AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This amended and restated agreement made as of the 1st day of May, 2003
BETWEEN:
ALDERWOODS GROUP CANADA INC.
(the "Company")
-And-
XXXX X. XXXXX
(the "Chairman")
WHEREAS:
The Company is a wholly-owned subsidiary of Alderwoods Group, Inc., a
Delaware corporation ("AGI"), the holding entity for a corporate group
engaged in the operation of funeral homes, insurance and cemeteries in
Canada, the United States and England;
Alderwoods Group Services Inc. and the Chairman entered into an
Employment Agreement (the "Prior Agreement") dated January 2, 2002;
Alderwoods Group Services Inc. amalgamated with Alderwoods Group
Canada Inc. ("AGCI") on December 29,2002;
AGI granted the Chairman 200,000 stock options on March 26, 2003 at
$3.65 a share; and
The Company and the Chairman wish to enter into a new agreement which
will supersede the Prior Agreement and will provide the Chairman with
an incentive to act as Chairman of the Company.
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 this Agreement 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 23, 24 and 25; 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;
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d) any adverse change to the Chairman's title or function;
e) any change in the organizational reporting relationship between the
Chairman and the Board of Directors;
f) harassment by AGI or the Company; 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
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. 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 and the 2003-2005 Executive Strategic Incentive Plan of
Alderwoods Group Canada Inc. 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.
EMPLOYMENT
8. The Company agrees to employ the Chairman, and the Chairman agrees to be
employed by the Company for a fixed term beginning on the date hereof and
ending December 31, 2005. 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 December 31, 2005, unless extended by mutual
agreement, or the effective date of the termination of Chairman's
employment with the Company, if earlier.
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.
BASE COMPENSATION
10.
a) Commencing from the Employment Date, the Chairman will receive a base
salary for 2003 of $505,000 U.S. per annum, reducing to $405,000 on
January 1, 2004 and to $305,000 on January 1, 2005. The 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
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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 16, 17 or 18, 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 17 or 18. If the
Chairman's employment is terminated without Just Cause or the Chairman
resigns in compliance with paragraphs 17 or 18 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 17 or 18, the bonus which the
Chairman 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 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 OPTIONS
13. No further grants of stock options in addition to the March 26, 2003 grant
shall be made to the Chairman during the term of this Agreement, unless
otherwise determined by the Board of Directors of AGI at their sole
discretion.
Nothing in this Agreement shall have any effect with respect to any stock
option agreement or agreements made prior to the effective date of this
Agreement.
2003-2005 EXECUTIVE STRATEGIC PLAN INCENTIVE
14. The Chairman shall participate in the 2003-2005 Executive Strategic
Incentive Plan of Alderwoods Group Canada Inc., a copy of which shall be
provided to the Chairman.
BENEFITS
15. 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) 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
16. 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 17 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 the sum
of sub-paragraphs i) to iv) below:
i) 24 months' base salary;
ii) the replacement value of all Chairman's benefit coverage,
including contributions to the Registered Retirement Savings
Plan, following the date of the Chairman's termination (such
benefit coverage and contributions being calculated over 24
months following resignation or termination);
iii) the amount of any unpaid short term incentive 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; and
v) in addition, the Chairman shall be allowed 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 on such
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 18 below following a Change in Control, both in
compliance with paragraph 17 or paragraph 18, as the case may be; or
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d) on December 31, 2005 (the "Expiration Date"), provided that this
Agreement is not terminated earlier by either party in accordance
with paragraph 16, 17 or 18, of this Agreement or provided that
this Agreement is not renewed or restated. If this Agreement
terminates on the Expiration Date, the Company will have no
further obligation to the Chairman under this Agreement 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 and a retiring allowance
equal to 15% of the sum of (i) his current annual salary plus
(ii) the average of his annual short term incentive plan payments
over the preceding 36 months, for each year of his total service
with the Company and with The Xxxxxx Group Inc., to a maximum of
50% of the said sum, and the Chairman shall be allowed 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
on such termination.
e) 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
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 and a retiring
allowance equal to 15% of the sum of (i) his current annual
salary plus (ii) the average of his annual short term incentive
plan payments over the preceding 36 months, for each year of his
total service with the Company and with The Xxxxxx Group Inc., to
a maximum of 50% of the said sum.
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, 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 equal to
the sum of sub-paragraphs i) to iv) below:
i) 24 months' base salary;
ii) the replacement value of all Chairman's benefit coverage,
including contributions to the Registered Retirement Savings
Plan, following the date of the Chairman's termination (such
benefit coverage and contributions 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: and
v) in addition, the Chairman shall be allowed 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 on such
resignation or termination.
Payments identified in sub-paragraphs (i) - (iv) will be subject to
deductions required by applicable law.
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VOLUNTARY RESIGNATION DUE TO CHANGE IN CONTROL
18. In the event that an agreement is reached which would result in a Change in
Control, but the Change in 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
17(i) - (iv) inclusive of the retiring allowance amount otherwise payable
under paragraph 16. In the event that the Change in Control does not occur,
the Chairman shall not be entitled to the payments prescribed under
paragraph 17(i) - (iv), and the resignation shall be deemed to not have
been tendered.
19. Immediately prior to the effective date of a Change in Control, the
Chairman shall be allowed 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 AGI upon a Change in 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
20. The Chairman's entitlements, if any, on termination of employment,
voluntary resignation, Change in Control, retirement, termination of
employment on the Expiration Date, total disability or death under the
2003-2005 Executive Strategic Incentive Plan of Alderwoods Group Canada
Inc. (the "Plan") shall be determined solely in accordance with the terms
of the Plan as in effect from time to time.
21. In the event that it is determined (as hereinafter provided) that any
payment (other than the Gross-Up Payments provided for in this paragraph 21
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, 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.
22. The obligations set forth in paragraph 21 will be subject to the procedural
provisions described in Annex A.
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CONFIDENTIAL INFORMATION; COMPETITIVE ACTIVITY
23.
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 23) 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 23 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.
24. In addition, subject to the terms of paragraph 25, 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% or more 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%
or more 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 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.
25. During the term of this Agreement and for a period of 24 months thereafter,
the Chairman will not without the prior written consent of the Company,
directly or indirectly, accept employment from, act as a consultant to or
otherwise advise with respect to any company that is designated in writing
to the Chairman by the Board of Directors of AGI as a Major Competitor of
the Company.
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26.
a) The Chairman and the Company agree that the covenants contained in
paragraphs 23, 24 and 25 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 26 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
employee of, nor business consultant to, any other company or business
without the prior express approval of a majority of the independent
Directors of AGI. The directorships currently held by the Chairman are
as listed on Annex B to this Agreement. The Chairman will not accept
any additional directorships without the prior express approval of a
majority of the independent Directors of AGI. The provisions of this
paragraph 26(b) are in addition to, and in no way derogate from, any
and all other provisions of this Agreement.
27. For purposes of paragraphs 23, 24, 25 and 26, the term "Company" will also
include AGI and any subsidiary of AGI.
GENERAL
28. 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, 18 or 20 are reasonable estimates of the damages which
would be suffered by the Chairman. Any amount paid under paragraphs 16, 17
or 18 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.
29. Any payment made to the Chairman under paragraphs 16, 17, 18 or 20 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.
30. Any payment other than for base salary while employed by the Company 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.
31. 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.
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32. 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.
33. All dollar amounts identified in this contract are in U.S. currency.
34. The parties' respective rights and obligations under paragraphs 21, 22, 23,
24, 25, 26, 38 and 39 will survive any termination or expiration of this
Agreement or the termination of the Chairman's employment for any reason
whatsoever.
GOVERNING LAWS
35. 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
36. 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
37.
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
38. 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.
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39. 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
40. 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 Canada Inc.
11th Floor
0000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx. Xxxxxxx X0X 0X0
Attention: Senior Vice-President, Legal & Compliance
WITH A COPY TO:
Alderwoods Group, Inc.
000 Xxx Xxxxxx
Xxxxx 0000, Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Senior Vice-President, Legal & Compliance
or such other address, individual or electronic communication as may be
designated by notice given by either party to the other.
ADDITIONAL
41. 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.
42. 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, 23, 24, 25 and 26, any
rights or remedies under or by reason of this Agreement and AGI shall be a
third party beneficiary of this Agreement.
11
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 CANADA INC.
Per _________________________________
Xxxxx Xxxxxx
Senior Vice-President,
Legal & Compliance
ALDERWOODS GROUP, INC.
Per _________________________________
X. X. Xxxxx
Director
Witness:
__________________________ _________________________________
Xxxx X. Xxxxx
12
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 21 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
A-2
extent thereof, the amount of Gross-Up Payment required to be paid by
the Company to the Chairman pursuant to paragraph 21 of this Agreement
and this Annex A.
A-3
ANNEX B
CURRENT DIRECTORSHIPS
Cancer Care Ontario
Canadian Tire Corporation
Doncaster Consolidated
Telus Corporation
Tricap Restructuring Fund
