Document:

Exhibit 10.5

 

AMENDMENT
TO THE

2003-2005
EXECUTIVE STRATEGIC INCENTIVE PLAN OF

ALDERWOODS
GROUP CANADA INC.

 

This Amendment to the 2003-2005
Strategic Incentive Plan of Alderwoods Group Canada Inc. (the “Plan”) is made
as of July 21, 2005.

 

1.               Paragraph 14 is
hereby amended by adding the following at the end of such paragraph 14:

 

“Notwithstanding anything
to the contrary contained in the Plan, the maximum award pool relating to the
Net Debt reduction goals shall be payable by Alderwoods Group Canada Inc. (“AGCI”)
to each participant in accordance with the terms of the Plan on August 1,
2005.”

 

2.               Paragraph 18 is
hereby amended to provide in its entirety:

 

“Any award earned under
the Plan will be paid by AGCI in cash. 
Such awards will be paid as follows: (i) with respect to the Net
Debt Reduction goals, the maximum award pool will be paid to the participants
on August 1, 2005; and (ii) with respect to the Net Debt/EBITDA Ratio
goals, the applicable award earned under the Plan will be paid to the
participants as soon as possible after the completion of the Period, but no
later than March 15, 2006.  Such
payments will be subject to any federal, provincial, state and local taxes,
domestic or foreign, or other withholdings required by law or regulation.”

 

3.               Paragraph 19 is
hereby amended by inserting the phrase “relating to the Net Debt/EBITDA goals”
immediately after the word “pools” in the first sentence of such paragraph.Exhibit 10.6

 

2005-2007 Executive
Strategic Incentive Plan

of Alderwoods Group Canada Inc.

 

Purpose

 

1.     The
purpose of the 2005-2007 Executive Strategic Incentive Plan (the “Plan”)
of Alderwoods Group Canada Inc. (“AGCI”) is to motivate and reward the AGCI
senior management team for achieving the shareholder value objectives approved
by the Board of Directors (the “Board”) of Alderwoods Group, Inc. (“AGI”).

 

Plan Type

 

2.               Under the Plan, the Participants (as
defined below) will have the opportunity to earn cash awards that will be
payable by AGCI in accordance with the terms of the Plan based on the
attainment of increases in shareholder value, as measured by the price of AGI
common shares as hereinafter described.

 

Administration

 

3.               The Plan will be administered by the
Compensation Committee of AGI (the “Committee”).

 

4.               The Committee may delegate certain of
its administrative responsibilities to the President and Chief Executive
Officer, the Executive Vice-President and Chief Financial Officer and/or the Secretary
of AGI.

 

5.               All determinations and decisions made by
the Committee pursuant to the terms of the Plan will be final, conclusive and
binding on all persons, including, without limitation, AGCI, its affiliates and
subsidiaries, all Participants in the Plan and their estates and beneficiaries.

 

6.               The Committee may, in its discretion,
require a Participant’s guardian or legal representative to supply it with
evidence the Committee deems necessary to establish the authority of the
guardian or legal representative to act on behalf of the Participant.

 

Eligibility

 

7.               The following employees of AGCI (each, a
“Participant” and collectively the “Participants”) will be designated as the “senior
management team” and will be eligible to receive payments under the Plan:

 

 

	
  Name

  
	
  John S. Lacey

  
	
  Paul A. Houston

  
	
  Kenneth A. Sloan

  
	
  Ross S. Caradonna

  

 

Performance Period

 

8.               The Performance Period (“Period”) for
purposes of the Plan shall be from August 1, 2005 to December 31,
2007 inclusive.

 

Currency

 

9.               All dollar amounts identified in this
Plan are in U.S. currency.

 

Earning of Awards

 

10.   Awards
under the Plan will be earned based on achievement of the threshold, target and
“stretch” stock prices set forth in the matrix below (the “Matrix”).  Following the end of the Period, the
Committee will determine the average stock price (using the closing sale price
per common share as reported on the NASDAQ National Market System or such other
principal exchange on which the common shares of AGI are then trading) of AGI common
shares for the period from December 1, 2007 to December 31, 2007 (the
“Stock Price”).  If the Stock Price is
above the threshold level, an incentive pool (the “Incentive Pool”) will be
funded and distributed to Participants based on the level of achievement of
such Stock Price as set forth in the Matrix below.  Each Participant will be assigned a
percentage share of the earned Incentive Pool (each, an “Individual Incentive
Opportunity”) as set forth in paragraph 11 below.

 

	
   

  	
   

  	
  Threshold

  	
   

  	
  Target

  	
   

  	
  Stretch #1

  	
   

  	
  Stretch #2

  	
   

  
	
  Stock Price

  	
   

  	
  $

  	
  17

  	
   

  	
  $

  	
  18

  	
   

  	
  $

  	
  19

  	
   

  	
  $

  	
  20

  	
  + 

  
	
  Incentive Pool

  	
   

  	
  $

  	
  5.6

  	
  m 

  	
  $

  	
  8.0

  	
  m 

  	
  $

  	
  9.6

  	
  m 

  	
  $

  	
  11.2

  	
  m+ 

  

 

(a)                                       If the Stock
Price is between one of the levels set forth in the Matrix, or if the Stock
Price exceeds $20 (and is otherwise not equal to an even dollar amount), then
the Incentive Pool shall be calculated using the following formula:

 

2

 

The Incentive Pool = The
Incentive Pool for the immediately preceding level + (The amount by which the
Stock Price exceeds the immediately preceding level as set forth in the Matrix
X (The Incentive Pool in the next highest level - the Incentive Pool for the
immediately preceding level)).

 

For this purpose, if the Stock Price is greater than $20, then for each
dollar increase in an AGI common share, the Incentive Pool will increase by
$1.6 million.

 

(b)                                 Example
#1: If the Stock Price is $17.20 per share, then the Incentive Pool shall
be equal to:

 

5.6m + (.20 X (8.0m - 5.6m)) = $6.08m

 

Example #2: If the
Stock Price is $20.40 per share, then the Incentive Pool shall be equal to:

 

11.2m + (.40 X (12.8m - 11.2m)) = $11.84m

 

(c)                                  There
is no limit on the amount of awards that can be earned under the Plan.

 

Pool Allocation

 

11.         Each Participant’s Individual Incentive
Opportunity shall be as follows:

 

	
  Name

  	
   

  	
  Allocation of

  Incentive Pool

  	
   

  
	
  John S. Lacey

  	
   

  	
  20

  	
  %

  
	
  Paul A. Houston

  	
   

  	
  35

  	
  %

  
	
  Kenneth A. Sloan

  	
   

  	
  25

  	
  %

  
	
  Ross Caradonna

  	
   

  	
  20

  	
  %

  

 

 

A Participant’s final award will be determined by multiplying (a) the
Incentive Pool as determined in paragraph 10 above by (b) the Participant’s
Individual Incentive Opportunity as set forth above.

 

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Award Payments

 

12.         No portion of the Incentive Pool will be
payable if threshold performance, as set forth in the Matrix, is not achieved
or if AGI breaches any of its financial covenants, debt repayment covenants or
any other material covenants of the outstanding debt instruments of AGI during
the Period (which covenants are not otherwise waived or cured pursuant to the
terms of the applicable covenants).

 

13.         If a Participant is terminated with Just Cause
under any circumstances, no payments shall be made to him under the Plan and
all rights of such Participant hereunder shall be immediately forfeited.

 

14.         If a Participant (i) is terminated
without Just Cause, (ii) resigns with Stated Good Reason, (iii) dies
or (iv) becomes Totally Disabled prior to the end of the Period, he shall
be entitled to a pro-rata share of his Individual Incentive Opportunity based
on his service from August 1, 2005 to the date of his termination,
resignation, retirement, death or Total Disability and the pro-rata share shall
be determined by the Committee and payable by AGCI after the end of the Period.

 

15.         Any award earned under the Plan will be paid
by AGCI in cash, as soon as possible after the completion of the Period, but no
later than March 15, 2008.  Such
payments will be subject to any federal, provincial, state and local taxes,
domestic or foreign, or other withholdings required by law or regulation.

 

16.         In the event of a Change in Control, the
Incentive Pool and each Participant’s Individual Incentive Opportunity will be
calculated based on the price of AGI’s common shares on the date of the Change
in Control and all such amounts shall immediately vest 100% and become payable
to the Participants or to their estates within 30 days of such Change in
Control.  Such payments will be subject
to any federal, provincial, state and local taxes, domestic or foreign, or other
withholdings required by law or regulation.

 

Modifications

 

17.         Notwithstanding anything to the contrary
contained in this Plan, if the Committee determines that a change in the
business, operations, corporate structure or capital structure of AGI, the
manner in which it conducts business or other events or circumstances render
the performance measure or the applicable levels of performance to be
unsuitable, the Committee may modify such performance measure or the related
levels of performance and the minimum acceptable level of achievement, in whole
or in part.

 

Plan Amendment, Suspension or Termination

 

18.   The
Plan may be amended, suspended or terminated at any time by the Board of
Directors of AGCI upon the recommendation of the Committee.  Such 

 

4

 

amendment, suspension or termination will not, however, affect awards
earned as of the date of such amendment, suspension or termination.

 

Effective Date

 

19.         The effective date of the Plan shall be August 1,
2005.

 

Expiry

 

20.         If not previously expired by reason of a
Change in Control, the Plan will expire immediately after the award payments
under the Plan have been made to the Participants for the Period.

 

Retirement Benefit Consequences

 

21.         Incentive awards earned under the Plan will
not be included within the definition of compensation or earnings for purposes
of calculating benefits under or contributions to any pension, retirement or
savings plan of AGCI, or of its affiliates or subsidiaries.

 

Non-Transferability

 

22.         No rights under the Plan prior to the end of
the Period may be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution,
or pursuant to a domestic relations order.

 

General

 

23.         If any provision of the Plan is held illegal
or invalid for any reason, the illegality or invalidity will not affect the
remaining parts of the Plan, and the Plan will be construed and enforced as if
the illegal or invalid provision had not been included.

 

24.         The determination of participation in the Plan
and the cash payouts under the Plan will be subject to all applicable laws, rules and
regulations.

 

25.         The Plan is intended to constitute an “unfunded”
plan for purposes of providing incentive compensation.  With respect to any payments not yet made to
a Participant, the Participant’s rights shall be no greater than those of a
general creditor of AGCI, or its affiliates or subsidiaries.

 

26.         To the extent not preempted by federal law,
domestic or foreign, the Plan will be construed in accordance with and governed
by the laws of the Province of Ontario.

 

5

 

Plan Definitions

 

27.         “Change in Control” means a Change in Control
as defined in the August 1, 2005 employment agreements between AGCI and
each Participant.

 

28.         “Just Cause” means willful misconduct or
willful neglect of duty by the Participant, including, but not limited to,
intentional wrongful disclosure of confidential or proprietary information of
AGCI, its affiliates or subsidiaries, intentional wrongful engagement in any
competitive activity prohibited by the terms of the Participant’s employment
agreement, and the intentional material breach of any provision of the
Participant’s employment agreement.

 

29.         “Stated Good Reason” has the meaning set forth
in the August 1, 2005 employment agreements between AGCI and each
Participant.

 

30.         “Totally Disabled” means a physical handicap
or medical condition for which the Participant is receiving benefit payments
under a long term disability plan sponsored by AGCI, or its affiliates or
subsidiaries.

 

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