LOEWEN GROUP INC, DEF 14A, 1999-04-29

LOEWEN GROUP INC
DEF 14A, 1999-04-29
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 Radisson Hotel Burnaby, 4331
Dominion Street, Burnaby, British Columbia, Canada, at 10:30 a.m. (Pacific
Daylight Time) on Friday, the 4th day of June, 1999, 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,
1998, together with the report of the auditors thereon;

2. to elect two 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 approve an amendment to the
1994 Outside Director Plan to increase the number of Common Shares
issuable thereunder by 200,000 Common Shares; and

6. 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 April 26, 1999 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 CIBC Mellon Trust Company not later than 10:00 a.m. (Pacific
Daylight Time) on Thursday, the 3rd day of June, 1999, at 200 Queens Quay East,
Unit 6, Toronto, Ontario, Canada, M5A 4K9, or by mail at P.O. Box 12005 Stn. BRM
B, Toronto, Ontario, Canada, M7Y 2K5, or by fax at (416) 368-2502.

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 26th day of April, 1999.

BY ORDER OF THE BOARD

/s/ ROBERT B LUNDGREN
Robert B. Lundgren
President and Chief Executive Officer
<PAGE> 3

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 JUNE 4, 1999

DATED AS OF APRIL 26, 1999

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 Radisson Hotel Burnaby, 4331 Dominion Street,
Burnaby, British Columbia, Canada, at 10:30 a.m. (Pacific Daylight Time) on
Friday, the 4th day of June, 1999 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 29, 1999.

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 $6,000 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>
1996 $1 United States = $1.3635 Canadian
1997 $1 United States = $1.3847 Canadian
1998 $1 United States = $1.4831 Canadian
</TABLE>

1
<PAGE> 4

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 CIBC Mellon Trust Company not later than 10:00 a.m. (Pacific
Daylight Time) on Thursday, the 3rd day of June, 1999, at 200 Queens Quay East,
Unit 6, Toronto, Ontario, Canada, M5A 4K9, or by mail at P.O. Box 12005 Stn. BRM
B, Toronto, Ontario, Canada, M7Y 2K5, or by fax at (416) 368-2502.

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 duly authorized officer of, or
attorney-in-fact for, the corporation. If a form of proxy is executed by an
attorney-in-fact for an individual Shareholder or joint Shareholders or by an
officer of, 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
will be counted for determination of a quorum.

Under the rules of the New York Stock Exchange (the "NYSE"), brokers may
vote Common Shares held in street name on a proposed resolution without specific
instructions if the proposed resolution relates to the election of directors or
the appointment of auditors. 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.

2
<PAGE> 5

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 receive 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, 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 April 26, 1999, 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.

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 April 26, 1999. As at the close of business on April 26, 1999, there
were 74,061,600 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 two nominees
receiving the highest number of votes will be elected. Where no instructions
with respect to the election of Directors are received from the customer, a
broker that is subject to the rules of the NYSE is nonetheless entitled to vote
such customer's Common Shares.

In the case of the resolution to approve the amendment to the 1994 Outside
Director Compensation Plan (the "Outside Director Plan"), the rules of the NYSE
require that: (1) a majority of the Common Shares entitled to vote must actually
be voted and (2) votes "for" must constitute at least a majority of that number.
In these circumstances, abstentions count as shares voted for purposes of
determining whether a majority of the Common Shares has been voted, while broker
non-votes do not count as shares voted.

Subject to the immediately preceding paragraph, the resolutions scheduled
to be presented to the Meeting are ordinary resolutions that require, in order
to pass, the affirmative vote of a simple majority of the votes cast at the
Meeting. Abstentions and broker non-votes do not constitute votes cast at the
Meeting for these purposes.

Although there are no controlling precedents under British Columbia law
regarding the treatment of broker non-votes, the Company intends to apply the
principles set forth in this Proxy Statement and Information Circular.

3
<PAGE> 6

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
April 26, 1999 other than:

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------------------ -------------------- ----------------
<S> <C> <C>
Canadian Imperial Bank of Commerce.......................... 10,062,125(1) 13.59
161 Bay Street -- 6th Floor
P.O. Box 500
Toronto, ON M5J 2S8

TMI-FW, Inc. and Thomas M. Taylor........................... 7,524,367(2) 10.16
Ontario Teachers' Pension Plan Board
Tundra Investors, L.P.
201 Main Street -- Suite 2600
Forth Worth, TX 76102

Leon G. Cooperman........................................... 4,146,100(3) 5.60
88 Pine Street
Wall Street Plaza - 31st Floor
New York, NY 10005
</TABLE>

(1) Information as to the number of Common Shares owned by Canadian Imperial
Bank of Commerce, a Canadian chartered bank, was obtained from the early
warning report filed by Canadian Imperial Bank of Commerce with the Canadian
securities regulatory authorities on November 4, 1998.

(2) Thomas M. Taylor, a Director of the Company, is President and sole
stockholder of TMI-FW, Inc. ("TMI"), an investment adviser. Information as
to the amount and nature of beneficial ownership was obtained from Mr.
Taylor and Amendment No. 4 to Schedule 13D filed by TMI with the Securities
and Exchange Commission (the "SEC") on December 18, 1998. According to these
sources, TMI had sole voting power with respect to 7,524,367 Common Shares,
sole dispositive power with respect to 4,149,917 of these shares pursuant to
an account management agreement with the Ontario Teachers' Pension Plan
Board and sole dispositive power with respect to 691,658 of these shares
pursuant to an account management agreement with Tundra Investors, L.P.
These sources also indicate that persons other than TMI, namely the Ontario
Teachers' Pension Plan Board and Tundra Investors, L.P., have the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, Common Shares.

(3) Information as to the amount and nature of beneficial ownership was obtained
from Amendment No. 1 to Schedule 13D filed by Mr. Cooperman with the SEC on
March 16, 1999. The Schedule 13D reflects that Mr. Cooperman had sole voting
and dispositive power with respect to 2,382,600 Common Shares and shared
voting and dispositive power with respect to 1,763,500 Common Shares.
According to the Schedule 13D, the Common Shares as to which Mr. Cooperman
has sole voting and dispositive power are owned directly by Omega Overseas
Partners, Ltd. Omega Advisors, Inc., a Delaware corporation controlled by
Mr. Cooperman, serves as investment manager to Omega Overseas Partners, Ltd.
Omega Advisors, Inc. also serves as discretionary investment advisor to
certain institutional clients. Mr. Cooperman shares voting and dispositive
power with such clients with respect to shares owned by such clients.

4
<PAGE> 7

The following table shows: (i) the number of Common Shares beneficially
owned by each of the 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
April 26, 1999 (excluding shares which such persons have the right to acquire
within 60 days of April 26, 1999 but do not actually own), (ii) the number of
Common Shares which each of such persons has the right to acquire within 60 days
of April 26, 1999 but does not actually own, and (iii) the total number of
Common Shares which each of such persons owns as of April 26, 1999 and has the
right to acquire within 60 days of April 26, 1999. Except for Thomas M. Taylor
who beneficially owns approximately 10.16% 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 10.78% of the Common Shares outstanding.

None of the Directors, nominees or Named Executive Officers is related to
one another.

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED, RIGHT TO ACQUIRE TOTAL NUMBER
EXCLUDING RIGHT TO SHARES WITHIN OF SHARES
NAME ACQUIRE SHARES (1) 60 DAYS BENEFICIALLY OWNED
- ---- ------------------- ---------------- ------------------
<S> <C> <C> <C>
DIRECTORS
John S. Lacey................................... Nil Nil Nil
Charles B. Loewen............................... 8,000 18,250 26,250
Robert B. Lundgren.............................. 9,005 14,750 23,755
James D. McLennan............................... 7,658 16,679 24,337
Thomas M. Taylor (2)............................ 7,524,367 Nil 7,524,367

NOMINEES
William R. Riedl................................ Nil Nil Nil
The Rt. Hon. John N. Turner, P.C., C.C., Q.C.... 5,003 16,524 21,527

NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
OR NOMINEES
George M. Amato (3)............................. 16,905 18,656 35,561
Thomas C. Hardy................................. 1,005 20,000 21,005
Timothy R. Hogenkamp (3)........................ 40,837 105,600 146,437
Raymond L. Loewen (3)(4)........................ 2,265,581 Nil 2,265,581
Lawrence Miller................................. 203,181 72,000 275,181
Paul Wagler..................................... 245 68,041 68,286
ALL DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
AS A GROUP (19 persons) (2)(3)(4)(5).......... 7,599,995 431,971 8,031,966
</TABLE>

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

(2) The shares were purchased by Tundra Investors, L.P. and the Ontario
Teachers' Pension Plan Board. TMI, of which Mr. Taylor is President, has
sole voting power with respect to 7,524,367 Common Shares, sole dispositive
power with respect to 4,149,917 of these shares pursuant to an account
management agreement with the Ontario Teachers' Pension Plan Board and sole
dispositive power with respect to 691,658 of these shares pursuant to an
account management agreement with Tundra Investors, L.P. Persons other than
TMI, namely the Ontario Teachers' Pension Plan Board and Tundra Investors,
L.P., have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, Common Shares.

(3) 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.

(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.

(5) Includes 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.

5
<PAGE> 8

ELECTION OF DIRECTORS

INFORMATION REGARDING DIRECTORS AND NOMINEES

The Board of Directors of the Company presently consists of seven members.
Two 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 2003). Thomas M. Taylor, John S. Lacey and William R. Riedl were
appointed as Directors by the Board of Directors on December 17, 1998 to fill
the casual vacancies arising from the resignations on the same date of Lawrence
Miller, Timothy R. Hogenkamp and Paul Wagler, respectively. In keeping with a
determination of the Board that the number of Directors should be reduced,
Kenneth S. Bagnell, The Honorable J. Carter Beese, Jr., Earl A. Grollman, Albert
S. Lineberry, Sr., Ernest G. Penner and Kenneth T. Stevenson retired from the
Board of Directors effective March 30, 1999 and the Board of Directors
consequently reduced the size of the Board to eight members. On April 12, 1999,
the position on the Board of Directors theretofore occupied by Raymond L. Loewen
was eliminated, further reducing the size of the Board to seven members.

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 April 8, 1999.

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

JOHN S. LACEY..................... 56 Chairman of the December 17, 1998/
Toronto, Ontario Board and Director Annual General
Canada Meeting in 2000

CHARLES B. LOEWEN................. 66 Director President, May 24, 1990/
Toronto, Ontario Corporate Services Annual General
Canada International Inc. Meeting in 2001
(international
investment and
consulting company)

ROBERT B. LUNDGREN................ 55 President, Chief June 16, 1986/
Langley, British Columbia Executive Officer Annual General
Canada and Director Meeting in 2000

JAMES D. MCLENNAN................. 62 Director President, McLennan June 1, 1993/
Park Ridge, Illinois Company (realty Annual General
U.S.A. company) Meeting in 2002

THOMAS M. TAYLOR.................. 56 Director President, Thomas M. December 17, 1998/
Fort Worth, Texas Taylor & Co. Annual General
U.S.A. (investment Meeting in 2001
consulting firm)
</TABLE>

6
<PAGE> 9

NOMINEES

<TABLE>
<CAPTION>
AGE AS AT PRINCIPAL OCCUPATION DATE BECAME DIRECTOR
NAME, MUNICIPALITY AND APRIL 26, IF DIFFERENT FROM OF THE COMPANY/DATE
COUNTRY OF PRESENT RESIDENCE 1999 OFFICE HELD OFFICE HELD (1)(2) of Expiry of Term (3)
---------------------------- --------- ----------- -------------------- ---------------------
<S> <C> <C> <C> <C>
WILLIAM R. RIEDL..................... 58 Director President and Chief December 17, 1998/
Toronto, Ontario Executive Officer, Annual General
Canada Fairvest Securities Meeting in 1999
Corporation (stock
brokerage firm)
THE RIGHT HONOURABLE JOHN N. TURNER,
P.C., C.C., Q.C...................... 69 Director Partner, Miller June 1, 1992/
Toronto, Ontario Thomson, Barristers Annual General
Canada and Solicitors Meeting in 1999
</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: John S.
Lacey, who prior to November 1998 was President and Chief Executive Officer
of The Oshawa Group Ltd., Toronto, Ontario, Canada (a holding company for
food retail and distribution companies), prior to August 1998 was President
and Chief Executive Officer of WIC Western International Communications
Inc., Vancouver, British Columbia, Canada (a broadcasting, communications
and entertainment company), and prior to November 1996 was President and
Chief Executive Officer of Scott's Hospitality Inc., Toronto, Ontario,
Canada (a foodservice franchise company); Charles B. Loewen, who prior to
September 1995 was Vice-Chairman, Loewen, Ondaatje, McCutcheon Limited,
Toronto, Ontario, Canada (investment dealer); and Robert B. Lundgren, who
prior to October 1998 was retired.

(2) John S. Lacey also serves as director of Scott's Restaurants Inc. (a holding
company for restaurants). Charles B. Loewen also serves as director of
Redekop Properties Inc. (a property development company), Canadian
Brokerlink Inc. (an acquiror and operator of insurance brokerages), Ukraine
Enterprise Corp. (a holding company for financial and resource investments)
and MedNet International Ltd. (an eyecare company). James D. McLennan also
serves as a director of The ServiceMaster Company (a diversified services
company). Thomas M. Taylor also serves as director of Agrium, Inc. (a
fertilizer company), Encal Energy Limited (an oil and gas exploration
company), John Wiley & Sons (a publishing company), Kirby Corporation (a
marine transportation company), MacMillan Bloedel Limited (a forestry
company), Meditrust Companies (a healthcare and hotel REIT), and Moore
Corporation Limited (a business forms and services company). 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), Triple Crown Electronics Inc. (an
electronics company) and Iroquois Falls Power Corp. (a power 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.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established a standing Audit Committee, a
standing Compensation Committee, a standing Corporate Governance Committee and a
Special 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 Charles B. Loewen
(Chairman), James D. McLennan, The Right Honourable John N. Turner, P.C., C.C.,
Q.C. and Thomas M. Taylor, all of whom are non-employee Directors. The Audit
Committee held nine meetings during 1998.

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 seven
meetings during 1998. For particulars of the functions and composition of the
Corporate Governance Committee, see CORPORATE GOVERNANCE below.

The Compensation Committee reviews and recommends, for approval by the
Board of Directors, specifically the executive compensation of the Chief
Executive Officer and generally the Company's executive compensation policies.
The Compensation Committee held seven meetings in 1998. For particulars of the
functions and

7
<PAGE> 10

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

The Special Committee was established by the Board of Directors in
September 1998 to identify and evaluate opportunities for the maximization of
Shareholder value including strategic alternatives available to the Company, and
to liaise with senior management of the Company and with the investment advisers
appointed by the Company to assist in the maximization of Shareholder value and
the initiation of discussions with potential partners regarding possible
strategic partnerships, combinations and capital investments in the Company. The
members of this Committee are The Right Honourable John N. Turner, P.C., C.C.,
Q.C. (Chairman), Charles B. Loewen, James D. McLennan, William R. Riedl and John
S. Lacey. Robert B. Lundgren was Executive Director of this Committee until his
appointment as President and Chief Executive Officer of the Company on October
8, 1998. The Special Committee met 15 times in 1998.

DIRECTOR MEETINGS; DIRECTOR COMPENSATION AND OTHER PAYMENTS

The Board of Directors held 17 meetings in 1998, of which 13 were held by
telephone conference call and four were held in person. The aggregate average
attendance at meetings of the Board of Directors and its permanent standing
Committees was 93%. Each incumbent Director attended at least 75% of the total
number of meetings, of the Board of Directors and the respective Committees on
which he served, held in 1998 during his incumbency.

Directors who are not officers or employees of the Company or any of its
Subsidiaries ("outside Directors") were each entitled to an annual retainer of
$23,500 for 1998. In addition, each outside Director was entitled to $1,500 for
attendance in person at a meeting (Board or Committee), $250 for attendance by
telephone at a meeting (Board or Committee), $5,000 per annum for being a member
of a Committee and $5,000 per annum for chairing a Committee. Fees were pro
rated for service periods of less than a complete year. Directors are reimbursed
their reasonable travel expenses for attending meetings of the Board and its
Committees.

Pursuant to the Outside Director Plan, 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 on an annual basis each
outside Director may receive options to purchase Common Shares. The specific
number of Common Shares underlying such options is determined by the full Board
of Directors prior to June 1 of each year. For 1998, each outside Director
received an option to purchase 7,000 Common Shares, and each outside Director
who also served on a Committee of the Board of Directors received an option to
purchase an additional 2,000 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.

Thomas M. Taylor has agreed to waive all fees for acting as a Director of
the Company, including any Common Share or option awards under the Outside
Director Plan.

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
1998, payments made on behalf of Mr. Lineberry for such benefits totalled
$23,513. Mr. Lineberry retired as a Director of the Company on March 30, 1999,
but the Lineberry Contract otherwise remains in force.

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 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 1998 payment was $93,750.

8
<PAGE> 11

Dr. Earl A. Grollman, through EAG, Inc. (a corporation owned by Dr.
Grollman), was paid $6,000 by a Subsidiary in 1998 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. Dr. Grollman retired as a
Director of the Company on March 30, 1999.

In November 1998, the Board of Directors approved and authorized the
payment to Robert L. Lundgren of a stipend of Cdn. $50,000 for his full-time
services from July 27, 1998 to December 1, 1998, at which time Mr. Lundgren's
salary as President and Chief Executive Officer formally commenced.

The Board of Directors also approved special stipends of US $50,000 to be
paid to each of The Right Honourable John N. Turner, P.C., C.C., Q.C. and
Charles B. Loewen in light of the unusual and challenging circumstances faced by
the Company during 1998 and their resulting expanded responsibilities and time
commitments as Chairs of the Special and Audit Committees, respectively.

In December 1998, the Special Committee approved a payment to James D.
McLennan of $1,500 for his attendance in person at meetings to review issues
relative to Raymond L. Loewen's resignation as President and Chief Executive
Officer in October 1998.

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,
no Director or nominee, except Thomas M. Taylor (as specified above under VOTING
SHARES AND PRINCIPAL HOLDERS THEREOF), 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

In December 1995, a Corporate Governance Committee was established as a
permanent standing committee of the Board. The current members of the Corporate
Governance Committee are William R. Riedl (Chairman), The Right Honourable John
N. Turner, P.C., C.C., Q.C. and John S. Lacey, each of whom is an outside,
"unrelated" Director and brings to the Corporate Governance Committee the
benefit of his experience in sitting on other public company boards.

In August 1997, the Board of Directors asked the Corporate Governance
Committee to review the present Board status with respect to Board size,
composition and process in light of prevailing corporate governance practices.
Following preliminary research, the Corporate Governance Committee met in two
special sessions. The recommendations of the Corporate Governance Committee,
adopted by the Board on March 5, 1998, included a recommended reduction over
time in size of the Board from 15 to no more than 12 and a reduction in the
number of "inside" (or "management") Directors to one or possibly two at most.
As part of this plan, the Committee also recommended that the Board continue to
consider additional appropriately qualified candidates to serve as outside
Directors.

In pursuance of this policy, in September 1998 the Committee retained the
search firm of Spencer Stuart to assist with recruiting additional appropriately
qualified candidates to serve as outside Directors.

In December 1998, three Board members who were inside Directors retired
from the Board: Messrs. Lawrence Miller, Timothy R. Hogenkamp and Paul Wagler.
Appointed to replace them were three new outside Directors: Messrs. Thomas R.
Taylor, John S. Lacey and William R. Riedl.

In January 1999, Mr. John S. Lacey was appointed non-executive Chairman of
the Board.

On March 30, 1999, Kenneth S. Bagnell, The Honorable J. Carter Beese, Jr.,
Earl A. Grollman, Albert S. Lineberry, Sr., Ernest G. Penner and Kenneth T.
Stevenson retired from the Board, and the size of the Board was reduced to
eight. On April 12, 1999, the position on the Board theretofore occupied by
Raymond L. Loewen was eliminated, further reducing the size of the Board to
seven (with only one inside Director, namely Mr. Lundgren).

The Toronto Stock Exchange (the "TSE") and the Montreal Exchange (the "ME")
require each listed corporation to disclose in its information circular or
annual report its approach to corporate governance. The following discussion is
provided in compliance with such listing requirements. The TSE and the ME
recommend 14 guidelines with respect to systems of corporate governance
generally, which guidelines were adopted in 1995 in a policy of the TSE (the
"TSE Policy") and in a similar policy of the ME (the "ME Policy"). The Company
is fully
9
<PAGE> 12

or substantially aligned with nearly all of these guidelines. The TSE Policy
provides that the guidelines are not requirements, but recommendations. The
Company believes that flexibility in approaches to corporate governance
practices is important in order to most effectively pursue Shareholder value.

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

<TABLE>
<CAPTION>
DOES THE
COMPANY ALIGN
TSE AND ME POLICIES 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 process Yes The Board and its committees review
strategic issues throughout the year.
- identification of principal risks, and Yes The Audit Committee and the Board
implementing risk management systems periodically assess the Company's
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 senior Yes As a matter of policy, the Board
management annually reviews the succession plan for
the Company. This was most recently done
on November 17, 1998. The Compensation
Committee monitors the performance of
the CEO and senior management.
- communications policy Yes The Company has a Communications
Department. Both the Chairman and the
CEO are 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 senior
management information systems management regularly reviews the
integrity of these systems, consulting
with the Company's auditors as
appropriate.
2. Majority of directors should be "unrelated" Yes Of the seven Board members, six are
(independent of management and free from "unrelated". The remaining Director is
conflicting interest) automatically deemed "related" by being
a member of senior management.
3. Disclosure for each director whether he or Yes In deciding whether a particular
she is related, and how that conclusion was Director is "related" or "unrelated",
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 and
ME Policies are broad and, in some
cases, difficult to apply.
</TABLE>

10
<PAGE> 13

<TABLE>
<CAPTION>
DOES THE
COMPANY ALIGN
TSE AND ME POLICIES WITH THE
CORPORATE GOVERNANCE GUIDELINES GUIDELINES? COMMENTS
------------------------------- ------------- --------
<S> <C> <C> <C>
4. - Appoint a committee responsible for Yes The Corporate Governance Committee is
appointment/assessment of directors responsible for assessing and
recommending potential candidates for
appointment to the Board.
- Composed exclusively of non-management Yes
directors, the majority of whom are
"unrelated"
5. Implement a process for considering the Yes The process is one of informal review
assessment of the effectiveness of the board, and consultation. As well, Directors
its committees and individual directors periodically discuss the effectiveness
of Board operations as part of Board or
Committee meetings.
6. Provide orientation and education programs Yes Prior to official appointment, new
for new directors Directors are provided considerable
education and orientation about the
Company and the industry.
7. Consider reducing size of board, with a view Yes The Board was reduced in size from 14 to
to improving effectiveness eight on March 30, 1999 and from eight
to seven on April 12, 1999. This is
below the level of 20 or more which the
TSE Policy considers can lead to
ineffectiveness.
8. Review compensation of directors in light of Yes The Compensation Committee reviews this
risks and responsibilities item on a periodic basis.
9. - Committees should generally be composed of Yes The Board committees are composed solely
non-management directors of non-management Directors.
- Majority of committee members should be Yes
"unrelated"
10. Appoint a committee responsible for approach Yes The Board has appointed a specific
to corporate governance issues committee to be responsible for the
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.
(ii) the CEO Yes The mandate of the CEO is reviewed each
year by the Corporate Governance
Committee.
</TABLE>

11
<PAGE> 14

<TABLE>
<CAPTION>
DOES THE
COMPANY ALIGN
TSE AND ME POLICIES WITH THE
CORPORATE GOVERNANCE GUIDELINES GUIDELINES? COMMENTS
------------------------------- ------------- --------
<S> <C> <C> <C>
- Board should approve CEO's corporate Yes The CEO's responsibility is to implement
objectives corporate policies and objectives as
determined by the Board. The Corporate
Governance Committee periodically
reviews these policies and objectives.
Certain performance objectives relating
specifically to compensation may be
established by the Compensation
Committee.
12. Establish structures and procedures to enable Yes The Board has a non-executive Chairman.
the board to function independently of The Board has three standing Committees
management (Audit, Compensation and Corporate
Governance), each of which is composed
entirely of Directors who are "outside"
and "unrelated". The Company believes
that the Board and senior management
presently have a highly effective
working relationship.
In 1998, the Board established a Special
Committee to enable the Board to
function independently of management in
assessing and pursuing strategic
alternatives for the Company.
13. - Establish an audit committee with a Yes The Board has an Audit Committee with a
specifically defined mandate specifically defined mandate. This
mandate has been reviewed by external
counsel to ensure alignment with the
guidelines of the TSE Policy.
- All members should be non-management Yes
directors
14. Implement a system to enable individual Yes Individual Directors can engage outside
directors to engage outside advisers, at advisers with the authorization of the
corporation's expense Corporate Governance Committee.
</TABLE>

12
<PAGE> 15

EXECUTIVE COMPENSATION

The following table sets forth compensation earned during the last three
fiscal years by each person who served as the Chief Executive Officer during
1998, the Company's four most highly compensated executive officers, other than
the persons who served as Chief Executive Officer, who served as executive
officers at the end of 1998 and one individual who served as an executive
officer during 1998, but not at the end of 1998 (collectively, the "Named
Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Annual Compensation (1)
-------------------------------------------------------------------------
AWARDS
-----------------------
OTHER ANNUAL SECURITIES UNDER ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS GRANTED COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (2) ($) (3) (#) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Lundgren 1998 33,973 nil 50,660(5) 411,000(5) 34,753(6)
President and Chief 1997 nil nil (5) (5)
Executive Officer (4) 1996 nil nil 46,250 5,500 nil
(5) (5) nil
49,750 4,500
- -----------------------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp 1998 367,495 nil(8) -- nil(8) 10,738(9)
Executive 1997 360,000 nil -- nil
Vice-President, 1996 325,904 -- -- 40,600 61,531
Corporate Affairs and 63,723
Chairman of the
Board, LGII (7)
- -----------------------------------------------------------------------------------------------------------------------------
Thomas C. Hardy 1998 249,425 25,000 -- nil 3,200(11)
President, Loewen Life 1997 107,702 nil -- 50,000
Insurance (10) 1996 n/a n/a n/a n/a 102,653
n/a
- -----------------------------------------------------------------------------------------------------------------------------
George M. Amato 1998 261,256 nil(12) -- nil(12) 11,881(13)
Regional 1997 231,750 nil 28,400 nil
Vice-President, 1996 187,693 -- 29,492 10,656 nil
Funeral Division, 576
North East Region
- -----------------------------------------------------------------------------------------------------------------------------
Paul Wagler 1998 246,629 nil -- 50,000 3,996(14)
Executive Vice- 1997 247,454 nil -- nil
President and Chief 1996 205,777 106,956 -- 26,041 2,855
Operating Officer 4,967
- -----------------------------------------------------------------------------------------------------------------------------
Raymond L. Loewen (15) 1998 1(16) nil(19) 15,108 114,286(16) 228(20)
1997 (17) nil 16,219 (17)(19)
1996 1 (19) 16,445 600,000 39,095
(18) -- (18)(19) 20,771
1 200,747
- -----------------------------------------------------------------------------------------------------------------------------
Lawrence Miller (21) 1998 373,200(22) nil(24) -- 3,000(22) 1,385(25)
1997 1 nil 13,200 351,353
1996 (23) -- 13,200 (24) 511
87,258 83,960 1,374
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</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) Generally, bonuses earned in respect of a particular fiscal year are paid
in the following fiscal year but are reported herein as compensation for
the fiscal year for which they were earned.

(3) 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. Except for compensation paid to
Mr. Lundgren as described in Footnote (5), the amounts reported in this
column consist solely of taxable auto benefits.

(4) Mr. Lundgren was appointed President and Chief Executive Officer on October
8, 1998.

(5) Mr. Lundgren has served as a Director since June 16, 1986 and received
compensation pursuant to the Outside Director Plan for his service as an
outside Director in 1996 and 1997 and until the time of his appointment as
President and Chief Executive Officer on October 8, 1998. Mr. Lundgren
received annual retainer and meeting fees aggregating $49,750 in 1996,
$46,250 in 1997 and $50,660 in 1998. In addition, pursuant to the Outside
Director Plan, Mr. Lundgren was granted options to purchase 4,500 Common
Shares in 1996, 5,500 Common Shares in 1997 and 11,000 Common Shares in
1998. Mr. Lundgren also received an option to purchase 400,000 Common
Shares in 1998 in connection with his appointment as President and Chief
Executive Officer. Further particulars appear in Report on Executive
Compensation below.

(Footnotes continue on following page)

13
<PAGE> 16

(6) Consists of a special stipend paid for full-time services from July 27,
1998 to December 1, 1998, at which time Mr. Lundgren's salary as President
and Chief Executive Officer formally commenced ($33,713), a contribution to
the Company's group registered retirement plan ($1,018) and taxable medical
benefits ($22).

(7) Mr. Hogenkamp served as President and Chief Operating Officer until
November 5, 1997. On November 5, 1997, Mr. Hogenkamp was appointed Chairman
of the Board of LGII. On November 20, 1998, Mr. Hogenkamp was appointed
Executive Vice-President, Corporate Affairs.

(8) In August 1996, Mr. Hogenkamp was granted, in lieu of a cash bonus for
1996, an option to purchase 19,600 Common Shares.

(9) Consists of life insurance premiums paid by the Company ($1,030), a
matching contribution to the LGII 401(k) Retirement Plan ($3,200), tax
services ($1,753) and imputed interest on a non-interest-bearing loan
($4,755).

(10) Mr. Hardy commenced employment with the Company on March 17, 1997.

(11) Consists solely of a matching contribution to the LGII 401(k) Retirement
Plan.

(12) In August 1996, Mr. Amato was granted, in lieu of a cash bonus for 1996, an
option to purchase 10,656 Common Shares.

(13) Consists of life insurance premiums paid by the Company ($1,030), a
matching contribution to the LGII 401(k) Retirement Plan ($1,999) and
imputed interest on a non-interest-bearing loan ($8,852).

(14) Consists of a contribution to the Company's group registered retirement
plan ($3,466) and taxable medical benefits ($530).

(15) Mr. R. Loewen resigned as President and Chief Executive Officer on October
8, 1998. All of Mr. R. Loewen's options were cancelled 45 days following
such resignation.

(16) In lieu of substantially all of his salary for 1998, Mr. R. Loewen was
granted in May 1998 an option to purchase 114,286 Common Shares.

(17) In lieu of substantially all of his salary for 1997, Mr. R. Loewen was
granted in September 1997 an option to purchase 57,812 Common Shares and in
February 1998 an option to purchase 42,188 Common Shares.

(18) In lieu of substantially all of his salary for 1996, Mr. R. Loewen was
granted in August 1996 an option to purchase 145,600 Common Shares.

(19) In May 1997, Mr. R. Loewen was granted an option to purchase 101,288 Common
Shares in lieu of a cash bonus for 1996, an option to purchase 240,900
Common Shares as his 1996 long-term incentive and an option to purchase
200,000 Common Shares as his 1997 long-term incentive.

(20) Consists solely of taxable medical benefits.

(21) Mr. Miller resigned in his capacity as Director and officer of the Company
on December 17, 1998 and as employee of the Company on March 31, 1999.

(22) In lieu of substantially all of his salary for 1997, Mr. Miller was granted
in September 1997 an option to purchase 42,353 Common Shares.

(23) In lieu of a portion of his salary for 1996, Mr. Miller was granted in
August 1996 an option to purchase 47,660 Common Shares.

(24) In August 1996, Mr. Miller was granted, in lieu of a cash bonus for 1996,
an option to purchase 18,300 Common Shares.

(25) Consists solely of a matching contribution to the LGII 401(k) Retirement
Plan.

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, 1998
<TABLE>
<CAPTION>

NUMBER OF % OF TOTAL MARKET VALUE
SECURITIES OPTIONS OF SECURITIES
UNDERLYING GRANTED TO UNDERLYING
OPTIONS EMPLOYEES EXERCISE OR OPTIONS ON THE
GRANTED IN FISCAL BASE PRICE DATE OF GRANT EXPIRATION
NAME (#) (1) YEAR (2) ($/SECURITY) ($/SECURITY) DATE
<S> <C> <C> <C> <C> <C>
Robert B. Lundgren 5,500(3) 0.48 Cdn 35.8130 Cdn 36.00 Mar. 5, 2008
5,500(3) 0.48 Cdn 39.3459 Cdn 39.10 July 14, 2008
400,000(4) 35.19 Cdn 12.00 Cdn 12.00 Dec. 9, 2008
Timothy R. Hogenkamp nil n/a n/a n/a n/a
Thomas C. Hardy nil n/a n/a n/a n/a
George M. Amato nil n/a n/a n/a n/a
Paul Wagler 50,000(5) 4.40 Cdn 33.80 Cdn 33.80 Feb. 17, 2008
Raymond L. Loewen (6) 42,188 3.71 Cdn 32.00 Cdn 32.00 Feb. 2, 2008
114,286 10.05 Cdn 38.10 Cdn 38.10 May 28, 2008
Lawrence Miller 3,000 0.26 US 25.00 US 25.00 Mar. 4, 2008

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF SHARE
PRICE APPRECIATION FOR
OPTION TERM
NAME 5% ($) 10% ($)
<S> <C> <C>
Robert B. Lundgren 123,874 313,922
136,094 344,890
3,018,694 7,649,964
Timothy R. Hogenkamp n/a n/a
Thomas C. Hardy n/a n/a
George M. Amato n/a n/a
Paul Wagler 1,062,832 2,693,425
Raymond L. Loewen (6) 849,018 2,151,578
2,738,394 6,939,627
Lawrence Miller 47,167 119,531
</TABLE>

(1) To the extent permitted by applicable securities and tax laws and stock
exchange rules, options granted under the Company's Employee Stock Option
Plans and the Outside Director Plan are transferable to a personal holding
company of which the optionee holds all direct and indirect interests.

(2) Includes options granted by the Company pursuant to all of its option plans,
including options granted to Directors and consultants.

(3) Comprised of grants pursuant to the Outside Director Plan.

14
<PAGE> 17

(4) Option becomes exercisable in five equal annual instalments beginning
December 9, 1999.

(5) Option becomes exercisable in five equal annual instalments beginning
February 17, 1999.

(6) Mr. R. Loewen resigned as President and Chief Executive Officer on October
8, 1998. All of Mr. R. Loewen's options were cancelled 45 days following
such resignation.

The following table sets forth certain information regarding options
exercised during the year ended December 31, 1998 and options held by the Named
Executive Officers as at December 31, 1998.

AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1998
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SECURITIES UNDERLYING UNEXERCISED
ACQUIRED AGGREGATE OPTIONS AT
ON Value December 31, 1998 (#) (1)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Robert B. Lundgren nil nil 7,000(2) 416,000(2)
Timothy R. Hogenkamp nil nil 105,600 300,000(3)
Thomas C. Hardy nil nil 10,000 40,000
George M. Amato nil nil 18,656 125,000(4)
Paul Wagler nil nil 50,041 66,000
Raymond L. Loewen nil nil nil 1,780,000(5)
Lawrence Miller nil nil 288,313 330,000
</TABLE>

(1) The closing price of the Common Shares on December 31, 1998 on the TSE was
Cdn. $12.50 and on the NYSE was US $8.437. No options disclosed in these
columns were in-the-money as at such date.

(2) Comprised of grants to Mr. Lundgren pursuant to the Outside Director Plan of
options to purchase an aggregate of 23,000 Common Shares (exercisable in
respect of 7,000 Common Shares and unexercisable in respect of 16,000 Common
Shares), as well as a grant of an option in connection with Mr. Lundgren's
appointment as President and Chief Executive Officer to purchase 400,000
Common Shares, to vest over five years in equal annual instalments.

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

(4) Comprised of a grant under the 1994 Management Equity Investment Plan to Mr.
Amato of an option to purchase 125,000 Common Shares.

(5) Comprised of grants under the 1994 Management Equity Investment Plan to Mr.
R. Loewen of an option to purchase 280,000 Common Shares, being that portion
of an option to purchase 500,000 Common Shares which had vested and become
non-forfeitable at the time of Mr. R. Loewen's resignation as President and
Chief Executive Officer on October 8, 1998, and of certain purchase rights
in respect of an additional 1,500,000 Common Shares under the 1994
Management Equity Incentive Plan.

PENSION BENEFITS

The Company does not have any defined benefit or actuarial pension plans.
The Company does have a defined contribution retirement plan for United States
employees, the LGII 401(k) Retirement Plan. For Canadian employees, the Company
has a group registered retirement savings plan.

The estimated aggregate cost to the Company for the year ended December 31,
1998 of pension benefits for senior officers under the Company's group
registered retirement savings plan was $47,990.

The estimated aggregate cost to the Company for the year ended December 31,
1998 of benefits for senior officers of the Company under the LGII 401(k)
Retirement Plan was $73,975. 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) had not been carried out at
the date hereof.

EMPLOYMENT CONTRACTS

The following Named Executive Officers have written employment agreements
with the Company: Robert B. Lundgren, Timothy R. Hogenkamp, Thomas C. Hardy,
George Amato and Paul Wagler. The agreements outline duties and
responsibilities, initial compensation and related benefits, including bonuses
and initial stock option grants. The agreements for Messrs. Lundgren, Hogenkamp,
Hardy, Amato and Wagler do not specify a term of

15
<PAGE> 18

years and are terminable by the Company upon twelve months' notice, in the case
of Mr. Lundgren, six months' notice, in the case of Messrs. Hogenkamp, Hardy and
Amato, or upon reasonable notice, in the case of Mr. Wagler.

Mr. Hardy also has a written equity incentive agreement (the "Incentive
Agreement") with LGII and Loewen Life Insurance Group, Inc. ("Loewen Life")
which provides for certain deferred compensation based on the operating results
of the Company's life insurance operations. The Incentive Agreement contemplates
the delivery to Mr. Hardy of a percentage interest, currently 9.86% but subject
to adjustment, of the total net worth of Loewen Life and certain other life
insurance Subsidiaries. In exchange for the right to receive this percentage
interest, Mr. Hardy has delivered to LGII pursuant to the Incentive Agreement a
promissory note in the amount of $10,000,000, which amount is also subject to
adjustment, plus interest at 9% per annum. The percentage interest becomes
exercisable for a cash award, determined pursuant to a formula set forth in the
Incentive Agreement, upon the occurrence of certain triggering events, including
the termination of Mr. Hardy's employment other than for cause, or upon a change
in control of the Company. The promissory note is repayable solely by reduction
of such cash award and is without personal recourse to Mr. Hardy.

The Company had a written employment agreement with Mr. Miller which
specified a maximum term of five years commencing in March 1995, but was
terminable early by the Company upon 90 days' notice. Mr. Miller resigned his
employment on March 31, 1999 in connection with the disposition by the Company
of certain cemeteries and funeral homes to an investor group which included Mr.
Miller, thereby terminating the employment contract. See CERTAIN TRANSACTIONS.

In October 1996, the Company entered into written agreements with each of
Messrs. Lundgren, Hogenkamp, Wagler, R. Loewen and Miller fully indemnifying
them in their capacities as officers and/or Directors of the Company. In
February 1999, the Company entered into a second written agreement with Mr.
Lundgren fully indemnifying him in his capacity as an officer of the Company.

Also in October 1996, Messrs. Hogenkamp, Wagler and Miller entered into
severance agreements with the Company and Mr. Amato entered into a similar
agreement with a Subsidiary of the Company. Messrs. Lundgren and Hardy entered
into similar agreements with the Company in November 1998. 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. Hogenkamp, Amato and R. Loewen, 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.

Certain executive officers and other key employees of the Company,
including Messrs. Hogenkamp, Hardy, Amato and Wagler, participate in the
Company's Retention Bonus Plan, which is described in the Report on Executive
Compensation below.

COMPOSITION OF THE COMPENSATION COMMITTEE

The Chairman of the Compensation Committee is Thomas M. Taylor, an outside
Director of the Company. In addition to Mr. Taylor, the current members of the
Compensation Committee are Charles B. Loewen and James D. McLennan. The
Compensation Committee met seven times in 1998. All members are outside
Directors of the Company.

REPORT ON EXECUTIVE COMPENSATION

The Company's executive compensation program is directed and monitored by
the Compensation Committee. The Compensation Committee reviews and recommends,
for approval by the Board of Directors, specifically the executive compensation
of the Chief Executive Officer and generally the Company's executive
compensation policies. With respect to the Company's stock plans, awards made to
executive officers are generally made by the Compensation Committee (and
approval of the full Board of Directors will not be sought) in order to provide
for the deductibility of stock-based compensation under United States income tax
laws. See "Policy with Respect to Deductibility of Compensation" below.

16
<PAGE> 19

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 normally 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:

- To align the interests of management with those of Shareholders;

- To integrate compensation with the Company's business objectives;

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

- To provide fair and competitive compensation packages; and

- To reward both corporate and individual performance.

Base Salary

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

In each of 1995, 1996 and 1997 the Compensation Committee retained external
consultants to review the general levels of executive salary within the Company.
In 1998, William M. Mercer Ltd. ("Mercer") was retained by the Compensation
Committee as an external consultant to conduct such a review.

Since approximately 90% of the Company's revenue is derived from operations
in the United States, comparisons of executive salaries are primarily made with
United States companies, although Canadian data is also sampled. The
Compensation Committee believes the general level of executive salaries within
the Company to be comparable to public companies of similar size in North
America.

Annual Incentives (Bonuses)

In light of the changing circumstances of the Company through 1998, the
Compensation Committee thoroughly reviewed the annual incentive program for
executive officers. Mercer was engaged as a external specialized consultant to
assist with this review. The Compensation Committee recommended that bonuses
generally not be paid to executive officers in respect of 1998, and accordingly
such bonuses were limited to an aggregate amount of approximately $53,000 paid
to three individuals.

However, the Committee also concluded that in light of the changing and
uncertain circumstances of the Company it was essential to establish a retention
or "stay put" short term incentive program for the purpose of retaining or
recruiting key executives during a period of uncertainty. Accordingly, a
Retention Bonus Plan was established in October 1998 and was designed to
encourage key executives to stay with the Company and to perform at an above
normal level over the short term. The Retention Bonus Plan provides for the
payment of a potential bonus in the amount of 50% of an executive's base salary
provided that the executive continues employment with the Company for the six
month period from October 1, 1998 until March 31, 1999, subject to a subjective
review of the executive's performance, energy and commitment. A further bonus
may be made available in the future for continuation of employment during an
additional term.

Long-Term Incentives

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

Certain executive officers participate in the 1994 Management Equity
Investment Plan (the "MEIP"), which was approved by the Shareholders at the 1994
annual general meeting. The MEIP gives participants the right to acquire an
aggregate of 3,410,200 Common Shares beginning in June 1999 for an aggregate
purchase price of approximately $102.4 million. However, the purchase price per
Common Share is $30.04, so the MEIP benefits will not be "in-the-money" until
the share price exceeds $30.04.

17
<PAGE> 20

Chief Executive Officer's Compensation

In March 1998, the Compensation Committee recommended a base salary of
$900,000.00 for the then Chief Executive Officer, Raymond L. Loewen. As a
long-term incentive, the Committee determined to grant the Chief Executive
Officer an option to acquire 250,000 Common Shares to vest over five years in
equal annual instalments; however, this option was never granted.

Raymond L. Loewen resigned as Chief Executive Officer on October 8, 1998.
No agreement has been reached with Raymond L. Loewen concerning retirement
entitlements.

On October 8, 1998, Robert B. Lundgren was appointed Chief Executive
Officer. On November 16, 1998, the Compensation Committee recommended for Mr.
Lundgren, as Chief Executive Officer, a base salary of $425,000.00. As a
long-term incentive, the Committee determined to grant the Chief Executive
Officer an option to acquire 400,000 Common Shares exercisable at Cdn. $12.00
per Share, to vest over five years in equal annual instalments. Mr. Lundgren's
base salary and the foregoing option grant are both set forth in his written
employment agreement.

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 programs, including the Retention Bonus Plan, currently do 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:

Thomas M. Taylor, Chairman
Charles B. Loewen
James D. McLennan

18
<PAGE> 21

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 NYSE) 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).

<TABLE>
<CAPTION>
THE LOWEN GROUP INC. PEER GROUP S&P 500 TSE 300
-------------------- ---------- ------- -------
<S> <C> <C> <C> <C>
'1993' 100 100 100 100
'1994' 111 112 104 98
'1995' 104 172 136 109
'1996' 163 223 165 137
'1997' 112 278 224 155
'1998' 26 282 305 149
</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,
1998 was $10,516,208. These amounts include salaries, fees (including Directors'
retainer and meeting fees), commissions and bonuses; cash bonuses to be paid for
services rendered in 1998 (unless such amounts have not been allocated); cash
bonuses paid in 1998 for services rendered in previous years; the cash
equivalent of Common Shares issued to Directors under the Outside Director Plan;
and all deferred compensation earned in 1998; but excludes compensation paid in
1998 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 1998 aggregating $295,717 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.

19
<PAGE> 22

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 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES MARKET VALUE
OPTIONED DATE EXERCISE ON DATE EXPIRATION
GROUP IN 1998 OF GRANT PRICE OF GRANT DATE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Directors 42,188 Feb. 2 Cdn $ 32.00 Cdn $ 32.00 Feb. 2, 2008
and Senior 220,000 Feb. 17 Cdn $ 33.80 Cdn $ 33.80 Feb. 17, 2008
Officers 50,000 Mar. 4 Cdn $ 35.40 Cdn $ 35.40 Mar. 4, 2008
6,000 Mar. 4 US $ 25.00 US $ 25.00 Mar. 4, 2008
29,000 Mar. 5 Cdn $35.8130 Cdn $ 36.00 Mar. 5, 2008
18,000 Mar. 5 US $25.1860 US $ 25.25 Mar. 5, 2008
114,286 May 28 Cdn $ 38.10 Cdn $ 38.10 May 28, 2008
17,500 June 12 US $27.1875 US $27.5625 June 12, 2008
29,000 July 14 Cdn $39.3459 Cdn $ 39.10 July 14, 2008
18,000 July 14 US $26.5494 US $ 26.375 July 14, 2008
14,550 Sept. 24 US $ 15.00 US $ 15.00 Sept. 24, 2008
400,000 Dec. 9 Cdn $ 12.00 Cdn $ 12.00 Dec. 9, 2008
20,000 Dec. 21 US $ 8.125 US $ 8.125 Dec. 21, 2008
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------

<CAPTION>
- ------------------------------------------------------
- ------------------------------------------------------
MARKET VALUE
(LOW-HIGH RANGE)
IN 30 DAY PERIOD
GROUP PRECEDING GRANT
- ------------------------------------------------------
<S> <C>
Directors Cdn $ 30.30-$ 36.50
and Senior Cdn $ 30.55-$ 34.00
Officers Cdn $ 30.60-$ 35.80
US $ 21.00-$ 25.125
Cdn $ 30.60-$ 36.00
US $21.3125-$ 25.25
Cdn $ 38.10-$ 41.40
US $ 26.25-$28.1875
Cdn $ 38.40-$ 40.75
US $26.0625-$ 27.75
US $11.1875-$ 15.875
Cdn $ 12.00-$ 17.45
US $ 7.4375-$ 9.9375
- ------------------------------------------------------
- ------------------------------------------------------
</TABLE>

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
1998:
<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 and June 12 1,700 US $18.63 US $14,557.10 US $26.25-$28.1875
Senior Officers June 19 4,150 Cdn $36.85 Cdn $15,770.00 Cdn $38.10-$ 41.00
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</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.

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 and, in some instances, by the SEC.)

INDEBTEDNESS UNDER SECURITIES PURCHASE PROGRAMS

As at April 1, 1999, the aggregate indebtedness

(i) to the Company or any of its Subsidiaries, or

(ii) 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

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 was $3,754,242.

20
<PAGE> 23

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 1998 ($) (1) APRIL 1, 1999 ($) (1) During 1998 (2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
George M. Amato LGII is guarantor 275,381 280,716 n/a
Regional Vice-President,
Funeral Division, North East
Region
- ---------------------------------------------------------------------------------------------------------------------------------
David FitzSimmons (3) LGII is guarantor 152,643 155,601 n/a
- ---------------------------------------------------------------------------------------------------------------------------------
Dwight K. Hawes LGII is guarantor 113,439 115,849 n/a
Senior Vice-President,
Corporate Controller
- ---------------------------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp LGII is guarantor 660,754 673,556 n/a
Executive Vice-President,
Corporate Affairs and
Chairman of the Board, LGII
- ---------------------------------------------------------------------------------------------------------------------------------
Peter S. Hyndman LGII is guarantor 55,865 58,518 n/a
Corporate Secretary
- ---------------------------------------------------------------------------------------------------------------------------------
Kenneth E. Lee, Jr. LGII is guarantor 110,126 112,259 n/a
Vice-President,
Combination Operations and
Alternative Funerals
- ---------------------------------------------------------------------------------------------------------------------------------
F. Duane Schaefer LGII is guarantor 132,151 134,711 n/a
Regional Vice-President,
Funeral Division, West
Region
- ---------------------------------------------------------------------------------------------------------------------------------
Michael L. Schweer LGII is guarantor 130,845 133,379 n/a
Vice-President, Funeral Home
Operations, North Central
Region
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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 plus 0.25 percent 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.

(3) Mr. FitzSimmons ceased employment with the Company on May 1, 1998, prior to
which time he served as Vice-President, Operations.

INDEBTEDNESS OTHER THAN UNDER SECURITIES PURCHASE PROGRAMS

As at April 1, 1999, the aggregate indebtedness

(i) to the Company or any of its Subsidiaries, or

(ii) 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

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 securities purchase programs of the Company or any of its
Subsidiaries was $9,031,465.

21
<PAGE> 24

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

INVOLVEMENT OF LARGEST AMOUNT OUTSTANDING
THE COMPANY AMOUNT OUTSTANDING AS AT
NAME AND PRINCIPAL POSITION OR SUBSIDIARY (1) DURING 1998 ($) APRIL 1, 1999 ($)
- --------------------------- ----------------- ------------------ ------------------
<S> <C> <C> <C>
George M. Amato LGII is lender 760,780 773,912
Regional Vice-President, Funeral Division,
North East Region (2)
Jeffrey L. Cashner Company is lender 275,712 278,573
Senior Vice-President, Funeral Home & Cemetery Operations
(3)
Donald F. Delaney Company is lender 275,000 275,000
Vice-President, Corporate Controller (4)
Peter Gray LGII is lender 35,000 35,000
Vice-President, Finance -- Operations, Cemeteries (5)
Timothy R. Hogenkamp LGII is lender 567,449 576,619
Executive Vice-President, Corporate Affairs and Chairman
of the Board, LGII (6)
Kenneth E. Lee, Jr. LGII was lender 50,000 nil
Vice-President, Combination Operations and Alternative
Funerals (7)
Loewen Development Corporation (8) Company is lender Cdn. 253,866 Cdn. 253,866
Donald W. Matthews LGII is lender 47,586 48,407
Vice-President, Cemetery Operations, West Region (9)
Lawrence Miller LGII was lender 2,952,500 nil
William R. Shane
Osiris Investments, L.L.C. (10)
Frank Milles LGII was lender 75,000 nil
Vice-President, Administration, Cemeteries (11)
Ronald P. Robertson LGII is lender 25,000 25,000
Regional Vice-President, Cemetery Division,
North East Region (12)
Roger Ryan LGII was lender 386,745 nil
Vice-President, Taxation (13)
Michael L. Schweer LGII is lender 627,604 638,437
Vice-President, Funeral Home Operations,
North Central Region (14)
Michael G. Weedon Company was Cdn. 35,000 nil
Executive Vice-President, Administration, Accounting and lender
Control and Chief Administrative Officer (15)
</TABLE>

Notes:

(1) This table and the amount of aggregate indebtedness disclosed in the
paragraph immediately preceding this table do not include an amount which
may become payable by Thomas C. Hardy, of New Orleans, Louisiana, to LGII
pursuant to a non-recourse promissory note delivered in connection with Mr.
Hardy's equity incentive agreement with LGII and Loewen Life. See
"EXECUTIVE COMPENSATION -- Employment Agreements".

(2) George M. Amato, of New York, New York, is indebted to LGII for a
promissory note in the amount of $723,854, which was used for investment
purposes and as a housing loan. The note bears interest at 7% per annum
from April 30, 1998 and is due and payable on December 31, 2002. Mr. Amato
has agreed to provide, but has not yet provided at the date hereof,
security for the loan.

(3) Jeffrey L. Cashner, of Montgomery, Texas, is indebted to the Company for a
secured promissory note in the amount of $320,000. The note bears interest
at 7% per annum from February 18, 1997 and was due and payable on February
18, 1999. Mr. Cashner repaid $80,000 of his principal indebtedness in
September 1997. The balance of the indebtedness remains unpaid, and the
Company intends to extend the loan to February 18, 2000, less a principal
repayment of $60,000 expected shortly and further principal repayments from
future bonus payments.

(4) Donald F. Delaney, of Blaine, Washington, was indebted to the Company for a
secured promissory note in the amount of $275,000, the proceeds of which
were used for a housing loan. The note was non-interest bearing. Mr.
Delaney repaid the full amount of his indebtedness in April 1999.

22
<PAGE> 25

(5) Peter Gray, of Yardley, Pennsylvania, is indebted to LGII for a secured
promissory note in the amount of $35,000 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 October 1, 1995 and is
due and payable on May 1, 2000.

(6) Timothy R. Hogenkamp, of Cincinnati, Ohio, is indebted to LGII for an
unsecured demand loan expiring May 12, 2000 and personal advances which
were primarily used for investment purposes. The loan bears interest at
8.5% per annum from May 12, 1998. The advances bear interest at 7% per
annum from date of advance.

(7) Kenneth E. Lee, Jr. of Doylestown, Pennsylvania, was 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 bore interest at 7% per annum from June 2, 1995 and was due
and payable on June 2, 2000. This indebtedness was satisfied in connection
with the disposition by the Company of certain cemeteries and funeral homes
to an investor group led by McCown De Leeuw & Co. See CERTAIN TRANSACTIONS.

(8) 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. Loewen Development Corporation has
provided security for and pays interest on this indebtedness at 7% per
annum from April 1, 1998 and has agreed to repay these amounts by April 1,
2003.

(9) Donald W. Matthews, of Reno, Nevada, is indebted to LGII for a promissory
note in the amount of $42,000 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 February 21, 1997 and is due and
payable on February 21, 2002.

(10) 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,
were indebted to LGII for a promissory note in the amount of $2,952,500,
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. were jointly and severally
liable under the promissory note, which was 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
was non-interest-bearing. This indebtedness was satisfied in connection
with the disposition by the Company of certain cemeteries and funeral homes
to an investor group led by McCown De Leeuw & Co. See CERTAIN TRANSACTIONS.

(11) Frank Milles, of Langhorne, Pennsylvania, was 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 bore interest at 7% per annum from October 19, 1995 and was
due and payable on July 19, 2000. This indebtedness was satisfied in
connection with the disposition by the Company of certain cemeteries and
funeral homes to an investor group led by McCown De Leeuw & Co. See CERTAIN
TRANSACTIONS.

(12) 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 and an additional $25,000 of his
principal indebtedness in December 1997.

(13) Roger Ryan, of Bellevue, Washington, was indebted to LGII for a promissory
note in the amount of $386,745 given in connection with the construction of
his home. The note bore interest at 8% per annum. Mr. Ryan repaid the full
amount of his indebtedness in January 1998.

(14) Michael L. Schweer, of Cincinnati, Ohio, is indebted to LGII for an
unsecured demand loan expiring May 12, 2000 and personal advances, which
were used for investment purposes. The loan bears interest at 8.5% per
annum from May 12, 1998. The advances bear interest at 7% per annum from
date of advance.

(15) Michael G. Weedon, of West Vancouver, British Columbia, Canada, was
indebted to the Company for an unsecured promissory note in the amount of
Cdn. $35,000, the funds of which were used for a housing loan. The note was
non-interest-bearing. Mr. Weedon repaid the full amount of his indebtedness
in March 1998.

CERTAIN TRANSACTIONS

Albert S. Lineberry, Sr., who retired as a Director of the Company on March
30, 1999, is the controlling shareholder of Gaines Corporation of Greensboro,
North Carolina. Gaines Corporation received $112,486 from Lineberry Group, Inc.,
a Subsidiary, in 1998 for the lease of its North Elm Chapel premises in
Greensboro, North Carolina.

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 ($31.5 million of which
had been paid) to former shareholders of Osiris (including Lawrence Miller and
William R. Shane, who were formerly part of the Company's senior management)
based on the achievement of certain performance-related criteria over a period
of up to six years from the closing of the acquisition. In March 1999, the
Company disposed of 124 cemeteries and three funeral homes in the United States
to an investor group which includes Messrs. Miller and Shane and is led by
McCown De Leeuw & Co., a private investment firm. Total proceeds from the
disposition amounted to approximately $186 million, after taking into account
the assumption of responsibility by the investor group for all unpaid

23
<PAGE> 26

contingent consideration for the Osiris transaction. Specifically, approximately
$2.9 million in contingent consideration for the Osiris transaction was offset
against indebtedness owed to LGII by Messrs. Miller and Shane and Osiris
Investments, L.L.C., a Delaware limited liability company of which Messrs.
Miller and Shane are the sole members, and the balance of $7.35 million in
contingent consideration for the Osiris transaction was partially discounted to
net present value and applied as a reduction of the purchase price in the March
1999 transaction. Messrs. Miller and Shane will each retain options in respect
of 90,000 Common Shares which were granted in connection with the Osiris
transaction.

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

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors, executive officers and beneficial owners of more than
10% of the outstanding Common Shares (collectively, "reporting persons") to file
with the U.S. Securities and Exchange Commission reports of ownership and
changes in ownership of equity securities of the Company. Based solely upon its
review of such reports and written representations from the reporting persons
that Forms 5 were either filed or not required to be filed by such reporting
persons, the Company believes that all of the reporting persons (32 persons
total) complied with the Section 16(a) filing requirements during the year ended
1998, except as follows. John S. Lacey, Chairman of the Board and Director,
failed to file an Initial Statement of Beneficial Ownership on Form 3 ("Form 3")
within the 10 day period. F. Duane Schaefer, Regional President, Operations,
South Central Region, failed to file Form 4 within the time frame permitted
reporting an acquisition in the open market.

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 LLP, 777 Dunsmuir Street, Vancouver, British Columbia,
Canada, V7Y 1K3, as auditors of the Company to hold office until the next annual
general meeting of Shareholders and to authorize the Directors to fix the
remuneration of the auditors so appointed. KPMG LLP (or predecessor firms
thereof) has been the Company's auditors since 1986. Where no instructions with
respect to the appointment and authorization to fix the remuneration of the
auditors are received from the customer, a broker that is subject to the rules
of the NYSE is nonetheless entitled to vote such customer's Common Shares.

Representatives of KPMG LLP 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 remuneration paid in 1998 to full-time and part-time employees of
the Company and its Subsidiaries (not including benefits) was approximately $357
million. The total remuneration paid in 1997 to full-time and part-time
employees of the Company and its Subsidiaries (not including benefits) was
approximately $328 million. The total number of full-time and part-time
employees of the Company and its Subsidiaries as at December 31, 1998 was
16,700.

PARTICULARS OF OTHER MATTERS TO BE VOTED ON
APPROVAL OF AMENDMENT TO THE 1994 OUTSIDE DIRECTOR COMPENSATION PLAN

BACKGROUND

The Board of Directors has unanimously approved, and recommends that the
Shareholders approve, an amendment to the Outside Director Plan to increase the
number of Common Shares issuable thereunder by 200,000.

The Outside Director Plan was initially adopted by the Board of Directors
and Shareholders in 1994. The purpose of the Outside Director Plan is to promote
the interests of the Company by attracting and retaining qualified persons who
are neither employees nor officers of the Company or a Subsidiary in the United
States or Canada to serve on the Boards of Directors of the Company and its
Subsidiaries. The Outside Director Plan is intended to

24
<PAGE> 27

further align the interest of outside Directors with Shareholders, thereby
promoting long-term growth and performance by the Company.

The Outside Director Plan is administered by the Board of Directors. The
Outside Director Plan provides for an annual grant of options to be made to each
outside Director immediately following a Shareholder meeting in which Directors
have been elected. The number of options to be granted is determined by the
Board of Directors. When an outside Director is first elected or appointed to
the Board, he or she receives an initial grant of options in an amount
determined by the Board of Directors. In each case, the option exercise price is
determined based on the weighted average trading price of the Common Shares for
a specified five-day period. The Board determines the other terms and conditions
of the options.

An outside Director also may elect to receive his or her annual retainer
and fees paid in respect of Committee service and Board and Committee meetings
in Common Shares instead of cash. The number of Common Shares to be issued is
determined based on the weighted average trading price of the Common Shares for
a specified five-day period.

As of April 26, 1999, the Company's six outside Directors were eligible to
participate in the Outside Director Plan.

The potential benefit to be received by an outside Director in respect of
options granted under the Outside Director Plan is dependent on increases in the
price of the Common Shares between the option grant date and exercise date. With
respect to Common Shares issued in lieu of cash fees, the value of the Common
Shares is the weighted average trading price of the Common Shares for a
specified five-day period immediately preceding the first business day of the
calendar year or the calendar quarter.

In accordance with the Outside Director Plan, the Board intends to grant
options to the outside Directors (other than Thomas M. Taylor) immediately
following the Annual General Meeting. It is anticipated that the Chairman will
receive options in respect of 50,000 Common Shares. The number of options to be
granted to the other outside Directors has not yet been determined.

On April 23, 1999, the closing price of the Common Shares on the NYSE was
US $1.063 and on the TSE was Cdn. $1.59.

The maximum number of Common Shares that may be issued pursuant to the
Outside Director Plan has not been increased since the Outside Director Plan's
inception and is currently 250,000. During 1998, the Company anticipated that
the number of Common Shares to be issued or issuable pursuant to options granted
under the Outside Director Plan would exceed the number of shares available for
grant under the Outside Director Plan sometime during 1998. The Board of
Directors thereafter approved an increase in the number of Common Shares
available under the Outside Director Plan in the amount of 200,000, subject to
disinterested Shareholder approval. The TSE and ME conditionally approved the
increase. As of April 26, 1999, options in respect of 47,000 Common Shares had
been granted pursuant to the increased limitation under the Outside Director
Plan. The options granted pursuant to the increased limitation under the Outside
Director Plan were granted subject to Shareholder approval at the Meeting of the
proposed increase to the maximum number of Common Shares issuable pursuant to
the Outside Director Plan.

APPROVAL

Under the rules of the TSE and ME, the approval of a simple majority of the
votes cast by disinterested Shareholders is required to approve the proposed
amendments to the Outside Director Plan to increase the number of Common Shares
issuable thereunder. 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 amendment
to the Outside Director Plan has been obtained is 7,620,236.

Under the rules of the NYSE, Shareholder approval requires that (1) a
majority of the Common Shares entitled to vote must actually be voted (with
abstentions counting as shares voting and broker non-votes not counting as
shares voting) and (2) votes "for" must constitute at least a majority of that
number.

Approval by the Shareholders of the increase of 200,000 Common Shares
available for issuance under the Outside Director Plan will serve as
ratification by such Shareholders of the options granted pursuant to the
increased share limitation set forth in the Outside Director Plan.

25
<PAGE> 28

THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF, AN AMENDMENT TO INCREASE THE NUMBER OF COMMON
SHARES ISSUABLE UNDER THE OUTSIDE DIRECTOR PLAN BY 200,000 SHARES.

The full text of the Outside Director 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.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The discussion under this heading summarizes the principal United States
federal income tax consequences of participation in the Outside Director Plan,
including issuance of Common Shares in payment of annual fees and meeting fees,
the grant and exercise of options, and the holding and disposing of Common
Shares received as payment for fees or acquired by the exercise of an option by
a participant in the Outside Director Plan (a "Participant"), who is not an
employee of the Company and who is resident in the United States and is not
resident in Canada. It is based on the current provisions of the Internal
Revenue Code of 1986 (the "Code") and the regulations thereunder and on
counsel's understanding of the current administrative practices of the Internal
Revenue Service. This discussion is general only and is not a substitute for
independent advice from a Participant's own tax adviser.

Common Shares Received in Lieu of Meeting Fees

To the extent that a Participant elects in accordance with the Outside
Director Plan to receive Common Shares for all or a portion of the meeting fees
payable for the immediately preceding service period, the Participant will
recognize, at the time the meeting fees would otherwise have been paid, ordinary
income equal to the meeting fees that would otherwise have been received. In
addition, the Participant will recognize, upon receipt of the Common Shares,
ordinary income equal to the excess of the fair market value of the Common
Shares on the date the Common Shares are received over the meeting fees that
would otherwise have been received. Taxes on self-employment income will also
apply.

Common Shares Received in Lieu of Annual Fees

To the extent that a Participant elects in accordance with the Outside
Director Plan to receive Common Shares for all or a portion of the annual fees
payable for the service period to which the election relates, the Participant
will recognize, upon receipt of the Common Shares, ordinary income equal to the
fair market value of the Common Shares on the date the Common Shares are
received. Taxes on self-employment income will also apply.

Options

A Participant will not recognize any taxable income at the time an option
is granted.

Upon exercise of an option, a Participant will recognize ordinary income
for federal income tax purposes equal to the excess, if any, of the fair market
value of the Common Shares on the date of exercise over the exercise price.
Taxes on self-employment income will also apply.

Other Tax Consequences

When a Participant sells the Common Shares issued in payment of annual fees
or meeting fees or acquired pursuant to the exercise of an option, any
difference between the sale price and the Participant's tax basis in the Common
Shares will be treated as capital gain or loss. For dispositions occurring after
July 28, 1997, long-term capital gains will be taxed at a rate of 10% (for
persons in the 15% tax bracket) or 20% (for other individuals), if the Common
Shares were held for more than eighteen months. A rate of 28% will apply in the
case of Common Shares held more than one year but not more than eighteen months.
Capital losses may generally be used to offset capital gains and are available
to offset up to $3,000 of ordinary income in a given taxable year. Individuals
may carry forward unused capital losses indefinitely.

The corporation for which the Participant serves as an outside director
will be entitled to tax deductions to the extent and in the year that ordinary
income is recognized by the Participant.

Dividends payable on Common Shares out of earnings and profits are ordinary
income taxable at ordinary income tax rates. United States resident Shareholders
may be permitted to credit Canadian withholding taxes (see below) against the
portion of their United States income tax liability attributable to such
dividends.

26
<PAGE> 29

CANADIAN TAX CONSEQUENCES

The discussion under this heading summarizes the principal Canadian income
tax consequences of participation in the Outside Director Plan, including
issuance of Common Shares in payment of annual fees and meeting fees, the grant
and exercise of options, and the holding and disposing of Common Shares received
as payment for fees or acquired by the exercise of an option by (i) a
Participant who is resident in the United States and is not resident in Canada
and (ii) a Participant who is resident in Canada and is not resident in the
United States. It is based on the current provisions of the Income Tax Act of
Canada (the "Tax Act"), the regulations thereunder and on counsel's
understanding of the current administrative practices of Revenue Canada Customs,
Excise and Taxation. The provisions of the Tax Act are subject to income tax
treaties to which Canada is a party, including the Canada-United States Income
Tax Convention (the "Tax Treaty"). This summary assumes that the Company will
continue to be a public corporation for purposes of the Tax Act, and that any
Common Shares acquired by a Participant who is resident in Canada will
constitute capital property to the Participant. Common Shares so acquired will
generally be considered to constitute capital property unless the Participant
either holds the Common Shares in the course of carrying on a business or has
acquired the Common Shares in a transaction or transactions considered to be an
adventure in the nature of trade. This discussion is general only and is not a
substitute for independent advice from a Participant's own tax adviser.

United States Resident Participants

A Participant who is a resident of the United States and is not resident in
Canada will not be subject to Canadian income tax on either the acquiring or
exercising of an option or on the acquiring, holding or selling of Common Shares
acquired upon making an election in connection with annual fees or meeting fees
or pursuant to the exercise of an option.

Under the Tax Act and the Tax Treaty, Canadian withholding tax at the rate
of 15% will apply on any dividends on Common Shares paid by the Company to a
Participant who is a resident of the United States and is not resident in
Canada.

Canadian Resident Participants

To the extent that a Participant who is a resident of Canada and is not
resident in the United States elects in accordance with the Outside Director
Plan to receive Common Shares for all or a portion of annual fees and meeting
fees otherwise payable to the Participant, the Participant will recognize income
for Canadian tax purposes equal to the fair market value of the Common Shares on
the date the Common Shares are received.

A Participant who is a resident of Canada will not recognize income at the
time of acquiring an option.

Neither the Company nor any of its Subsidiaries will be entitled to a
deduction for Canadian tax purposes at any time in respect of the grant or
exercise of an option by a Participant.

Upon exercise of an option, a Participant who is a resident of Canada will
recognize income equal to the amount by which the fair market value of the
Common Shares acquired (determined as at the time of their acquisition) exceeds
the exercise price for the Common Shares pursuant to the option. Provided that
the Participant deals at arm's length with the Company, the Participant would be
entitled to a deduction equal to one-quarter of the amount of income required to
be so recognized. Where possible, the Company would be required to withhold tax
in respect of this income.

Upon a disposition of Common Shares acquired by a Participant who is a
resident of Canada to a purchaser other than the Company, the Participant will
recognize a capital gain (or capital loss) equal to the amount by which the
proceeds of disposition exceed (or are exceeded by) the adjusted cost base to
the Participant of the Common Shares so disposed of. The adjusted cost base of
such Common Shares will equal the cost to the Participant of the Common Shares
(such cost being the value of the Common Shares determined as at the time of
their acquisition) averaged with the cost of all such shares of the same class
already owned by the Participant. Three-quarters of any capital gains realized
by a Participant will be required to be included in income for Canadian tax
purposes.

27
<PAGE> 30

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

The Shareholders will be asked to approve at the Meeting an amendment to
the Outside Director Plan to increase the number of Common Shares issuable
thereunder by 200,000. The outside Directors and their associates have an
interest in the Plan because such Directors are entitled to participate in the
Plan. Accordingly, such persons are precluded from voting their Common Shares
with respect to this matter for the purposes of the approval required under the
rules of the TSE and ME. Reference is made to PARTICULARS OF OTHER MATTERS TO BE
VOTED ON -- APPROVAL OF AMENDMENT TO THE 1994 OUTSIDE DIRECTOR COMPENSATION
PLAN.

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
CIBC Mellon Trust Company may act and vote as management of the Company may
recommend.

SHAREHOLDERS' PROPOSALS

There is no provision in the British Columbia Company Act entitling the
shareholders of a company incorporated thereunder to initiate proposals for an
annual general meeting. The Company is incorporated pursuant to the British
Columbia Company Act.

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 6, 1998 IN CONNECTION WITH THE ANNUAL GENERAL MEETING OF
SHAREHOLDERS HELD ON MAY 14, 1998;

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.

28
<PAGE> 31

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 26th day of April, 1999.

By Order of the Board of Directors

/s/ ROBERT B. LUNDGREN
----------------------------------
Robert B. Lundgren
President and
Chief Executive Officer

29
<PAGE> 32

THE LOEWEN GROUP INC.

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

TO BE HELD ON JUNE 4, 1999

THIS PROXY IS SOLICITED BY AND ON BEHALF OF MANAGEMENT

The undersigned, being a holder of Common shares without par value ("Common
Shares") in the capital of The Loewen Group Inc. (the "Company") and hereby
revoking any proxy previously given, hereby appoints JOHN S. LACEY, or failing
him, ROBERT B. LUNDGREN, 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 4th day of June, 1999, 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 BOTH OF THE
NOMINEES FOR DIRECTOR LISTED IN ITEM 1 BELOW AND FOR ALL MATTERS IN ITEMS 2
THROUGH 4 BELOW, UNLESS AN INSTRUCTION TO THE CONTRARY IS INDICATED.

<TABLE>
<S> <C> <C>
1. The election of William R. Riedl 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 The Right Honourable John N. Turner, P.C., FOR [ ] or WITHHOLD [ ]
C.C., Q.C. as a Director of the Company for a term ending at
the fourth annual general meeting after the Meeting.

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

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

4. To approve an amendment of the Outside Director Plan to FOR [ ] or AGAINST [ ] or ABSTAIN [ ]
increase the number of Common Shares issuable thereunder by
200,000 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 June 3,
1999.

- ------------------------------------------------------------
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> 33

NOTES TO PROXY

1. Shareholders who are unable to attend the Meeting are requested to complete
and deposit this proxy with CIBC Mellon Trust Company no later than 10:00
a.m. (Pacific Daylight Time), June 3, 1999, at 200 Queens Quay East, Unit 6,
Toronto, Ontario, Canada, M5A 4K9, or by mail at P.O. Box 12005 Stn. BRM B,
Toronto, Ontario, Canada, M7Y 2K5, or by fax at (416) 368-2502.

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 PROPOSED 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 of, 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 of, or attorney-in-fact for, 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> 34

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

TO: CIBC MELLON TRUST COMPANY
PO BOX 7010
ADELAIDE STREET POSTAL STATION
TORONTO, ONTARIO
CANADA
M5C 2W9
<PAGE> 35

VOTING INSTRUCTIONS
TO CIBC MELLON TRUST COMPANY
AS PLAN AGENT UNDER THE EMPLOYEE STOCK BONUS PLAN
ANNUAL GENERAL MEETING OF THE LOEWEN GROUP INC.
TO BE HELD JUNE 4, 1999
AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF

INSTRUCTIONS:
1. PLEASE INSTRUCT CIBC MELLON TRUST COMPANY, BY CHECKING THE APPROPRIATE
BOXES, HOW TO VOTE YOUR FIVE COMMON SHARES WITHOUT PAR VALUE ("COMMON SHARES")
IN THE CAPITAL OF THE LOEWEN GROUP INC. (THE "COMPANY") FOR EACH OF THE ITEMS
SET FORTH BELOW.

2. DATE, SIGN AND MAIL IN THE ATTACHED ENVELOPE TO CIBC MELLON TRUST COMPANY.

The undersigned participant in the Employee Stock Bonus Plan (hereinafter
referred to as the "Plan") of the Company hereby instructs CIBC Mellon 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
William R. Riedl [ ] [ ]
The Right Honourable John N. Turner, P.C., C.C., [ ] [ ]
Q.C.
VOTING CHOICE ON THE:
Appointment of KPMG LLP 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: FOR AGAINST ABSTAIN
Resolution to approve an amendment of the Outside [ ] [ ] [ ]
Director Plan to increase the number of Common
Shares issuable thereunder by 200,000 Common
Shares
</TABLE>

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

DATE: ____________________________

__________________________________
Signatures:

__________________________________
Print Name:

<PAGE> 36

VOTING INSTRUCTIONS
TO CIBC MELLON TRUST COMPANY
UNDER THE 401(k) PLAN

ANNUAL GENERAL MEETING OF THE LOEWEN GROUP INC.
TO BE HELD JUNE 4, 1999
AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF

INSTRUCTIONS:
1. PLEASE INSTRUCT CIBC MELLON TRUST COMPANY, BY CHECKING THE APPROPRIATE
BOXES, HOW TO VOTE THE COMMON SHARES WITHOUT PAR VALUE ("COMMON SHARES") IN
THE CAPITAL OF THE LOEWEN GROUP INC. (THE "COMPANY") 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 CIBC MELLON TRUST COMPANY.

The undersigned participant in the 401(k) Plan (hereinafter referred to as the
"Plan") of Loewen Group International, Inc. hereby instructs CIBC Mellon Trust
Company as Trustee's Agent to exercise at the above meeting the voting rights
pertaining to THE COMMON SHARES OF THE COMPANY UNDER THE PLAN AS FOLLOWS:

DATE: ______________________________

____________________________________
Signature:

____________________________________
Print Name:

NOTE: IF YOU DATE, SIGN AND MAIL THESE VOTING INSTRUCTIONS TO CIBC MELLON TRUST
COMPANY BUT DO NOT INSTRUCT CIBC MELLON TRUST COMPANY HOW TO VOTE YOUR
COMMON SHARES WITH RESPECT TO ANY OF THE ITEMS ABOVE, CIBC MELLON 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 PROPOSED RESOLUTIONS, AND IN THE CASE OF ANY OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING, YOU HEREBY CONFER
DISCRETIONARY AUTHORITY ON CIBC MELLON 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.
<PAGE> 37
THE LOEWEN GROUP INC.

1994 OUTSIDE DIRECTOR COMPENSATION PLAN
(RESTATED AND AMENDED AS AT JANUARY 9, 1997 AND FURTHER
AMENDED AS AT AUGUST 15, 1997, JUNE 25, 1998 AND APRIL 23, 1999)

SECTION 1. PURPOSE

The purpose of the 1994 Outside Director Compensation Plan (the "Plan") is to
promote the interests of The Loewen Group Inc. ("TLGI") by attracting and
retaining qualified individuals who are neither employees nor officers of TLGI
or a Subsidiary (as defined below) to serve as directors of TLGI or a
Subsidiary. The Plan is intended to further align the interests of outside
directors with the shareholders of TLGI, thereby promoting long-term growth and
performance of TLGI.

SECTION 2. DEFINITIONS

"ANNUAL FEES" means (i) the annual retainer, (ii) the fees for serving on a
Committee, (iii) the fees for serving as Chairman of a Committee and (iv) any
other fees for serving as a director of TLGI with respect to an Annual Service
Period (other than Meeting Fees), to be paid by TLGI to a TLGI Participant
during or in respect of any Annual Service Period, at the rates determined by
the Board of Directors in advance of such period.

"ANNUAL FEES ELECTION" means an irrevocable election made in accordance with
Section 5(a).

"ANNUAL SERVICE PERIOD" means an annual period determined by the Board of
Directors, which annual period shall be January 1 through December 31 or such
other annual period as may be designated from time to time by the Board of
Directors.

"APPLICABLE STOCK EXCHANGE" means, with respect to Common Shares issued or
Options granted (i) to a Participant who is a resident of Canada, the TSE; and
(ii) to a Participant who is a resident of any country other than Canada, the
New York Stock Exchange; provided, however, that the Board of Directors may,
subject to any required stock exchange approval, from time to time, designate
another Stock Exchange as the Applicable Stock Exchange for purposes of clause
(i) or clause (ii).

"BOARD OF DIRECTORS" means the Board of Directors of TLGI.

"BUSINESS DAY" means any day on which the principal executive offices of TLGI in
Burnaby, British Columbia, are open for business and all of the Stock Exchanges
are open for trading.

"COMMITTEE" means a committee of the Board of Directors.

"COMMON SHARES" means the Common shares without par value of TLGI.

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"DETERMINATION DATE" means (i) with respect to Common Shares issued pursuant to
Section 5(a), the first Business Day of the Annual Service Period to which the
Annual Fee Election relates, (ii) with respect to Common Shares granted pursuant
to Section 5(b), the first Business Day of the Quarterly Service Period
immediately following the Quarterly Service Period to which the Meeting Fees
Election relates, (iii) with respect to Options granted pursuant to Section 6,
the Grant Date, and (iv) with respect to Options granted pursuant to Section 7,
the first Business Day of the first full calendar month that a Participant first
serves as a director.

"GRANT DATE" means the date that an Option is granted; provided, however, that
if the date the Option is granted is not a Business Day, the Grant Date shall be
deemed to be the Business Day immediately following such date of grant.

"MEETING FEES" means the aggregate fee compensation actually earned during a
Quarterly Service Period by a TLGI Participant for attending (in person, by
telephone, or by videoconference) Board of Director and Committee meetings.

"MEETING FEES ELECTION" means an irrevocable election made in accordance with
Section 5(b).

"OPTION" means an option to acquire Common Shares granted pursuant to Section 6
or Section 7.

"PARTICIPANT" means a TLGI Participant or a Subsidiary Participant.

"PLAN" means this 1994 Outside Director Compensation Plan, as amended and
restated.

"QUARTERLY SERVICE PERIOD" means each of the quarters ended March 31, June 30,
September 30 and December 31, or such other quarterly periods as may be
designated by the Board of Directors from time to time.

"SECURITIES LAWS" means the securities laws of the United States, Canada, the
states and territories of the United States, the provinces and territories of
Canada, the securities laws of the jurisdiction of residence of any Subsidiary
Participant, and applicable laws, rules and regulations promulgated thereunder.

"SHARE PRICE" means (i) with respect to Common Shares, the Weighted Average
Trading Price or (ii) with respect to Options, the greater of (A) the weighted
average of the trading prices on the Determination Date of the Common Shares on
the Applicable Stock Exchange and (B) the Weighted Average Trading Price.

"SHARES" means the Common Shares and any security convertible into or
exchangeable for Common Shares.

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"STOCK EXCHANGES" means the New York Stock Exchange (or, if the Common Shares
are not traded on the New York Stock Exchange, any United States national
securities exchange or quotation system on which the Common Shares are traded)
and any securities exchange outside of the United States on which the Common
Shares are traded.

"SUBSIDIARY" means a direct or indirect subsidiary of TLGI.

"SUBSIDIARY PARTICIPANT" means an individual duly elected or appointed as a
director of a Subsidiary who is (i) not an officer or employee of TLGI or any
Subsidiary or (ii) not a resident of the United States or Canada.

"TLGI" means The Loewen Group Inc., a body corporate under the laws of British
Columbia, Canada.

"TLGI PARTICIPANT" means an individual duly elected or appointed as a director
of TLGI who is not also an officer or employee of TLGI or any Subsidiary. Absent
action by the Board of Directors to the contrary, an honorary director or a
director emeritus shall be deemed to be TLGI Participant.

"TSE" means The Toronto Stock Exchange.

"WEIGHTED AVERAGE TRADING PRICE" means the weighted average trading price of the
Common Shares on the Applicable Stock Exchange for the five trading days on
which such shares are traded immediately preceding the Determination Date.

"1934 ACT" means the Securities Exchange Act of 1934, as amended.

SECTION 3. ADMINISTRATION

The Plan shall be administered by the Board of Directors.

SECTION 4. COMMON SHARES SUBJECT TO THE PLAN

The total number of Common Shares that may be issued under the Plan shall not
exceed 450,000. The number of Common 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 Common Shares on a non-diluted
basis. If any Options granted under this Plan are surrendered before exercise or
lapse without exercise, in whole or in part, then the Common Shares reserved
therefor shall continue to be available under the Plan.

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<PAGE> 40
SECTION 5. ELECTIONS

(a) Annual Fees Election. Not later than ten Business Days prior to the
first day of an Annual Service Period, each TLGI Participant may, by filing a
written election with TLGI, direct TLGI to pay to such TLGI Participant, in the
form of Common Shares, some or all of the Annual Fees payable to such TLGI
Participant for the related Annual Service Period (the "Annual Fees Election").
An Annual Fees Election filed with TLGI shall be effective for the entire Annual
Service Period to which the Annual Fees Election relates. The number of Common
Shares to be issued pursuant to Section 5(a) shall be equal to the Annual Fees
or such portion thereof to which the Annual Fee Election relates, divided by the
Share Price as at the Determination Date. Such Common Shares shall be issued as
soon as is reasonably possible after the last day of the Annual Service Period
to which the Annual Fees Election relates. Cash shall be paid in lieu of
fractional shares. If actual fees to be paid with respect to any component of
Annual Fees is increased during the Annual Service Period, TLGI Participants
shall receive such increase in cash and not Common Shares, regardless of whether
an Annual Fees Election has been made.

(b) Meeting Fees Election. Each TLGI Participant may deliver a notice to
TLGI directing TLGI to pay to such TLGI Participant, in the form of Common
Shares, some or all of the Meeting Fees for the immediately preceding Quarterly
Service Period (the "Meeting Fees Election"); provided, however, that the first
Quarterly Service Period for which a Meetings Fees Election may be filed is the
quarter ended March 31, 1997. The Meeting Fees Election shall be delivered to
TLGI between the 40th and 60th day following the relevant Quarterly Service
Period. The number of Common Shares to be issued pursuant to Section 5(b) shall
be equal to the Meeting Fees to which the Meeting Fee Election relates, divided
by the Share Price as at the Determination Date. Such Common Shares shall be
issued as soon as is reasonably possible after the due date of the relevant
Meetings Fee Election. Cash shall be paid in lieu of fractional shares.

SECTION 6. ANNUAL GRANT OF OPTIONS

On June 1 of each year or such other date as the Board of Directors shall
determine, each TLGI Participant who is a Board member immediately following the
last meeting of shareholders in which directors have been elected (a
"Shareholders' Meeting") shall receive an annual grant of Options; provided,
however, that with respect to the year commencing June 1, 1996, the annual grant
of Options shall occur on January 9, 1997. In addition, each TLGI Participant
who is a Committee member immediately following the Shareholders' Meeting shall
receive a grant of Options for service as a Committee member. The number of
Options to be granted for Board service and Committee service shall be
determined annually by the Board of Directors by no later than the last physical
Board meeting held prior to June 1 of the relevant year.

SECTION 7. INITIAL AND ONE-TIME GRANTS

A TLGI Participant who is initially appointed (rather than elected at a
Shareholders' Meeting) to the Board of Directors shall, on the first Business
Day of the first full calendar month after the date during which such
appointment occurred, receive an initial grant of Options in an amount to

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<PAGE> 41
be determined by the Board of Directors. In addition, the Board of Directors
shall have the discretion to make a one-time grant of up to 2,000 Options to a
Subsidiary Participant, such grant to be made as of the first Business Day of
the first full calendar month after the date on which a Subsidiary Participant
is initially elected or appointed to a Subsidiary board of directors.

SECTION 8. OPTION AGREEMENT

Each Option granted under the provisions of this Plan shall be evidenced by an
option agreement ("Option Agreement") in such form as may be approved by the
Board of Directors, which agreement shall be duly executed and delivered on
behalf of TLGI and by the Participant to whom such Option is granted. The Option
Agreement shall contain such terms, provisions and conditions not inconsistent
with the Plan as may be determined by the Board of Directors.

SECTION 9. TERMS OF OPTIONS

(a) Exercise Price. The Option exercise price shall be the Share Price.

(b) Term. Except as determined pursuant to Section 12 hereof, each Option
shall expire ten years after the Grant Date.

(c) Vesting; Exercise. 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 and at any time and from time to time
thereafter with respect to all or a portion of the Common Shares covered by such
vested installments. In addition, if an Offer (as hereinafter defined) is made,
the Board of Directors may while the Offer remains outstanding:

(i) determine that each Option granted by TLGI to purchase Common
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 Shares made to the
holders of 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 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

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<PAGE> 42
the Shares owned by each of them. Paragraphs (i) and (ii) shall apply to each
Option granted or to be granted by TLGI, 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 canceled or otherwise has ceased to exist.

(d) Payment. An Option shall be exercised by delivery of a written notice of
such exercise to TLGI at its principal executive office, together with full
payment of the aggregate exercise price for the Common Shares with respect to
which the Option is exercised.

(e) Share Issuance. Upon payment of the aggregate exercise price, TLGI shall
issue the Common Shares so acquired as soon as is reasonably possible.

SECTION 10. OPTIONS NOT TRANSFERABLE

An Option granted under the Plan shall not be transferred, pledged or assigned
except to the extent permitted by applicable Securities Laws and the applicable
rules and regulations of the Stock Exchanges and (i) only as hereinafter
provided or (ii) with the approval of the Board of Directors.

SECTION 11. PROTECTION AGAINST DILUTION

The Board of Directors shall adjust the number of Common Shares covered by the
Plan and any Option 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 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 Board of Directors
shall also adjust the exercise price under any Option in a manner which it
considers equitable if the number of Common Shares covered by the Option is
adjusted pursuant to this section.

SECTION 12. PERSONAL HOLDING COMPANY

To the extent permitted by applicable Securities Laws and the applicable rules
and regulations of the Stock Exchanges, a Participant shall be entitled to
direct TLGI (i) to issue Shares or Options to a personal holding company of
which the Participant holds all of the direct and indirect interests ("PHC") or
(ii) to permit the transfer by a Participant of his or her Options to a PHC.

SECTION 13. EFFECT OF TERMINATION OF DIRECTORSHIP

(a) Death. In the event of the death of a Participant, the Participant's
personal legal representatives (the "Successors") or PHC, as the case may be,
may exercise any Options previously issued to the extent that such Options are
exercisable at the date of death, but no further vesting shall occur. Absent the
prior written consent of the Board of Directors, any such

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Option must be exercised prior to the earlier to occur of (i) two years after
the date of death and (ii) the expiration date of the Option. In addition, the
Successors or the PHC, as the case may be, shall be entitled to receive, on
behalf of a deceased TLGI Participant, a pro rata amount of the Common Shares
that the TLGI Participant elected to receive pursuant to Section 5(a), and all
of the Common Shares that the TLGI Participant elected to receive pursuant to
Section 5(b).

(b) Termination by Board Resolution. If a Participant's directorship is
terminated by resolution of the Board of Directors or the board of directors of
a Subsidiary, all Options previously issued to such Participant or PHC, as the
case may be, shall expire on a date to be determined by the Board of Directors.
Until such date, any Options previously issued may be exercised to the extent
that such Options are exercisable on the termination date, but no further
vesting shall occur. The Board of Directors shall also determine the extent, if
at all, that such TLGI Participant or PHC, as the case may be, shall receive any
Common Shares with respect to the Annual Service Period during which such
termination occurs.

(c) Other Termination. In the event that a Participant's directorship
terminates for any reason other than by death or by resolution, any Options
previously issued may be exercised, to the extent that such Options are
exercisable on the termination date, but no further vesting shall occur. Any
such Options must be exercised prior to the earlier to occur of (i) forty-five
days after the date of termination and (ii) the expiration date of the Option. A
TLGI Participant or PHC, as the case may be, shall be entitled to receive a pro
rata amount of the Common Shares that the TLGI Participant elected to receive
pursuant to Section 5(a), and all of the Common Shares that the TLGI Participant
elected to receive pursuant to Section 5(b).

(d) Honorary/Emeritus Director. Notwithstanding Sections 13(a) and 13(b)
above, a director who becomes an honorary director or director emeritus shall
not be deemed to be terminated as a result of assuming such status.

(e) Share Certificates. A certificate representing Common Shares to be
acquired pursuant to this Section 13 shall be issued in accordance with Section
5(a), 5(b) or 9(e), as the case may be.

SECTION 14. RESTRICTIONS ON ISSUANCE OF SHARES

TLGI shall have no obligation to issue any Common Shares or deliver any
certificate representing Common Shares until the following conditions shall be
satisfied:

(i) At the time of the issue, (A) such shares effectively shall have
been registered or qualified by prospectus, as the case may be,
under applicable Securities Laws as now in force or hereafter
amended or (B) counsel for TLGI shall have given an opinion that
such shares are exempt from registration or qualification by
prospectus, as the case may be, under Securities Laws as now in
force or hereafter amended; and

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(ii) TLGI shall have complied with all regulations imposed by the
Stock Exchanges.

In addition, any such certificate shall bear such restrictive legends as TLGI
determines are necessary or desirable, from time to time, in order to comply
with applicable Securities Laws and all regulations imposed by the Stock
Exchanges.

SECTION 15. TERMINATION OR AMENDMENT

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

SECTION 16. GENERAL LIMITATIONS

Neither the Participant, the Participant's Successors nor the Participant's PHC
shall have any rights as a shareholder of TLGI with respect to Common Shares
covered by Options until the Participant, Participant's Successors or PHC, as
the case may be, becomes the holder of record of such shares.

SECTION 17. RISK

EACH PARTICIPANT ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE
COMMON SHARES.

SECTION 18. APPLICABLE LAW

All questions concerning the interpretation, validity and construction of this
Plan and the instruments evidencing Options shall be governed by the internal
law, and not the law of conflicts, of the Province of British Columbia.

SECTION 19. COMPLIANCE WITH CERTAIN U.S. LAWS

So long as TLGI is subject to Section 16 of the 1934 Act, any equity security,
as defined in the rules and regulations under the 1934 Act, offered pursuant to
the Plan may not be sold for at least six months after the date of grant
thereof, and any derivative security, as defined in the rules and regulations
promulgated under Section 16, offered pursuant to the Plan may not be sold for
at least six months after the acquisition thereof, except in the event of the
death or disability of the holder thereof. To the extent that any provision of
this Plan or action by the Board of Directors fails to comply with the rules and
regulations promulgated under Section 16, it shall be null and void to the
extent permitted by law and deemed advisable by the Board of Directors.

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