EXHIBIT 10.21
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This amended and restated agreement made as of the 2nd day of January, 2002
BETWEEN:
ALDERWOODS GROUP SERVICES INC.
(the "Company")
-And-
XXXX X. XXXXX
(the "Chairman")
WHEREAS:
On June 1, 1999, Alderwoods Group, Inc., a Delaware corporation (formerly
known as Xxxxxx Group International, Inc.) ("AGI"), its parent corporation,
The Xxxxxx Group, Inc., a British Columbia corporation ("TLGI"), and
certain of their subsidiaries commenced reorganization cases by filing a
voluntary petition for relief under chapter 11 of the United States
Bankruptcy Code;
On June 1, 1999, a predecessor of the Company and certain of its affiliates
filed for protection under the Companies' Creditors Arrangement Act in
Canada;
On December 5, 2001, the United States Bankruptcy Court for the District of
Delaware entered an order confirming the Fourth Amended Joint Plan of
Reorganization of Xxxxxx Group International, Inc., its Parent Corporation
and Certain of Their Debtor Subsidiaries, as modified (the "Plan of
Reorganization") and on December 7, 2001, the Ontario Superior Court of
Justice entered an order confirming and giving recognition to such U.S.
order in Canada;
The Company is a wholly-owned subsidiary of AGI and AGI is the holding
entity for a corporate group engaged in the operation of funeral homes,
insurance and cemeteries in Canada, the United States and England;
TLGI and the Chairman previously entered into (1) a short-term agreement
(on October 21, 1999) providing for the services of the Chairman; and (2)
an Employment Agreement (on November 1, 2000) (the "Prior Agreements"); and
The Company and the Chairman wish to enter into a new agreement which will
supersede the Prior Agreements and will provide the Chairman with an
incentive to act as Chairman of the Company following emergence from
bankruptcy protection.
IN CONSIDERATION of the mutual covenants contained herein, the parties agree as
follows:
DEFINITIONS
1. "Change in Control" means any one of the following events that occurs
during the term of this Agreement other than pursuant to a plan of
reorganization submitted by AGI and confirmed by the U.S. Bankruptcy Court:
a) the acquisition by any individual, entity or group (a "Person") of
beneficial ownership of 30% or more of the combined voting power of
the then outstanding Voting Stock (as defined below) of AGI; PROVIDED,
HOWEVER, that the following acquisitions will not constitute a Change
in Control: (1) any issuance of Voting Stock of AGI directly from AGI
that is approved by the Incumbent Board (as defined below), (2) any
acquisition by AGI of Voting Stock of AGI, (3) any acquisition of
Voting Stock of AGI by any employee benefit plan (or related trust)
sponsored or maintained by AGI or any subsidiary of AGI, or (4) any
acquisition of Voting Stock of AGI by any Person pursuant to a
Business Combination (as defined below) that would not constitute a
Change in Control;
b) the consummation of a reorganization, amalgamation, merger or
consolidation, a sale or other disposition of all or substantially all
of the assets of AGI, or any other transaction (each, a "Business
Combination") in which all or substantially all of the individuals and
entities who were the beneficial owners of Voting Stock of AGI
immediately prior to such Business Combination beneficially own,
directly or indirectly, immediately following such Business
Combination less than 40% of the combined voting power of the then
outstanding shares of Voting Stock of the entity resulting from such
Business Combination;
c) individuals who, as of the effective date of the Plan of
Reorganization confirmed by the U.S. Bankruptcy Court, constitute the
Board of Directors of AGI (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; PROVIDED, HOWEVER,
that any individual becoming a Director subsequent to such effective
date whose election, or nomination for election by AGI's stockholders,
was approved by a vote of at least two-thirds of the Directors then
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of AGI in which such person is named
as a nominee for director, without objection to such nomination) will
be deemed to have been a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest
with respect to the election or removal of Directors or other actual
or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
d) the approval by the stockholders of AGI of a complete liquidation or
dissolution of AGI, except pursuant to a Business Combination that
would not constitute a Change in Control.
2. "JUST CAUSE" means willful misconduct or willful neglect of duty by the
Chairman, including, but not limited to, intentional wrongful disclosure of
confidential or proprietary information of the Company or AGI or any of its
subsidiaries; intentional wrongful engagement in any competitive activity
prohibited by paragraph 22; and the intentional material breach of any
provision of this Agreement.
3. "STATED GOOD REASON" means the occurrence, other than pursuant to a plan of
reorganization confirmed by the U.S. Bankruptcy Court, of one or more of
the following events (regardless of whether any other reason, other than
Just Cause, exists for the termination of Chairman's employment):
a) the geographic relocation by more than 25 miles of the Chairman's
principal work location, excluding, however, the relocation of the
Company's principal executive offices in connection with a plan of
reorganization confirmed by the U.S. Bankruptcy Court;
b) any material reduction in the Chairman's job duties or
responsibilities;
c) any material reduction in the Chairman's level of compensation or
benefits;
d) any adverse change to the Chairman's title or function;
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e) any change in the organizational reporting relationship between the
Chairman and the Board of Directors;
f) harassment; or
g) any circumstance in which the Chairman was induced by the actions of
the Company or AGI to terminate his employment other than on a purely
voluntary basis.
4. "SERVICES" has the meaning set forth in the Management Services Agreements,
dated as of January 2, 2002, by and between the Company and AGI and the
Company and certain subsidiaries of AGI.
5. "TERMINATION WITHOUT JUST CAUSE" includes, but is not limited to, any
unilateral change in the material terms and conditions of the Chairman's
employment.
6. "VOTING STOCK" means securities entitled to vote generally in the election
of directors.
ENTIRE AGREEMENT
7.
a) The Chairman and the Company agree that this Agreement represents the
entire employment agreement between the parties and that any and all
prior agreements, written or verbal, express or implied, between the
parties relating to or in any way connected with the employment of the
Chairman by the Company or any related, associated, affiliated,
predecessor or parent corporations are declared null and void and are
superseded by the terms of this Agreement. There are no
representations, warranties, forms, conditions, undertakings, or
collateral agreements, express, implied or statutory between the
parties other than as expressly set forth in this Agreement. No waiver
or modification of this Agreement shall be valid unless in writing and
duly executed by both the Company and the Chairman.
b) The Chairman acknowledges and agrees that, as of the Employment Date
(as defined below), the Key Employee Retention Program will terminate
and be of no further force or effect with respect to the Chairman.
EMPLOYMENT
8. The Company and the Chairman agree that the Chairman shall commence
employment with the Company on the effective date of the Company's Plan of
Reorganization (the "Employment Date"), such employment to be for a fixed
term ending August 1, 2004. As used in this Agreement, the phrase "term of
this Agreement" means the period beginning on the Employment Date and
ending on the earlier of August 1, 2004, or the effective date of the
termination of Chairman's employment.
9. The Chairman agrees that he will at all times faithfully, industriously,
and to the best of his skill, ability, and talents, perform all of the
duties required of his position in a manner which is in the best interests
of the Company and in accordance with the Company's objectives. The
Chairman acknowledges and agrees that the duties required of his position
include, without limitation, the provision of Services on behalf of, and
for the account of, the Company.
COMPENSATION
10.
a) Commencing from the Employment Date, the Chairman will receive a base
salary of $500,000 U.S. per annum which amount of such shall be
subject to review and improvement on a periodic basis in accordance
with Company practice, but in no event shall such amount be reduced.
The
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Chairman's base salary is payable in accordance with the Company's
customary payroll practices and is subject to deductions required by
applicable law.
b) The Company shall reimburse the Chairman for all reasonable expenses
incurred by the Chairman during the term of this Agreement in the
course of the Chairman performing his duties under this Agreement.
These reimbursements shall be consistent with the Company's policies
in effect from time to time with respect to travel, entertainment and
other reimbursable business expenses, subject to the Company's
requirements applicable generally with respect to reporting and
documentation of such expenses.
SHORT TERM INCENTIVE PLAN - ANNUAL BONUS
11. The Chairman will be entitled to participate in a short term incentive plan
as adopted by the Company from time to time, subject to a maximum of 100%
of the Chairman's annual base salary, less deductions required by
applicable law. The bonus payable under such plan will be paid in full
within 90 days after the end of each year. With the exception of the bonus
that becomes payable under paragraphs 15, 16 or 17, the Chairman's
entitlement to a bonus under the short term incentive plan will be based on
the financial performance of AGI as determined under the terms of such
incentive plan.
12. The short term incentive plan bonus is subject to the following conditions
and exceptions:
a) In order to qualify for and receive the annual bonus, the Chairman
must be employed by the Company or its successor at the time the bonus
is paid unless the Chairman is terminated without Just Cause or the
Chairman resigns in compliance with paragraphs 16 or 17. If the
Chairman's employment is terminated without Just Cause or the Chairman
resigns in compliance with paragraphs 16 or 17 after the end of the
year but before the bonus amount is paid, the Chairman shall receive
the bonus for that completed year calculated in accordance with terms
of the short term incentive plan. The payment shall be made by the
Company within seven days of the termination or resignation and will
be subject to deductions required by applicable law. If the bonus
amount has not been determined within seven days of the termination or
resignation it will be paid in full within 90 days of the subject year
end.
b) If, before the end of a year, the Chairman's employment is terminated
by the Company or its successor without Just Cause or the Chairman
resigns in compliance with paragraphs 16 or 17, the bonus which the
Chairman will be entitled to receive under paragraphs 15, 16 or 17 for
that year will be equal to the bonus that would have been paid for the
full year based upon a bonus level equal to 100% of the Chairman's
base salary without regard to the financial performance of AGI, but
will be prorated on the basis of the number of days in the year up to
and including the date of termination.
STOCK OPTION PLAN
13. The Chairman is eligible for participation in AGI's equity incentive plan
or plans. Following the Employment Date, the Chairman will be entitled to
receive an initial grant of stock options under AGI's equity incentive plan
exercisable to purchase 495,000 shares of common stock. The options granted
pursuant to the immediately preceding sentence will become exercisable in
cumulative installments to the extent of (1) 25% of the shares on the date
the options are granted; (2) 25% of the shares on November 1, 2002; and (3)
50% of the shares on November 1, 2003; provided that the Chairman will not
be entitled to exercise any options until the offering and sale of the
shares have been registered under the U.S. Securities Act of 1933. Further
grants of stock options shall be as determined by the Board of Directors of
AGI.
BENEFITS
14. The Chairman will be eligible to participate in the following benefit plans:
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a) GROUP BENEFITS
The Chairman will participate in the Company's Group Benefit Plan and
any other group perquisites all as in effect from time to time.
b) VEHICLE ALLOWANCE
The Chairman will be entitled to a vehicle allowance of $1,000.00 U.S.
per month plus auto insurance and operating expense coverage for the
term of this Agreement.
c) FINANCIAL PLANNING
The Chairman will be entitled to the amount of $10,000.00. U.S. per
year for the purposes of obtaining financial and retirement planning
services, expenses and advice for the term of this Agreement, as
directed by the Chairman.
d) CLUB MEMBERSHIP
The Chairman will be entitled to the amount of $2,500.00 U.S. per year
for club memberships as directed by the Chairman.
TERMINATION OF EMPLOYMENT
15. The parties agree that the Chairman's employment under this Agreement may
be terminated as follows:
a) by the Company, in writing, without notice of termination or pay in
lieu thereof, for Just Cause;
b) by the Company, in writing, not following a Change in Control as set
forth in paragraph 16 below, at its sole discretion and for any reason
other than Just Cause upon payment to the Chairman in a lump sum,
within seven days of such termination, of an amount equal to:
i) 24 months' base salary;
ii) the replacement value of all Chairman's benefit coverage,
including the full vesting of all stock options granted to the
Chairman, exercised or not, and all monies due from the
Registered Retirement Savings Plan, following the date of the
Chairman's termination (such benefit coverage being calculated
over 24 months following resignation or termination);
iii) the amount of any unpaid bonus earned by the Chairman up to and
including the date of termination calculated in accordance with
paragraph 12. Such bonus shall be payable regardless of the
financial performance of the Company; and
iv) the amount of any unpaid salary or vacation earned by the
Chairman up to and including the date of termination.
Payments identified in sub-paragraphs (i) - (iv) will be subject
to deductions required by applicable law;
c) by the Company for any reason other than Just Cause or by the Chairman
for Stated Good Reason or pursuant to a voluntary resignation as set
forth in paragraph 17 below following a Change in Control, both in
compliance with paragraph 16 or paragraph 17, as the case may be; or
d) by the Chairman, for any reason, upon thirty (30) days advance written
notice to the Company in which case the Company will have no further
obligation to the Chairman under this Agreement or
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otherwise except to pay the Chairman the unpaid portion, if any, of
the Chairman's base salary payable for the period through the date of
termination of the Chairman's employment.
CHANGE IN CONTROL
16. If a Change in Control occurs and, within two years of the effective date
of the Change in Control, the Company, in writing, terminates the Chairman
without Just Cause or the Chairman submits a written resignation for Stated
Good Reason to the Board of Directors of the Company, the Company shall,
within seven days of the date of resignation or termination, pay to the
Chairman in a lump sum the following payments:
i) 24 months' base salary;
ii) the replacement value of all Chairman's benefit coverage,
including the full vesting of all stock options granted to the
Chairman, exercised or not, and all monies due from the
Registered Retirement Savings Plan, following the date of the
Chairman's termination termination (such benefit coverage being
calculated over 24 months following resignation or termination);
iii) the amount of any unpaid bonus earned by the Chairman up to and
including the date of termination calculated in accordance with
paragraph 12. Such bonus will be payable regardless of the
financial performance of the Company; and
iv) the amount of any unpaid salary or vacation earned by the
Chairman up to and including the date of resignation or
termination.
Payments identified in sub-paragraphs (i) - (iv) will be subject to
deductions required by applicable law.
VOLUNTARY RESIGNATION DUE TO CHANGE IN CONTROL
17. In the event that an agreement is reached which would result in a Change of
Control, but the Change of Control has not yet occurred, the Chairman can,
for any reason, submit his resignation in writing to the Company prior to
the effective date of the Change in Control. Any such resignation will be
effective as of the date of the Change in Control, and the Chairman shall
continue to work for the Company up until that date. Further, if the
Chairman resigns in these circumstances and continues to work for the
Company until the effective date of the Change in Control, then on the
effective date of the Change in Control the Company shall pay to the
Chairman a lump sum amount equal to the payments prescribed under paragraph
16(i) -(iv). In the event that the Change in Control does not occur, the
Chairman shall not be entitled to the payments prescribed under paragraph
16(i) - (iv), and the resignation shall be deemed to not have been
tendered.
18. Immediately prior to the effective date of a Change in Control, the Company
shall allow the Chairman to exercise all stock options or share
appreciation rights, whether vested or not, granted to the Chairman
including shares with respect to which such options would not otherwise be
exercisable. The Chairman shall be entitled to receive all dividends
declared and paid by the Company upon a Change of Control on the shares
received by the Chairman following the exercise of the Chairman's stock
options or share appreciation rights.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
19. In the event that it is determined (as hereinafter provided) that any
payment (other than the Gross-Up Payments provided for in this paragraph 19
and Annex A) or distribution by the Company, AGI or any of its affiliates
to or for the benefit of the Chairman, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement,
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policy, plan, program or arrangement, including, without limitation, the
lapse or termination of any restriction on the vesting or exercisability of
any benefit under any of the foregoing (a "Payment"), would be subject to
the excise tax imposed by Section 4999 of the United States Internal
Revenue Code of 1986, as amended (the "Code") (or any successor provision
thereto), by reason of being considered "contingent on a change in
ownership or control," within the meaning of Section 280G of the Code (or
any successor provision thereto) or to any similar tax imposed by U.S.
state or local law, or any interest or penalties with respect to such tax
(such tax or taxes, together with any such interest and penalties, being
hereafter collectively referred to as the "Excise Tax"), then the Chairman
will be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"). The Gross-Up Payment will be in an
amount such that, after payment by the Chairman of all U.S. taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment, the Chairman
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payment. For purposes of determining the amount of the Gross-Up
Payment, the Chairman will be considered to pay any applicable U.S.
federal, state and local income taxes at the highest rate applicable to the
Chairman in effect in the year in which the Gross-Up Payment will be made,
net of the maximum reduction in U.S. federal income tax that could be
obtained from deduction of such state and local taxes.
20. The obligations set forth in paragraph 19 will be subject to the procedural
provisions described in Annex A.
CONFIDENTIAL INFORMATION; COMPETITIVE ACTIVITY
21.
a) The Chairman agrees that he will not, without the prior written
consent of the Company, during the term of this Agreement or at any
time thereafter, disclose to any person not employed by the Company,
or use in connection with engaging in competition with the Company,
any confidential or proprietary information of the Company. For
purposes of this Agreement, the term "confidential or proprietary
information" includes all information of any nature and in any form
that is owned by the Company and that is not publicly available (other
than by Chairman's breach of this paragraph 21) or generally known to
persons engaged in businesses similar or related to those of the
Company. Confidential or proprietary information will include, without
limitation, the Company's financial matters, customers, employees,
industry contracts, strategic business plans, product development (or
other proprietary product data), marketing plans, and all other
secrets and all other information of a confidential or proprietary
nature. The foregoing obligations imposed by this paragraph 21 will
not apply (i) during the Term, in the course of the business of and
for the benefit of the Company, (ii) if such confidential or
proprietary information has become, through no fault of the Chairman,
generally known to the public or (iii) if the Chairman is required by
law to make disclosure (after giving the Company notice and an
opportunity to contest such requirement).
b) The Chairman agrees that, upon termination of this Agreement for any
reason, the Chairman will return to the Company, in good condition,
all property of the Company in his possession or under his control.
22. In addition, during the term of this Agreement and for a period of 12
months thereafter, the Chairman will not, without the prior written consent
of the Company, which consent will not be unreasonably withheld:
a) Engage in any Competitive Activity. For purposes of this Agreement,
"Competitive Activity" means the Chairman's participation in the
management of any business enterprise if such enterprise engages in
substantial and direct competition with the Company and such
enterprise's sales of any product or service competitive with any
product or service of the Company amounted to 10% of such enterprise's
net sales for its most recently completed fiscal year and if the
Company's net sales of said product or service amounted to 10% of the
Company's net sales for its most recently completed fiscal year.
"Competitive Activity" will not include (i) the mere ownership of
securities in any such enterprise and the exercise of rights
appurtenant thereto or (ii)
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participation in the management of any such enterprise other than in
connection with the competitive operations of such enterprise.
b) On behalf of the Chairman or on behalf of any person, firm or company,
directly or indirectly, attempt to influence, persuade or induce, or
assist any other person in so persuading or inducing, any employee of
the Company or any of its subsidiaries to give up, or to not commence,
employment or a business relationship with the Company or any of its
subsidiaries.
23.
a) The Chairman and the Company agree that the covenants contained in
paragraphs 21 and 22 are reasonable under the circumstances, and
further agree that if in the opinion of any court of competent
jurisdiction any such covenant is not reasonable in any respect, such
court will have the right, power and authority to excise or modify any
provision or provisions of such covenants as to the court will appear
not reasonable and to enforce the remainder of the covenants as so
amended. The Chairman acknowledges and agrees that the remedy at law
available to the Company for breach of any of his obligations under
this paragraph 23 would be inadequate and that damages flowing from
such a breach may not readily be susceptible to being measured in
monetary terms. Accordingly, the Chairman acknowledges, consents and
agrees that, in addition to any other rights or remedies that the
Company may have at law, in equity or under this Agreement, upon
adequate proof of his violation of any such provision of this
Agreement, the Company will be entitled to immediate injunctive relief
and may obtain a temporary order restraining any threatened or further
breach, without the necessity of proof of actual damage.
b) During the term of this Agreement, the Chairman will not serve as
Chairman or employee of, nor consultant to, any other company or
business without the prior express approval of a majority of the
independent Directors of the Company. The provisions of this paragraph
23(b) are in addition to, and in no way derogate from, any and all
other provisions of this Agreement.
24. For purposes of paragraphs 21, 22 and 23, the term "Company" will also
include AGI and any subsidiary of AGI.
GENERAL
25. The parties confirm that the provisions of this Agreement are fair and
reasonable and that the total compensation and benefits payable under
paragraphs 15, 16 or 17 are reasonable estimates of the damages which would
be suffered by the Chairman. Any amount paid under paragraphs 15, 16 or 17
shall be in full satisfaction of all claims whatsoever relating to the
Chairman's employment or for the termination of the Chairman's employment,
including claims for salary, bonus, benefits, vacation pay, termination pay
and/or severance pay pursuant to the Ontario Employment Standards Act, as
amended, including sections 57 and 58 thereof.
26. Any payment made to the Chairman under paragraphs 15, 16 or 17 of this
Agreement shall be paid to the Chairman by the Company regardless of any
offer of alternate employment made to the Chairman by the Company or by any
other prospective employer, whether accepted by the Chairman or not. The
Chairman will not be required to mitigate any damages arising from this
Agreement and any amounts and benefits to be provided to the Chairman
hereunder shall not be reduced or set off against any amounts earned by the
Chairman from alternate employment, including self-employment, or by other
means.
27. Any payment other than for base salary made to the Chairman under this
Agreement shall be made by way of a lump sum payment or, at the Chairman's
option, in such other manner as he may direct, less deductions required by
applicable law.
28. Where the context requires, the singular shall include the plural and the
plural shall include the singular. Masculine pronouns shall be deemed to be
read as feminine pronouns and vice versa. Words importing
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persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations and vice versa.
29. The division of this Agreement into paragraphs and the insertion of
headings are for the convenience of reference only and shall not affect the
construction or interpretation of this Agreement. The terms "this
Agreement," "hereof," "hereunder" and similar expressions refer to this
Agreement only and not to any particular paragraph and include any
agreement or instrument supplemental or ancillary to the Agreement.
References herein to paragraphs are to paragraphs of this Agreement unless
something in the subject matter or context is inconsistent therewith.
30. All dollar amounts identified in this contract are in U.S. currency.
31. The parties' respective rights and obligations under paragraphs 19, 20, 21,
22, 23, 35 and 36 will survive any termination or expiration of this
Agreement or the termination of the Chairman's employment for any reason
whatsoever.
GOVERNING LAWS
32. This Agreement shall be governed by the laws of the Province of Ontario
without giving effect to the principles of conflict of laws thereof. Each
party to this Agreement hereby consents and submits himself or itself to
the jurisdiction of the courts of the Province of Ontario for the purposes
of any legal action or proceeding arising out of this Agreement.
SEVERABILITY
33. All terms and covenants contained in this Agreement are severable and in
the event that any of them is held to be invalid by any competent court in
the Province of Ontario, the invalid provision shall be deleted and the
balance of this Agreement shall be interpreted as if such invalid clause or
covenant were not contained herein.
CONTINUITY
34.
a) This Agreement shall be binding upon and enure to the benefit of (i)
the Chairman and his heirs, executors, administrators and legal
representatives and (ii) the Company, its related corporations,
affiliates, and associates, and any other entity or organization which
shall succeed to substantially all or any distinct portion of the
business, divisions or property of the Company or its related
corporations, affiliates, and associates, whether by means of
amalgamation, merger, consolidation, acquisition, and/or sale of all
or part of the shares or assets of the Company or otherwise, including
by operation of law or by succession to the business of AGI pursuant
to a plan of reorganization approved by the U.S. Bankruptcy Court. In
addition, the Company will require any such successor expressly to
assume and agree, by written agreement, to perform this Agreement in
the same manner and to the same extent the Company would be required
to perform if no such succession had taken place.
b) If the Chairman should die while any amount would still be payable to
the Chairman hereunder if the Chairman had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the devisee, legatee or other
designee of the Chairman or, if there is no such designee, to the
estate of the Chairman.
LEGAL ADVICE
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35. The Chairman acknowledges that he has obtained or has had an opportunity to
obtain independent legal advice in connection with this Agreement, and
further acknowledges that he has read, understands, and agrees to be bound
by all of the terms and conditions contained herein.
36. The Company agrees to reimburse the Chairman for all reasonable legal
expenses incurred in connection with any dispute involving the Chairman,
the Company, its related corporations, affiliates, successors, or assigns,
or any other third party, as between any of them, arising from the
validity, interpretation, or enforcement of this Agreement or any of its
terms, including all reasonable legal expenses incurred by the Chairman in
respect of any action or actions commenced by the Chairman to obtain,
enforce, or retain any right, benefit or payment provided for in this
Agreement regardless of whether such expenses are incurred during the term
of this Agreement or after; provided that, in regard to such matters, the
Chairman has not acted in bad faith or with no colorable claim of success.
However, the Company shall not be required to reimburse the Chairman for
any legal costs or expenses in relation to any action commenced by the
Company to enforce the confidentiality and non-competition provisions
hereof and in respect of which in a court of competent jurisdiction the
Company is the prevailing party for either preliminary or final remedy.
NOTICE
37. Any demand, notice or other communication to be given in connection with
this Agreement shall be given in writing by personal delivery, by
registered mail or by electronic means of communication addressed to the
recipient as follows:
TO THE CHAIRMAN:
Xxxx X. Xxxxx
00 Xxxxxxxx Xxxxx, X.X. #0
Xxx Xxxxx, Xxxxxxx X0X 0X0
TO THE COMPANY:
Alderwoods Group Services Inc.
11th Floor
0000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx. Xxxxxxx X0X 0X0
Attention: Senior Vice-President, Legal & Asset Management
WITH A COPY TO:
Alderwoods Group, Inc.
000 Xxx Xxxxxx
Xxxxx 0000, Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Senior Vice-President, Legal & Asset Management
or such other address, individual or electronic communication as may be
designated by notice given by either party to the other.
ADDITIONAL
38. The failure of a party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver of such party's
rights or deprive such party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
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39. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person, other than (1) the parties to this
Agreement, (2) any permitted assignees of the Company and the Chairman, and
(3) AGI, as contemplated by paragraphs 7(b), 9, 13, 21, 22, 23 and 24, any
rights or remedies under or by reason of this Agreement and AGI shall be a
third party beneficiary of this Agreement.
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IN WITNESS WHEREOF the Chairman has executed and the Company has caused its duly
authorized representative to execute this Agreement as of the date set forth on
the first page of this Agreement.
ALDERWOODS GROUP SERVICES INC.
Per: /s/ Xxxx X. Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx
President and Chief Executive Officer
Witness:
/s/ Xxxxxxx X. Xxxx /s/ Xxxx X. Xxxxx
----------------------- --------------------------------
Xxxx X. Xxxxx
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ANNEX A
EXCISE TAX GROSS-UP PROCEDURAL PROVISIONS
1. Subject to the provisions of paragraph 5 of this Annex, all determinations
required to be made under paragraph 19 of this Agreement and this Annex A,
including whether an Excise Tax is payable by the Chairman and the amount
of such Excise Tax and whether a Gross-Up Payment is required to be paid by
the Company to the Chairman and the amount of such Gross-Up Payment, if
any, will be made by a U.S. nationally recognized accounting firm (the
"National Firm") selected by the Chairman in his sole discretion. The
Chairman will direct the National Firm to submit its determination and
detailed supporting calculations to both the Company and the Chairman
within 30 calendar days after the date of his termination of employment, if
applicable, and any such other time or times as may be requested by the
Company or the Chairman. If the National Firm determines that any Excise
Tax is payable by the Chairman, the Company will pay the required Gross-Up
Payment to the Chairman within five business days after receipt of such
determination and calculations with respect to any Payment to the Chairman.
If the National Firm determines that no Excise Tax is payable by the
Chairman with respect to any material benefit or amount (or portion
thereof), it will, at the same time as it makes such determination, furnish
the Company and the Chairman with an opinion that the Chairman has
substantial authority not to report any Excise Tax on his U. S. federal,
state or local income or other tax return with respect to such benefit or
amount. As a result of the uncertainty in the application of Section 4999
of the Code and the possibility of similar uncertainty regarding applicable
U. S. state or local tax law at the time of any determination by the
National Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts or fails to pursue its
remedies pursuant to paragraph 5 of this Annex and the Chairman thereafter
is required to make a payment of any Excise Tax, the Chairman will direct
the National Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting
calculations to both the Company and the Chairman as promptly as possible.
Any such Underpayment will be promptly paid by the Company to, or for the
benefit of, the Chairman within five business days after receipt of such
determination and calculations.
2. The Company and the Chairman will each provide the National Firm access to
and copies of any books, records and documents in the possession of the
Company or the Chairman, as the case may be, reasonably requested by the
National Firm, and otherwise cooperate with the National Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by paragraph 1 of this Annex. Any determination by the
National Firm as to the amount of the Gross-Up Payment will be binding upon
the Company and the Chairman.
3. The U.S. federal, state and local income or other tax returns filed by the
Chairman will be prepared and filed on a consistent basis with the
determination of the National Firm with respect to the Excise Tax payable
by the Chairman. The Chairman will report and make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income
tax return as filed with the U.S. Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested
by the Company, evidencing such payment. If prior to the filing of the
Chairman's federal income tax return, or corresponding state or local tax
return, if relevant, the National Firm determines that the amount of the
Gross-Up Payment should be reduced, the Chairman will within five business
days pay to the Company the amount of such reduction.
4. The fees and expenses of the National Firm for its services in connection
with the determinations and calculations contemplated by paragraph 1 of
this Annex will be borne by the Company. If such fees and expenses are
initially paid by the Chairman, the Company will reimburse the Chairman the
full amount of such fees and expenses within five business days after
receipt from the Chairman of a statement therefor and reasonable evidence
of his payment thereof.
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5. The Chairman will notify the Company in writing of any claim by the U.S.
Internal Revenue Service or any other U.S. taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment.
Such notification will be given as promptly as practicable but no later
than 10 business days after the Chairman actually receives notice of such
claim and the Chairman will further apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid (in
each case, to the extent known by the Chairman). The Chairman will not pay
such claim prior to the expiration of the 30-calendar-day period following
the date on which he gives such notice to the Company or, if earlier, the
date that any payment of amount with respect to such claim is due. If the
Company notifies the Chairman in writing prior to the expiration of such
period that it desires to contest such claim, the Chairman will:
(A) provide the Company with any written records or documents in his
possession relating to such claim reasonably requested by the
Company;
(B) take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(C) cooperate with the Company in good faith in order effectively to
contest such claim; and
(D) permit the Company to participate in any proceedings relating to
such claim;
PROVIDED, HOWEVER, that the Company will bear and pay directly all costs
and expenses (including interest and penalties) incurred in connection with
such contest and will indemnify and hold harmless the Chairman, on an
after-tax basis, for and against any Excise Tax or income or other tax,
including interest and penalties with respect thereto, imposed as a result
of such representation and payment of costs and expenses. Without limiting
the foregoing provisions of this paragraph 5, the Company will control all
proceedings taken in connection with the contest of any claim contemplated
by this paragraph 5 and, at its sole option, may pursue or forego any and
all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim (PROVIDED, HOWEVER, that the
Chairman may participate therein at his own cost and expense) and may, at
its option, either direct the Chairman to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and the Chairman
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company determines; provided, HOWEVER, that
if the Company directs the Chairman to pay the tax claimed and xxx for a
refund, the Company will advance the amount of such payment to the Chairman
on an interest-free basis and will indemnify and hold the Chairman
harmless, on an after-tax basis, from any Excise Tax or income or other
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and PROVIDED FURTHER, HOWEVER, that any extension
of the statute of limitations relating to payment of taxes for the taxable
year of the Chairman with respect to which the contested amount is claimed
to be due is limited solely to such contested amount. Furthermore, the
Company's control of any such contested claim will be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Chairman will be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
6. If, after the receipt by the Chairman of an amount advanced by the Company
pursuant to paragraph 5 of this Annex, the Chairman receives any refund
with respect to such claim, the Chairman will (subject to the Company's
complying with the requirements of such paragraph 5) promptly pay to the
Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the receipt
by the Chairman of an amount advanced by the Company pursuant to paragraph
5 of this Annex, a determination is made that the Chairman is not entitled
to any refund with respect to such claim and the Company does not notify
the Chairman in writing of its intent to contest such denial or refund
prior to the expiration of 30 calendar days after such determination, then
such advance will be forgiven and will not be required to be repaid and the
amount of any such advance will offset, to the
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extent thereof, the amount of Gross-Up Payment required to be paid by the
Company to the Chairman pursuant to paragraph 19 of this Agreement and this
Annex A.
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