Exhibit 10.5**SEPARATION AGREEMENT**     This Separation Agreement (the “Agreement”) is made and entered into this 11th dayof October, 2005, by and between Stewart Enterprises, Inc., a Louisiana corporation (the “Company”)and Michael K. Crane (the “Employee”).     WHEREAS, the Company entered into an Employment Agreement with the Employee effective as ofNovember 1, 2004, (the “Employment Agreement”);     WHEREAS, the Company entered into a Change of Control Agreement with the Employee effective asof November 1, 2004 (the “Change of Control Agreement”);     WHEREAS, the Employee and the Company have agreed that Employee will retire from hisemployment with the Company and that Employee will assist the Company with an orderly transition,as provided herein; and     WHEREAS, the Employee and the Company have agreed on certain benefits that are different fromthose that might otherwise be provided under the Employment Agreement.     NOW THEREFORE, in consideration of the mutual promises herein contained and other good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, and intendingto be legally bound hereby, the parties hereto agree as follows:     1. Effective Time. This Agreement shall be effective July 14, 2005 (the “EffectiveDate”) following its execution and delivery by the parties hereto.     2. Employment. For the period beginning August 1, 2005 through October 31, 2005,Employee shall continue to be employed by the Company on a full-time basis and shall hold the titleof Senior Vice President. Effective at the close of business on October 31, 2005 (the “TerminationDate”), Employee shall retire from all positions with the Company and its subsidiaries. Whileemployed hereunder, the Employee’s duties shall be to assist the Company in effecting an orderlytransition from four to two divisions, to assist with strategic planning and to perform such otherduties as may be reasonably requested by the Company’s Board of Directors or the Company’s ChiefExecutive Officer.     3. Pre-Termination Compensation and Benefits. While the Employee is employed pursuantto this Agreement, Employee’s compensation and benefits shall remain unchanged. In particular, theEmployee shall continue to receive the Base Salary and be eligible to receive a Bonus for thefiscal year ending October 31, 2005 under the terms provided in Appendix A to the EmploymentAgreement.     4. Post-Termination Payments. In accordance with the terms of the EmploymentAgreement applicable to a termination by the Employee for “Good Reason,” the Company shall pay tothe Employee $300,000 (Three Hundred Thousand Dollars), which sum shall be payable in equalsemi-monthly installments over a two-year period beginning on the first regular payroll date of theCompany on or after May 1, 2006 and continuing at such intervals as other salaried employees of theCompany are paid.
 

 
     5. Post-Termination Health Insurance. Subject to the conditions described in thisparagraph 5, the Employee shall be entitled to continue to participate through October 31, 2006 inthe Stewart Enterprises, Inc. group health insurance program on the same terms as are applicable tothe Company’s executive officers. The Employee shall be offered COBRA continuation coverage withthe COBRA continuation coverage period beginning November 1, 2006. The Company’s obligation toprovide continued health insurance coverage described herein is subject to approval by theapplicable re-insurance provider. The Company agrees to use its best efforts to obtain suchconsent. In the event the Company is unable to obtain such consent, the Company shall self-insureor shall fund the cost of comparable insurance issued directly to the Employee.     6. Options and Restricted Stock. The Employee’s stock options and restricted stockshall remain in effect in accordance with their terms, it being acknowledged that those options andrestricted stock that vest in accordance with their terms on or before October 31, 2005 shall vestas so provided, and that those options and restricted stock that vest thereafter shall beforfeited; provided, however*,*that if the Employee’s employment hereunder terminates for any reasonprior to October 31, 2005, options and restricted stock scheduled to vest after the date oftermination of employment shall be forfeited.     7. Post-Employment Benefits. Upon the Employee’s retirement on October 31, 2005, theEmployee shall be entitled to such benefits under Company benefit plans in which he is aparticipant applicable to a voluntary termination of his employment on October 31, 2005, inaccordance with the terms and conditions of such plans, including such benefits as he may beentitled to receive under the Company’s Supplemental Executive Retirement Plan (the “SERP”),Supplemental Retirement and Deferred Compensation Plan (the “Deferred Compensation Plan”) and401(k) plan, except that:     (a) for purposes of calculating Employee’s retirement benefits under the SERP, Employeeshall be credited with an additional year in age such that the benefit, as a percentage ofFinal Average Pay, as defined in the SERP, shall be 35.8%, which is the SERP benefit thatEmployee would have been entitled to receive had he retired on October 31, 2006; and     (b) in order that Employee may avoid the imposition of interest and additional taxunder Section 409A of the Internal Revenue Code of 1986 (“Section 409A”), as amended, nopayments shall be made to Employee under the SERP or the Deferred Compensation Plan untilthe Company’s first regular payroll date on or after May 1, 2006, but the first payment madeto the Employee under each such plan shall be equal to the total payments that Employeewould have been entitled to receive under the terms of such plans, if payments had been madeon each of the Company’s regular payroll dates from December 1, 2005 through the firstregular payroll date on or after May 1, 2006.     The additional SERP benefits provided in paragraph 7(a) above shall be treated as anadditional deferral of compensation and shall be subject to Section 409A. The additional benefitdescribed in paragraph 7(a) above shall be forfeited by Employee, along with other SERP benefits,if Employee engages in certain restricted activities in certain areas as provided in Article 9 ofthe SERP. All compensation, fringe benefits, perquisites and participation in any
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bonus or incentive plan shall cease as of the date of termination of Employee’s employment,unless otherwise specifically provided herein.     8. Indemnity Agreement. The Indemnity Agreement dated as of December 23, 2004 by andbetween the Company and the Employee shall survive this Agreement and remain in full force andeffect in accordance with its terms.     9. Effect on Employment Agreement and Change of Control Agreement. Except as modifiedhereby, the Employment Agreement, including without limitation, the nondisclosure, noncompetitionand proprietary rights covenants contained therein, shall remain in full force and effect. TheChange of Control Agreement shall terminate effective as of the Effective Date of this Agreement.     10. Withholding. The Employee agrees that the Company has the right to withhold, fromthe amounts payable pursuant to this Agreement, all amounts required to be withheld underapplicable income and/or employment tax laws, or as otherwise stated in documents granting rightsthat are affected by this Agreement.     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the dayand year first above written.      STEWART ENTERPRISES, INC.