Exhibit 10.1


 


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-


 


John S. Lacey


 


(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 and the United States;


 


Alderwoods Group Services
Inc. and the Chairman entered into an Employment Agreement dated January 2,
2002 and an Amended and Restated Employment Agreement dated May 1, 2003 (the “Prior
Agreements”);


 


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


 


The Company and the
Chairman wish to enter into a new agreement which will supersede the Prior
Agreements and will provide the Chairman with an incentive to act as Chairman
of the Company.


 


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.                                       “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 paragraphs 25, 26 and 27; and the intentional material
breach of any provision of this Agreement.


 


3.                                       “Stated Good Reason” means 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 Chairman’s employment):


 


a)                                      the
geographic relocation by more than 25 miles of the Chairman’s principal work
location;


 


b)                                     any
material reduction in the Chairman’s job duties or responsibilities;


 


c)                                      any
material reduction in the Chairman’s level of compensation or benefits;


 


d)                                     any
adverse change to the Chairman’s title or function;


 


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e)                                      any
change in the organizational reporting relationship between the Chairman and
the Board of Directors;


 


f)                                        harassment
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 (including, without limitation, the Prior
Agreements), 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 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 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 on the
earlier of December 31, 2007, unless extended by mutual agreement, or the
effective date of the termination of the Chairman’s employment with the Company
(such period of time referred to herein as the “Initial Term of Employment”).  The Company will continue to employ the
Chairman, and the Chairman agrees to be employed by the Company following the
Initial Term of Employment for an additional term beginning on January 1,
2008 and ending on the earlier of July 31, 2008, unless extended by mutual
agreement, or the effective date of the termination of the Chairman’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.”


 


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)                                      The
Chairman will receive a base salary as follows:


 


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i)                                         commencing
from the date of this Agreement and for the remainder of calendar year 2005,
$305,000 U.S. per annum;


 


ii)                                      for
calendar year 2006, $425,000 U.S. per annum;


 


iii)                                   for
calendar year 2007, $450,000 U.S. per annum; and


 


iv)                                  during
the Notice Period, $450,000 U.S. per annum.


 


b)                                     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.


 


c)                                      The
Company shall reimburse the Chairman for all reasonable expenses incurred by
the Chairman during the term of this Agreement in the course of the Chairman
performing his duties under this Agreement. 
These reimbursements shall be consistent with the Company’s policies in
effect from time to time with respect to travel, entertainment and other
reimbursable business expenses, subject to the Company’s requirements
applicable generally with respect to reporting and documentation of such
expenses.


 


Short
Term Incentive Plan - Annual Bonus


 


11.           During
2005, 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 75 days after the end of each year.  With the exception of the bonus that becomes
payable under paragraphs 17, 18 or 19, 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.  The Chairman will not be eligible to
participate in the short term incentive plan during calendar years 2006 and
2007 or during the Notice Period.


 


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 during 2005, 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 18 or 19.


 


b)                                     If
the Chairman’s employment is terminated without Just Cause or the Chairman
resigns in compliance with paragraphs 18 or 19 after the end of 2005 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 75 days of the
subject year end.


 


c)                                      If,
before the end of 2005, the Chairman’s employment is terminated by the Company
or its successor without Just Cause or the Chairman resigns in compliance with
paragraphs 18 or 19, the bonus which the Chairman will be entitled to receive
under paragraphs 17, 18 or 19 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.


 


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Stock
Options


 


13.                                 In
2005, the Chairman will receive a grant of stock options covering 75,000 shares
of AGI common stock.  No further grants
of stock options will be made to the Chairman 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
Chairman shall continue to participate in the 2003-2005 Executive Strategic
Incentive Plan of Alderwoods Group Canada Inc. (the “2003-2005 Plan”), a copy
of which has been provided to the Chairman. 
Pursuant to action by AGI’s Board of Directors, the Chairman’s portion
of the maximum award pool relating to the Net Debt reduction goals under the
2003-2005 Plan will be paid to the Chairman by AGCI on August 1,
2005.  The Chairman 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 Chairman.


 


Benefits


 


15.                                 During
the term of this Agreement, the Chairman will be eligible to participate in the
following benefit plans:


 


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.


 


Stock
Ownership Requirement


 


16.                                 From
and after August 10, 2005 and until April 10, 2006 (the “Subsequent
Purchase Date”) the Chairman will hold 100,000 shares of common stock of
AGI.  From and after the Subsequent
Purchase Date and at all times during the remaining term of this Agreement, the
Chairman will hold a total of 200,000 shares of common stock of AGI.  Such common stock may be stock acquired by
the Chairman and owned by him outright or stock acquired and held through AGI’s
Employee Stock Purchase Plan.  In
connection with such stock ownership requirement, the Chairman agrees that on
or prior to August 10, 2005, he will acquire 100,000 shares of common
stock of AGI with the proceeds received under the 2003-2005 Plan, pursuant to
paragraph 14 above.  In addition, in
connection with such stock ownership requirement, the Chairman agrees that he
will acquire an additional 100,000 shares of common stock of AGI no later than
the Subsequent Purchase Date.


 


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Termination
of Employment


 


17.           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
18 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 (v) 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 during
calendar year 2005 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;


 


iv)                                  the
amount of any unpaid salary or vacation earned by the Chairman up to and
including the date of termination;


 


v)                                     a
lump sum retiring allowance equal to the greater of (a) $500,000 U.S. and (b)
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 Loewen Group Inc.,
to a maximum of 50% of the said sum; and


 


vi)                                  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 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 the Chairman for Stated
Good Reason or pursuant to a voluntary resignation as set forth in paragraph 19
below following a Change in Control, both in compliance with paragraph 18 or
paragraph 19, as the case may be; or


 


d)                                     by
the Chairman, for any reason, upon thirty (30) days advance written notice to
the Company or upon expiration of the Notice Period, 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 lump sum retiring allowance equal to the
greater of (a) $500,000 U.S. and (b) 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 Loewen Group Inc., to a maximum of 50% of the said sum.


 


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Change
in Control


 


18.           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 (v) 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 during calendar year 2005 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;


 


iv)                                  the
amount of any unpaid salary or vacation earned by the Chairman up to and
including the date of resignation or termination;


 


v)                                     a
lump sum retiring allowance equal to the greater of (a) $500,000 U.S. and (b)
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 Loewen Group Inc.,
to a maximum of 50% of the said sum; and


 


vi)                                  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 the sub-paragraphs above will be subject to
deductions required by applicable law.


 


Voluntary
Resignation Due to Change in Control


 


19.           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 18(i) -
(v).  In the event that the Change in
Control does not occur, the Chairman shall not be entitled to the payments
prescribed under paragraph 18(i) - (v), and the resignation shall be deemed to
not have been tendered.


 


20.           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.


 


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Certain
Additional Payments by the Company


 


21.           The Chairman’s entitlements, if any, on
termination of employment, voluntary resignation, Change in Control,
retirement, total disability or death under the 2003-2005 Executive Strategic
Incentive Plan of Alderwoods Group Canada Inc. or the 2005-2007 Executive
Strategic 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.


 


22.           In
the event that it is determined (as hereinafter provided) that any payment
(other than the Gross-Up Payments provided for in this paragraph 22 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.


 


23.           The
obligations set forth in paragraph 22 will be subject to the procedural
provisions described in Annex A.


 


Confidential
Information; Competitive Activity


 


24.


 


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
24) 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 24 will not apply (i) during the term of
this Agreement, 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.


 


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25.           In
addition, subject to the terms of paragraph 26, 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.


 


26.           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.


 


27.


 


a)                                      The
Chairman and the Company agree that the covenants contained in paragraphs 24,
25 and 26 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 paragraphs 24, 25 and 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 27(b) are in addition to, and in no way derogate
from, any and all other provisions of this Agreement.


 


28.                                 For
purposes of paragraphs 24, 25, 26 and 27, the term “Company” will also include
AGI and any subsidiary of AGI.


 


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General


 


29.           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,
19 or 21 are reasonable estimates of the damages which would be suffered by the
Chairman.  Any amount paid under
paragraphs 17, 18 or 19 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.


 


30.           Any
payment made to the Chairman under paragraphs 17, 18, 19 or 21 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.


 


31.           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.


 


32.           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.


 


33.           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.


 


34.           All
dollar amounts identified in this contract are in U.S. currency.


 


35.           The
parties’ respective rights and obligations under paragraphs 17, 18, 19, 21, 22,
23, 24, 25, 26, 27, 29, 30, 39 and 40 will survive any termination or
expiration of this Agreement or the termination of the Chairman’s employment
for any reason whatsoever.


 


Governing
Laws


 


36.           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


 


37.           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.


 


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Continuity


 


38.


 


a)                                      This
Agreement shall be binding upon and inure 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


 


39.                                 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.


 


40.                                 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


 


41.                                 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:


 


John S. Lacey


7071 Bayview Avenue


Suite 507


Thornhill, Ontario L3T
7Y8


 


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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.


 


Additional


 


42.           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.


 


43.           Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give to any person, other than (a) the parties to this Agreement, (b) any
permitted assignees of the Company and the Chairman, and (c) AGI, as
contemplated by paragraphs 11, 13, 16, 24, 25, 26, 27 and 28, any rights or
remedies under or by reason of this Agreement and AGI shall be a third party
beneficiary of this Agreement.


 


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IN WITNESS WHEREOF the
Chairman has executed and the Company has caused its duly authorized
representative to execute this Agreement as of the date set forth on the first
page of this Agreement.


 


 


	
   

  	
  ALDERWOODS GROUP CANADA INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ellen Neeman

  	
   

  
	
   

  	
   

  	
  Ellen
  Neeman

  
	
   

  	
   

  	
  Senior
  Vice-President, Legal & Compliance

  
	
   

  	
   

  	
   

  
	
   

  	
  ALDERWOODS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. G. Eames

  	
   

  
	
   

  	
   

  	
  A.
  G. Eames

  
	
   

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  
	
  Witness:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Azalea Angeles

  	
   

  	
  /s/ John S. Lacey

  	
   

  
	
   

  	
  John S. Lacey

  
					



 


13





















 


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 22 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 sue 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 sue 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 22 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
[Western Forest Products]


 


Canadian Imperial Bank of
Commerce