Document:

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                              EMPLOYMENT AGREEMENT

This agreement made as of the 1st day of November, 2000

BETWEEN:

                              THE LOEWEN GROUP INC.

                                                                 (the "Company")

                                      -And-

                                 PAUL A. HOUSTON

                                                               (the "Executive")

WHEREAS:

         The Company is engaged in the operation of funeral homes and cemeteries
         in Canada, the United States and England;

         The Loewen Group Inc. and the Executive had previously entered into an
         Employment Agreement (the "Previous Employment Agreement"); and

         The Company and the Executive wish to enter into an amended written
         Employment Agreement which will provide the Executive with an incentive
         to continue in his position as President and Chief Executive Officer of
         the Company for the term of this Agreement.

IN CONSIDERATION of the mutual covenants contained herein, the parties agree as
follows:

DEFINITIONS

1.       "CHANGE IN CONTROL" means any one of the following events that occurs
         during the term of this Agreement other than pursuant to a plan of
         reorganization submitted by the Company and confirmed by the Bankruptcy
         Court:

         a)       the acquisition by any individual, entity or group (a
                  "Person") of beneficial ownership of 30% or more of the
                  combined voting power of the then outstanding Voting Stock (as
                  defined below) of the Company; provided, however, that the
                  following acquisitions will not constitute a Change in
                  Control: (1) any issuance of Voting Stock of the Company
                  directly from the Company that is approved by the Incumbent
                  Board (as defined below), (2) any acquisition by the Company
                  of Voting Stock of the Company, (3) any acquisition of Voting
                  Stock of the Company by any employee benefit plan (or related
                  trust) sponsored or maintained by the Company or any
                  subsidiary of the Company, or (4) any acquisition of Voting
                  Stock of the Company by any Person pursuant to a Business
                  Combination (as defined below) that would not constitute a
                  Change in Control;

         b)       the consummation of a reorganization, amalgamation, merger or
                  consolidation, a sale or other disposition of all or
                  substantially all of the assets of the Company, or other
                  transaction (each, a "Business Combination") in which all or
                  substantially all of the individuals and entities who were

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                  the beneficial owners of Voting Stock of the Company
                  immediately prior to such Business Combination beneficially
                  own, directly or indirectly, immediately following such
                  Business Combination less than 40% of the combined voting
                  power of the then outstanding shares of Voting Stock of the
                  entity resulting from such Business Combination;

         c)       individuals who, as of the effective date of the plan of
                  reorganization confirmed by the Bankruptcy Court, constitute
                  the Board of Directors of the Company (the "Incumbent Board")
                  cease for any reason to constitute at least a majority of the
                  Board; provided, however, that any individual becoming a
                  Director subsequent to such effective date whose election, or
                  nomination for election by the Company's shareholders, was
                  approved by a vote of at least two-thirds of the Directors
                  then comprising the Incumbent Board (either by a specific vote
                  or by approval of the proxy statement of the Company in which
                  such person is named as a nominee for director, without
                  objection to such nomination) will be deemed to have been a
                  member of the Incumbent Board, but excluding, for this
                  purpose, any such individual whose initial assumption of
                  office occurs as a result of an actual or threatened election
                  contest with respect to the election or removal of Directors
                  or other actual or threatened solicitation of proxies or
                  consents by or on behalf of a Person other than the Board; or

         d)       the approval by the shareholders of the Company of a complete
                  liquidation or dissolution of the Company, except pursuant to
                  a Business Combination that would not constitute a Change in
                  Control.

2.       "JUST CAUSE" means wilful misconduct or wilful neglect of duty by the
         Executive, including, but not limited to, intentional wrongful
         disclosure of confidential or proprietary information of the Company or
         any of its subsidiaries; intentional wrongful engagement in any
         competitive activity prohibited by paragraph 21; and the intentional
         material breach of any provision of this Agreement.

3.       "STATED GOOD REASON" means the occurrence, other than pursuant to a
         plan of reorganization confirmed by the Bankruptcy Court, of one or
         more of the following events (regardless of whether any other reason,
         other than Just Cause, exists for the termination of Executive's
         employment):

         a)       the geographic relocation by more than 25 miles of the
                  Executive's principal work location, excluding, however, the
                  relocation of the Company's principal executive offices in
                  connection with a plan of reorganization confirmed by the
                  Bankruptcy Court;

         b)       any material reduction in the Executive's job duties or
                  responsibilities;

         c)       any material reduction in the Executive's level of
                  compensation or benefits;

         d)       any adverse change to the Executive's title or function;

         e)       any change in the organizational reporting relationship
                  between the Executive and the Board of Directors;

         f)       harassment; or

         g)       any circumstance in which the Executive was induced by the
                  actions of the Company to terminate his employment other than
                  on a purely voluntary basis.

4.       "TERMINATION WITHOUT JUST CAUSE" includes, but is not limited to, any
         unilateral change in the material terms and conditions of the
         Executive's employment.

5.       "VOTING STOCK" means securities entitled to vote generally in the
         election of directors.

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ENTIRE AGREEMENT

6.       a)       The Executive and the Company agree that this Agreement
                  represents the entire agreement between the parties and that
                  any and all prior agreements, written or verbal, express or
                  implied, between the parties relating to or in any way
                  connected with the employment of the Executive by the Company
                  or any related, associated, affiliated, predecessor or parent
                  corporations are declared null and void and are superseded by
                  the terms of this Agreement subject only to paragraph 6(b)
                  hereof. There are no representations, warranties, forms,
                  conditions, undertaking, or collateral agreements, express,
                  implied or statutory between the parties other than as
                  expressly set forth in this Agreement. No waiver or
                  modification of this Agreement shall be valid unless in
                  writing and duly executed by both the Company and the
                  Executive.

         b)       The following item is excluded from the operation and effect
                  of paragraph (a) preceding, and such excluded item continues
                  in full force and effect and is hereby reconfirmed and
                  incorporated by this reference as part of this Agreement: all
                  of the agreement of the parties reflected in paragraph 6
                  ("Corporate Incentive Plan") of the Previous Employment
                  Agreement.

EMPLOYMENT

7.       The Company agrees to continue the employment of the Executive, and the
         Executive agrees to continue in the employ of the Company, in his
         current position as President and Chief Executive Officer to a fixed
         term ending August 1, 2004. As used in this Agreement, the phrase "term
         of this Agreement" means the period ending on the earlier of August 1,
         2004, or the effective date of the termination of Executive's
         employment.

8.       The Executive agrees that he will at all times faithfully,
         industriously, and to the best of his skill, ability, and talents,
         perform all of the duties required of his position in a manner which is
         in the best interests of the Company and in accordance with the
         Company's objectives, and will devote his full working time and
         attention to these duties.

COMPENSATION

9.       a)       In consideration for the Executive's continued performance of
                  his duties as President and Chief Executive Officer, the
                  Executive will receive a base salary as follows: a) $425,000
                  U.S. per annum for the period through December 31, 2000; b)
                  $500,000 U.S. per annum for the period from January 1, 2001
                  until the earlier of June 1, 2001 or the effective date of the
                  plan of reorganization confirmed by the Bankruptcy Court; c)
                  for the period beginning at the earlier of June 1, 2001 or the
                  effective date of the plan of reorganization, $600,000 U.S.
                  per annum. The amount of such salary shall be subject to
                  review and improvement on a periodic basis in accordance with
                  Company practice, but in no event shall such amount be
                  reduced. The Executive's base salary is payable in accordance
                  with the Company's customary payroll practices and is subject
                  to deductions required by applicable law.

         b)       The Company shall reimburse the Executive for all reasonable
                  expenses incurred by the Executive during the term of this
                  Agreement in the course of the Executive performing his duties
                  under this Agreement. These reimbursements shall be consistent
                  with the Company's policies in effect from time to time with
                  respect to travel, entertainment and other reimbursable
                  business expenses, subject to the Company's requirements
                  applicable generally with respect to reporting and
                  documentation of such expenses.

SHORT TERM INCENTIVE PLAN - ANNUAL BONUS

10.      The Executive will be entitled to participate in a short term incentive
         plan as adopted by the Company from time to time, subject to a maximum
         of 100% of the Executive's annual base salary, less deductions required
         by applicable law. The bonus payable under such plan will be paid in
         full within 90 days after the end of

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         each year. With the exception of the bonus that becomes payable under
         paragraph 15, 16 or 17, the Executive's entitlement to a bonus under
         the short term incentive plan will be based entirely on the financial
         performance of the Company as determined under the terms of such
         incentive plan. The short term incentive entitlement of this
         paragraph 10 includes entitlement pursuant to the Corporate Incentive
         Plan of the Company's Key Employee Retention Program.

11.      The short term incentive plan bonus is subject to the following
         conditions and exceptions:

         a)       In order to qualify for and receive the annual bonus, the
                  Executive must be employed by the Company or its successor at
                  the time the bonus is paid unless the Executive is terminated
                  without Just Cause or the Executive resigns in compliance with
                  paragraphs 16 or 17. If the Executive's employment is
                  terminated without Just Cause or the Executive resigns in
                  compliance with paragraphs 16 or 17 after the end of the year
                  but before the bonus amount is paid, the Executive shall
                  receive the bonus for that completed year calculated in
                  accordance with terms of the short term incentive plan. The
                  payment shall be made by the Company within seven days of the
                  termination or resignation and will be subject to deductions
                  required by applicable law. If the bonus amount has not been
                  determined within seven days of the termination or resignation
                  it will be paid in full within 90 days of the subject year
                  end.

         b)       If, before the end of a year, the Executive's employment is
                  terminated by the Company or its successor without Just Cause
                  or the Executive resigns in compliance with paragraphs 16 or
                  17, the bonus which the Executive will be entitled to receive
                  under paragraphs 15, 16 or 17 for that year will be equal to
                  the bonus that would have been paid for the full year based
                  upon a bonus level equal to 100% of the Executive's salary
                  without regard to the financial performance of the Company but
                  will be prorated on the basis of the number of days in the
                  year up to and including the date of termination.

STOCK OPTION PLAN

12.      The Executive is eligible for participation in the Company's stock
         option plan or plans. Twenty percent of the pool of stock options
         granted to management employees pursuant to such plan or plans within
         180 days of the effective date of the plan of reorganization confirmed
         by the Bankruptcy Court will be granted to the Executive, with a
         vesting period of 3 years (25% 1ST year, 25% 2ND year, and 50% 3rd
         year), it being understood that all such options granted to the
         Executive will vest prior to August 1, 2004. Further grants of stock
         options shall be as determined by the Board of Directors of the
         reorganized company.

REORGANIZATION INCENTIVE

13.      a)       The parties acknowledge that pursuant to paragraphs 4 and 5
                  of the Previous Employment Agreement, Executive was eligible
                  to receive both a Confirmation Incentive Payment and a Value
                  Added Payment based upon the finalized content of the
                  Company's Plan of Reorganization and the timing of the
                  effective date of its confirmation. The parties further
                  acknowledge that the work leading to finalization of the
                  Company's Plan of Reorganization and its confirmation has been
                  substantially completed.

         b)       Accordingly the parties agree that in lieu of the Confirmation
                  Incentive Payment and Value Added Payment as specified in the
                  Previous Employment Agreement, Executive will qualify for a
                  one-time incentive payment of $1,500,000 (U.S.) payable within
                  15 days of the effective date of the Plan of Reorganization
                  being confirmed by the Bankruptcy Court. Executive agrees to
                  purchase, no later than 30 days after payment of this
                  incentive, shares of common stock of the Company having an
                  aggregate value equal to 25% of the net after-tax incentive.
                  Executive will retain such shares through the term of this
                  Agreement.

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BENEFITS

14.      The Executive will continue to participate in the following benefit
         plans:

         a)       GROUP BENEFITS

         The Executive will participate in the Company's Group Benefit Plan and
         any other group perquisites all as in effect from time to time.

         b)       VEHICLE ALLOWANCE

         The Executive will be entitled to a vehicle allowance of $1,000.00 U.S.
         per month plus auto insurance and operating expense coverage for the
         term of this Agreement.

         c)       FINANCIAL PLANNING

         The Executive will be entitled to the amount of $10,000.00. U.S. per
         year for the purposes of obtaining financial and retirement planning
         services, expenses and advice for the term of this Agreement, as
         directed by the Executive.

         d)       CLUB MEMBERSHIP

         The Executive will be entitled to the amount of $2,500.00 U.S. per year
         for club memberships as directed by the Executive.

TERMINATION OF EMPLOYMENT

15.      The parties agree that the Executive's employment under this Agreement
         may be terminated as follows:

         a)       by the Company, without notice of termination or pay in lieu
                  thereof, for Just Cause; or,

         b)       by the Company, at its sole discretion and for any reason
                  other than Just Cause upon payment to the Executive in a lump
                  sum, within seven days of such termination, of an amount equal
                  to:

                  i)       24 months' base salary;

                  ii)      the replacement value of all Executive's benefit
                           coverage, including the full vesting of all stock
                           options issued (exercised or not ) granted to the
                           Executive, and all monies due from the Registered
                           Retirement Savings Plan, following the date of the
                           Executive's termination (such benefit coverage being
                           calculated over 24 months following resignation or
                           termination);

                  iii)     The amount of any unpaid bonus earned by the
                           Executive up to and including the date of termination
                           calculated in accordance with paragraph 11. Such
                           bonus shall be payable regardless of the financial
                           performance of the Company; and

                  iv)      The amount of any unpaid salary or vacation earned by
                           the Executive up to and including the date of
                           termination.

Payments identified in sub paragraphs (i) - (iv) will be subject to deductions
required by applicable law.

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CHANGE IN CONTROL

16.      If a Change in Control occurs and, within two years of the effective
         date of the Change in Control, the Company terminates the Executive
         without Just Cause or the Executive submits a written resignation for
         Stated Good Reason to the Board of Directors of the Company, the
         Company shall, within seven days of the date of resignation or
         termination, pay to the Executive in a lump sum the following payments:

                  i)       24 months' base salary;

                  ii)      the replacement value of all Executive's benefit
                           coverage, including the full vesting of all stock
                           options issued (exercised or not ) granted to the
                           Executive, and all monies due from the Registered
                           Retirement Savings Plan, following the date of the
                           Executive's termination (such benefit coverage being
                           calculated over 24 months following termination);

                  iii)     The amount of any unpaid bonus earned by the
                           Executive up to and including the date of termination
                           calculated in accordance with paragraph 12. Such
                           bonus will be payable regardless of the financial
                           performance of the Company; and

                  iv)      The amount of any unpaid salary or vacation earned by
                           the Executive up to and including the date of
                           resignation or termination.

Payments identified in paragraphs (i) - (iv) will be subject to deductions
required by applicable law.

VOLUNTARY RESIGNATION DUE TO CHANGE IN CONTROL

17.      In the event that an agreement is reached which would result in a
         Change of Control, but the Change of Control has not yet occurred, the
         Executive can, for any reason, submit his resignation in writing to the
         Company prior to the effective date of the Change in Control. Any such
         resignation will be effective as of the date of the Change in Control,
         and the Executive shall continue to work for the Company up until that
         date. Further, if the Executive resigns in these circumstances and
         continues to work for the Company until the effective date of Change in
         Control, then on the effective date of the Change in Control the
         Company shall pay to the Executive a lump sum amount equal to the
         payments prescribed under paragraph 16 (i) - (iv). In the event that
         the Change in Control does not occur, the Executive shall not be
         entitled to the payments prescribed under paragraph 16 (i) - (iv), and
         the resignation shall be deemed to not have been tendered.

18.      Immediately prior to the effective date of a Change in Control, the
         Company shall allow the Executive to exercise all stock options or
         share appreciation rights, whether vested or not, granted to the
         Executive including shares with respect to which such options would not
         otherwise be exercisable. The Executive shall be entitled to receive
         all dividends declared and paid by the Company upon a Change of Control
         on the shares received by the Executive following the exercise of the
         Executive's stock options or share appreciation rights.

CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY

19.      In the event that it is determined (as hereinafter provided) that any
         payment (other than the Gross-Up Payments provided for in this
         paragraph 19 and Annex A) or distribution by the Company or any of its
         affiliates to or for the benefit of the Executive, whether paid or
         payable or distributed or distributable pursuant to the terms of this
         Agreement or otherwise pursuant to or by reason of any other agreement,
         policy, plan, program or arrangement, including without limitation the
         lapse or termination of any restriction on the vesting or
         exercisability of any benefit under any of the foregoing (a "Payment"),
         would be subject to the excise tax imposed by Section 4999 of the
         United States Internal Revenue Code of 1986, as amended (the "Code")
         (or any successor provision thereto), by reason of being considered
         "contingent on a change in ownership or control" of the Company, within
         the meaning of Section 280G of the Code (or any

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         successor provision thereto) or to any similar tax imposed by U. S.
         state or local law, or any interest or penalties with respect to such
         tax (such tax or taxes, together with any such interest and penalties,
         being hereafter collectively referred to as the "Excise Tax"), then the
         Executive will be entitled to receive an additional payment or payments
         (collectively, a "Gross-Up Payment"). The Gross-Up Payment will be in
         an amount such that, after payment by the Executive of all U. S. taxes
         (including any interest or penalties imposed with respect to such
         taxes), including any Excise Tax imposed upon the Gross-Up Payment,
         the Executive retains an amount of the Gross-Up Payment equal to the
         Excise Tax imposed upon the Payment. For purposes of determining the
         amount of the Gross-Up Payment, the Executive will be considered to pay
         any applicable U. S. federal, state and local income taxes at the
         highest rate applicable to the Executive in effect in the year in
         which the Gross-Up Payment will be made, net of the maximum reduction
         in U. S. federal income tax that could be obtained from deduction of
         such state and local taxes.

20.      The obligations set forth in paragraph 19 will be subject to the
         procedural provisions described in Annex A.

CONFIDENTIAL INFORMATION; COMPETITIVE ACTIVITY

21.      The Executive agrees that he will not, without the prior written
         consent of the Company, during the term of this Agreement or at any
         time thereafter, disclose to any person not employed by the Company, or
         use in connection with engaging in competition with the Company, any
         confidential or proprietary information of the Company. For purposes of
         this Agreement, the term "confidential or proprietary information"
         includes all information of any nature and in any form that is owned by
         the Company and that is not publicly available (other than by
         Executive's breach of this paragraph 21) or generally known to persons
         engaged in businesses similar or related to those of the Company.
         Confidential or proprietary information will include, without
         limitation, the Company's financial matters, customers, employees,
         industry contracts, strategic business plans, product development (or
         other proprietary product data), marketing plans, and all other secrets
         and all other information of a confidential or proprietary nature. For
         purposes of the preceding two sentences, the term "Company" will also
         include any subsidiary of the Company. The foregoing obligations
         imposed by this paragraph 21 will not apply (i) during the Term, in the
         course of the business of and for the benefit of the Company, (ii) if
         such confidential or proprietary information has become, through no
         fault of the Executive, generally known to the public or (iii) if the
         Executive is required by law to make disclosure (after giving the
         Company notice and an opportunity to contest such requirement).

22.      In addition, during the term of this Agreement and for a period of 12
         months thereafter, the Executive will not, without the prior written
         consent of the Company, which consent will not be unreasonably
         withheld:

         a)       Engage in any Competitive Activity. For purposes of this
                  Agreement, "Competitive Activity" means the Executive's
                  participation in the management of any business enterprise if
                  such enterprise engages in substantial and direct competition
                  with the Company and such enterprise's sales of any product or
                  service competitive with any product or service of the Company
                  amounted to 10% of such enterprise's net sales for its most
                  recently completed fiscal year and if the Company's net sales
                  of said product or service amounted to 10% of the Company's
                  net sales for its most recently completed fiscal year.
                  "Competitive Activity" will not include (i) the mere ownership
                  of securities in any such enterprise and the exercise of
                  rights appurtenant thereto or (ii) participation in the
                  management of any such enterprise other than in connection
                  with the competitive operations of such enterprise.

         b)       On behalf of the Executive or on behalf of any person, firm or
                  company, directly or indirectly, attempt to influence,
                  persuade or induce, or assist any other person in so
                  persuading or inducing, any employee of the Company or any of
                  its subsidiaries to give up, or to not commence, employment or
                  a business relationship with the Company or any of its
                  subsidiaries.

23.      The Executive and the Company agree that the covenants contained in
         paragraphs 21 and 22 are reasonable under the circumstances, and
         further agree that if in the opinion of any court of competent
         jurisdiction any such covenant is not reasonable in any respect, such
         court will have the right, power and authority to excise

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         or modify any provision or provisions of such covenants as to the court
         will appear not reasonable and to enforce the remainder of the
         covenants as so amended. The Executive acknowledges and agrees that the
         remedy at law available to the Company for breach of any of his
         obligations under this paragraph 23 would be inadequate and that
         damages flowing from such a breach may not readily be susceptible to
         being measured in monetary terms. Accordingly, the Executive
         acknowledges, consents and agrees that, in addition to any other rights
         or remedies that the Company may have at law, in equity or under this
         Agreement, upon adequate proof of his violation of any such provision
         of this Agreement, the Company will be entitled to immediate injunctive
         relief and may obtain a temporary order restraining any threatened or
         further breach, without the necessity of proof of actual damage.

GENERAL

24.      The parties confirm that the provisions of this Agreement are fair and
         reasonable and that the total compensation and benefits payable under
         paragraphs 15, 16 or 17 are reasonable estimates of the damages which
         would be suffered by the Executive. Any amount paid under paragraphs
         15, 16 or 17 shall be in full satisfaction of all claims whatsoever
         relating to the Executive's employment or for the termination of the
         Executive's employment, including claims for salary, bonus, benefits,
         vacation pay, termination pay and/or severance pay pursuant to the
         Ontario EMPLOYMENT STANDARDS ACT, as amended, including sections 57 and
         58 thereof.

25.      Any payment made to the Executive under paragraphs 15, 16 or 17 of this
         Agreement shall be paid to the Executive by the Company regardless of
         any offer of alternate employment made to the Executive by the Company
         or by any other prospective employer, whether accepted by the Executive
         or not. The Executive will not be required to mitigate any damages
         arising from this Agreement and any amounts and benefits to be provided
         to the Executive hereunder shall not be reduced or set off against any
         amounts earned by the Executive from alternate employment, including
         self-employment, or by other means.

26.      Any payment other than for base salary made to the Executive under this
         Agreement shall be made by way of a lump sum payment or, at the
         Executive's option, in such other manner as he may direct, less
         deductions required by applicable law.

27.      Where the context requires, the singular shall include the plural and
         the plural shall include the singular. Masculine pronouns shall be
         deemed to be read as feminine pronouns and VICE VERSA. Words importing
         persons shall include individuals, partnerships, associations, trusts,
         unincorporated organizations and corporations and VICE VERSA.

28.      The division of this Agreement into paragraphs and the insertion of
         headings are for the convenience of reference only and shall not affect
         the construction or interpretation of this Agreement. The terms "this
         Agreement", "hereof", "hereunder" and similar expressions refer to this
         Agreement only and not to any particular paragraph and include any
         agreement or instrument supplemental or ancillary to the Agreement.
         References herein to paragraphs are to paragraphs of this Agreement
         unless something in the subject matter or context is inconsistent
         therewith.

29.      All dollar amounts identified in this contract are in U.S. $ currency.

30.      The parties' respective rights and obligations under paragraphs 19, 20,
         21, 22, 23, 34 and 35 will survive any termination or expiration of
         this Agreement or the termination of the Executive's employment for any
         reason whatsoever.

GOVERNING LAWS

31.      This Agreement shall be governed by the laws of the Province of
         Ontario.

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SEVERABILITY

32.      All terms and covenants contained in this Agreement are severable and
         in the event that any of them is held to be invalid by any competent
         court in the Province of Ontario, the invalid provision shall be
         deleted and the balance of this Agreement shall be interpreted as if
         such invalid clause or covenant were not contained herein.

CONTINUITY

33.      This Agreement shall be binding upon and enure to the benefit of (i)
         the Executive and his heirs, executors, administrators and legal
         representatives and (ii) the Company, its related corporations,
         affiliates, and associates, and any other entity or organization which
         shall succeed to substantially all or any distinct portion of the
         business, divisions or property of the Company or its related
         corporations, affiliates, and associates, whether by means of
         amalgamation, merger, consolidation, acquisition, and/or sale of all or
         part of the shares or assets of the Company or otherwise, including by
         operation of law or by succession to the business of the Company
         pursuant to a Plan of Reorganization approved by the Bankruptcy Court.
         In addition, the Company will require any such successor expressly to
         assume and agree, by written agreement, to perform this Agreement in
         the same manner and to the same extent the Company would be required to
         perform if no such succession had taken place.

LEGAL ADVICE

34.      The Executive acknowledges that he has obtained or has had an
         opportunity to obtain independent legal advice in connection with this
         Agreement, and further acknowledges that he has read, understands, and
         agrees to be bound by all of the terms and conditions contained herein.

35.      The Company agrees to reimburse the Executive for all reasonable legal
         expenses incurred in connection with any dispute involving the
         Executive, the Company, its related corporations, affiliates,
         successors, or assigns, or any other third party, as between any of
         them, arising from the validity, interpretation, or enforcement of this
         Agreement or any of its terms, including all reasonable legal expenses
         incurred by the Executive in respect of any action or actions commenced
         by the Executive to obtain, enforce, or retain any right, benefit or
         payment provided for in this Agreement regardless of whether such
         expenses are incurred during the term of the Agreement or after;
         provided that, in regard to such matters, the Executive has not acted
         in bad faith or with no colorable claim of success. However, the
         Company shall not be required to reimburse the Executive for any legal
         costs or expenses in relation to any action commenced by the Company to
         enforce the confidentiality or non-competition provisions hereof and in
         respect of which in a court of competent jurisdiction the Company is
         the prevailing party for either preliminary or final remedy.

NOTICE

36.      Any demand, notice or other communication to be given in connection
         with this Agreement shall be given in writing by personal delivery, by
         registered mail or by electronic means of communication addressed to
         the recipient as follows:

         TO THE EXECUTIVE:

         Paul A. Houston
         5 Hewison Court
         Ajax , Ontario , L1T 3X7

         TO THE COMPANY:

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         The Loewen Group Inc.
         11th Floor
         2225 Sheppard Avenue East
         Toronto, Ontario   M2J 5B5

         Attention: Senior Vice-President, Legal  & Asset Management

         WITH A COPY TO:

         The Loewen Group Inc.
         311 Elm Street
         Suite 1000, First Floor
         Cincinnati, OH  45202

         Attention: Senior Vice-President, Legal & Asset Management

         or such other address, individual or electronic communication as may be
         designated by notice given by either party to the other.

ADDITIONAL

37.      The failure of a party to insist upon strict adherence to any term of
         this Agreement on any occasion shall not be considered a waiver of such
         party's rights or deprive such party of the right thereafter to insist
         upon strict adherence to that term or any other term of this Agreement.

38.      This Agreement shall be effective upon the date of its execution by the
         Executive following execution by the Company.

                                                                    ...CONTINUED

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IN WITNESS WHEREOF the Executive has hereunto set his hand and the Company has
affixed hereto its corporate seal attested by the hand of its duly authorized
officer as of the date set forth on the first page of this Agreement.

                                      THE LOEWEN GROUP INC.

                                      Per:
                                          ------------------------------------

                                       Per:
                                           -----------------------------------
                                             CHAIRMAN, COMPENSATION COMMITTEE

WITNESS:

-------------------------------------      -----------------------------------
                                                       PAUL A. HOUSTON

                                       11

<PAGE>

                                     ANNEX A

EXCISE TAX GROSS-UP PROCEDURAL PROVISIONS

1.       Subject to the provisions of paragraph 5 of this Annex, all
         determinations required to be made under paragraph 19 of this Agreement
         and this Annex A, including whether an Excise Tax is payable by the
         Executive and the amount of such Excise Tax and whether a Gross-Up
         Payment is required to be paid by the Company to the Executive and the
         amount of such Gross-Up Payment, if any, will be made by a U. S.
         nationally recognized accounting firm (the "National Firm") selected by
         the Executive in his sole discretion. The Executive will direct the
         National Firm to submit its determination and detailed supporting
         calculations to both the Company and the Executive within 30 calendar
         days after the date of his termination of employment, if applicable,
         and any such other time or times as may be requested by the Company or
         the Executive. If the National Firm determines that any Excise Tax is
         payable by the Executive, the Company will pay the required Gross-Up
         Payment to the Executive within five business days after receipt of
         such determination and calculations with respect to any Payment to the
         Executive. If the National Firm determines that no Excise Tax is
         payable by the Executive with respect to any material benefit or amount
         (or portion thereof), it will, at the same time as it makes such
         determination, furnish the Company and the Executive with an opinion
         that the Executive has substantial authority not to report any Excise
         Tax on his U. S. federal, state or local income or other tax return
         with respect to such benefit or amount. As a result of the uncertainty
         in the application of Section 4999 of the Code and the possibility of
         similar uncertainty regarding applicable U. S. state or local tax law
         at the time of any determination by the National Firm hereunder, it is
         possible that Gross-Up Payments that will not have been made by the
         Company should have been made (an "Underpayment"), consistent with the
         calculations required to be made hereunder. In the event that the
         Company exhausts or fails to pursue its remedies pursuant to paragraph
         5 of this Annex and the Executive thereafter is required to make a
         payment of any Excise Tax, the Executive will direct the National Firm
         to determine the amount of the Underpayment that has occurred and to
         submit its determination and detailed supporting calculations to both
         the Company and the Executive as promptly as possible. Any such
         Underpayment will be promptly paid by the Company to, or for the
         benefit of, the Executive within five business days after receipt of
         such determination and calculations.

2.       The Company and the Executive will each provide the National Firm
         access to and copies of any books, records and documents in the
         possession of the Company or the Executive, as the case may be,
         reasonably requested by the National Firm, and otherwise cooperate with
         the National Firm in connection with the preparation and issuance of
         the determinations and calculations contemplated by paragraph 1 of this
         Annex. Any determination by the National Firm as to the amount of the
         Gross-Up Payment will be binding upon the Company and the Executive.

3.       The U. S. federal, state and local income or other tax returns filed by
         the Executive will be prepared and filed on a consistent basis with the
         determination of the National Firm with respect to the Excise Tax
         payable by the Executive. The Executive will report and make proper
         payment of the amount of any Excise Tax, and at the request of the
         Company, provide to the Company true and correct copies (with any
         amendments) of his federal income tax return as filed with the U. S.
         Internal Revenue Service and corresponding state and local tax returns,
         if relevant, as filed with the applicable taxing authority, and such
         other documents reasonably requested by the Company, evidencing such
         payment. If prior to the filing of the Executive's federal income tax
         return, or corresponding state or local tax return, if relevant, the
         National Firm determines that the amount of the Gross-Up Payment should
         be reduced, the Executive will within five business days pay to the
         Company the amount of such reduction.

4.       The fees and expenses of the National Firm for its services in
         connection with the determinations and calculations contemplated by
         paragraph 1 of this Annex will be borne by the Company. If such fees
         and expenses are initially paid by the Executive, the Company will
         reimburse the Executive the full amount of such fees and expenses
         within five business days after receipt from the Executive of a
         statement therefor and reasonable evidence of his payment thereof.

                                      A-1

<PAGE>

5.       The Executive will notify the Company in writing of any claim by the U.
         S. Internal Revenue Service or any other U. S. taxing authority that,
         if successful, would require the payment by the Company of a Gross-Up
         Payment. Such notification will be given as promptly as practicable but
         no later than 10 business days after the Executive actually receives
         notice of such claim and the Executive will further apprise the Company
         of the nature of such claim and the date on which such claim is
         requested to be paid (in each case, to the extent known by the
         Executive). The Executive will not pay such claim prior to the
         expiration of the 30-calendar-day period following the date on which he
         gives such notice to the Company or, if earlier, the date that any
         payment of amount with respect to such claim is due. If the Company
         notifies the Executive in writing prior to the expiration of such
         period that it desires to contest such claim, the Executive will:

                           (A) provide the Company with any written records or
         documents in his possession relating to such claim reasonably requested
         by the Company;

                           (B) take such action in connection with contesting
         such claim as the Company reasonably requests in writing from time to
         time, including without limitation accepting legal representation with
         respect to such claim by an attorney competent in respect of the
         subject matter and reasonably selected by the Company;

                           (C) cooperate with the Company in good faith in order
         effectively to contest such claim; and

                           (D) permit the Company to participate in any
         proceedings relating to such claim;

         PROVIDED, HOWEVER, that the Company will bear and pay directly all
         costs and expenses (including interest and penalties) incurred in
         connection with such contest and will indemnify and hold harmless the
         Executive, on an after-tax basis, for and against any Excise Tax or
         income or other tax, including interest and penalties with respect
         thereto, imposed as a result of such representation and payment of
         costs and expenses. Without limiting the foregoing provisions of this
         paragraph 5, the Company will control all proceedings taken in
         connection with the contest of any claim contemplated by this paragraph
         5 and, at its sole option, may pursue or forego any and all
         administrative appeals, proceedings, hearings and conferences with the
         taxing authority in respect of such claim (provided, however, that the
         Executive may participate therein at his own cost and expense) and may,
         at its option, either direct the Executive to pay the tax claimed and
         sue for a refund or contest the claim in any permissible manner, and
         the Executive agrees to prosecute such contest to a determination
         before any administrative tribunal, in a court of initial jurisdiction
         and in one or more appellate courts, as the Company determines;
         PROVIDED, HOWEVER, that if the Company directs the Executive to pay the
         tax claimed and sue for a refund, the Company will advance the amount
         of such payment to the Executive on an interest-free basis and will
         indemnify and hold the Executive harmless, on an after-tax basis, from
         any Excise Tax or income or other tax, including interest or penalties
         with respect thereto, imposed with respect to such advance; and
         PROVIDED FURTHER, HOWEVER, that any extension of the statute of
         limitations relating to payment of taxes for the taxable year of the
         Executive with respect to which the contested amount is claimed to be
         due is limited solely to such contested amount. Furthermore, the
         Company's control of any such contested claim will be limited to issues
         with respect to which a Gross-Up Payment would be payable hereunder and
         the Executive will be entitled to settle or contest, as the case may
         be, any other issue raised by the Internal Revenue Service or any other
         taxing authority.

6.       If, after the receipt by the Executive of an amount advanced by the
         Company pursuant to paragraph 5 of this Annex, the Executive receives
         any refund with respect to such claim, the Executive will (subject to
         the Company's complying with the requirements of such paragraph 5)
         promptly pay to the Company the amount of such refund (together with
         any interest paid or credited thereon after any taxes applicable
         thereto). If, after the receipt by the Executive of an amount advanced
         by the Company pursuant to paragraph 5 of this Annex, a determination
         is made that the Executive is not entitled to any refund with respect
         to such claim and the Company does not notify the Executive in writing
         of its intent to contest such denial or refund prior to the expiration
         of 30 calendar days after such determination, then such advance will be
         forgiven and will not be required to be repaid and the amount of any
         such advance will offset, to the

                                      A-2

<PAGE>

         extent thereof, the amount of Gross-Up Payment required to be paid by
         the Company to the Executive pursuant to paragraph 19 if this Agreement
         and this Annex A.

                                      A-3<PAGE>

      EX-4.3

             RESOLUTIONS

                                                                     Exhibit 4.3

                                   RESOLUTIONS

     RESOLVED, that 100,000 shares of the Common Stock of the Company, no par
value, be issued to Daniels & Daniels for legal services rendered, and be it

     FURTHER RESOLVED, that all of the above referenced shares of the
Company's common stock be registered in a registration statement on Form S-8
to be filed with the Securities and Exchange Commission, and be it

     FUTHER RESOLVED, that the officers of the Corporation be and hereby are,
authorized and directed to take all actions, and execute all instruments and
other documents in the name and on behalf of the Corporation as such officers
shall determine to be necessary or advisable in order to effectuate the
foregoing resolutions and to carry out the purposes thereof.

NESS ENERGY INTERNATIONAL INC.
Harold Hayseed Stephens, President & Chairman

____________________________

Mary Gene Stephens, Secretary Treasurer

_____________________________

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