LOEWEN GROUP INC, DEF 14A, 1997-04-11

LOEWEN GROUP INC
DEF 14A, 1997-04-11
PERSONAL SERVICES

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<PAGE> 1

================================================================================
SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
[ ] Confidential, For Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))

THE LOEWEN GROUP INC.
(Name of Registrant as Specified in its Charter)

N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

================================================================================
<PAGE> 2

LOGO

THE LOEWEN GROUP INC.

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the Annual General Meeting (the "Meeting") of
the holders of Common shares without par value ("Common shares") of The Loewen
Group Inc. (the "Company") will be held at the Pan Pacific Hotel, 999 Canada
Place, Vancouver, British Columbia, Canada, at 2:30 p.m. (Pacific Daylight Time)
on Thursday, the 15th day of May, 1997, for the following purposes:

1. to receive the report of the Directors to the shareholders and the
financial statements of the Company for the year ended December 31,
1996, together with the report of the auditors thereon;

2. to elect four Directors for terms of office as more particularly
described in the accompanying Proxy Statement and Information
Circular;

3. to appoint auditors for the ensuing year;

4. to authorize the Directors to fix the remuneration to be paid to the
auditors;

5. to consider and, if thought advisable, to pass ordinary resolutions
to approve amendments of the Employee Stock Option Plan (United
States) to increase the number of Common shares issuable thereunder
by 1,000,000 Common shares and to increase the number of Common
shares for which options may be granted thereunder in any one
calendar year to any one participant by 300,000 Common shares;

6. to consider and, if thought advisable, to pass ordinary resolutions
to approve amendments of the Employee Stock Option Plan (Canada) to
increase the number of Common shares issuable thereunder by 1,000,000
Common shares and to increase the number of Common shares for which
options may be granted thereunder in any one calendar year to any one
participant by 300,000 Common shares;

7. to consider and, if thought advisable, to pass an ordinary resolution
to approve the amendment of the Employee Stock Bonus Plan to increase
the number of Common shares issuable thereunder by 50,000 Common
shares; and

8. to consider such other matters as may properly be brought before the
Meeting or any adjournment or postponement thereof.

The share transfer books of the Company will not be closed, but the Board
of Directors has fixed March 27, 1997 as the record date for the determination
of shareholders entitled to notice of and to vote at the Meeting and at any
adjournment or postponement thereof. Each registered holder of Common shares at
the close of business on that date is entitled to such notice and to vote at the
Meeting in the circumstances set out in the accompanying Proxy Statement and
Information Circular.

A Proxy Statement and Information Circular and form of proxy accompany this
Notice of Meeting.

Shareholders who are registered holders of Common shares and who are unable
to attend or who are not expecting to be present at the Meeting in person are
requested to date and sign the enclosed form of proxy for holders of Common
shares and return it in the envelope provided for that purpose. Forms of proxy
must be received by The R-M Trust Company, at Fifth Floor, 393 University
Avenue, Toronto, Ontario, Canada, M5G 2M7 (fax number (416) 813-4679) not later
than 10:00 a.m. (Pacific Daylight Time) on Wednesday, the 14th day of May, 1997.
<PAGE> 3

Shareholders who are not registered holders receiving the Meeting materials
from their broker or other representative are requested to complete and return
the materials as instructed by such broker or other representative.

DATED at Burnaby, British Columbia, Canada, the 8th day of April, 1997.

BY ORDER OF THE BOARD

/s/ RAYMOND L. LOEWEN
-------------------------------
Raymond L. Loewen,
Chairman of the Board and Chief
Executive Officer

2
<PAGE> 4

LOGO

THE LOEWEN GROUP INC.
4126 NORLAND AVENUE
BURNABY, BRITISH COLUMBIA, CANADA
V5G 3S8

PROXY STATEMENT AND INFORMATION CIRCULAR

IN CONNECTION WITH THE ANNUAL GENERAL MEETING
TO BE HELD ON MAY 15, 1997

DATED AS OF APRIL 8, 1997

SOLICITATION OF PROXIES

THIS PROXY STATEMENT AND INFORMATION CIRCULAR IS FURNISHED IN CONNECTION
WITH THE SOLICITATION BY MANAGEMENT OF THE LOEWEN GROUP INC. (THE "COMPANY") OF
PROXIES TO BE USED AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS OF THE COMPANY
(THE "MEETING") to be held at the Pan Pacific Hotel, 999 Canada Place,
Vancouver, British Columbia, Canada, at 2:30 p.m. (Pacific Daylight Time) on
Thursday, the 15th day of May, 1997 and at any adjournment or postponement
thereof, for the purposes set forth in the accompanying Notice of Annual General
Meeting of Shareholders ("Notice of Meeting"). References in this Proxy
Statement and Information Circular to "Shareholder" or "Shareholders" are
references to the holder or holders of Common shares without par value of the
Company ("Common shares"). References in this Proxy Statement and Information
Circular to "Subsidiaries" are references to the direct and indirect
subsidiaries and associated entities of the Company, unless the context
otherwise requires.

This Proxy Statement and Information Circular and the enclosed form of
proxy are first being sent to Shareholders on or about April 11, 1997.

The total cost of solicitation of proxies will be borne by the Company. The
solicitation of proxies is being made initially by mail. Directors, officers and
other employees of the Company may solicit proxies in person, by telephone, by
mail or other means. Brokers, banks and other persons will be reimbursed by the
Company for expenses they incur in forwarding proxy material to obtain voting
instructions from beneficial Shareholders. The Company also intends to use the
services of Morrow & Co., Inc. to assist in the solicitation of proxies. The
cost of such proxy solicitation services to be rendered to the Company is
estimated to be $10,000 plus customary out-of-pocket expenses.
------------------------

All dollar amounts are expressed in United States dollars, unless indicated
otherwise. The following rates of exchange, each of which is a weighted average
of the Bank of Canada noon spot rate of exchange for the relevant year, were
used to translate Canadian dollar amounts to United States dollar amounts for
the respective fiscal years indicated:

<TABLE>
<CAPTION>
FISCAL YEAR RATE
- ----------- -------------------------------------
<C> <S>
1994 $1 United States = $1.3657 Canadian
1995 $1 United States = $1.3723 Canadian
1996 $1 United States = $1.3635 Canadian
</TABLE>

1
<PAGE> 5

APPOINTMENT AND REVOCATION OF PROXIES

The persons named as proxyholders (the "designated persons") in the
enclosed form of proxy were designated by the Directors of the Company. A
SHAREHOLDER DESIRING TO APPOINT A PERSON (WHICH MAY BE A COMPANY) TO ATTEND AND
ACT FOR AND ON BEHALF OF THAT SHAREHOLDER AT THE MEETING, OTHER THAN THE
DESIGNATED PERSONS IN THE ENCLOSED FORM OF PROXY, MAY DO SO BY STRIKING OUT THE
PRINTED NAMES AND INSERTING THE NAME OF SUCH OTHER PERSON AND, IF DESIRED, AN
ALTERNATE TO SUCH PERSON (NEITHER OF WHOM NEED BE A SHAREHOLDER) IN THE BLANK
SPACE PROVIDED IN THE FORM OF PROXY. The completed form of proxy must be
received by The R-M Trust Company at Fifth Floor, 393 University Avenue,
Toronto, Ontario, Canada, M5G 2M7 (fax number (416) 813-4679) not later than
10:00 a.m. (Pacific Daylight Time) on Wednesday, the 14th day of May, 1997.

A proxy may not be valid unless it is dated and signed by the Shareholder
who is giving it or by that Shareholder's attorney-in-fact duly authorized by
that Shareholder in writing or, in the case of a corporation, dated and executed
under its corporate seal or by any officer of, or attorney-in-fact for, the
corporation duly authorized. If a form of proxy is executed by an
attorney-in-fact for an individual Shareholder or joint Shareholders or by an
officer or attorney-in-fact for a corporate Shareholder not under its corporate
seal, the instrument so empowering the officer or attorney-in-fact, as the case
may be, or a notarial copy thereof, should accompany the form of proxy.

A Shareholder who has given a proxy may revoke it at any time, before it is
exercised, by an instrument in writing (a) executed by that Shareholder or by
that Shareholder's attorney-in-fact authorized in writing or, where that
Shareholder is a corporation, by a duly authorized officer of, or
attorney-in-fact for, the corporation; and (b) delivered either (i) to the
registered office of the Company at Suite 2100-1075 West Georgia Street,
Vancouver, British Columbia, Canada, V6E 3G2 at any time up to and including the
last business day preceding the day of the Meeting or, if adjourned or
postponed, any reconvening thereof, or (ii) to the Chairman of the Meeting prior
to the vote on matters covered by the proxy on the day of the Meeting or, if
adjourned or postponed, any reconvening thereof; or in any other manner provided
by law. Attendance at the Meeting and participation in a poll (ballot) by a
Shareholder will automatically revoke the proxy. A revocation of a proxy does
not affect any matter on which a vote has been taken prior to the revocation.

VOTING OF PROXIES AND EXERCISE OF DISCRETION BY PROXYHOLDERS

If a poll (ballot) is taken and the instructions are certain, the
designated persons in the enclosed form of proxy will vote for or against, or
will withhold or abstain from voting, as the case may be, the shares in respect
of which they are appointed in accordance with the direction of the Shareholders
appointing them. IN THE ABSENCE OF SUCH DIRECTION, IT IS INTENDED THAT SUCH
SHARES WILL BE VOTED ON ANY POLL (BALLOT) FOR THE APPROVAL OF ALL OF THE MATTERS
IN THE ITEMS SET OUT IN THE FORM OF PROXY AND IN FAVOR OF EACH OF THE NOMINEES
NAMED THEREIN FOR ELECTION AS DIRECTORS. The accompanying form of proxy confers
discretionary authority upon the persons named therein with respect to
amendments or variations to any matters identified in the Notice of Meeting and
with respect to other matters which may properly come before the Meeting. At the
date of this Proxy Statement and Information Circular, management of the Company
knew of no such amendments, variations, or other matters to come before the
Meeting.

In the case of abstentions from or withholding of the voting of shares on
any matter, the shares which are the subject of the abstention or withholding
("non-voted shares") will be counted for determination of a quorum, but will not
be counted as affirmative or negative votes on the matter to be voted upon.
Under the rules of the New York Stock Exchange, brokers may not vote Common
shares held in street name on behalf of customers on a proposed resolution
without specific instructions from their customers. If a customer has not given
any instructions on the proposed resolutions, then the votes attaching to such
customer's Common shares are not counted for the determination of quorum. If a
customer has given instructions on some but not all of the proposed resolutions,
then the votes attaching to the customer's Common shares are counted for the
determination of quorum for all purposes. On any given resolution, where no
instructions are received from the customer, the votes attaching to such
customer's Common shares ("broker non-votes") will not be counted as affirmative
or negative votes on the matter to be voted upon.

2
<PAGE> 6

Participants in the Company's Employee Stock Bonus Plan and the Loewen
Group International, Inc. ("LGII") 401(k) Retirement Plan who receive this Proxy
Statement and Information Circular in such capacity will be receiving voting
instruction forms instead of a form of proxy.

VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

The authorized capital of the Company consists of 990,000,000 shares
divided into 750,000,000 Common shares without par value, 40,000,000 Class A
shares without par value (the "Class A shares") and 200,000,000 First Preferred
Shares without par value of which 1,000,000 shares are designated as 7.75%
Cumulative Redeemable Convertible First Preferred Shares, Series A ("Series A
Preferred Shares"), 425,000 shares are designated as Convertible First Preferred
Shares, Series B ("Series B Preferred Shares") and 8,800,000 shares are
designated as 6.00% Cumulative Redeemable Convertible First Preferred Shares,
Series C ("Series C Preferred Shares"). As of March 27, 1997, there were
8,800,000 Series C Preferred Shares outstanding. There are no Class A shares,
Series A Preferred Shares or Series B Preferred Shares outstanding. The Company
has no current intention to issue Class A shares or Series A Preferred Shares.
All of the Series B Preferred Shares have been allotted for issuance pursuant to
the Company's 1994 Management Equity Investment Plan. However, absent
extraordinary circumstances, no Series B Preferred Shares will be issued prior
to June 1999.

The record date for determining the names of Shareholders entitled to
receive the Notice of Meeting and to vote at the Meeting is the close of
business on March 27, 1997. As at the close of business on March 27, 1997, there
were 59,125,489 Common shares issued and outstanding, the registered holders of
which are entitled to vote at the Meeting. The holders of the issued and
outstanding Series C Preferred Shares are not entitled to vote at the Meeting.

Each Common share to be voted at the Meeting will entitle the holder
thereof to one vote on a poll (ballot).

On voting for Directors to be elected at the Meeting, the four nominees
receiving the highest number of votes will be elected.

Any resolution presented to the Meeting which calls for a vote for or
against an ordinary resolution requires, in order to pass, the affirmative vote
of a simple majority of the votes cast at the Meeting. Non-voted shares and
broker non-votes do not constitute votes cast at the Meeting and, accordingly,
will not have any effect on the resolutions presented to the Meeting. All
resolutions expected to be proposed at the Meeting are ordinary resolutions.

The Directors and officers of the Company are not aware of any person or
company that beneficially owns, directly or indirectly, or exercises control or
direction over, shares carrying more than five percent (5%) of the voting rights
attached to the Common shares of the Company as at the close of business on
March 27, 1997 other than:

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Raymond L. Loewen................................................ 9,088,128(1) 15.37
The Loewen Group Inc.
4126 Norland Avenue
Burnaby, British Columbia V5G 3S8
Denver Investment Advisors LLC................................... 3,806,276(2) 6.44
1225 Seventeenth Street, 26th Floor
Denver, Colorado 80202
</TABLE>

(1) The Common shares reported by Mr. R. Loewen include 2,254,838 shares owned
by his wife, Anne Loewen. Mrs. Loewen has sole voting and dispositive power
with respect to her shares, and Mr. R. Loewen disclaims beneficial ownership
of such shares. The Common shares reported by Mr. R. Loewen also include
239,200 shares owned by Loewen Limited Partnership ("LLP"), a limited
partnership in which Mr. R. Loewen is the sole general partner, 5,107,600
shares owned by Loewen Financial Inc. ("LFI"), a corporation of which Mr. R.
Loewen is the sole shareholder, and 600,000 shares owned by Loewen Financial
Limited Partnership ("LFLP"), a limited partnership in which LFI is the sole
general partner. LLP, LFI and LFLP have the same address as Mr. R. Loewen.
In the course of its business, LFI pledges its Common shares and Common
shares held by LFLP to various Canadian banks to secure certain credit
facilities. The number of Common shares pledged to the Canadian banks varies
from time to time based on the market value of the Common shares. If a
default on the credit facilities were to occur and if the Canadian banks
were to foreclose on the pledged shares, a change of control of the Company
could result, under certain circumstances. The Common shares reported by Mr.
R. Loewen also include 750,747 shares that he has the right to acquire
within 60 days of March 27, 1997 but does not actually own.

3
<PAGE> 7

(2) Information as to the amount and nature of beneficial ownership was obtained
from Amendment No. 3 to Schedule 13G filed by Denver Investment Advisors LLC
("DIA"), a registered investment adviser, with the Securities and Exchange
Commission on February 12, 1997. The Schedule 13G reflects that DIA had sole
voting power with respect to 2,488,976 Common shares, sole dispositive power
with respect to 3,805,276 Common shares and shared dispositive power with
respect to 1,000 Common shares. The Schedule 13G also indicates that various
persons other than DIA have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, Common shares.
None of such persons is identified by name in the Schedule 13G.

The following table shows: (i) the number of Common shares beneficially
owned by Directors, nominees, the Named Executive Officers (as defined herein)
identified in the Summary Compensation Table that appears on page 13 and all
Directors, nominees and executive officers as a group, as of March 27, 1997
(excluding shares which such persons have the right to acquire within 60 days of
March 27, 1997 but do not actually own), (ii) the number of Common shares which
such persons have the right to acquire within 60 days of March 27, 1997 but do
not actually own, and (iii) the total number of Common shares which such persons
own as of March 27, 1997 and have the right to acquire within 60 days of March
27, 1997. Except for Raymond L. Loewen who beneficially owns approximately
15.37% of the Common shares outstanding, no Director, nominee or executive
officer beneficially owns 1% or more of the Common shares outstanding. All of
the Directors, nominees and executive officers together beneficially own
approximately 16.28% of the Common shares outstanding.

<TABLE>
<CAPTION>
===============================================================================================================
NUMBER OF SHARES
BENEFICIALLY
OWNED, RIGHT TO ACQUIRE TOTAL NUMBER OF
EXCLUDING RIGHT TO SHARES WITHIN SHARES BENEFICIALLY
NAME ACQUIRE SHARES (1) 60 DAYS OWNED
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIRECTORS
- ---------------------------------------------------------------------------------------------------------------
The Honorable J. Carter Beese, Jr. 1,607 1,000 2,607
- ---------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp (2) 40,837 87,600 128,437
- ---------------------------------------------------------------------------------------------------------------
Peter S. Hyndman (2) 5 16,117 16,122
- ---------------------------------------------------------------------------------------------------------------
Albert S. Lineberry, Sr. (3) 6,854 4,718 11,572
- ---------------------------------------------------------------------------------------------------------------
Raymond L. Loewen (4) 8,337,381 750,747 9,088,128
- ---------------------------------------------------------------------------------------------------------------
Robert B. Lundgren 8,005 2,000 10,005
- ---------------------------------------------------------------------------------------------------------------
James D. McLennan 4,428 2,929 7,357
- ---------------------------------------------------------------------------------------------------------------
Ernest G. Penner 444 2,444 2,888
- ---------------------------------------------------------------------------------------------------------------
The Rt. Hon. John N. Turner, P.C., C.C., Q.C. 3,878 274 4,152
- ---------------------------------------------------------------------------------------------------------------
Paul Wagler 5 42,041 42,046
- ---------------------------------------------------------------------------------------------------------------
NOMINEES
- ---------------------------------------------------------------------------------------------------------------
Reverend Kenneth S. Bagnell 5,326 nil 5,326
- ---------------------------------------------------------------------------------------------------------------
Dr. Earl A. Grollman 8,718 2,718 11,436
- ---------------------------------------------------------------------------------------------------------------
Charles B. Loewen 8,000 2,000 10,000
- ---------------------------------------------------------------------------------------------------------------
Lawrence Miller (2) 11,505 155,960 167,465
- ---------------------------------------------------------------------------------------------------------------
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS OR
NOMINEES
- ---------------------------------------------------------------------------------------------------------------
Douglas J. McKinnon nil 23,500 23,500
- ---------------------------------------------------------------------------------------------------------------
William R. Shane (2) 11,005 134,535 145,540
- ---------------------------------------------------------------------------------------------------------------
ALL DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS AS 8,485,473 1,359,605 9,845,078
A GROUP
(33 persons) (2)(3)(4)(5)
===============================================================================================================
</TABLE>

(1) In some instances voting and dispositive power is shared with the spouse of
the identified person.

(Footnotes continue on following page)

4
<PAGE> 8

(2) Certain executive officers participate in either the LGII 401(k) Retirement
Plan (for United States employees) or the Retirement Savings Plan for the
Employees of The Loewen Group Inc. (for Canadian employees). The foregoing
table does not include interests in funds offered as investment alternatives
under such retirement plans that invest in Common shares.

(3) Includes 295 shares owned by Mr. Lineberry's wife. Mrs. Lineberry has sole
voting and dispositive power with respect to her shares, and Mr. Lineberry
disclaims beneficial ownership of such shares. Also includes 4,800 shares
beneficially owned by Gaines Corporation, of which Mr. Lineberry is the
controlling shareholder.

(4) Includes 2,254,838 shares owned by Mr. R. Loewen's wife, Anne Loewen. Mrs.
Loewen has sole voting and dispositive power with respect to her shares, and
Mr. R. Loewen disclaims beneficial ownership of such shares. The Common
shares reported by Mr. R. Loewen also include 239,200 shares owned by LLP,
5,107,600 shares owned by LFI, and 600,000 shares owned by LFLP. In the
course of its business, LFI pledges its Common shares and Common shares held
by LFLP to various Canadian banks to secure certain credit facilities. The
number of Common shares pledged to the Canadian banks varies from time to
time based on the market value of the Common shares. If a default on the
credit facilities were to occur and if the Canadian banks were to foreclose
on the pledged shares, a change of control of the Company could result,
under certain circumstances.

(5) Includes 300 shares owned by an age of minority son of one executive officer
as to which such executive officer has voting and dispositive power; 300
shares owned by the wife of one executive officer as to which she has sole
voting and dispositive power and as to which such executive officer
disclaims beneficial ownership; and five shares owned by the wife of one
executive officer as to which she has sole voting and dispositive power and
as to which such executive officer disclaims beneficial ownership.

ELECTION OF DIRECTORS

INFORMATION REGARDING DIRECTORS AND NOMINEES

The Board of Directors of the Company presently consists of 14 members.
Four Directors are to be elected at the Meeting, each for a term expiring at the
fourth annual general meeting of Shareholders after the Meeting (expected to be
held in 2001). Lawrence Miller was appointed a Director by the Directors on
September 17, 1996 to fill the casual vacancy left by the resignation of A.M.
Bruce Watson. As to the 10 incumbent Directors continuing as Directors through
and after the Meeting, the terms of office expire as to three of such Directors
at each of the annual general meetings expected to be held in 1998 and 2000 and
as to four of such Directors at the annual general meeting expected to be held
in 1999.

As required by the Company Act of British Columbia, advance notice of the
Meeting was published in the Vancouver Sun newspaper in Vancouver, British
Columbia, Canada on March 19, 1997.

The following table and the notes thereto state the names of all the
persons continuing as Directors through and after the Meeting and proposed to be
nominated for election as Directors, the municipalities and countries in which
they are presently resident, their ages, all positions and offices with the
Company now held by them, their principal occupations or employment within the
five preceding years and the dates upon which they became Directors of the
Company. Each of the continuing Directors and proposed nominees whose name is
set forth below has consented in writing to act as a Director of the Company.

CONTINUING DIRECTORS

PRINCIPAL DATE BECAME
NAME, MUNICIPALITY AND AGE AS AT OCCUPATION DIRECTOR
COUNTRY OF PRESENT MARCH 27, IF DIFFERENT FROM OF THE COMPANY/DATE
RESIDENCE 1997 OFFICE HELD OFFICE HELD (1)(2) OF EXPIRY OF TERM (3)
- ------------------------- --------- ------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
THE HONORABLE JOHN CARTER
BEESE, JR................ 40 Director Chairman, Alex. May 17, 1995/
Owings Mills, Maryland Brown International Annual General
U.S.A. (investment bank) Meeting in 1998

TIMOTHY ROBERT
HOGENKAMP................ 51 President and Chief March 30, 1989/
Cincinnati, Ohio Operating Officer Annual General
U.S.A. and Director Meeting in 2000
</TABLE>

5
<PAGE> 9

PETER STEWART HYNDMAN.... 55 Vice-President, Law June 16, 1986/
Vancouver, British and Corporate Annual General
Columbia Secretary and Meeting in 1998
Canada Director

ALBERT SHULER LINEBERRY, SR 78 Director Chairman of the May 9, 1991/
Greensboro, North Board, Gaines Annual General
Carolina Corporation Meeting in 1999
U.S.A. (property
development
company)

RAYMOND LOEWEN LOEWEN.... 56 Chairman of the December 27, 1985/
Burnaby, British Columbia Board and Chief Annual General
Canada Executive Officer Meeting in 2000
and Director

ROBERT BRUCE LUNDGREN.... 52 Director Retired June 16, 1986/
Langley, British Columbia Annual General
Canada Meeting in 2000

JAMES DUDLEY MCLENNAN.... 60 Director President, McLennan June 1, 1993/
Park Ridge, Illinois Company (realty Annual General
U.S.A. company) Meeting in 1998

ERNEST GLENN PENNER...... 60 Director President, Penn-Co February 26, 1987/
Steinbach, Manitoba Construction Ltd. Annual General
Canada (property Meeting in 1999
development
company)
THE RIGHT HONOURABLE JOHN
NAPIER TURNER, P.C.,
C.C., Q.C................ 67 Director Partner, Miller June 1, 1992/
Toronto, Ontario Thomson, Barristers Annual General
Canada and Solicitors Meeting in 1999

PAUL WAGLER.............. 50 Senior March 29, 1995/
Vancouver, British Vice-President, Annual General
Columbia Finance and Chief Meeting in 1999
Canada Financial Officer
and Director
</TABLE>

6
<PAGE> 10

NOMINEES

REVEREND KENNETH SIDNEY
BAGNELL.................. 62 Director Author and May 18, 1989/
Toronto, Ontario Clergyman Annual General
Canada Meeting in 1997

DR. EARL ALAN GROLLMAN... 62 Director Author and Lecturer June 16, 1986/
Belmont, Massachusetts Annual General
U.S.A. Meeting in 1997

CHARLES BARNARD LOEWEN... 64 Director President, May 24, 1990/
Toronto, Ontario Corporate Services Annual General
Canada International Inc. Meeting in 1997
(international
investment and
consulting company)

LAWRENCE MILLER.......... 48 Executive Vice- September 17, 1996/
Ivyland, Pennsylvania President, Annual General
U.S.A. Operations and Meeting in 1997
Director
</TABLE>

(1) All the continuing Directors of the Company and the proposed nominees have
held their present principal occupations noted opposite their respective
names throughout the last five years with the following exceptions: The
Honorable J. Carter Beese, Jr., who prior to November 1996 was
Vice-Chairman, Alex. Brown International, Baltimore, Maryland (investment
bank) and prior to November 1994 was a Commissioner of the Securities and
Exchange Commission; Timothy R. Hogenkamp, who prior to September 15, 1993
was Senior Vice-President, Operations of the Company and prior to March 23,
1993 was Vice-President, Operations of the Company; Peter S. Hyndman, who
prior to March 22, 1995 was Corporate Secretary of the Company and prior to
November 1, 1994 was the Senior Vice-President, Law and General Counsel and
Corporate Secretary of the Company; Albert S. Lineberry, Sr., who prior to
January 1, 1993 was a Representative in the North Carolina General Assembly;
Raymond L. Loewen, who prior to September 15, 1993 was President and Chief
Executive Officer of the Company; Robert B. Lundgren, who prior to September
15, 1993 was Senior Vice-President, Finance and Corporate Development of the
Company; The Right Honourable John N. Turner, P.C., C.C., Q.C., who from
1984 to 1993 was the Member of Parliament for Vancouver Quadra; Paul Wagler,
who prior to March 20, 1995 was a Senior Vice-President, ABN AMRO Bank
Canada, Vancouver, British Columbia, Canada; Charles B. Loewen, who prior to
September 18, 1995 was Vice-Chairman, Loewen, Ondaatje, McCutcheon Limited,
Toronto, Ontario, Canada (investment dealer), prior to December 1992 was
Chairman and Director of Loewen, Ondaatje, McCutcheon & Company Limited,
Toronto, Ontario, Canada (investment dealer) and prior to December 1992 was
Director, prior to July 1, 1992 was Chairman and Director and prior to May
15, 1992 was Deputy Chairman and Director of Loewen, Ondaatje, McCutcheon
Inc., Toronto, Ontario, Canada (holding company for investment dealers); and
Lawrence Miller, who prior to July 30, 1996 was President, Cemetery and
Combination Division of the Company and prior to March 17, 1995 was
President, Osiris Holding Corporation, Philadelphia, Pennsylvania (a
cemetery holding company acquired by the Company in March 1995).

(2) The Honorable J. Carter Beese, Jr. also serves as a director of Renaissance
Hotel Group N.V. Peter S. Hyndman also serves as a director of Molnar
Capital Corporation (a real estate development company) and Arctic Group
Inc. (a company engaged in the ice-making business). James D. McLennan also
serves as a director of ServiceMaster Limited Partnership (a diversified
services company). Lawrence Miller also serves as a director of Rose Hills
Company (a company that provides funeral and cemetery services). The Right
Honourable John N. Turner, P.C., C.C., Q.C. also serves as a director of
Noranda Forest Inc. (a forestry company), McDermott International, Inc. (an
energy service company), E-L Financial Corporation (a holding company for
financial and insurance companies) and Triple Crown Electronics Inc. (an
electronics company).

(3) All expiry dates in this column contemplate the holding of an annual general
meeting in the year in question. It is possible that the annual general
meeting date could be extended into a following year and in that case the
terms of office would extend to the date of holding the annual general
meeting.

7
<PAGE> 11

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established a standing Audit Committee, a
standing Compensation Committee and a standing Corporate Governance Committee
(each, a "Committee"). The Board does not have an Executive Committee or a
Nominating Committee.

The Audit Committee receives and considers the reports of the firm of
independent auditors appointed by the Shareholders and approves the consolidated
financial statements of the Company. This Committee also oversees the Company's
internal auditing and compliance with the Company's environmental policies and
environmental laws. The members of this Committee are Messrs. Charles B. Loewen
(Chairman), The Honorable J. Carter Beese, Jr., Robert B. Lundgren and The Right
Honourable John N. Turner, P.C., C.C., Q.C., all of whom are non-employee
Directors. The Audit Committee held eight meetings during 1996.

The Corporate Governance Committee considers and makes recommendations
concerning the composition and functioning of the Board of Directors and
committees thereof and generally all matters pertaining to the organization and
management of the Company. The Corporate Governance Committee held five meetings
during 1996. For particulars of the functions and composition of the Corporate
Governance Committee, see CORPORATE GOVERNANCE below.

For particulars of the functions and composition of the Compensation
Committee, see EXECUTIVE COMPENSATION -- Composition of the Compensation
Committee and EXECUTIVE COMPENSATION -- Report on Executive Compensation below.

MEETINGS; DIRECTOR COMPENSATION AND OTHER PAYMENTS

The Board of Directors held 27 meetings in 1996. The aggregate average
attendance at meetings of the Board of Directors and its permanent standing
committees was 96%. With the exception of Mr. Ernest G. Penner, each Director
attended at least 75% of the total number of meetings of the Board of Directors
and the respective committees on which he served.

Each outside Director was entitled to an annual retainer of $23,500 for
1996. In addition, each outside Director was entitled to $1,500 for attendance
in person at a meeting (Board or committee of the Board), $250 for attendance by
telephone at a meeting (Board or committee of the Board), $5,000 per annum for
being a member of a committee of the Board, and $5,000 per annum for chairing a
committee of the Board. Fees were pro rated for service periods of less than a
complete year. Directors are reimbursed their travel expenses for attending
meetings of the Board and its committees.

Pursuant to the Company's 1994 Outside Director Compensation Plan (amended
and restated as at January 9, 1997) (the "Outside Director Plan"), Directors who
are not officers or employees of the Company or any of its Subsidiaries
("outside Directors") may elect to receive all or part of their retainer and
meeting fees in Common shares. In addition, the Outside Director Plan provides
that each outside Director will be granted options to purchase Common shares.
The specific number of Common shares will be determined by the full Board of
Directors prior to June 1 of each year. For 1996, each outside Director received
an option to purchase 3,500 Common shares, and each outside Director who also
served on a Committee of the Board of Directors received an option to purchase
1,000 Common shares for his service on each such Committee. Also pursuant to the
Outside Director Plan, when an outside Director is first appointed to the Board
of Directors, he or she is granted an option to purchase a number of Common
shares, as determined by the Board of Directors at the time of his or her
appointment. The exercise price for all options granted pursuant to the Outside
Director Plan is the fair market value of the underlying Common shares,
specifically the weighted average of the Common share trading price for the five
trading days preceding the grant date.

A consultant's contract between Albert S. Lineberry, Sr. and a Subsidiary
(the "Lineberry Contract"), which was entered into in connection with the
acquisition of certain funeral homes from a corporation controlled by Mr.
Lineberry, and which was renewed for a term of five years effective November 14,
1995, provides for his nomination as a Director of the Company. No salary is
paid to Mr. Lineberry under the Lineberry Contract. However, the Lineberry
Contract provides for the payment of certain benefits for Mr. Lineberry. During
1996, payments made on behalf of Mr. Lineberry for such benefits totalled
$30,856.

In July 1994, the Company entered into a consulting agreement with Charles
B. Loewen and a corporation of which Mr. C. Loewen is an employee, officer and
director (the "C.B. Loewen Agreement"). Under the terms of the

8
<PAGE> 12

C.B. Loewen Agreement, Mr. C. Loewen agrees to provide, from time to time as
requested, advice on financial planning, financial presentation, Board of
Director and other matters relating to compensation, corporate governance, audit
and general corporate policy, in exchange for payments to be made for such
services, which payments are, in each case, in lieu of payments to him
personally of Directors' retainer and meeting fees. The 1996 payment was
$82,750.

Dr. Earl A. Grollman, through EAG, Inc. (a corporation owned by Dr.
Grollman), was paid $16,500 by a Subsidiary in 1996 by way of honoraria for
presentations to managers and employees of the Company, as well as other
industry groups, made at the request of the Company.

See CERTAIN TRANSACTIONS for a description of certain transactions between
entities related to certain Directors and the Company.

Based on information furnished by the Directors and nominees individually,
Raymond L. Loewen, together with his associates and affiliates, is the only
Director or nominee who beneficially owns, directly or indirectly, or exercises
control or direction over shares of the Company carrying 10% or more of the
voting rights attaching to shares of the Company.

CORPORATE GOVERNANCE

The Toronto Stock Exchange Committee on Corporate Governance in Canada in
December, 1994 issued a series of proposed guidelines for effective corporate
governance (the "TSE Report"). The guidelines address matters such as the
constitution and independence of corporate boards, the functions to be performed
by boards and their committees and the effectiveness and education of board
members. To implement these guidelines, the TSE Report contained a
recommendation to The Toronto Stock Exchange (the "TSE") that the TSE adopt as a
listing requirement disclosure by each listed corporation in its information
circular or annual report of its approach to corporate governance with reference
to the proposed guidelines. On February 23, 1995 the Board of Governors of the
TSE adopted the recommendation, subject to regulatory approval by the Ontario
Securities Commission (the "OSC"). On May 3, 1995 the OSC gave regulatory
approval. This disclosure is required annually, commencing with corporations
with year ends of June 30, 1995. The Montreal Exchange (the "ME") adopted a
similar policy on July 7, 1995 (the "ME Policy"). The following discussion is
provided in compliance with the listing requirements of the TSE and the Montreal
Exchange.

The Company's Board of Directors and senior management consider good
corporate governance to be central to the effective and efficient operation of
the Company. Accordingly, on May 17, 1995 the Board of Directors established an
informal task force to consider the TSE Report and matters arising from it, and
to report back to the Board upon completion of its consideration. As a result of
this review, a Corporate Governance Committee consisting of The Right Honourable
John N. Turner, P.C., C.C., Q.C. (Chairman), The Honorable J. Carter Beese, Jr.,
Charles B. Loewen and James D. McLennan was established on December 1, 1995 as a
permanent standing committee of the Board. Additionally, the two previously
existing permanent standing committees of the Board (the Audit Committee and the
Compensation Committee) each asked external legal counsel to review the TSE
Report and the structure and operations of the committees to ensure that the
existing structure and operations were in alignment with the recommendations of
the TSE Report. No changes in the structure or operations of these two
committees were required; both committees fully align with the guidelines.

The TSE Report and the ME Policy contain, by way of recommendation,
fourteen guidelines with respect to systems of corporate governance generally.
The Company is fully or substantially aligned with nearly all of these
guidelines. As the TSE Report stresses, the guidelines are not requirements, but
recommendations; flexibility in approaches to corporate governance practices is
particularly important, especially in the case of a company led by an
entrepreneur which may have to develop its own system of corporate governance,
reflecting its own circumstances, in order to most effectively pursue
shareholder value. The Company believes that in the case of some of the
recommended guidelines, the alternative approach of the Company is preferable
given the unique nature of the Company, its entrepreneurial leadership, and the
continued objective to maximize shareholder value.

9
<PAGE> 13

The following table sets forth the 14 guidelines from the TSE Report and
the ME Policy, together with a summary of the position of the Company with
respect to each guideline.

<TABLE>
<CAPTION>
DOES THE
COMPANY ALIGN
TSE REPORT AND ME POLICY WITH THE
CORPORATE GOVERNANCE GUIDELINES GUIDELINES? COMMENTS
- ------------------------------------------- --------------- -------------------------------------
<S> <C> <C> <C>
1. Board should explicitly assume
responsibility for stewardship of the
corporation, and specifically for:
- adoption of a strategic planning Yes The Corporate Governance Committee
process will review strategic issues and
direct the Board's attention to
specified issues at meetings through
the year.
- identification of principal risks, Yes The Audit Committee and the Board
and implementing risk management periodically assess the Company's
systems principal risks. The Company has an
internal Risk Management Department.
Senior management and the Audit
Committee regularly review the
Company's system of internal
controls.
- succession planning and monitoring Yes As a matter of policy, the Board
senior management annually reviews the Succession Plan
for the Company. The Compensation
Committee monitors the performance of
the CEO and senior management. The
compensation of senior management is
largely performance linked.
- communications policy Yes The Company has a Communications
Department headed by a
Vice-President, Communications in
addition to the investor relations
function of the Finance Department.
The CEO is involved in the Company's
communications policy with respect to
shareholders, lenders, market
analysts, employees, the industry,
governments and the public.
- integrity of internal control and Yes Each of the Audit Committee and
management information systems senior management regularly review
the integrity of these systems,
consulting with the Company's
auditors as appropriate.
2. Majority of directors should be Yes Of the 14 Board members, a majority
"unrelated" (independent of (nine) are unrelated. The remaining
management and free from conflicting five are automatically deemed related
interest) by being members of senior
management.
3. Disclosure for each director whether Yes In deciding whether a particular
he or she is related, and how that Director is "related" or "unrelated",
conclusion was reached the Board of Directors examined the
factual circumstances of each
Director and considered them in the
context of a number of relevant
factors. In this regard, the
definitions in the TSE Report and the
ME Policy are broad and, in some
cases, difficult to apply.
</TABLE>

10
<PAGE> 14

<TABLE>
<CAPTION>
DOES THE
COMPANY ALIGN
TSE REPORT AND ME POLICY WITH THE
CORPORATE GOVERNANCE GUIDELINES GUIDELINES? COMMENTS
- ------------------------------------------- --------------- -------------------------------------
<S> <C> <C> <C>
4. - Appoint a committee responsible for No An informal consultation process is
appointment/assessment of directors used with respect to both the
appointment and assessment of
Directors. This is deemed to be more
effective than the use of a
formalized committee.
- Composed exclusively of non- Not Applicable Not applicable by virtue of the
management directors, the majority immediately preceding paragraph.
of whom are unrelated However, the informal consultation
process described above does involve
not only unrelated, non-management
Directors but also persons completely
arm's-length from the Company.
5. Implement a process for assessing the Yes The process is one of informal review
effectiveness of the board, its and consultation. As well, Directors
committees and individual directors periodically discuss the
effectiveness of Board operations as
part of Board or Committee meetings.
6. Provide orientation and education Yes Prior to official appointment, new
programs for new directors Directors will be provided
considerable education and
orientation about the Company and the
industry.
7. Consider reducing size of board, with Not Applicable The Board consists of 14 members.
a view to improving effectiveness This is already below the range of 20
or more which the TSE Report feels
can lead to ineffectiveness, and is
within the range of 10-16 which the
TSE Report suggests is the most
effective range.
8. Review compensation of directors in Yes The Compensation Committee reviews
light of risks and responsibilities this item on a periodic basis.
9. - Committees should generally be Yes The Board committees are composed
composed of non-management solely of non-management Directors.
directors
- Majority of committee members Yes
should be unrelated
10. Appoint a committee responsible for Yes The Board has appointed a specific
approach to corporate governance committee to be responsible for the
issues Company's approach to corporate
governance issues.
11. - Define limits to management's
responsibilities by developing
mandates for:
(i) the board No There can be no specific or narrowed
mandate for the Board since the Board
has an unfettered general mandate and
general legal responsibility to
oversee the management of the Company
and to represent the Shareholders'
interests.
</TABLE>

11
<PAGE> 15

12
<PAGE> 16

EXECUTIVE COMPENSATION

The following table sets forth compensation earned during the last three
fiscal years by the Chief Executive Officer and the Company's four most highly
compensated executive officers other than the Chief Executive Officer who served
as executive officers at the end of 1996 (collectively, the "Named Executive
Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION (1)
---------------------------------------------------------
AWARDS
-----------------
OTHER ANNUAL SECURITIES UNDER ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS GRANTED COMPENSATION
POSITION YEAR ($) ($) ($) (2) (#) (3) ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Raymond L. Loewen 1996 1(4) --(5) 16,445(6) 200,747(4)(5) 20,771(7)
Chairman of the 1995 546,528 --(4) -- nil 5,283
Board and Chief 1994 466,794 439,335 -- 2,000,000(8) 5,309
Executive Officer

- ------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp 1996 325,904 --(9) -- 40,600(9) 63,723(10)
President and 1995 269,230 --(9) -- nil 59,678
Chief Operating 1994 258,750 187,500 -- 300,000(8) 59,379
Officer
- ------------------------------------------------------------------------------------------------------------
Lawrence Miller 1996 87,258(12) --(12) 13,200(13) 83,960(12) 1,374(14)
Executive 1995 153,952 --(12) -- 180,000 1,106
Vice-President, 1994 n/a n/a n/a n/a n/a
Operations(11)
- ------------------------------------------------------------------------------------------------------------
William R. Shane 1996 101,923(16) --(16) 13,200(17) 62,535(16) 1,899(18)
Senior 1995 157,798 --(16) -- 180,000 1,106
Vice-President 1994 n/a n/a n/a n/a n/a
and Chief Financial
Officer, Cemetery
and Combination
Division(15)
- ------------------------------------------------------------------------------------------------------------
Douglas J. McKinnon 1996 207,938 --(20) -- 63,500(20) --
Executive 1995 n/a n/a n/a n/a n/a
Vice-President 1994 n/a n/a n/a n/a n/a
(19)
============================================================================================================
</TABLE>

(1) The Company has not granted any restricted shares or restricted share
units, stock appreciation rights or long-term incentive plan payouts to the
Named Executive Officers.

(2) In accordance with SEC rules, the value of perquisites and other personal
benefits, securities and property for each Named Executive Officer that
does not exceed the lesser of $50,000 and 10% of the total of the annual
salary and bonus is not reported herein.

(3) For the year 1994 in the cases of Messrs. R. Loewen and Hogenkamp, the
securities are Common shares of the Company underlying the options and
certain purchase rights granted under the 1994 Management Equity Investment
Plan, which is described in the Report on Executive Compensation below.
Absent extraordinary circumstances, such options and purchase rights do not
begin to become exercisable until June 1999. All other grants were made
under the Company's stock option plans.

(4) In lieu of substantially all of his salary for 1996 ($739,999), Mr. R.
Loewen was granted in August 1996 an option to purchase 145,600 Common
shares. Also in August 1996, Mr. R. Loewen was granted an option to
purchase 55,147 Common shares in lieu of a cash bonus for 1995 ($275,028).

(5) For information pertaining to a proposed grant to Mr. R. Loewen of an
option to purchase at least 250,000 Common shares (representing 74,000
Common shares in lieu of his 1996 cash bonus and 176,000 Common shares in
respect of his 1996 long-term incentive), see -- Report on Executive
Compensation, below.

(6) Consists solely of taxable auto benefits.

(7) Consists of life insurance premiums paid by the Company ($2,914), tax
services ($3,667) and imputed interest on a non-interest-bearing loan
($14,190).

(Footnotes continue on following page)

13
<PAGE> 17

(8) Comprised of grants under the 1994 Management Equity Investment Plan. Mr.
Loewen was granted an option to purchase 500,000 Common shares and certain
purchase rights in respect of an additional 1,500,000 Common shares. Mr.
Hogenkamp was granted an option to purchase 300,000 Common shares.

(9) In August 1996, Mr. Hogenkamp was granted, in lieu of a cash bonus for 1996
($196,000), an option to purchase 19,600 Common shares and, in lieu of a
cash bonus for 1995 ($105,000), an option to purchase 21,000 Common shares.

(10) Consists of life insurance premiums paid by the Company ($576), a matching
contribution to the LGII 401(k) Retirement Plan ($6,697), tax services
($8,625), forgiveness of indebtedness ($42,500) and imputed interest on a
non-interest-bearing loan ($5,325).

(11) Mr. Miller commenced employment with the Company on March 17, 1995.

(12) In lieu of a portion of his salary for 1996 ($238,300), Mr. Miller was
granted in August 1996 an option to purchase 47,660 Common shares. Also in
August 1996, Mr. Miller was granted, in lieu of a cash bonus for 1996
($183,000), an option to purchase 18,300 Common shares and, in lieu of a
cash bonus for 1995 ($45,000), an option to purchase 9,000 Common shares.
In March 1996, Mr. Miller was granted an option to purchase 9,000 Common
shares for the achievement of certain performance-related objectives
identified in his employment contract.

(13) Consists solely of taxable auto benefits.

(14) Consists of a taxable benefit for the Employee Stock Bonus Plan ($90) and a
matching contribution to the LGII 401(k) Retirement Plan ($1,284).

(15) Mr. Shane commenced employment with the Company on March 17, 1995.

(16) In lieu of a portion of his salary for 1996 ($170,800), Mr. Shane was
granted in August 1996 an option to purchase 34,160 Common shares. Also in
August 1996, Mr. Shane was granted, in lieu of a cash bonus for 1996
($118,750), an option to purchase 11,875 Common shares and, in lieu of a
cash bonus for 1995 ($37,500), an option to purchase 7,500 Common shares.
In March 1996, Mr. Shane was granted an option to purchase 9,000 Common
shares for the achievement of certain performance-related objectives
identified in his employment contract.

(17) Consists solely of taxable auto benefits.

(18) Consists of life insurance premiums paid by the Company ($576) and a
matching contribution to the LGII 401(k) Retirement Plan ($1,323).

(19) Mr. McKinnon commenced employment with the Company on April 1, 1996.

(20) In August 1996, Mr. McKinnon was granted, in lieu of a cash bonus for 1996
($134,653), an option to purchase 13,500 Common shares. In May 1996, Mr.
McKinnon was granted an option to purchase 50,000 Common shares related to
the commencement of his employment with the Company.

The following table sets forth individual grants of stock options by the
Company during the last fiscal year to the Named Executive Officers.

OPTION GRANTS DURING THE
YEAR ENDED DECEMBER 31, 1996

POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL MARKET VALUE VALUE AT ASSUMED
SECURITIES OPTIONS OF SECURITIES ANNUAL RATES OF SHARE
UNDERLYING GRANTED TO UNDERLYING PRICE APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OR OPTIONS ON THE OPTION TERM
GRANTED IN FISCAL BASE PRICE DATE OF GRANT EXPIRATION ---------------------------
NAME (#) YEAR ($/SECURITY) ($/SECURITY) DATE 5% ($) 10% ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Raymond L. 200,747(1) 10.03 Cdn. 36.85 Cdn. 36.85 August 1, 2006 Cdn. 4,652,237 Cdn. 11,789,733
Loewen
- -----------------------------------------------------------------------------------------------------------------------------
Timothy R. 40,600(1) 2.03 US 26.8125 US 26.8125 August 1, 2006 US 684,601 US 1,734,925
Hogenkamp
- -----------------------------------------------------------------------------------------------------------------------------
Lawrence 9,000 0.45 US 28.63 US 28.625 March 25, 2006 US 162,018 US 410,587
Miller 74,960(1) 3.75 US 26.8125 US 26.8125 August 1, 2006 US 1,263,985 US 3,203,201
- -----------------------------------------------------------------------------------------------------------------------------
William R. 9,000 0.45 US 28.63 US 28.625 March 25, 2006 US 162,018 US 410,587
Shane 53,535(1) 2.67 US 26.8125 US 26.8125 August 1, 2006 US 902,713 US 2,287,665
- -----------------------------------------------------------------------------------------------------------------------------
Douglas J. 50,000 2.50 Cdn. 40.25 Cdn. 40.25 May 16, 2006 Cdn. 1,265,643 Cdn. 3,207,401
McKinnon 13,500(1) 0.67 Cdn. 36.85 Cdn. 36.85 August 1, 2006 Cdn. 312,857 Cdn. 792,845
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Options granted in lieu of salary for 1996, in the cases of Messrs. R.
Loewen, Miller and Shane and in lieu of cash bonuses in the cases of each of
the Named Executive Officers. See -- Report on Executive Compensation.

14
<PAGE> 18

The following table sets forth certain information regarding options
exercised during the year ended December 31, 1996 and options held by the Named
Executive Officers as at December 31, 1996.

AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1996
AND FISCAL YEAR-END OPTION VALUES

(1) The closing price of the Common shares on December 31, 1996 on the TSE was
Cdn. $53.50 and on the New York Stock Exchange was U.S. $39.125. These
columns set forth the market value less the exercise price as at such date.

(2) Comprised of grants under the 1994 Management Equity Investment Plan, which
is described in the Report on Executive Compensation below, to Mr. R. Loewen
of an option to purchase 500,000 Common shares and of certain purchase
rights in respect of an additional 1,500,000 Common shares.

(3) Comprised of a grant under the 1994 Management Equity Investment Plan to Mr.
Hogenkamp of an option to purchase 300,000 Common shares.

PENSION BENEFITS

The Company does not have any defined benefit or actuarial pension plans.
The Company does have a defined contribution pension plan and, in Canada, a
group registered retirement savings plan.

The estimated aggregate cost to the Company for the year ended December 31,
1996 of pension benefits under the Company's group registered retirement savings
plan for senior officers was $28,703.

The estimated aggregate cost to the Company for the year ended December 31,
1996 of pension benefits under the Company's pension plan applicable to United
States-based senior officers of the Company was $83,752. Annual discrimination
testing (that is to say, the testing of the entitlement of more highly
compensated employees against the entitlement of employees with lower
compensation) gave rise to adjustments in respect of two United States-based
senior officers for 1996 in the aggregate amount of $3,487. Refunded sums
represent compensation to such officers and were included in the amounts set out
above in the Summary Compensation Table (as to the portions paid to Named
Executive Officers).

EMPLOYMENT CONTRACTS

The following Named Executive Officers have written employment agreements
with the Company: Timothy R. Hogenkamp, Lawrence Miller, William R. Shane and
Douglas J. McKinnon. The agreements outline duties and responsibilities, initial
compensation and related benefits, including bonuses and initial stock option
grants. The agreements for Messrs. Hogenkamp and McKinnon do not specify a term
of years and are terminable by the Company upon six months' notice. The
agreements for Mr. Miller and Mr. Shane specify a maximum term of five years
commencing in March 1995, but are terminable early by the Company upon 90 days'
notice.

In October 1996, the Company entered into written agreements with each of
Messrs. R. Loewen, Hogenkamp, Miller, Shane and McKinnon fully indemnifying them
in their capacities as officers and, if applicable, directors of the Company.
Also in October 1996, Messrs. Hogenkamp, Miller and McKinnon entered into
severance agreements with the Company and Mr. Shane entered into a similar
severance agreement with a Subsidiary of the Company.

15
<PAGE> 19

All of the severance agreements provide for the payment of certain retention
bonuses and severance benefits in the event of a change in control of the
Company.

Each of the participants in the 1994 Management Equity Investment Plan,
including Messrs. R. Loewen and Hogenkamp, has entered into an Executive
Agreement with the Company or a Subsidiary (the "Executive Agreement"). The
Executive Agreement includes certain obligations of a participant with respect
to his conduct during the term of employment, and includes a confidentiality
agreement and a covenant not to compete that is effective for two years
immediately following the date of termination of employment. The Executive
Agreement does not include any compensatory provisions.

COMPOSITION OF THE COMPENSATION COMMITTEE

The Chairman of the Compensation Committee is Charles B. Loewen, an outside
Director of the Company. Charles B. Loewen is not related to Raymond L. Loewen
or Anne Loewen. The other members of the Compensation Committee for the fiscal
year ended December 31, 1996 were James D. McLennan, Ernest G. Penner and The
Right Honourable John N. Turner, P.C., C.C., Q.C. The Compensation Committee met
nine times in 1996 and also passed a written consent resolution dated as of
August 1, 1996. All members are outside Directors of the Company.

REPORT ON EXECUTIVE COMPENSATION

The Company's executive compensation program is administered by the
Compensation Committee. All of the members of the Compensation Committee are
outside Directors. The Compensation Committee reviews and recommends, for
approval by the Board of Directors, the Company's executive compensation
policies and the compensation to be paid to the executive officers, with the
following exception. Awards made to executive officers pursuant to the Company's
stock plans are generally made by the Compensation Committee (and approval of
the full Board of Directors will not be sought) in order to qualify such awards
for an exemption from certain "short-swing" profits liability rules under the
United States securities laws and to provide for the deductibility of stock-
based compensation under United States income tax laws. See "Policy with Respect
to Deductibility of Compensation", below.

Compensation Philosophy

The Company's executive compensation program is designed to provide
incentives for executives to enhance shareholder value, to successfully
implement the Company's business plan and to improve corporate and individual
performance.

The program, which is based on a pay-for-performance philosophy, consists
of three components: base salary, an annual incentive (bonus) typically paid in
cash and long-term equity-based incentives.

The program's overall objectives are:

1. To align the interests of management with those of shareholders;

2. To integrate compensation with the Company's business objectives;

3. To attract and retain qualified executives critical to the success of
the Company;

4. To provide fair and competitive compensation packages; and

5. To reward both corporate and individual performance.

The Compensation Committee also considers the relationship between
aggregate executive remuneration and revenues. The Compensation Committee
expects that, as the Company continues to grow, aggregate remuneration for
executive officers will increase. However, the Compensation Committee believes
that it is appropriate to set levels of executive remuneration such that
aggregate executive remuneration, as a percentage of revenues and assets, is
stable or decreases as the Company grows.

Base Salary

In general, an executive's base salary is determined by a subjective
assessment of his or her responsibilities and sustained performance.

16
<PAGE> 20

In 1995, the Compensation Committee obtained research data from Frederic W.
Cook & Co., Inc. ("Frederic W. Cook") and Smith Barney Inc. with respect to
compensation levels for the chief executive officers and for the top five
executives in relation to the compensation of the chief executive officers,
based on surveys of approximately 68 reasonably comparable companies. The
studies provided analyses of compensation based on a series of different
factors, including growth in equity, revenue and income and number of employees.
The Compensation Committee determined that base salaries generally would be set
in approximate relation to a benchmark percentile of salaries paid by the
surveyed companies.

In January 1996, the Compensation Committee determined that the 75th
percentile of salaries paid by the surveyed companies would be an appropriate
benchmark to establish base salaries.

In the spring of 1996, senior management recommended that it would be
appropriate to undertake an updated review of alternative incentive-based
executive compensation structures. In connection with this effort, the
Compensation Committee commissioned KPMG, the Company's auditors, to provide a
report on a wide range of executive and director compensation issues (the "KPMG
Report"). The KPMG Report also provided updated research on base salaries paid
to the chief executive officer of 27 publicly-traded high-growth companies that
had sales or revenues equal to or up to three times the revenues of the Company
and made recommendations relating to the Chief Executive Officer's base salary.
See "Chief Executive Officer's Compensation."

Annual Bonuses

In 1995, the Company's executive officers were eligible for annual cash
bonuses under a program that awarded bonuses based on attainment of specified
performance levels related to the Company's achievement of targeted net earnings
per share. In accordance with the bonus program then in effect, the Compensation
Committee determined in early 1995 that (i) no bonus would be paid if the
increase in fully diluted earnings per share ("EPS") from 1994 to 1995 were less
than 20%, (ii) a bonus (which varied from individual to individual, but not to
exceed 50% of base salary) would be paid if the increase in EPS from 1994 to
1995 were between 20% and 25% (the "Tier 1 Bonus"), and (iii) a bonus equal to
two times the Tier 1 Bonus would be paid if the increase in 1995 EPS were more
than 25% (the "Tier 2 Bonus").

In November 1995, a Mississippi state court jury awarded $100 million in
compensatory damages and $400 million in punitive damages to Gulf National
Insurance Company and certain affiliates in a lawsuit against the Company and
certain affiliates (the "Gulf National litigation"). In early January 1996, the
Compensation Committee determined that it would defer consideration of whether
bonuses might be awarded in respect of 1995 results until the Gulf National
litigation was resolved and the impact on the Company's earnings and operations
could be fully assessed.

The Gulf National litigation was settled in January 1996 and litigation
involving Provident American Corporation and a subsidiary (the "Provident
litigation") was settled in March 1996.

In June 1996, the Compensation Committee met to consider whether any bonus
should be awarded in respect of 1995. The Compensation Committee noted that
actual 1995 EPS growth was less than 20% because of costs of legal settlements,
litigation-related finance costs and certain general and administrative costs.
The Compensation Committee determined, however, that in light of (i) the
extraordinary commitment of time and effort by executive officers in dealing
with the operational and financial ramifications of the Gulf National
litigation, including settling the Gulf National and Provident litigation and
consummating significant financings during the first half of 1996, (ii) the
Company's revenues to date in 1996, and (iii) the record 1996 acquisition pace,
it was appropriate to pay some bonus in respect of 1995. It was determined that
these bonuses should be paid on the basis of 1995 "normalized" EPS (excluding
losses resulting from the Gulf National and Provident litigation settlements,
litigation-related finance costs and certain general and administrative costs),
under the Company's previously established bonus program. This meant that senior
executives would be entitled to the Tier 1 bonus.

At the June 1996 meeting, the Compensation Committee considered a proposal
by senior management that these bonuses generally be paid by way of options
rather than cash. Senior management believed that this proposal, following upon
settlement of the Gulf National and Provident litigation, would benefit
Shareholders by enhancing EPS and demonstrating senior management's confidence
in and commitment to the long term success of the Company. Based in part on the
methodology of option valuation known as the Black-Scholes model, the KPMG
Report stated that options granted typically might be valued at one-third of the
then current stock price (approximately $10 based on a then-current Common share
price of $30). The Compensation Committee

17
<PAGE> 21

determined, however, that executive officers who elected to take options in lieu
of 1995 cash bonuses should receive a premium because those options would be
granted in exchange for riskless cash in hand. Accordingly, the options granted
to executive officers in lieu of bonuses in respect of 1995 were valued at $5
per underlying Common share. The exercise price of the options is the fair
market value of the underlying Common shares on the date of grant.

With respect to 1996 bonuses, the Compensation Committee determined that in
light of the unique circumstances of fiscal 1996, the Compensation Committee
would accept senior management's offer to also receive options in lieu of a 1996
cash bonus. It was determined that such options would be valued at $10 and that
the number of options to be granted would be calculated based on the assumption
that the members of senior management would receive a Tier 2 Bonus in 1996. The
Compensation Committee noted, however, that its willingness to consider granting
options in lieu of cash bonus for 1996 should not be viewed as a precedent but
rather as a special situation in light of the unique circumstances following
settlement of the Gulf National and Provident litigation. The Compensation
Committee determined that the success of the special approach taken in 1996
would be subsequently assessed in light of whether 1996 financial objectives
were achieved.

Long-Term Incentives

Certain executive officers participate in the 1994 Management Equity
Investment Plan (the "MEIP"), which was approved by the Shareholders at the
annual general meeting of the Company held on May 16, 1994. The purpose of the
MEIP is two-fold: first, to provide a cost-effective financing program for the
Company's U.S. Subsidiaries and second, to provide an opportunity for designated
key employees to participate in the long-term growth of the Company. The MEIP
requires participants (including executive officers) to pay an aggregate of
approximately $5.7 million to a U.S. Subsidiary of the Company in exchange for
the right (in either the form of an option or a purchase agreement) to
ultimately acquire, upon a further aggregate payment of approximately $107.6
million, an aggregate of 3,769,800 Common shares beginning in 1999. This right
is exercisable as to 50% in 1999, 25% in 2000 and 25% in 2001. The effective
purchase price for the Common shares was set at $30.040, which is 25% higher
than the weighted average trading price of the Common shares for the five
consecutive trading days ended April 8, 1994. If a participant does not exercise
his right to acquire the Common shares, then his portion of the sum of $5.7
million paid is refundable to him. Through December 31, 1996, rights relating to
an aggregate of 3,769,800 Common shares were outstanding under the MEIP. This
includes 1,500,000 Common shares that the Chief Executive Officer has the option
to ultimately acquire upon exercise of a convertible debenture that he is
required to purchase.

Executive officers also are eligible to receive grants of options under the
Company's Employee Stock Option Plans.

In June 1996, the Compensation Committee determined it would be appropriate
to provide a long-term incentive award in the form of stock options to the Chief
Executive Officer. See "Chief Executive Officer's Compensation."

Chief Executive Officer's Compensation

In January 1996, the Compensation Committee recommended a base salary of
$625,000 for the Chief Executive Officer for 1996 and a bonus for 1996 of up to
$625,000 based on the two-tier formula applied in 1995. In June 1996, following
consideration of the KPMG Report, the Compensation Committee adjusted the Chief
Executive Officer's 1996 salary to $740,000 (with a corresponding increase in
his potential bonus). To demonstrate his commitment to and confidence in the
long range success of the Company, and to enhance earnings per share, the Chief
Executive Officer offered to take his 1996 salary in options in lieu of cash,
and the Compensation Committee accepted the offer. The options were valued at
$5. See "Annual Bonuses" above for an explanation of the methodology and
analysis used to determine the option value. The Chief Executive Officer
received a grant of 200,747 stock options in August 1996 in lieu of his 1995
cash bonus ($275,028) and substantially all of his 1996 salary ($739,999).

The KPMG Report recommended that the annual long-term incentive program for
the Chief Executive Officer should be valued at approximately the aggregate of
his salary and bonus for the year. The Compensation Committee

18
<PAGE> 22

considered the recommendation in the KPMG Report and related factors and
subsequently determined that it would issue to the Chief Executive Officer, in
lieu of his anticipated 1996 bonus of $740,000 and 1996 long-term incentive, the
greater of (i) 250,000 options or (ii) the number of options determined by the
following formula:

<TABLE>
<S> <C> <C>
250,000 + [(FV - PV) X 250,000]
----------------------
Option Valuation
</TABLE>

where FV is the market price of the stock on the date of issue; PV is the market
price of the stock at August 1, 1996; and the Option Valuation will be
determined by the Company's advisers as of the issue date of the options. Such
issuance will not be made until the Shareholders have approved an increase in
authorized shares for the Employee Stock Option Plan (Canada).

The Chief Executive Officer participates in the MEIP, pursuant to which, in
June 1994, he received options to ultimately acquire 500,000 Common shares and
purchase agreement rights by which he is required to purchase a debenture that
is ultimately convertible, at the Chief Executive Officer's option, into
1,500,000 Common shares.

Policy with Respect to Deductibility of Compensation

Section 162(m) of the United States Internal Revenue Code of 1986, as
amended ("Section 162(m)"), governs the deductibility of discretionary,
incentive-based compensation in excess of $1 million paid annually to the Chief
Executive Officer and certain other highly-paid executive officers.

The Company believes that the MEIP and the Company's employee stock option
plans qualify for an exception from the $1 million limitation. The Company's
incentive cash bonus program currently does not so qualify, but the Company does
not anticipate that this will result in any significant cost. The Compensation
Committee will continue to monitor the impact of Section 162(m) and will
recommend modification to the Company's compensation program in the future if
appropriate.

Submitted by the Compensation Committee:

Charles B. Loewen, Chairman
James D. McLennan
Ernest G. Penner
The Right Honourable John N. Turner, P.C., C.C., Q.C.

19
<PAGE> 23

PERFORMANCE GRAPH

The following graph compares the cumulative total Shareholder return on the
Common shares with the cumulative return on the Peer Group Total Return Index,
TSE 300 Total Return Index and Standard & Poor's 500 Total Return Index for a
five year period. Such cumulative Shareholder return and the Total Return
Indices reflect the cumulative return, including dividend reinvestment. The Peer
Group Total Return Index is comprised of the cumulative shareholder return on
the common stock of Service Corporation International (listed on the New York
Stock Exchange) and Stewart Enterprises, Inc. (quoted on the Nasdaq National
Market) and the Class A and Class B Shares of Arbor Memorial Services, Inc.
(listed on the TSE). As at December 31, 1996, the Company owned approximately
28% of the aggregate outstanding Class A and Class B Shares of Arbor Memorial
Services, Inc.

COMPARISON OF CUMULATIVE TOTAL RETURN

(VALUE OF CDN. $100 INVESTED)

<TABLE>
<CAPTION>
PEER GROUP
MEASUREMENT PERIOD THE LOEWEN TOTAL RETURN S&P 500 TOTAL TSE 300 TOTAL
(FISCAL YEAR COVERED) GROUP INC. INDEX RETURN INDEX RETURN INDEX
<S> <C> <C> <C> <C>
1991 100 100 100 100
1992 126 120 118 99
1993 214 184 136 131
1994 237 202 146 130
1995 222 309 195 149
1996 347 402 241 192
</TABLE>

OTHER COMPENSATION INFORMATION

(The information set forth under the two following subheadings is stipulated for
disclosure pursuant to the Company Act of British Columbia. This includes
disclosure with respect to "senior officers", which term generally includes any
vice-president, the secretary, the treasurer, the general manager and any
individual who performs functions similar to those normally performed by an
individual occupying any of these offices, as well as the Named Executive
Officers.)

DIRECTORS' AND OFFICERS' REMUNERATION

The aggregate compensation paid or payable directly to the Company's
Directors and senior officers as a group (including the Named Executive
Officers) by the Company and its Subsidiaries for the year ended December 31,
1996 was $8,077,883. These amounts include salaries, fees (including Directors'
retainer and meeting fees), commissions and bonuses; cash bonuses to be paid for
services rendered in 1996 (unless such amounts have not been allocated); cash
bonuses paid in 1996 for services rendered in previous years; the cash
equivalent of Common shares issued to Directors under the 1994 Outside Director
Compensation Plan; and all deferred compensation earned in 1996; but excludes
compensation paid in 1996 in respect of another year that was described in a
previous information circular and excludes the value of options granted in
partial compensation for salary or bonus. The Directors and senior officers as a
group earned taxable benefits in 1996 aggregating $443,091 including, among
other benefits, taxable auto benefits, medical insurance, life insurance
(taxable benefits portion only), spousal travel, forgiveness of indebtedness,
relocation expenses and imputed interest on non-interest-bearing loans.

20
<PAGE> 24

OPTIONS

The following table sets forth certain information with respect to options
to purchase Common shares that were granted to Directors and senior officers as
a group during the fiscal year 1996:

(1) In August 1996, 417,656 options to purchase Common shares were granted to
certain senior officers in lieu of salary or bonuses. See EXECUTIVE
COMPENSATION -- Report on Executive Compensation.

No monetary consideration was received by the Company for the granting of
the foregoing.

The following table sets forth the options to purchase Common shares
exercised by Directors and senior officers as a group during the fiscal year
1996 (all amounts are expressed to take account of the subdivision of the Common
shares on a 2:1 basis in June 1991):

<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE LESS MARKET VALUE
COMMON PURCHASE PRICE (LOW-HIGH RANGE)
DATE OF SHARES PURCHASE ON THE DATE IN 30 DAY PERIOD
GROUP EXERCISE PURCHASED PRICE OF PURCHASE PRECEDING PURCHASE
<S> <C> <C> <C> <C> <C>
Directors February 1 32,000 US $ 9.56 US $ 586,080 US $ 18.625-$29.00
and Senior February 1 12,000 US $13.875 US $ 168,000 US $ 18.625-$29.00
Officers April 30 2,000 Cdn. $ 10.80 Cdn. $ 60,400 Cdn. $ 38.85-$42.25
May 21 8,000 US $ 9.56 US $ 153,020 US $ 27.375-$31.00
May 31 100,000 Cdn. $ 10.18 Cdn. $2,922,000 Cdn. $ 37.00-$41.10
June 24 12,000 US $ 13.28 US $ 193,140 US $26.953125-$29.875
June 24 3,500 Cdn. $ 16.88 Cdn. $ 81,270 Cdn. $ 37.20-$41.00
August 22 3,000 Cdn. $ 16.88 Cdn. $ 70,860 Cdn. $ 36.85-$40.75
September 3 1,000 Cdn. $ 16.88 Cdn. $ 23,120 Cdn. $ 39.20-$40.90
September 11 12,500 Cdn. $ 18.50 Cdn. $ 159,375 Cdn. $ 28.375-$31.25
September 17 200 Cdn. $ 32.50 Cdn. $ 4,490 Cdn. $ 39.75-$54.95
September 17 2,000 Cdn. $ 34.75 Cdn. $ 40,400 Cdn. $ 39.75-$54.95
October 23 10,600 Cdn. $ 18.50 Cdn. $ 222,600 Cdn. $ 38.875-$42.0625
November 8 3,000 US $ 13.28 US $ 79,035 US $ 38.875-$40.00
November 11 8,000 Cdn. $21.625 Cdn. $ 144,000 Cdn. $ 39.00-$40.00
-----------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>

OTHER

Eligible employees of the Company also are entitled to participate in the
Company's Employee Share Purchase Plans, which provide an opportunity to acquire
Common shares via payroll deduction. In addition, certain senior employees of
LGII and its Subsidiaries participate in an Amended and Restated Executive
Deferred Compensation Plan, which allows participants to defer compensation and
to direct the investment of the deferred amounts.

21
<PAGE> 25

INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS

(The information set forth in this section is stipulated for disclosure pursuant
to the Securities Act of British Columbia.)

The aggregate indebtedness of all officers, Directors, employees and former
officers, Directors and employees of the Company or any of its Subsidiaries in
connection with the purchase of securities of the Company or any of its
Subsidiaries to the Company or any of its Subsidiaries or to another entity
which is the subject of a guarantee, support agreement, letter of credit or
similar arrangement or understanding provided by the Company or any of its
Subsidiaries as at March 31, 1997 was $3,349,265.

The following table sets forth guaranteed indebtedness of senior officers
pursuant to the 1994 Management Equity Investment Plan approved by the
Shareholders at the annual general meeting of the Company held on May 16, 1994.
All dollar amounts are expressed in United States dollars.

TABLE OF INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS
AND SENIOR OFFICERS UNDER SECURITIES PURCHASE PROGRAMS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
INVOLVEMENT OF LARGEST AMOUNT AMOUNT OUTSTANDING FINANCIALLY ASSISTED
NAME AND PRINCIPAL POSITION ISSUER OR OUTSTANDING AS AT SECURITIES PURCHASED
(IN ALPHABETICAL ORDER) SUBSIDIARY DURING 1996 ($)(1) MARCH 31, 1997 ($)(1) DURING 1996 (2)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
George M. Amato
Regional President, Operations
North East Region LGII is guarantor 232,675 237,482 n/a
- -----------------------------------------------------------------------------------------------------------------------
Timothy A. Birch
Vice-President, Corporate
Development & Law LGII is guarantor 186,095 189,940 n/a
- -----------------------------------------------------------------------------------------------------------------------
J.C. Carothers, Jr.
Vice-President, Operations,
Mid-South Division LGII is guarantor 111,657 113,964 n/a
- -----------------------------------------------------------------------------------------------------------------------
David FitzSimmons
Vice-President, Operations LGII is guarantor 230,320 235,078 n/a
- -----------------------------------------------------------------------------------------------------------------------
Dwight K. Hawes
Vice-President, Finance LGII is guarantor 95,100 100,100 n/a
- -----------------------------------------------------------------------------------------------------------------------
William V. Hocker
Vice-President, Operations,
Mid-Central Division LGII is guarantor 111,657 113,964 n/a
- -----------------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp
President and Chief Operating
Officer LGII is guarantor 558,284 569,819 n/a
- -----------------------------------------------------------------------------------------------------------------------
Peter S. Hyndman
Vice-President, Law and
Corporate Secretary LGII is guarantor 47,550 52,550 n/a
- -----------------------------------------------------------------------------------------------------------------------
Kenneth E. Lee, Jr.
Vice-President,
Combination Operations and
Alternative Funerals LGII is guarantor 93,047 94,970 n/a
- -----------------------------------------------------------------------------------------------------------------------
Albert S. Lineberry, Jr.
Vice-President, Operations,
East Central Division LGII is guarantor 111,657 113,964 n/a
- -----------------------------------------------------------------------------------------------------------------------
John E. Malletta, Sr.
Vice-President, Operations,
Mountain Division LGII is guarantor 93,047 94,970 n/a
- -----------------------------------------------------------------------------------------------------------------------
Peter W. Roberts
Vice-President, Financial
Information Systems
and Corporate Controller LGII is guarantor 152,160 157,160 n/a
- -----------------------------------------------------------------------------------------------------------------------
F. Duane Schaefer
Regional President, Operations,
South Central Region LGII is guarantor 111,657 113,964 n/a
- -----------------------------------------------------------------------------------------------------------------------
Michael L. Schweer
Vice-President,
Funeral Home Operations,
North Central Region LGII is guarantor 110,553 112,837 n/a
- -----------------------------------------------------------------------------------------------------------------------
Dillis E.R. Ward
Regional President,
West Region LGII is guarantor 111,657 113,964 n/a
- -----------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

(Footnotes on following page)

22
<PAGE> 26

Notes:

(1) In each case, indebtedness is to a third party lender and is guaranteed by
LGII. Capitalized interest has been added to the principal amount to the
relevant date. The amount of each guarantee is limited to twice the
principal amount of the original indebtedness in order to cover capitalized
interest. Interest is charged on such indebtedness at the prime rate of the
Wachovia Bank of Georgia, N.A. for U.S.-based officers and at the U.S. base
rate of a Canadian chartered bank for Canadian-based officers. Security has
not been provided for such indebtedness.

(2) The indebtedness represents a 5% down payment on an option to acquire
exchangeable debentures issued by LGII. Payment of the remaining 95% of the
exercise price entitles the optionholder to acquire debentures exchangeable
for Series B Preferred Shares of the Company. The Series B Preferred Shares
are immediately convertible to Common shares. Further particulars appear in
the Report on Executive Compensation above.

The aggregate indebtedness of all officers, Directors, employees and former
officers, Directors and employees of the Company or any of its Subsidiaries not
entered into in connection with the purchase of the securities of the Company or
any of its Subsidiaries to the Company or any of its Subsidiaries or to another
entity which is the subject of a guarantee, support agreement, letter of credit
or similar arrangement or undertaking provided by the Company or any of its
Subsidiaries as at March 31, 1997 was $7,034,672.

TABLE OF INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS
AND SENIOR OFFICERS OTHER THAN UNDER SECURITIES PURCHASE PROGRAMS

<TABLE>
<CAPTION>
INVOLVEMENT OF LARGEST AMOUNT OUTSTANDING
THE COMPANY AMOUNT OUTSTANDING AS AT
NAME AND PRINCIPAL POSITION OR SUBSIDIARY DURING 1996 ($) MARCH 31, 1997 ($)
--------------------------- --------------- ------------------- ------------------
<S> <C> <C> <C>
Dwight K. Hawes
Vice-President, Finance (1) Company is lender US 21,600 nil
Timothy R. Hogenkamp
President and Chief Operating Officer (2) Company is lender US 135,000 US 50,000
Raymond L. Loewen
Chairman and Chief Executive Officer (3) Company is lender Cdn. 1,750,000 nil
Loewen Development Corporation (4) Company is lender US 192,075 US 192,075
Lawrence Miller
Executive Vice-President, Operations
William R. Shane
Senior Vice-President and Chief Financial
Officer, Cemetery and Combination
Division
Osiris Investments, L.L.C. (5) LGII is lender US 2,952,500 US 2,952,500
Michael L. Schweer
Vice-President, Funeral Home Operations
North Central Region (6) Company is lender US 122,800 US 118,800
Kenneth E. Lee, Jr.
Vice-President, Combination Operations
and Alternative Funerals (7) LGII is lender US 52,666 US 50,875
Ronald P. Robertson
Vice-President, Sales (8) LGII is lender US 75,436 US 50,875
Peter Gray
Vice-President, Accounting, Cemeteries
(9) LGII is lender US 35,011 US 35,613
Robert P. Pence
Vice-President, Cemetery Operations,
North East Region (10) LGII is lender US 65,017 US 66,138
Frank Milles
Vice-President, Administration, Cemeteries (11) LGII is lender US 82,623 US 76,313
</TABLE>

(Footnotes on following page)

23
<PAGE> 27

Notes:

(1) Dwight K. Hawes, of North Vancouver, British Columbia, Canada was indebted
to the Company for an unsecured promissory note, the funds of which were
used for investment purposes. The note is non-interest-bearing and was
repaid in full by July 1996.

(2) Timothy R. Hogenkamp, of Cincinnati, Ohio, is indebted to the Company for
two unsecured demand loans, the funds of which were used for investment
purposes. No interest is charged on Mr. Hogenkamp's loans. One of such
loans, in the original principal amount of $170,000, is forgivable in four
annual instalments of $42,500 each, commencing in 1994.

(3) Raymond L. Loewen, of Burnaby, British Columbia, Canada, or associates of
Raymond L. Loewen, were indebted to the Company for non-interest-bearing
unsecured demand loans totalling Cdn. $1,750,000, particulars of which are
provided under the heading Certain Transactions. The loans were repaid in
full by October 1996.

(4) Loewen Development Corporation of Burnaby, British Columbia, Canada, a
wholly-owned subsidiary of Loewen Capital Corporation, is an associate of
Raymond L. Loewen and Anne Loewen (the sole shareholders of Loewen Capital
Corporation). Loewen Development Corporation is indebted to the Company in
connection with the consolidation of funeral home operations as part of the
initial organization of the Company. The amounts receivable from Loewen
Development Corporation are non-interest-bearing and there are no set terms
of repayment.

(5) Lawrence Miller, of Ivyland, Pennsylvania, William R. Shane, of Cherry
Hill, New Jersey and Osiris Investments, L.L.C., a Delaware limited
liability company of which Messrs. Miller and Shane are the sole members,
are indebted to LGII for a promissory note, the proceeds of which were used
to repay an obligation to and purchase an obligation from Montefiore
Cemetery Company Perpetual Care Fund. Messrs. Miller and Shane and Osiris
Investments, L.L.C. are jointly and severally liable under the promissory
note, which is secured by contingent payments to be made to them by LGII in
connection with LGII's acquisition of Osiris Holding Corporation, a
Delaware corporation of which Messrs. Miller and Shane were the majority
shareholders prior to such acquisition. The note is non-interest-bearing.

(6) Michael L. Schweer, of Cincinnati, Ohio, is indebted to the Company for an
unsecured promissory note, the funds of which were used for investment
purposes. No interest is charged on Mr. Schweer's note.

(7) Kenneth E. Lee, Jr. of Doylestown, Pennsylvania, is indebted to LGII for a
promissory note in the amount of $50,000 given in connection with the
purchase of a home relating to his employment at the Philadelphia office of
LGII. The note bears interest at 7% per annum from June 2, 1995 and is due
and payable on June 2, 2000.

(8) Ronald P. Robertson of Jamison, Pennsylvania, is indebted to LGII for a
promissory note in the amount of $75,000 given in connection with the
purchase of a home relating to his employment at the Philadelphia office of
LGII. The note bears interest at 7% per annum from August 15, 1995 and is
due and payable on August 15, 2000. Mr. Robertson repaid $25,000 of his
principal indebtedness in October 1996.

(9) Peter Gray, of Yardley, Pennsylvania, is indebted to LGII for a promissory
note in the amount of $26,000 given in connection with the purchase of a
home relating to his employment at the Philadelphia office of LGII. The
note bears interest at 7% per annum from August 1, 1995 and is due and
payable on May 1, 2000. Mr. Gray is also indebted to LGII for a second
promissory note in the amount of $49,000 which bears interest at 7% per
annum and is due and payable from proceeds from the sale of his residence.
Mr. Gray repaid $40,000 of his aggregate principal indebtedness in 1996.

(10) Robert P. Pence, of Philadelphia, Pennsylvania, is indebted to LGII for a
promissory note in the amount of $65,000 given in connection with the
purchase of a home relating to his employment at the Philadelphia office of
LGII. The note bears interest at 7% per annum from May 5, 1995 and is due
and payable on May 5, 2000.

(11) Frank Milles, of Yardley, Pennsylvania, is indebted to LGII for a
promissory note in the amount of $75,000 given in connection with the
purchase of a home relating to his employment at the Philadelphia office of
LGII. The note bears interest at 7% from October 19, 1995 and is due and
payable on July 19, 2000.

CERTAIN TRANSACTIONS

Albert S. Lineberry, Sr. is the controlling shareholder of Gaines
Corporation of Greensboro, North Carolina. Gaines Corporation received $104,008
from Lineberry Group, Inc., a Subsidiary, in 1996 for the lease of its North Elm
Chapel premises in Greensboro, North Carolina.

Messrs. Raymond L. Loewen, Timothy R. Hogenkamp, Paul Wagler and Peter S.
Hyndman, all of whom are Directors and officers of the Company and of LGII,
together with Robert O. Wienke, a former officer of the Company and a former
Director and officer of LGII, have been named as defendants in three class
action proceedings commenced in the United States. Subject to the provisions of
the Company Act of British Columbia, a Director of the Company is, under the
Articles of the Company, entitled in certain circumstances to indemnification
for costs and other amounts incurred by him as a result of legal proceedings to
which he has been made a party by reason of his being a Director. Under Section
145 of the General Corporation Law of the State of Delaware, LGII may indemnify
Directors and officers in certain circumstances. In addition, the Board of
Directors of LGII has determined that the expenses of each such individual in
defending the class action proceedings should be paid by LGII from time to time
in advance of the final disposition of the proceedings, subject to such
individual entering into an undertaking to repay all amounts paid by LGII if it
is ultimately determined that such individual is not entitled to be indemnified
by LGII under the Delaware General Corporation Law.

In March 1995 the Company purchased all of the outstanding shares of Osiris
Holding Corporation ("Osiris") of Philadelphia, Pennsylvania. The total
consideration for the transaction was $103.8 million plus additional
consideration of up to approximately $42 million payable ($18.4 million of which
has been paid) to former shareholders of Osiris (including Lawrence Miller and
William R. Shane, who are now part of the Company's senior management), if
certain performance-related criteria are achieved over a period of up to six
years from the closing

24
<PAGE> 28

of the acquisition. The full amount of any unpaid contingent consideration will
be immediately payable in certain events, including the death, permanent
disability, or termination of employment without cause, of either of Lawrence
Miller or William R. Shane. Messrs. Miller and Shane also each were granted
90,000 options which vest in increments of 18,000 annually if certain
performance-related criteria are met.

During 1996, the Company periodically chartered at competitive rates a
motor vessel, jet aircraft and helicopter for business purposes from companies
owned or controlled by Raymond L. Loewen. Payments by the Company to companies
owned or controlled by Raymond L. Loewen for all such charters in 1996 totalled
approximately $605,110.

In connection with the intended transfer of each of these assets to
companies owned by third parties, the Company provided interim financing to
companies owned by Raymond L. Loewen or to Raymond L. Loewen totalling Cdn.
$1,750,000. The interim financing was repaid in full by October 1996.

The intended transfer of the motor vessel to a third party was not
consummated. Instead, Raymond L. Loewen sold to the Company all of the capital
stock of the company that owned the vessel, 476822 B.C. Ltd. ("BC Ltd."), for an
effective purchase price of approximately Cdn. $7.8 million on October 28, 1996.
In the transaction, the motor vessel was valued at Cdn. $7.2 million, and the
other assets of BC Ltd. were valued at cost and aggregated approximately Cdn.
$0.6 million. A third party appraisal of the motor vessel had established its
fair market value at Cdn. $7.35 million and its replacement value at Cdn. $12.5
million.

Mr. R. Loewen has an option to reacquire either (i) the motor vessel and
related assets, for a price equal to their fair market value, or (ii) all of the
capital stock of BC Ltd, for a price equal to the fair market value of the net
assets of BC Ltd. Such option is exercisable upon the occurrence of certain
"change in control" events, including the acquisition of 25% or more of the
Common shares by any person other than Raymond L. Loewen.

The jet aircraft was sold for $3,475,000 on July 31, 1996 and the
helicopter for $350,000 on September 19, 1996, both to the same independent
financial institution. The institution has leased the jet and helicopter to the
Company under commercially reasonable terms.

The Board of Directors approved the transaction pertaining to the jet
aircraft in July 1996 and the transactions pertaining to the motor vessel and
helicopter in September 1996.

Reference is made to pages 8 and 9 for a description of certain
arrangements between the Company or LGII and Directors Albert S. Lineberry, Sr.,
Charles B. Loewen and Dr. Earl A. Grollman.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors, executive officers and 10% beneficial owners ("insiders") to file
with the United States Securities and Exchange Commission reports of ownership
and change in ownership of equity securities of the Company. Based solely on its
review of such reports, or written representations from certain insiders that
all required reports were filed, the Company believes that during the year ended
December 31, 1996, the Company's Directors and officers (33 persons total)
complied with all Section 16 filing requirements, except as follows. During
1996, each of the following outside Directors amended his Statement of Changes
in Beneficial Ownership on Form 4 ("Form 4") to correct a mathematical error on
his Form 4 filing: Dr. Earl A. Grollman; Albert S. Lineberry, Sr.; James D.
McLennan; Ernest G. Penner; and The Right Honourable John Napier Turner P.C.,
C.C., Q.C. . Each of the following persons failed to file an Initial Statement
of Beneficial Ownership on Form 3 within the 10 day period following his
appointment as an executive officer: Douglas J. McKinnon, Executive
Vice-President, Daniel N. Nakagawa, Vice-President, Insurance Operations; F.
Andrew Scott, Vice-President, Finance and Investment Management; and Thomas E.
Stilgenbauer, Vice-President, Operations, Funeral Homes. Lawrence Miller,
Executive Vice-President, Operations and William R. Shane, Senior Vice-President
and Chief Financial Officer, Cemetery and Combination Division filed Forms 4
late reporting Employee Stock Options received based on satisfying certain
criteria with respect to the 1995 year end.

APPOINTMENT OF AUDITORS

The Board of Directors recommends, and unless otherwise directed the
designated persons named in the enclosed form of proxy will vote for, the
appointment of KPMG, 777 Dunsmuir Street, Vancouver, British Columbia, Canada,
V7Y 1K3, as auditors of the Company to hold office until the next annual general
meeting of

25
<PAGE> 29

Shareholders and to authorize the Directors to fix the remuneration of the
auditors so appointed. KPMG (or predecessor firms thereof) has been the
Company's auditors since 1986.

Representatives of KPMG are expected to be present at the Meeting and will
have the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.

INFORMATION AS TO EMPLOYEES

The total number of full-time and part-time employees of the Company and
its Subsidiaries as at December 31, 1996 was 15,985 (compared to 10,494 as at
December 31, 1995). The total remuneration paid in 1996 to full-time and
part-time employees of the Company and its Subsidiaries (not including benefits)
was approximately $260 million. The total remuneration paid in 1995 to full-time
and part-time employees of the Company and its Subsidiaries (not including
benefits) was approximately $167 million.

PARTICULARS OF OTHER MATTERS TO BE VOTED ON

APPROVAL OF AMENDMENTS TO EMPLOYEE STOCK OPTION PLANS

BACKGROUND

The Board of Directors has unanimously approved, and recommends that the
Shareholders approve, amendments to each of the Employee Stock Option Plan
(United States) (the "U.S. Plan") and the Employee Stock Option Plan (Canada)
(the "Canadian Plan" and, together with the U.S. Plan, the "Plans") to increase
the number of Common shares issuable pursuant to options granted under each of
the Plans by 1,000,000 and to increase the number of Common shares for which
options may be granted under each of the Plans in any one calendar year to any
one participant by 300,000.

Historically, the Company has granted options under the Plans for two
important purposes: (i) to provide certain new employees (who typically join the
Company in connection with an acquisition) with an immediate incentive to
develop and promote the business and financial success of the Company, and (ii)
to give selected employees long-term incentives as a component of their
compensation.

The Company continued its growth and expansion in North America in 1996,
acquiring 149 funeral homes, 135 cemeteries and two insurance companies in the
United States and 10 funeral homes and one cemetery in Canada through 168
separate acquisition transactions. In 1996, the number of employees of the
Company and its Subsidiaries increased by more than 5,000, to almost 16,000
employees as at December 31, 1996.

In addition, in 1996, the Company compensated certain employees through the
grant of options in lieu of 1995 and 1996 bonuses (and, in some cases, 1996
salary) that would otherwise have been paid in cash. The employees who have
participated in this program demonstrated their commitment to the Company by
foregoing cash payments in return for the opportunity to participate in the
future growth of the Company. More importantly, the Shareholders benefited from
enhanced earnings per share performance because of the reduction of compensation
paid in cash. Reference is made to EXECUTIVE COMPENSATION -- Report on Executive
Compensation, for further information concerning options granted to executive
officers in lieu of salary and bonuses.

During 1996, the Company granted an aggregate of 2,000,808 options to
approximately 580 employees. Due primarily to the rapid acquisition pace in 1996
and the grants of options in lieu of salary and bonus, the number of options
granted exceeds the number of shares available for grant under the Plans. To
accommodate these grants, the Company proposed, and in November 1996 the TSE and
ME conditionally accepted notice of, interim increases in the number of Common
shares available under the U.S. Plan and the Canadian Plan in the amounts of
185,000 and 85,000 respectively. The TSE and the ME conditionally accepted
notice, on March 31, 1997 and April 4, 1997 respectively, of further proposed
increases in the number of Common shares available under the U.S. Plan and the
Canadian Plan in the amounts of 815,000 and 915,000 respectively, for an
aggregate increase of 1,000,000 in the number of Common shares available under
each of the Plans. As of March 27, 1997, the U.S. Plan limitation of 3,400,000
Common shares had been exceeded by 103,508, and the Canadian Plan limitation of
1,700,000 Common shares had been exceeded by 76,607. The options granted under
the Plans in excess of the maximum number of Common shares permitted to be
issued were granted subject to approval by disinterested Shareholders at the
Meeting of the proposed aggregate increases to the maximum number of shares
issuable pursuant to options under the Plans.

26
<PAGE> 30

If the proposal to increase the number of Common shares to be issued under
each of the Plans by 1,000,000 is approved, the aggregate Common shares
underlying options outstanding and available for grant under the Plans will
represent 10.6% of the Company's outstanding Common shares as at March 27, 1997.

<TABLE>
<CAPTION>
AGGREGATE COMMON SHARES
UNDERLYING OPTIONS
OUTSTANDING AND AVAILABLE
COMMON SHARES UNDERLYING FOR GRANT UNDER PLANS, AS
OPTIONS OUTSTANDING PROPOSED
------------------------- -------------------------
NUMBER(1) PERCENT(2) NUMBER PERCENT(2)
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Canadian Plan................................. 1,529,957 2.6% 2,453,350 4.1%
U.S. Plan..................................... 2,934,033 5.0% 3,830,525 6.5%
--------- ---------- --------- ----------
Total......................................... 4,463,990 7.6% 6,283,875 10.6%
======== ======== ======== ========
</TABLE>

(1) The numbers in this column do not exceed the U.S. Plan and Canadian Plan
limitations of 3,400,000 and 1,700,000 Common shares, respectively,
primarily because of grants exercised.

(2) Percent of Common shares outstanding as at March 27, 1997.

The Company believes that long-term incentive compensation in the form of
options is becoming a much more significant component of senior executive
compensation. The Company believes that it will have more flexibility in
fashioning compensation packages necessary to attract and retain senior
executives if the per person annual limitation in each of the Plans is increased
to 600,000 Common shares.

Each of the Plans includes a provision limiting the number of Common shares
for which options may be granted to an individual participant in any calendar
year. This provision is required in order to qualify compensation derived from
options granted under the Plans for deductibility under Section 162(m) of the
United States Internal Revenue Code. Section 162(m) does not require any
specific percentage or number limitation. The current Plans provide that the
maximum number of Common shares in respect of which options may be granted to
any individual participant in any calendar year shall not exceed 300,000. The
proposed amendments would increase this per person annual limitation by 300,000,
to 600,000 Common shares.

APPROVAL

The approval of a simple majority of the votes cast by disinterested
Shareholders is required to approve the proposed amendments to each of the Plans
to increase the number of Common shares issuable thereunder and to increase the
number of Common shares for which options may be granted thereunder in any one
calendar year to any one participant. Shareholders may vote on each of the four
proposed amendments separately. To the best of the Company's knowledge, the
number of votes attaching to the Common shares that will not be counted for the
purposes of determining whether the required level of Shareholder approval of
the amendments to the U.S. Plan has been obtained is 234,758, and the number of
votes attaching to the Common shares that will not be counted for the purposes
of determining whether the required level of shareholder approval of the
amendments to the Canadian Plan has been obtained is 8,338,631.

Approval by the disinterested Shareholders of the increase of 1,000,000
Common shares available for issuance under each of the Plans will serve as
ratification by such Shareholders of the options granted in excess of the share
limitations set forth in the Plans.

The Board of Directors believes that the Plans are a key component of
incentive-based compensation for eligible employees and are an important feature
of the Company's acquisition program.

THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR, APPROVAL OF THE AMENDMENTS TO INCREASE THE NUMBER OF
COMMON SHARES ISSUABLE UNDER THE U.S. PLAN BY 1,000,000 SHARES AND TO INCREASE
THE NUMBER OF COMMON SHARES FOR WHICH OPTIONS MAY BE GRANTED THEREUNDER IN ANY
ONE CALENDAR YEAR TO ANY ONE PARTICIPANT BY 300,000 COMMON SHARES.

27
<PAGE> 31

THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR, APPROVAL OF THE AMENDMENTS TO INCREASE THE NUMBER OF
COMMON SHARES ISSUABLE UNDER THE CANADIAN PLAN BY 1,000,000 SHARES AND TO
INCREASE THE NUMBER OF COMMON SHARES FOR WHICH OPTIONS MAY BE GRANTED THEREUNDER
IN ANY ONE CALENDAR YEAR TO ANY ONE PARTICIPANT BY 300,000 COMMON SHARES.

The full text of the Plans can be obtained from the Corporate Secretary of
the Company at the Company's principal executive office at 4126 Norland Avenue,
Burnaby, British Columbia, Canada V5G 3S8.

CERTAIN ADDITIONAL INFORMATION REGARDING THE PLANS

General

Under the Plans, employees of the Company are eligible to be granted
options to purchase Common shares. As of December 31, 1996, approximately 14,793
persons were eligible to participate in the U.S. Plan (employees who are
residents of the United States and its territories) and approximately 1,192
persons were eligible to participate in the Canadian Plan (employees who are
residents of Canada).

The Plans are administered by the Compensation Committee of the Board of
Directors. The number of options granted to selected employees is determined by
the Compensation Committee. The Compensation Committee also determines certain
terms and conditions of options granted.

Option Agreement

Each optionee under the Plans is required to enter into a separate option
agreement, which sets forth, among other things, the number of options granted,
the specific exercise price and the vesting conditions, within the following
parameters: (i) the exercise price of an option may not be less than the closing
price of the Common shares on the trading day immediately prior to the grant
date, as quoted on the New York Stock Exchange (for options granted under the
U.S. Plan) or on the TSE (for options granted under the Canadian Plan); and (ii)
in no event may an option terminate later than 10 years after the grant date.

Exercise of Option

An optionee may exercise an option by delivering to the Company a duly
completed notice of exercise together with full payment, by cash or check, for
the Common shares being purchased under the option and any taxes required to be
withheld and collected from the optionee.

Allocation of Options

The potential benefit to be received by an optionee is dependent on
increases in the price of the Common shares prior to the exercise of the option.
Accordingly, the ultimate dollar value of options is not currently
ascertainable. At April 1, 1997, the closing price of the Common shares on the
New York Stock Exchange was U.S. $31.625 and on the TSE was Cdn. $44.00.

The following table sets forth certain information with respect to options
granted in 1996 under each of the Plans to the current executive officers of the
Company as a group and to all employees of the Company as a group, including
officers who are not executive officers of the Company. Directors who are not
employees are not eligible to receive options under the Plans. For a discussion
of options granted in 1996 to the Named Executive Officers, see EXECUTIVE
COMPENSATION.

28
<PAGE> 32

EMPLOYEE STOCK OPTION PLANS

<TABLE>
<CAPTION>
COMMON SHARES
GROUP RANGE OF EXERCISE PRICES UNDERLYING OPTIONS
- ---------------------------------------------------- ----------------------------- ------------------
<S> <C> <C>
Employee Stock Option Plan (United States)
Executive Group................................... US $26.8125 -- US $29.1250 274,491
Non-Executive Officer Employee Group(1)........... US $26.8125 -- US $42.0625 1,135,900
Employee Stock Option Plan (Canada)
Executive Group(1)................................ Cdn. $36.85 -- Cdn. $41.60 414,332
Non-Executive Officer Employee Group(1)........... Cdn. $36.85 -- Cdn. $55.70 176,085
</TABLE>

- ---------------

(1) Options granted to certain executive officers in Canada and to certain
non-executive officer employees in the United States and Canada were granted
subject to Shareholder approval of the proposed amendments to increase the
number of Common shares issuable under the Plans. If such amendments are
approved by the Shareholders, 103,508 of the 1,000,000 additional Common
shares issuable under the U.S. Plan and 76,607 of the 1,000,000 additional
Common shares issuable under the Canadian Plan will be allocated to such
options.

The Chief Executive Officer of the Company will be granted, subject to
disinterested Shareholder approval of the proposed amendment to increase the
Common shares available for grant under the Canadian Plan by 1,000,000, an
option to purchase at least 250,000 Common shares (representing 74,000 Common
shares in lieu of his 1996 cash bonus and 176,000 Common shares in respect of
his 1996 long-term incentive). See EXECUTIVE COMPENSATION -- Report on Executive
Compensation. In addition, it is anticipated that the Chief Executive Officer
will receive an option grant to purchase 200,000 Common shares in respect of his
long-term incentive for 1997. This option grant will be made subject to
disinterested Shareholder approval of the proposed amendments to the Canadian
Plan.

United States Federal Income Tax Consequences

The following is a summary of the principal anticipated United States
federal income tax consequences of the grant and exercise of an option to and by
an optionee who is a resident or citizen of the United States. It is based on
the current provisions of the U.S. Internal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations thereunder. This discussion is
general only and is not a substitute for independent advice from an individual's
own tax adviser.

Options granted under the Plans are intended to be "non-qualified options"
that do not meet the criteria of "incentive stock options" within the meaning of
Section 422 of the Code. An optionee will not recognize any taxable income at
the time an option is granted. Upon exercise of an option, an optionee generally
will recognize ordinary income, for United States income tax purposes, equal to
the excess, if any, of the then fair market value of the Common shares acquired
over the exercise price of the option. Any taxable income recognized in
connection with the exercise of an option will be subject to tax withholding by
the optionee's employer.

The employer of the optionee generally will be entitled to United States
income tax deductions to the extent and in the year that ordinary income is
recognized by the optionee in the circumstances described above.

Dividends payable on Common shares out of earnings and profits are ordinary
income taxable at ordinary income rates. When an optionee sells Common shares
acquired pursuant to the exercise of an option, any difference between the sale
price and the optionee's tax basis in the Common shares will be treated as
capital gain or loss.

Under certain circumstances, United States citizens who are resident
outside the United States may be entitled to certain foreign tax credits against
United States income tax liability incurred in the circumstances described
above.

APPROVAL OF AMENDMENT TO EMPLOYEE STOCK BONUS PLAN

In 1993, the Board of Directors approved the Company's Employee Stock Bonus
Plan (the "Bonus Plan"). The Bonus Plan was subsequently amended and approved by
the Shareholders at the annual general meeting in 1994. The purpose of the Bonus
Plan is to provide all employees with a sense of ownership of the Company
through the provision of Common shares of the Company. The Bonus Plan is also
known by the name "Share the Vision". The Bonus Plan operates through the
one-time grant of five Common shares to each eligible employee of the

29
<PAGE> 33

Company, which grant is generally earned after three consecutive months of
service with the Company or its Subsidiaries, with credit for employment with a
Subsidiary acquired by the Company or its Subsidiaries.

At the annual general meeting in 1994, the Shareholders approved the Bonus
Plan with a maximum of 50,000 Common shares. There has been significant growth
in the Company through its acquisition strategy, and the number of employees of
the Company and its Subsidiaries is approaching 16,000. A limitation of 50,000
Common shares will not allow for the continuation of the Bonus Plan in the long
term. The Board of Directors considers that the continuation of the Bonus Plan
is in the interests of the Shareholders by virtue of the advantages flowing from
employee share ownership. On April 2, 1997, the Board of Directors unanimously
approved an amendment to the Bonus Plan to increase the number of Common shares
issuable under the Bonus Plan by 50,000 (from 50,000 to 100,000).

APPROVAL

The amendment to increase the number of Common shares available under the
Bonus Plan requires the approval of a simple majority of the votes cast by
disinterested Shareholders. Only new employees have an interest in the Bonus
Plan, as current participants in the Bonus Plan have no entitlement to any
further grants under the Bonus Plan. Therefore, no votes attaching to Common
shares will be discounted for the purposes of determining whether the required
level of Shareholder approval of the amendment to the Bonus Plan has been
obtained.

THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR, APPROVAL OF THE AMENDMENT TO INCREASE THE NUMBER OF
COMMON SHARES ISSUABLE UNDER THE BONUS PLAN BY 50,000 SHARES.

The full text of the Bonus Plan can be obtained from the Corporate
Secretary of the Company at the Company's principal executive office at 4126
Norland Avenue, Burnaby, British Columbia, Canada, V5G 3S8.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

The Shareholders will be asked to approve at the Meeting amendments to the
Employee Stock Option Plan (United States) (previously defined herein as the
"U.S. Plan") to increase the number of Common shares issuable thereunder by
1,000,000 and to increase the number of Common shares for which options may be
granted thereunder in any one calendar year to any one participant by 300,000
and amendments to the Employee Stock Option Plan (Canada) (previously defined
herein as the "Canadian Plan") to increase the number of Common shares issuable
thereunder by 1,000,000 and to increase the number of Common shares for which
options may be granted thereunder in any one calendar year to any one
participant by 300,000. The United States-based senior officers of the Company
(being officers of the rank of vice-president and higher, including executive
officers) and their associates have an interest in the U.S. Plan because such
senior officers are entitled to participate in U.S. Plan. Accordingly, such
persons are precluded from voting their Common shares with respect to this
matter. The Canadian-based senior officers of the Company (being officers of the
rank of vice-president and higher, including executive officers) and their
associates have an interest in the Canadian Plan because such senior officers
are entitled to participate in the Canadian Plan. Accordingly, such persons are
precluded from voting their Common shares with respect to this matter. Reference
is made to PARTICULARS OF OTHER MATTERS TO BE VOTED ON -- APPROVAL OF AMENDMENT
TO EMPLOYEE STOCK OPTION PLANS.

The Shareholders will be asked to approve at the Meeting the amendment to
the Company's Employee Stock Bonus Plan (previously defined as the "Bonus Plan")
to increase the number of Common Shares issuable thereunder by 50,000 Common
shares. Only new employees have an interest in the Bonus Plan, as current
participants of the Bonus Plan have no entitlement to any further grants under
the Bonus Plan. Therefore, no persons are precluded from voting their Common
shares with respect to this matter. Reference is made to PARTICULARS OF OTHER
MATTERS TO BE VOTED ON -- APPROVAL OF AMENDMENT TO EMPLOYEE STOCK BONUS PLAN.

30
<PAGE> 34

OTHER MATTERS

To the best of the knowledge, information and belief of the Directors,
there are no other matters which are to be acted upon at the Meeting. If such
matters arise, the form of proxy provides that discretionary authority is
conferred on the designated persons in the enclosed form of proxy to vote with
respect to such matters; and the voting instructions for participants in the
Employee Stock Bonus Plan and in the LGII 401(k) Retirement Plan provide that
The R-M Trust Company may act and vote as management of the Company may
recommend.

SHAREHOLDERS' PROPOSALS

To be considered for inclusion in the Proxy Statement and Information
Circular for the 1998 annual general meeting, proposals of Shareholders must be
received by the Company no later than December 9, 1997. Such proposals should be
directed to the Corporate Secretary of the Company.

AVAILABLE DOCUMENTS

A COPY OF THE FOLLOWING DOCUMENTS IS AVAILABLE ON REQUEST FROM THE
CORPORATE SECRETARY OF THE COMPANY AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE
AT 4126 NORLAND AVENUE, BURNABY, BRITISH COLUMBIA, CANADA, V5G 3S8, TELEPHONE
(604) 299-9321:

(1) THE COMPANY'S LATEST ANNUAL REPORT ON FORM 10-K REQUIRED UNDER THE
UNITED STATES SECURITIES EXCHANGE ACT OF 1934 WHICH REPORT IS ALSO FILED
WITH CANADIAN SECURITIES COMMISSIONS IN SATISFACTION OF THE REQUIREMENT
TO FILE AN ANNUAL INFORMATION FORM PURSUANT TO CANADIAN SECURITIES LAWS
AND POLICIES;

(2) THE COMPARATIVE FINANCIAL STATEMENTS OF THE COMPANY FOR THE COMPANY'S
MOST RECENTLY COMPLETED FISCAL YEAR IN RESPECT OF WHICH SUCH FINANCIAL
STATEMENTS HAVE BEEN ISSUED TOGETHER WITH THE ACCOMPANYING REPORT OF THE
AUDITORS AND ANY INTERIM FINANCIAL STATEMENTS OF THE COMPANY REQUIRED BY
LAW AND ISSUED SUBSEQUENT TO SUCH COMPARATIVE FINANCIAL STATEMENTS; AND

(3) THE PROXY STATEMENT AND INFORMATION CIRCULAR OF THE COMPANY DATED AS
OF APRIL 9, 1996 IN CONNECTION WITH THE ANNUAL GENERAL MEETING OF
SHAREHOLDERS HELD ON MAY 16, 1996;

SUBJECT TO (I) IN THE CASE OF PERSONS WHO ARE NOT SECURITIES HOLDERS OF THE
COMPANY, THE PAYMENT OF A REASONABLE CHARGE AND (II) IN ANY EVENT, THAT THE
COMPANY MAY REQUIRE PAYMENT OF A REASONABLE CHARGE FOR EXHIBITS TO THE ANNUAL
REPORT ON FORM 10-K.

APPROVAL OF THE BOARD OF DIRECTORS

The contents of this Proxy Statement and Information Circular have been
approved and the mailing thereof to the Shareholders of the Company has been
authorized by the Board of Directors of the Company.

DATED at Burnaby, British Columbia, Canada, the 8th day of April, 1997.

By Order of the Board of Directors

/s/ RAYMOND L. LOEWEN
-----------------------------------
Raymond L. Loewen,
Chairman of the Board and
Chief Executive Officer

31
<PAGE> 35

APPENDICES TO THE

LOEWEN GROUP INC.

PROXY STATEMENT
<PAGE> 36

THE LOEWEN GROUP INC.

FORM OF PROXY
FOR THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
OF THE LOEWEN GROUP INC.

TO BE HELD ON MAY 15, 1997

THIS PROXY IS SOLICITED BY AND ON BEHALF OF MANAGEMENT

The undersigned, being a holder of Common shares in the capital of The
Loewen Group Inc. (the "Company") and hereby revoking any proxy previously
given, hereby appoints RAYMOND L. LOEWEN, or failing him, TIMOTHY R. HOGENKAMP,
or instead of either of them,_________________________________________________
as proxyholder of the undersigned, to attend and vote for the undersigned and
otherwise act for and on behalf of and in the name of the undersigned at the
Annual General Meeting (the "Meeting") of shareholders of the Company, to be
held on the 15th day of May, 1997, and at any adjournment or postponement
thereof. The undersigned hereby instructs the proxyholder to vote for or vote
against, or withhold or abstain from voting, as the case may be, all of the
Common shares in the capital of the Company or such number of shares as may be
noted hereon registered in the name of the undersigned on any poll (ballot) in
respect of the following matters, details of which are provided in the Proxy
Statement and Information Circular, as indicated below.

THE UNDERSIGNED HEREBY AUTHORIZES THE PROXYHOLDER TO VOTE FOR ALL OF THE
NOMINEES FOR DIRECTOR LISTED IN ITEM 1 BELOW AND FOR ALL MATTERS IN ITEMS 2
THROUGH 6 BELOW, UNLESS AN INSTRUCTION TO THE CONTRARY IS INDICATED.

<TABLE>
<S> <C> <C>
1. The election of Reverend Kenneth Sidney Bagnell as a Director FOR [ ] or WITHHOLD [ ]
of the Company for a term ending at the fourth annual general
meeting after the Meeting.
The election of Doctor Earl Alan Grollman as a Director of FOR [ ] or WITHHOLD [ ]
the Company for a term ending at the fourth annual general
meeting after the Meeting.
The election of Charles Barnard Loewen as a Director of the FOR [ ] or WITHHOLD [ ]
Company for a term ending at the fourth annual general
meeting after the Meeting.
The election of Lawrence Miller as a Director of the Company FOR [ ] or WITHHOLD [ ]
for a term ending at the fourth annual general meeting after
the Meeting.

2. The appointment of KPMG as auditors of the Company for the FOR [ ] or WITHHOLD [ ]
ensuing year.

3. To authorize the Directors to fix the remuneration to be paid FOR [ ] or AGAINST [ ] or
to the auditors. ABSTAIN [ ]

4. To approve amendments of the Employee Stock Option Plan
(United States) to increase:

(a) the number of Common shares issuable thereunder by FOR [ ] or AGAINST [ ] or
1,000,000 Common shares; and ABSTAIN [ ]

(b) the number of Common shares for which options may be FOR [ ] or AGAINST [ ] or
granted thereunder in any one calendar year to any one ABSTAIN [ ]
participant by 300,000 Common shares.

5. To approve amendments of the Employee Stock Option Plan
(Canada) to increase:

(a) the number of Common shares issuable thereunder by FOR [ ] or AGAINST [ ] or
1,000,000 Common shares; and ABSTAIN [ ]

(b) the number of Common shares for which options may be FOR [ ] or AGAINST [ ] or
granted thereunder in any one calendar year to any ABSTAIN [ ]
one participant by 300,000 Common shares.

6. To approve the amendment of the Employee Stock Bonus Plan to FOR [ ] or AGAINST [ ] or
increase the number of Common shares issuable thereunder by ABSTAIN [ ]
50,000 Common shares.
</TABLE>

The Notes to Proxy on the reverse are incorporated in and form part of this form
of proxy.

If this form of proxy is returned undated, the undersigned hereby authorizes the
Chairman of the Meeting or the Chairman's delegate to fill in the date May 14,
1997.

- ------------------------------------------------------------------------------
Signature of Shareholder (a proxy may not be valid unless signed)

- -----------------------------------------------------------------
Please Print Name Here

- ----------------------------------------------------
Date (a proxy may not be valid unless dated)
<PAGE> 37

NOTES TO PROXY

1. Shareholders who are unable to attend the Meeting are requested to complete
and deposit with or mail this proxy to The R-M Trust Company, Fifth Floor,
393 University Avenue, Toronto, Ontario, Canada, M5G 2M7 (fax number (416)
813-4679). This proxy must be received by the said office no later than
10:00 a.m. (Pacific Daylight Time), May 14, 1997.

2. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR OR AGAINST, OR THE
VOTING OF SUCH SHARES WILL BE WITHHELD OR ABSTAINED FROM, AS THE CASE MAY
BE, ON ANY POLL (BALLOT) IN RESPECT OF THE ITEMS SET FORTH IN THE FORM OF
PROXY AS THE SHAREHOLDER MAY HAVE SPECIFIED BY MARKING AN "X" IN THE PLACE
PROVIDED FOR THAT PURPOSE. IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE
VOTED ON ANY POLL (BALLOT) AS IF THE SHAREHOLDER HAD SPECIFIED VOTING FOR
(I.E. IN FAVOR OF) THE ITEMS, AND THE SHAREHOLDER HEREBY CONFERS AUTHORITY
ON THE PROXYHOLDER OR PROXYHOLDERS HEREBY APPOINTED TO VOTE THE SHARES
ACCORDINGLY.

3. EACH SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHICH MAY BE A COMPANY)
TO ATTEND AND ACT ON THE SHAREHOLDER'S BEHALF AT THE MEETING OTHER THAN THE
PERSONS DESIGNATED IN THIS FORM OF PROXY. IF THE SHAREHOLDER DOES NOT WANT
TO APPOINT THE PERSONS DESIGNATED IN THE FORM OF PROXY, THE SHAREHOLDER
SHOULD STRIKE OUT THEIR NAMES AND INSERT IN THE BLANK SPACE PROVIDED THE
NAME OF THE PERSON THE SHAREHOLDER WISHES TO ACT AS THE SHAREHOLDER'S
PROXYHOLDER AND, IF DESIRED, AN ALTERNATE PROXYHOLDER. A PROXYHOLDER OR
ALTERNATE PROXYHOLDER NEED NOT BE A SHAREHOLDER OF THE COMPANY.

4. IN THE CASE OF ANY AMENDMENTS OR VARIATIONS TO THE RESOLUTIONS, AND IN THE
CASE OF ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING, THE
SHAREHOLDER HEREBY CONFERS DISCRETIONARY AUTHORITY ON THE PROXYHOLDER HEREBY
APPOINTED TO ACT AND VOTE ON THE SHAREHOLDER'S BEHALF ON ANY POLL (BALLOT),
AS THE PROXYHOLDER IN THE PROXYHOLDER'S SOLE DISCRETION MAY SEE FIT, ALL IN
THE SAME MANNER AND TO THE SAME EXTENT AND WITH THE SAME POWER AS THE
SHAREHOLDER COULD, IF THE SHAREHOLDER WERE PERSONALLY PRESENT AT SUCH
MEETING. NO SUCH AMENDMENTS, VARIATIONS, OR OTHER MATTERS WERE KNOWN TO
MANAGEMENT AT THE TIME THIS PROXY WAS SOLICITED.

5. This proxy may not be valid unless it is dated and signed by the
shareholder or by the shareholder's attorney-in-fact duly authorized by the
shareholder in writing or, in the case of a corporation, is executed under
its corporate seal or by an officer or officers or attorney-in-fact for the
corporation duly authorized. If this proxy is executed by an
attorney-in-fact for an individual shareholder or joint shareholders or by
an officer or officers or attorney-in-fact of a corporate shareholder not
under its corporate seal, the instrument so empowering the officer or
officers or the attorney-in-fact, as the case may be, or a notarial copy
thereof, should accompany the Form of Proxy.

6. This proxy is revocable in the manner described under the heading
"Appointment and Revocation of Proxies" in the accompanying Proxy Statement
and Information Circular.
<PAGE> 38

TO NON-REGISTERED HOLDERS (BENEFICIAL HOLDERS)

In accordance with National Policy Statement No. 41/Shareholder Communication,
beneficial shareholders may elect annually to have their name added to an
issuer's supplemental mailing list in order to receive interim financial
statements. If you are interested in receiving such statements please complete
and return this form.

NAME OF CORPORATION: THE LOEWEN GROUP INC.
----------------------------------------------------------

NAME OF SHAREHOLDER:
----------------------------------------------------------
ADDRESS:
-----------------------------------------------------------------------
Postal or Zip Code:
-------------------------------------- ------------

I certify that I am a beneficial shareholder.

SIGNATURE:
--------------------------------------------------------------------

FIRST CLASS MAIL

ATTN: CORPORATE TRUST
DEPARTMENT

TO: THE R-M TRUST COMPANY
FIFTH FLOOR
393 UNIVERSITY AVENUE
TORONTO, ONTARIO
CANADA
M5G 2M7
<PAGE> 39

VOTING INSTRUCTIONS
TO THE R-M TRUST COMPANY
AS PLAN AGENT UNDER THE EMPLOYEE STOCK BONUS PLAN
FOR THE ANNUAL GENERAL MEETING OF THE LOEWEN GROUP INC.
TO BE HELD ON MAY 15, 1997
AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF
INSTRUCTIONS:
1. PLEASE INSTRUCT THE R-M TRUST COMPANY, BY CHECKING THE APPROPRIATE BOXES,
HOW TO VOTE YOUR FIVE COMMON SHARES FOR EACH OF THE ITEMS SET FORTH BELOW.

2. DATE, SIGN AND MAIL IN THE ATTACHED ENVELOPE TO THE R-M TRUST COMPANY.

The undersigned participant in the Employee Stock Bonus Plan (hereinafter
referred to as the "Plan") of The Loewen Group Inc. (the "Company") hereby
instructs The R-M Trust Company as Plan Agent to exercise at the above meeting
the voting rights pertaining to the undersigned's five Common shares of the
Company under the Plan as follows:

<TABLE>
<S> <C> <C> <C>
VOTING CHOICE FOR THE ELECTION AS A DIRECTOR OF: FOR WITHHOLD
Reverend Kenneth Sidney Bagnell [ ] [ ]
Doctor Earl Alan Grollman [ ] [ ]
Charles Barnard Loewen [ ] [ ]
Lawrence Miller [ ] [ ]

VOTING CHOICE ON THE:
Appointment of KPMG as auditors of the Company [ ] [ ]
for the ensuing year.

VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution authorizing the Directors to fix the [ ] [ ] [ ]
remuneration to be paid to the auditors.

VOTING CHOICE ON THE:
Resolution to approve amendments of the Employee
Stock Option Plan (United States) to increase:
(a) the numbers of Common shares issuable [ ] [ ] [ ]
thereunder by 1,000,000 Common shares; and
(b) the number of Common shares for which [ ] [ ] [ ]
options may be granted thereunder in any one
calendar year to any one participant by
300,000 Common shares.

VOTING CHOICE ON THE:
Resolution to approve amendments of the Employee
Stock Option Plan (Canada) to increase:
(a) the numbers of Common shares issuable [ ] [ ] [ ]
thereunder by 1,000,000 Common shares; and
(b) the number of Common shares for which [ ] [ ] [ ]
options may be granted thereunder in any one
calendar year to any one participant by
300,000 Common shares.
</TABLE>

<TABLE>
<S> <C> <C> <C>
VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution to approve the amendment of
the Stock Bonus Plan to increase the [ ] [ ] [ ]
number of shares issuable thereunder
by 50,000 Common shares.

NOTE: IF YOU DATE, SIGN AND MAIL THESE VOTING INSTRUCTIONS TO THE R-M
TRUST COMPANY BUT DO NOT INSTRUCT THE R-M TRUST COMPANY HOW TO VOTE
YOUR FIVE COMMON SHARES WITH RESPECT TO ANY OF THE ITEMS ABOVE, THE
R-M TRUST COMPANY, AS PLAN AGENT, WILL VOTE YOUR FIVE COMMON SHARES
FOR EACH UNMARKED ITEM. IN THE CASE OF ANY AMENDMENTS OR VARIATIONS
TO THE RESOLUTIONS, AND IN THE CASE OF ANY OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING, YOU HEREBY CONFER DISCRETIONARY
AUTHORITY ON THE R-M TRUST COMPANY, AS PLAN AGENT, TO ACT AND VOTE
ON YOUR BEHALF ON ANY POLL (BALLOT) AS MANAGEMENT OF THE COMPANY MAY
RECOMMEND.

DATE:
----------------------------------

- ----------------------------------------------------------
Signature:

- ----------------------------------------------------------
Print Name:

</TABLE>
<PAGE> 40

VOTING INSTRUCTIONS
TO THE R-M TRUST COMPANY
AS THE TRUSTEE'S AGENT UNDER THE 401(k) RETIREMENT PLAN
FOR THE ANNUAL GENERAL MEETING OF THE LOEWEN GROUP INC.
TO BE HELD ON MAY 15, 1997
AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF

INSTRUCTIONS:

1. PLEASE INSTRUCT THE R-M TRUST COMPANY, BY CHECKING THE APPROPRIATE BOXES,
HOW TO VOTE THE COMMON SHARES ALLOCATED TO YOU UNDER THE 401(k) RETIREMENT
PLAN FOR EACH OF THE ITEMS SET FORTH BELOW.

2. DATE, SIGN AND MAIL IN THE ATTACHED ENVELOPE TO THE R-M TRUST COMPANY.

The undersigned participant in the 401(k) Retirement Plan (hereinafter referred
to as the "Plan") of Loewen Group International, Inc. hereby instructs The R-M
Trust Company as the Trustee's Agent to exercise at the above meeting the voting
rights pertaining to the Common shares of the Loewen Group Inc. (the "Company")
allocated to the undersigned under the Plan as follows:

VOTING CHOICE ON THE:
Appointment of KPMG as auditors of the Company for [ ] [ ]
the ensuing year.

VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution authorizing the Directors to fix the [ ] [ ] [ ]
remuneration to be paid to the auditors.

<TABLE>
<S> <C> <C> <C>
VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution to approve the amendment of the [ ] [ ] [ ]
Employee Stock Bonus Plan to increase the
number of shares issuable thereunder by
50,000 Common shares.
</TABLE>

NOTE: IF YOU DATE, SIGN AND MAIL THESE VOTING INSTRUCTIONS TO THE R-M TRUST
COMPANY BUT DO NOT INSTRUCT THE R-M TRUST COMPANY HOW TO VOTE YOUR COMMON
SHARES WITH RESPECT TO ANY OF THE ITEMS ABOVE, THE R-M TRUST COMPANY, AS
THE TRUSTEE'S AGENT, WILL VOTE THE COMMON SHARES ALLOCATED TO YOU UNDER
THE PLAN FOR EACH UNMARKED ITEM. IN THE CASE OF ANY AMENDMENTS OR
VARIATIONS TO THE RESOLUTIONS, AND IN THE CASE OF ANY OTHER MATTERS WHICH
MAY PROPERLY COME BEFORE THE MEETING, YOU HEREBY CONFER DISCRETIONARY
AUTHORITY ON THE R-M TRUST COMPANY, AS THE TRUSTEE'S AGENT TO ACT AND
VOTE ON YOUR BEHALF ON ANY POLL (BALLOT) AS MANAGEMENT OF THE COMPANY MAY
RECOMMEND.

DATE:
--------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Signature:

- --------------------------------------------------------------------------------
Print Name:

<PAGE> 41

THE LOEWEN GROUP INC.

EMPLOYEE STOCK OPTION PLAN (UNITED STATES)
(RESTATED AND AMENDED AS AT APRIL 7, 1994 AND FURTHER AMENDED AS AT
APRIL 7, 1995, SEPTEMBER 19, 1995, APRIL 2, 1996, NOVEMBER 20, 1996 AND MAY -,
1997)

Section 1 - General

(a) The purpose of the Employee Stock Option Plan (United States) (the "Plan")
is to promote the interests of The Loewen Group Inc. (the "Company") by:

(i) furnishing Eligible Employees (as defined below) with greater
incentive to develop and promote the business and financial success
of the Company; and

(ii) further associate the interests of Eligible Employees with
those of the shareholders of the Company by encouraging such
employees to acquire share ownership in the Company.

(b) The Plan is not qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code") and is not subject to any of the provisions of
the Employment Retirement Income Security Act of 1974.

(c) Any questions concerning the Plan should be directed to the Corporate
Secretary of the Company, at the Company's principal executive office located
at 4126 Norland Avenue, Burnaby, British Columbia, Canada V5G 3S8, telephone
number (604) 299-9321.

(d) The Plan shall be governed by, and construed in accordance with, the laws
of the province of British Columbia.

Section 2 - Eligibility

(a) Under the Plan, employees of the Company or any of its direct or indirect
subsidiaries ("Subsidiaries") who are residents of the United States or its
territories (the "Eligible Employees") are eligible to be granted options
("Options") to purchase Common shares without par value of the Company
("Shares").

(b) The Compensation Committee of the Company (the "Committee") or such officer
as the Committee may designate shall determine from time to time those Eligible
Employees to be granted Options under the Plan, and the number of Shares
subject to each such Option. Each grant of an Option pursuant to the Plan
shall be evidenced by a stock option agreement ("Option Agreement") executed by
the employee to whom the Option is granted (the "Optionee") and the Company.
Each Option Agreement shall incorporate such terms and conditions as the
Committee, in its discretion, deems consistent with the terms of the Plan.

<PAGE> 42

(c) Each Option Agreement shall specify the dates upon which all or any
installment of the Option will be exercisable. An Option may be exercised when
installments vest at any time and from time to time thereafter with respect to
all or a portion of the Shares covered by such vested installments. In
addition, if an Offer (as hereinafter defined) is made, the Board of Directors,
or Committee, may while the Offer remains outstanding:

(i) determine that each Option granted by the Company to purchase
Shares shall, notwithstanding any vesting period or deferral of the
right to exercise otherwise applicable, be immediately exercisable
effective on and after a date declared by the Board of Directors, or
Committee, to be an advanced exercise date ("Advanced Exercise
Date"); and

(ii) rescind any declaration of an Advanced Exercise Date but no
such rescission shall affect the validity of the exercise of such
Option if validly exercised on or after a particular Advanced
Exercise Date and before the date of rescission of the declaration
of the particular Advanced Exercise Date.

For the purposes hereof, "Offer" means an offer to acquire the Shares made to
the holders of the Company's Shares where the Shares which are the subject of
the offer to purchase, together with the offeror's then presently owned Shares,
will in the aggregate exceed twenty percent (20%) of the outstanding Shares of
the Company and where two or more persons or companies make offers jointly or
in concert or intending to exercise jointly or in concert any voting rights
attaching to the Shares to be acquired, then the Shares owned by each of them
shall be included in the calculation of the percentage of the Shares of the
Company owned by each of them. Paragraphs (i) and (ii) shall apply to each
Option granted or to be granted by the Company, which is outstanding at the
time of any such declaration regardless of the date of grant thereof, provided
that all other terms and conditions of the Option shall continue to apply and
nothing herein shall operate to extend, enlarge or revise any Option which has
expired, has been exercised, has been cancelled or otherwise has ceased to
exist.

Section 3 - Number of Shares Subject to Plan

(a) The number of Shares issuable pursuant to the exercise of Options after the
effective date of the restatement and amendment of the Plan is limited as
follows:

(i) subject to adjustment pursuant to Section 9, the aggregate
number of Shares issuable pursuant to Options under the Plan shall
not exceed 4,400,000 Shares (including 1,178,457 Shares under
Options previously granted but not exercised as of April 7, 1994);
and

(ii) the number of Shares reserved for issuance to any one person
pursuant to options (whether granted under this Plan or otherwise)
shall not exceed 5% of the total issued and outstanding Shares on a
non-diluted basis.

<PAGE> 43

(b) The maximum number of Shares for which Options are granted after the
effective date of restatement and amendment of the Plan in any one calendar
year under the Plan to any one Eligible Employee shall not exceed 500,000
Shares, subject to adjustment pursuant to Section 9.

(c) If an Option granted under the Plan expires for any reason without being
exercised in full, the number of Shares that would have been issuable upon the
exercise of such Option shall continue to be available under the Plan.

(d) Subject to the maximum limits described in subsections (a) and (b) above,
the Board of Directors of the Company (the "Board") shall reserve the number of
Shares required to honor Options granted from time to time to Optionees
pursuant to the Plan, and shall reserve from time to time additional Shares, if
any, to ensure that a sufficient number of Shares are available for purchase
under Options granted in the future.

Section 4 - Administration of the Plan

(a) The Plan shall be administered by the Committee which shall be comprised of
two or more members of the Board who are "outside directors" within the meaning
of Section 162(m) of the United States Internal Revenue Code of 1986, as
amended; provided, however, that, with respect to Options that may be granted
to Eligible Employees who are not subject to Section 16 of the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Committee
may delegate its responsibilities to a subcommittee consisting of one or more
executive officers of the Company. The address of the Committee is care of the
Company's principal executive office at 4126 Norland Avenue, Burnaby, British
Columbia, Canada, V5G 3S8.

(b) The Committee shall have all powers and discretion necessary or appropriate
to administer the Plan, consistent with and subject to the parameters set forth
in the Plan, including but not limited to the power (1) to determine from time
to time the Eligible Employees to be granted Options under the Plan, (2) to
determine the number of Shares subject to each Option granted under the Plan,
(3) to set or amend the terms of each Option Agreement, (4) to interpret the
Plan, (5) to adopt such rules or guidelines as it deems appropriate to
administer the Plan, and (6) to make all other decisions, and take or cause to
be taken all other actions, relating to the operation of the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons. No member of the Committee shall be liable to any person for any
action or decision made in good faith in connection with the performance of the
Committee's duties or the exercise of its powers under the Plan.

Section 5 - Option Price and Exercisability

(a) The exercise price of an Option shall not be less than the closing price of
a Share on the trading day immediately prior to the date of grant, as quoted on
The Toronto Stock

<PAGE> 44

Exchange (with respect to Options denominated in Canadian currency) and on the
Nasdaq National Market or a United States national securities exchange or
quotation system on which the Shares are then traded (with respect to Options
denominated in United States currency).

(b) Except as otherwise provided in an Option Agreement, no Options shall be
exercised by an Optionee until at least 6 months after the date of the grant.
An Optionee may exercise an Option by delivering to the Company a duly
completed form of notice of such exercise together with full payment for the
Shares being purchased under the Option. The form of notice must identify the
Option being exercised, state the exercise price, be signed by the Optionee and
be dated the date of exercise. The Company shall promptly notify the Optionee
as to any taxes required to be withheld and collected from the Optionee.
Unless otherwise provided in the Option Agreement or consented to by the
Company, payment for the Shares must be made in the currency in which the
Option is denominated.

(c) The sale of the Shares to the Optionee shall be deemed to have occurred,
and the Optionee shall be deemed to be the holder of such Shares, on the date
that both the form of notice and the payment in a manner acceptable to the
Company of the exercise price and any applicable taxes have been received by
the Company. A certificate representing the Shares acquired by the Optionee
shall be issued and delivered to the Optionee by the Company as soon is
reasonably possible after the sale.

Section 6 - Termination of Options

(a) Any Option granted pursuant to the Plan shall terminate upon the earlier
of: (i) ten years after the date of grant; and (ii) such event(s) of
termination as are provided in the Option Agreement or as are determined from
time to time by the Committee.

(b) A change in the duties or position of the Optionee, or the transfer of the
Optionee from one position with the Company to another, or the transfer of an
Optionee from one employer to another employer shall not trigger the
termination of such Optionee's Option so long as such Optionee remains a bona
fide employee of the Company or any Subsidiary.

Section 7 - Non-transferability of Options

Except as hereafter provided, an Option granted under the Plan may not be
transferred, pledged or assigned otherwise than by will or the laws of descent
and distribution and may be exercised only by the Optionee during his or her
lifetime. Options that are exercisable at the date of an Optionee's death may
be exercised by the Optionee's heirs entitled thereto or by the administrator
or the executor or trustee of his or her last will and testament. Any such
exercise may not take place after the earlier of: (i) the expiration of the
Option in accordance with Section 6(a)(i) above; and (ii) two years after the
date of the Optionee's death without the prior written consent of the Company.

<PAGE> 45

Section 8 - Termination or Amendment

Subject to regulatory approval and, where required, approval of the
shareholders of the Company, the Committee may, at any time and for any reason,
amend or terminate the Plan, subject to ratification by the Board. The Plan
shall remain in effect until it is terminated by the Committee, subject to
ratification by the Board. No Options may be granted under the Plan after its
termination, but no termination or amendment of the Plan shall affect any
previously granted Option.

Section 9 - Protection Against Dilution

The Committee shall adjust the number of Shares covered by the Plan and
any Option in a manner it considers equitable to reflect any change in the
capitalization of the Company including, but not limited to, such changes as
stock dividends, consolidations and subdivisions of shares or changes resulting
from an amalgamation of the Company with one or more corporations. No
fractional shares or rights to acquire a fractional share will be created as a
result of an adjustment made pursuant to this section. The Committee shall
also adjust the exercise price under any Option in a manner it considers
equitable if the number of Shares covered by the Option is adjusted pursuant to
this section.

Section 10 - Rights as Shareholders

An Optionee shall have no rights as a shareholder (including the right to
vote and to receive dividends) of the Company with respect to Shares covered by
Options until such participant becomes the holder of record of such Shares.

Section 11 - Compliance with Certain U.S. Securities Laws

With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. If any
provision of the Plan or action by the Committee fails to so comply, it shall
be deemed null and void, to the extent permitted by law and deemed advisable by
the Committee.

Section 12 - Restrictions on Resale

Under United States federal law, Shares purchased pursuant to Options
granted under the Plan by Optionees who are not "affiliates" of the Company
within the meaning of the Securities Act of 1933, as amended (the "Act"),
generally may be resold without registration or other restriction under the
Act. Generally, Shares purchased by "affiliates" pursuant to Options granted
under the Plan may not be resold to the public in the United States without
registration

<PAGE> 46

under the Act, except pursuant to an exemption from such registration. One
such exemption from registration is Rule 144 under the Act, which permits
resales by affiliates so long as certain volume, manner of sale and other
requirements have been satisfied. An "affiliate" is a person who directly or
indirectly controls, or is controlled by, or is under common control with, the
Company.

Section 13 - General Limitations

Neither the Plan nor any Option granted hereunder is to be interpreted as
giving any person a right to remain an employee of the Company or any of its
Subsidiaries. The Company and its Subsidiaries reserve the right to terminate
anyone's service at any time, with or without cause, and neither the Plan nor
any Option granted hereunder affects that right. THE EMPLOYEE ASSUMES THE RISK
OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE SHARES.

<PAGE> 47

THE LOEWEN GROUP INC.

EMPLOYEE STOCK OPTION PLAN (CANADA)
(RESTATED AND AMENDED AS AT APRIL 7, 1994 AND FURTHER AMENDED AS AT
APRIL 7, 1995, SEPTEMBER 19, 1995, APRIL 2, 1996, NOVEMBER 20, 1996 AND MAY -,
1997)

Section 1 - General

(a) The purpose of the Employee Stock Option Plan (Canada) (the "Plan") is to
promote the interests of The Loewen Group Inc. (the "Company") by:

(i) furnishing Eligible Employees (as defined below) with greater
incentive to develop and promote the business and financial success
of the Company; and

(ii) further associate the interests of Eligible Employees with
those of the shareholders of the Company by encouraging such
employees to acquire share ownership in the Company.

(b) Any questions concerning the Plan should be directed to the Corporate
Secretary of the Company, at the Company's principal executive office located
at 4126 Norland Avenue, Burnaby, British Columbia, Canada, V5G 3S8, telephone
number (604) 299-9321.

Section 2 - Eligibility

(a) Under the Plan, employees of the Company or any of its direct or indirect
subsidiaries ("Subsidiaries") who are residents of Canada ("Eligible
Employees") are eligible to be granted options ("Options") to purchase Common
shares without par value of the Company ("Shares").

(c) Each Option Agreement shall specify the dates upon which all or any
instalment of the Option will be exercisable. An Option may be exercised when
instalments vest at any time and from time to time thereafter with respect to
all or a portion of the Shares covered by such vested installments. In
addition, if an Offer (as hereinafter defined) is made, the Board of Directors,
or Committee, may while the Offer remains outstanding:

<PAGE> 48

Section 3 - Number of Shares Subject to Plan

(a) The number of Shares issuable pursuant to the exercise of Options after the
effective date of restatement and amendment of the Plan is limited as follows:

(i) subject to adjustment pursuant to Section 9, the aggregate
number of Shares issuable pursuant to Options under the Plan shall
not exceed 2,700,000 Shares (including 1,051,025 Shares under
Options previously granted but not exercised as of April 7, 1994);
and

<PAGE> 49

(d) Subject to the maximum limits described in subsections (a) and (b) above,
the Board of Directors of the Company (the "Board") shall reserve the number of
Shares required to honour Options granted from time to time to Optionees
pursuant to the Plan, and shall reserve from time to time additional Shares, if
any, to ensure that a sufficient number of Shares are available for purchase
under Options granted in the future.

Section 4 - Administration of the Plan

(a) The Plan shall be administered by the Committee which shall be comprised of
two or more members of the Board who are "outside directors" within the meaning
of Section 162(m) of the United States Internal Revenue Code of 1986, as
amended; provided, however, that, with respect to Options that may be granted
to Eligible Employees who are not subject to Section 16 of the United States
Securities Exchange Act of 1934, as amended, the Committee may delegate its
responsibilities to a subcommittee consisting of one or more executive officers
of the Company. The address of the Committee is care of the Company's
principal executive office at 4126 Norland Avenue, Burnaby, British Columbia,
Canada, V5G 3S8.

Section 5 - Option Price and Exercisability

(a) The exercise price of an Option shall not be less than the closing price of
the Shares as quoted on The Toronto Stock Exchange on the trading day
immediately prior to the date of the grant.

(b) Except as otherwise provided in an Option Agreement, no Options shall be
exercised by an Optionee for at least 6 months after the date of the grant. An
Optionee may exercise an Option by delivering to the Company a duly completed
form of notice of such exercise together with full payment for the Shares being
purchased under the Option. The form of notice must identify the Option being
exercised, state the exercise price, be signed by the Optionee and be dated the
date of exercise. The Company shall promptly notify the Optionee as to any
taxes

<PAGE> 50

required to be collected from the Optionee. Unless otherwise provided in the
Option Agreement or consented to by the Company, payment for the Shares must be
made in the currency in which the Option is denominated.

Section 6 - Termination of Options

Section 7 - Non-transferability of Options

Except as hereafter provided, an Option granted under the Plan may not be
transferred, pledged or assigned otherwise than by will or the laws of descent
and distribution and may be exercised only by the Optionee during the
Optionee's lifetime. Options that are exercisable at the date of an Optionee's
death may be exercised by the Optionee's heirs entitled thereto or by the
administrator or the executor or trustee of his or her last will and testament.
Any such exercise may not take place after the earlier of: (i) the expiration
of the Option in accordance with Section 6(a)(i) above; and (ii) two years
after the date of the Optionee's death without the prior written consent of the
Company.

Section 8 - Termination or Amendment

<PAGE> 51

Section 9 - Protection Against Dilution

The Committee shall adjust the number of Shares covered by the Plan and
any Option in a manner which it considers equitable to reflect any change in
the capitalization of the Company including, but not limited to, such changes
as stock dividends, consolidations and subdivisions of shares or changes
resulting from an amalgamation of the Company with one or more corporations.
No fractional shares or rights to acquire a fractional share will be created as
a result of an adjustment made pursuant to this section. The Committee shall
also adjust the exercise price under any Option in a manner it considers
equitable if the number of Shares covered by the Option is adjusted pursuant to
this section.

Section 10 - Rights as Shareholders

Section 11 - Securities Regulation

Where necessary to effect an exemption from the registration or
distribution requirements applicable to the Options or the Shares under
applicable securities laws or policies, the Committee may take such action or
require such action or agreement by any Optionee as may from time to time be
necessary to comply with such applicable securities laws and policies. The
directors may decline to grant some or all of the Options or to issue some or
all of the Shares pursuant to the Plan unless the grant of such Options or the
issuance of such Shares is exempt from such requirements, upon the advice of
counsel to the Company.

Section 12 - General Limitations

THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF
THE SHARES.

<PAGE> 52

THE LOEWEN GROUP INC.

EMPLOYEE STOCK BONUS PLAN
(AS AMENDED AS AT APRIL 7, 1995 AND MAY -, 1997)

1. PURPOSE AND EFFECTIVE DATE

1.1 PURPOSE. The purpose of the Plan is to enhance the sense of commitment and
community among the Employees of the Company and to foster the interest of such
Employees in the growth and development of the Company by providing such
Employees, through the grant of Common shares in TLGI, with a proprietary
interest in the Company and a real sense of ownership and by means of the
foregoing to advance the interests of the Company.

1.2 EFFECTIVE DATE. The Plan shall be effective as of September 1, 1993.

2. DEFINITION AND INTERPRETATION

2.1 DEFINITIONS. In the Plan, unless the context otherwise requires, the
following terms shall have the following meanings:

"Board of Directors" means the Board of Directors of TLGI;

"Committee" means the committee appointed by the Board of Directors
pursuant to Section 3.1 of the Plan;

"Company" means TLGI and its Subsidiaries;

"Employee" means, at a relevant date:

(a) a regular full time employee (including officer) of TLGI or a
Subsidiary who has been so employed for at least 90 consecutive days
as at that date;

(b) a regular part time employee (including officer) of TLGI or a
Subsidiary who has been so employed for at least 90 consecutive days
as at that date, is not employed by any company or person other than
TLGI or a Subsidiary, works an average of 20 hours per week and is
entitled to substantially all of the benefits of a regular full time
employee;

(c) a part time or on-call employee of TLGI or a Subsidiary who as
at that date has been so employed for at least 5 years, works an
average of 5 hours per week or 260 hours per year and who the
Committee determines has made a contribution to the Company; and

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<PAGE> 53

(d) an employee of TLGI or a Subsidiary who as at that date is paid
on a commission basis, is meeting his or her sales and income
requirements and is entitled to substantially all of the benefits of
a regular full time employee;

and for the purpose of the Plan:

(e) the average of 5 hours per week or 20 hours per week shall be
determined as follows:

(i) if the employee has been employed for 12 months or
more, then averaged over a period of 12 months preceding the
relevant date;

(ii) if the employee has been employed less than 12
months preceding the relevant date, then averaged over such
period of employment; or

(iii) on such other basis as the Committee may determine;

(f) employed for consecutive days shall mean employment without any
termination or leave of absence, except for a leave of absence
approved by the employer which is less than 6 consecutive months in
duration;

(g) there shall be taken into account employment with a company or
person before that company became a Subsidiary or before that
company's or person's funeral service or related assets were
acquired by TLGI or a Subsidiary; and

(h) "Employee" shall not include an employee of another company or
person who is on temporary loan to TLGI or a Subsidiary, a short
term temporary employee, a probationary employee, a director of TLGI
or a Subsidiary unless such director is otherwise eligible as an
Employee and such other persons or class of persons as may be
excluded from participation from time to time by the Committee;

"Participant" means an Employee who has delivered an acknowledgment in
accordance with Section 4.3 of the Plan;

"Plan" means the employee stock bonus plan described herein;

"Plan Administrator" means the person or persons designated from time to
time by the Committee pursuant to Section 3.2 of the Plan as being
responsible for maintaining records in connection with the Plan;

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<PAGE> 54

"Plan Agent" means the person or persons from time to time appointed by
the Board of Directors to act as plan agent for the Plan;

"Shares" means Common shares of TLGI;

"Subsidiaries" means any corporations which are direct or indirect
subsidiaries of TLGI; and

"TLGI" means The Loewen Group Inc., a company incorporated under the laws
of the Province of British Columbia and any successor company.

2.2 ARTICLES, SECTIONS AND HEADINGS. The division of the Plan into Articles
and Sections and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation of the Plan.

2.3 EXTENDED MEANINGS. Where the context so requires, words importing the
singular include the plural and vice versa, and words importing the masculine
gender include the feminine and neuter genders.

2.4 APPLICABLE LAW. The Plan shall be governed by and construed in accordance
with the laws of the Province of British Columbia.

3. ADMINISTRATION OF THE PLAN

3.1 COMMITTEE. The Plan will be administered by a specifically designated
Committee of the Board of Directors. The Committee shall consist of such two
or more directors of TLGI as the Board of Directors may designate from time to
time. The Committee is authorized to interpret and construe the Plan,
including but not limited to adjudicating as to and rectifying inconsistencies
and omissions, and may from time to time make, amend and rescind rules and
regulations for carrying out the Plan. The Committee may in its absolute
discretion, if it determines that there is hardship or other good cause, grant
relief from the literal provisions of the Plan, but no such grant of relief
shall constitute a precedent in any other circumstance. Any such interpretation
or construction of any provision of the Plan or grant of relief shall be final
and conclusive. All administrative costs of the Plan shall be paid by TLGI.
No member of the Committee shall be liable for any action or inaction or
determination made in good faith with respect to the Plan or any Shares granted
under it.

3.2 PLAN ADMINISTRATOR. The Committee may appoint a person or persons from
time to time, called a Plan Administrator, to maintain records in connection
with the Plan.

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<PAGE> 55

4. PARTICIPATION

4.1 INITIAL ISSUANCE. TLGI will, subject to Section 4.3, issue on the date
determined by the Committee (the "Initial Issuance Date"), 5 Shares for each
person who is an Employee as of June 30, 1993 and has not ceased to be an
Employee as of the Initial Issuance Date, for services performed by that
person. The 5 Shares may be issued either (a) directly to and in the name of
each Employee or (b) in the name of the Plan Agent and held by the Plan Agent
as nominee for each such person, as the Committee may determine in its sole
discretion.

4.2 FUTURE ISSUANCES. TLGI will, subject to Section 4.3, issue, on dates from
time to time determined by the Committee (each such date being at approximately
three month intervals or such other intervals as the Committee may select) 5
Shares for each person (other than a person who has, in the past, received 5
Shares pursuant to Section 4.1 or this Section 4.2), who qualifies as an
Employee after June 30, 1993 and has not ceased to be an Employee as of the
relevant issuance date, for services performed by that person. The 5 Shares
may be issued either (a) directly to and in the name of each Employee or (b) in
the name of the Plan Agent and held by the Plan Agent as nominee for each such
person as the Committee may determine in its sole discretion.

4.3 ACKNOWLEDGMENT. An Employee who has qualified pursuant to Section 4.1 or
4.2 must, as a condition to the issuance of the 5 Shares relating to such
person, deliver to the Plan Administrator prior to the date of issue of that
Employee's 5 Shares a completed form of acknowledgment substantially in the
form attached hereto as Schedule A or in such other form as the Committee may
approve, expressing the agreement of such Employee to the terms and conditions
of the Plan as it may be amended from time to time. An Employee delivering
such acknowledgment shall be a Participant in the Plan.

4.4 ONE TIME ENTITLEMENT. Unless the Committee otherwise determines, any one
person's entitlement under the Plan is limited to one grant of 5 Shares.

5. SPECIFIC PROVISIONS AFFECTING SHARES

5.1 HOLD PERIOD. A Participant may not sell, assign, mortgage, pledge or
otherwise dispose of that Participant's 5 Shares while that Participant is an
Employee. If that Participant ceases to be an Employee for any reason
(including death) then that Participant or that Participant's personal
representative may not sell, assign, mortgage, pledge or otherwise dispose of
that Participant's 5 Shares unless and until 3 years have elapsed since the
date of issuance of such 5 Shares.

5.2 PLAN AGENT AS HOLDER. At the sole discretion of the Committee, a
certificate representing the 5 Shares awarded to a Participant may be issued
directly to and in the name of such Participant or may be issued in the name of
the Plan Agent and held by the Plan Agent as nominee for such Employee. If the
Plan Agent so acts, the Plan Agent will continue to be the registered

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<PAGE> 56

holder of 5 Shares on behalf of a Participant during the relevant hold period
described in Section 5.1 and thereafter until that Participant makes a written
request to the Plan Administrator that a share certificate for that
Participant's 5 Shares be issued to that Participant or that Participant's
order, and TLGI has issued such share certificate. A Participant shall be
solely responsible for the sale or other disposition of that Participant's 5
Shares including compliance with all relevant securities laws and conditions
imposed by relevant stock exchanges and quotation systems, provided that
nothing herein contained shall preclude a Participant from participating, if
eligible, in any plan that TLGI may establish for the purchase of Shares from
shareholders.

5.3 DIVIDENDS AND DISTRIBUTIONS. Any dividends (cash, stock or in specie)
declared on each Participant's 5 Shares and any other distributions (including
any warrants, options or rights) with respect to such Shares shall be paid or
delivered by TLGI to either (a) the respective Participants entitled thereto or
(b) the Plan Agent, as the Committee may determine in its sole discretion. If
such dividends or other distributions are paid or delivered to the Plan Agent,
then the Plan Agent shall hold such dividends or other distributions for the
benefit of the Participants entitled thereto, without interest or other return
to such Participants on such dividends or other distributions held, during the
relevant hold period described in Section 5.1 and thereafter, subject to the
following sentence. If a Participant requests a certificate for that
Participant's 5 Shares pursuant to Section 5.2, the Plan Agent shall pay or
deliver the aggregate dividends or other distributions held for that
Participant to that Participant or that Participant's order, less any
withholding taxes. TLGI shall be entitled to earn interest, commissions, fees
or other returns on all dividends or other distributions held by the Plan
Agent. Nothing herein contained shall preclude a Participant from
participating, if eligible, in a plan that TLGI may establish for dividend
reinvestment and/or share purchases. Any warrants, options or rights with
respect to the Shares may in the sole discretion of the Committee be delivered
to the Participants for exercise or be allowed to lapse (if the Committee
determines that there is negligible value to the warrants, options or rights)
or be sold by the Plan Agent on behalf of the Participants, and the proceeds of
any such sale shall be proportionately credited to each Participant.

5.4 VOTING. Shares held directly by a Participant will be voted by such
Participant. Shares held by the Plan Agent under the Plan will be voted by the
Plan Agent in accordance with the directions, if any, of the respective
Participants and in the absence of a direction will be voted for any proposals
or resolutions proposed by management of TLGI.

5.5 REPRESENTATIVE CERTIFICATE. In the event that the Plan Agent holds Shares
on behalf of a Participant, the Plan Administrator may, but shall not be
obligated to, issue or cause to be issued to a Participant a representative
certificate confirming the entitlement of that Participant to the beneficial
interest in that Participant's 5 Shares held in the name of the Plan Agent.

5.6 PROTECTION AGAINST DILUTION. The Committee will adjust the number of
Shares covered by the Plan in a manner which it considers equitable to reflect
any change in the capitalization of TLGI including, but not limited to, such
changes as stock dividends, consolidations and subdivisions of shares or
changes resulting from an amalgamation of TLGI with one or more

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<PAGE> 57

corporations. No fractional shares or rights to acquire a fractional share
will be created as a result of an adjustment made pursuant to this section.

6. MAXIMUM NUMBER OF SHARES

6.1 LIMITATIONS. The number of Shares that may be issued under the Plan is
limited as follows:

(a) the aggregate number of Shares to be issued pursuant to the Plan
shall not exceed 100,000 Shares;

(b) the aggregate number of Shares issued shall not exceed 1% of the
total issued and outstanding Shares on an annual basis; and

(c) Shares issued to insiders of TLGI (as defined in the Securities
Act (British Columbia)) shall not exceed 0.5% of the total issued
and outstanding Shares on an annual basis;

subject to any change to such limitations as determined by the Committee and as
required and approved by relevant regulatory authorities, stock exchanges,
quotation systems and, where required, the shareholders of TLGI.

7. EMPLOYMENT

7.1 NO ENTITLEMENT. The Plan is a voluntary plan on the part of the Company
and shall not constitute consideration for or an inducement to or condition of
the employment of any Employee. Nothing contained in the Plan shall confer upon
any Employee any right with respect to employment or continuance of employment
with TLGI or any Subsidiary or interfere in any way with the right of TLGI or
any Subsidiary to terminate an Employee's employment at any time. The Plan
does not give any Employee or any beneficiary of an Employee any right or claim
to any benefit except to the extent provided for in the Plan.

8. SECURITIES REGULATION AND TAX COMPLIANCE

8.1 SECURITIES COMPLIANCE. Where necessary to effect exemption from
registration or distribution or to effect qualification of the Shares under
securities laws or policies applicable to the Shares, the Board of Directors or
the Committee may take such action or require such action or agreement by any
Employee as may from time to time be necessary to comply with such applicable
securities laws and policies. Such action may include but is not limited to
(a) requiring a Participant to acquire Shares with investment intent and not
with a view to their distribution, and to present to the Board of Directors or
the Committee an undertaking to that effect in a form

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<PAGE> 58

acceptable to the Board of Directors or the Committee, as the case may be, (b)
the legending of certificates issued pursuant to the Plan, (c) requiring of an
opinion of counsel for a transferor or transferee with respect to the legality
of the transfer of Shares issued pursuant to the Plan and (d) the establishment
of other or different custody arrangements whereby Shares issued pursuant to
the Plan will be held by a custodian designated by the Board of Directors or
the Committee pursuant to a custodian arrangement for the benefit of
Participants. This Section 8.1 shall in no way obligate the Company to
undertake the registration or qualification of any Shares under any securities
laws applicable to the securities of the Company. The Committee may decline to
issue some or all of the Shares pursuant to the Plan unless the Shares to be
issued hereunder are qualified under appropriate securities laws, or the
issuance of the Shares hereunder is exempt therefrom in the opinion of the
Committee, upon advice of counsel to the Company.

8.2 SECTION 16 COMPLIANCE. With respect to persons subject to Section 16 of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the 1934 Act. If any provision of the Plan or
action by the Plan Administrator fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Plan
Administrator.

8.3 TAX AND OTHER COMPLIANCE. The Participant shall be solely responsible for
reporting and paying all taxes, duties and imposts relating to the Shares
including but not limited to reporting on such Participant's income tax return
and paying tax on the value of the Shares on issuance, tax on dividends and
other distributions and tax on the sale or other disposition of the Shares.
The Company may make withholdings from salary or other sums payable to
Participants on account of taxes, duties and imposts relating to the Shares,
dividends or other distributions.

8.4 DELAYING CERTIFICATES. Issuance, transfer or delivery of certificates for
Shares issued or to be issued pursuant to the Plan may be delayed, at the
discretion of the Committee, until the Committee is satisfied that the
applicable requirements of securities, income tax and other laws and the rules,
regulations and policies of stock exchanges and quotation systems have been
met.

9. AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN

9.1 BOARD OR COMMITTEE MAY AMEND, SUSPEND OR TERMINATE. The Board of Directors
or the Committee may amend, suspend or terminate the Plan, in whole or in part,
if and when it is advisable in the absolute discretion of the Board of
Directors or the Committee (including but not limited to amendment, suspension
or termination of the Plan due to regulatory requirements) and to provide for
the consequences thereof (including but not limited to the consequences that
Employees will have no entitlement or further entitlement under this Plan upon
amendment, suspension or termination); provided, however, that the Plan may not
be amended more than once every six months, except to comply with changes to
the U.S. Internal Revenue Code or the U.S. Employee Retirement Income Security
Act of 1974. In particular and without limitation, the Board of Directors or
the Committee may determine that share certificates for the Shares shall be
issued to Participants or that dividends or other distributions will be paid or
delivered to

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<PAGE> 59

Participants before the expiration of the relevant hold period in Section 5.1
or without a written request pursuant to Section 8.1. The provisions of the
Plan are subject to and shall be read as incorporating all laws, rules,
regulations and policies as may from time to time be applicable thereto,
including but not limited to rules, regulations and policies of any stock
exchange or quotation system. Any amendment of the Plan is subject to
regulatory approval in accordance with such laws, rules, regulations and
policies and, where required thereunder, the approval of the shareholders of
TLGI.

10. FUTURE VALUE

10.1 NO REPRESENTATION. The Participants by participating in the Plan shall be
deemed to have accepted all risks associated with acquiring Shares pursuant to
the Plan. The Company, the Board of Directors, the Committee, the Plan
Administrator(s) and the Plan Agent make no representation, warranty or
guarantee as to the future value of the Shares and shall not be liable to any
Employee for any loss resulting from a decline, or failure to increase, in the
market value of the Shares issued with respect to that Employee under the Plan
or as a result of the amendment, suspension or termination of the Plan.

11. NON-ASSIGNABILITY OF RIGHTS

11.1 NO ASSIGNMENT. No right of an Employee under the Plan is capable of being
sold, assigned, mortgaged, pledged or otherwise disposed of, in whole or in
part.

12. NECESSARY APPROVALS

12.1 CESSATION OF PLAN. The obligation of TLGI to issue and deliver any Shares
in accordance with the Plan is subject to any necessary approval of any
regulatory authority having jurisdiction over the securities of TLGI. If any
Shares cannot be issued to or for the benefit of a Participant for any reason
whatsoever, the obligation of TLGI, if any, to issue such Shares shall
terminate without further liability.

13. SEVERABILITY

13.1 SEVERABILITY. Each provision of the Plan shall be severable, and the
invalidity, illegality or unenforceability of any provision will not affect or
impair the validity, legality and enforceability of any other provisions of the
Plan.

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<PAGE> 60

14. NOTICE AND DELIVERY

14.1 ADDRESS OF PARTICIPANT. Any notice, document, certificate or other form
of communication may be delivered to a Participant to the address for such
Participant shown from time to time in the Plan Administrator's records.

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<PAGE> 61

SCHEDULE A

to the Employee Stock Bonus Plan of The Loewen Group Inc.

TO: The Loewen Group Inc.
4126 Norland Avenue
Burnaby, British Columbia
V5G 3S8
Attention: Plan Administrator
Employee Stock Bonus Plan

The undersigned hereby elects to participate in The Loewen Group Inc. Employee
Stock Bonus Plan (the "Plan") and agrees to all of the terms and conditions of
the Plan as it may be amended from time to time. The undersigned accordingly
hereby subscribes for 5 Common shares (the "Shares") of The Loewen Group Inc.
(" TLGI").

The undersigned will be the owner of the Shares. The undersigned acknowledges
that for administrative purposes, his or her Shares may be held by the Plan
Agent under the Plan and issued in the name of the Plan Agent as the
representative of the undersigned.

THE FOLLOWING IS A SUMMARY OF SOME OF THE TERMS AND CONDITIONS OF THE PLAN BUT
THE UNDERSIGNED AGREES THAT THE FULL TEXT OF ALL OF THE TERMS AND CONDITIONS OF
THE PLAN, AS IT MAY BE AMENDED FROM TIME TO TIME, SHALL GOVERN.

1. The undersigned will not sell, pledge or otherwise dispose of the Shares
during the undersigned's employment with TLGI or a Subsidiary of TLGI (as
defined in the Plan). If such employment ceases for any reason, the
undersigned will not sell, pledge or otherwise dispose of the Shares
unless and until 3 years have elapsed from the date the Shares were issued
to the undersigned. When the undersigned is permitted to sell the Shares,
the sale or other disposition of the Shares will be the sole
responsibility of the undersigned.

2. The undersigned agrees that all dividends and distributions on the Shares
may, if the Committee appointed under the Plan so decides, be held by the
Plan Agent without interest or other income payable to the undersigned and
that TLGI may earn interest, commission, fees or other income on such
dividends and distributions.

3. The undersigned acknowledges and agrees that the value of the Shares on
issuance, the dividends and other distributions and the proceeds of the
sale of the Shares are taxable to the undersigned, that the undersigned
will be responsible for all reporting and payment of taxes and that TLGI
or the undersigned's employer may make withholdings from salary or other
amounts payable to the undersigned on account of taxes.

4. The undersigned accepts all risks associated with acquiring the Shares
and agrees that there is no guarantee as to the future value of the Shares
and that TLGI and its directors, the undersigned's employer, and the
Committee, the Plan Administrator(s) and the Plan Agent under the Plan are
not liable for any loss.

The undersigned's full name and address are as follows:

_______________________________________
Name

_______________________________________
Number and Street

_______________________________________
City etc.
___________________________________
Signature

___________________________________
Date

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