Exhibit 10.2


 


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-


 


Paul A. Houston


 


(the “Executive”)


 


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 Executive 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 Executive wish to enter into a new agreement which will
supersede the Prior Agreements and will provide the Executive with an incentive
to act as President and Chief Executive Officer of the Company.


 


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 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 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 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 Executive’s employment):


 


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


 


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


 


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


 


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


 


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


 


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f)                                        harassment by AGI or the Company; or


 


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


 


4.                                       “Services” has the meaning set forth in the
Management Services Agreements 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, 2007, 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 “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 additional term beginning on January 1, 2008 and ending on the
earlier of March 31, 2008, unless extended by mutual agreement, or the
effective date of the termination of Executive’s employment (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 Executive agrees that he will hold the
position of President and Chief Executive 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 offices of
President and Chief Executive 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.


 


Base Compensation


 


10.


 


a)                                      In consideration for the Executive’s continued performance
of his duties as President and Chief Executive Officer, the Executive will
receive a base salary as follows:


 


i)                                         commencing from the date of this Agreement and
for the remainder of calendar year 2005, $755,000 U.S. per annum;


 


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ii)                                      for calendar year 2006, during the remainder of
the Initial Term of Employment and during the Notice Period, $800,000 U.S. per
annum


 


b)                                     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.


 


c)                                      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, subject to a maximum (a) for calendar
year 2005, of 100% of the Executive’s annual base salary; and (b) for calendar
years 2006 and 2007, of 150% of the Executive’s annual base salary, less
deductions required by applicable law. 
The bonus payable under such plan will be paid in full within 75 days
after the end of each year.  With the
exception of the bonus that becomes payable under paragraphs 17, 18 or 19, the Executive’s entitlement to a bonus under the
short term incentive plan will be based on the financial performance of AGI as
determined under the terms of such incentive plan.


 


12.                                 The short term incentive plan bonus is subject to
the following conditions and exceptions:


 


a)                                      In order to qualify for and receive the annual
bonus 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 without Just Cause or the Executive resigns in
compliance with paragraphs 18 or 19.


 


b)                                     If the Executive’s employment is terminated
without Just Cause or the Executive resigns in compliance with paragraphs 18 or
19 after the end of the year during the Initial Term of Employment but before
the bonus amount is paid, the Executive shall receive the bonus for that
completed year calculated in accordance with terms of the short term incentive
plan.  The payment shall be made by the
Company within seven days of the termination or resignation and will be subject
to deductions required by applicable law. 
If the bonus amount has not been determined within seven days of the
termination or resignation it will be paid in full within 75 days of the
subject year end.


 


c)                                      If, before the end of a year during the Initial
Term of Employment, the Executive’s employment is terminated by the Company or
its successor without Just Cause or the Executive resigns in compliance with
paragraphs 18 or 19,  the bonus which the
Executive 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 150% of the Executive’s salary
without regard to the financial performance of AGI, but will be prorated on the
basis of the number of days in the year up to and including the date of
termination.


 


Stock Options


 


13.                                 In
2005, the Executive will receive a grant of stock options covering 130,000
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.


 


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Executive Strategic Incentive Plans


 


14.                                 The Executive 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
Executive.  Pursuant to action by
AGI’s Board of Directors, the Executive’s portion of the maximum award pool
relating to the Net Debt reduction goals under the 2003-2005 Plan will be paid
to the Executive by AGCI on August 1, 2005.  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 $1,000.00 U.S. per month plus auto insurance and
operating expense coverage for the term of this Agreement.


 


c)                                      Club Membership


 


The Executive will be entitled
to the amount of $2,500.00 U.S. per year for club memberships as directed by
the Executive.


 


Stock
Ownership Requirement


 


16.                                 From
and after August 10, 2005 and until April 10, 2006 (the “Subsequent
Purchase Date”) the Executive 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
Executive will hold a total of 200,000 shares of common stock of AGI.  Such common stock may be stock acquired by
the Executive 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 Executive 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 Executive agrees that he
will acquire an additional 100,000 shares of common stock of AGI no later than
the Subsequent Purchase Date.


 


Termination of Employment


 


17.                                 The parties agree that the Executive’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 Executive 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;


 


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ii)                                      the replacement value of all Executive’s benefit
coverage, including all monies that would have been contributed 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 resignation or termination);


 


iii)                                   the amount of any unpaid short term incentive
plan bonus earned by the Executive during the Initial Term of Employment 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 Executive up to and including the date of termination;


 


v)                                     a
lump sum retiring allowance equal to 15% of the sum of (i) his current annual
salary plus (ii) the average of his annual short term incentive plan payments
over the preceding 36 months, for each year of his total service with the
Company and with The Loewen Group Inc., to a maximum of 100% of the said sum; and


 


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


 


d)                                     by
the Executive, 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 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 and a lump sum retiring allowance equal to 15% of
the sum of (i) his current annual salary plus (ii) the average of his annual
short term incentive plan payments over the preceding 36 months, for each year
of his total service with the Company and with The Loewen Group Inc., to a
maximum of 100% of the said sum.


 


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 terminates
the Executive without Just Cause or the Executive submits a written resignation
for Stated Good Reason to the Board of Directors of the Company, the Company
shall, within seven days of the date of resignation or termination, pay to the
Executive in a lump sum equal to the sum of sub-paragraphs (i) to (v) below:


 


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 resignation or
termination);


 


iii)                                   The amount of any unpaid short term incentive
plan bonus earned by the Executive up to and including the date of termination
calculated in accordance with paragraph 12. Such bonus will be payable
regardless of the financial performance of the Company;


 


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


 


v)                                     a
lump sum retiring allowance equal to 15% of the sum of (i) his current annual
salary plus (ii) the average of his annual short term incentive plan payments
over the preceding 36 months, for each year of his total service with the
Company and with The Loewen Group Inc., to a maximum of 100% of the said sum; and


 


vi)                                  in addition, 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.


 


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 Executive can, for any reason, submit his resignation in writing
to the Company prior to the effective date of the Change in Control.  Any such resignation will be effective as of
the date of the Change in Control, and the Executive shall continue to work for
the Company up until that date. Further, if the Executive resigns in these
circumstances and continues to work for the Company until the effective date of
the Change in Control, then on the effective date of the Change in Control the
Company shall pay to the Executive a lump sum amount equal to the payments
prescribed under paragraph 18(i) - (v). In the event that the Change in Control
does not occur, the Executive 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 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. The Executive shall be entitled to receive all dividends declared
and paid by AGI upon a Change in Control on the shares received by the
Executive following the exercise of the Executive’s stock options or share
appreciation rights.


 


Certain Additional Payments by the Company


 


21.                                 The Executive’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 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.


 


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 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


 


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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 by the Executive 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 Executive agrees that he will not, without the prior written consent of the
Company, during the term of this Agreement or at any time thereafter, disclose
to any person not employed by the Company, or use in connection with engaging
in competition with the Company, any confidential or proprietary information of
the Company.  For purposes of this
Agreement, the term “confidential or proprietary information” includes all
information of any nature and in any form that is owned by the Company and that
is not publicly available (other than by Executive’s breach of this paragraph
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 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).


 


b)                                     The
Executive agrees that, upon termination of this Agreement for any reason, the
Executive will return to the Company, in good condition, all property of the
Company in his possession or under his control.


 


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 Executive will not, without the prior written consent of the Company, which
consent will not be unreasonably withheld:


 


a)                                      Engage in any Competitive Activity.  For purposes of this Agreement, “Competitive
Activity” means the Executive’s participation in the management of any business enterprise if such enterprise engages
in substantial and direct competition with the Company and such enterprise’s
sales of any product or service competitive with any product or service of the
Company amounted to 10% 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 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.


 


26.           During the
term of this Agreement and for a period of 24 months thereafter, the Executive
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 Executive by
the Board of Directors of AGI as a Major Competitor of the Company.


 


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27.


 


a)                                      The
Executive 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 Executive 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 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.


 


b)                                     During
the term of this Agreement, the Executive 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
Executive are as listed on Annex B to this Agreement.  The Executive 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.


 


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 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.


 


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


 


31.           Any payment other than for base salary while
employed by 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.


 


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.


 


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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 Executive’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.


 


Continuity


 


38.           This Agreement shall be binding upon and inure to
the benefit of (i) the Executive and his heirs, executors, administrators and
legal representatives and (ii) the Company, its related corporations,
affiliates, and associates, and any other entity or organization which shall
succeed to substantially all or any distinct portion of the business, divisions
or property of the Company or its related corporations, affiliates, and
associates, whether by means of amalgamation, merger, consolidation,
acquisition, and/or sale of all or part of the shares or assets of the Company
or otherwise, including by operation of law or by succession to the business of
AGI pursuant to a Plan of Reorganization approved by the U.S. Bankruptcy
Court.  In addition, the Company will
require any such successor expressly to assume and agree, by written agreement,
to perform this Agreement in the same manner and to the same extent the Company
would be required to perform if no such succession had taken place.


 


Legal Advice


 


39.           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.


 


40.           The Company agrees to reimburse the Executive for
all reasonable legal expenses incurred in connection with any dispute involving
the Executive, the Company, its related corporations, affiliates, successors,
or assigns, or any other third party, as between any of them, arising from the
validity, interpretation, or enforcement of this Agreement or any of its terms,
including all reasonable legal expenses incurred by the Executive in respect of
any action or actions commenced by the Executive to obtain, enforce, or retain
any right, benefit or payment provided for in this Agreement regardless of
whether such expenses are incurred during the term of the Agreement or after;
provided that, in regard to such matters, the Executive has not acted in bad
faith or with no colorable claim of success. 
However, the Company shall not be required to reimburse the Executive for
any legal costs or expenses in relation to any action commenced by the Company
to enforce the confidentiality or non-competition provisions hereof and in
respect of which in a court of competent jurisdiction the Company is the
prevailing party for either preliminary or final remedy.


 


10





















 


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 Executive:


 


Paul A. Houston


5 Hewison Court


Ajax, Ontario, L1T 3X7


 


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 9, 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.


 


11





















 


IN
WITNESS WHEREOF the Executive has executed and the Company and AGI have
caused their duly authorized representatives 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/ John S. Lacey

  	
   

  	
  /s/ Paul A. Houston

  	
   

  
	
   

  	
  Paul A. Houston

  
					



 


12





















 


ANNEX A


 


Excise Tax Gross-Up Procedural Provisions


 


1.                                       Subject to the provisions of paragraph 5 of this
Annex, all determinations required to be made under paragraph 22 of this Agreement
and this Annex A, including whether an Excise Tax is payable by the Executive
and the amount of such Excise Tax and whether a Gross-Up Payment is required to
be paid by the Company to the Executive and the amount of such Gross-Up
Payment, if any, will be made by a U.S. nationally recognized accounting firm
(the “National Firm”) selected by the Executive in his sole discretion. The
Executive will direct the National Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within
30 calendar days after the date of his termination of employment, if
applicable, and any such other time or times as may be requested by the Company
or the Executive. If the National Firm determines that any Excise Tax is payable
by the Executive, the Company will pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the National Firm
determines that no Excise Tax is payable by the Executive with respect to any
material benefit or amount (or portion thereof), it will, at the same time as
it makes such determination, furnish the Company and the Executive with an
opinion that the Executive has substantial authority not to report any Excise
Tax on his U.S. federal, state or local income or other tax return with respect
to such benefit or amount. As a result of the uncertainty in the application of
Section 4999 of the Code and the possibility of similar uncertainty
regarding applicable U. S. state or local tax law at the time of any
determination by the National Firm hereunder, it is possible that Gross-Up
Payments that will not have been made by the Company should have been made (an “Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to paragraph
5 of this Annex and the Executive thereafter is required to make a payment of
any Excise Tax, the Executive will direct the National Firm to determine the
amount of the Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment will be promptly paid by the
Company to, or for the benefit of, the Executive within five business days
after receipt of such determination and calculations.


 


2.                                       The Company and the Executive will each provide
the National Firm access to and copies of any books, records and documents in
the possession of the Company or the Executive, as the case may be, reasonably
requested by the National Firm, and otherwise cooperate with the National Firm
in connection with the preparation and issuance of the determinations and calculations
contemplated by paragraph 1 of this Annex. Any determination by the National
Firm as to the amount of the Gross-Up Payment will be binding upon the Company
and the Executive.


 


3.                                       The U.S. federal, state and local income or other
tax returns filed by the Executive will be prepared and filed on a consistent
basis with the determination of the National Firm with respect to the Excise
Tax payable by the Executive. The Executive will report and make proper payment
of the amount of any Excise Tax, and at the request of the Company, provide to
the Company true and correct copies (with any amendments) of his federal income
tax return as filed with the U.S. Internal Revenue Service and corresponding
state and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of the Executive’s federal
income tax return, or corresponding state or local tax return, if relevant, the
National Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive will within five business days pay to the Company the
amount of such reduction.


 


4.                                       The fees and expenses of the National Firm for
its services in connection with the determinations and calculations
contemplated by paragraph 1 of this Annex will be borne by the Company. If such
fees and expenses are initially paid by the Executive, the Company will
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his payment thereof.


 


5.                                       The Executive will notify the Company in writing
of any claim by the U.S. Internal Revenue Service or any other U.S. taxing
authority that, if successful, would require the payment by the Company of a
Gross- Up


 


A-1





















 


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 extent
thereof, the amount of Gross-Up Payment required to be paid by the Company to
the Executive pursuant to paragraph 22 of this Agreement and this Annex A.


 


A-2





















 


ANNEX B


 


Current
Directorships


 


CFM Corporation