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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
SCHEDULE 14D-9/A
(AMENDMENT NO. 5)
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
________________
THE LOEWEN GROUP INC.
(Name of Subject Company)
THE LOEWEN GROUP INC.
(Name of Person(s) Filing Statement)
COMMON SHARES, WITHOUT PAR VALUE
(AND ASSOCIATED SHARE PURCHASE RIGHTS)
6.00% CUMULATIVE REDEEMABLE CONVERTIBLE FIRST
PREFERRED SHARES, SERIES C, WITHOUT PAR VALUE
(Title of Class of Securities)
54042L100
54042L407
(CUSIP Number of Class of Securities)
________________
Peter S. Hyndman
Vice President, Law and Corporate Secretary
The Loewen Group Inc.
4126 Norland Avenue
Burnaby, British Columbia
Canada V5G 3S8
(604)299-9321
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
WITH A COPY TO:
Lyle G. Ganske, Esq.
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
(216) 586-3939
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This statement amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9, as amended (the "Schedule 14D-9") of The Loewen
Group Inc., a corporation incorporated under the laws of British Columbia,
Canada (the "Company"), initially filed with the Securities and Exchange
Commission (the "Commission") on October 10, 1996, with respect to the proposed
exchange offers (the "Second SCI Proposal") announced on October 2, 1996, and
disclosed in a Registration Statement on Form S-4, as amended (the "Registration
Statement") initially filed with the Commission on October 3, 1996, by New
Service Corporation International, a Delaware corporation ("New SCI"), and SCI
Holdings Canada, Inc., a company incorporated under the laws of British
Columbia, Canada ("Canadian SCI"), each a wholly owned direct or indirect
subsidiary of Service Corporation International, a Texas Corporation ("SCI").
The proposed exchange offers contemplated by the Second SCI Proposal have not
yet commenced.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND.
Item 3 is amended and supplemented hereby by inserting the following
after the first sentence in the fourth paragraph of Item 3(b):
On December 4, 1996, the Board, upon the recommendation of the
Compensation Committee thereof, approved the execution of Severance Agreements
with an additional six Executives.
Item 3 is amended and supplemented hereby by inserting the following
four paragraphs after the eighth paragraph of Item 3(b):
On December 4, 1996, in an effort to retain employees of the Company
and certain of its subsidiaries who are not currently parties to Severance
Agreements but who are involved in significant regional activities of the
Company and certain of its subsidiaries, the Board, upon the recommendation of
the Compensation Committee thereof, approved the execution of individual change-
in-control severance agreements (the "Regional Executive Severance Agreements")
with 12 employees of the Company and certain subsidiaries thereof (each, a
"Regional Executive"). A copy of the form of Regional Executive Severance
Agreement is filed as Exhibit 51 to this Schedule 14D-9 and is incorporated
herein by reference. The following summary of the form of Regional Executive
Severance Agreement does not purport to be complete and is qualified in its
entirety by reference to the form of Regional Executive Severance Agreement.
The Regional Executive Severance Agreements are substantially similar
in all material respects to the Severance Agreements for Executives previously
described except that (i) the provisions authorizing a lump-sum retention bonus
payment (if the employee remains employed by the Company or a subsidiary thereof
for 30 days after a change in control or if the employee's employment with the
Company or a subsidiary thereof is terminated due to the death or permanent
disability of the employee following a change in control but prior to the 31st
day following a change in control) are not included in the Regional Executive
Severance Agreements, and (ii) the provisions allowing certain employees to
terminate their employment for any reason or without reason during the 30-day
period immediately following the first occurrence of a change in control and
receive the severance benefits are not included in the Regional Executive
Severance Agreements. If a Regional Executive is terminated with rights to
receive severance benefits, the Regional Executive will be entitled to receive
(i) a lump-sum severance payment equal to one or one and one-half times (as
specified on a case-by-case basis, depending on the Regional Executive's
position) the sum of the Regional Executive's base salary and target annual
bonus, and (ii) employee health and welfare benefits for a period of 12 or 18
months (as specified on a case-by-case basis, depending on the Regional
Executive's position).
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In an effort to retain certain consultants of the Company, who are
involved in significant activities for the Company and LGII, in the context of a
threatened change in control of the Company, the Board, upon the recommendation
of the Compensation Committee thereof, on December 4, 1996, also approved the
execution of individual change-in-control severance agreements (the "Consultant
Severance Agreements") with three of the Company's and LGII's consultants (each,
a "Consultant"). A copy of the form of Consultant Severance Agreement is filed
as Exhibit 52 to this Schedule 14D-9 and is incorporated herein by reference.
The following summary of the form of Consultant Severance Agreement does not
purport to be complete and is qualified in its entirety by reference to the form
of Consultant Severance Agreement.
The Consultant Severance Agreements are substantially similar in all
material respects to the Severance Agreements for Executives previously
described except that (i) all provisions in the Severance Agreements relating to
"Employees Benefits", "Incentive Pay" and "Target Annual Bonus" have been
deleted or conformed in the Consultant Severance Agreements to reflect the
Consultants' contractual relationships with the Company, and (ii) the provisions
allowing certain employees to terminate their employment for any reason or
without reason during the 30-day period immediately following the first
anniversary of the first occurrence of a change in control and receive the
severance benefits have not been included in the Consultant Severance
Agreements. If (i) a Consultant remains engaged by the Company or a subsidiary
thereof for 30 days after a change in control or (ii) the Consultant's
engagement with the Company or a subsidiary thereof is terminated due to the
death or permanent disability of the Consultant following a change in control
but prior to the 31st day following a change in control, the Consultant will be
entitled to receive a lump-sum retention bonus payment equal to one-third or
one-half times (as specified on a case-by-case basis, depending on the
Consultant's position) the compensation earned by the Consultant in respect of
services rendered to the Company and its affiliates during the twelve months
immediately preceding the month in which a change in control occurs. If the
Consultant's engagement is terminated with rights to receive severance benefits,
the Consultant will be entitled to receive a lump-sum severance payment equal to
(A) one or one and one-half times (as specified on a case-by-case basis,
depending on the Consultant's position) the compensation earned by the
Consultant in respect of services rendered to the Company and its affiliates
during the twelve months immediately preceding the month in which a change in
control occurs minus (B) any amount actually paid to the Consultant as a
retention bonus, as described above.
Item 3 is amended and supplemented hereby by inserting the following
two new paragraphs after the seventeenth paragraph (after insertion of the
amendment described above) of Item 3(b):
On December 4, 1996, in an effort to retain two key Executives of the
Company (William R. Shane and Lawrence Miller, who is also a director of the
Company), the Board, upon the recommendation of the Compensation Committee
thereof, recommended that the Company and LGII enter into agreements amending
certain non-competition covenants (the "Non-Competition Amendments") among the
Company, LGII and each such Executive arising out of the purchase from Messrs.
Shane and Miller of Osiris Holding Corporation. Definitive Non-Competition
Amendments have not yet been drafted or executed and would require approval of
the Board of Directors of LGII.
According to the Board's recommendation, the Non-Competition
Amendments would provide that upon the termination of such Executive's
employment following a change in control of the Company, the term of certain
non-competition covenants between such Executive and LGII will be reduced to a
period of six months following the Executive's termination of employment. In
consideration of the Company entering into the Non-Competition Amendments, each
such Executive would agree to forfeit his rights to receive certain bonus
payments provided for in the transaction documents relating to the Osiris
Holding Corporation transaction.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Except for Exhibits 51 and 52 which are filed herewith, the following
Exhibits were previously filed with the Schedule 14D-9:
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Exhibit 1 -- Letter from L. William Heiligbrodt to Raymond L. Loewen, dated September 17, 1996.
Exhibit 2 -- Letter from L. William Heiligbrodt to Raymond L. Loewen, dated September 18, 1996.
Exhibit 3 -- Letter to Shareholders from Raymond L. Loewen, dated September 24, 1996.
Exhibit 4 -- Letter to L. William Heiligbrodt from Raymond L. Loewen, dated September 24, 1996.
Exhibit 5 -- [Intentionally omitted].
Exhibit 6 -- Press Release issued by Loewen, dated September 17, 1996.
Exhibit 7 -- [Intentionally omitted].
Exhibit 8 -- Press Release issued by Loewen, dated September 24, 1996.
Exhibit 9 -- Press Release issued by Loewen, dated September 27, 1996.
Exhibit 10 -- Press Release issued by Loewen, dated October 1, 1996.
Exhibit 11 -- Press Release issued by SCI, dated October 2, 1996.
Exhibit 12 -- Press Release issued by Loewen, dated October 2, 1996.
Exhibit 13* -- Press Release issued by Loewen, dated October 10, 1996.
Exhibit 14 -- Complaint in KRIM V. BAGNELL, ET AL. (Superior Court of the State of California).
Exhibit 15 -- First Amended Complaint in SERVICE CORPORATION INTERNATIONAL V. THE
LOEWEN GROUP INC. (United States District Court for the Southern District of Texas).
Exhibit 16 -- Complaint in THE LOEWEN GROUP INC. V. SERVICE CORPORATION
INTERNATIONAL, ET AL. (United States District Court for the Eastern District of New York).
Exhibit 17* -- Opinion letter of Smith Barney Inc. to Loewen Board of Directors, dated October 10, 1996.
Exhibit 18* -- Opinion letter of Nesbitt Burns Inc. to Loewen Board of Directors, dated October 10, 1996.
Exhibit 19 -- Pages 15 - 20 and 32 - 34 of The Loewen Group Inc. Proxy Statement, dated April 9, 1996.
Exhibit 20 -- The Loewen Group Inc. Employee Stock Option Plan (United States).
Exhibit 21 -- The Loewen Group Inc. Employee Stock Option Plan (Canada).
Exhibit 22 -- Form of The Loewen Group Inc. Employee Stock Option Plan Agreement (Directors of
Loewen Group International, Inc.).
Exhibit 23 -- Form of The Loewen Group Inc. Employee Stock Option Plan Agreement (Directors of
subsidiaries).
Exhibit 24 -- Form of The Loewen Group Inc. Employee Stock Option Plan Agreement (employees).
Exhibit 25 -- The Loewen Group Inc. Employee Share Purchase Plan (United States).
Exhibit 26 -- The Loewen Group Inc. Employee Share Purchase Plan (Canada).
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Exhibit 27 -- The Loewen Group Inc. 1994 Management Equity Investment Plan.
Exhibit 28 -- Form of The Loewen Group Inc. 1994 Management Equity Investment Plan Investment
Option Agreement.
Exhibit 29 -- The Loewen Group Inc. Supplement to 1994 Management Equity Investment Plan.
Exhibit 30 -- The Loewen Group Inc. Addendum to 1994 Management Equity Investment Plan.
Exhibit 31 -- Form of The Loewen Group Inc. Management Equity Investment Plan Borrowing
Agreement.
Exhibit 32 -- Form of The Loewen Group Inc. Management Equity Investment Plan Executive
Agreement.
Exhibit 33 -- Form of The Loewen Group Inc. Management Equity Investment Plan 1994 Exchangeable
Floating Rate Debenture due July 15, 2001.
Exhibit 34 -- The Loewen Group Inc. 1994 Outside Director Compensation Plan.
Exhibit 35 -- The Loewen Group Inc. Employee Stock Bonus Plan.
Exhibit 36 -- The Loewen Group Inc. Shareholder Protection Rights Plan Agreement and Amendments.
Exhibit 37 -- Employment Agreement with Timothy R. Hogenkamp.
Exhibit 38 -- [Intentionally omitted].
Exhibit 39 -- Form of Indemnification Agreement with Outside Directors.
Exhibit 40 -- Form of Indemnification Agreement with Officers.
Exhibit 41 -- Form of The Loewen Group Inc. Severance Agreement.
Exhibit 42 -- The Loewen Group Inc. Severance Pay Plan.
Exhibit 43* -- Letter to Shareholders from Raymond L. Loewen, dated October 10, 1996.
Exhibit 44 -- Press Release issued by Loewen, dated October 14, 1996.
Exhibit 45 -- Press Release issued by Loewen, dated October 17, 1996.
Exhibit 46 -- Press Release issued by Loewen, dated October 20, 1996.
Exhibit 47 -- Press Release issued by Loewen, dated November 1, 1996.
Exhibit 48 -- Press Release issued by Loewen, dated November 3, 1996.
Exhibit 49 -- Memorandum Opinion dated November 27, 1996 (United States District Court for the
Southern District of Texas).
Exhibit 50 -- Press Release issued by Loewen, dated December 1, 1996.
Exhibit 51 -- Form of The Loewen Group Inc. Regional Executive Severance Agreement.
Exhibit 52 -- Form of The Loewen Group Inc. Consultant Severance Agreement.
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* Exhibits distributed to Shareholders.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 14D-9 is true, complete
and correct.
THE LOEWEN GROUP INC.
By: /s/ Peter S. Hyndman
-----------------------------------
Name: Peter S. Hyndman
Title: Vice President, Law and
Corporate Secretary
Dated: December 4, 1996
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EXHIBIT 51
SEVERANCE AGREEMENT
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This Severance Agreement (this "Agreement"), is made and entered into
as of December ___, 1996, by and between Loewen Group International, Inc., a
Delaware corporation (the "Company"), and ___________________ (the "Executive").
WITNESSETH:
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WHEREAS, the Company is a wholly owned subsidiary of The Loewen Group
Inc., a British Columbia corporation ("Parent"), and Parent, by executing the
signature page hereto, has requested that the Company enter into this Agreement;
WHEREAS, the Executive is a senior executive of the Company and has
made and is expected to continue to make major contributions to the short- and
long-term profitability, growth and financial strength of the Company;
WHEREAS, Parent desires that the Company take action to assure itself
of both present and future continuity of management and to establish certain
retention bonus and severance benefits for certain of its senior executives,
including the Executive, applicable in the event of a Change in Control;
WHEREAS, Parent desires that the Company take action to ensure that
its senior executives are not practically disabled from discharging their duties
in respect of a proposed or actual transaction involving a Change in Control;
and
WHEREAS, Parent desires that the Company take action to provide
additional inducement for the Executive to continue to remain in the ongoing
employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms: In addition to terms defined elsewhere
herein, the following terms have the following meanings when used in this
Agreement with initial capital letters:
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(a) "Base Pay" means the Executive's annual base salary at a rate not
less than the Executive's annual fixed or base compensation as in effect
for Executive immediately prior to the occurrence of a Change in Control or
such higher rate as may be determined from time to time by the Board of
Directors of the Company (the "Board") or a committee thereof.
(b) "Cause" means that, prior to any termination pursuant to Section
3(b), the Executive shall have committed:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with the
Company or any Subsidiary;
(ii) intentional wrongful damage to property of the Company or
any Subsidiary;
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or
(iv) intentional wrongful engagement in any Competitive
Activity;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed "intentional" if it was due primarily to an error
in judgment or negligence, but shall be deemed "intentional" only if done
or omitted to be done by the Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for "Cause" hereunder unless and until there
shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds of the Board
then in office at a meeting of the Board called and held for such purpose,
after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel (if the Executive chooses to have
counsel present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, the Executive had committed
an act
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constituting "Cause" as herein defined and specifying the particulars
thereof in detail. Nothing herein will limit the right of the Executive or
his beneficiaries to contest the validity or propriety of any such
determination.
(c) "Change in Control" means the occurrence during the Term of any of
the following events:
(i) Parent is merged, consolidated or reorganized into or with
another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than two-thirds of the
combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors ("Voting Stock") of such
corporation or person immediately after such transaction are held in
the aggregate by the holders of Voting Stock of Parent immediately
prior to such transaction;
(ii) Parent sells or otherwise transfers all or substantially
all of its assets to another corporation or other legal person, and as
a result of such sale or transfer less than two-thirds of the combined
voting power of the then-outstanding Voting Stock of such corporation
or person immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of Parent immediately prior
to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person (as the term "person" is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act),
other than Raymond L. Loewen, a person including Raymond L. Loewen, or
a person whose beneficial ownership of Voting Stock of Parent is
shared with Raymond L. Loewen, has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act) of securities
representing 25% or more of the combined voting power of the then-
outstanding Voting Stock of Parent;
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(iv) Parent files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) that a change in control of Parent has
occurred or will occur in the future pursuant to any then-existing
contract or transaction; or
(v) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the directors of
Parent cease for any reason to constitute at least a majority thereof;
provided, however, that for purposes of this clause (v) each director
who is first elected, or first nominated for election by Parent's
stockholders, by a vote of at least two-thirds of the directors of
Parent (or a committee thereof) then still in office who were
directors of Parent at the beginning of any such period will be deemed
to have been a director of Parent at the beginning of such period.
Notwithstanding the foregoing provisions of Sections 1(c)(iii) or 1(c)(iv),
unless otherwise determined in a specific case by majority vote of the
Board, a "Change in Control" shall not be deemed to have occurred for
purposes of Section 1(c)(iii) or 1(c)(iv) solely because (A) Parent, (B) an
entity in which Parent directly or indirectly beneficially owns 50% or more
of the outstanding Voting Stock (a "Subsidiary"), or (C) any Parent-
sponsored employee stock ownership plan or any other employee benefit plan
of Parent or any Subsidiary either files or becomes obligated to file a
report or a proxy statement under or in response to Schedule 13D, Schedule
14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) under the Exchange Act disclosing beneficial ownership by
it of shares of Voting Stock, whether in excess of 25% or otherwise, or
because Parent reports that a change in control of Parent has occurred or
will occur in the future by reason of such beneficial ownership.
(d) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement
income and welfare benefit policies, plans, programs or arrangements in
which Executive is entitled to participate, including without limitation
any
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stock option, stock purchase, stock appreciation, savings, pension,
supplemental executive retirement, or other retirement income or welfare
benefit, deferred compensation, incentive compensation, group or other
life, health, medical/hospital or other insurance (whether funded by actual
insurance or self-insured by the Company), disability, salary continuation,
expense reimbursement and other employee benefit policies, plans, programs
or arrangements that may now exist or any equivalent successor policies,
plans, programs or arrangements that may be adopted hereafter by the
Company, providing perquisites, benefits and service credit for benefits at
least as great in the aggregate as are payable thereunder prior to a Change
in Control.
(e) "Incentive Pay" means an annual amount equal to not less than the
greatest aggregate annual bonus, incentive or other payments of cash
compensation, in addition to Base Pay, made or to be made in regard to
services rendered in any calendar year during the three calendar years
immediately preceding the year in which the Change in Control occurred
pursuant to any bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program or
arrangement (whether or not funded) of the Company, or any successor
thereto providing benefits at least as great as the benefits payable
thereunder prior to a Change in Control.
(f) "Severance Period" means the period of time commencing on the date
of the first occurrence of a Change in Control and continuing until the
earliest of (i) the second anniversary of the occurrence of the Change in
Control or (ii) the Executive's death; provided, however, that commencing
on each anniversary of the occurrence of the Change in Control, the
Severance Period will automatically be extended for an additional year
unless, not later than 90 calendar days prior to such anniversary date,
either the Company or the Executive shall have given written notice to the
other that the Severance Period is not to be so extended.
(g) "Target Annual Bonus" means the aggregate amount of all payments
in the nature of annual cash bonus to which the Executive would be entitled
in respect of any particular year if (i) the Executive were employed
throughout the
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entirety of such year and (ii) with respect to any such payment that is
contingent in whole or in part upon the achievement of one or more
specified performance targets, a performance level equal to the minimum
performance target established to determine whether any bonus would be
payable (in the event that only one performance target applicable thereto
shall have been established) or a performance level equal to the midpoint
of the minimum and maximum performance targets established to determine the
amount of any bonus that would be payable (in the event that two or more
performance targets applicable thereto shall have been established) were
achieved in respect of that year.
(h) "Term" means the period commencing as of the date hereof and
expiring as of the later of (i) the close of business on December 31, 1998,
or (ii) the expiration of the Severance Period; provided, however, that (A)
commencing on January 1, 1998 and each January 1 thereafter, the term of
this Agreement will automatically be extended for an additional year
unless, not later than September 30 of the immediately preceding year, the
Company or the Executive shall have given notice that it or the Executive,
as the case may be, does not wish to have the Term extended and (B) subject
to the last sentence of Section 9, if, prior to a Change in Control, the
Executive ceases for any reason to be an employee of the Company and any
Subsidiary, thereupon without further action the Term shall be deemed to
have expired and this Agreement will immediately terminate and be of no
further effect. For purposes of this Section 1(h), the Executive shall not
be deemed to have ceased to be an employee of the Company and any
Subsidiary by reason of the transfer of Executive's employment between the
Company and any Subsidiary, or among any Subsidiaries.
2. Operation of Agreement: This Agreement will be effective and
binding immediately upon its execution, but, anything in this Agreement to the
contrary notwithstanding, this Agreement will not be operative unless and until
a Change in Control occurs. Upon the occurrence of a Change in Control at any
time during the Term, without further action, this Agreement shall become
immediately operative.
3. Termination Following a Change in Control: (a) In the event of the
occurrence of a Change in Control, the Executive's employment may be terminated
by the Company during
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the Severance Period and the Executive shall be entitled to the benefits
provided by Section 4(a) unless such termination is the result of the occurrence
of one or more of the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability benefits
pursuant to, the long-term disability plan in effect for, or
applicable to, Executive immediately prior to the Change in Control;
or
(iii) Cause.
If, during the Severance Period, the Executive's employment is terminated by the
Company or any Subsidiary otherwise than pursuant to Section 3(a)(i), 3(a)(ii)
or 3(a)(iii), the Executive will be entitled to the benefits provided by Section
4(a) hereof.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary
during the Severance Period with the right to severance compensation as
provided in Section 4(a) upon the occurrence of one or more of the
following events (regardless of whether any other reason, other than Cause
as hereinabove provided, for such termination exists or has occurred,
including without limitation other employment):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially equivalent
office or position, of or with the Company and/or a Subsidiary, as the
case may be, which the Executive held immediately prior to a Change in
Control, or the removal of the Executive as a director of the Company
(or any successor thereto) if the Executive shall have been a director
of the Company immediately prior to the Change in Control;
(ii) (A) A significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties
attached to the position with the Company and any Subsidiary which the
Executive held immediately prior to the Change in Control, (B) a
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reduction in the aggregate of the Executive's Base Pay and Incentive
Pay received from the Company and any Subsidiary, or (C) the
termination or denial of the Executive's rights to Employee Benefits
or a reduction in the scope or value thereof, any of which is not
remedied by the Company within 10 calendar days after receipt by the
Company of written notice from the Executive of such change, reduction
or termination, as the case may be;
(iii) A determination by the Executive (which determination will
be conclusive and binding upon the parties hereto provided it has been
made in good faith and in all events will be presumed to have been
made in good faith unless otherwise shown by the Company by clear and
convincing evidence) that a change in circumstances has occurred
following a Change in Control, including, without limitation, a change
in the scope of the business or other activities for which the
Executive was responsible immediately prior to the Change in Control,
which has caused Executive to suffer a substantial reduction in any of
the authorities, powers, functions, responsibilities or duties
attached to the position held by the Executive immediately prior to
the Change in Control, which situation is not remedied within 10
calendar days after written notice to the Company from the Executive
of such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all
of its business and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization, transfer or
otherwise) to which all or substantially all of its business and/or
assets have been transferred (directly or by operation of law) assumed
all duties and obligations of the Company under this Agreement
pursuant to Section 11(a);
(v) The Company requires the Executive to have his principal
location of work changed, to any location which is in excess of 25
miles from the location thereof immediately prior to the Change of
Control, or requires the Executive to travel away from his office
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in the course of discharging his responsibilities or duties hereunder
at least 20% more (in terms of aggregate days in any calendar year or
in any calendar quarter when annualized for purposes of comparison to
any prior year) than was required of Executive in any of the three
full years immediately prior to the Change of Control without, in
either case, his prior written consent; or
(vi) Without limiting the generality or effect of the foregoing,
any material breach of this Agreement by the Company or any successor
thereto.
(c) A termination by the Company pursuant to Section 3(a) or by the
Executive pursuant to Section 3(b)
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will not affect any rights which the Executive may have pursuant to any
agreement, policy, plan, program or arrangement of the Company providing
Employee Benefits, which rights shall be governed by the terms thereof
(subject in all events to the provisions of Section 6).
4. Severance Compensation: (a) If, following the occurrence of a
Change in Control, the Company terminates the Executive's employment during the
Severance Period other than pursuant to Section 3(a), or if the Executive
terminates his employment pursuant to Section 3(b), the Company will pay to the
Executive the following amounts within 10 business days after the date (the
"Termination Date") that the Executive's employment is terminated (the effective
date of which shall be the date of termination, or such other date that may be
specified by the Executive if the termination is pursuant to Section 3(b)) and
continue to provide to the Executive the following benefits:
(i) A lump sum payment (the "Severance Payment") in an amount
equal to (A) the multiple set forth under Item I on Annex A hereto
times the sum of Base Pay and Target Annual Bonus (at the highest
combined rate in effect for any period prior to the Termination Date).
(ii) (A) for the number of months set forth under Item II on
Annex A hereto (the "Continuation Period") following the Termination
Date, the Company will arrange to provide the Executive with Employee
Benefits that are health or welfare benefits (but not stock option,
stock purchase, stock appreciation or similar compensatory benefits)
substantially similar to those which the Executive was receiving or
entitled to receive immediately prior to the Termination Date, and (B)
such Continuation Period will be considered service with the Company
for the purpose of determining service credits and benefits due and
payable to the Executive under any retirement income, supplemental
executive retirement and other benefit plans of the Company applicable
to the Executive, his dependents or his beneficiaries immediately
prior to the Termination Date. If and to the extent that any benefit
described in subsection (A) or (B) of this Section 4(a)(ii) is not or
cannot be paid or provided under any policy, plan, program or
arrangement of the Company or any Subsidiary, as the case may be, then
the Company will
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itself pay or provide for the payment to the Executive, his dependents
and beneficiaries, of such Employee Benefits. Notwithstanding the
foregoing, Employee Benefits otherwise receivable by the Executive
pursuant to subsection (A) of this Section 4(a)(ii) will be reduced to
the extent comparable health or welfare benefits are actually received
by the Executive from another employer during the Continuation Period
following the Executive's Termination Date, and any such benefits
actually received by the Executive shall be reported by the Executive
to the Company.
(b) Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment or provide any benefit required to
be made or provided hereunder on a timely basis, the Company will pay
interest on the amount or value thereof at an annualized rate of interest
equal to the so-called composite "prime rate" as quoted from time to time
during the relevant period in the Northeast Edition of The Wall Street
Journal. Such interest will be payable as it accrues on demand. Any
change in such prime rate will be effective on and as of the date of such
change.
(c) Promptly following the date hereof, Parent will (if it has not
already done so) establish a trust (the "Trust") for the purpose of
assuring the payment of amounts that may become payable to the Executive
under Section 4(a) together, at Parent's election, with amounts that may
become payable under other retention bonus or change-in-control severance
agreements or plans to which Parent is a party or under which Parent is an
obligor. A reputable commercial bank or trust company selected by Parent
shall serve as trustee of the Trust (the "Trustee") pursuant to a written
trust agreement between Parent and the Trustee. Prior to the occurrence of
a Change in Control, Parent shall deposit with the Trustee cash and/or a
letter of credit in an amount sufficient to fund all amounts which may
become payable to the Executive under Section 4(a) together with all
amounts that may become payable under all other retention bonus or change-
in-control severance agreements or plans that are intended to be secured by
the Trust, and shall thereafter make such additional deposits, if any, as
may be necessary to result in the Trust holding at all times a combination
of cash and/or letters of credit sufficient for the payment of
11
<PAGE>
all such amounts. Any letter of credit deposited with the Trustee pursuant
to this Section 4(c) shall be issued by a reputable commercial bank having
combined capital and surplus of at least $500 million, shall be irrevocable
and shall entitle the Trustee to draw all amounts payable thereunder
immediately upon the occurrence of a Change in Control. Without limiting
Parent's obligations under the preceding provisions of this Section 4(c),
in the event that Parent shall have failed to fully fund the Trust as
provided herein prior to the occurrence of a Change in Control, Parent
shall do so as promptly as practicable thereafter. All amounts required to
be deposited with the Trustee pursuant to this Section 4(c) that are so
deposited after the occurrence of a Change in Control shall be deposited
solely in the form of cash. No failure by Parent to satisfy any of its
obligations under this Section 4(c) shall limit the rights of the Executive
hereunder. Notwithstanding the foregoing provisions of this Section 4(c),
with respect to any and all amounts which may become payable to the
Executive under this Agreement, the Executive shall have the status of a
general unsecured creditor of the Company and shall have no right to, or
security interest in, any assets of the Company.
(d) Notwithstanding any other provision of this Agreement to the
contrary, the parties' respective rights and obligations under this Section
4 and under Sections 5 and 8 will survive any termination or expiration of
this Agreement or the termination of the Executive's employment following a
Change in Control for any reason whatsoever.
5. Limitation on Payments and Benefits. Notwithstanding any
provision of this Agreement to the contrary, if any amount or benefit to be paid
or provided under this Agreement (taking into account all other amounts and
benefits to be paid or provided to or for the benefit of the Executive by the
Company or any affiliate thereof under this Agreement or otherwise as though all
such other amounts and benefits had already been so paid or provided) would be
an "Excess Parachute Payment," within the meaning of Section 280G of the United
States Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision thereto, but for the application of this sentence, then the payments
and benefits to be paid or provided under this Agreement shall be reduced to the
minimum extent necessary (but in no event to less than zero) so that no portion
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<PAGE>
of any such payment or benefit, as so reduced, constitutes an Excess Parachute
Payment; provided, however, that the foregoing reduction shall be made only if
and to the extent that such reduction would result in an increase in the
aggregate payment and benefits to be provided, determined on an after-tax basis
(taking into account the excise tax imposed pursuant to Section 4999 of the
Code, or any successor provision thereto, any tax imposed by any comparable
provision of United States state law, and any applicable United States federal,
state and local income taxes). The determination of whether any reduction in
such payments or benefits to be provided under this Agreement is required
pursuant to the preceding sentence shall be made at the expense of the Company,
if requested by the Executive or the Company, by the Company's independent
accountants. The fact that the Executive's right to payments or benefits may be
reduced by reason of the limitations contained in this Section 5 shall not of
itself limit or otherwise affect any other rights of the Executive other than
pursuant to this Agreement. In the event that any payment or benefit intended
to be provided under this Agreement is required to be reduced pursuant to this
Section 5, the Executive shall be entitled to designate the payments and/or
benefits to be so reduced in order to give effect to this Section 5. The
Company shall provide the Executive with all information reasonably requested by
the Executive to permit the Executive to make such designation. In the event
that the Executive fails to make such designation within 5 business days of the
Bonus Date or the Termination Date, as applicable, the Company may effect such
reduction in any manner it deems appropriate.
6. Waiver by Executive of Certain Rights: The Executive hereby
irrevocably waives any and all rights that the Executive may have pursuant to
any agreement (other than this Agreement), policy, plan, program or arrangement
of the Company or any affiliate (as the term "affiliate" is defined under Rule
12b-2 promulgated under the Exchange Act) of the Company in effect as of the
date hereof to receive payments and/or benefits in the nature of severance
payments or benefits.
7. No Mitigation Obligation: The Company hereby acknowledges that
it will be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date. Accordingly, the payment
of the severance compensation by the Company to the Executive in accordance with
the terms of this Agreement is hereby acknowledged by the Company
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to be reasonable, and the Executive will not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise, nor will any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Executive hereunder or otherwise, except as
expressly provided in the last sentence of Section 4(a)(ii).
8. Legal Fees and Expenses: It is the intent of the Company that
the Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if it should appear to the Executive that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be provided to
the Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to whether
the Executive prevails, in whole or in part, in connection with any of the
foregoing, the Company will pay and be solely financially responsible for any
and all attorneys' and related fees and expenses incurred by the Executive in
connection with any of the foregoing.
9. Employment Rights: Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the
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employment of the Company or any Subsidiary prior to or following any Change in
Control. Any termination of employment of the Executive or the removal of the
Executive from the office or position in the Company or any Subsidiary following
the commencement of any discussion with a third person that ultimately results
in a Change in Control shall be deemed to be a termination or removal of the
Executive after a Change in Control for purposes of this Agreement.
10. Withholding of Taxes: The Company may withhold from any amounts
payable under this Agreement all federal, provincial, state, city or other taxes
as the Company is required to withhold pursuant to any law or government
regulation or ruling.
11. Successors and Binding Agreement: (a) The Company will require
any successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree 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. This Agreement will be binding upon and inure
to the benefit of the Company and any successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business or assets of the Company whether by purchase,
merger, consolidation, reorganization or otherwise (and such successor shall
thereafter be deemed the "Company" for the purposes of this Agreement), but will
not otherwise be assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 11(a) and 11(b). Without limiting the
generality or effect of the foregoing, the Executive's right to receive
payments hereunder will not be assignable,
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<PAGE>
transferable or delegable, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by Executive's will or by
the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 11(c), the Company shall
have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
12. Notices: For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service such as Federal Express, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive office and to the Executive at his principal
residence, or to such other address as any party may have furnished to the other
in writing and in accordance herewith, except that notices of changes of address
shall be effective only upon receipt.
13. Governing Law: The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws thereof.
14. Validity: If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
15. Miscellaneous: No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance
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<PAGE>
with any condition or provision of this Agreement to be performed by such other
party will be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. References to Sections are to references to
Sections of this Agreement.
16. Counterparts: This Agreement may be executed in one or more
-------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
LOEWEN GROUP INTERNATIONAL, INC.
By:
---------------------------------------
Its:
---------------------------------------
---------------------------------------
[Executive]
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By signing this Agreement below, Parent (i) in its capacity as the
sole stockholder of the Company, hereby requests that the Company enter into
this Agreement and hereby authorizes the Company to execute and deliver this
Agreement and to perform its obligations hereunder and (ii) agrees with each of
the Company and the Executive that it will timely perform all obligations to be
performed by Parent under Section 4(c).
THE LOEWEN GROUP INC.
By:
-----------------------------------
Its:
-----------------------------------
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Annex A
-------
I. Multiple of Base Pay and Target Annual Bonus.
--------------------------------------------
[ONE] [ONE AND ONE-HALF] times.
II. Months of Health and Welfare Benefit Continuation
and Additional Retirement Income Service Credit.
-----------------------------------------------
[12] [18] months.
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EXHIBIT 52
SEVERANCE AGREEMENT
-------------------
This Severance Agreement (this "Agreement"), is made and entered into
as of December ___, 1996, by and between Loewen Group International, Inc., a
Delaware corporation (the "Company"), and __________________ (the "Consultant").
WITNESSETH:
----------
WHEREAS, the Company is a wholly owned subsidiary of The Loewen Group
Inc., a British Columbia corporation ("Parent"), and Parent, by executing the
signature page hereto, has requested that the Company enter into this Agreement;
WHEREAS, the Consultant has made and is expected to continue to make
major contributions to the short- and long-term profitability, growth and
financial strength of the Company;
WHEREAS, Parent desires that the Company take action to assure itself
of both present and future continuity of management and consulting services and
to establish certain retention bonus and severance benefits for certain of its
senior executives and consultants, including the Consultant, applicable in the
event of a Change in Control;
WHEREAS, Parent desires that the Company take action to ensure that
its senior executives and consultants are not practically disabled from
discharging their duties in respect of a proposed or actual transaction
involving a Change in Control; and
WHEREAS, Parent desires that the Company take action to provide
additional inducement for the Consultant to continue to remain in the ongoing
service of the Company.
NOW, THEREFORE, the Company and the Consultant agree as follows:
1. Certain Defined Terms: In addition to terms defined elsewhere
herein, the following terms have the following meanings when used in this
Agreement with initial capital letters:
(a) "Base Pay" means an amount equal to the compensation earned by the
Consultant in respect of services rendered to the Company and its
affiliates during the twelve months immediately preceding the month in
which a Change in Control occurs, or such higher rate as may be determined
from time to time by the Board of Directors of the Company (the "Board") or
a committee thereof.
<PAGE>
(b) "Cause" means that, prior to any termination pursuant to Section
3(b), the Consultant shall have committed:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his engagement with the
Company or any Subsidiary;
(ii) intentional wrongful damage to property of the Company or
any Subsidiary;
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or
(iv) intentional wrongful engagement in any Competitive Activity;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Consultant shall be deemed "intentional" if it was due primarily to an
error in judgment or negligence, but shall be deemed "intentional" only if
done or omitted to be done by the Consultant not in good faith and without
reasonable belief that his action or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Consultant shall not be
deemed to have been terminated for "Cause" hereunder unless and until there
shall have been delivered to the Consultant a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds of the Board
then in office at a meeting of the Board called and held for such purpose,
after reasonable notice to the Consultant and an opportunity for the
Consultant, together with his counsel (if the Consultant chooses to have
counsel present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, the Consultant had committed
an act constituting "Cause" as herein defined and specifying the
particulars thereof in detail. Nothing herein will limit the right of the
Consultant or his beneficiaries to contest the validity or propriety of any
such determination.
(c) "Change in Control" means the occurrence during the Term of any of
the following events:
(i) Parent is merged, consolidated or reorganized into or with
another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than two-thirds of the
combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors ("Voting Stock") of such
corporation or person immediately after such transaction are held in
the
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aggregate by the holders of Voting Stock of Parent immediately prior
to such transaction;
(ii) Parent sells or otherwise transfers all or substantially all
of its assets to another corporation or other legal person, and as a
result of such sale or transfer less than two-thirds of the combined
voting power of the then-outstanding Voting Stock of such corporation
or person immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of Parent immediately prior
to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person (as the term "person" is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act),
other than Raymond L. Loewen, a person including Raymond L. Loewen, or
a person whose beneficial ownership of Voting Stock of Parent is
shared with Raymond L. Loewen, has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act) of securities
representing 25% or more of the combined voting power of the then-
outstanding Voting Stock of Parent;
(iv) Parent files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) that a change in control of Parent has
occurred or will occur in the future pursuant to any then-existing
contract or transaction; or
(v) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the directors of
Parent cease for any reason to constitute at least a majority thereof;
provided, however, that for purposes of this clause (v) each director
who is first elected, or first nominated for election by Parent's
stockholders, by a vote of at least two-thirds of the directors of
Parent (or a committee thereof) then still in office who were
directors of Parent at the beginning of any such period will be deemed
to have been a director of Parent at the beginning of such period.
Notwithstanding the foregoing provisions of Sections 1(c)(iii) or 1(c)(iv),
unless otherwise determined in a specific case by majority vote of the
Board, a "Change
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<PAGE>
in Control" shall not be deemed to have occurred for purposes of Section
1(c)(iii) or 1(c)(iv) solely because (A) Parent, (B) an entity in which
Parent directly or indirectly beneficially owns 50% or more of the
outstanding Voting Stock (a "Subsidiary"), or (C) any Parent-sponsored
employee stock ownership plan or any other employee benefit plan of Parent
or any Subsidiary either files or becomes obligated to file a report or a
proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item
therein) under the Exchange Act disclosing beneficial ownership by it of
shares of Voting Stock, whether in excess of 25% or otherwise, or because
Parent reports that a change in control of Parent has occurred or will
occur in the future by reason of such beneficial ownership.
(d) "Severance Period" means the period of time commencing on the date
of the first occurrence of a Change in Control and continuing until the
earliest of (i) the second anniversary of the occurrence of the Change in
Control or (ii) the Consultant's death; provided, however, that commencing
on each anniversary of the occurrence of the Change in Control, the
Severance Period will automatically be extended for an additional year
unless, not later than 90 calendar days prior to such anniversary date,
either the Company or the Consultant shall have given written notice to the
other that the Severance Period is not to be so extended.
(e) "Term" means the period commencing as of the date hereof and
expiring as of the later of (i) the close of business on December 31, 1998,
or (ii) the expiration of the Severance Period; provided, however, that (A)
commencing on January 1, 1998 and each January 1 thereafter, the term of
this Agreement will automatically be extended for an additional year
unless, not later than September 30 of the immediately preceding year, the
Company or the Consultant shall have given notice that it or the
Consultant, as the case may be, does not wish to have the Term extended and
(B) subject to the last sentence of Section 9, if, prior to a Change in
Control, the Consultant ceases for any reason to be a consultant,
independent contractor or employee of the Company and any Subsidiary,
thereupon without further action the Term shall be deemed to have expired
and this Agreement will immediately terminate and be of no further effect.
For purposes of this Section 1(h), the Consultant shall not be deemed to
have ceased to be a consultant, independent contractor or employee of the
Company and any Subsidiary by reason of the transfer of Consultant's
engagement between the Company and any Subsidiary, or among any
Subsidiaries.
2. Operation of Agreement: This Agreement will be effective and
binding immediately upon its execution, but, anything in this Agreement to the
contrary notwithstanding, this
4
<PAGE>
Agreement will not be operative unless and until a Change in Control occurs.
Upon the occurrence of a Change in Control at any time during the Term, without
further action, this Agreement shall become immediately operative.
3. Termination Following a Change in Control: (a) In the event of
the occurrence of a Change in Control, the Consultant's engagement may be
terminated by the Company during the Severance Period and the Consultant shall
be entitled to the benefits provided by Section 4(b) unless such termination is
the result of the occurrence of one or more of the following events:
(i) The Consultant's death;
(ii) If the Consultant becomes permanently disabled and begins
actually to receive disability benefits at least equal on an
annualized basis to 60% of Base Pay pursuant to any long-term
disability plan or insurance policy that may be made available to the
Consultant by or through the Company from time to time; or
(iii) Cause.
If, during the Severance Period, the Consultant's engagement is terminated by
the Company or any Subsidiary otherwise than pursuant to Section 3(a)(i),
3(a)(ii) or 3(a)(iii), the Consultant will be entitled to the benefits provided
by Section 4(b) hereof.
(b) In the event of the occurrence of a Change in Control, the
Consultant may terminate his engagement with the Company and any
Subsidiary during the Severance Period with the right to severance
compensation as provided in Section 4(b) upon the occurrence of one or more
of the following events (regardless of whether any other reason, other than
Cause as hereinabove provided, for such termination exists or has occurred,
including without limitation other employment):
(i) Failure to elect or reelect or otherwise to maintain the
Consultant in the office or the position, or a substantially
equivalent office or position, of or with the Company and/or a
Subsidiary, as the case may be, which the Consultant held immediately
prior to a Change in Control, or the removal of the Consultant as a
director of the Company (or any successor thereto) if the Consultant
shall have been a director of the Company immediately prior to the
Change in Control;
(ii) (A) A significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties
attached to the position with the Company and any Subsidiary which the
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<PAGE>
Consultant held immediately prior to the Change in Control or (B) a
reduction in the rate at which the Consultant's Base Pay is earned or
the amount of Base Pay earned;
(iii) A determination by the Consultant (which determination
will be conclusive and binding upon the parties hereto provided it has
been made in good faith and in all events will be presumed to have
been made in good faith unless otherwise shown by the Company by clear
and convincing evidence) that a change in circumstances has occurred
following a Change in Control, including, without limitation, a change
in the scope of the business or other activities for which the
Consultant was responsible immediately prior to the Change in Control,
which has caused Consultant to suffer a substantial reduction in any
of the authorities, powers, functions, responsibilities or duties
attached to the position held by the Consultant immediately prior to
the Change in Control, which situation is not remedied within 10
calendar days after written notice to the Company from the Consultant
of such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all
of its business and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization, transfer or
otherwise) to which all or substantially all of its business and/or
assets have been transferred (directly or by operation of law) assumed
all duties and obligations of the Company under this Agreement
pursuant to Section 11(a);
(v) The Company requires the Consultant to have his principal
location of work changed, to any location which is in excess of 25
miles from the location thereof immediately prior to the Change of
Control, or requires the Consultant to travel away from his office in
the course of discharging his responsibilities or duties hereunder at
least 20% more (in terms of aggregate days in any calendar year or in
any calendar quarter when annualized for purposes of comparison to any
prior year) than was required of Consultant in any of the three full
years immediately prior to the Change of Control without, in either
case, his prior written consent; or
(vi) Without limiting the generality or effect of the foregoing,
any material breach of this Agreement by the Company or any successor
thereto.
6
<PAGE>
4. Retention Bonus and Severance Compensation: (a) If (i) the
Consultant remains engaged by the Company or any Subsidiary for 30 days
after the first occurrence of a Change in Control (the "Bonus Date") or
(ii) the Consultant's engagement with the Company or any Subsidiary is
terminated pursuant to Section 3(a)(i) or 3(a)(ii) following the first
occurrence of a Change in Control but prior to the 31st day after the first
occurrence of a Change in Control, the Company will pay to the Consultant,
within 10 business days after the Bonus Date, a lump sum payment (the
"Retention Bonus Payment") in an amount equal to the multiple set forth
under Item I on Annex A hereto times Base Pay.
(b) If, following the occurrence of a Change in Control, the Company
terminates the Consultant's engagement during the Severance Period other
than pursuant to Section 3(a), or if the Consultant terminates his
engagement pursuant to Section 3(b), the Company will pay to the
Consultant, within 10 business days after the date (the "Termination Date")
that the Consultant's engagement is terminated (the effective date of which
shall be the date of termination, or such other date that may be specified
by the Consultant if the termination is pursuant to Section 3(b)), a lump
sum payment (the "Severance Payment") in an amount equal to (A) the
multiple set forth under Item II on Annex A hereto times Base Pay minus (B)
the amount of any Retention Bonus Payment actually paid to the Consultant
pursuant to Section 4(a).
(c) Without limiting the rights of the Consultant at law or in equity,
if the Company fails to make any payment or provide any benefit required to
be made or provided hereunder on a timely basis, the Company will pay
interest on the amount or value thereof at an annualized rate of interest
equal to the so-called composite "prime rate" as quoted from time to time
during the relevant period in the Northeast Edition of The Wall Street
Journal. Such interest will be payable as it accrues on demand. Any
change in such prime rate will be effective on and as of the date of such
change.
(d) Promptly following the date hereof, Parent will (if it has not
already done so) establish a trust (the "Trust") for the purpose of
assuring the payment of amounts that may become payable to the Consultant
under Sections 4(a) and (b) together, at Parent's election, with amounts
that may become payable under other retention bonus or change-in-control
severance agreements or plans to which Parent is a party or under which
Parent is an obligor. A reputable commercial bank or trust company
selected by Parent shall serve as trustee of the Trust (the "Trustee")
pursuant to a written trust agreement between Parent and the Trustee.
Prior to the occurrence of a Change in Control,
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Parent shall deposit with the Trustee cash and/or a letter of credit in an
amount sufficient to fund all amounts which may become payable to the
Consultant under Sections 4(a) and (b), together with all amounts that may
become payable under all other retention bonus or change-in-control
severance agreements or plans that are intended to be secured by the Trust,
and shall thereafter make such additional deposits, if any, as may be
necessary to result in the Trust holding at all times a combination of cash
and/or letters of credit sufficient for the payment of all such amounts.
Any letter of credit deposited with the Trustee pursuant to this Section
4(d) shall be issued by a reputable commercial bank having combined capital
and surplus of at least $500 million, shall be irrevocable and shall
entitle the Trustee to draw all amounts payable thereunder immediately upon
the occurrence of a Change in Control. Without limiting Parent's
obligations under the preceding provisions of this Section 4(d), in the
event that Parent shall have failed to fully fund the Trust as provided
herein prior to the occurrence of a Change in Control, Parent shall do so
as promptly as practicable thereafter. All amounts required to be
deposited with the Trustee pursuant to this Section 4(d) that are so
deposited after the occurrence of a Change in Control shall be deposited
solely in the form of cash. No failure by Parent to satisfy any of its
obligations under this Section 4(d) shall limit the rights of the
Consultant hereunder. Notwithstanding the foregoing provisions of this
Section 4(d), with respect to any and all amounts which may become payable
to the Consultant under this Agreement, the Consultant shall have the
status of a general unsecured creditor of the Company and shall have no
right to, or security interest in, any assets of the Company.
(e) Notwithstanding any other provision of this Agreement to the
contrary, the parties' respective rights and obligations under this Section
4 and under Sections 5 and 8 will survive any termination or expiration of
this Agreement or the termination of the Consultant's engagement following
a Change in Control for any reason whatsoever.
5. Limitation on Payments and Benefits. Notwithstanding any
provision of this Agreement to the contrary, if any amount or benefit to be paid
or provided under this Agreement (taking into account all other amounts and
benefits to be paid or provided to or for the benefit of the Consultant by the
Company or any affiliate thereof under this Agreement or otherwise as though all
such other amounts and benefits had already been so paid or provided) would be
an "Excess Parachute Payment," within the meaning of Section 280G of the United
States Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision thereto, but for the application of this sentence, then the payments
and benefits to be paid or provided under this Agreement shall be reduced to the
minimum extent necessary (but in no event to less than zero) so that no portion
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of any such payment or benefit, as so reduced, constitutes an Excess Parachute
Payment; provided, however, that the foregoing reduction shall be made only if
and to the extent that such reduction would result in an increase in the
aggregate payment and benefits to be provided, determined on an after-tax basis
(taking into account the excise tax imposed pursuant to Section 4999 of the
Code, or any successor provision thereto, any tax imposed by any comparable
provision of United States state law, and any applicable United States federal,
state and local income taxes). The determination of whether any reduction in
such payments or benefits to be provided under this Agreement is required
pursuant to the preceding sentence shall be made at the expense of the Company,
if requested by the Consultant or the Company, by the Company's independent
accountants. The fact that the Consultant's right to payments or benefits may
be reduced by reason of the limitations contained in this Section 5 shall not of
itself limit or otherwise affect any other rights of the Consultant other than
pursuant to this Agreement. In the event that any payment or benefit intended
to be provided under this Agreement is required to be reduced pursuant to this
Section 5, the Consultant shall be entitled to designate the payments and/or
benefits to be so reduced in order to give effect to this Section 5. The
Company shall provide the Consultant with all information reasonably requested
by the Consultant to permit the Consultant to make such designation. In the
event that the Consultant fails to make such designation within 5 business days
of the Bonus Date or the Termination Date, as applicable, the Company may effect
such reduction in any manner it deems appropriate.
6. Waiver by Consultant of Certain Rights: The Consultant hereby
irrevocably waives any and all rights that the Consultant may have pursuant to
any agreement (other than this Agreement), policy, plan, program or arrangement
of the Company or any affiliate (as the term "affiliate" is defined under Rule
12b-2 promulgated under the Exchange Act) of the Company in effect as of the
date hereof to receive payments and/or benefits in the nature of severance
payments or benefits.
7. No Mitigation Obligation: The Company hereby acknowledges that
it will be difficult and may be impossible for the Consultant to find reasonably
comparable work following the Termination Date. Accordingly, the payment of the
severance compensation by the Company to the Consultant in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be reasonable,
and the Consultant will not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
will any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Consultant hereunder or otherwise.
8. Legal Fees and Expenses: It is the intent of the Company that
the Consultant not be required to incur legal fees
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and the related expenses associated with the interpretation, enforcement or
defense of Consultant's rights under this Agreement by litigation or otherwise
because the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Consultant hereunder. Accordingly, if
it should appear to the Consultant that the Company has failed to comply with
any of its obligations under this Agreement or in the event that the Company or
any other person takes or threatens to take any action to declare this Agreement
void or unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, the Consultant the benefits
provided or intended to be provided to the Consultant hereunder, the Company
irrevocably authorizes the Consultant from time to time to retain counsel of
Consultant's choice, at the expense of the Company as hereafter provided, to
advise and represent the Consultant in connection with any such interpretation,
enforcement or defense, including without limitation the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any Director, officer, stockholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Consultant's entering into an attorney-client relationship with
such counsel, and in that connection the Company and the Consultant agree that a
confidential relationship shall exist between the Consultant and such counsel.
Without respect to whether the Consultant prevails, in whole or in part, in
connection with any of the foregoing, the Company will pay and be solely
financially responsible for any and all attorneys' and related fees and expenses
incurred by the Consultant in connection with any of the foregoing.
9. Engagement Rights: Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Consultant to have the Consultant remain in the service of the Company or any
Subsidiary prior to or following any Change in Control. Any termination of the
Consultant or the removal of the Consultant from the office or position in the
Company or any Subsidiary following the commencement of any discussion with a
third person that ultimately results in a Change in Control shall be deemed to
be a termination or removal of the Consultant after a Change in Control for
purposes of this Agreement.
10. Withholding of Taxes: The Company may withhold from any amounts
payable under this Agreement all federal, provincial, state, city or other taxes
as the Company is required to withhold pursuant to any law or government
regulation or ruling.
11. Successors and Binding Agreement: (a) The Company will require
any successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to
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all or substantially all of the business or assets of the Company, by agreement
in form and substance satisfactory to the Consultant, expressly to assume and
agree 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.
This Agreement will be binding upon and inure to the benefit of the Company and
any successor to the Company, including without limitation any persons acquiring
directly or indirectly all or substantially all of the business or assets of the
Company whether by purchase, merger, consolidation, reorganization or otherwise
(and such successor shall thereafter be deemed the "Company" for the purposes
of this Agreement), but will not otherwise be assignable, transferable or
delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
the Consultant's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 11(a) and 11(b). Without limiting the
generality or effect of the foregoing, the Consultant's right to receive
payments hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest, or otherwise, other
than by a transfer by Consultant's will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer
contrary to this Section 11(c), the Company shall have no liability to pay
any amount so attempted to be assigned, transferred or delegated.
12. Notices: For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service such as Federal Express, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive office and to the Consultant at his
principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except that notices of changes
of address shall be effective only upon receipt.
13. Governing Law: The validity, interpretation, construction and
performance of this Agreement will be governed
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by and construed in accordance with the substantive laws of the State of
Delaware, without giving effect to the principles of conflict of laws thereof.
14. Validity: If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
15. Miscellaneous: No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Consultant and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
16. Counterparts: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
LOEWEN GROUP INTERNATIONAL, INC.
By: ______________________________
Its: ______________________________
______________________________
[Consultant]
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By signing this Agreement below, Parent (i) in its capacity as the
sole stockholder of the Company, hereby requests that the Company enter into
this Agreement and hereby authorizes the Company to execute and deliver this
Agreement and to perform its obligations hereunder and (ii) agrees with each of
the Company and the Consultant that it will timely perform all obligations to be
performed by Parent under Section 4(d).
THE LOEWEN GROUP INC.
By: ______________________________
Its: ______________________________
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Annex A
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I. Multiple of Base Pay.
--------------------
[ONE-THIRD] [ONE-HALF] times
II. Multiple of Base Pay.
--------------------
[ONE] [ONE AND ONE-HALF] times.
