CHANGE OF CONTROL AGREEMENT

            This Change of Control Agreement ("Agreement") between Stewart
Enterprises, Inc., a Louisiana corporation (the "Company"), and Michael K. Crane
(the "Employee") is effective as of February 1, 2001 (the "Change of Control
Agreement Date").

 

ARTICLE I
DEFINITIONS

            1.1    Employment Agreement.     After a Change of Control (defined
below), this Agreement supersedes the Employment Agreement effective February 1,
2001 between the Employee and the Company (the "Employment Agreement") except to
the extent that certain provisions of the Employment Agreement are expressly
incorporated by reference herein. After a Change of Control (defined below), the
definitions in this Agreement supersede definitions in the Employment Agreement,
but capitalized terms not defined in this Agreement have the meanings given to
them in the Employment Agreement.

            1.2    Definition of "Company".     As used in this Agreement,
"Company" shall mean the Company as defined above and any successor to or
assignee of (whether direct or indirect, by purchase, merger, consolidation or
otherwise) all or substantially all of the assets or business of the Company.

            1.3    Change of Control Defined.     "Change of Control" shall
mean:

>             (a)     the acquisition by any individual, entity or group (within
> the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial
> ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
> Act) of more than 30% of the outstanding shares of the Company=s Class A
> Common Stock, no par value per share (the "Common Stock"); provided, however,
> that for purposes of this subsection (a), the following acquisitions shall not
> constitute a Change of Control:
> 
> >             (i)       any acquisition of Common Stock directly from the
> > Company,
> > 
> >             (ii)      any acquisition of Common Stock by the Company,
> > 
> >             (iii)     any acquisition of Common Stock by any employee
> > benefit plan (or related trust) sponsored or maintained by the Company or
> > any corporation controlled by the Company, or
> > 
> >             (iv)     any acquisition of Common Stock by any corporation
> > pursuant to a transaction that complies with clauses (i), (ii) and (iii) of
> > subsection (c) of this Section 1.3; or

>             (b)     individuals who, as of the Change of Control Agreement
> Date, constitute the Board (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 the Change of Control Agreement
> Date whose election, or nomination for election by the Company=s shareholders,
> was approved by a vote of at least a majority of the directors then comprising
> the Incumbent Board shall be considered a member of the Incumbent Board,
> unless such individual=s 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 Incumbent Board; or
> 
>             (c)     consummation of a reorganization, merger or consolidation,
> or sale or other disposition of all of substantially all of the assets of the
> Company (a "Business Combination"), in each case, unless, following such
> Business Combination,
> 
> >             (i)     all or substantially all of the individuals and entities
> > who were the beneficial owners of the Company=s outstanding common stock and
> > the Company=s voting securities entitled to vote generally in the election
> > of directors immediately prior to such Business Combination have direct or
> > indirect beneficial ownership, respectively, of more than 50% of the then
> > outstanding shares of common stock, and more than 50% of the combined voting
> > power of the then outstanding voting securities entitled to vote generally
> > in the election of directors, of the corporation resulting from such
> > Business Combination (which, for purposes of this paragraph (i) and
> > paragraphs (ii) and (iii), shall include a corporation which as a result of
> > such transaction controls the Company or all or substantially all of the
> > Company=s assets either directly or through one or more subsidiaries), and
> > 
> >             (ii)     except to the extent that such ownership existed prior
> > to the Business Combination, no person (excluding any corporation resulting
> > from such Business Combination or any employee benefit plan or related trust
> > of the Company or such corporation resulting from such Business Combination)
> > beneficially owns, directly or indirectly, 20% or more of the then
> > outstanding shares of common stock of the corporation resulting from such
> > Business Combination or 20% or more of the combined voting power of the then
> > outstanding voting securities of such corporation, and
> > 
> >             (iii)     at least a majority of the members of the board of
> > directors of the corporation resulting from such Business Combination were
> > members of the Incumbent Board at the time of the execution of the initial
> > agreement, or of the action of the Board, providing for such Business
> > Combination; or
> 
>             (d)     approval by the shareholders of the Company of a complete
> liquidation or dissolution of the Company.

            1.4    Affiliate.     "Affiliate" or "affiliated companies" shall
mean any company controlled by, controlling, or under common control with, the
Company.

            1.5    Cause.     "Cause" shall mean:

>             (a)     the willful and continued failure of the Employee to
> perform substantially the Employee=s duties with the Company or its affiliates
> (other than any such failure resulting from incapacity due to physical or
> mental illness), after a written demand for substantial performance is
> delivered to the Employee by the Board of the Company which specifically
> identifies the manner in which the Board believes that the Employee has not
> substantially performed the Employee=s duties, or
> 
>             (b)     the willful engaging by the Employee in illegal conduct or
> gross misconduct which is materially and demonstrably injurious to the Company
> or its affiliates.

For purposes of this provision, no act or failure to act, on the part of the
Employee, shall be considered "willful" unless it is done, or omitted to be
done, by the Employee in bad faith or without reasonable belief that the
Employee=s action or omission was in the best interests of the Company or its
affiliates. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of a senior
officer of the Company or based upon the advice of counsel for the Company or
its affiliates shall be conclusively presumed to be done, or omitted to be done,
by the Employee in good faith and in the best interests of the Company or its
affiliates. The cessation of employment of the Employee shall not be deemed to
be for Cause unless and until there shall have been delivered to the Employee a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Employee and the Employee is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
the Employee is guilty of the conduct described in subparagraph (a) or (b)
above, and specifying the particulars thereof in detail.

            1.6    Good Reason.     "Good Reason" shall mean:

>             (a)     Any failure of the Company or its affiliates to provide
> the Employee with the position, authority, duties and responsibilities at
> least commensurate in all material respects with the most significant of those
> held, exercised and assigned at any time during the 120-day period immediately
> preceding the Change of Control. The Employee=s position, authority, duties
> and responsibilities after a Change of Control shall not be considered
> commensurate in all material respects with Employee=s position, authority,
> duties and responsibilities prior to a Change of Control unless after the
> Change of Control Employee holds (i) an equivalent position in the Company or,
> (ii) if the Company is controlled or will after the transaction be controlled
> by another company (directly or indirectly), an equivalent position in the
> ultimate parent company.

>             (b)     The assignment to the Employee of any duties inconsistent
> in any material respect with Employee=s position (including status, offices,
> titles and reporting requirements), authority, duties or responsibilities as
> contemplated by Section 2.1(b) of this Agreement, or any other action that
> results in a diminution in such position, authority, duties or
> responsibilities, excluding for this purpose an isolated, insubstantial and
> inadvertent action not taken in bad faith that is remedied within 10 days
> after receipt of written notice thereof from the Employee to the Company;
> 
>             (c)     Any failure by the Company or its affiliates to comply
> with any of the provisions of this Agreement, other than an isolated,
> insubstantial and inadvertent failure not occurring in bad faith that is
> remedied within 10 days after receipt of written notice thereof from the
> Employee to the Company;
> 
>             (d)     The Company or its affiliates requiring the Employee to be
> based at any office or location other than as provided in Section 2.1(b)(ii)
> hereof or requiring the Employee to travel on business to a substantially
> greater extent than required immediately prior to the Change of Control;
> 
>             (e)     Any purported termination of the Employee=s employment
> otherwise than as expressly permitted by this Agreement; or
> 
>             (f)     Any failure by the Company to comply with and satisfy
> Sections 3.1(c) and (d) of this Agreement.

For purposes of this Section 1.6, any good faith determination of "Good Reason"
made by the Employee shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Employee for any reason during
the 30-day period immediately following the first anniversary of the Change of
Control shall be deemed to be a termination for Good Reason.

 

ARTICLE II
CHANGE OF CONTROL BENEFIT

            2.1    Employment Term and Capacity after Change of Control. (a) If
a Change of Control occurs on or before October 31, 2001, then the Employee=s
employment term (the "Employment Term") shall continue through the later of (a)
the second anniversary of the Change of Control or (b) October 31, 2001, subject
to any earlier termination of the Employee=s status as an employee pursuant to
this Agreement.

            (b)     After a Change of Control and during the Employment Term,
(i) the Employee=s position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Change of Control and (ii) the Employee=s service shall be
performed at the location where the Employee was employed immediately preceding
the Change of Control or any office or location less than 35 miles from such
location. The Employee=s position, authority, duties and responsibilities after
a Change of Control shall not be considered commensurate in all material
respects with the Employee=s position, authority, duties and responsibilities
prior to a Change of Control unless after the Change of Control Employee holds
(x) an equivalent position in the Company or, (y) if the Company is controlled
or will after the transaction be controlled by another company (directly or
indirectly), an equivalent position in the ultimate parent company. The Employee
shall devote himself to his employment responsibilities with the Company (or, if
applicable, the ultimate parent entity) as provided in Article I Section 3 of
the Employment Agreement.

            2.2    Compensation and Benefits. During the Employment Term, the
Employee shall be entitled to the following compensation and benefits:

>             (a)     Salary. A salary ("Base Salary") at the rate of $225,000
> per year, payable to the Employee at such intervals no less frequent than the
> most frequent intervals in effect at any time during the 120-day period
> immediately preceding the Change of Control or, if more favorable to the
> Employee, the intervals in effect at any time after the Change of Control for
> other peer employees of the Company and its affiliated companies.
> 
>             (b)     Bonus. An annual incentive bonus (the "Bonus") of $225,000
> shall be paid in cash (1) no later than November 30, 2001 or (2) if the
> Employee so elects, between January 1 and January 15 of 2002.
> 
>             (c)     Fringe Benefits. The Employee shall be entitled to fringe
> benefits (including, but not limited to, automobile allowance, reimbursement
> for membership dues, and first class air travel) in accordance with the most
> favorable agreements, plans, practices, programs and policies of the Company
> and its affiliated companies in effect for the Employee at any time during the
> 120-day period immediately preceding the Change of Control or, if more
> favorable to the Employee, as in effect generally at any time thereafter with
> respect to other peer employees of the Company and its affiliated companies.
> 
>             (d)     Expenses. The Employee shall be entitled to receive prompt
> reimbursement for all reasonable expenses incurred by the Employee in
> accordance with the most favorable agreements, policies, practices and
> procedures of the Company and its affiliated companies in effect for the
> Employee at any time during the 120-day period immediately preceding the
> Change of Control or, if more favorable to the Employee, as in effect
> generally at any time thereafter with respect to other peer employees of the
> Company and its affiliated companies.
> 
>             (e)     Incentive, Savings and Retirement Plans. The Employee
> shall be entitled to participate in all incentive, savings and retirement
> plans, practices, policies and programs applicable generally to other peer
> employees of the Company and its affiliated companies, but in no event shall
> such plans, practices, policies and programs provide the Employee with
> incentive opportunities (measured with respect to both regular and special
> incentive opportunities, to the extent, if any, that such distinction is
> applicable), savings opportunities and retirement benefit opportunities, in
> each case, less favorable than the most favorable of those provided by the
> Company and its affiliated companies for the Employee under any agreements,
> plans, practices, policies and programs as in effect at any time during the
> 120-day period immediately preceding the Change of Control or, if more
> favorable to the Employee, those provided generally at any time after the
> Change of Control to other peer employees of the Company and its affiliated
> companies.

>             (f)     Welfare Benefit Plans. The Employee and/or the Employee=s
> family, as the case may be, shall be eligible for participation in and shall
> receive all benefits under welfare benefit plans, practices, policies and
> programs provided by the Company and its affiliated companies (including,
> without limitation, medical, prescription, dental, disability, employee life,
> group life, accidental death and travel accident insurance plans and programs)
> to the extent applicable generally to other peer employees of the Company and
> its affiliated companies, but in no event shall such plans, practices,
> policies and programs provide the Employee with benefits, in each case, less
> favorable than the most favorable of any agreements, plans, practices,
> policies and programs in effect for the Employee at any time during the
> 120-day period immediately preceding the Change of Control or, if more
> favorable to the Employee, those provided generally at any time after the
> Change of Control to other peer employees of the Company and its affiliated
> companies.
> 
>             (g)     Office and Support Staff. The Employee shall be entitled
> to an office or offices of a size and with furnishings and other appointments,
> and to exclusive personal secretarial and other assistance, at least equal to
> the most favorable of the foregoing provided to the Employee by the Company
> and its affiliated companies at any time during the 120-day period immediately
> preceding the Change of Control or, if more favorable to the Employee, as
> provided generally at any time thereafter with respect to other peer employees
> of the Company and its affiliated companies.
> 
>             (h)     Vacation. The Employee shall be entitled to paid vacation
> in accordance with the most favorable agreements, plans, policies, programs
> and practices of the Company and its affiliated companies as in effect for the
> Employee at any time during the 120-day period immediately preceding the
> Change of Control or, if more favorable to the Employee, as in effect
> generally at any time thereafter with respect to other peer employees of the
> Company and its affiliated companies.

            2.3    Termination of Employment after a Change of Control. After a
Change of Control and during the Employment Term, the Employee=s status as an
employee shall terminate or may be terminated by the Employee, the Company (or,
if applicable, the ultimate parent company), as provided in Article III of the
Employment Agreement (provided, however, that the definitions of ACause@ and
AGood Reason@ in this Agreement shall supersede those definitions in the
Employment Agreement).

> 2.4 Obligations upon Termination after a Change of Control.

>             (a)     Termination by Company for Reasons other than Death,
> Disability or Cause; by Employee for Good Reason.     If, after a Change of
> Control and during the Employment Term, the Company (or, if applicable the
> ultimate parent company), terminates the Employee=s employment other than for
> Cause, death or Disability, or the Employee terminates employment for Good
> Reason, the Company shall pay to the Employee in a lump sum in cash within 30
> days of the Date of Termination an amount equal to three times the sum of (i)
> the amount of Base Salary in effect at the Date of Termination, plus (ii) the
> maximum Bonus for which the Employee is eligible for the 12-month period in
> which the Date of Termination occurs.

>             (b)     Death.     If, after a Change of Control and during the
> Employment Term, the Employee=s status as an employee is terminated by reason
> of the Employee=s death, this Agreement shall terminate without further
> obligation to the Employee=s legal representatives (other than those already
> accrued to the Employee), other than the obligation to make any payments due
> pursuant to employee benefit plans maintained by the Company or its affiliated
> companies.
> 
>             (c)     Disability.     If, after a Change of Control and during
> the Employment Term, the Employee=s status as an employee is terminated by
> reason of the Employee=s Disability (as defined in the Employment Agreement),
> this Agreement shall terminate without further obligation to the Employee
> (other than those already accrued to the Employee), other than the obligation
> to make any payments due pursuant to employee benefit plans maintained by the
> Company or its affiliated companies.
> 
>             (d)     Cause.     If, after a Change of Control and during the
> Employment Term, the Employee=s status as an employee is terminated by the
> Company (or, if applicable, the ultimate parent entity) for Cause, this
> Agreement shall terminate without further obligation to the Employee other
> than for obligations imposed by law and obligations imposed pursuant to any
> employee benefit plan maintained by the Company or its affiliated companies.
> 
>             (e)     Termination by Employee for Reasons other than Good
> Reason.     If, after a Change of Control and during the Employment Term, the
> Employee=s status as an employee is terminated by the Employee for reasons
> other than Good Reason, then the Company shall pay to the Employee an amount
> equal to a single year=s Base Salary in effect at the Date of Termination,
> payable in equal installments over a two-year period at such intervals as
> other salaried employees of the Company are paid.
> 
>             (f)     Nondisclosure, Noncompetition and Proprietary Rights.    
> The rights and obligations of the Company and Employee contained in Article V
> ("Nondisclosure, Noncompetition and Proprietary Rights") of the Employment
> Agreement shall continue to apply after a Change of Control, except as
> provided in Section 2.10 of this Agreement.

            2.5    Accrued Obligations and Other Benefits.     It is the intent
of the Employment Agreement and this Agreement that upon termination of
employment for any reason the Employee be entitled to receive promptly, and in
addition to any other benefits specifically provided, (a) the Employee=s Base
Salary through the Date of Termination to the extent not theretofore paid, (b)
any accrued vacation pay, to the extent not theretofore paid, and (c) any other
amounts or benefits required to be paid or provided or which the Employee is
entitled to receive under any plan, program, policy practice or agreement of the
Company.

            2.6    Stock Options.     The foregoing benefits are intended to be
in addition to the value of any options to acquire Common Stock of the Company
the exercisability of which is accelerated pursuant to the terms of any stock
option, incentive or other similar plan heretofore or hereafter adopted by the
Company.

            2.7    Protection of Benefits.     To the extent permitted by
applicable law, the Company shall take all reasonable steps to ensure that the
Employee is not, by reason of a Change of Control, deprived of the economic
value (including any value attributable to the Change of Control transaction) of
(a) any options to acquire Common Stock of the Company or (b) any Common Stock
of the Company beneficially owned by the Employee.

            2.8    Certain Additional Payments.     If after a Change of Control
the Employee is subjected to an excise tax as a result of the "excess parachute
payment" provisions of section 4999 of the Internal Revenue Code of 1986, as
amended, whether by virtue of the benefits of this Agreement or by virtue of any
other benefits provided to Employee in connection with a Change of Control
pursuant to Company plans, policies or agreements (including the value of any
options to acquire Common Stock of the Company the exercisability of which is
accelerated pursuant to the terms of any stock option, incentive or similar plan
heretofore or hereafter adopted by the Company), the Company shall pay to
Employee (whether or not his employment has terminated) such amounts as are
necessary to place Employee in the same position after payment of federal income
and excise taxes as he would have been if such provisions had not been
applicable to him.

            2.9    Legal Fees.     The Company agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Employee or others of the validity or enforceability of, or
liability under, any provision of this Agreement (including as a result of any
contest by the Employee about the amount or timing of any payment pursuant to
this Agreement.)

            2.10    Set-Off; Mitigation.     After a Change of Control, the
Company=s and its affiliates= obligations to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company or its affiliates may have against the Employee or
others. After a Change of Control, an asserted violation of the provisions of
Article V ("Nondisclosure, Noncompetition and Proprietary Rights") of the
Employment Agreement shall not constitute a basis for deferring or withholding
any amounts otherwise payable to the Employee; specifically, the third through
sixth sentences of Article V Section 4 shall not apply after a Change of
Control. It is the intent of the Employment Agreement and this Agreement that in
no event shall the Employee be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Employee under
any of the provisions of this Agreement or the Employment Agreement.

 

ARTICLE III
MISCELLANEOUS

            3.1    Binding Effect; Successors.

                        (a)     This Agreement shall be binding upon and inure
to the benefit of the Company and any of its successors or assigns.

                        (b)     This Agreement is personal to the Employee and
shall not be assignable by the Employee without the consent of the Company
(there being no obligation to give such consent) other than such rights or
benefits as are transferred by will or the laws of descent and distribution.

                        (c)     The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase, merger, consolidation or
otherwise) all or substantially all of the assets or businesses of the Company
(i) to assume unconditionally and expressly this Agreement and (ii) to agree to
perform or to cause to be performed all of the obligations under this Agreement
in the same manner and to the same extent as would have been required of the
Company had no assignment or succession occurred, such assumption to be set
forth in a writing reasonably satisfactory to the Employee.

                        (d)     The Company shall also require all entities that
control or that after the transaction will control (directly or indirectly) the
Company or any such successor or assignee to agree to cause to be performed all
of the obligations under this Agreement, such agreement to be set forth in a
writing reasonably satisfactory to the Employee.

            3.2    Notices.     All notices hereunder must be in writing and
shall be deemed to have given upon receipt of delivery by: (a) hand (against a
receipt therefor), (b) certified or registered mail, postage prepaid, return
receipt requested, (c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) telecopy transmission with confirmation of
receipt. All such notices must be addressed as follows:

> If to the Company, to:
> 
> Stewart Enterprises, Inc.
> 110 Veterans Memorial Boulevard
> Metairie, Louisiana 70005
> Attn: Chief Executive Officer
> 
> If to the Employee, to:
> 
> Michael K. Crane
> 4933 Alphonse Drive
> Metairie, Louisiana 70006

or such other address as to which any party hereto may have notified the other
in writing.

            3.3    Governing Law.     This Agreement shall be construed and
enforced in accordance with and governed by the internal laws of the State of
Louisiana without regard to principles of conflict of laws, except as expressly
provided in Article V Section 6 of the Employment Agreement with respect to the
resolution of disputes arising under, or the Company=s enforcement of, such
Article V.

            3.4    Withholding.     The Employee agrees that the Company has the
right to withhold, from the amounts payable pursuant to this Agreement, all
amounts required to be withheld under applicable income and/or employment tax
laws, or as otherwise stated in documents granting rights that are affected by
this Agreement.

            3.5    Amendment, Waiver.     No provision of this Agreement may be
modified, amended or waived except by an instrument in writing signed by both
parties.

            3.6    Severability.     If any term or provision of this Agreement,
or the application thereof to any person or circumstance, shall at any time or
to any extent be invalid, illegal or unenforceable in any respect as written,
the Employee and the Company intend for any court construing this Agreement to
modify or limit such provision so as to render it valid and enforceable to the
fullest extent allowed by law. Any such provision that is not susceptible of
such reformation shall be ignored so as to not affect any other term or
provision hereof, and the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid, illegal or unenforceable, shall not be affected thereby and
each term and provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.

            3.7    Waiver of Breach.     The waiver by either party of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach thereof.

            3.8    Remedies Not Exclusive.     No remedy specified herein shall
be deemed to be such party=s exclusive remedy, and accordingly, in addition to
all of the rights and remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by applicable law, rule or
regulation.

            3.9    Company's Reservation of Rights.     The Employee
acknowledges and understands that the Employee serves at the pleasure of the
Board and that the Company has the right at any time to terminate the Employee=s
status as an employee of the Company, or to change or diminish his status during
the Employment Term, subject to the rights of the Employee to claim the benefits
conferred by this Agreement.

            3.10    Counterparts.     This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.

            IN WITNESS WHEREOF, the Company and the Employee have caused this
Agreement to be executed as of the Change of Control Agreement Date.

STEWART ENTERPRISES, INC.

By:          /S/ JAMES W. MCFARLAND     
            James W. McFarland
            Compensation Committee Chairman
EMPLOYEE:

           /S/ MICHAEL K. CRANE           .   
                    Michael K. Crane