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                              THE LOEWEN GROUP INC.
                            CORPORATE INCENTIVE PLAN

1.       PURPOSE.

         The purpose of The Loewen Group Inc. Corporate Incentive Plan (the
         "Plan") is to:

         (a)      Focus key corporate employees on the achievement of financial
                  goals considered essential for the Company's success during
                  and after the pending insolvency proceedings.

         (b)      Promote the success and enhance the value of the Company by
                  linking the personal interests of Participants to those of the
                  Company by providing Participants with incentives for
                  excellent performance.

         (c)      Motivate, attract and retain top quality high performing key
                  employees.

         THIS PLAN SUPERCEDES AND REPLACES ALL PRIOR CORPORATE INCENTIVE PLANS
         MAINTAINED BY THE LOEWEN GROUP INC. OR LOEWEN GROUP INTERNATIONAL, INC.

2.       DEFINITIONS.

         For the purposes of the Plan, the following terms shall have the
         meanings indicated.

         (a)      AWARD. "Award" means the amount paid as an incentive bonus
                  pursuant to Section 5 below.

         (b)      BOARD. "Board" means the Board of Directors of the Company.

         (c)      COMPANY. "Company" means The Loewen Group Inc.

         (d)      COMPENSATION COMMITTEE. " Compensation Committee" means the
                  Compensation Committee of the Board or such other committee of
                  the Board authorized by the Board to administer the Plan.

         (e)      CREDITORS' COMMITTEE. "Creditors' Committee" means the
                  official committee of unsecured creditors appointed by the
                  United States trustee for the District of Delaware in the
                  bankruptcy cases of certain of the Employers pending before
                  the United States Bankruptcy Court for the District of
                  Delaware, captioned LOEWEN GROUP INTERNATIONAL, INC., ET AL.,
                  Case No. 99-1244.

         (f)      DESIGNATED EMPLOYEE GROUP. "Designated Employee Group" means
                  any one of the groups of employees described on Exhibit A, as
                  such Exhibit may be amended from time to time.

         (g)      EFFECTIVE DATE. "Effective Date" means the date on which an
                  individual Participant executes a Release Agreement.

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         (h)      EMPLOYER. "Employer" means each of the Company and those of
                  its divisions, subsidiaries and operating units, as are set
                  forth on Exhibit B, as such Exhibit may be amended from time
                  to time.

         (i)      MAXIMUM AWARD PERCENTAGE. "Maximum Award Percentage" means the
                  percentage of Salary that a Participant is eligible to earn in
                  a Plan Year if the maximum Performance Goals established for
                  the Company are achieved or exceeded. The Maximum Award
                  Percentages for each Designated Employee Group are specified
                  on Exhibit A, as such Exhibit may be amended from time to
                  time.

         (j)      MINIMUM AWARD PERCENTAGE. "Minimum Award Percentage" means the
                  percentage of Salary that a Participant is eligible to earn in
                  a Plan Year if the minimum Performance Goals established for
                  the Company are achieved or exceeded. The Minimum Award
                  Percentages for each Designated Employee Group are specified
                  on Exhibit A, as such Exhibit may be amended from time to
                  time.

         (k)      PARTICIPANT. "Participant" means any full-time employee of an
                  Employer who becomes a Participant in the Plan as provided in
                  Section 4 and who has not ceased to be a Participant pursuant
                  to Section 4 or Section 6.

         (l)      PERFORMANCE GOALS. "Performance Goals" means the financial
                  criteria established by the Compensation Committee pursuant to
                  Section 5(a) below to measure corporate performance during a
                  Plan Year.

         (m)      PLAN. "Plan" means The Loewen Group Inc. Corporate Incentive
                  Plan.

         (n)      PLAN YEAR. "Plan Year" means the calendar year. The first Plan
                  Year shall begin on January 1, 2000.

         (o)      RELEASE AGREEMENT. "Release Agreement" means an agreement, in
                  a form that is acceptable to the Employer, under which the
                  Participant, among other things, releases and waives any
                  rights, claims or entitlements that he or she may have at law
                  or under existing employment or consulting agreements or
                  company programs.

         (p)      SALARY. "Salary" means a Participant's rate of regular base
                  compensation, excluding commissions, overtime pay, bonuses and
                  any extra remuneration, determined at the end of a Plan Year,
                  without reduction for any salary or wage reduction
                  contributions made to a Company sponsored plan.

         (q)      TARGET AWARD PERCENTAGE. "Target Award Percentage" means the
                  percentage of Salary that a Participant is eligible to earn in
                  a Plan Year if the targeted Performance Goals established for
                  the Company are achieved. The Target Award Percentages for
                  each Designated Employee Group are specified on Exhibit A, as
                  such Exhibit may be amended from time to time.

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3.       PLAN ADMINISTRATION.

         (a)      Subject to the authority and powers of the Board, the
                  Compensation Committee shall administer the Plan. The
                  Compensation Committee shall have full authority to interpret
                  the Plan and to adopt such rules, regulations and procedures
                  for carrying out the Plan as it may deem necessary or
                  advisable, including without limitation, the authority to:

                  (i)      designate employees as Participants;

                  (ii)     designate and thereafter administer the Performance
                           Goals; and

                  (iii)    determine other terms and conditions related to
                           Awards (including to provide appropriate adjustments
                           or prorations of Awards in the case of Participants
                           who are hired, cease to be Participants or are
                           changed from one Designated Employee Group to another
                           during a Plan Year).

         (b)      Any dispute, controversy or claim arising out of or relating
                  to any Plan benefit, including, without limitation, any
                  dispute, controversy or claim as to whether the decision of
                  the Committee respecting the benefits under this Plan or
                  interpretation of this Plan is arbitrary and capricious, shall
                  be settled by final and binding arbitration in accordance with
                  the American Arbitration Association Employment Dispute
                  Resolution or the Rules of the Arbitration and Mediation
                  Institute of Canada, as appropriate. The Eligible Employee
                  must request arbitration in writing within the limitations
                  period set by applicable state, provincial or federal law.

                  The arbitrator shall be selected by mutual agreement of the
                  parties, if possible. If the parties fail to reach agreement
                  upon appointment of an arbitrator within 30 days following
                  receipt by one party of the other party's notice of desire to
                  arbitrate, the arbitrator shall be selected from a panel or
                  panels of persons submitted by the American Arbitration
                  Association (the "AAA") or the Arbitration and Mediation
                  Institute of Canada ("AMI"), as applicable. The selection
                  process shall be that which is set forth in the AAA Employment
                  Dispute Resolution Rules or similar process of the AMI, except
                  that, if the parties fail to select an arbitrator from one or
                  more panels, neither AAA nor AMI shall have the power to make
                  an appointment but shall continue to submit additional panels
                  until an arbitrator has been selected.

                  All fees and expenses of the arbitration, including a
                  transcript if requested, will be shared by the parties
                  equally. The arbitrator shall have no power to amend, add to
                  or subtract from this Plan. The award shall be admissible in
                  any court or agency action seeking to enforce or render
                  unenforceable this Plan or any portion thereof. Any action to
                  enforce or vacate the arbitrator's award shall be governed by
                  the Federal Arbitration Act if applicable or such other
                  legislation as may be applicable in the jurisdiction where the
                  Eligible Employee ordinarily is a resident.

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         (c)      All expenses and liabilities incurred by the Compensation
                  Committee in the administration of the Plan shall be borne by
                  the Company. The Compensation Committee may retain
                  accountants, attorneys or other advisors to render services in
                  connection with the administration of the Plan.

         (d)      Neither the Employers, the Board, the Compensation Committee,
                  nor any member of the Board or Compensation Committee, nor any
                  officer or employee of any Employer shall be personally liable
                  for any action, determination, or interpretation taken or made
                  in good faith with respect to the Plan. Any action taken or
                  omitted to be taken by any such person in good faith reliance
                  on the advice of any accountant, attorney or other advisor
                  retained by the Compensation Committee or the Employer shall
                  be conclusively presumed not to involve gross negligence or
                  willful misconduct. The members of the Board and the
                  Compensation Committee and the officers and employees of any
                  Employer shall be indemnified by the applicable Employer with
                  respect to any such liability to the fullest extent permitted
                  by applicable laws, rules and regulations.

4.       ELIGIBILITY.

         (a)      Each full-time employee who (i) is a member of a Designated
                  Employee Group on the Effective Date, (ii) is provided written
                  notification of participation by the Compensation Committee
                  and (iii) executes a Release Agreement shall be a Participant
                  in the Plan as of the Effective Date.

         (b)      Any other employee who becomes a member of a Designated
                  Employee Group after the adoption of this Plan by the Company
                  and is provided written notification of participation by the
                  Compensation Committee shall become a Participant in the Plan
                  as of the date membership in such Designated Employee Group
                  commences.

         (c)      Any Participant whose employment with the Employer terminates
                  for any reason shall cease to be a Participant, except for
                  Participants who transfer employment from one Employer to
                  another Employer during a Plan Year and continue as a member
                  of a Designated Employee Group at the new Employer.

         (d)      If an individual who became a Participant in the Plan pursuant
                  to Section 4(a) or 4(b) above later ceases to be a member of a
                  Designated Employee Group then such individual shall likewise
                  cease to be a Participant.

5.       DETERMINATION AND PAYMENT OF AWARDS.

         Determination and payment of Awards pursuant to the Plan shall be
         subject to the following terms and conditions:

         (a)      PERFORMANCE GOALS. Performance Goals will be set by the
                  Compensation Committee, with reference to the achievement of
                  specified measures of financial performance of the Company.
                  Such Performance Goals shall be subject to review and
                  approval, prior to the confirmation of a plan of
                  reorganization for the

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                  Company, by the Creditors' Committee. Once approvals are
                  obtained, the minimum, targeted and maximum Performance
                  Goals shall be communicated in writing to Participants
                  within 15 days. The Compensation Committee expressly
                  retains the ability under the Plan to adjust targeted
                  Performance Goals to reflect any asset sales or closings of
                  operating units or any other reconfigurations of the
                  Company's operations. If actual financial results are less
                  than the minimum Performance Goal, no Award shall be earned.

         (b)      CALCULATION OF FINAL AWARDS. After the end of a Plan Year,
                  Awards shall be calculated by comparing actual financial
                  results to the pre-established Performance Goals. When making
                  these calculations, actual financial results will be reduced
                  by an amount equal to total Awards earned by Participants and
                  total awards earned under the Company's Operations Incentive
                  Plan. If actual financial results equal the minimum
                  Performance Goal, an Award equal to the Minimum Award
                  Percentage multiplied by a Participant's Salary shall be
                  earned. If actual financial results equal the targeted
                  Performance Goal, an Award equal to the Target Award
                  Percentage multiplied by a Participant's Salary shall be
                  earned. If actual financial results equal or exceed the
                  maximum Performance Goal, an Award equal to the Maximum Award
                  Percentage multiplied by a Participant's Salary shall be
                  earned. If actual financial results exceed the minimum
                  Performance Goal but are less than the targeted Performance
                  Goal, an award percentage will be determined by applying
                  straight-line interpolation to the Minimum Award Percentage
                  and the Target Award Percentage, with reference to the
                  relationship between actual financial results and the minimum
                  and targeted Performance Goals. The resulting award percentage
                  shall be multiplied by the Participant's Salary to determine
                  the Award earned for the Plan Year. If actual financial
                  results exceed the targeted Performance Goal but are less than
                  the maximum Performance Goal, an award percentage will be
                  determined by applying straight-line interpolation to the
                  Target Award Percentage and the Maximum Award Percentage, with
                  reference to the relationship between actual financial results
                  and the targeted and maximum Performance Goals. The resulting
                  award percentage shall be multiplied by the Participant's
                  Salary to determine the Award earned for the Plan Year. In
                  addition, no Awards above the Awards payable if actual
                  financial results equal the targeted Performance Goal will be
                  payable for fiscal year 2000 if the Employers, as a result of
                  paying such incremental awards, would not retain a substantial
                  portion of the incremental cash flow giving rise to such
                  payments.

         (c)      ADJUSTMENTS TO FINAL AWARDS. The Company, through the
                  Compensation Committee, expressly retains the ability under
                  the Plan to: (i) adjust Awards based on adjustments to
                  targeted Performance Goals under Section 5(a) above and (ii)
                  adjust an individual Participant's Award downward by as much
                  as 33% based on the discretionary assessment of that
                  Participant's performance by his or her direct supervisor. An
                  adjustment pursuant to Section 5(a) or this Section shall not
                  be treated as an amendment to the Plan.

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         (d)      TIMING OF PAYMENT OF AWARDS. Awards earned with respect to any
                  Plan Year shall be paid in cash by the Employer within 90 days
                  following the last day of any Plan Year.

6.       TERMINATION OF EMPLOYMENT.

         In the event that a Participant's employment with the Employer
         terminates for any reason before the last day of a Plan Year, the
         Participant shall not be entitled to receive any Award under the Plan.
         Notwithstanding the foregoing, if a Participant becomes an employee of
         a successor employer upon the acquisition of any business, unit, or
         facility by such employer, then there shall be paid to such Participant
         promptly after the last day of the Plan Year in which such acquisition
         occurs (whether or not he or she remains an employee of the successor
         employer on such last day unless he or she voluntarily withdraws from
         the employ of such successor employer) an amount equal to the Award
         that would have been payable for such Plan Year based on actual
         financial results through the last day of the month prior to the date
         of acquisition. Such award will be prorated based on the number of
         complete months worked during the Plan Year prior to the date of
         acquisition.

7.       WITHHOLDING.

         The Employer shall have the right to withhold any taxes or any other
         amounts as are required to be withheld by law with respect to any
         payments due under the Plan.

8.       AMENDMENT OR TERMINATION.

         The Company may modify, amend or terminate the Plan, in whole or in
         part, at any time; provided, however, that any modification, amendment
         or termination of the Plan shall not, without the consent of the
         Participant, adversely affect any right to an Award for the Plan Year
         in which the modification, amendment or termination goes into effect
         after Performance Goals have been communicated. In addition, the Plan
         may not be terminated prior to January 1, 2001.

9.       EFFECT UPON OTHER PLANS.

         The adoption of the Plan shall not affect any other compensation or
         benefit plan adopted or implemented by the Company simultaneously with
         this Plan and the Plan shall not preclude the Board from establishing
         any other form of incentive, bonus or other compensation for employees
         of the Company. The amounts awarded to a Participant under the Plan
         shall not be deemed to be compensation for the purpose of calculating
         the amount of a Participant's benefits under any retirement, insurance,
         disability or other benefit plan, except to the extent specifically
         provided in such plan.

10.      BREACH.

         In the event that a Participant breaches any of his or her obligations
         under the Plan or any other documents or instruments executed herewith
         (including, without limitation, the Release Agreement), the Company
         shall have the right to demand the repayment of all or

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<PAGE>

         a portion of any amounts paid to the Participant under the Plan and,
         in addition, (a) the Company shall have no further obligation to
         that Participant pursuant to the Plan and (b) that Participant shall
         pay any expenses or damages incurred by the Company or the
         applicable Employer as a result of said breach, including all costs
         incurred by the Company or the applicable Employer, including
         reasonable attorneys' fees, in defending against any claims related
         to or arising from said breach.

11.      ASSIGNABILITY OF AWARDS.

         No Eligible Employee shall have the power to transfer, assign,
         anticipate, mortgage or otherwise encumber any rights or any amounts
         payable under this Plan; nor shall any such rights or amounts payable
         under this Plan be subject to seizure, attachment, execution,
         garnishment or other legal or equitable process, or for the payment of
         any debts, judgments, alimony, or separate maintenance, or be
         transferable by operation of law in the event of bankruptcy,
         insolvency, or otherwise. In the event a person who is receiving or is
         entitled to receive benefits under the Plan attempts to assign,
         transfer or dispose of such right, or if an attempt is made to subject
         such right to such process, such assignment, transfer or disposition
         shall be null and void.

12.      PLAN NOT A CONTRACT OF EMPLOYMENT; EMPLOYER'S POLICIES CONTROL.

         Nothing contained in this Plan shall give a Participant the right to be
         retained in the employment of an Employer. This Plan is not a contract
         of employment between the Employer and any Participant.

         Any dispute involving issues of employment other than claims for
         benefits under this Plan shall be governed by the appropriate
         employment dispute resolution policies and procedures of the Employer.

13.      ACTION BY AN EMPLOYER.

         Unless expressly indicated to the contrary herein, any action required
         to be taken by the Employer may be taken by action of its board of
         directors or by any appropriate officer or officers traditionally
         responsible for such determination or actions, or such other individual
         or individuals as may be designated by the board of directors or any
         such officer.

14.      GOVERNING LAW.

         The Plan shall be governed by and construed in accordance with the laws
         of the jurisdiction in which the Eligible Employee ordinarily is a
         resident.

15.      SEVERABILITY.

         If any provision of this Plan shall be held illegal or invalid for any
         reason, said illegality or invalidity shall not affect the remaining
         parts of this Plan, but this Plan shall be

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         construed and enforced as if said illegal or invalid provision had
         never been included herein.

         IN WITNESS WHEREOF, the Company has caused this Plan to be adopted on
         the _____ day of October, 1999.

                                                 THE LOEWEN GROUP INC.


                                                 By: _____________________

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                                                                     EXHIBIT A

  DESIGNATED EMPLOYEE GROUPS AND MINIMUM, TARGET AND MAXIMUM AWARD PERCENTAGES

<TABLE>
<CAPTION>
    ------------------------------------------------ -------------------- ------------------- -------------------
                                                           MINIMUM              TARGET              MAXIMUM
                                                            AWARD                AWARD               AWARD
    DESIGNATED EMPLOYEE GROUPS                            PERCENTAGE          PERCENTAGE           PERCENTAGE
    <S>                                               <C>                  <C>                 <C>
    ------------------------------------------------ -------------------- ------------------- -------------------

    ------------------------------------------------ -------------------- ------------------- -------------------
    SENIOR CORPORATE EXECUTIVES

    ------------------------------------------------ -------------------- ------------------- -------------------
       Chairman of the Board                                 25%                 50%                 100%
    ------------------------------------------------ -------------------- ------------------- -------------------
       Chief Executive Officer                               25%                 50%                 100%
    ------------------------------------------------ -------------------- ------------------- -------------------
       Tier 1:  Admin, Finance, Legal                        25%                 50%                 100%
    ------------------------------------------------ -------------------- ------------------- -------------------
       Tier 2:  HR, CIO, Controller, Treasurer &
       Corp. Sec.                                            20%                 40%                 80%
    ------------------------------------------------ -------------------- ------------------- -------------------
       Tier 3:  VPs/Functional Head                          15%                 30%                 60%
    ------------------------------------------------ -------------------- ------------------- -------------------

    ------------------------------------------------ -------------------- ------------------- -------------------
    CORPORATE STAFF

    ------------------------------------------------ -------------------- ------------------- -------------------
       Other VPs                                            12.5%                25%                 50%
    ------------------------------------------------ -------------------- ------------------- -------------------
       Directors                                             10%                 20%                 40%
    ------------------------------------------------ -------------------- ------------------- -------------------
       Senior Managers                                      7.5%                 15%                 30%
    ------------------------------------------------ -------------------- ------------------- -------------------
       Managers/Professional/Technical                       5%                  10%                 20%
    ------------------------------------------------ -------------------- ------------------- -------------------

    ------------------------------------------------ -------------------- ------------------- -------------------
</TABLE>


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                                                                     EXHIBIT B

                             PARTICIPATING EMPLOYERS