<PAGE>


                                                                    Exhibit 10.6

                              EMPLOYMENT AGREEMENT


This agreement made as of the 2nd day of January, 2004



BETWEEN:

                          ALDERWOODS GROUP CANADA INC.

                                                                 (the "Company")

                                      -And-

                                KENNETH A. SLOAN

                                                               (the "Executive")


WHEREAS:

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

         Alderwoods Group Services Inc. and the Executive entered into an
         Employment Agreement (the "Prior Agreement") as of January 2, 2002;
         and

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

         The Company and the Executive wish to enter into a written Employment
         Agreement which will provide the Executive with an incentive to
         continue in his position as Executive Vice President, Chief Financial
         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 other than pursuant to a plan of
     reorganization submitted by AGI and confirmed by the U.S. Bankruptcy Court:

     a)   the acquisition by any individual, entity or group (a "Person") of
          beneficial ownership of 30% or more of the combined voting power of
          the then-outstanding Voting Stock (as defined below) of AGI; provided,
          however, that the following acquisitions will not constitute a Change
          in Control: (1) any issuance of Voting Stock of AGI directly from AGI
          that is approved by the Incumbent Board (as defined below), (2) any
          acquisition by AGI of Voting Stock of AGI, (3) any acquisition of
          Voting Stock of AGI by any employee benefit plan (or related trust)
          sponsored or maintained by AGI or any subsidiary of AGI, or (4) any
          acquisition of Voting Stock of AGI by any Person pursuant to a
          Business Combination (as defined below) that would not constitute a
          Change in Control;


<PAGE>

     b)   the consummation of a reorganization, amalgamation, merger or
          consolidation, a sale or other disposition of all or substantially all
          of the assets of AGI, or any other transaction (each, a "Business
          Combination") in which all or substantially all of the individuals and
          entities who were the beneficial owners of Voting Stock of AGI
          immediately prior to such Business Combination beneficially own,
          directly or indirectly, immediately following such Business
          Combination less than 40% of the combined voting power of the then
          outstanding shares of Voting Stock of the entity resulting from such
          Business Combination;

     c)   individuals who, as of the effective date of this Agreement,
          constitute the Board of Directors of AGI (the "Incumbent Board") cease
          for any reason to constitute at least a majority of the Board;
          provided, however, that any individual becoming a Director subsequent
          to such Effective Date whose election, or nomination for election by
          AGI's stockholders, was approved by a vote of at least two-thirds of
          the Directors then comprising the Incumbent Board (either by a
          specific vote or by approval of the proxy statement of AGI in which
          such person is named as a nominee for director, without objection to
          such nomination) will be deemed to have been a member of the Incumbent
          Board, but excluding, for this purpose, any such individual whose
          initial assumption of office occurs as a result of an actual or
          threatened election contest with respect to the election or removal of
          Directors or other actual or threatened solicitation of proxies or
          consents by or on behalf of a Person other than the Board; or

     d)   the approval by the stockholders of AGI of a complete liquidation or
          dissolution of AGI, except pursuant to a Business Combination that
          would not constitute a Change in Control.

2.   "CONSTRUCTIVE DISCHARGE" means the termination of the Executive's
     employment by the Executive following the occurrence of one or more of the
     following events (regardless of whether any other reason, other than Just
     Cause, exists for the termination of Executive's employment):

     a)   the geographic relocation of the Executive's place of employment by
          the Company by more than 50 miles from Toronto, Ontario;

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

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

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

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

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

3.   "JUST CAUSE" means willful misconduct or willful neglect of duty by the
     Executive, including, but not limited to, intentional wrongful disclosure
     of confidential or proprietary information of the Company or AGI or any of
     its subsidiaries; intentional wrongful engagement in any competitive
     activity prohibited by paragraph 21; and the intentional material breach of
     any provision of this Agreement.

4.   "SERVICES" has the meaning set forth in the Management Services Agreements,
     by and between the Company and AGI and the Company and certain subsidiaries
     of AGI.

5.   "TERMINATION WITHOUT JUST CAUSE" includes, but is not limited to, any
     unilateral change in the material terms and conditions of the Executive's
     employment.

6.   "VOTING STOCK" means securities entitled to vote generally in the election
     of directors.

                                        2

<PAGE>

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, between the parties relating to or
     in any way connected with the employment of the Executive by the Company or
     any related, associated, affiliated, predecessor or parent corporations are
     declared null and void and are superseded by the terms of this Agreement.
     There are no representations, warranties, forms, conditions, undertakings,
     or collateral agreements, express, implied or statutory between the parties
     other than as expressly set forth in this Agreement. No waiver or
     modification of this Agreement shall be valid unless in writing and duly
     executed by both the Company and the Executive.

EMPLOYMENT

8.   The Company agrees to employ the Executive, and the Executive agrees to be
     employed by the Company, in the position of Executive Vice President, Chief
     Financial Officer. The Executive also agrees that, as part of the
     Executive's duties, the Executive shall occupy and perform the office of
     Executive Vice President, Chief Financial Officer of AGI, on behalf of the
     Company, for the term of this Agreement. As used in this Agreement, the
     phrase "term of this Agreement" means the period beginning January 2, 2004
     and ending on the earlier of January 2, 2007, or the effective date of the
     termination of Executive's employment. Notwithstanding anything to the
     contrary in this Agreement, paragraph 16(b) shall survive and remain in
     effect following the term of this Agreement.

9.   The Executive agrees that he will at all times faithfully, industriously,
     and to the best of his skill, ability, and talents, perform all of the
     duties required of his position in a manner which is in the best interests
     of the Company and in accordance with the Company's objectives, and will
     devote his full working time and attention to these duties. The Executive
     acknowledges and agrees that the duties required of his position include,
     without limitation, the provision of Services on behalf of, and for the
     account of, the Company.

COMPENSATION

10.

     a)   In consideration for the Executive's continued performance of his
          duties as Executive Vice President, Chief Financial Officer, the
          Executive will receive a base salary of $290,700 U.S. per annum. The
          amount of such salary shall be subject to review and improvement on a
          periodic basis in accordance with Company practice, but in no event
          shall such amount be reduced. The Executive's base salary is payable
          in accordance with the Company's customary payroll practices and is
          subject to deductions required by applicable law.

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

SHORT TERM INCENTIVE PLAN - ANNUAL BONUS

11.  The Executive will be entitled to participate in a short term incentive
     plan as adopted by the Company from time to time in a manner commensurate
     with his position and level of responsibility with the Company. The bonus
     payable under such plan will be paid in full within 90 days after the end
     of each year.

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

                                        3

<PAGE>

     a)   In order to qualify for and receive the annual bonus, the Executive
          must be employed by the Company or its successor at the time the bonus
          is paid unless the Executive is terminated (1) without Just Cause or
          (2) by reason of Constructive Discharge in compliance with paragraph
          17. If the Executive's employment is terminated without Just Cause or
          by reason of Constructive Discharge after the end of the year but
          before the bonus amount is paid, the Executive shall receive the bonus
          for that completed year calculated in accordance with terms of the
          short term incentive plan. The payment shall be made by the Company
          within seven days of the termination and will be subject to deductions
          required by applicable law. If the bonus amount has not been
          determined within seven days of the termination it will be paid in
          full within 90 days of the subject year-end.

     b)   If, before the end of a year, the Executive's employment is terminated
          by the Company or its successor without Just Cause, the bonus which
          the Executive will be entitled to receive under paragraph 16 for that
          year will be equal to the Executive's pro rata portion of the bonus
          for the year of termination (for the number of days elapsed in the
          current year), based on the achievement of the applicable performance
          criteria through the date of termination.

STOCK OPTION PLAN

13.  The Executive is eligible for participation in AGI's equity incentive plan
     or plans. Stock options will be granted to the Executive as determined by
     the Board of Directors of AGI. Nothing in this Agreement shall have any
     effect with respect to any stock option agreement or agreements made prior
     to the effective date of this Agreement.

2003-2005 EXECUTIVE STRATEGIC PLAN INCENTIVE

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

BENEFITS

15.  The Executive will be eligible to participate in the following benefit
     plans:

          a.   GROUP BENEFITS. The Executive will participate in the Company's
               Group Benefit Plan and any other group perquisites all as in
               effect from time to time.

          b.   VEHICLE ALLOWANCE. The Executive will be entitled to a vehicle
               allowance of $600.00 per month plus operating expenses with no
               allowance for auto insurance coverage.

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

          d.   EXECUTIVE MEDICAL. The Executive will be entitled to participate
               in the Company's Annual Medical Program.

          e.   OTHER BENEFITS. The Executive will be entitled to participate in
               the Company's Health Services Spending Account Program.

TERMINATION OF EMPLOYMENT

16.  The parties agree that the Executive's employment under this Agreement may
     be terminated as follows:

     a.   by the Company, without notice of termination or pay in lieu thereof,
          for Just Cause;

                                        4

<PAGE>

     b.   by the Company, not following a Change in Control as set forth in
          paragraph 17 below, at its sole discretion and for any reason other
          than Just Cause upon payment to the Executive in a lump sum, within
          seven days of such termination, of an amount equal to:

          i.   24 months' base salary;

          ii.  The amount of any unpaid bonus earned by the Executive up to and
               including the date of termination calculated in accordance with
               paragraph 12(b); and

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

          Payments identified in sub paragraphs (i) - (iii) will be subject to
          deductions required by applicable law;

     c.   by the Company for any reason other than Just Cause or by reason of
          Constructive Discharge, following a Change in Control, both in
          compliance with paragraph 17 below; or

     d.   by the Executive, for any reason, upon thirty (30) days advance
          written notice to the Company in which case the Company will have no
          further obligation to the Executive under this Agreement or otherwise
          except to pay the Executive the unpaid portion, if any, of the
          Executive's base salary payable for the period through the date of
          termination of the Executive's employment.

CHANGE IN CONTROL

17.  If a Change in Control occurs and, within two years of the effective date
     of the Change in Control, the Executive's employment is terminated by the
     Company without Just Cause or by reason of Constructive Discharge, the
     Company shall, within seven days of the date of termination, pay to the
     Executive in a lump sum the following payments:

               i.   24 months' base salary;

               ii.  The replacement value of all Executive's benefit coverage
                    including contributions to the Registered Retirement Savings
                    Plan, following the date of the Executive's termination
                    (such benefit coverage and contributions being calculated
                    over 24 months following termination);

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

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

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

               vi.  The Executive shall be allowed to exercise all stock options
                    or share appreciation rights, whether vested or not, granted
                    to the Executive, including shares with respect to which
                    such options would not otherwise be exercisable on such
                    resignation or termination.

Payments identified in paragraphs (i) - (v) will be subject to deductions
required by applicable law. Any termination of employment of the Executive by
the Company or the removal of the Executive from the office or position in the
Company or AGI that occurs (A) not more than 365 days prior to the date on which
a Change in Control occurs and

                                        5

<PAGE>


(B) following the commencement of any discussion with a third party that
ultimately results in a Change in Control will be deemed to be a termination or
removal of the Executive after a Change in Control for purposes of this
Agreement.

CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY

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

19.  In the event that it is determined (as hereinafter provided) that any
     payment (other than the Gross-Up Payments provided for in this paragraph 19
     and Annex A) or distribution by the Company, AGI or any of its affiliates
     to or for the benefit of the Executive, whether paid or payable or
     distributed or distributable pursuant to the terms of this Agreement or
     otherwise pursuant to or by reason of any other agreement, policy, plan,
     program or arrangement, including, without limitation, the lapse or
     termination of any restriction on the vesting or exercisability of any
     benefit under any of the foregoing (a "Payment"), would be subject to the
     excise tax imposed by Section 4999 of the United States Internal Revenue
     Code of 1986, as amended (the "Code") (or any successor provision thereto),
     by reason of being considered "contingent on a change in ownership or
     control," within the meaning of Section 280G of the Code (or any successor
     provision thereto) or to any similar tax imposed by U.S. state or local
     law, or any interest or penalties with respect to such tax (such tax or
     taxes, together with any such interest and penalties, being hereafter
     collectively referred to as the "Excise Tax"), then the Executive will be
     entitled to receive an additional payment or payments (collectively, a
     "Gross-Up Payment"). The Gross-Up Payment will be in an amount such that,
     after payment by the Executive of all U.S. taxes (including any interest or
     penalties imposed with respect to such taxes), including any Excise Tax
     imposed upon the Gross-Up Payment, the Executive retains an amount of the
     Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For
     purposes of determining the amount of the Gross-Up Payment, the Executive
     will be considered to pay any applicable U.S. federal, state and local
     income taxes at the highest rate applicable to the Executive in effect in
     the year in which the Gross-Up Payment will be made, net of the maximum
     reduction in U.S. federal income tax that could be obtained from deduction
     of such state and local taxes.

20.  The obligations set forth in paragraph 19 will be subject to the procedural
     provisions described in Annex A.

CONFIDENTIAL INFORMATION; COMPETITIVE ACTIVITY

21.  The Executive agrees that he will not, at any time, without the prior
     written consent of the Company, disclose to any person not employed by the
     Company, or use in connection with engaging in competition with the
     Company, any confidential or proprietary information of the Company. For
     purposes of this Agreement, the term "confidential or proprietary
     information" includes all information of any nature and in any form that is
     owned by the Company and that is not publicly available (other than by
     Executive's breach of this paragraph 21) 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 21 will not apply (i) during the Term, in the course of the
     business of and for the benefit of the Company, (ii) if such confidential
     or proprietary information has become, through no fault of the Executive,
     generally known to the public or (iii) if the Executive is required by law
     to make disclosure (after giving the Company notice and an opportunity to
     contest such requirement).

22.  In addition, the Executive agrees that while employed by the Company and
     for a period of 12 months thereafter, the Executive will not, without the
     prior written consent of the Company, which consent will not be
     unreasonably withheld:

                                        6

<PAGE>

     a.   Engage in any Competitive Activity. For purposes of this Agreement,
          "Competitive Activity" means the Executive's participation in the
          management of any business enterprise if such enterprise engages in
          substantial and direct competition with the Company and such
          enterprise's sales of any product or service competitive with any
          product or service of the Company amounted to 10% of such enterprise's
          net sales for its most recently completed fiscal year and if the
          Company's net sales of said product or service amounted to 10% of the
          Company's net sales for its most recently completed fiscal year.
          "Competitive Activity" will not include (i) the mere ownership of
          securities in any such enterprise and the exercise of rights
          appurtenant thereto or (ii) participation in the management of any
          such enterprise other than in connection with the competitive
          operations of such enterprise.

     b.   On behalf of the Executive or on behalf of any person, firm or
          company, directly or indirectly, attempt to influence, persuade or
          induce, or assist any other person in so persuading or inducing, any
          employee of the Company or any of its subsidiaries to give up, or to
          not commence, employment or a business relationship with the Company
          or any of its subsidiaries.

23.  The Executive and the Company agree that the covenants contained in
     paragraphs 21 and 22 are reasonable under the circumstances, and further
     agree that if, in the opinion of any court of competent jurisdiction, any
     such covenant is not reasonable in any respect, such court will have the
     right, power and authority to excise or modify any provision or provisions
     of such covenants as to the court will appear not reasonable and to enforce
     the remainder of the covenants as so amended. The Executive acknowledges
     and agrees that the remedy at law available to the Company for breach of
     any of his obligations under this paragraph 22 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.

24.  For purposes of paragraphs 21, 22 and 23, the term "Company" will also
     include AGI and any subsidiary of AGI.

GENERAL

25.  The parties confirm that the provisions of this Agreement are fair and
     reasonable and that the total compensation and benefits payable under
     paragraphs 16, 17 or 18 are reasonable estimates of the damages, which
     would be suffered by the Executive. Any amount paid under paragraphs 16, 17
     or 18 shall be in full satisfaction of all claims whatsoever relating to
     the Executive's employment or for the termination of the Executive's
     employment, including claims for salary, bonus, benefits, vacation pay,
     termination pay and/or severance pay pursuant to the Ontario EMPLOYMENT
     STANDARDS ACT, as amended, including sections 57 and 58 thereof.

26.  Any payment made to the Executive under paragraphs 16, 17 or 18 of this
     Agreement shall be paid to the Executive by the Company regardless of any
     offer of alternate employment made to the Executive by the Company or by
     any other prospective employer, whether accepted by the Executive or not.
     The Executive will not be required to mitigate any damages arising from
     this Agreement and any amounts and benefits to be provided to the Executive
     hereunder shall not be reduced or set off against any amounts earned by the
     Executive from alternate employment, including self-employment, or by other
     means.

27.  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.

28.  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

                                        7

<PAGE>

     shall include individuals, partnerships, associations, trusts,
     unincorporated organizations and corporations and VICE VERSA.

29.  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.

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

31.  The parties' respective rights and obligations under paragraphs 16(b), 18,
     19, 20, 21, 22, 23, 35 and 36 will survive any termination or expiration of
     this Agreement or the termination of the Executive's employment for any
     reason whatsoever.

GOVERNING LAWS

32.  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

33.  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

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

LEGAL ADVICE

35.  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.

36.  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

                                        8

<PAGE>

     colorable claim of success. However, the Company shall not be required to
     reimburse the Executive for any legal costs or expenses in relation to any
     action commenced by the Company to enforce the confidentiality or
     non-competition provisions hereof and in respect of which in a court of
     competent jurisdiction the Company is the prevailing party for either
     preliminary or final remedy.

NOTICE

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

         TO THE EXECUTIVE:

         Kenneth A. Sloan
         3600 Yonge Street
         Suite 632
         Toronto, Ontario  M4N 3R8

         TO THE COMPANY:

         Alderwoods Group Canada Inc.
         11th Floor, Atria III
         2225 Sheppard Avenue East
         Toronto, Ontario   M2J 5C2

         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

38.  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.

39.  Nothing herein expressed or implied is intended or shall be construed to
     confer upon or give to any person, other than (1) the parties to this
     Agreement, (2) any permitted assignees of the Company and the Executive,
     and (3) AGI, as contemplated by paragraphs 8, 9, 13, 21, 22, 23 and 24, any
     rights or remedies under or by reason of this Agreement and AGI shall be a
     third party beneficiary of this Agreement.


                                                                    ...CONTINUED


                                        9

<PAGE>

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

                                  ALDERWOODS GROUP CANADA INC.


                                   By:
                                       -----------------------------------------
                                   Name:   Paul A. Houston

                                   Title:  President and Chief Executive Officer


WITNESS:
----------------------             ---------------------------------------------
                                                   Kenneth A. Sloan


                                       10


<PAGE>


                                     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 18 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.

                                      A-1

<PAGE>

5.   The Executive will notify the Company in writing of any claim by the U.S.
     Internal Revenue Service or any other U.S. taxing authority that, if
     successful, would require the payment by the Company of a Gross-Up Payment.
     Such notification will be given as promptly as practicable but no later
     than 10 business days after the Executive actually receives notice of such
     claim and the Executive will further apprise the Company of the nature of
     such claim and the date on which such claim is requested to be paid (in
     each case, to the extent known by the Executive). The Executive will not
     pay such claim prior to the expiration of the 30-calendar-day period
     following the date on which he gives such notice to the Company or, if
     earlier, the date that any payment of amount with respect to such claim is
     due. If the Company notifies the Executive in writing prior to the
     expiration of such period that it desires to contest such claim, the
     Executive will:

          (A) provide the Company with any written records or documents in his
     possession relating to such claim reasonably requested by the Company;

          (B) take such action in connection with contesting such claim as the
     Company reasonably requests in writing from time to time, including,
     without limitation, accepting legal representation with respect to such
     claim by an attorney competent in respect of the subject matter and
     reasonably selected by the Company;

          (C) cooperate with the Company in good faith in order effectively to
     contest such claim; and

          (D) permit the Company to participate in any proceedings relating to
     such claim;

     PROVIDED, HOWEVER, that the Company will bear and pay directly all costs
     and expenses (including interest and penalties) incurred in connection with
     such contest and will indemnify and hold harmless the Executive, on an
     after-tax basis, for and against any Excise Tax or income or other tax,
     including interest and penalties with respect thereto, imposed as a result
     of such representation and payment of costs and expenses. Without limiting
     the foregoing provisions of this paragraph 5, the Company will control all
     proceedings taken in connection with the contest of any claim contemplated
     by this paragraph 5 and, at its sole option, may pursue or forego any and
     all administrative appeals, proceedings, hearings and conferences with the
     taxing authority in respect of such claim (provided, however, that the
     Executive may participate therein at his own cost and expense) and may, at
     its option, either direct the Executive to pay the tax claimed and sue for
     a refund or contest the claim in any permissible manner, and the Executive
     agrees to prosecute such contest to a determination before any
     administrative tribunal, in a court of initial jurisdiction and in one or
     more appellate courts, as the Company determines; PROVIDED, HOWEVER, that
     if the Company directs the Executive to pay the tax claimed and sue for a
     refund, the Company will advance the amount of such payment to the
     Executive on an interest-free basis and will indemnify and hold the
     Executive harmless, on an after-tax basis, from any Excise Tax or income or
     other tax, including interest or penalties with respect thereto, imposed
     with respect to such advance; and PROVIDED FURTHER, HOWEVER, that any
     extension of the statute of limitations relating to payment of taxes for
     the taxable year of the Executive with respect to which the contested
     amount is claimed to be due is limited solely to such contested amount.
     Furthermore, the Company's control of any such contested claim will be
     limited to issues with respect to which a Gross-Up Payment would be payable
     hereunder and the Executive will be entitled to settle or contest, as the
     case may be, any other issue raised by the Internal Revenue Service or any
     other taxing authority.

6.   If, after the receipt by the Executive of an amount advanced by the Company
     pursuant to paragraph 5 of this Annex, the Executive receives any refund
     with respect to such claim, the Executive will (subject to the Company's
     complying with the requirements of such paragraph 5) promptly pay to the
     Company the amount of such refund (together with any interest paid or
     credited thereon after any taxes applicable thereto). If, after the receipt
     by the Executive of an amount advanced by the Company pursuant to paragraph
     5 of this Annex, a determination is made that the Executive is not entitled
     to any refund with respect to such claim and the Company does not notify
     the Executive in writing of its intent to contest such denial or refund
     prior to the expiration of 30 calendar days after such determination, then
     such advance will be forgiven and will not be required to be repaid and the
     amount of any such advance will offset, to the

                                      A-2

<PAGE>

     extent thereof, the amount of Gross-Up Payment required to be paid by the
     Company to the Executive pursuant to paragraph 18 of this Agreement and
     this Annex A.



                                      A-3