-five business days paid
vacation in each calendar year, which shall be taken at such time as
Is consistent with Xxxxx' 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 Xxxxx shall have the right to terminate this Agreement at any time at
upon 90 days notice to the Company. In the event that Xxxxx 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 Xxxxx 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
Xxxxx' employment with the Company for cause at any time. As used
herein, the term "Cause" shall include (I) willful malfeasance or
willful misconduct by Xxxxx in connection with his employment, (ii)
any failure or refusal by Xxxxx to perform his duties hereunder or to
follow any lawful direction from the Company which refusal or failure
continues after Xxxxx has been given notice by the Company that it
deems that such failure or refusal has occurred, (iii) any breach by
Xxxxx of Section 5 herein or any other material breach of this
Agreement, or (iv) the commission by Xxxxx 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 Xxxxx with advance notice of termination for
cause.
4.3 In the event that Xxxxx 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 Xxxxx 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 Xxxxx. In the event of a termination under this paragraph, Xxxxx
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 Xxxxx 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 Xxxxx 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 Xxxxx for that year would be calculated as:
TB B x 5(.083)
where TB = The Termination Bonus to be paid,
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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, Xxxxx 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.
5. Confidential Information Non-Competition
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5.1 Xxxxx 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 Xxxxx 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
Xxxxx' breach of this Agreement).
5.2 During the period of his employment hereunder and for two years
thereafter, Xxxxx 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 Xxxxxx 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, Xxxxxx, 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 Xxxxxx if it owns, operates or manages
a funeral home or cemetery property that is located within 10 miles of
Rose Hills Memorial Park and Mortuary. Nothing in this Agreement
shall be construed to xxx Xxxxx from accepting employment with a
funeral home or cemetery property or in any other geographic region.
5.4 Xxxxx 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.
5.5 Xxxxx agrees that any breach of the covenants of this section 5 would
cause irreparable injury to the Company, Xxxxxx and Blackstone for
which monetary damages would not be an adequate remedy. Accordingly,
Xxxxx agrees that, in the event of such breach, the Company, Xxxxxx 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 Xxxxx.
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, Xxxxxx
or Blackstone for injunctive relief under section 5 of this Agreement,
or (ii) an action by Xxxxx 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
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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 Xxxxxx 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
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7.1 This Agreement shall inure to the benefit of and be binding upon the
undersigned parties hereto and there respective successors and
assigns.
7.2 Xxxxx may not assign his performance of this Agreement without the
prior, expressed written, consent of the Company,
8. Survival of Covenants
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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.
10. Effect on Prior Agreements
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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, Xxxxxx or any of their affiliates and Xxxxx 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/ XXXXXX X. XXXX Signed:
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Xxxxxx X. Xxxx
President and CEO
/s/XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
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SCHEDULE A
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Annual Incentive Bonus
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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. For
only the fiscal year ended December 31, 1998, the percent of salary shall be
limited to a maximum of 50% regardless of EBITDA attained.
Projected EBITDA for the year ended December 31, 1998 (before adjustments for
acquisitions) shall be $30.0 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% .0%
90% 25.0%
91% 27.5%
92% 30.0%
93% 32.5%
94% 35.0%
95% 37.5%
96% 40.0%
97% 42.5%
98% 45.0%
99% 47.5%
100% 50.0%
101% 55.0%
102% 60.0%
103% 65.0%
104% 70.0%
105% 75.0%
106% 80.0%
107% 85.0%
108% 90.0%
109% 95.0%
110% or greater 100.0%
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