Document:

exv10w14

 

Exhibit 10.14

Loan No. 3789055-101

LINE OF CREDIT AGREEMENT

     THIS LINE OF CREDIT AGREEMENT (''Line of Credit Agreement”) is entered
into as of October 5, 2006, between FARM CREDIT WEST, PCA, Visalia,
California (“FCW”) and CALAVO GROWERS, INC., Santa Paula, California (the
“Company”).

     SECTION 1. The Credit Facility. On the terms and conditions set forth in
this Line of Credit Agreement, FCW agrees to make advances to the Company
during the period set forth below in an aggregate principal amount not to
exceed $12,000,000.00 (the “Commitment”). The Line of Credit Agreement and
Commitment is executed, delivered and accepted not in payment of but for the
purpose of amending, restating and replacing the following described
obligations, and renewing any unpaid balance(s) evidenced thereby: Note dated
August 17, 2005, in the principal amount of $12,000,000.00. Furthermore, the
Commitment also evidences an additional loan advance(s) to the extent the
Commitment under this Line of Credit Agreement exceeds the renewed unpaid
balance(s) referred to above.

     SECTION 2. Sale of Interest. The Company acknowledges that FCW has the
option to participate all or a portion of the Commitment with one or more
lenders, including CoBank, ACB (“CoBank”). All advances hereunder shall be
made by CoBank as agent for FCW and all repayments by the Company hereunder
shall be made to CoBank as agent for FCW.

     SECTION 3. Purpose. The purpose of the Commitment is to finance the
ongoing operating needs of the Company.

     SECTION
4. Term. The term of the Commitment shall be from the date
hereof, up to and including February 1, 2010.

     SECTION 5. Availability. Subject to the provisions of Section 25,
advances will be made available on any day on which FCW, CoBank, and the
Federal Reserve Banks are open for business upon the telephonic or written
request of the Company. Requests for advances must be received no later than
12:00 Noon, Company’s local time, on the date the advance is desired. Advances
will be made available by CoBank by wire transfer of immediately available
funds to such account or accounts as may be authorized by the Company. The
Company shall furnish to CoBank a duly completed and executed copy of a CoBank
Delegation and Wire and Electronic Transfer Authorization Form, and CoBank
shall be entitled to rely on (and shall incur no liability to the Company in
acting on) any request or direction furnished in accordance with the terms
thereof.

     SECTION 6. Interest and Fees.

          (A) Interest. The Company agrees to pay interest on the unpaid balance of
the Commitment in accordance with the following interest rate option:

 

 

			
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     (1) 7-Day
LIBOR Index Rate. At a rate (rounded upward to the
nearest 1/100th% and adjusted for reserves required on “Eurocurrency Liabilities” (as
hereinafter defined) for banks subject to “FRB Regulation D” (as hereinafter defined) or required by any
other federal law or regulation) per annum equal at all times to 100 basis points (1.00%) above
the annual rate quoted by the British Bankers Association (the
“BBA”) at 11:00 a.m. London time
for the offering of seven (7) day of U.S. dollars deposits, as published by Bloomberg or
another major information vendor listed on BBA’s official
website on the first U.S. Banking Day (as
hereinafter defined) in each week with such rate to change weekly on such day. The rate shall be
reset automatically, without the necessity of notice being provided to the Company or any other
party, on the first U.S. Banking Day of each succeeding week and each change in the rate shall
be applicable to all balances subject to this option and information about the then current
rate shall be made available upon telephonic request. For purposes hereof (a) “U.S. Banking
Day” shall mean a day
on which CoBank is open for business, dealings in U.S. dollar deposits are
being carried out in
the London interbank market, and banks are open for business in New York
City and London,
England; (b) “Eurocurrency Liabilities” shall have meaning as set forth in
“FRB Regulation D”;
and (c) “FRB Regulation D” shall mean Regulation D as promulgated by the
Board of Governors
of the Federal Reserve System, 12 CFR Part 204, as amended.

     (2) LIBOR.
At a fixed rate per annum equal to “LIBOR” (as hereinafter
defined) plus 100 basis points (1%). Under this option: (1) rates may be fixed for
“Interest Periods” (as hereinafter defined) of 1, 2, 3, 6, 9 or 12 months as selected by the
Company; (2) amounts may be fixed in increments of $100,000.00 or multiples thereof; (3) the
maximum number of fixes in place at any one time shall be 10; and (4) rates may only be fixed on a
“Banking Day” (as hereinafter defined) on 3 Banking Days’ prior written notice. For purposes
hereof: (a) “LIBOR” shall mean the rate (rounded upward to the nearest sixteenth) and adjusted
for reserves required on “Eurocurrency Liabilities” (as
hereinafter defined) for banks subject to
“FRB Regulation D” (as herein defined) or required by any other federal law or regulation)
quoted by the British Bankers Association (the “BBA”) at
11:00 a.m. London time 2 Banking Days
before the commencement of the Interest Period for the offering of U.S. dollar
deposits in the London interbank market for the Interest Period designated by the Company; as
published by Bloomberg or another major information vendor listed on
BBA’s official website; (b) “Banking Day” shall
mean a day on which CoBank is open for business, dealings in U.S. dollar
deposits are being carried out in the London interbank market, and banks are open for
business in New York City and London, England; (c) “Interest Period” shall mean a period commencing
on the date this option is to take effect and ending on the numerically corresponding day
in the next calendar month or the month that is 2, 3, 6, 9 or 12 months thereafter, as the case
may be; provided, however, that: (i) in the event such ending
day is not a Banking Day,
such period shall be extended to the next Banking Day unless such next Banking Day falls in the
next calendar month, in which case it shall end on the preceding Banking Day; and (ii)
if there is no numerically corresponding day in the month, then such period shall end on
the last Banking Day in the relevant month; (d) “Eurocurrency Liabilities” shall have meaning
as set forth in “FRB

 

 

			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
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Regulation D”;
and (e) “FRB Regulation D” shall
mean.Regulation D as promulgated by the Board of Governors of the
Federal Reserve System, 12 CFR Part 204, as amended.

     The Company shall select the applicable rate option at the time it
requests a loan hereunder and may, subject to the limitations set forth
above, elect to convert balances bearing interest at the 7-Day LIBOR Index
Rate option to the LIBOR rate option. Upon the expiration of any fixed rate
period, interest shall automatically accrue at the 7-Day LIBOR Index Rate
option provided for above unless the amount fixed is repaid or fixed for an
additional period in accordance with the terms hereof. Notwithstanding the
foregoing, rates may not be fixed in such a manner as to cause the Company to
have to break any fixed rate balance in order to pay any installment of
principal. All elections provided for herein shall be made telephonically or
in writing and must be received by 12:00 Noon Company’s local time. Interest
shall be calculated on the actual number of days each loan is outstanding on
the basis of a year consisting of 360 days and shall be payable monthly in
arrears by the 20th day of the following month or on such other day in such
month as FCW shall require in a written notice to the Company.

     (B) Commitment Fee. In consideration of the Commitment, the Company
agrees to pay to FCW a commitment fee on the average daily unused portion of
the Commitment at the rate of 0.15% per annum (calculated on a 360 day basis
based on utilization, which is defined as outstanding advances plus issued
and outstanding letters of credit divided by the total available amount of
the Commitment), payable quarterly in arrears by the 20th day following each
quarter. Such fee shall be payable for each quarter (or portion thereof)
occurring during the original or any extended term of the Commitment.

     SECTION 7. Repayment and Maturity. The unpaid principal balance of the
Commitment shall mature and be due and payable on February 1, 2010 (the
“Maturity Date”).

     SECTION 8. Promissory Note. The Company’s obligation to repay the
Commitment shall be evidenced by a promissory note in the form attached hereto
as Exhibit A (“Note”).

     SECTION 9. Manner and Time of Payment. CoBank shall maintain a record of
all loans, the interest accrued thereon, and all payments made with respect
thereto, and such record shall, absent proof of manifest error, be conclusive
evidence of the outstanding principal and interest on the loans. All payments
shall be made by wire transfer of immediately available funds, by check, or
by automated clearing house or other similar cash handling processes as
specified by separate agreement between the Company and CoBank. Wire
transfers shall be made to ABA No. 307088754 for advice to and credit of
CoBank (or to such other account as CoBank may direct by notice). The Company
shall give CoBank telephonic notice no later than 12:00 Noon Company’s local
time of its intent to pay by wire and funds received after 3:00 p.m.
Company’s local time shall be credited on the next business day. Checks shall
be mailed to CoBank, Department 167, Denver, Colorado 80291-0167 (or to such
other place as CoBank may direct by notice). Credit for payment by check will
not be given until the later of: (a) the day on which CoBank receives
immediately available funds; or (b) the next business day after receipt of

 

 

			
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the check all as set forth in the Servicing Agreement between
Borrower, FCW, and CoBank in form attached hereto as Exhibit B.

     SECTION
10. Capitalization. The Company has purchased a $1,000.00
stock investment under FCW’s capitalization plan. The Company understands
that FCW’s stock is at risk and that any reference to “FCW equities” or to
“stock or participation certificates required by Lender’s bylaws”
in any document, agreement or Loan Document shall mean the FCW stock
investment described herein.

     SECTION 11. Patronage. The Commitment is eligible for patronage under
the plan and in accordance with the provisions of FCW’s bylaws and its
practices and procedures related to patronage distribution and as set forth
in Section 27.

     SECTION 12. Security. The Company’s obligations under this Line of
Credit Agreement and the Note shall be secured by a statutory first lien on all equity
which the Company may now own or hereafter acquire in FCW. With the exception of the security
referenced in the preceding sentence, the Company’s obligations under this Line of Credit
Agreement and the Note shall be unsecured.

     SECTION 13. Conditions Precedent. FCW’s obligation to make advances
hereunder is subject to the condition precedent that FCW receive, in form and
content satisfactory to FCW, each of the following:

     (A) Line of Credit Agreement. A duly executed copy of this Line of
Credit Agreement and all instruments and documents contemplated hereby.

     (B) Evidence of Authority. Such certified board resolutions, evidence of
incumbency, and other evidence that FCW may require that this Line of Credit Agreement
and the Note have been duly authorized and executed.

     (C) Fees and Other Charges. All fees and other charges provided for herein.

     (D) Evidence of Insurance. Such evidence as FCW may require that the
Company is in compliance with Section 15(C) hereof.

     (E) Event
of Default. That no “Event of Default” (as defined in Section 18
hereof) or event which with the giving of notice and/or the passage of time would
become an Event of Default hereunder (a “Potential Default’’), shall have occurred and be
continuing.

     SECTION 14. Representations and Warranties.

     (A) Line of Credit Agreement. The Company represents and warrants to
FCW that as of the date of this Line of Credit Agreement:

 

 

			
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     (1) Compliance. The Company and, to the extent contemplated
hereunder, each “Subsidiary” (as defined below), is in compliance with all of the terms of
this Line of Credit Agreement, and no Event of Default or Potential Default exists hereunder.

     (2) Subsidiaries. The Company has the following Subsidiaries: Calavo
Foods,
Inc. (CFI); Maui Fresh International, Inc.; Calavo de Mexico S.A. de C.V.;
and Calavo Foods de
Mexico S.A. de C.V. For purposes hereof, a “Subsidiary” shall mean a
corporation of which shares of stock having ordinary voting power to elect a majority of the
board of directors or other
managers of such corporation are owned, directly or indirectly, by the
Company.

     (3) Conflicting Agreements. This Line of Credit Agreement and the Note
(collectively, at any time, the “Loan Documents”), do not conflict with,
or require the consent of
any party to, any other agreement to which the Company is a party or by
which it or its property
may be bound or affected, and do not conflict with any provision of the
Company’s bylaws,
articles of incorporation, or other organizational documents.

     (4) Compliance. The Company and, to the extent contemplated hereunder,
each Subsidiary, if any, is in compliance with all of the terms of the Loan
Documents.

     (5) Binding Agreement. The Loan Documents create legal, valid, and binding
obligations of the Company which are enforceable in accordance with their
terms, except to the extent that enforcement may be limited by applicable bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally.

     SECTION 15. Affirmative Covenants. Unless otherwise agreed to in writing
by FCW, while this Line of Credit Agreement is in effect, the Company agrees
to and with respect to Subsections 15(A) through 15(F) hereof, agrees to
cause each Subsidiary, if any, to:

     (A) Corporate Existence, Licenses. (i) Preserve and keep in full force and
effect its existence and good standing in the jurisdiction of its incorporation or
formation; (ii) qualify and remain qualified to transact business in all jurisdictions where such
qualification is required, and (iii) obtain and maintain all licenses, certificates, permits,
authorizations, approvals, and the like which are material to the conduct of its business or required by law,
rule, regulation, ordinance, code, order, and the like (collectively, “Laws”).

     (B) Compliance with Laws. Comply in all material respects with all
applicable Laws, including, without limitation, all Laws relating to environmental
protection. In addition, the Company agrees to cause all persons occupying or present on any of its
properties, and to cause each Subsidiary, if any, to cause all persons occupying or present on any
of its properties, to comply in all material respects with all environmental protection Laws.

 

 

			
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     (C) Insurance. Maintain insurance with insurance companies or
associations acceptable to FCW in such amounts and covering such risks as are
usually carried by companies engaged in the same or similar business and
similarly situated, and make such increases in the type or amount of coverage
as FCW may request. At FCW’s request, all policies (or such other proof of
compliance with this Subsection as may be satisfactory to FCW) shall be
delivered to FCW.

     (D) Property Maintenance. Maintain all of its property that is necessary
to or useful in the proper conduct of its business in good working condition,
ordinary wear and tear excepted.

     (E) Books and Records. Keep adequate records and books of account in
which complete entries will be made in accordance with generally accepted
accounting principles (“GAAP”) consistently applied.

     (F) Inspection. Permit FCW or its agents, upon reasonable notice and
during normal business hours or at such other times as the parties may agree,
to examine its properties, books, and records, and to discuss its affairs,
finances, and accounts, with its respective officers, directors, employees,
and independent certified public accountants.

     (G) Reports and Notices. Furnish to FCW:

          (1) Annual
Financial Statements. As soon as available, but in no event
more than 90 days after the end of each fiscal year of the Company occurring
during the term hereof, annual consolidated and consolidating financial statements of the Company
and its consolidated Subsidiaries, if any, prepared in accordance with GAAP consistently
applied. Such financial statements shall: (a) be audited by independent certified public
accountants selected by the Company and acceptable to FCW; (b) be accompanied by a report of such
accountants containing an opinion thereon acceptable to FCW; (c) be prepared in
reasonable detail and in comparative form; and (d) include a balance sheet, a statement of income,
a statement of retained earnings, a statement of cash flows, and all notes and schedules relating
thereto.

          (2) Interim Financial Statements. As soon as available, but in no event
more than 45 days after the end of each fiscal quarter, a consolidated balance
sheet of the Company and its consolidated Subsidiaries, if any, as of the end of such quarter,
a consolidated statement of income for the Company and its consolidated Subsidiaries, if any, for
such period and for the period year to date, and such other interim statements as FCW may
specifically request, all prepared in reasonable detail and in comparative form in accordance with
GAAP consistently applied and certified by an authorized officer or employee of the Company
acceptable to FCW.

          (3) Notice of Default. Promptly after becoming aware thereof, notice of
the occurrence of an Event of Default or a Potential Default.

 

 

			
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          (4) Notice of Non-Environmental Litigation. Promptly
after the commencement thereof, notice of the commencement of all actions, suits, or
proceedings before any court, arbitrator, or governmental department, commission, board,
bureau, agency, or instrumentality affecting the Company or any Subsidiary which, if determined
adversely to the Company or any such Subsidiary, could have a material adverse effect on
the financial condition, properties, profits, or operations of the Company or any such Subsidiary.

          (5) Notice of Environmental Litigation. Promptly after receipt thereof,
notice of the receipt of all pleadings, orders, complaints, indictments, or any
other communication alleging a condition that may require the Company or any Subsidiary to
undertake or to contribute to a cleanup or other response under environmental Laws, or
which seek penalties, damages, injunctive relief, or criminal sanctions related to alleged
violations of such Laws, or which claim personal injury or property damage to any person as a result
of environmental factors or conditions.

          (6) Bylaws and Articles. Promptly after any change in the Company’s bylaws
or articles of incorporation (or like documents), copies of all such changes,
certified by the Company’s Secretary.

          (7) Other Information. Such other information regarding the condition or
operations, financial or otherwise, of the Company or any Subsidiary as
FCW may from time to time reasonably request, including but not limited to copies of all
pleadings, notices, and communications referred to in Subsections 15(G)(4) and (5) above.

          (8) Financial Certificate. Together with each set of financial
statements furnished to FCW pursuant to Section 15(G)(l), and each quarterly
statement submitted pursuant to Section 15(G)(2) for a period corresponding to a period for which one
or more of the financial covenants set forth in Section 17 hereof are required to be tested, a
certificate of an officer or employee of the Company acceptable to FCW setting forth calculations
showing compliance with each of the financial covenants that require compliance at the end of
the period for which the statements are being furnished.

          (H) Certain Organizational Changes. Provide FCW with prior notice (and
as early as practicable) of any merger, consolidation reorganization under a
different provision of law, acquisition of all or a material part of the
assets of another organization, change of name, adoption of any trade name,
or creation of any Subsidiary, affiliate or material joint venture(s). For
purposes of this covenant, joint venture transaction(s), which alone or in
the aggregate exceed $1,000,000, are considered material.

     SECTION
16. Negative Covenants. Unless otherwise agreed to in writing by
FCW, which agreement will not be unreasonably withheld, while this Line of
Credit Agreement is in effect, the Company will not:

 

 

			
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          (A) Borrowings. Create, incur, assume, or allow to exist, directly
or indirectly, any
indebtedness or liability for borrowed money (including trade or barkers’
acceptances), letters of
credit, or the deferred purchase price of property or services (including
capitalized leases),
except for: (i) debt to FCW; (ii) accounts payable to trade creditors
incurred in the ordinary
course of business; and (iii) current operating liabilities (other than
for borrowed money)
incurred in the ordinary course of business; (iv) debt of the Company to
Bank of America in an
amount not to exceed $12,000,000.00 and all extensions, renewals, and
refinancings thereof; (v)
(vi) letters of credit issued by any bank for the account of the Company
in an aggregate face
amount not to exceed $5,000,000.00 at any one time outstanding; and (vii)
capitalized leases
existing on the date hereof existing from time to time.

          (B) Liens. Create, incur, assume, or allow to exist any mortgage, deed of
trust, pledge,
lien (including the lien of an attachment, judgment, or execution),
security interest, or other
encumbrance of any kind upon any of its property, real or personal
(collectively, “Liens”). The
foregoing restrictions shall not apply to: (i) Liens in favor of FCW or
CoBank; (ii) Liens for
taxes, assessments, or governmental charges that are not past due; (iii)
Liens and deposits under
workers’ compensation, unemployment insurance, and social security Laws;
(iv) Liens and
deposits to secure the performance of bids, tenders, contracts (other than
contracts for the
payment of money), and like obligations arising in the ordinary course of
business as conducted
on the date hereof; (v) Liens imposed by Law in favor of mechanics,
materialmen,
warehousemen, and like persons that secure obligations that are not past
due; and (vi) easements,
rights-of-way, restrictions, and other similar encumbrances which, in the
aggregate, do not
materially interfere with the occupation, use, and enjoyment of the
property or assets
encumbered thereby in the normal course of its business or materially
impair the value of the
property subject thereto.

          (C) Transfer of Assets. Sell, transfer, lease, or otherwise dispose of any
of its assets, except in the ordinary course of business.

          (D) Contingent Liabilities. Assume, guarantee, become liable as a surety,
endorse,
contingently agree to purchase, or otherwise be or become liable, directly
or indirectly
(including, but not limited to, by means of a maintenance agreement, an
asset or stock purchase
agreement, or any other agreement designed to ensure any creditor against
loss), for or on
account of the obligation of any person or entity, except by the
endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of the
Company’s business.

          (E) Change in Business. Engage in any business activities or operations
substantially
different from or unrelated to the Company’s present business activities
or operations.

     SECTION 17. Financial Covenants. Unless otherwise agreed to in writing, while this Line of Credit Agreement is in effect:

 

 

			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
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          (A) Working Capital. The Company will maintain, on a consolidated
basis, current
assets in excess of current liabilities of at least Fifteen Million
Dollars ($15,000,000), measured
on a quarterly basis.

          (B) Tangible Net Worth. The Company will maintain, on a consolidated
basis, a
‘Tangible Net Worth” equal to at least Thirty-Two Million Five Hundred
Thousand Dollars
($32,500,000.00), measured on a quarterly basis. “Tangible Net Worth”
means the value of total
assets (including leaseholds and leasehold improvements and reserves
against assets but
excluding goodwill, patents, trademarks, trade names, organization
expense, unamortized debt
discount and expense, capitalized or deferred research and development
costs, deferred
marketing expenses, and other like intangibles, and monies due from
affiliates, officers,
directors, employees, shareholders, members or managers) less total
liabilities, including but not
limited to accrued and deferred income taxes, but excluding the
non-current portion of
Subordinated Liabilities. “Subordinated Liabilities” means liabilities
subordinated to the
Borrower’s obligations to FCW in a manner acceptable to FCW in its sole
discretion.

          (C) EBITDA. The Company will maintain an “EBITDA” of at least Seven
Million
Five Hundred Thousand Dollars ($7,500,000.00). “EBITDA” means net income,
less income or
plus loss from discontinued operations and extraordinary items, plus income taxes, plus interest
expense, plus depreciation, depletion, and amortization. This covenant
will be calculated at the
end of each reporting period for which FCW requires financial statements,
using the results of
the twelve-month period ending with that reporting period. The current
portion of long-term
liabilities will be measured as of the last day of the calculation period.

     SECTION 18. Events of Default. Each of the following shall constitute an
“Event of Defaultt’ under this Line of Credit Agreement:

          (A) Payment Default. The Company should fail to make any payment when due.

          (B) Representations and Warranties. Any representation or warranty made
or
deemed made by the Company herein or in the Note, application, agreement,
certificate, or other
document related to or furnished in connection with this Line of Credit
Agreement or the Note,
shall prove to have been false or misleading in any material respect on or
as of the date made or
deemed made.

          (C) Certain
Affirmative Covenants. The Company or, to the extent
required hereunder, any Subsidiary should fail to perform or comply with Sections
l5(A) through
15(G)(2), and 15(G)(6) and such failure continues for 15 days after
written notice thereof shall
have been delivered by FCW to the Company.

          (D) Other Covenants and Agreements. The Company or, to the extent
required
hereunder, any Subsidiary should fail to perform or comply with any other
covenant or
agreement contained herein or in any other Loan Document or shall use the
proceeds of any loan
for an unauthorized purpose.

 

 

			
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          (E) Cross-Default. The Company should, after any applicable grace
period, breach or be in default under the terms of any other agreement between
the Company and FCW.

          (F) Other Indebtedness. The Company or any Subsidiary should fail to pay
when due any indebtedness to any other person or entity for borrowed money or
any long-term obligation for the deferred purchase price of property
(including any capitalized lease), or any other event occurs which, under any
agreement or instrument relating to such indebtedness or obligation, has the
effect of accelerating or permitting the acceleration of such indebtedness or
obligation, whether or not such indebtedness or obligation is actually
accelerated or the right to accelerate is conditioned on the giving of
notice, the passage of time, or otherwise.

          (G) Judgments. A judgment, decree, or order for the payment of money
shall be rendered against the Company or any Subsidiary and either: (i)
enforcement proceedings shall have been commenced; (ii) a Lien prohibited
under Section 10(B) hereof shall have been obtained; or (iii) such judgment,
decree, or order shall continue unsatisfied and in effect for a period of 20
consecutive days without being vacated, discharged, satisfied, or stayed
pending appeal.

          (H) Insolvency. The Company or any Subsidiary shall: (i) become insolvent
or shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they come due; or (ii) suspend its business
operations or a material part thereof or make an assignment for the benefit of
creditors; or (iii) apply for, consent to, or acquiesce in the appointment of
a trustee, receiver, or other custodian for it or any of its property or, in
the absence of such application, consent, or acquiescence, a trustee,
receiver, or other custodian is so appointed; or (iv) commence or have
commenced against it any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation Law of any
jurisdiction.

          (I) Material Adverse Change. Any material adverse change occurs, as
reasonably determined by FCW, in the Company’s financial condition, results of
operation, or ability to perform its obligations hereunder or under any
instrument or document contemplated hereby.

     SECTION 19. Remedies. Upon the occurrence and during the continuance of
an Event of Default or any Potential Default, FCW shall have no obligation to
continue to extend credit to the Company and may discontinue doing so at any
time without prior notice. For all purposes hereof, the term “Potential
Default” means the occurrence of any event which, with the passage of time or
the giving of notice or both would become an Event of Default. In addition,
upon the occurrence and during the continuance of any Event of Default, FCW
may, upon notice to the Company, terminate any commitment and declare the
entire unpaid principal balance of the loans, all accrued interest thereon,
and all other amounts payable under this Line of Credit Agreement, all
Supplements, and the other Loan Documents to be immediately due and payable.
Upon such a declaration, the unpaid principal balance of the loans and all
such other amounts

 

 

			
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shall become immediately due and payable, without protest, presentment,
demand, or further notice of any kind, all of which are hereby expressly
waived by the Company. In addition, upon such an acceleration:

          (A) Enforcement. FCW may proceed to protect, exercise, and enforce such rights and
remedies as may be provided by this Line of Credit Agreement, any other
Loan Document or
under Law. Each and every one of such rights and remedies shall be
cumulative and may be
exercised from time to time, and no failure on the part of FCW to
exercise, and no delay in
exercising, any right or remedy shall operate as a waiver thereof, and no
single or partial exercise
of any right or remedy shall preclude any other or future exercise
thereof, or the exercise of any
other right. Without limiting the foregoing, FCW may hold and/or set off
and apply against the
Company’s obligations to FCW any cash collateral held by FCW, or any
balances held by FCW
for the Company’s account (whether or not such balances are then due).

          (B) Application of Funds. CoBank may apply all payments received by it
to the
Company’s obligations to FCW in such order and manner as FCW may elect in
its sole
discretion.

          In addition to the rights and remedies set forth above: (i) if the
Company fails to make any payment when due, then at FCW’s option in each
instance, such payment shall bear interest from the date due to the date paid
at 2% per annum in excess of the rate(s) of interest that would otherwise be
in effect on that loan; and (ii) after the maturity of any loan (whether as a
result of acceleration or otherwise), the unpaid principal balance of such
loan (including without limitation, principal, interest, fees and expenses)
shall automatically bear interest at 2% per annum in excess of the rate(s)
of interest that would otherwise be in effect on that loan. All interest
provided for herein shall be payable on demand and shall be calculated on the
basis of a year consisting of 365 days.

     SECTION 20. Broken Funding Surcharge. Notwithstanding any provision
contained in the Note giving the Company the right to repay any loan prior to
the date it would otherwise be due and payable, the Company agrees to provide
three Business Days’ prior written notice for any prepayment of a fixed rate
balance and that in the event it repays any fixed rate balance prior to its
scheduled due date or prior to the last day of the fixed rate period
applicable thereto (whether such payment is made voluntarily, as a result of
an acceleration, or otherwise), the Company will pay to CoBank a surcharge in
an amount equal to the greater of: (i) an amount which would result in FCW
being made whole (on a present value basis) for the actual or imputed funding
losses incurred by FCW as a result thereof; or (ii) $300.00. Notwithstanding
the foregoing, in the event any fixed rate balance is repaid as a result of
the Company refinancing the loan with another lender or by other means, then
in lieu of the foregoing, the Company shall pay to CoBank a surcharge in an
amount sufficient (on a present value basis) to enable FCW to maintain the
yield it would have earned during the fixed rate period on the amount repaid.
Such surcharges will be calculated in accordance with methodology established
by FCW (a copy of which will be made available to the Company upon request).

 

 

			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 12

     SECTION 21. Complete Agreement, Amendments. This Line of Credit
Agreement, the Note, and all other instruments and documents contemplated
hereby and thereby, are intended by the parties to be a complete and final
expression of their agreement. No amendment, modification, or waiver of any
provision hereof or thereof, and no consent to any departure by the Company
herefrom or therefrom, shall be effective unless approved by FCW and
contained in a writing signed by or on behalf of FCW, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. Additionally, any headings used in this Line of
Credit Agreement are inserted only as a matter of convenience and for
reference, and in no way define, limit or describe the scope or intent of any
term or provision. As used herein, the word “including” means “including
without limitation” and/or “including but not limited to”.

     SECTION 22. Applicable Law. Except to the extent governed by applicable
federal law, this Line of Credit Agreement and the Note shall be governed by
and construed in accordance with the laws of the State of California, without
reference to choice of law doctrine.

     SECTION 23. Notices. All notices hereunder shall be in writing and shall
be deemed to be duly given upon delivery if personally delivered or sent by
telegram or facsimile transmission, or 3 days after mailing if sent by
express, certified or registered mail, to the parties at the following
addresses (or such other address for a party as shall be specified by like
notice):

	 	 	 
	If to FCW, as follows:

	 	If to the Company, as follows:
	 
	 	 
	Farm Credit West, PCA

	 	Calavo Growers, Inc.
	2929 W. Main Street, Suite A

	 	Attn: Vice President-Finance
	Visalia, CA 93291-5700

	 	1141-A Cummings Road

	

	 	
Santa Paula, CA 93060

	Attention: James Neeley

	 	
Fax No: (805) 921-3232
	Fax No.: 559-627-4728

	 	

	 
	 	 

     SECTION 24. Taxes and Expenses. To the extent allowed by law, the
Company agrees to pay all reasonable out-of-pocket costs and expenses
(including the fees and expenses of counsel retained by FCW) incurred by FCW
in connection with the administration, collection, and enforcement of this
Line of Credit Agreement and the other Loan Documents, including, without
limitation, all costs and expenses incurred in perfecting, maintaining,
determining the priority of, and releasing any security for the Company’s
obligations to FCW, and any stamp, intangible, transfer, or like tax payable
in connection with this Line of Credit Agreement or any other Loan Document.

     SECTION 25. Effectiveness and Severability. This Line of Credit
Agreement shall continue in effect until: (i) all indebtedness and
obligations of the Company under this Line of

 

 

			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 13

Credit Agreement, the Note, and all other Loan Documents shall have
been paid or satisfied; and (ii) FCW has no commitment to extend credit to or
for the account of the Company hereunder. Any provision of this Line of
Credit Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof.

     SECTION 26. Successors and Assigns. This Line of Credit Agreement, the
Note, and the other Loan Documents shall be binding upon and inure to the
benefit of the Company and FCW and their respective successors and assigns,
except that the Company may not assign or transfer its rights or obligations
under this Line of Credit Agreement, the Note or any other Loan Document
without the prior written consent of FCW.

     SECTION 27. Participations. From time to time, FCW may sell to one or
more banks, financial institutions or other lenders a participation in all or a
portion of the Commitment or other extensions of credit made pursuant to this
Line of Credit Agreement. However, no such participation shall relieve FCW of
any commitment made to the Company hereunder, or any obligation FCW may have
to pay patronage due the Company from FCW under the provisions of the bylaws
of FCW and its practices and procedures related to patronage distribution. In
connection with the foregoing, FCW may disclose information concerning the
Company and its Subsidiaries to any participant or prospective participant,
provided that such participant or prospective participant agrees to keep such
information confidential. Accordingly, all interests in the Commitment that is
included in a sale of participation interests shall not be entitled to
patronage distributions. A sale of participation interest may include certain
voting rights of the participants regarding the Commitment hereunder
(including without limitation the administration, servicing and enforcement
thereof). FCW agrees to give written notification to the Company of any sale
of participation interests.

     IN WITNESS WHEREOF, the parties have caused this Line of Credit
Agreement to be executed by their duly authorized officers as of the date
shown above.

	 	 	 	 	 	 	 	 	 	 	 
	FARM CREDIT WEST, PCA	 	CALAVO GROWERS, INC., a California Corporation
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ James Neeley
	 	By:
	 	/s/ Arthur J. Bruno	 	 	 	 
	 

	 	 
	 	 	 	 Arthur J. Bruno	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	Sr. Vice President
 

	 	Title:
	 	Chief Operating Officer, Chief

Financial Officer & Corporate

Secretary	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott H. Runge	 	 	 	 
	 

	 	 	 	 	 	Scott H. Runge	 	 	 	 
	 

	 	 	 	Title
	 	Treasurer	 	 	 	 

 

 

PROMISSORY
NOTE

			
	$12,000,000.00
	 	October 5, 2006

     
FOR VALUE RECEIVED, on the Maturity Date as set forth in that certain
Line of Credit Agreement dated October 5, 2006, or in any amendments
thereto (the “Line of Credit Agreement”), the undersigned
promises to pay to the order of Farm Credit West, PCA (the “Payee”), or
order, at the place and in the manner set forth in the Line of Credit
Agreement, the principal amount of TWELVE MILLION DOLLARS
($12,000,000.00). The undersigned promises to pay interest on the
principal amount hereof remaining unpaid from time to time from the date
hereon until the date of payment in full, payable as provided below under
“Repayment Terms”.

     
This note is given for advances to be made by Payee to the
undersigned from time to time in accordance with the terms and conditions
of the Line of Credit Agreement, all the terms and conditions of which are
incorporated herein by reference. Advances, accrued interest, and payments
shall be posted by the Payee upon an appropriate accounting record, shall
be prima facie evidence as to all such amounts and shall be binding on the
undersigned absent manifest error. The total of such advances may not
exceed the face amount of this note. This note is executed, delivered and
accepted not in payment of but for the purpose of amending, restating and
replacing the following described obligations, and renewing any unpaid
balance(s) evidenced thereby: note dated August 27, 2006, in the principal
amount of $12,000,000.00. Furthermore, this note also evidences an
additional loan advance(s) to the extent the note under exceeds the renewed
unpaid balance(s) referred to above.

     Repayment
Terms: The undersigned shall pay to Payee, Thirty-nine (39)
monthly interest only payments, in the amount billed, beginning on
November 01, 2006; and One (1) installment of interest in the amount billed
plus principal of any amount necessary to pay the note in full on
February 1, 2010. Payments, other than those required as specified in this Section
or in the Line of Credit Agreement, may be made at any time and in any
amount during the term of this note, unless limited or prohibited herein
or unless otherwise required by FCW in writing. This note is due and
payable in full on February 1, 2010 (“Maturity Date”), at which time the
undersigned shall pay the unpaid principal balance and all accrued
interest in full. Any amount of principal hereof which is not paid when
due, whether at stated maturity, by acceleration or otherwise, shall bear
interest from the date when due until said principal is paid in full,
payable on demand, at a rate per annum set forth in the Line of Credit
Agreement.

     The makers or endorsers hereof hereby waive presentment for payment,
demand, protest, and notice of dishonor and nonpayment of this note, and
all defenses on the ground of delay or of any extension of time for the
payment hereof which may be hereafter given by the holder or holders hereof
to them or either of them or to anyone who has assumed the payment of this
note, and it is specifically agreed that the obligations of said makers or
endorsers shall not be in anyway affected or altered to the prejudice of
the holder or holders hereof by reason of the assumption of payment of the
same by any other person or entity.

     The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned’s
obligations hereunder or in enforcing or attempting to enforce any of such
holder’s rights hereunder, including reasonable attorneys’ fees and
disbursements, whether or not an action is filed in connection therewith.

 

 

Page 2

     
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA. REPRESENTATIVES OF FCW ARE NOT
AUTHORIZED TO MAKE ANY ORAL AGREEMENTS OR ASSURANCES. DO NOT SIGN THIS NOTE
IF YOU BELIEVE THAT THERE ARE ANY AGREEMENTS OR UNDERSTANDING BETWEEN YOU AND
FCW THAT ARE NOT SET FORTH IN WRITING IN THIS NOTE, THE LINE OF CREDIT
AGREEMENT OR OTHER LOAN DOCUMENTS EVIDENCING THE COMMITMENT.

	 	 	 	 	 
	 	CALAVO GROWERS, INC.

 	 
	 	By	 	/s/ Arthur J. Bruno	 
	 	 	 	Arthur J. Bruno,	 
	 	 	 	Chief Operating Officer, Chief
Financial

Officer & Corporate Secretary 	 
	 
	 
	 	By	 	/s/ Scott H. Runge	 
	 	 	 	Scott H. Runge, Treasurer	 
	 	 	 
	 

INDORSEMENT —
The within Note is hereby indorsed by the payee named
in the body of said Note as if the name of the payee were actually executed
under the indorsement.

PAY TO THE ORDER OF U.S. AgBANK, FCB, Wichita, Kansas

 

 

EXHIBIT A

PROMISSORY NOTE

			
	$12,000,000.00
	 	October 5, 2006

     FOR VALUE RECEIVED,
on the Maturity Date as set forth in that certain Line
of Credit Agreement dated October 5, 2006, or in any amendments thereto (the
“Line of Credit Agreement”), the undersigned promises to pay to the order of
Farm Credit West, PCA (the “Payee”), or order, at the place and in
the manner set forth in the Line of Credit Agreement, the principal amount of
TWELVE MILLION DOLLARS ($12,000,000.00). The undersigned promises to pay
interest on the principal amount hereof remaining unpaid from time to
time from the date hereon until the date of payment in full, payable as provided below
under “Repayment Terms”.

     This note is given for advances to be made by Payee to the undersigned
from time to time in accordance with the terms and conditions of the Line of
Credit Agreement, all the terms and conditions of which are incorporated
herein by reference. Advances, accrued interest, and payments shall be posted
by the Payee upon an appropriate accounting record, shall be prima facie
evidence as to all such amounts and shall be binding on the undersigned
absent manifest error. The total of such advances may not exceed the face
amount of this note. This note is executed, delivered and accepted not in
payment of but for the purpose of amending, restating and replacing the
following described obligations, and renewing any unpaid balance(s) evidenced
thereby: note dated August 17, 2005, in the principal amount of
$12,000,000.00. Furthermore, this note also evidences an additional loan
advance(s) to the extent the note under exceeds the renewed unpaid balance(s)
referred to above.

     Repayment
Terms: The undersigned shall, pay to Payee, Thirty-nine (39)
monthly interest-only payments, in the amount billed, beginning on November
01, 2006; and One (1) installment of interest in the amount billed plus
principal of any amount necessary to pay the note in full on February 1,
2010. Payments, other than those required as specified in this Section or in
the Line of Credit Agreement, may be made at any time and in any amount
during the term of this note, unless limited or prohibited herein or unless
otherwise required by FCW in writing. This note is due and payable in full on
February 1, 2010 (“Maturity Date”), at which time the undersigned shall pay
the unpaid principal balance and all accrued interest in full. Any amount of
principal hereof which is not paid when due, whether at stated maturity, by
acceleration or otherwise, shall bear interest from the date when due until
said principal is paid in full, payable on demand, at a rate per annum set
forth in the Line of Credit Agreement.

     The
makers or endorsers hereof hereby waive presentment for payment,
demand, protest, and notice of dishonor and nonpayment of this note, and all
defenses on the ground of delay or of any extension of time for the payment
hereof which may be hereafter given by the holder or holders hereof to them
or either of them or to anyone who has assumed the payment of this note, and
it is specifically agreed that the obligations of said makers or endorsers
shall not be in anyway affected or altered to the prejudice of the holder or
holders hereof by reason of the assumption of payment of the same by any
other person or entity.

     The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned’s obligations
hereunder or in enforcing or attempting to enforce any of such holder’s
rights hereunder, including reasonable attorneys’ fees and disbursements,
whether or not an action is filed in connection therewith.

 

 

Page 2

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA. REPRESENTATIVES OF FCW ARE NOT
AUTHORIZED TO MAKE ANY ORAL AGREEMENTS OR ASSURANCES. DO NOT SIGN THIS NOTE
IF YOU BELIEVE THAT THERE ARE ANY AGREEMENTS OR UNDERSTANDING BETWEEN YOU
AND FCW THAT ARE NOT SET FORTH IN WRITING IN THIS NOTE, THE LINE OF CREDIT
AGREEMENT OR OTHER LOAN DOCUMENTS EVIDENCING THE COMMITMENT.

INDORSEMENT — The within Note is hereby indorsed by the payee named in the body
of said Note as if the name of the payee were actually executed under the
indorsement.

PAY TO THE ORDER OF U.S. AgBANK, FCB, Wichita, Kansas

 

 

EXHIBIT B

SERVICING AGREEMENT

October 5, 2006

Pursuant to Section 9 of the Line
of Credit Agreement dated October 5, 2006
(“Line of Credit Agreement”) between Farm Credit West, PCA and CALAVO
GROWERS, Inc., a California Corporation, the undersigns acknowledges and
confirms the agreement to have CoBank, ACB perform the services as described
below:

Manner and Time of Payment.
CoBank shall maintain a record of all loans,
the interest accrued thereon, and all payments made with respect thereto,
and such record shall, absent proof of manifest error, be conclusive evidence
of the outstanding principal and interest on the loans. All payments shall be
made by wire transfer of immediately available funds, by check, or by
automated clearing house or other similar cash handling processes as
specified by separate agreement between the Calavo Growers
(“Company”) and CoBank.
Wire transfers shall be made to ABA No. 307088754 for advice to and credit
of CoBank (or to such other account as CoBank may direct by notice). The
Company shall give CoBank telephonic notice no later than 12:00 Noon
Company’s local time of its intent to pay by wire and funds received after
3:00 pm. Company’s local time shall be credited on the next business day.
Checks shall be mailed to CoBank, Department 167, Denver,
Colorado 80291-0167 (or to such other place as CoBank may direct by
notice). Credit for payment by check will not be given until the
later of:
(a) the day on which CoBank receives immediately available funds; or (b)
the next business day after receipt of the check.

	 	 	 	 	 	 	 	 	 	 	 
	Farm Credit West, PCA	 	CALAVO GROWERS, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ James K. Neeley
	 	By:
	 	 /s/ Arthur Bruno	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	James K. Neeley, Sr. Vice President	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott Runge	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	CoBank, ACB	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Ed Nishio
	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Edward H. Nishio, V.P.<PAGE>

                                                                    Exhibit 10.1

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement") between Stewart Enterprises, Inc.,
a Louisiana corporation (the "Company"), and Thomas M. Kitchen (the "Employee")
was originally effective as of December 2, 2004 (the "Agreement Date") and is
amended and restated effective as of November 8, 2006 (the "Amendment Date").

                                   WITNESSETH:

     WHEREAS, Employee currently is employed by the Company;

     WHEREAS, the Company desires to retain the services of Employee pursuant to
the terms of this Agreement, subject to Employee's acceptance of the conditions
stated herein;

     WHEREAS, Employee wishes to be employed by the Company in consideration of
the compensation and benefits set forth herein and pursuant to the terms hereof;

     WHEREAS, during the course of his employment with the Company, Employee has
or will have received extensive and unique knowledge, training and education in,
and access to resources involving, the Death Care Business (as defined below) at
a substantial cost to the Company, which Employee acknowledges has enhanced or
substantially will enhance Employee's skills and knowledge in such business;

     WHEREAS, during the course of his employment with the Company, Employee has
or will have received access to and information about the Company's customers,
suppliers, joint venture partners and others having important commercial
relationships with the Company, the preservation of which the Employee
acknowledges are vital to the continuing commercial success of the Company;

     WHEREAS, during the course of his employment with the Company, Employee has
had and will continue to have access to valuable oral and written information,
knowledge and data relating to the business and operations of the Company and
its subsidiaries that is non-public, confidential or proprietary in nature and
is particularly useful in the Death Care Business; and

     WHEREAS, in view of the training provided by the Company to Employee, its
cost to the Company, the importance of maintaining continuing favorable
relationships with customers, suppliers, partners and others, and the need for
the Company to be protected against disclosures by Employee of the Company's and
its subsidiaries' trade secrets and other non-public, confidential or
proprietary information, the Company and Employee desire, among other things, to
prohibit Employee from disclosing or utilizing, outside the scope and term of
his employment with the Company, any non-public, confidential or proprietary
information, knowledge and data relating to the business and operations of the
Company or its subsidiaries received by Employee during the course of his
employment, and to restrict the ability of Employee to compete with the Company
or its subsidiaries for a limited period of time;

<PAGE>

     NOW, THEREFORE, for and in consideration of the continued employment of
Employee by the Company and the payment of salary, benefits and other
compensation to Employee by the Company, the parties hereto agree as follows:

                                    ARTICLE I
                          EMPLOYMENT CAPACITY AND TERM

     1.1 CAPACITY AND DUTIES OF EMPLOYEE. The Employee is employed by the
Company to render services on behalf of the Company in the capacity set forth in
Appendix A hereto, as such Appendix may be amended or supplemented from time to
time (as so amended or supplemented, "Appendix A"). The Employee shall perform
such duties, consistent with the Employee's job title, as are assigned to the
title or titles held by the Employee as set forth from time to time in the
Company's Bylaws and such other duties as may be prescribed from time to time by
the Company's Board of Directors (the "Board") or the executive of the Company
to whom the Employee directly reports.

     1.2 EMPLOYMENT TERM. The term of this Agreement (the "Employment Term")
shall commence on the Agreement Date and shall continue through October 31,
2007, subject to any earlier termination of Employee's status as an employee
pursuant to this Agreement.

     1.3 DEVOTION TO RESPONSIBILITIES. During the Employment Term, the Employee
shall devote all of his business time to the business of the Company, shall use
his best efforts to perform faithfully and efficiently his duties under this
Agreement, and shall not engage in or be employed by any other business;
provided, however, that nothing herein shall prohibit the Employee from (a)
serving as a member of the board of directors, board of trustees or the like of
any for-profit or non-profit entity that does not compete with the Company, or
performing services of any type for any civic or community entity, whether or
not the Employee receives compensation therefor, (b) investing his assets in
such form or manner as shall require no more than nominal services on the part
of the Employee in the operation of the business of the entity in which such
investment is made, or (c) serving in various capacities with, and attending
meetings of, industry or trade groups and associations, as long as the
Employee's activities permitted by clauses (a), (b) and (c) above do not
materially and unreasonably interfere with the ability of the Employee to
perform the services and discharge the responsibilities required of him under
this Agreement. Notwithstanding clause (b) above, during the Employment Term,
the Employee may not beneficially own more than 2% of the equity interests of a
business organization required to file periodic reports with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (the "Exchange
Act") and may not beneficially own more than 2% of the equity interests of a
business organization that competes with the Company. For purposes of this
paragraph, "beneficially own" has the meaning ascribed to that term in Rule
13d-3 under the Securities Exchange Act of 1934, as amended from time to time
(the "Exchange Act").

                                   ARTICLE II
                            COMPENSATION AND BENEFITS

     During the Employment Term, the Company shall provide the Employee with the
compensation and benefits described below:

                                       -2-

<PAGE>

     2.1 SALARY AND BONUS. (a) The Company shall pay the Employee a salary
("Base Salary") at an annual rate per fiscal year of the Company ("Fiscal Year")
as set forth in Appendix A, which shall be payable to the Employee at such
intervals as other salaried employees of the Company are paid.

          (b) The Employee shall be eligible to receive an annual incentive
     bonus (the "Bonus"), up to the maximum amount set forth in Appendix A. The
     Bonus will be awarded based upon factors to be established or approved
     annually by the Compensation Committee in its discretion and set forth in
     Appendix A or a supplement thereto. Any Bonus for the fiscal year ended
     October 31, 2005 shall be paid in calendar year 2006. Any Bonus awarded for
     any subsequent fiscal year shall be paid no later than March 15 of the
     following calendar year. The Bonus may be paid in cash or the Class A
     common stock of the Company (the "Common Stock") in the discretion of the
     Compensation Committee of the Board of Directors of the Company.

          (c) Any change in the Employee's title, Base Salary or Bonus
     eligibility during the Employment Term shall be set forth in one or more
     supplements to Appendix A to this Agreement, each of which shall be signed
     by the Employee and a member of the Compensation Committee of the Board of
     Directors of the Company.

     2.2 BENEFITS. The Employee shall be eligible to participate in all benefit
programs provided to other employees of the Company, including without
limitation a fully-paid insurance benefit package similar to that provided other
employees of the Company.

     2.3 EXPENSES. The Employee shall be reimbursed for reasonable out-of-pocket
expenses incurred from time to time on behalf of the Company or any subsidiary
in the performance of his duties under this Agreement, upon the presentation of
such supporting invoices, documents and forms as the Company reasonably
requests.

     2.4 SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT. In lieu of participating
in the Company's Supplemental Executive Retirement Plan (the "SERP"), the
executive shall be entitled to earn a supplemental retirement benefit on the
terms and subject to the conditions set forth in the Amended and Restated
Supplemental Executive Retirement Agreement included as Appendix C hereto (the
"SERP Agreement"). At such time as the Company has amended and restated the SERP
to incorporate all benefits of the Employee described in Appendix C, the SERP
Agreement shall automatically terminate and the Employee shall simultaneously
become a participant in the SERP.

                                   ARTICLE III
                            TERMINATION OF EMPLOYMENT

     3.1 DEATH. The Employee's status as an employee shall terminate immediately
and automatically upon the Employee's death during the Employment Term.

     3.2 DISABILITY. The Employee's status as an employee may be terminated for
"Disability" as follows:

                                       -3-

<PAGE>

          (a) The Employee's status as an employee shall terminate if the
     Employee has a disability that would entitle him to receive benefits under
     the Company's long-term disability insurance policy in effect at the time
     either because he is Totally Disabled or Partially Disabled, as such terms
     are defined in such policy. Any such termination shall become effective on
     the first day on which the Employee is eligible to receive payments under
     such policy (or on the first day that he would be so eligible, if he had
     applied timely for such payments).

          (b) If the Company has no long-term disability plan in effect, if (i)
     the Employee is rendered incapable because of physical or mental illness of
     satisfactorily discharging his duties and responsibilities under this
     Agreement for a period of 90 consecutive days and (ii) a duly qualified
     physician chosen by the Company and reasonably acceptable to the Employee
     or his legal representatives so certifies in writing, the Board shall have
     the power to determine that the Employee has become disabled. If the Board
     makes such a determination, the Company shall have the continuing right and
     option, during the period that such disability continues, and by notice
     given in the manner provided in this Agreement, to terminate the status of
     Employee as an employee. Any such termination shall become effective 30
     days after such notice of termination is given, unless within such 30-day
     period, the Employee becomes capable of rendering services of the character
     contemplated hereby (and a physician chosen by the Company and reasonably
     acceptable to the Employee or his legal representatives so certifies in
     writing) and the Employee in fact resumes such services.

          (c) The "Disability Effective Date" shall mean the date on which
     termination of employment becomes effective due to Disability.

     3.3 CAUSE. The Company may terminate the Employee's status as an employee
for Cause. As used herein, "Cause" shall mean the Employee's: (a) breach of this
Agreement; (b) intentional failure to perform his prescribed duties; (c)
unauthorized acts or omissions that could reasonably be expected to cause
material financial harm to the Company or materially disrupt Company operations;
(d) commission of a felony; (e) commission of an act of dishonesty (even if not
a crime) resulting in the enrichment of the Employee at the expense of the
Company; (f) knowing falsification or knowing attempted falsification of
financial records of the Company in violation of SEC Rule 13b2-1; or (g) willful
failure to follow established Company policies or procedures; provided, however,
that no such termination may take place in the case of (a) through (c) or (g)
above unless the Company has provided written notice to the Employee of such
conduct and the Employee has failed to remedy such conduct within 10 days
following receipt of such notice.

     3.4 GOOD REASON. The Employee may terminate his status as an employee for
Good Reason. As used herein, the term "Good Reason" shall mean:

          (a) The occurrence of any of the following during the Employment Term:

               (i) the assignment to the Employee of any duties or
          responsibilities that are inconsistent with the Employee's status,
          title and position as set forth in Appendix A;

                                       -4-

<PAGE>

               (ii) any removal of the Employee from, or any failure to
          reappoint or reelect the Employee to, the position set forth in
          Appendix A, except in connection with a termination of Employee's
          status as an employee as permitted by this Agreement;

               (iii) the Company's requiring the Employee to be based anywhere
          other than in the metropolitan area set forth in Appendix A, except
          for required travel in the ordinary course of the Company's business;

          (b) any breach of this Agreement by the Company that continues for a
     period of 10 days after written notice thereof is given by the Employee to
     the Company;

          (c) the failure by the Company to obtain the assumption of its
     obligations under this Agreement by any successor or assign as contemplated
     in this Agreement; or

          (d) any purported termination by the Company of the Employee's status
     as an employee for Cause that is not effected pursuant to a Notice of
     Termination satisfying the requirements of this Agreement.

     3.5 VOLUNTARY TERMINATION BY THE COMPANY. The Company may terminate the
Employee's status as employee for other than death, Disability or Cause.

     3.6 VOLUNTARY TERMINATION BY THE EMPLOYEE. The Employee may voluntarily
terminate the Employee's status as employee for other than Good Reason.

     3.7 NOTICE OF TERMINATION. Any termination by the Company or by the
Employee, shall be communicated by Notice of Termination to the other party
hereto given in accordance with Article VII Section 7.2 of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
that (a) indicates the specific termination provision in this Agreement relied
upon (b) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provisions so indicated and (c) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the giving
of such notice). The failure by the Employee or the Company to set forth in the
Notice of Termination any fact or circumstance that contributes to a showing of
Good Reason, Disability or Cause shall not negate the effect of the notice nor
waive any right of the Employee or the Company, respectively, hereunder or
preclude the Employee or the Company, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's rights hereunder.

     3.8 DATE OF TERMINATION. "Date of Termination" means (a) if Employee's
employment is terminated by reason of his death or Disability, the Date of
Termination shall be the date of death of Employee or the Disability Effective
Date, as the case may be, (b) if Employee's employment is terminated by the
Company for Cause, or by the Employee for Good Reason, the date of delivery of
the Notice of Termination or any later date specified therein (which date shall
not be more than 30 days after the giving of such notice) as the case may be,
(c) if the Employee's employment is terminated by the Company for reasons other
than death, Disability or Cause, the Date of Termination shall be the date on
which the Company notifies the

                                       -5-

<PAGE>

Employee of such termination or any later date specified therein, and (d) if the
Employee's employment is terminated voluntarily by the Employee for reasons
other than Good Reason, the Date of Termination shall be the date on which the
Employee notifies the Company of such termination or any later date specified
therein (which date shall not be later than 30 days after the giving of such
notice) as the case may be.

                                   ARTICLE IV
                          OBLIGATIONS UPON TERMINATION

     4.1 DEATH. If 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 under this Agreement, other
than the obligation to pay accrued salary through the Date of Termination and to
make any payments due pursuant to employee benefit plans maintained by the
Company or its subsidiaries.

     4.2 DISABILITY. If Employee's status as an employee is terminated by reason
of Employee's Disability, this Agreement shall terminate without further
obligation to the Employee, other than the obligation to pay accrued salary
through the Date of Termination and to make any payments due pursuant to
employee benefit plans maintained by the Company or its subsidiaries.

     4.3 TERMINATION BY THE COMPANY FOR REASONS OTHER THAN DEATH, DISABILITY OR
CAUSE; TERMINATION BY THE EMPLOYEE FOR GOOD REASON. If the Company terminates
the Employee's status as an employee for reasons other than death, Disability or
Cause, or the Employee terminates his employment for 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 over a two-year period as follows:
beginning on the first regular payroll date that is at least six months after
the Date of Termination, the Employee shall be paid one-fourth of a single
year's Base Salary, and the remaining three-fourths shall be paid in equal
installments on the Company's regular bi-weekly payroll dates over the following
18 months.

     4.4 CAUSE. If the Employee's status as an employee is terminated by the
Company for Cause, this Agreement shall terminate without further obligation to
the Employee other than for accrued salary through the Date of Termination,
obligations imposed by law and obligations imposed pursuant to any employee
benefit plan maintained by the Company or its subsidiaries.

     4.5 RESIGNATION FROM BOARD OF DIRECTORS. If Employee is a director of the
Company and his employment is terminated for any reason other than death, the
Employee shall, if requested by the Company, immediately resign as a director of
the Company. If such resignation is not received when so requested, the Employee
shall forfeit any right to receive any payments pursuant to this Agreement.

     4.6 NO ACCELERATION OF PAYMENTS. No acceleration of payments and benefits
provided for herein shall be permitted, except that the Company may accelerate
payment, if permitted under the regulations under Section 409A of the Code, as
necessary to allow the Employee to pay FICA taxes on amounts payable hereunder
and additional taxes resulting from the payment of such FICA amount, or as
necessary to pay taxes and penalties arising as a result

                                       -6-

<PAGE>

of the payments provided for in this Agreement failing to meet the requirements
of Section 409A of the Code.

                                    ARTICLE V
              NONDISCLOSURE, NONCOMPETITION AND PROPRIETARY RIGHTS

     5.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:

          (a) "Confidential Information" means any information, knowledge or
     data of any nature and in any form (including information that is
     electronically transmitted or stored on any form of magnetic or electronic
     storage media) relating to the past, current or prospective business or
     operations of the Company and its subsidiaries, that at the time or times
     concerned is not generally known to persons engaged in businesses similar
     to those conducted or contemplated by the Company and its subsidiaries
     (other than information known by such persons through a violation of an
     obligation of confidentiality to the Company), whether produced by the
     Company and its subsidiaries or any of their consultants, agents or
     independent contractors or by Employee, and whether or not marked
     confidential, including without limitation information relating to the
     Company's or its subsidiaries' products and services, business plans,
     business acquisitions, joint ventures, processes, product or service
     research and development ideas, methods or techniques, training methods and
     materials, and other operational methods or techniques, quality assurance
     procedures or standards, operating procedures, files, plans,
     specifications, proposals, drawings, charts, graphs, support data, trade
     secrets, supplier lists, supplier information, purchasing methods or
     practices, distribution and selling activities, consultants' reports,
     marketing and engineering or other technical studies, maintenance records,
     employment or personnel data, marketing data, strategies or techniques,
     financial reports, budgets, projections, cost analyses, price lists,
     formulae and analyses, employee lists, customer records, customer lists,
     customer source lists, proprietary computer software, and internal notes
     and memoranda relating to any of the foregoing.

          (b) "Death Care Business" means (i) the owning and operating of
     funeral homes and cemeteries, including combined funeral home and cemetery
     facilities, (ii) the offering of services and products to meet families'
     funeral needs, including prearrangement, family consultation, the sale of
     caskets and related funeral and cemetery products and merchandise (whether
     at physical locations or by means of the Internet), the removal,
     preparation and transportation of remains, cremation, the use of funeral
     home facilities for visitation and worship, and related transportation
     services, (iii) the marketing and sale of funeral services and cemetery
     property or merchandise on an at-need or prearranged basis, (iv) providing,
     managing and administering financing arrangements (including trust funds,
     escrow accounts, insurance and installment sales contracts) for prearranged
     funeral plans and cemetery property and merchandise, (v) providing
     interment services, the sale (on an at-need or prearranged basis) of
     cemetery property including lots, lawn crypts, family and community
     mausoleums and related cemetery merchandise such as monuments, memorials
     and burial vaults, (vi) the maintenance of

                                       -7-

<PAGE>

     cemetery grounds pursuant to perpetual care contracts and laws or on a
     voluntary basis, and (vii) offering mausoleum design, construction and
     sales services.

     5.2 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. During the Employment Term,
Employee shall hold in a fiduciary capacity for the benefit of the Company all
Confidential Information which shall have been obtained by Employee during
Employee's employment (whether prior to or after the Agreement Date) and shall
use such Confidential Information solely within the scope of his employment with
and for the exclusive benefit of the Company. For a period of five years after
the Employment Term, commencing with the Date of Termination, Employee agrees
(a) not to communicate, divulge or make available to any person or entity (other
than the Company) any such Confidential Information, except upon the prior
written authorization of the Company or as may be required by law or legal
process, and (b) to deliver promptly to the Company any Confidential Information
in his possession, including any duplicates thereof and any notes or other
records Employee has prepared with respect thereto. In the event that the
provisions of any applicable law or the order of any court would require
Employee to disclose or otherwise make available any Confidential Information,
Employee shall give the Company prompt prior written notice of such required
disclosure and an opportunity to contest the requirement of such disclosure or
apply for a protective order with respect to such Confidential Information by
appropriate proceedings.

     5.3 LIMITED COVENANT NOT TO COMPETE. During the Employment Term and for a
period of two years thereafter, commencing with the Date of Termination,
Employee agrees that, with respect to each State of the United States or other
jurisdiction, or specified portions thereof, in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b)
conducts the business of the Company or any of its subsidiaries or (c)
supervises the activities of other employees of the Company or any of its
subsidiaries, as identified in Appendix B attached hereto and forming a part of
this Agreement, and in which the Company or any of its subsidiaries engages in
the Death Care Business on the Date of Termination (collectively, the "Subject
Areas"), Employee will restrict his activities within the Subject Areas as
follows:

          (a) Employee will not, directly or indirectly, for himself or others,
     own, manage, operate, control, be employed in an executive, managerial or
     supervisory capacity by, consult with, or otherwise engage or participate
     in or allow his skill, knowledge, experience or reputation to be used in
     connection with, the ownership, management, operation or control of, any
     company or other business enterprise engaged in the Death Care Business
     within any of the Subject Areas; provided, however, that nothing contained
     herein shall prohibit Employee from making passive investments as long as
     Employee does not beneficially own more than 2% of the equity interests of
     a business enterprise engaged in the Death Care Business within any of the
     Subject Areas. For purposes of this paragraph, "beneficially own" shall
     have the same meaning ascribed to that term in Rule 13d-3 under the
     Exchange Act.

          (b) Employee will not call upon any customer of the Company or its
     subsidiaries for the purpose of soliciting, diverting or enticing away the
     business of such person or entity, or otherwise disrupting any previously
     established relationship existing between such person or entity and the
     Company or its subsidiaries;

                                       -8-

<PAGE>

          (c) Employee will not solicit, induce, influence or attempt to
     influence any supplier, lessor, lessee, licensor, partner, joint venturer,
     potential acquiree or any other person who has a business relationship with
     the Company or its subsidiaries, or who on the Date of Termination is
     engaged in discussions or negotiations to enter into a business
     relationship with the Company or its subsidiaries, to discontinue or reduce
     or limit the extent of such relationship with the Company or its
     subsidiaries; and

          (d) Employee will not make contact with any of the employees of the
     Company or its subsidiaries with whom he had contact during the course of
     his employment with the Company for the purpose of soliciting such employee
     for hire, whether as an employee or independent contractor, or otherwise
     disrupting such employee's relationship with the Company or its
     subsidiaries.

          (e) Employee further agrees that, for a period of one year from and
     after the Date of Termination, Employee will not hire, on behalf of himself
     or any person or entity engaged in the Death Care Business with which
     Employee is associated, any employee of the Company or its subsidiaries as
     an employee or independent contractor, whether or not such engagement is
     solicited by Employee; provided, however, that the restriction contained in
     this subsection (e) shall not apply to Company employees who reside in, or
     are hired by Employee to perform work in, any of the Subject Areas located
     within the States of Virginia, Arkansas or Georgia.

     Employee agrees that he will from time to time upon the Company's request
promptly execute any supplement, amendment, restatement or other modification of
Appendix B as may be necessary or appropriate to correctly reflect the
jurisdictions which, at the time of such modification, should be covered by
Appendix B and this Article V Section 3. Furthermore, Employee agrees that all
references to Appendix B in this Agreement shall be deemed to refer to Appendix
B as so supplemented, amended, restated or otherwise modified from time to time.

     5.4 INJUNCTIVE RELIEF; OTHER REMEDIES. Employee acknowledges that a breach
by Employee of Section 5.2 or 5.3 of this Article V would cause immediate and
irreparable harm to the Company for which an adequate monetary remedy does not
exist; hence, Employee agrees that, in the event of a breach or threatened
breach by Employee of the provisions of Section 5.2 or 5.3 of this Article V
during or after the Employment Term, the Company shall be entitled to injunctive
relief restraining Employee from such violation without the necessity of proof
of actual damage or the posting of any bond, except as required by non-waivable,
applicable law. Nothing herein, however, shall be construed as prohibiting the
Company from pursuing any other remedy at law or in equity to which the Company
may be entitled under applicable law in the event of a breach or threatened
breach of this Agreement by Employee, including without limitation the recovery
of damages and/or costs and expenses, such as reasonable attorneys' fees,
incurred by the Company as a result of any such breach or threatened breach. In
addition to the exercise of the foregoing remedies, the Company shall have the
right upon the occurrence of any such breach or threatened breach to cancel any
unpaid salary, bonus, commissions or reimbursements otherwise outstanding at the
Date of Termination. In particular, Employee acknowledges that the payments
provided under Article IV Section 4.3 are conditioned upon Employee fulfilling
any noncompetition and nondisclosure agreements contained in this Article V. In
the event Employee shall at any time materially breach or threaten to breach any

                                       -9-

<PAGE>

noncompetition or nondisclosure agreements contained in this Article V, the
Company may suspend or eliminate payments under Article IV during the period of
such breach or threatened breach. Employee acknowledges that any such suspension
or elimination of payments would be an exercise of the Company's right to
suspend or terminate its performance hereunder upon Employee's breach of this
Agreement; such suspension or elimination of payments would not constitute, and
should not be characterized as, the imposition of liquidated damages.

     5.5 REQUESTS FOR WAIVER IN CASES OF UNDUE HARDSHIP. In the event that
Employee should find any of the limitations of Article V Section 5.3 (including
without limitation the geographic restrictions of Appendix B) to impose a severe
hardship on Employee's ability to secure other employment, Employee may make a
request to the Company for a waiver of the designated limitations before
accepting employment that otherwise would be a breach of Employee's promises and
obligations under this Agreement. Such request must be in writing and clearly
set forth the name and address of the organization with which employment is
sought and the location, position and duties that Employee will be performing.
The Company will consider the request and, in its sole discretion, decide
whether and on what conditions to grant such waiver.

     5.6 GOVERNING LAW OF THIS ARTICLE V; CONSENT TO JURISDICTION. Any dispute
regarding the reasonableness of the covenants and agreements set forth in this
Article V (including Appendix B hereto), or the territorial scope or duration
thereof, or the remedies available to the Company upon any breach of such
covenants and agreements, shall be governed by and interpreted in accordance
with the laws of the State of the United States or other jurisdiction in which
the alleged prohibited competing activity or disclosure occurs, and, with
respect to each such dispute, the Company and Employee each hereby irrevocably
consent to the exclusive jurisdiction of the state and federal courts sitting in
the relevant State (or, in the case of any jurisdiction outside the United
States, the relevant courts of such jurisdiction) for resolution of such
dispute, and agree to be irrevocably bound by any judgment rendered thereby in
connection with such dispute, and further agree that service of process may be
made upon him or it in any legal proceeding relating to this Article V and/or
Appendix B by any means allowed under the laws of such jurisdiction. Each party
irrevocably waives any objection he or it may have as to the venue of any such
suit, action or proceeding brought in such a court or that such a court is an
inconvenient forum.

     5.7 EMPLOYEE'S UNDERSTANDING OF THIS ARTICLE. Employee hereby represents to
the Company that he has read and understands, and agrees to be bound by, the
terms of this Article V (including Appendix B hereto). Employee acknowledges
that the geographic scope and duration of the covenants contained in Article V
Section 5.3 are the result of arm's-length bargaining and are fair and
reasonable in light of (i) the importance of the functions performed by Employee
and the length of time it would take the Company to find and train a suitable
replacement, (ii) the nature and wide geographic scope of the operations of the
Company and its subsidiaries, (iii) Employee's level of control over and contact
with the business and operations of the Company and its subsidiaries in a
significant number of jurisdictions where same are conducted and (iv) the fact
that all facets of the Death Care Business are conducted by the Company and its
subsidiaries throughout the geographic area where competition is restricted by
this Agreement. It is the desire and intent of the parties that the provisions
of this Agreement be enforced to the fullest extent permitted under applicable
law, whether now or hereafter in effect

                                      -10-

<PAGE>

and, therefore, to the extent permitted by applicable law, the parties hereto
waive any provision of applicable law that would render any provision of this
Article V (including Appendix B hereto) invalid or unenforceable.

                                   ARTICLE VI
                                   ARBITRATION

     6.1 BINDING AGREEMENT TO ARBITRATE. Any claim or controversy arising out of
any provision of this Agreement (other than Article V hereof), or the breach or
alleged breach of any such provision, shall be settled by arbitration
administered by the American Arbitration Association (the "AAA") under its
National Rules for the Resolution of Employment Disputes (the "Rules"), and
judgment on the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof.

     6.2 SELECTION AND QUALIFICATIONS OF ARBITRATORS. If no party to the
arbitration makes a claim in excess of $1.0 million, exclusive of interest and
attorneys' fees, the proceedings shall be conducted before a single neutral
arbitrator selected in accordance with the Rules. If any party makes a claim
that exceeds $1.0 million, the proceedings shall be conducted before a panel of
three neutral arbitrators, one of whom shall be selected by each party within 15
days after commencement of the proceeding and the third of whom shall be
selected by the first two arbitrators within 10 days after their appointment. If
the two arbitrators selected by the parties are unable or fail to agree on the
third arbitrator, the third arbitrator shall be selected by the AAA. Each
arbitrator shall be a member of the bar of the State of Louisiana and actively
engaged in the practice of employment law for at least 15 years.

     6.3 LOCATION OF PROCEEDINGS. The place of arbitration shall be New Orleans,
Louisiana.

     6.4 REMEDIES. Any award in an arbitration initiated under this Article VI
shall be limited to actual monetary damages, including if determined appropriate
by the arbitrator(s) an award of costs and fees to the prevailing party. "Costs
and fees" mean all reasonable pre-award expenses of the arbitration, including
arbitrator's fees, administrative fees, travel expenses, out-of-pocket expenses
such as copying, telephone, witness fees and attorneys' fees. The arbitrator(s)
will have no authority to award consequential, punitive or other damages not
measured by the prevailing party's actual damages, except as may be required by
statute.

     6.5 OPINION. The award of the arbitrators shall be in writing, shall be
signed by a majority of the arbitrators, and shall include findings of fact and
a statement of the reasons for the disposition of any claim.

                                   ARTICLE VII
                                  MISCELLANEOUS

     7.1 BINDING EFFECT.

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

                                      -11-

<PAGE>

          (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
     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. In the event of any such
     assignment or succession, the term "Company" as used in this Agreement
     shall refer also to such successor or assign.

     7.2 NOTICES. All notices hereunder must be in writing and shall be deemed
to have been 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.
     1333 South Clearview Parkway
     Jefferson, LA 70121
     Attn: Chief Executive Officer

     If to the Employee, to:

     Thomas M. Kitchen
     229 East William David
     Metairie, LA 70005

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

     7.3 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 5.6 above with respect to the resolution of disputes
arising under, or the Company's enforcement of, Article V of this Agreement.

     7.4 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.

                                      -12-

<PAGE>

     7.5 SEVERABILITY. If any term or provision of this Agreement (including
without limitation those contained in Appendix B), 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, Employee and the Company
intend for any court construing this Agreement to modify or limit such provision
temporally, spatially or otherwise 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.

     7.6 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.

     7.7 REMEDIES NOT EXCLUSIVE. Except as provided in Article VI hereof, 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.

     7.8 COMPANY'S RESERVATION OF RIGHTS. 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 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.

     7.9 JURY TRIAL WAIVER. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT.

     7.10 SURVIVAL. The rights and obligations of the Company and Employee
contained in Article V of this Agreement shall survive the termination of the
Agreement. Following the Date of Termination, each party shall have the right to
enforce all rights, and shall be bound by all obligations, of such party that
are continuing rights and obligations under this Agreement.

     7.11 PRIOR EMPLOYMENT AGREEMENT. Effective as of the Agreement Date, this
Agreement supersedes any prior employment agreement between the Employee and the
Company.

     7.12 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.

     7.13 SECTION 409A OF THE INTERNAL REVENUE CODE. In the event that any of
the compensation or benefits payable to the Employee hereunder are considered to
be non-qualified deferred compensation under Section 409A of the Code ("Section
409A") and any regulations issued or to be issued by the Department of the
Treasury thereunder, the Company and the

                                      -13-

<PAGE>

Employee shall negotiate in good faith and agree to such amendments to this
Agreement as they and their respective tax counsel deem necessary to avoid the
imposition of additional taxes and penalties under Section 409A or such
regulations, while preserving the economic benefits intended to be conferred on
the Employee by this Agreement.

     IN WITNESS WHEREOF, the Company and the Employee have caused this Amended
and Restated Agreement to be executed on the dates set forth below and effective
as of the Amendment Date.

                                        STEWART ENTERPRISES, INC.

Dated: November 8, 2006                 By: /s/ JAMES W. MCFARLAND
                                            ------------------------------------
                                            James W. McFarland
                                            Compensation Committee Chairman

                                        EMPLOYEE:

Dated: November 8, 2006                 /s/ THOMAS M. KITCHEN
                                        ----------------------------------------
                                        Thomas M. Kitchen

                                      -14-

<PAGE>

             APPENDIX A TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                        BETWEEN STEWART ENTERPRISES, INC.
                                       AND
                                THOMAS M. KITCHEN

                  BASE SALARY, BONUS COMPENSATION AND BENEFITS

1.   Effective June 9, 2006, Employee's title(s) shall be Acting Chief Executive
     Officer, Executive Vice President and Chief Financial Officer, and
     Employee's principal work location shall be the New Orleans, Louisiana
     metropolitan area. While serving as Acting Chief Executive Officer or Chief
     Executive Officer, Employee's Base Salary shall be $550,000. At such time
     as Employee ceases to serve as Acting Chief Executive Officer but continues
     to serve as Chief Financial Officer, his Base Salary shall be decreased to
     $325,000. Employee's replacement as Chief Executive Officer shall not
     constitute Good Reason for a termination of employment under this
     Employment Agreement.

2.   For Fiscal Year 2006 ("FY 2006"), Employee shall be eligible to receive a
     maximum Bonus of up to 130% of the Base Salary paid for the period that he
     served only as Executive Vice President and Chief Financial Officer and
     160% of Base Salary for the period that he served as Acting Chief Executive
     Officer or Chief Executive Officer. The Bonus for Fiscal Year 2006 shall be
     determined as provided in Attachment 1 to this Appendix A.

                                        Agreed to and accepted:

                                        STEWART ENTERPRISES, INC.

Date: November 8, 2006                  By: /S/ JAMES W. MCFARLAND
                                            ------------------------------------
                                            James W. McFarland
                                            Compensation Committee Chairman

                                        EMPLOYEE

Date: November 8, 2006                  /S/ THOMAS M. KITCHEN
                                        ----------------------------------------
                                        Thomas M. Kitchen

                                       A-1

<PAGE>

                           ATTACHMENT 1 TO APPENDIX A

CEO AND CFO
2006 BONUS CALCULATION

The bonus determination for the CEO and CFO will be based on EPS, FCF and a
Qualitative component.

The EPS and FCF components will be triggered by the achievement of specified EPS
and FCF amounts and any bonus available will be disbursed as described below.
The EPS allotment is equal to 50% of Total Bonus Potential and the FCF allotment
is equal to 35% of Total Bonus Potential. No bonus is available for the EPS and
FCF components unless the EPS and FCF achieved by the Company are $.33 / per
share and $44 million respectively.

The qualitative component allotment is equal to 15% of Total Bonus Potential.

TOTAL BONUS POTENTIAL FOR CEO IS $880,000 (160% OF $550,000 BASE SALARY) AND CFO
IS $422,500 (130% OF $325,000 BASE SALARY).

<TABLE>
<CAPTION>
                                        CEO         CFO
                                     --------    --------
<S>                                  <C>         <C>
CORPORATE OBJECTIVES
   MAXIMUM AVAILABLE @ 85%           $748,000    $360,000
                                     ========    ========
EPS COMPONENT
   MAXIMUM AVAILABLE @ 50%           $440,000 A  $211,250 A
                                     ========    ========
   .33 / per share                   $ 88,000    $ 42,250
   .35 / per share                   $220,000    $105,625
   .38 / per share                   $440,000    $211,250
FCF COMPONENT
   MAXIMUM AVAILABLE @ 35%           $308,000 B  $ 148,750 B
                                     ========    ========
   $44 MILLION                       $ 61,600    $ 29,750
   $46 MILLION                       $154,000    $ 74,375
   $48 MILLION                       $308,000    $148,750
TOTAL CORPORATE OBJECTIVES = A + B   $748,000    $360,000
                                     ========    ========
QUALITATIVE COMPONENT
   MAXIMUM AVAILABLE @ 15%           $132,000    $ 62,500
                                     ========    ========
</TABLE>

Qualitative bonuses criteria would include such criteria as leadership,
strategic planning and execution, business development and growth, financial
management, succession planning, customer satisfaction, employee satisfaction
and employee development.

<TABLE>
<S>                                  <C>         <C>
   MAXIMUM BONUS                     $880,000    $422,500
                                     ========    ========
</TABLE>

                                       A-2

<PAGE>

                       APPENDIX B TO EMPLOYMENT AGREEMENT
                        BETWEEN STEWART ENTERPRISES, INC.
                                       AND
                                THOMAS M. KITCHEN

                        Jurisdiction In Which Competition
                            Is Restricted As Provided
                            In Article V Section 5.3

A.   States and Territories of the United States:

1.   Louisiana-- The following parishes in the State of Louisiana:

     Orleans, St. Bernard, St. Tammany, Plaquemines, Jefferson, Lafourche, St.
     Charles, St. John the Baptist, Tangipahoa

     as well as any other parishes in the State of Louisiana in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

2.   Florida-- The following counties in the State of Florida:

     Seminole, Dade, Hillsborough, Duval, Orange, Pinellas, Indian River, Palm
     Beach, Volusia, Lake, Brevard, Broward, Monroe, Collier, Pasco, Manatee,
     Polk, Hardee, Nassau, Baker, Clay, St. Johns, St. Lucie, Osceola,
     Ockeechobee, Martin, Hendry, Marion, Alachua, Putnam, Levy, Hernando,
     Citrus, Sumter, Sarasota, DeSoto, Highlands, Charlotte, Glades

     as well as any other counties in the State of Florida in which the Employee
     regularly (a) makes contact with customers of the Company or any of its
     subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

AGREED TO AND ACCEPTED:

STEWART ENTERPRISES, INC.               EMPLOYEE

BY:
    ---------------------------------   ----------------------------------------
    JAMES W. MCFARLAND                  EFFECTIVE DATE:                 , 2006
    COMPENSATION COMMITTEE CHAIRMAN                     ------------ ---
    EFFECTIVE DATE:            , 2006
                   ------------

                                       B-1

<PAGE>

3.   Texas-- The following counties in the State of Texas:

     Kaufman, Dallas, Collin, Tarrant, Lamar, Harris, Denton, Johnson, Rockwall,
     Brazoria, Henderson, Van Zandt, Hunt, Ellis, Fannin, Wise, Parker, Red
     River, Delta, Galveston, Ft. Bend, Waller, Montgomery, Liberty, Chambers,
     Hood, Bosque, Hill, Matagorda, Franklin, Wharton, Somervell

     as well as any other counties in the State of Texas in which the Employee
     regularly (a) makes contact with customers of the Company or any of its
     subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

4.   Maryland-- The following counties in the State of Maryland:

     Baltimore, Baltimore City, Howard, Prince George's, Anne Arundel,
     Montgomery, Carroll, Frederick, Harford, Calvert, Charles, Kent, Queen
     Anne's, Talbot, Wicomico, Worcester, Somerset, Dorchester

     as well as any other counties in the State of Maryland in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

5.   Virginia-- The following counties in the State of Virginia:

     Chesterfield, Roanoke, Rockingham, Fairfax, Tazewell, Goochland, Pulaski,
     Albemarle, Hanover, Henrico, Dinwiddie, Amelia, Powhatan, Charles City,
     Prince George, Bedford, Montgomery, Franklin, Botetourt, Craig, Floyd,
     Augusta, Shenandoah, Page, Greene, Prince William, Bland, Russell,
     Fluvanna, Louisa, Wythe, Giles, Carroll, Orange, Buckingham, Nelson, King
     William, New Kent, Spotsylvania, Caroline, Buchanan, Loudoun, Arlington,
     Smith

     as well as any other counties in the State of Virginia in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

6.   West Virginia-- The following counties in the State of West Virginia:

     Raleigh, Kanawha, Fayette, Berkeley, Boone, Summers, Wyoming, Clay,
     Lincoln, Jackson, Putnam, Roane, Greenbrier, Nicholas, Logan, Wayne,
     McDowell, Morgan, Jefferson, Mercer, Mingo, Cabell, Mason

                                        EMPLOYEE

                                        ----------------------------------------
                                        EFFECTIVE DATE:                , 2006
                                                        ----------- ---

                                       B-2

<PAGE>

     as well as any other counties in the State of West Virginia in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

7.   Puerto Rico-- The following towns in the Commonwealth of Puerto Rico:

     Bayamon, San Juan, Cayey, Canovanas, Ponce, Caguas, Carolina, Humacao, Toa
     Baja, Toa Alta, Naranjito, Aguas Buenas, Guaynabo, Comereo, Catano, Vega
     Alta, Patilla, San Lorenzo, Guayama, Salinas, Aibonito, Loita, Rio Grande,
     Las Marias, Juncos, Juana Diaz, Jajuja, Utuado, Adjuntas, Puenulas,
     Trujillo, Alto, Gurabo, Cidra, Yagucoa, Naguabo, Mayaguez, Anasco, Maricao,
     Hormiguero, San German, Cabo Rojo, Loiza, Las Piedras, Ceiba, Naguabo,
     Luquillo, San Juan

     as well as any other towns in the Commonwealth of Puerto Rico in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

8.   North Carolina-- The following counties in the State of North Carolina:

     Catawba, Wilson, Guilford, Haywood, Johnston, Wake, Wilkes, Craven, Nash,
     Iredell, Burke, Caldwell, Lincoln, Alexander, Cleveland, Greene, Wayne,
     Edgecombe, Pitt, Davidson, Randolph, Forsyth, Stokes, Rockingham, Caswell,
     Alamance, Jackson, Buncombe, Henderson, Transylvania, Swain, Madison,
     Sampson, Franklin, Durham, Harnett, Granville, Chatham, Alleghany, Surry,
     Ashe, Watauga, Yadkin, Pamilco, Halifax, Warren, Carteret, Jones, Lenoir,
     Beaufort, Vance, Lee, Moore, Cumberland, Davie

     as well as any other counties in the State of North Carolina in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

9.   South Carolina-- The following counties in the State of South Carolina:

                                        EMPLOYEE

                                        ----------------------------------------
                                        EFFECTIVE DATE:                , 2006
                                                        ----------- ---

                                       B-3

<PAGE>

     Greenville, Charleston, Aiken, Pickens, Laurens, Spartanburg, Anderson,
     Abbeville, Berkeley, Dorchester, Colleton, Edgefield, Saluda, Lexington,
     Orangeburg, Barnwell, Richland, Fairfield, Kershaw, Sumter, Calhoun,
     Newberry, Oconee, Georgetown

     as well as any other counties in the State of South Carolina in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

10.  Tennessee-- The following counties in the State of Tennessee:

     Davidson, Sumner, Robertson, Knox, Sullivan, Sevier, Wilson, Rutherford,
     Williamson, Cheatham, Trousdale, Macon, Montgomery, Jefferson, Grainger,
     Union, Anderson, Loudon, Blount, Roane, Greene, Washington, Carter,
     Johnson, Hawkins, Cocke, Cannon, Dekalb, Smith, Hamblen, Unicoi

     as well as any other counties in the State of Tennessee in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

11.  Arkansas-- The following counties in the State of Arkansas:

     Saline, Pulaski, Hot Spring, Garland, Perry, Grant, Lonoke, White,
     Jefferson, Faulkner, Dallas, Clark, Montgomery, Van Buren, Cleburne, Conway

     as well as any other counties in the State of Arkansas in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

12.  Georgia-- The following counties in the State of Georgia:

     Cobb, Cherokee, Henry, Dekalb, Fulton, Douglas, Paulding, Bartow, Pickens,
     Forsyth, Dawson, Gordon, Clayton, Rockdale, Newton, Butts, Spalding,
     Gwinnett, Fayette, Coweta, Carroll

     as well as any other counties in the State of Georgia in which the Employee
     regularly (a) makes contact with customers of the Company or any of its
     subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

                                        EMPLOYEE

                                        ----------------------------------------
                                        EFFECTIVE DATE:                , 2006
                                                        ----------- ---

                                       B-4

<PAGE>

13.  Alabama-- The following counties in the State of Alabama:

     Mobile, Madison, Baldwin, Monroe, Washington, Jackson, Marshall, Morgan,
     Limestone, Clarke, Elmore, Montgomery, Macon, Coosa, Tallapoosa, Autauga,
     Chilton, Walker, Jefferson, Blount, Cullman, Winston, Tuscaloosa, Fayette,
     Marion, Wilcox, Marengo, Choctaw, Bibb, Talladega, St. Clair, Shelby,
     Perry, Hale

     as well as any other counties in the State of Alabama in which the Employee
     regularly (a) makes contact with customers of the Company or any of its
     subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

14.  Mississippi-- The following counties in the State of Mississippi:

     Hinds, Madison, Rankin, Simpson, Copiah, Claiborne, Warren, Yazoo

     as well as any other counties in the State of Mississippi in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

15.  Pennsylvania-- The following counties in the State of Pennsylvania:

     Montgomery, Philadelphia, Bucks, Delaware, Chester, Berks, Lehigh,
     Northampton

     as well as any other counties in the State of Pennsylvania in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

16.  Kentucky-- The following counties in the State of Kentucky:

     Pike, Martin, Floyd, Knott, Letcher

     as well as any other counties in the State of Kentucky in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

17.  The District of Columbia

                                        EMPLOYEE

                                        ----------------------------------------
                                        EFFECTIVE DATE:                , 2006
                                                        ----------- ---

                                       B-5

<PAGE>

18.  Kansas-- The following counties in the State of Kansas:

     Douglas, Leavenworth, Johnson, Miami, Franklin, Wyandotte, Sedgwick,
     Cowley, Sumner, Butler, Harvey, Reno, Kingman

     as well as any other counties in the State of Kansas in which the Employee
     regularly (a) makes contact with customers of the Company or any of its
     subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

19.  Missouri-- The following counties in the State of Missouri:

     Boone, Audrain, Callaway, Cole, Cooper, Howard, Moniteau, Randolph,
     Jackson, Lafayette, Johnson, Cass, Clay, Ray, Platte, Clinton, Morgan,
     Pettis, Saline

     as well as any other counties in the State of Missouri in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

20.  Nebraska-- The following counties in the State of Nebraska:

     Lancaster, Otoe, Sarpy, Gage, Saline, Seward, Saunders, Cass, Butler,
     Douglas, Washington, Dodge, Johnson

     as well as any other counties in the State of Nebraska in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

     Employee and the Company agree that, throughout the Employment Term,
     Employee shall comply with all of the requirements and restrictions set
     forth in Article V of the Agreement of which this Appendix A forms a part;
     however, Employee and the Company agree that, notwithstanding anything to
     the contrary contained in Article V, Section 3 of the Agreement, Employee
     shall be required to restrict his post-employment activities in the State
     of Nebraska only to: (i) complying with the restrictions set forth in
     Article V, Section 2 of the Agreement and (ii) refraining from calling upon
     any customer of the Company or its subsidiaries with whom Employee has done
     business and/or had personal contact for the purpose of soliciting,
     diverting or enticing away the business of such person or entity, or
     otherwise disrupting any previously established relationship existing
     between such person or entity and the Company or its subsidiaries. The
     parties hereby acknowledge and agree that this modification to the
     restrictions of Article V, Section 5.3

                                        EMPLOYEE

                                        ----------------------------------------
                                        EFFECTIVE DATE:                , 2006
                                                        ----------- ---

                                       B-6

<PAGE>

     as they relate to post-employment competition in the State of Nebraska is
     being entered into solely to comply with the limitations provided in
     Nebraska law on the extent to which noncompetition agreements may be
     enforced. This modification does not reflect the parties' agreement as to
     the extent of the limitations upon competition necessary to protect the
     legitimate interests of the Company; rather, the provisions of Article V of
     the Agreement reflect such agreement.

21.  Iowa-- The following county in the State of Iowa:

     Polk, Jasper, Marion, Warren, Madison, Dallas, Story, Boone

     as well as any other counties in the State of Iowa in which the Employee
     regularly (a) makes contact with customers of the Company or any of its
     subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

22.  Nevada-- The following counties in the State of Nevada:

     Clark, Lincoln, Nye

     as well as any other counties in the State of Nevada in which the Employee
     regularly (a) makes contact with customers of the Company or any of its
     subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

23.  New Mexico-- The following counties in the State of New Mexico:

     Bernalillo, Sandoval, Sante Fe, Torrance, Los Alamos, Rio Arriba, Mora, San
     Miguel

     as well as any other counties in the State of New Mexico in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

24.  Oregon-- The following counties in the State of Oregon:

     Josephine, Washington, Douglas, Curry, Jackson, Klamath, Clatsop, Columbia,
     Multnomah, Clackamas, Yamhill, Tillamook

     as well as any other counties in the State of Oregon in which the Employee
     regularly (a) makes contact with customers of the Company or any of its
     subsidiaries, (b) conducts the

                                        EMPLOYEE

                                        ----------------------------------------
                                        EFFECTIVE DATE:                , 2006
                                                        ----------- ---

                                       B-7

<PAGE>

     business of the Company or any of its subsidiaries or (c) supervises the
     activities of other employees of the Company or any of its subsidiaries as
     of the Date of Termination.

25.  California-- The following counties in the State of California:

     Glenn, Plumas, Sutter, Yuba, Colusa, Tehama, Fresno, San Mateo, Contra
     Costa, San Joaquin, Stanislaus, Santa Clara, Mariposa, Orange, San
     Bernardino, Kern, Ventura, Inyo, Riverside, Los Angeles, Monterey, Kings,
     Santa Barbara, Madera, Tulare, San Benito, Merced, San Luis Obispo, Nevada,
     Alameda, Sacramento, El Dorado, Amador, Yolo, Solano, San Diego, Imperial,
     Sonoma, Napa, Lake, Marin, Santa Cruz, Calaveras, Placer, Butte, Mendocino,
     San Francisco

     as well as any other counties in the State of California in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

     Employee and the Company agree that, throughout the Employment Term,
     Employee shall comply with all of the requirements and restrictions set
     forth in Article V of the Agreement of which this Appendix A forms a part;
     however, Employee and the Company agree that, notwithstanding anything to
     the contrary contained in Article V, Section 5.2 or 5.3 of the Agreement,
     Employee shall be required to restrict his post-employment activities in
     the State of California only to: (i) complying with the restrictions set
     forth in Article V, Section 5.2 of the Agreement to the extent that
     Confidential Information constitutes a trade secret under California law
     and (ii) complying with the restrictions set forth in Article V, Sections
     5.3(c) and 5.3(d) of the Agreement. The parties hereby acknowledge and
     agree that these modifications to the restrictions of Article V, Sections
     5.2 and 5.3 as they relate to post-employment disclosure and competition in
     the State of California are being entered into solely to comply with the
     limitations provided in California law on the extent to which nondisclosure
     and noncompetition agreements may be enforced. These modifications do not
     reflect the parties' agreement as to the extent of the limitations upon
     disclosure and competition necessary to protect the legitimate interests of
     the Company; rather, the provisions of Article V of the Agreement reflect
     such agreement.

27.  Illinois-- The following counties in the State of Illinois:

     Cook, Lake, McHenry, Kane, DuPage, Will

     as well as any other counties in the State of Illinois in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the

                                        EMPLOYEE

                                        ----------------------------------------
                                        EFFECTIVE DATE:                , 2006
                                                        ----------- ---

                                       B-8

<PAGE>

     business of the Company or any of its subsidiaries or (c) supervises the
     activities of other employees of the Company or any of its subsidiaries as
     of the Date of Termination.

28.  Washington-- The following counties in the State of Washington:

     King, Snohomish, Kittitas, Pierce, Kitsap, Skagit, Chelan, Island

     as well as any other counties in the State of Washington in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

29.  Wisconsin-- The following counties in the State of Wisconsin:

     Waukesha, Dodge, Ozaukee, Jefferson, Washington, Racine, Walworth,
     Milwaukee, Winnebago, Fond du Lac, Green Lake, Calumet, Waushara,
     Outagamie, Waupaca, Kenosha

     as well as any other counties in the State of Wisconsin in which the
     Employee regularly (a) makes contact with customers of the Company or any
     of its subsidiaries, (b) conducts the business of the Company or any of its
     subsidiaries or (c) supervises the activities of other employees of the
     Company or any of its subsidiaries as of the Date of Termination.

B.   Acknowledgment

     The Company and Employee acknowledge that Employee's voluntary compliance
     with Article V, Sections 5.2 and 5.3 constitutes a significant part of the
     consideration for the Company's agreement to make the payments specified in
     Article IV. Therefore, the Company and Employee acknowledge that it is the
     intent of this Agreement that if Employee engages in conduct described as
     prohibited conduct in Article V Section 5.2 or 5.3, the Company may suspend
     or eliminate payments under Article IV, including Section 4.3 of Article
     IV, during the period of such conduct, even if the parties' contractual
     prohibitions on such conduct are determined to be invalid, illegal or
     unenforceable under applicable law.

     Furthermore, the parties acknowledge that any provision in this Appendix B
     that permits Employee to engage, after the Date of Termination, in a
     particular jurisdiction, in conduct otherwise prohibited by Article V
     Section 5.2 or 5.3 (for example, as in California and Nebraska) has been
     agreed to solely in order to comply with the limitations provided in the
     law of that jurisdiction on the extent to which nondisclosure and
     noncompetition agreements may be enforced. Therefore, the parties
     acknowledge that, although Employee may be permitted pursuant to this
     Appendix B to engage, after the Date of

                                        EMPLOYEE

                                        ----------------------------------------
                                        EFFECTIVE DATE:                , 2006
                                                        ----------- ---

                                       B-9

<PAGE>

     Termination, in certain jurisdictions (such as California and Nebraska), in
     conduct otherwise prohibited by Article V Section 5.2 or 5.3, if Employee
     does engage in conduct prohibited by the provisions of Article V Section
     5.2 or 5.3 (as such provisions appear in the Agreement without giving
     effect to any modifications to such provisions made by this Appendix B),
     Employee will forfeit his or her right to payments under Article IV,
     including Section 4.3 of Article IV, during the period of such conduct.

                                        EMPLOYEE

                                        ----------------------------------------
                                        EFFECTIVE DATE:                , 2006
                                                        ----------- ---

                                      B-10
<PAGE>

             APPENDIX C TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                        BETWEEN STEWART ENTERPRISES, INC.
                                       AND
                                THOMAS M. KITCHEN

                   AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE
           RETIREMENT AGREEMENT AS PROVIDED IN ARTICLE II, SECTION 2.4

                        AMENDED AND RESTATED SUPPLEMENTAL
                         EXECUTIVE RETIREMENT AGREEMENT

     THIS AMENDED AND RESTATED AGREEMENT (the "Agreement") is effective as of
October __, 2006 by and between Stewart Enterprises, Inc., a Louisiana
corporation (the "Employer" or the "Company"), and Thomas M. Kitchen
("Employee").

     WHEREAS, in connection with Employer's entering into an Amended and
Restated Employment Agreement with the Employee pursuant to which Employee will
serve as Acting Chief Executive Officer and Chief Financial Officer of the
Employer, Employer wishes to provide Employee with certain unfunded retirement
benefits;

     NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:

                                    ARTICLE I
                                   DEFINITIONS

     1.1 An ACTUARIALLY EQUIVALENT benefit means a benefit having the same value
as the benefit to which it is compared. Actuarial equivalence shall be
determined using a mortality table and an interest rate that are selected from
time to time by the Compensation Committee and that meet the requirements for
valuing a lump sum distribution under Internal Revenue Code Section 417(e), as
elaborated by IRS regulations and other applicable rules. Pursuant to current
Treasury Regulation Section 1.417(e)-1(d), the interest rate shall be the annual
interest rate on 30-year Treasury securities (or a replacement basket of
securities identified by the IRS for use under Code Section 417(e)) for the
month prior to the calendar year for which the determination is to be made.

     1.2 ANNUITY STARTING DATE means the first regular bi-weekly payroll date of
the Employer that occurs after the date that is at least six months following
the Employee's Termination of Employment, except that if the Employee's
Termination of Employment is because of death, the Annuity Starting Date shall
be the first payroll date of the second month following the month in which the
Employee dies.

     1.3 BENEFICIARY means any of the following;

          (a) In the case of a 10-Years-Certain-and-Life Annuity (including a
     pre-retirement death benefit under Paragraph 4.1(b) of Article IV), the
     person or persons designated by the Employee (on his Benefit Election Form)
     to receive the remainder of

                                       C-1

<PAGE>

     the guaranteed bi-weekly payments if the Employee dies before the end of
     the payout period. If no person is effectively named by the Employee as the
     Beneficiary, the Beneficiary shall be the Employee's surviving spouse, if
     any, and otherwise the Employee's heirs or legatees. If a Beneficiary dies
     after the Employee but before full payment has been made, the share of the
     remaining payments that would have been paid to the Beneficiary if he or
     she had survived shall be paid to the person or persons who would have
     received that share of the benefit if the Beneficiary had predeceased the
     Employee.

          (b) In the case of a Joint-and-Survivor Annuity, the person named by
     the Employee (on his Benefit Election Form) as his joint annuitant, if that
     person survives the Employee.

     1.4 BENEFIT ELECTION FORM means the form set forth as Exhibit A, or any
successor form provided by the Compensation Committee, on which the Employee
elects the manner in which his benefit under this Agreement will be paid.

     1.5 FINAL AVERAGE PAY means the Employee's average monthly base salary for
the 36 full months immediately preceding Employee's Termination of Employment.
If Employee's employment has been for less than 36 months, then the Final
Average Pay means the average monthly base salary from inception of employment
on December 2, 2004, until and through the Employee's Termination Date. Monthly
base salary is determined by dividing annual base salary plus annual auto
allowance by 12. Base salary does not include accrued vacation pay.

     1.6 NORMAL FORM of benefit means a bi-weekly pension commencing on the
Employee's Annuity Starting Date, and paid on each regular payroll date of the
Employee thereafter, terminating with the payment made on the last regular
payroll date in the month of the Employee's death. The first payment made on the
Annuity Starting Date should be equal to the total of the bi-weekly pension
payments that the Employee would have received if a payment had been made
starting with the first payroll date of the second month following the month in
which the Employee's Termination of Employment occurred, through the Annuity
Starting Date, or, in effect, a catch up payment. No death benefit is payable
under the Normal Form.

     1.7 OPTIONAL FORM of benefit means either the 10-Years-Certain-and-Life
Annuity or the Joint-and-Survivor Annuity, described in Paragraph 2.3 of Article
II, below.

     1.8 SECTION 409A means Section 409A of the Internal Revenue Code of 1986,
as amended, and all regulations and guidance issued thereunder.

     1.9 TERMINATION OF EMPLOYMENT means the termination of the employment of
the Employee with the Employer that constitutes a "separation from service"
under Section 409A.

                                   ARTICLE II
                               RETIREMENT BENEFIT

     2.1 Upon the Termination of Employment of the Employee, the Employee shall
be entitled to the vested portion of his retirement benefit commencing on his
Annuity Starting Date.

                                       C-2

<PAGE>

     2.2 The Employee's fully vested retirement benefit paid in the Normal Form
shall be 40% of Final Average Pay.

     2.3 Instead of payment in the Normal Form, the Employee may elect to
receive the benefit in either of the following two Optional Forms:

          (a) As a Joint-and-Survivor Annuity, as follows: a pension is paid to
     the Employee, with the first payment on his Annuity Starting Date being
     determined as set forth in the definition of "Normal Form," continuing with
     regular bi-weekly payment amounts on each regular payroll date of the
     Employer, and terminating with the payment on the last regular payroll date
     of the Employer in the month of the Employee's death; and if the joint
     annuitant named by the Employee as of the Annuity Starting Date survives
     the Employee, the amount that would have been paid on each bi-weekly
     payroll date to the Employee will be continued and paid to the joint
     annuitant on each regular payroll date, terminating with the payment on the
     last regular payroll date in the month of the joint annuitant's death.

          (b) As a 10-Years-Certain-and-Life Annuity, as follows: a benefit is
     paid to the Employee, with the first payment on his Annuity Starting Date
     being determined as set forth in the definition of "Normal Form,"
     continuing with regular bi-weekly payment amounts on each regular payroll
     date of the Employer and terminating with the later of the payment on the
     last regular payroll date in the month of the Employee's death or in the
     month in which the ten-year payment period terminates. If the Employee dies
     prior to the end of the ten-year payment period, the remainder of the
     scheduled bi-weekly payments are made to the Employee's Beneficiary.

     2.4 The form of pension payment must be elected by the Employee prior to
December 31, 2006. An election to change the form of payment may only be made
if: (a) such change does not take effect for 12 months; (b) the election is made
at least 18 months prior to the Annuity Starting Date under the original payment
form; and (c) payment of the benefit is deferred at least five years from the
date on which payout would otherwise commence, if required under Section 409A.
If the Employee makes no election within the time periods described herein, the
benefit shall be paid in the Normal Form. Notwithstanding the above, the
Employee may change from the Normal Form to the Joint-and-Survivor Annuity form
of payment (and vice-versa) at any time prior to Termination of Employment.

     2.5 The Employee's pension paid in an Optional Form shall be Actuarially
Equivalent to the pension paid in the Normal Form.

                                   ARTICLE III
                          VESTING OF RETIREMENT BENEFIT

     3.1 The Employee's retirement benefit, commencing at the Annuity Starting
Date, shall be a percentage of his Final Average Pay, which shall be calculated
according to the following schedule, with pro rata additions for each full
two-week pay period in a partial year of service:

                                       C-3

<PAGE>

<TABLE>
<CAPTION>
Years of Service   % of Final Average Pay
----------------   ----------------------
<S>                <C>
1                             4%
2                             8%
3                            12%
4                            16%
5                            20%
6                            24%
7                            28%
8                            32%
9                            36%
10 or more                   40%
</TABLE>

     3.2 If the Employee terminates employment and is subsequently re-employed
by the Employer or one of its subsidiaries, the Employee will accrue additional
benefits hereunder with respect to his period of reemployment only if so
determined by the Compensation Committee. Furthermore, the Employee's
re-employment by the Employer or one of its subsidiaries after the Employee's
Annuity Starting Date will not affect the Employee's pension benefit under this
Agreement.

                                   ARTICLE IV
                                      DEATH

     4.1 Upon the death of the Employee prior to his Termination of Employment
for any other reason, if the Employee had a vested retirement benefit on such
date of death, the Employee's Beneficiary shall receive a death benefit that
shall commence as of the first regular payroll date of the Employer in the month
following the month of death, and shall be determined as follows:

          (a) If the Employee is survived by his spouse, and the surviving
     spouse is the only Beneficiary, the surviving spouse shall be entitled to a
     bi-weekly benefit for her life, equal to the pension the surviving spouse
     would have received if the Employee had retired on the date of his death
     and had elected a Joint-and-Survivor Annuity with the surviving spouse as
     the Beneficiary, and had died before his Annuity Starting Date.

          (b) If Paragraph 4.1(a) of this Article IV does not apply, the death
     benefit shall be paid to the Employee's Beneficiary for ten years,
     determined as if the Employee had retired on the date of his death and had
     elected to receive his benefit in the form of a 10-Years-Certain-and-Life
     Annuity but died before his Annuity Starting Date.

     4.2 Upon the death of the Employee after his Termination of Employment, a
benefit will be paid only if the Employee elected an Optional Form of benefit
under which a benefit is due to a Beneficiary.

                                       C-4

<PAGE>

                                    ARTICLE V
                          AMENDMENT AND DISCONTINUANCE

     5.1 The Employer expects to continue this Agreement indefinitely but
reserves the right, acting through the Compensation Committee, to amend or
discontinue it, except as provided in Section 9.3 hereof and provided, however,
that a vested benefit can be affected without the Employee's consent only as set
forth below, and subject to Article VIII hereof.

     5.2 If the Compensation Committee should discontinue this Agreement, the
Employer shall be obligated to continue to pay on the same schedule all benefits
that have already commenced.

     5.3 The Compensation Committee can terminate this Agreement at any time in
its discretion without the Employee's consent, if the Employee has not had a
Termination of Employment. In that event a benefit shall be paid, as set forth
in Paragraph 5.4 below, to the Employee only if he is vested with respect to all
or a portion of his benefits hereunder as of the date such action is taken.

     5.4 In the event of the termination of this Agreement, the benefit under
Paragraph 5.3 of this Article V shall be based on the Employee's Final Average
Pay determined as of the date of termination of this Agreement. Nevertheless,
the Annuity Starting Date, the retirement benefit, the discount (if any), and
the form of the benefit, shall be determined in the normal way upon the
Employee's Termination of Employment.

     5.5 An amendment or discontinuance of this Agreement shall not result in
the acceleration of the payment of a benefit hereunder, unless permitted by
Section 409A. The Employer may terminate this Agreement and accelerate the
payment of benefits under the conditions of Section 1.409A-3(h)(2)(viii) of the
currently proposed regulations under Section 409A (or a successor provision) in
the event of an arrangement termination in connection with a corporate
dissolution or bankruptcy, in connection with a change of control event or in
connection with a termination of all arrangements that would be aggregated with
this Agreement under Section 409A.

                                   ARTICLE VI
                           RESTRICTIONS ON ASSIGNMENT

     The interest of the Employee or a Beneficiary hereunder may not be sold,
transferred, assigned, or encumbered in any manner, either voluntarily or
involuntarily. Neither shall the benefits hereunder be liable for or subject to
the claims of the creditors of any person to whom such benefits or funds are
payable, except that (i) no amount shall be payable hereunder until and unless
any and all amounts representing debts or other obligations owed to the Employer
or any affiliate of the Employer by the Employee with respect to whom such
amounts would otherwise be payable shall have been fully paid and satisfied, and
(ii) no amounts shall be payable hereunder to any Employee (or the Employee's
Beneficiary) if the Employee engages in any of the activities described in
Article VII hereof.

                                       C-5

<PAGE>

                                   ARTICLE VII
                          CONDITION OF NON-COMPETITION

     7.1 The Employee (and the Employee's Beneficiary) will lose the right to
any unpaid benefits under the Agreement if the Employee engages in any
Restricted Activities following his Termination of Employment.

     7.2 The term "Restricted Activities" means any one or more of the following
activities:

          (a) Employee, directly or indirectly, for himself or others, owns,
     manages, operates, controls, is employed in an executive, managerial or
     supervisory capacity by, consults with, or otherwise engages or
     participates in or allows his skill, knowledge, experience or reputation to
     be used in connection with, the ownership, management, operation or control
     of, any company or other business enterprise engaged in the Death Care
     Business within any of the Subject Areas; provided, however, a passive
     investment by the Employee is not a Restricted Activity as long as Employee
     does not beneficially own more than 2% of the equity interests of a
     business enterprise engaged in the Death Care Business within any of the
     Subject Areas. For purposes of this paragraph, "beneficially own" shall
     have the same meaning ascribed to that term in Rule 13d-3 under the
     Securities Exchange Act of 1934.

          (b) Employee calls upon any customer of the Company or its
     subsidiaries for the purpose of soliciting, diverting or enticing away the
     business of such person or entity, or otherwise disrupting any previously
     established relationship existing between such person or entity and the
     Company or its subsidiaries.

          (c) Employee solicits, induces, influences or attempts to influence
     any supplier, lessor, lessee, licensor, partner, joint venturer, potential
     acquiree or any other person who has a business relationship with the
     Company or its subsidiaries, or who on the date of Termination of
     Employment is engaged in discussions or negotiations to enter into a
     business relationship with the Company or its subsidiaries, to discontinue
     or reduce or limit the extent of such relationship with the Company or its
     subsidiaries.

          (d) Employee makes contact with any of the employees of the Company or
     its subsidiaries with whom he had contact during the course of his
     employment with the Company for the purpose of soliciting such employee for
     hire, whether as an employee or independent contractor, or otherwise
     disrupting such employee's relationship with the Company or its
     subsidiaries.

     7.3 The following terms used in this Article VII are defined as follows:

          (a) "Subject Areas" means each State of the United States or other
     jurisdiction in which Employee regularly (a) makes contact with customers
     of the Company or any of its subsidiaries, (b) conducts the business of the
     Company or any of its subsidiaries or (c) supervises the activities of
     other employees of the Company or any of its subsidiaries, and in which the
     Company or any of its subsidiaries engages in the Death Care Business (as
     hereinafter defined) on the date of Termination of Employment.

                                       C-6

<PAGE>

          (b) "Death Care Business" means (i) the owning and operating of
     funeral homes and cemeteries, including combined funeral home and cemetery
     facilities, (ii) the offering of services and products to meet families'
     funeral needs, including prearrangement, family consultation, the sale of
     caskets and related funeral and cemetery products and merchandise (whether
     at physical locations or by means of the Internet), the removal,
     preparation and transportation of remains, cremation, the use of funeral
     home facilities for visitation and worship, and related transportation
     services, (iii) the marketing and sale of funeral services and cemetery
     property or merchandise on an at-need or prearranged basis, (iv) providing,
     managing and administering financing arrangements (including trust funds,
     escrow accounts, insurance and installment sales contracts) for prearranged
     funeral plans and cemetery property and merchandise, (v) providing
     interment services, the sale (on an at-need or prearranged basis) of
     cemetery property including lots, lawn crypts, family and community
     mausoleums and related cemetery merchandise such as monuments, memorials
     and burial vaults, (vi) the maintenance of cemetery grounds pursuant to
     perpetual care contracts and laws or on a voluntary basis, and (vii)
     offering mausoleum design, construction and sales services.

                                  ARTICLE VIII
                               NATURE OF AGREEMENT

     The Employee and Beneficiaries under this Agreement have only an unsecured
right to receive benefits from the Employer as general creditors of the
Employer. The Agreement constitutes a mere promise to make payments in the
future. The Employer may set aside funds, in a trust or otherwise, for the
purpose of satisfying its obligations under this Agreement. The setting aside of
amounts by the Employer with which to discharge its obligations hereunder shall
not create any security for the payment of benefits, however. Any and all funds
so set aside shall remain subject to the claims of the general creditors of the
Employer, present and future. This provision shall not require the Employer to
set aside any funds, but the Employer may set aside such funds if it chooses to
do so.

                                   ARTICLE IX
                                CHANGE OF CONTROL

     9.1 Notwithstanding the provisions of Article V, Article VIII or any other
provisions of this Agreement to the contrary, if the Employee has a Termination
of Employment before December 2, 2009 and following a Change of Control (as such
term is defined in the Change of Control Agreement between the Employee and the
Employer), the Employee shall receive the same benefits hereunder that the
Employee would have received if the Employee had completed five years of service
to the Employer hereunder.

     9.2 If the Employee's Termination of Employment occurs during the two-year
period beginning with the Change of Control and the Change of Control
constitutes a change in the ownership or effective control of the Company or a
change in the ownership of a substantial portion of the assets of the Company,
as such terms are defined in Section 409A, the Employee shall receive as his
only benefit under the Plan a lump sum that is Actuarially Equivalent to the
Normal Form of benefit that the Employee otherwise would have been entitled to
under the Plan (including, if applicable, Paragraph 9.1 of this Article IX) that
shall be paid on the first regular

                                       C-7

<PAGE>

payroll date that is at least six months following Termination of Employment. In
computing the Normal Form for the purpose of this benefit, however, Final
Average Pay shall be determined immediately before the Change of Control or
immediately before the Termination of Employment, whichever produces the larger
amount.

     9.3 During the two-year period following a Change of Control, the Employer
shall have no right to terminate this Agreement.

                                    ARTICLE X
                                 ADMINISTRATION

     The Compensation Committee of the Board of Directors of the Employer shall
have full power and authority to interpret, construe and administer this
Agreement, and its interpretations and constructions hereof and actions
hereunder, including the timing, form, amount or receipt of any payment to be
made hereunder, within the scope of its authority, shall be binding and
conclusive for all purposes. The Compensation Committee may delegate its
responsibilities hereunder to one or more employees of the Employer.

                                   ARTICLE XI
                                  MISCELLANEOUS

     11.1 If the Employee anticipates a Termination of Employment, the Employee
should apply for a benefit using the Benefit Election Form provided by the
Compensation Committee. Upon the death of the Employee when a benefit is payable
to a Beneficiary, the Beneficiary should notify the Compensation Committee of
the death. All claims for benefit shall be addressed to the Chairman of the
Compensation Committee, Stewart Enterprises, Inc., 1333 South Clearview Parkway,
Jefferson, Louisiana 70121. The procedures of making a claim, and for appealing
from a partial or complete denial, are attached hereto as Exhibit B. The remedy
of an employee who is unsatisfied after completing the appeal process is to
enter binding arbitration with the Employer.

     11.2 If the Employer, through a mistake of law or fact, pays to the
Employee or other person a benefit hereunder that the recipient is not entitled
to, the recipient shall repay the mistaken amount to the Employer. The Employer
may offset the future benefits of any recipient who refuses to return an
erroneous payment, in addition to pursuing other remedies provided by law.

     11.3 Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Employer in any capacity.

     11.4 This Agreement shall be binding upon and inure to the benefit of the
Employer, its successors and assigns and the Employee and his or her heirs,
executors, administrators and legal representatives.

     11.5 The Employee is being offered the benefits of this Agreement in
consideration of agreeing to become an employee of the Employer and the
non-competition covenant contained in Article VII hereto, to which such Employee
explicitly agrees by executing this Agreement.

                                       C-8

<PAGE>

     11.6 This Agreement shall be construed in accordance with and governed by
the laws of the State of Louisiana, except to the extent that the Agreement is
governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). It is
the Employer's intent that the Agreement shall be exempt from ERISA's provisions
to the maximum extent permitted by law. The Agreement is intended to be unfunded
for federal income tax purposes and for the purposes of Title I of ERISA, and is
intended to provide a pension benefit only for a select group of management or
highly compensated employees, so as to be exempt from Parts 2, 3 and 4 of Title
I of ERISA, pursuant to Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.

     11.7 This Agreement, and any amendment hereto, shall also serve as the
Agreement's Summary Plan Description. A copy of this Agreement and each
amendment hereto shall be provided to the Employee.

     11.8 It is the intent of the Employer that this Plan comply with the
requirements of Section 409A and it shall be construed accordingly. No
acceleration of payments hereunder shall occur unless permitted under Section
409A. As allowed under Section 409A, an acceleration may occur in order (a) to
fulfill a domestic relations order, (b) to allow for the payment of FICA taxes
on benefits hereunder and the resulting tax withholding amount thereon, and (c)
to pay amounts required to be included in income as a result of any failure of
this Agreement to comply with Section 409A.

     11.9 Notwithstanding any other provision of this Agreement, the Employer
shall withhold from payments made hereunder any amounts required to be so
withheld by any applicable law or regulation.

     Executed in duplicate originals in _________________, Louisiana, this _____
day of _____________, 200__.

WITNESSES:                              STEWART ENTERPRISES, INC.

                                        By: The Compensation Committee
-------------------------------------       of the Board of Directors

                                        By: /s/ JAMES W. MCFARLAND
-------------------------------------       ------------------------------------
                                            James W. McFarland,
                                            Chairman

WITNESSES:

                                        /S/ THOMAS M. KITCHEN
-------------------------------------   ----------------------------------------
                                        Thomas M. Kitchen

-------------------------------------

                                       C-9

<PAGE>

                            STEWART ENTERPRISES, INC.
                         EXECUTIVE RETIREMENT AGREEMENT

                        EXHIBIT A - BENEFIT ELECTION FORM

Name: ________________________________________________ SSN: ____________________

Address: _______________________________________________________________________

Date of Termination of Employment: ___________________

Form of Benefit (Elect One):

[ ]  For my life only

[ ]  For my life, but no less than a ten-year period ___________________________

     In the event of my death before ten years of payments have been made, the
     beneficiary or beneficiaries of the remaining payments shall be:

________________________________________________________________________________

[ ]  For my life, and at my death to the following individual for his or her
     life, if he or she survives me:

________________________________________________________________________________

                                        ----------------------------------------
                                        Thomas M. Kitchen

                                        ----------------------------------------
                                        Date

                                      C-10

<PAGE>

                            STEWART ENTERPRISES, INC.
                   SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

                          EXHIBIT B - CLAIMS PROCEDURES

     (a) Filing of a Claim for Benefits

          Claims for benefits under the Agreement are to be presented in writing
     by the claimant or an authorized representative to the Chairman of the
     Compensation Committee of the Board of Directors of Stewart Enterprises,
     Inc.

     (b) Notification to Claimant of Decision

          If a claim is wholly or partially denied, a notice of the decision
     rendered in accordance with the rules set forth below will be furnished to
     the claimant not later than 90 days after receipt of the claim by the
     Chairman of the Compensation Committee.

          If special circumstances require an extension of time for processing
     the claim, the Chairman of the Compensation Committee will give the
     claimant a written notice of the extension prior to the end of the initial
     90 day period. In no event will the extension exceed an additional 90 days.
     The extension notice will indicate the special circumstances requiring an
     extension of time and the date by which the Chairman of the Compensation
     Committee expects to render its final decision.

          If the notice of the denial of claim is not furnished in accordance
     with the procedure set out herein, the claim will be deemed denied and the
     claimant will be permitted to proceed to the review stage.

     (c) Content of Notice

          The Chairman of the Compensation Committee will provide to a claimant
     who is denied a claim for benefits written or electronic notice setting
     forth in a clear and simple manner:

          (1) The specific reason or reasons for denial;

          (2) Specific reference to pertinent plan provisions on which denial is
          based;

          (3) A description of any additional material or information necessary
          for the claimant to perfect the claim and an explanation of why such
          materials or information are necessary; and

          (4) Appropriate information as to the steps to be taken if the
          claimant wishes to submit his or her claim for review, including the
          right to bring a civil action under ERISA Section 502(a) following an
          adverse determination on review.

                                      C-11

<PAGE>

     (d) Review Procedure

          After the claimant has received written notification of the denial of
     the claim, the claimant or a duly authorized representative will have 60
     days within which to appeal, in writing, a denied claim to the full
     Compensation Committee. The Compensation Committee will afford the claimant
     a full and fair review of the denial of the claim. The claimant should
     include in his written appeal the following information to support his
     claim for benefits:

          (1) A list of the issues in the claim denial that he chooses to
          contest, if any, and that he wishes the Compensation Committee to
          review on appeal;

          (2) His position on each issue;

          (3) Any additional facts that he believes support his position on each
          issue; and

          (4) Any legal or other arguments he believes support his position on
          each issue.

          The claimant or a duly authorized representative will be permitted to
          submit issues and comments relevant to the claim. Upon request, the
          claimant will be given reasonable access to, and copies of, all
          documents and information relevant to the claim for benefits, at no
          charge.

          The review will consider all items submitted by the claimant,
          regardless of whether such information was submitted or considered in
          the initial benefit determination.

     (e) Decision on Review

          The decision on review by the Compensation Committee will be rendered
     as promptly as is feasible, but not later than 60 days after the receipt of
     a request for review unless the Compensation Committee in its sole
     discretion, determines that special circumstances require an extension of
     time for processing, in which case a decision will be rendered as promptly
     as is feasible, but not later than 120 days after receipt of a request for
     review.

          If an extension of time for review is required because of special
     circumstances, written notice of the extension will be furnished to the
     claimant before termination of the initial 60-day review period.

          The decision on review will be in written or electronic form. In the
     event of a claim denial, the decision shall contain: (1) specific reasons
     for the decision, written in a clear and simple manner; (2) specific
     references to the pertinent plan provisions on which the decision is based;
     (3) a statement that the claimant may request, at no charge,

                                      C-12

<PAGE>

     reasonable access to and copies of all documents, records and other
     information relevant to the claim for benefits; and (4) a description of
     the Agreement's appeal and arbitration procedures (if any), and the
     claimant's right to bring an action under ERISA Section 502(a).

          If the decision on review is not furnished within the time period(s)
     set out in this section, the claim will be deemed denied on review.

If the claimant wishes to contest the Compensation Committee's decision on
review, the claimant's claim shall be submitted to binding arbitration in
accordance with the following procedures:

     (f) Arbitration

          (1) Binding Agreement to Arbitrate. Any claim or controversy arising
          out of any provision of this Agreement that cannot be resolved through
          the claims procedures provided above, shall be settled by arbitration
          administered by the American Arbitration Association (the "AAA") under
          its National Rules for the Resolution of Employment Disputes (the
          "Rules"), and judgment on the award rendered by the arbitrator(s) may
          be entered in any court having jurisdiction thereof.

          (2) Selection and Qualifications of Arbitrators. If no party to the
          arbitration makes a claim in excess of $1.0 million, exclusive of
          interest and attorneys' fees, the proceedings shall be conducted
          before a single neutral arbitrator selected in accordance with the
          Rules. If any party makes a claim that exceeds $1.0 million, the
          proceedings shall be conducted before a panel of three neutral
          arbitrators, one of whom shall be selected by each party within 15
          days after commencement of the proceeding and the third of whom shall
          be selected by the first two arbitrators within 10 days after their
          appointment. If the two arbitrators selected by the parties are unable
          or fail to agree on the third arbitrator, the third arbitrator shall
          be selected by the AAA. Each arbitrator shall be a member of the bar
          of the State of Louisiana and actively engaged in the practice of
          employment law for at least 15 years.

          (3) Location of Proceedings. The place of arbitration shall be New
          Orleans, Louisiana.

          (4) Remedies. Any award in an arbitration initiated here shall be
          limited to actual monetary damages, including if determined
          appropriate by the arbitrator(s) an award of costs and fees to the
          prevailing party. "Costs and fees" mean all reasonable pre-award
          expenses of the arbitration, including arbitrator's fees,
          administrative fees, travel expenses, out-of-pocket expenses such as
          copying, telephone, witness fees and attorneys' fees. The
          arbitrator(s) will have no authority to award consequential, punitive
          or other damages not measured by the prevailing party's actual
          damages, except as may be required by statute.

                                      C-13

<PAGE>

          (5) Opinion. The award of the arbitrators shall be in writing, shall
          be signed by a majority of the arbitrators, and shall include findings
          of fact and a statement of the reasons for the disposition of any
          claim.

Agreed to and Accepted:

Stewart Enterprises, Inc.               Employee

By:
    ---------------------------------   ----------------------------------------
                                        Date:             , 200
                                              ------------     --

                                      C-14

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