EXHIBIT 10.12

                              EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of January ___, 1997 between THE YORK GROUP, INC., a Delaware corporation
("Employer"), and GERALD D. RUNNELS ("Employee").

        WHEREAS, Employee has been an employee of Houston Casket Company dba
York Southwest, a Texas corporation ("Houston Casket") and North Texas Casket
Company, a Texas corporation ("NTCC"), which are being acquired by Employer
pursuant to an Asset Purchase Agreement dated as of November 27, 1996;

        WHEREAS, Employee is one of a limited number of persons instrumental in
the development of the business of Houston Casket and NTCC;

        WHEREAS, Employer desires to entrust Employee with access to certain
Confidential Information (as hereinafter defined) concerning the Employer's
business and the relationships between the Employer and its customers, but only
if Employee agrees and covenants not to use or disclose such Confidential
Information in competition with Employer;

        WHEREAS, Employee recognizes that Employer will not entrust such
Confidential Information to him unless he agrees to the terms of this Agreement;
and

        WHEREAS, Employer and Employee recognize that the agreements and
covenants contained in this Agreement are essential to protect the business of
the Employer.

        NOW, THEREFORE, in consideration of the premises and the agreements
herein contained, the receipt and sufficiency of which are hereby acknowledged,
Employer and Employee hereby agree, as follows:

        1. EMPLOYMENT. Employer agrees to employ Employee and Employee agrees to
act as an employee of Employer. Employee hereby accepts such employment on the
terms and conditions set forth in this Agreement. Employee agrees to provide
such other services commensurate with such capacity as may be determined by the
Employer.
<PAGE>
2. EXTENT OF SERVICES. During the time that Employee is employed by Employer,
Employee shall devote his full business time and efforts to the performance of
his duties hereunder, except that Employee may attend to his personal
investments to the extent such activities do not interfere with his duties
hereunder. Employee hereby agrees and represents that his employment, and the
performance of his duties as required by this Agreement, do not violate any
agreements or relationships existing between Employee and any other person.
Employer agrees that the principal office location of Employee shall be in
Houston, Texas and that Employee shall not be required to change such principal
office location without his prior written consent.

        3. TERM OF EMPLOYMENT. Employee's employment shall commence as of the
effective date hereof (the "Effective Date") and shall continue (unless sooner
terminated as provided in Section 8 hereof) for a period of 5 years from the
Effective Date.

        4. POSITION AND RESPONSIBILITIES. Employee will be engaged by Employer
in said capacity to provide such services as may be determined by the Chief
Executive Officer and the Board of Directors of Employer from time to time.

        5. ACCESS TO CONFIDENTIAL INFORMATION. Employer agrees to provide
Employee with access to the Confidential Information (as defined below) and with
any specialized training necessary to enable Employee to perform the duties
assigned to him by Employer pursuant to this Agreement.

        6. COMPLIANCE WITH RULES. Employee agrees to observe and comply with the
lawful rules and regulations of Employer as adopted by Employer from time to
time with respect to the performance of Employee's duties, and to carry out and
to perform lawful orders, rules, directions, and policies announced to Employee
by Employer.

        7. COMPENSATION AND BENEFITS. Employer shall pay Employee, for all
services of Employee pursuant to this Agreement and any other duties assigned to
him by Employer, an annual base salary of $150,000 per year which shall be
payable in accordance with Employer's customary payroll practices with respect
to amount, time, and manner of payment. Such base salary may not be decreased
but may be increased from time to time during the term hereof in the sole
discretion of Employer. During the term of this Agreement, Employer shall
provide Employee such benefits as are made generally available to employees of
equal position and salary on the same basis as Employer makes such benefits
available to Employer's other employees. Employee shall be eligible to
participate in Employer's executive bonus plan and 1996 Employee Stock Option
Plan, any such awards to be determined by Employer's executive management and
the Compensation Committee of the Board of Directors. Employer shall reimburse
Employee for business usage of personal automobiles and shall reimburse Employee
for other reasonable business expenses in accordance with Employer's policy from
time to time. Employer shall pay Employee's country club membership dues not in
excess of $_____________ per month and will reimburse Employer for business
usage of such country club.

        8. TERMINATION OF EMPLOYMENT. Employee's employment shall be terminated
upon the occurrence of any one or more of the following events:

               (a) Employer gives written notice of termination for cause to
        Employee. For purposes of this Agreement, "cause" shall mean solely the
        following:

                      (i) Employee without proper legal cause has failed or
                      refused to
<PAGE>
                      use his best efforts to follow the lawful directions of
                      the Board of Directors;

                      (ii) Employee has been convicted of, or has pleaded guilty
                      or nolo contendere to a charge that he committed, a felony
                      involving moral turpitude;

                      (iii) Employee has perpetrated a fraud against, or theft
                      of property of, Employer or any affiliate thereof;

                      (iv) Employee has violated any applicable federal or state
                      law or regulation and, as a result of such violation, has
                      become, or has caused Employer to become, the subject of
                      any legal action or administrative proceeding or a
                      suspension of any right or privilege;

                      (v) Employee has committed any act that causes, or shall
                      knowingly or recklessly fail to take reasonable and
                      appropriate action to prevent, any material injury to the
                      financial condition or business reputation of Employer; or

                      (vi) Employee has violated any of the material provisions
                      of any noncompetition or nondisclosure agreement with
                      Employer.

With respect to the events described in subparagraphs (i), (v) and (vi),
Employer shall provide to Employee written notice of such an event and provide
Employee with a reasonable period of time not exceeding 30 days from the date of
such notice to endeavor to cure or remedy such event.

               (b) Death of Employee.

               (c) Disability of Employee. For purposes of this Agreement,
        "disability" shall mean a mental or physical condition resulting from an
        injury or illness which shall render Employee incapable of performing
        the essential functions of his position with reasonable accommodations
        from Employer for 90 days out of any 120 day period.

               (d) Resignation of Employee, who hereby agrees to provide not
        less than 60 days' prior written notice of such resignation to Employer.

               (e) Employer may terminate this Agreement without cause, but in
        such event Employer shall pay to Employee his base salary for the
        remainder of the five-year term hereof.

        9. CONFIDENTIALITY; NON-SOLICITATION.

               (a) In the course of performing his duties for Employer, Employee
        acknowledges that he will have access to certain proprietary information
        of the Employer, including but not limited to: the database of customer
        accounts; customer, supplier and distributor lists of Employer; customer
        profiles; information regarding sales and marketing activities and
        strategies of Employer; trade secrets of Employer; data regarding
        technology, products and services of Employer; information regarding
        pricing, pricing techniques and procurement by Employer; financial data
        regarding Employer and
<PAGE>
        customers, suppliers and distributors of Employer; software programs;
        and other sales, marketing, technical and financial information and
        know-how (collectively "Confidential Information"). Employee further
        acknowledges that this Confidential Information is a valuable, special
        and unique asset of Employer and that his access to and knowledge of the
        Confidential Information is essential to the performance of his duties
        as an Employee of Employer. In light of the competitive nature of the
        business in which Employer is engaged, Employee agrees that, so long as
        such information is not otherwise available to the public or required by
        a governmental authority to be disclosed, he will maintain the strict
        confidentiality of all Confidential Information known or obtained by him
        or to which he has access in connection with his employment by Employer
        and that he will not (i) disclose any Confidential Information to any
        person or entity, or (ii) make any use of any Confidential Information
        for his own purposes or for the direct or indirect benefit of any person
        or entity other than Employer without the express prior written consent
        of Employer. The agreements contained in this Section 9(a) shall survive
        the termination of this Agreement.

               (b) Employee agrees that all documents, records, notes, forms,
        manuals, notebooks, drawings, reports, books and other documents of any
        nature, or copies thereof, pertaining to the business or operations of
        Employer and received or made by Employee or made known to him in any
        manner in connection with his employment by Employer and any other
        Confidential Information are and will be the exclusive property of
        Employer. Employee agrees not to copy or remove any of such Confidential
        Information from the premises and custody of Employer except as
        expressly agreed by Employer, or to disclose the contents thereof to any
        person or entity. Employee acknowledges that all such Confidential
        Information will be subject to the control of Employer, and Employee
        agrees to surrender same upon the request of Employer and that he will
        surrender same immediately upon any termination of his employment with
        Employer for any reason.

               (c) In furtherance of the agreements contained in Section 9(a)
        hereof, from the date hereof and for a period of two (2) years after
        Employee's employment with Employer is terminated for any or no reason,
        Employee, on behalf of himself and his present and future affiliates and
        employers, agrees not to and shall not directly or indirectly (i) in the
        States of Texas, Louisiana or New Mexico, whether as owner, partner,
        joint venturer, lender, shareholder, director, officer, employee,
        consultant or otherwise, engage, invest or participate in any business
        engaged in the design, sale, marketing, manufacture or distribution of
        metal and hardwood caskets or casket components, or otherwise previously
        conducted by Employer, Houston Casket or NTCC, except by owning for
        investment purposes only less than 3% of the publicly traded stock of a
        company conducting any of the businesses referenced hereunder, (ii)
        compete for or solicit any of the business conducted by Employer from
        any customer of Employer, (iii) induce any customer of Employer to
        patronize any other entity engaged in any of the businesses conducted by
        Employer or request or advise any such customer to withdraw, curtail or
        cancel any such customer's business with Employer, or (iv) solicit the
        employment or services of, or cause or attempt to cause to leave the
        employment or services of Employer or any affiliate of Employer, any
        person employed by, or otherwise engaged to perform services for
        Employer or any affiliate of Employer (whether in the capacity of
        employee, consultant, independent contractor or otherwise).

               (d) In the event of a breach or threatened breach by Employee of
        the
<PAGE>
        provisions of any provision of this Section 9, Employer shall be
        entitled to temporary or permanent injunctions and other appropriate
        relief restraining Employee from using, disclosing or retaining, in
        whole or in part, such Confidential Information and from violating the
        terms of Section 9(c). Employee hereby waives any requirement that
        Employer post any bond in connection with obtaining any such relief.
        Nothing herein shall be construed as prohibiting Employer from pursuing
        any other remedies available to it.

               (e) Employee recognizes, agrees and represents that Employer
        would not permit Employee to access Employer's Confidential Information
        or provide any specialized training unless Employee agrees to the
        restrictions contained herein, and that Employer is relying on the
        agreements of Employee contained in this Agreement in permitting
        Employee access to the Confidential Information. Employee represents
        that being permitted to access the Confidential Information, the
        specialized training and the compensation described in this Agreement
        constitutes significant and valuable consideration for his agreements
        hereunder. Employee has read and considered the provisions of this
        Section 9 and, having done so, agrees, states, and covenants that the
        restrictions on competition set forth herein are fair and reasonable as
        to time, geographical area, and scope of activities to be restrained,
        and are reasonably required for the protection of the goodwill and other
        business interests of Employer. In the event a court of competent
        jurisdiction determines as a matter of law that any of the terms of
        Section 9 are unreasonable or overbroad, the parties expressly allow
        such court to reform this agreement to the extent necessary to make it
        reasonable as a matter of law and to enforce it as so reformed.

        10. NOTICES. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing and mailed, facsimilied, or
delivered to Employer at The York Group, Inc., 9430 Old Katy Road, Houston,
Texas 77055, Facsimile: (713) 984-5517, and to Employee at the address set forth
on the signature page hereof.

        11. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties regarding the employment of Employee by Employer and supersedes any
prior agreement, arrangement or understanding, whether oral or written, between
Employer and Employee concerning Employee's employment hereunder.

        12. CHOICE OF LAW. This Agreement shall be governed by, and enforced
according to, the laws of the State of Texas. The invalidity of any provision
shall be automatically reformed to the extent permitted by applicable law and
shall not affect the enforceability of the remaining provisions hereof. Employee
hereby waives any objection which he may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in the District Court of Harris County, State of Texas, or in
the United States District Court for the Southern District of Texas, Houston
Division, and hereby further waives any claims that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.

        13. ASSIGNMENTS. The rights and obligations under this Agreement of the
Employer and Employee may not be assigned, except that Employer may, at its
option, assign one or more of its rights or obligations under this Agreement to
any of its subsidiaries or affiliates, or in connection with a transfer of all
or substantially all of the assets or stock of Employer or a merger or
consolidation of Employer with and into another corporation or other entity,
provided
<PAGE>
that in each case Employer shall remain responsible for its obligation
hereunder.

        14. COUNTERPARTS. This Agreement may be executed in several identical
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.

        15. MODIFICATION; TERMINATION. This Agreement may be modified only by
written agreement signed by Employee and by the President of Employer. The
failure to insist upon compliance with any provision hereof shall not be deemed
a waiver of such provision or any other provision hereof.

        16. OTHER AGREEMENTS. The parties hereto expressly agree that the
provisions and covenants of this Agreement shall be in addition to and shall not
supersede or replace any similar provisions or covenants in any other contracts
or agreements between the parties.
<PAGE>
        IN WITNESS WHEREOF, this Agreement is executed by the parties as of the
day and year first above written.

                                            THE YORK GROUP, INC.

                                            By:_________________________________
                                            Name:_______________________________
                                            Title:______________________________

                                            ____________________________________
                                            Gerald D. Runnels

                                            Address of Employee

                                            19 Willowend
                                            Houston, Texas  77026
                                            Facsimile:__________________________