EXHIBIT 10.22
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. XXXXXXX
(the "Executive")
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 Executive have previously entered into Employment
Agreements (the "Prior Agreements"); and
The Company and the Executive wish to enter into a new agreement which
will supersede the Prior Agreements and will provide the Executive with an
incentive to act as President and Chief Executive Officer 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 the Company 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 the
Company, (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 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
Executive, 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 23; 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 Executive's employment):
a) the geographic relocation by more than 25 miles of the Executive'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 Executive's job duties or
responsibilities;
c) any material reduction in the Executive's level of compensation or
benefits;
d) any adverse change to the Executive's title or function;
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e) any change in the organizational reporting relationship between the
Executive and the Board of Directors;
f) harassment; or
g) any circumstance in which the Executive 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 Executive's
employment.
6. "VOTING STOCK" means securities entitled to vote generally in the election
of directors.
ENTIRE AGREEMENT
7.
a) The Executive and the Company agree that this Agreement represents
the entire 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 Executive 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 Executive.
b) The Executive acknowledges and agrees that, as of the date of this
Agreement, the Key Employee Retention Program will terminate and be
of no further force or effect with respect to the Executive.
EMPLOYMENT
8. The Company agrees to employ the Executive, and the Executive agrees to
be employed by the Company, in the position of President and Chief
Executive Officer for a fixed term beginning on the date hereof and
ending on August 1, 2004. The Executive also agrees that, as part of
the Executive's duties, the Executive shall occupy and perform the
offices of President and Chief Executive Officer of AGI, on behalf of
the Company, for the term of this Agreement. As used in this
Agreement, the phrase "term of this Agreement" means the period
beginning on the date hereof and ending on the earlier of August 1,
2004, or the effective date of the termination of Executive's
employment.
9. The Executive 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, and will devote his full working time and
attention to these duties. The Executive 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) In consideration for the Executive's performance of his duties as
President and Chief Executive Officer, the Executive will receive a
base salary of $600,000 U.S. per annum. The amount of such
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salary 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 Executive'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 Executive for all reasonable
expenses incurred by the Executive during the term of this Agreement
in the course of the Executive 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 Executive 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 Executive'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 16, 17 or 18, the
Executive'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 Executive
must be employed by the Company or its successor at the time the
bonus is paid unless the Executive is terminated without Just Cause
or the Executive resigns in compliance with paragraphs 17 or 18. If
the Executive's employment is terminated without Just Cause or the
Executive resigns in compliance with paragraphs 17 or 18 after the
end of the year but before the bonus amount is paid, the Executive
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 Executive's employment is
terminated by the Company or its successor without Just Cause or the
Executive resigns in compliance with paragraphs 17 or 18, the bonus
which the Executive will be entitled to receive under paragraphs 16,
17 or 18 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 Executive's 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 Executive is eligible for participation in AGI's equity incentive
plan or plans. Following the date of this Agreement, the Executive
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 Executive 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.
REORGANIZATION INCENTIVE
14.
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a) The parties acknowledge that pursuant to the terms of a Prior
Agreement, Executive was eligible to receive both a "Confirmation
Incentive Payment" and a "Value Added Payment" based upon the
finalized content of the Plan of Reorganization and the timing of
the effective date of its confirmation. The parties further
acknowledge that the work leading to finalization of the Plan of
Reorganization and its confirmation has been substantially
completed.
b) Accordingly the parties agree that in lieu of the "Confirmation
Incentive Payment" and "Value Added Payment" as specified in the
Prior Agreement, Executive will qualify for a one-time incentive
payment of $1,500,000 (U.S.) payable within 15 days of the effective
date of the Plan of Reorganization being confirmed by the U.S.
Bankruptcy Court. Executive agrees to purchase, no later than 30
days after payment of this incentive, shares of common stock of AGI
having an aggregate value equal to 25% of the net after-tax
incentive. Executive will retain such shares through the term of
this Agreement.
BENEFITS
15. The Executive will be eligible to participate in the following benefit
plans:
a) GROUP BENEFITS
The Executive 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 Executive 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 Executive 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 Executive.
d) CLUB MEMBERSHIP
The Executive will be entitled to the amount of $2,500.00 U.S. per
year for club memberships as directed by the Executive.
TERMINATION OF EMPLOYMENT
16. The parties agree that the Executive's employment under this Agreement may
be terminated as follows:
a) by the Company, without notice of termination or pay in lieu
thereof, for Just Cause; or,
b) by the Company, not following a Change in Control as set forth in
paragraph 17 below, at its sole discretion and for any reason other
than Just Cause upon payment to the Executive 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 Executive's benefit coverage,
including the full vesting of all stock options issued (exercised or
not) granted to the Executive, and all monies due from the
Registered Retirement Savings Plan, following the date of the
Executive's termination (such benefit coverage being calculated over
24 months following resignation or termination);
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iii) The amount of any unpaid bonus earned by the Executive 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
Executive 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
Executive for Stated Good Reason or pursuant to a voluntary
resignation as set forth in paragraph 18 below following a Change in
Control, in compliance with paragraph 17 or paragraph 18, as the
case may be; or
d) by the Executive, 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 Executive under this Agreement or
otherwise except to pay the Executive the unpaid portion, if any, of
the Executive's base salary payable for the period through the date
of termination of the Executive's employment.
CHANGE IN CONTROL
17. If a Change in Control occurs and, within two years of the effective date
of the Change in Control, the Company terminates the Executive without
Just Cause or the Executive 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 Executive
in a lump sum the following payments:
i) 24 months' base salary;
ii) the replacement value of all Executive's benefit coverage,
including the full vesting of all stock options issued (exercised or
not) granted to the Executive, and all monies due from the
Registered Retirement Savings Plan, following the date of the
Executive's termination (such benefit coverage being calculated over
24 months following resignation or termination);
iii) The amount of any unpaid bonus earned by the Executive 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
Executive 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
18. 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
Executive 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 Executive shall continue to work for the Company up until that
date. Further, if the Executive 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 Executive a lump sum amount equal to the
payments prescribed under paragraph 17(i) -(iv). In the event that the
Change in Control does not occur, the Executive shall not be entitled
to the payments prescribed under paragraph 17(i) - (iv), and the
resignation shall be deemed to not have been tendered.
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19. Immediately prior to the effective date of a Change in Control, the
Company shall allow the Executive to exercise all stock options or
share appreciation rights, whether vested or not, granted to the
Executive including shares with respect to which such options would not
otherwise be exercisable. The Executive shall be entitled to receive
all dividends declared and paid by the Company upon a Change of Control
on the shares received by the Executive following the exercise of the
Executive's stock options or share appreciation rights.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
20. In the event that it is determined (as hereinafter provided) that any
payment (other than the Gross-Up Payments provided for in this
paragraph 20 and Annex A) or distribution by the Company, AGI or any of
its affiliates to or for the benefit of the Executive, 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,
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 Executive 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 Executive 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 Executive 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
Executive will be considered to pay any applicable U.S. federal, state
and local income taxes at the highest rate applicable to the Executive
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.
21. The obligations set-forth in paragraph 20 will be subject to the
procedural provisions described in Annex A.
CONFIDENTIAL INFORMATION; COMPETITIVE ACTIVITY
22. The Executive 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
Executive's breach of this paragraph 22) 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 22 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 Executive, generally known to the
public or (iii) if the Executive is required by law to make disclosure
(after giving the Company notice and an opportunity to contest such
requirement).
23. In addition, during the term of this Agreement and for a period of 12
months thereafter, the Executive 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 Executive'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
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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) participation in the management of any
such enterprise other than in connection with the competitive
operations of such enterprise.
b) On behalf of the Executive 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.
24. The Executive and the Company agree that the covenants contained in
paragraphs 22 and 23 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 Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of his obligations under
this paragraph 24 would be inadequate and that damages flowing from
such a breach may not readily be susceptible to being measured in
monetary terms. Accordingly, the Executive 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.
25. For purposes of paragraphs 22, 23 and 24, the term "Company" will also
include AGI and any subsidiary of AGI.
GENERAL
26. The parties confirm that the provisions of this Agreement are fair and
reasonable and that the total compensation and benefits payable under
paragraphs 16, 17 or 18 are reasonable estimates of the damages which
would be suffered by the Executive. Any amount paid under paragraphs
16, 17 or 18 shall be in full satisfaction of all claims whatsoever
relating to the Executive's employment or for the termination of the
Executive'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.
27. Any payment made to the Executive under paragraphs 16, 17 or 18 of this
Agreement shall be paid to the Executive by the Company regardless of
any offer of alternate employment made to the Executive by the Company
or by any other prospective employer, whether accepted by the Executive
or not. The Executive will not be required to mitigate any damages
arising from this Agreement and any amounts and benefits to be provided
to the Executive hereunder shall not be reduced or set off against any
amounts earned by the Executive from alternate employment, including
self-employment, or by other means.
28. Any payment other than for base salary made to the Executive under this
Agreement shall be made by way of a lump sum payment or, at the
Executive's option, in such other manner as he may direct, less deductions
required by applicable law.
29. 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 persons shall
include individuals, partnerships, associations, trusts, unincorporated
organizations and corporations and VICE VERSA.
30. 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
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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.
31. All dollar amounts identified in this contract are in U.S. currency.
32. The parties' respective rights and obligations under paragraphs 20, 21,
22, 23, 24, 36 and 37 will survive any termination or expiration of this
Agreement or the termination of the Executive's employment for any reason
whatsoever.
GOVERNING LAWS
33. 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
34. 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
35. This Agreement shall be binding upon and enure to the benefit of (i)
the Executive 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.
LEGAL ADVICE
36. The Executive 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.
37. The Company agrees to reimburse the Executive for all reasonable legal
expenses incurred in connection with any dispute involving the
Executive, 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 Executive in respect of any action or actions commenced
by the Executive 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 the Agreement or after;
provided that, in regard to such matters, the Executive has not acted
in bad faith or with no colorable claim of success. However, the
Company shall not be required to reimburse the Executive for any legal
costs or expenses in relation to any action commenced by the Company to
enforce the confidentiality or 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.
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NOTICE
38. 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 EXECUTIVE:
Xxxx X. Xxxxxxx
0 Xxxxxxx Xxxxx
Xxxx, 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
Xxxxxxxxx, 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
39. 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.
40. 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, 22, 23, 24 and 25,
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 Executive 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. XXXXX
-----------------
Xxxx X. Xxxxx
Chairman of the Board
Witness:
/s/ XXXXXXX X. XXXX /s/ XXXX X. XXXXXXX
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Xxxx X. Xxxxxxx
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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 20 of this Agreement
and this Annex A, including whether an Excise Tax is payable by the
Executive and the amount of such Excise Tax and whether a Gross-Up
Payment is required to be paid by the Company to the Executive 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 Executive in his sole discretion. The Executive will direct the
National Firm to submit its determination and detailed supporting
calculations to both the Company and the Executive 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 Executive. If the National Firm determines that any Excise Tax is
payable by the Executive, the Company will pay the required Gross-Up
Payment to the Executive within five business days after receipt of
such determination and calculations with respect to any Payment to the
Executive. If the National Firm determines that no Excise Tax is
payable by the Executive 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 Executive with an opinion
that the Executive 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 Executive thereafter is required to make a
payment of any Excise Tax, the Executive 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 Executive as promptly as possible. Any such
Underpayment will be promptly paid by the Company to, or for the
benefit of, the Executive within five business days after receipt of
such determination and calculations.
2. The Company and the Executive will each provide the National Firm
access to and copies of any books, records and documents in the
possession of the Company or the Executive, 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 Executive.
3. The U.S. federal, state and local income or other tax returns filed by
the Executive 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 Executive. The Executive 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 Executive'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 Executive 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 Executive, the Company will reimburse the Executive
the full amount of such fees and expenses within five business days after
receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
5. The Executive 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
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Payment. Such notification will be given as promptly as practicable but
no later than 10 business days after the Executive actually receives
notice of such claim and the Executive 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
Executive). The Executive 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 Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive 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 Executive, 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
Executive may participate therein at his own cost and expense) and may, at
its option, either direct the Executive to pay the tax claimed and xxx for
a refund or contest the claim in any permissible manner, and the Executive
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 Executive to pay the tax claimed and xxx for a
refund, the Company will advance the amount of such payment to the
Executive on an interest-free basis and will indemnify and hold the
Executive 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 Executive 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 Executive 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 Executive of an amount advanced by the
Company pursuant to paragraph 5 of this Annex, the Executive receives
any refund with respect to such claim, the Executive 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 Executive of an amount advanced
by the Company pursuant to paragraph 5 of this Annex, a determination
is made that the Executive is not entitled to any refund with respect
to such claim and the Company does not notify the Executive 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 extent thereof, the amount of Gross-Up
Payment required to be paid by the Company to the Executive pursuant to
paragraph 20 of this Agreement and this Annex A.
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