Exhibit 10.4


 


AMENDED
AND RESTATED


EMPLOYMENT
AGREEMENT


 


This
amended and restated agreement is effective as of the 1st day
of August, 2005


 


BETWEEN:


 


Alderwoods
Group Canada Inc.


 


(the “Company”)


 


-And-


 


Ross
S. Caradonna


 


(the “Executive”)


 


WHEREAS:


 


The Company is a wholly-owned subsidiary of
Alderwoods Group, Inc. (“AGI”), a Delaware corporation that is the holding
entity for a corporate group engaged in the operation of funeral homes,
insurance and cemeteries in Canada and the United States; and


 


Alderwoods Group Services Inc. and the
Executive entered into Employment Agreements as of September 16, 2002 and January 2,
2004 (the “Prior Agreements”); and


 


Alderwoods Group Services Inc. amalgamated
with Alderwoods Group Canada Inc. (“AGCI”) on December 29, 2002; and


 


The Company and the Executive wish to enter
into a written Employment Agreement which will supersede the Prior Agreements
and will provide the Executive with an incentive to continue in his position as
Executive Vice President, Chief Information Officer 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:


 


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.             “Constructive Discharge” means the termination of the Executive’s employment by the Executive
following the occurrence 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 of the Executive’s place of employment by
the Company by more than 50 miles from Toronto, Ontario;


 


b)                                     any material reduction by the Company in the Executive’s job duties
or responsibilities;


 


c)                                      any material reduction by the Company in the Executive’s level of
compensation or benefits;


 


d)                                     any adverse change by the Company or AGI to the Executive’s title or
function;


 


e)                                      harassment by a representative or affiliate of the Company; or


 


f)                                        any circumstance in which the Executive was induced by the actions
of the Company to terminate his employment other than on a purely voluntary
basis.


 


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3.             “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.


 


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 Executive’s employment.


 


6.             “Voting Stock”
means securities entitled to vote generally in the election of directors.


 


Entire
Agreement


 


7.             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 (including, without limitation, the Prior
Agreements), 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 and by the terms of the 2003-2005
Executive Strategic Incentive Plan of Alderwoods Group Canada Inc. and the 2005-2007
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 Executive.


 


Employment


 


8.             The Company agrees to employ the Executive, and the Executive agrees to be
employed by the Company, for a fixed term beginning on the date hereof and
ending on the earlier of December 31, 2008, unless extended by mutual
agreement, or the effective date of the termination of the Executive’s
employment (such period of time referred to herein as the “Initial Term of
Employment”).  The Company will continue
to employ the Executive, and the Executive agrees to be employed by the Company
following the Initial Term of Employment for an addition term beginning on January 1,
2009 and ending on the earlier of June 30, 2009, unless extended by mutual
agreement, or the effective date of the termination of the Executive’s
employment with the Company (such period of time referred to herein as the “Notice
Period”).  The Initial Term of Employment
and the Notice Period are collectively referred to herein as “the term of this
Agreement.”  Notwithstanding anything to
the contrary in this Agreement, paragraph 17(b) shall survive and remain
in effect following the term of this Agreement.


 


9.             The Executive agrees that he will hold the position of Executive Vice
President, Chief Information Officer and 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 also agrees that, as part of
the Executive’s duties, the Executive shall occupy and perform the office of
Executive Vice President, Chief Information Officer of AGI, on behalf of the
Company, for the term of this Agreement. 
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.


 


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Compensation


 


10.


 


a)                                      In consideration for the Executive’s continued performance of his
duties as Executive Vice President, Chief Information Officer, the Executive
will receive a base salary of $251,689 U.S. per annum.  On May 1, 2006 and periodically
thereafter during the Initial Term of Employment, the amount of such salary
shall be subject to review and improvement in accordance with Company practice,
but in no event shall such amount be reduced. 
During the Notice Period, the Executive will receive a base salary equal
to the base salary that was payable to the Executive at the end of the Initial
Term of Employment.  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.           During the Initial Term of Employment, the Executive will be entitled to
participate in a short term incentive plan as adopted by the Company from time
to time in a manner commensurate with his position and level of responsibility
with the Company.  The bonus payable
under such plan will be paid in full within 75 days after the end of each year.


 


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 payable during
the Initial Term of Employment, the Executive must be employed by the Company
or its successor at the time the bonus is paid unless the Executive is
terminated (1) without Just Cause or (2) by reason of Constructive
Discharge in compliance with paragraph 18. If the Executive’s employment is
terminated without Just Cause or by reason of Constructive Discharge 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 and
will be subject to deductions required by applicable law. If the bonus amount
has not been determined within seven days of the termination it will be paid in
full within 75 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, the bonus
payable during the Initial Term of Employment which the Executive will be
entitled to receive under paragraph 17 for that year will be equal to the
Executive’s pro rata portion of the bonus for the year of termination (for the
number of days elapsed in the current year), based on the achievement of the
applicable performance criteria through the date of termination.


 


c)                                      Notwithstanding the anything to the contrary contained herein, if
Executive’s employment is terminated during, or upon expiration of, the Notice
Period, the Executive will be entitled to a bonus equal to 50% of the Executive’s
base salary as in effect at the time of termination of the Initial Term of
Employment, pro-rated based on the number of days that the Executive was
employed during the current year.


 


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Stock Option Plan


 


13.           In 2005, the Executive will receive a grant of stock options covering
100,000 shares of AGI common stock.  No
further grants of stock options will be made to the Executive during the term
of this Agreement, unless otherwise determined by the Board of Directors of AGI
in its 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.


 


Executive Strategic
Incentive Plans


 


14.           The Executive shall continue to participate in the
2003-2005 Executive Strategic Incentive Plan of Alderwoods Group Canada
Inc., a copy of which has been provided to the Executive.  The Executive shall be eligible to
participate in the 2005-2007 Executive Strategic Incentive Plan of
Alderwoods Group Canada, Inc., a copy of which shall be provided to the
Executive.


 


Benefits


 


15.           During the term of this Agreement, 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 $600.00 per month plus operating expenses with no allowance for
auto insurance coverage.


 


c)                                      Club Membership.  The Executive will be entitled to the amount
of $1,000.00 per year for club memberships as directed by the Executive.


 


d)                                     Executive Medical. The
Executive will be entitled to participate in the Company’s Annual Medical
Program.


 


e)                                      Other Benefits. The
Executive will be entitled to participate in the Company’s Health Services
Spending Account Program.


 


Stock
Ownership Requirement


 


16.           From and after August 1, 2005 and at all times during the term of
this Agreement, the Executive will hold a total of 40,000 shares of common
stock of AGI.  Such common stock may be (a) stock
acquired by the Executive and owned by him outright; (b) stock acquired
and held through AGI’s Employee Stock Purchase Plan; or (c) stock
underlying vested stock options and restricted stock units.


 


Termination of Employment


 


17.           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;


 


b)                                     by the Company, not following a Change in Control as set forth in
paragraph 18 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:


 


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i)              24 months’ base salary;


 


ii)             The amount of any unpaid bonus earned by the Executive up to and
including the date of termination calculated in accordance with
paragraph 12(b) or 12(c), as the case may be; and


 


iii)            The amount of any unpaid salary or vacation earned by the Executive
up to and including the date of termination.


 


Payments identified in the sub paragraphs above will
be subject to deductions required by applicable law;


 


c)                                      by the Company for any reason other than Just Cause or by reason of
Constructive Discharge, following a Change in Control, both in compliance with paragraph
18 below; 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


 


18.           If a Change in Control occurs and, within two years of the effective date
of the Change in Control, the Executive’s employment is terminated by the
Company without Just Cause or by reason of Constructive Discharge, the Company
shall, within seven days of the date of 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
contributions to the Registered Retirement Savings Plan, following the date of
the Executive’s termination (such benefit coverage and contributions being calculated
over 24 months following termination);


 


iii)            Two times the amount of incentive pay (in an amount equal to not
less than the highest aggregate incentive pay earned by the Executive in any of
the three fiscal years immediately preceding the year in which the Change in
Control occurred);


 


iv)                                  The amount of any unpaid short-term incentive bonus earned by the
Executive for a completed year, calculated in accordance with paragraph 12(a);


 


v)                                     The amount of any unpaid salary or vacation earned by the Executive
up to and including the date of termination; and


 


vi)                                  The Executive shall be allowed 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 on such resignation or termination.


 


Payments
identified in the sub-paragraphs above will be subject to deductions required
by applicable law.  Any termination of
employment of the Executive by the Company or the removal of the Executive from
the office or position in the Company or AGI that occurs (A) not more than
365 days prior to the date on which a Change in Control occurs and (B) following
the commencement of any discussion with a third party that ultimately results
in a Change in Control will be deemed to be a termination or removal of the
Executive after a Change in Control for purposes of this Agreement.


 


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Certain Additional Payments by the Company


 


19.           The Executive’s entitlements, if any, on termination
of employment, voluntary resignation, Change in Control, total disability or
death under the 2003-2005 Executive Strategic Incentive Plan of
Alderwoods Group Canada Inc. or the 2005-2007 Executive Strategic
Incentive Plan of Alderwoods Group Canada Inc. (the “Plans”) shall be
determined solely in accordance with the terms of the Plans as in effect from
time to time.


 


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, at any time, without the prior
written consent of the Company, 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, the Executive agrees that while employed by the Company 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 


 


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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) 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 paragraphs 22 and 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 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 17, 18 or 19 are reasonable estimates of the damages, which would be
suffered by the Executive.  Any amount
paid under paragraphs 17, 18 or 19 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 17, 18 or 19 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, while employed but the Company,
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 


 


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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 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 17, 18,
19, 20, 21, 22, 23, 24, 26, 27, 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 a 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 


 


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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.


 


Notice


 


38.           Any demand, notice or other communication to be given in connection with
this Agreement shall be given by personal delivery, by registered mail or by
electronic means of communication addressed to the recipient as follows:


 


To the Executive:


 


Ross S. Caradonna

823 Baylawn Drive


Pickering, Ontario L1X 2R9


 


To the Company:


 


Alderwoods Group Canada Inc.

259 Yorkland Road


Toronto, Ontario M2J 5B2


 


Attention: Senior Vice-President, Legal &
Compliance


 


With a copy to:


 


Alderwoods Group, Inc.


311 Elm Street


Suite 1000, First Floor


Cincinnati, OH 45202


 


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.


 


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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 Executive,
and (3) AGI, as contemplated by paragraphs 9, 13, 16, 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 CANADA INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul A. Houston

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Paul A. Houston

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALDERWOODS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. G. Eames

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  A. G. Eames

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John S. Lacey

  	
   

  	
  /s/ Ross S. Caradonna

  	
   

  
	
   

  	
  Ross S. Caradonna

  
					



 


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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.


 


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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
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 sue 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 sue 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 


 


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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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