Document:

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                                                                   EXHIBIT 10.33

                        SEPARATION AGREEMENT AND RELEASE

      This Separation Agreement and Release is between MARK W. DUFFEY, a
resident of Harris County, Texas (the "Employee"), and CARRIAGE SERVICES, INC.,
a Delaware corporation (the "Company").

      The Employee and the Company agree as follows:

      1. The Employee's full-time employment with the Company and/or one or more
of its subsidiaries (the Company, together with its subsidiaries, being
hereafter collectively referred to as "Carriage") will terminate effective as of
December 31, 2000 (the "Transition Date") by the voluntary resignation of the
Employee. The Employee shall be entitled to receive all base compensation,
benefits and accrued vacation through the Transition Date.

      2. Simultaneously with the parties' execution of this Agreement, the
Employee shall tender his resignation, effective as of the Transition Date, as a
member of the Board of Directors and as President of, together with any and all
other positions he may hold with, the Company. He shall also tender his
resignation as director and officer of or any other capacity with all other
Carriage entities of which he may serve in any such capacity. Notwithstanding
the foregoing, the Employee shall not resign as officer or director of Carriage
Life Events, Inc., a Delaware corporation ("Carriage Life Events"), which the
Employee acknowledges is 100% owned by the Company and as to which the Employee
shall have no contractual rights except for those specifically mentioned herein
and in the exhibits attached hereto.

      3. This Agreement and the exhibits hereto collectively supersede and
extinguish the Executive Employment Agreement between the parties dated November
8, 1999 ("Prior Employment Agreement"), as well as any other employment
agreement and/or bonus or incentive compensation plan or arrangement, if any,
entered into between the Employee and Carriage. Employee shall cease to be
eligible to participate in any of Carriage's employee benefit plans as of the
Transition Date except as otherwise expressly provided in this Agreement or the
exhibits hereto. Without limiting the generality of the foregoing, the Employee
shall thereupon cease to be eligible to participate in the Carriage Services
401(k) Plan, but (i) the Company shall direct the plan administrator to cause
the Employee to be 100% vested in such Plan, if he is not already, and (ii) the
Company shall coordinate with the Employee and the plan administrator to permit
the Employee to roll-over his benefits in such plan to a new plan or individual
retirement account of the Employee's choice, as provided by applicable law.

      4. Simultaneously with the execution and delivery of this Agreement, the
Company and the Employee have executed and delivered to one another (i) a
Consulting Agreement of even date herewith, substantially in the form of Exhibit
A hereto, which shall become effective as of January 1, 2001, respecting the
Employee's continued status with the Company as a consultant on an independent
contractor basis (the "Consulting Agreement"), and (ii) a Exclusive Development
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Agreement of even date herewith, substantially in the form of Exhibit B hereto,
which shall become effective as of January 1, 2001, respecting Employee's
participation in the E-Commerce Venture (as hereafter defined) (the "Exclusive
Development Agreement"). The parties understand that the Consulting Agreement
and the Exclusive Development Agreement shall not become binding until this
Agreement has become final and binding on the parties and the Company shall have
received the Non-Revocation Statement referred to in Section 16 below, and in
the event that the Employee revokes this Agreement pursuant to Section 16
hereof, the Consulting Agreement and the Exclusive Development Agreement shall
each thereupon become void ab initio as if never entered into.

      5. In lieu of any performance bonus for the year 2000, the Company shall
pay the Employee a bonus under the circumstances described in this Section 5 (in
addition to any bonus that might be earned in accordance with the Consulting
Agreement). If (but only if) the E-Commerce Venture (as hereafter defined)
receives on or before June 30, 2001 a Cash Equity Infusion (as hereafter
defined) of at least $10,000,000, then the Company shall either (i) assign to
the Employee an amount equal to ten percent (10%) of the Company's equity
ownership interest in the E- Commerce Venture, after giving effect to the
transactions which have resulted in the Cash Equity Infusion triggering the
bonus payment under this Section 5, or (ii) pay to the Employee an amount in
cash, less applicable withholdings, equal to the value of such 10% of the
Company's equity ownership interest. Such election shall be at the Company's
sole and absolute discretion. If payment is made pursuant to clause (i) above,
the Employee shall either pay the amount of his withholding obligation
associated therewith in cash to the Company, or else the Company shall withhold
an appropriate portion of such equity interest sufficient to pay for such
withholding obligation. In determining the value of the Company's equity
ownership interest in the E-Commerce Venture for purposes of clause (ii) above,
the same valuations shall be used as applied in the Cash Equity Infusion, with
appropriate consideration given to any preferential rights or other differences
between the new investors and the Company. The parties acknowledge that the
Company is currently the 100% owner of the E-Commerce Venture, and it is
understood that the terms and conditions under which the Company will agree to
any transaction involving a Cash Equity Infusion, including any dilution which
the Company will suffer as a result thereof, will be at the Company's sole and
absolute discretion, and the Company will have no liability or responsibility to
the Employee if the Company declines to permit such a transaction to occur. For
purposes of this Agreement:

            "E-Commerce Venture" means one or more business ventures, in
      whatever form (whether corporation, limited liability company, general or
      limited partnership, joint venture, business trust or otherwise), in which
      the Company or its affiliates or their successors and assigns has a
      financial interest, if such venture is primarily engaged in acting as a
      portal, or distribution channel, primarily (but not exclusively) through
      electronic means (such as via the Internet), for consumers to plan,
      finance and/or fulfill major life events and celebrations, which may
      include but will not necessarily be limited to death care and
      memorialization. An E-Commerce Venture specifically excludes a business or
      firm that is engaged in the traditional delivery of funeral or cemetery
      services. The parties acknowledge that the Company has heretofore engaged
      Electronic Data Systems Corporation to provide certain services toward the
      development of such a venture, in connection with which certain
      intellectual property rights have been created (including but not limited
      to certain confidential business plans), all of which are the exclusive
      property of the Company, and any

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      business venture which arises from such intellectual property rights and
      concepts is specifically intended to be encompassed with the definition of
      "E-Commerce Venture." In addition, the parties acknowledge that Carriage
      Life Events has been formed for the specific purpose of developing such
      rights and concepts and that it constitutes an E-Commerce Venture for
      purposes hereof. On the other hand, neither Lifetime Reflections nor
      Legacy Management Partners shall be deemed E-Commerce Ventures. The
      parties acknowledge that the idea or concept of rating businesses or firms
      (other than in the death care industry) according to quality or other
      criteria is not intellectual property of Carriage for purposes hereof.

            "Cash Equity Infusion" means funds provided by one or more investors
      in exchange for the issuance to such investors of equity interests in the
      E-Commerce Venture. Such funds shall constitute part of the Cash Equity
      Infusion if they are advanced for, or in connection with, the E-Commerce
      Venture's issuance of common stock, convertible preferred stock, or
      options or warrants convertible or exercisable into such common or
      convertible preferred stock. By way of example only, Cash Equity Infusion
      will include funds advanced through subordinated notes issued in
      conjunction with warrants to purchase common stock. The amount of the Cash
      Equity Infusion shall include the net cash proceeds actually received by
      the E-Commerce Venture, after deducting all commissions, fees and expenses
      (including legal and accounting fees) associated with the transaction in
      which the Cash Equity Infusion is made. The term "Cash Equity Infusion"
      specifically excludes services rendered or to be rendered in exchange for
      an equity interest in the E-Commerce Venture.

      6. Provided the Employee does not revoke this Agreement as provided in
Section 16 hereof, the Company shall pay the Employee the payments hereafter
described in paragraphs (a) and (b) of this Section 6, less applicable
withholdings, grant the Employee the options described in paragraph (c) of this
Section 6, and provide to the Employee and his eligible dependents the benefits
described in paragraph (d) of this Section 6 (collectively, the "Severance
Payments"). Payment and provision of the Severance Payments, as well as all
other obligations of the Company described in this Agreement and the exhibits
hereto, shall in all respects be subject to the Company's receipt from the
Employee of a properly completed and signed Non-Revocation Statement in the form
attached as Exhibit C hereto (the "Non-Revocation Statement"). The parties
understand that the Company's obligations to pay and provide the Severance
Payments, and the effectiveness of all of the other agreements of the parties
described herein, shall not become effective until the Company's receipt of the
properly completed and signed Non-Revocation Statement, and in the event that
the Employee revokes this Agreement pursuant to Section 16 hereof, all such
agreements shall thereupon become void ab initio as if never entered into.

            (a) The Company shall pay the Employee the sum of $783,500, in
      installments ("Fixed Severance Payments"), as hereafter provided in this
      paragraph (a).

                  (i) The first installment shall be in the amount of $200,000
            and shall be due on or before three business days following the
            Company's receipt of the Non- Revocation Statement.

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                  (ii) The next six installments shall be payable monthly, each
            in the amount of $15,666.67, and shall be due on or before the last
            day of January through June 2001.

                  (iii) The final thirty (30) installments shall also be payable
            monthly, each in the amount of $16,316.67, and shall be due on or
            before the last day of July 2001 through December 2003.

                  (iv) Notwithstanding the foregoing, if while any Fixed
            Severance Payments remain due and payable by the Company, the
            Employee sells all or any portion of the equity ownership interests
            owned by him or his affiliates in the E- Commerce Venture (as
            defined in Section 5 above), then the Net Sale Proceeds (as
            hereafter defined) from such transaction shall be deducted from all
            Fixed Severance Payments which become due after the date on
            consummation of such sale. For purposes of the foregoing, an
            affiliate of the Employee includes (i) the Employee's spouse and
            minor children, (ii) any trust (whether revocable or irrevocable) in
            which a majority in interest of the beneficiaries include one or
            more of the Employee, his spouse and his minor children, (iii) any
            corporation, general or limited partnership or other business entity
            that either (A) is controlled by the Employee or (B) a majority of
            the voting securities of which are owned directly or indirectly by
            the Employee, his spouse or his minor children, or (iv) any executor
            or custodian for the estate or person of the Employee. "Net Sale
            Proceeds" means the amount of all consideration received in the
            transaction, including the amount of all cash or cash equivalents,
            face amount of notes or deferred consideration, market value of
            marketable securities and fair market value of any other property
            received, and includes consideration allocated to no-compete
            covenants but excludes any amount allocated for bona fide services
            rendered or to be rendered.

                  (v) The Company, at its option and in its sole discretion, may
            elect at any time to prepay all or any portion of any remaining
            Fixed Severance Payments due under this Section 6(a). In such event,
            such remaining Fixed Severance Payments shall be discounted to
            present value based upon a discount rate of eight percent (8%) per
            annum, compounded monthly. To exercise such option, the Company
            shall provide written notice to such effect to the Employee,
            together with tender of payment of the amount prepaid as discounted
            in accordance herewith.

            (b) In addition to Fixed Severance Payments, the Company shall pay
      the Employee the amount, if any, by which Employee's Earned Income (as
      hereafter defined) in any of the three calendar years commencing January
      1, 2001 and ending December 31, 2003 ("Transition Years") is less than
      $150,000. The amounts payable by the Company under this paragraph (b)
      ("Stop-Gap Payments") shall initially be payable on a monthly basis,
      subject to reconciliation at the conclusion of each Transition Year. Such
      monthly Stop-Gap Payments shall be paid by the Company on or before the
      tenth day following the end of each month, with the first payment due by
      February 10, 2001. Initially, each monthly Stop-Gap payment shall be in
      the amount of $12,500. If Employee has any Earned Income in any

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      month, he shall so notify the Company at least five business days prior to
      the date fixed for payment (provided that, in the absence of bad faith,
      Employee's failure to timely so notify the Company shall not constitute a
      breach of this Agreement), and the monthly Stop-Gap Payment for that month
      will be reduced by the amount of such Earned Income. By no later than
      April 15 of the year after each Transition Year, Employee will furnish the
      Company with a true and correct copy of his federal income tax return for
      such Transition Year, and specifically including all Forms W-2, 1099 and
      other written documents relating to Earned Income received by Employee
      during such Transition Year. The Company will have the right to review the
      information furnished by Employee and conduct a reasonable inspection of
      his records, but only to the extent reasonably necessary to verify the
      amount of Earned Income received during the Transition Year. To the extent
      that the sum of Employee's Earned Income for the Transition Year plus the
      cumulative monthly Stop-Gap Payments paid in such Transition Year exceeds
      $150,000, Employee shall immediately pay to the Company the amount of the
      difference, up to (but not exceeding) the amount of such cumulative
      monthly Stop-Gap Payments. If such difference is not immediately paid, the
      Company shall be entitled to offset such difference against Fixed
      Severance Payments and Stop-Gap Payments under this paragraph (b). To the
      extent the sum of such Earned Income plus such cumulative monthly Stop-Gap
      Payments in a Transition Year is less than $150,000, the Company shall
      immediately pay the amount of the difference to the Employee.
      Notwithstanding the foregoing, if Employee's Earned Income in any
      Transition Year exceeds $150,000, then the amount of the excess shall be
      carried forward and included in Earned Income for subsequent Transition
      Years, it being the intention of the parties that the Company's maximum
      obligation hereunder over the three Transition Years shall not exceed
      $450,000 less the amount of Employee's total Earned Income over those
      three Transition Years. Payments under this paragraph (b) shall not be
      subject to offset for Net Sale Proceeds as described in paragraph (a)
      above. For purposes hereof, "Earned Income" includes the gross amount
      (before deduction for applicable withholdings) of all base compensation
      and bonuses (whether or not discretionary) for services rendered by the
      Employee, including salary and consulting fees, compensation for
      no-compete payments, and director's fees, from any and all sources
      (including but not limited to the E-Commerce Venture). Earned Income
      includes property received as compensation for services, but specifically
      excludes incentive stock options, non-statutory stock options and stock
      appreciation rights issued at a strike price equal to fair market value of
      the underlying security, and participation in employee stock purchase and
      other employee benefit plans. Consulting Fees for "Required Services"
      under the Consulting Agreement are excluded from Earned Income. The
      Company's obligation to make Fixed Severance Payments under paragraph (a)
      above shall survive Employee's death, but its obligation to pay Stop-Gap
      Payments under this paragraph (b) shall terminate upon Employee's death
      (subject to reconciliation through the date of death in accordance with
      the above provisions).

            (c) Effective as of December 29, 2000, while the Employee shall
      still be considered an employee of the Company, the Company shall cause to
      be issued to the Employee non-qualified options under the Company's 1995
      Stock Incentive Plan to purchase up to 50,000 shares of the Company's
      Class A Common Stock, $.01 par value, at an exercise price of $2-7/8 per
      share, expiring ten years from the date of grant, and vesting 25% per year

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      during the first four years of the term of the options, all subject to the
      terms and conditions of such Plan and the Nonqualified Stock Option
      Agreement to be issued thereunder evidencing such options. There shall be
      no conditions to the vesting of such options other than the passage of
      time, subject to termination of unvested options upon the Employee's death
      and the limited survival of vested options for exercise by his estate in
      the manner provided in such Plan; provided, however, that all unvested
      options shall become fully vested upon the occurrence of a "Change in
      Control" (as defined in such Plan).

            (d) For a period beginning January 1, 2001 and (subject to the
      remainder of this paragraph (d)) ending December 31, 2004, the Company
      shall cause the Employee and his eligible dependents to be included in
      Carriage's group medical benefits plan from time to time in effect and
      extended to Carriage's employees (or another plan providing substantially
      the same benefits), on substantially the same terms and conditions
      extended by Carriage to executive employees of the Company, until such
      time (if prior to December 31, 2004) that the Employee becomes eligible to
      participate in any other similar plan which might become available to the
      Employee and his dependents.

            (e) The Company's obligation to pay the Severance Payments is
      subject to Employee's compliance with his covenants in this Agreement and
      with the absence of a discharge for Cause pursuant to the Consulting
      Agreement. In the event of a discharge for Cause under the Consulting
      Agreement, or Employee's material breach of this Agreement and his failure
      to cure such breach (if the same is capable of being cured) within 30 days
      after the Company's written notice of such breach, then the Company shall
      be entitled to suspend payment of Severance Payments and to offset its
      damages arising from any breach by Employee of this Agreement or the
      Consulting Agreement against such Severance Payments.

      7. In consideration for the Severance Payments, and for the further
consideration of the other commitments made by the Company herein and in the
exhibits hereto, the Employee hereby discharges and releases Carriage and
Carriage's stockholders, directors, officers, employees, agents, successors and
assigns (collectively, "Released Parties") from any claim, demand, and/or cause
of action whatsoever, whether vicarious, derivative, or direct, presently known
or unknown, whether sounding in contract, tort or otherwise, under common law or
by statute or regulation, that is based upon facts arising prior to the date
hereof with respect to any matter or action related to the Employee's employment
with, termination from, and/or affiliation with Carriage, or in connection with
any statements made or actions taken in connection with such employment
relationship or its termination, including, but not limited to, any claims under
the Age Discrimination in Employment Act of 1967, the Civil Rights Act of 1964
(Title VII), as amended, the Civil Rights Act of 1991, the Pregnancy
Discrimination Act, the Family and Medical Leave Act of 1993, the Fair Labor
Standards Act, the Employee Retirement Security Act of 1974, the Americans With
Disabilities Act of 1990, the Fair Labor Standards Act, the Fair Credit
Reporting Act, the Worker Adjustment and Retraining Notification Act of 1988,
the Texas Commission on Human Rights Act, the Texas Wage Payment Statute or the
Texas Labor Code, all as amended and in effect on the date hereof, and all
claims based on the existence of any contract; breach of any duty or covenant of
good faith and fair dealing; slander; defamation; invasion of privacy;
detrimental reliance; intentional or negligent infliction of emotional distress;
duress; promissory estoppel; negligent misrepresentation; intentional

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misrepresentation or fraud; assault; battery; conspiracy; negligent hiring,
retention, or supervision; any alleged act of harassment or intimidation or any
other claim arising under employment-related statutes, laws, rules and
regulations; provided that the Employee does not release Carriage from its
obligations hereunder or in the exhibits hereto.

      8. In consideration for the releases and other commitments made by the
Employee herein and in the exhibits hereto, the Company, for itself and on
behalf of all Carriage entities, hereby discharges and releases the Employee and
his heirs and assigns from any claim, demand, and/or cause of action whatsoever,
whether vicarious, derivative, or direct, presently known or unknown, whether
sounding in contract, tort or otherwise, under common law or by statute or
regulation, that is based upon facts arising prior to the date hereof with
respect to any matter or action related to the Employee's employment with,
termination from, and/or affiliation with Carriage, or in connection with any
statements made or actions taken in connection with such employment relationship
or its termination; provided that the Company does not release the Employee from
its obligations hereunder or in the exhibits hereto.

      9. This Agreement is not a suggestion of or an admission of any wrongdoing
or liability on the part of any party. The Employee does not waive any rights or
claims that may arise after the date hereof.

      10. The Employee agrees and covenants not to sue or participate in any
suit, charge or proceeding of any kind against Carriage or any of the other
Released Parties, based upon any claim, demand, and/or cause of action
whatsoever, presently known or unknown, that is based upon facts arising prior
to the date hereof with respect to any matter or action related to the
Employee's employment, termination from, and/or affiliation with Carriage, or in
connection with any statements made or actions taken in connection with such
employment relationship or its termination.

      11. The parties shall issue, or have issued, a press release in the form
attached as Exhibit D hereto. Provided the Employee does not revoke this
Agreement, the parties agree not to make any public statements regarding the
nature of the Employee's separation from the Company which are inconsistent with
the statements set forth in such press release.

      12. This Agreement contains the entire agreement between the Employee and
the Company and cannot be changed, modified, or amended without a written
agreement signed by the Employee and the Company.

      13. This Agreement is made and shall be enforced pursuant to the laws of
the State of Texas.

      14. Should any part of this Agreement be found to be void, that
determination will not affect the remainder of the Agreement.

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      15. The offer made by the Company herein will expire at 12:01 a.m. on the
forty-fifth day following the date of the offer made herein. The Employee may
accept this offer at any time prior to the expiration by signing this Agreement.

      16. This Agreement has been entered into voluntarily and not as a result
of coercion, duress, or undue influence, economic or otherwise. The Employee
acknowledges that he has read and fully understands the terms of this Agreement,
has been advised to consult with an attorney before executing this Agreement,
and the Severance Payments constitute recited in Section are in excess of that
to which the Employee might otherwise be entitled to receive from the Company.
The Employee represents that he has been given up to forty-five (45) days to
consider the terms of the separation as described herein. Following the date of
this Agreement, the Employee shall have a period of seven (7) days to revoke
this Agreement by delivering to the Company, at its address shown opposite its
signature below, a written notice revoking this Agreement and specifically
referring to the right to do so under this Section 16. If the Employee desires
not to so revoke, the Employee will deliver the Non-Revocation Notice after
expiration of such seven-day period. Failure to deliver any notice within such
seven-day period shall constitute a lapse of the Employee's right to revoke, but
the Company's obligation to pay and provide the Severance Payments shall
nonetheless remain subject to receipt from the Employee of the signed
Non-Revocation Statement. If the Employee revokes this Agreement as aforesaid,
the Employee shall forfeit all rights hereunder, including any right to receive
the Severance Payments. In addition, in the event of such revocation (i) the
Consulting Agreement and the Exclusive Development Agreement shall be rendered
void ab initio as if never entered into, and (ii) the provisions of the Prior
Employment Agreement (including Paragraph 6 - Restrictive Covenants) shall
thereupon be reinstated.

Address:

                                    ____________________________________________
597 Piney Point Road                MARK W. DUFFEY
Houston, Texas  77024
                                    ____________________________________________
                                    Date

1900 St. James Place - 4th Floor    CARRIAGE SERVICES, INC.
Houston, Texas   77056

                                    By:_________________________________________
                                       Melvin C. Payne, Chief Executive Officer

                                    ____________________________________________
                                    Date

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Exhibits

A     -     Consulting Agreement
B     -     Exclusive Development Agreement
C     -     Non-Revocation Statement
D     -     Press Release

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                                                                       EXHIBIT C

                            NON-REVOCATION STATEMENT

      I, MARK W. DUFFEY, acknowledge that at least seven (7) days has expired
since the execution of the Separation Agreement and Release between me and
Carriage Services, Inc., a Delaware corporation, on the _____ day of
___________, 2000, and I knowingly and voluntarily elect not to revoke this
Separation Agreement and Release.

      EXECUTED this ____ day of ______________________, 2000.

                                    ____________________________________________
                                    MARK W. DUFFEY<PAGE>
                                                                   EXHIBIT 10.34

                              CONSULTING AGREEMENT

      THIS AGREEMENT, made effective as of the 1st day of January, 2001, is
between CARRIAGE SERVICES, INC., a Delaware corporation (the "Company"), and
MARK W. DUFFEY, a resident of Harris County, Texas (the "Consultant").

                              W I T N E S S E T H:

      WHEREAS, the Consultant has heretofore been a full-time employee of the
Company and one or more of its subsidiaries (collectively, "Carriage") as
President of the Company and most of its subsidiaries, pursuant to the terms of
the Executive Employment Agreement dated November 8, 1999 between the Company
and the Consultant (the "Prior Employment Agreement"); and

      WHEREAS, pursuant to the Separation Agreement and Release dated December
30, 2000 (the "Separation Agreement") the parties have mutually agreed to
convert the Consultant's status from that of an employee to that of a
consultant, and the Company recognizes that the Consultant's experience,
knowledge, reputation and contacts in the death care industry will continue to
be of great value to the Company and therefore desires to continue to retain his
services, on the terms and conditions hereafter set forth;

      NOW, THEREFORE, the Company and the Consultant hereby agree as follows:

      1. Term. The Company hereby engages the Consultant for a term commencing
on the date hereof and, subject to Section 5 hereof, ending on December 31, 2004
(the "term of this Agreement"), to consult with and advise the Company as
hereinafter provided. The Consultant agrees to accept such engagement and to
perform the services specified herein, all upon the terms and conditions
hereinafter stated. This Agreement is expressly made subject to the Consultant
not revoking the Separation Agreement, and in the event of such revocation, this
Agreement shall thereupon become void ab initio, as if never entered into.

      2. Duties.

            (a) During the term of this Agreement, the Consultant shall serve
      the Company in a consultive capacity and shall report to the Board of
      Directors of the Company or its Chief Executive Officer. The Consultant's
      services hereunder shall include providing advice and consultation
      regarding the following:

                  (i) The Company's e-commerce strategies, including its
            investment in Lifetime Reflections, L.P., and other exploitation of
            opportunities involving the Company through Internet-based
            technologies; it is understood, however, that the Consultant's
            involvement in Carriage Life Events, Inc. or any other E-Commerce
<PAGE>

            Venture (as defined in the Separation Agreement) shall not be
            covered by this Agreement;

                  (ii) The Company's relationship with former owners of funeral
            homes and cemeteries which have affiliated with the Company; and

                  (iii) Any other areas involving the Company and its business
            and operations as may be mutually identified by the parties.

            (b) From January 1, 2001 through June 30, 2001, the Consultant shall
      render services to the Company, if and when requested by the Company in
      writing, up to 24 hours per month. For each month thereafter throughout
      the remainder of the term of this Agreement, the Consultant shall render
      services to the Company, if and when requested by the Company in writing,
      up to 8 hours per month. The services so required to be rendered by
      Consultant hereunder are referred to as "Required Services." The Company
      may request that Consultant render services above the level of Required
      Services described above, which the Consultant may accept or reject in his
      sole discretion.

            (c) Consultant shall render services hereunder at times reasonably
      convenient to him, but this Section 2 shall not be construed so as to
      prevent Consultant from accepting employment on a full-time basis with any
      other person, subject to the covenants described in Sections 6 and Section
      7 hereof. Consultant shall take reasonable precautions to ensure that this
      Agreement does not conflict with any terms or conditions of any new
      employment which he may obtain. It shall not be necessary for Consultant
      to render Required Services or any other services at the Company's
      corporate offices or any other Carriage location, but rather such services
      may be rendered at locations of Consultant's choice and may include
      services provided electronically, such as by phone, fax or over the
      Internet, it being the intention of the parties that Consultant's services
      hereunder do not interfere with any new position which Consultant may
      accept elsewhere (subject to such covenants).

            (d) The Consultant agrees that at all times during the term of this
      Agreement:

                  (i) The Consultant will not knowingly or intentionally do or
            say any act in bad faith which is intended to impair, damage or
            destroy the goodwill and esteem for Carriage of its suppliers,
            employees, patrons, customers and others who may at any time have or
            have had business relations with Carriage.

                  (ii) The Consultant will not directly encourage, recommend or
            approve the use at any time of the services of any competitor of
            Carriage. This clause (ii) is not intended to (x) restrict an
            E-Commerce Venture of which the Consultant may become associated
            from networking and otherwise contracting with funeral homes,
            cemeteries and other death care businesses, including those which
            may be

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            competitors of Carriage or (y) prevent Consultant from privately
            making recommendations to family, friends and personal
            acquaintances.

                  (iii)The Consultant will not reveal to any third person any
            difference of opinion, if there be such at any time, between him and
            the management of the Company as to its personnel, policies or
            practices.

      3. Compensation.

            (a) Consulting Fees. As compensation for the Required Services, the
      Company shall pay to the Consultant a consulting fee of (i) $1,000.00 per
      month for the period January 2001 through June 2001, and (ii) $250.00 per
      month for the remainder of the term of this Agreement, in each case
      payable on or before the last day of each month. It is understood,
      however, that the foregoing fees are for only for the Required Services.
      If the Company requests any additional services from Consultant and
      Consultant agrees to provide such services, then the Company shall pay
      Consultant such additional consulting fees, at such rates and at such
      times and in such manner as the parties mutually agree.

            (b) Out-of-Pocket Expenses. The Company shall reimburse the
      Consultant for all reasonable out-of-pocket expenses incurred by him in
      rendering services hereunder, provided that the same are in accordance
      with the Company's expense reimbursement policy from time to time in
      effect and the Company has approved each and every such expense in advance
      and in writing.

      4. Independent Contractor. The Consultant is retained and engaged by the
Company only for the purposes and to the extent set forth herein, and the
Consultant's relation to the Company shall, during the term of this Agreement,
be that of an independent contractor and not that of an employee. In rendering
his services hereunder, the Consultant shall not, without the prior written
consent of the Company, represent that he has the right or authority to bind the
Company in any respect.

      5.    Termination.

            (a) Death. If the Consultant dies during the term of this Agreement,
      this Agree ment shall automatically terminate and the Company shall have
      no further obligation to the Consultant or his estate under this Agreement
      except that the Company shall pay the Consultant's estate that portion of
      any consulting fee which may have become earned as of the date of death
      but not yet paid in accordance with Section 3(a) hereof. Consultant's
      death shall not affect the Company's obligations under the Separation
      Agreement or any other exhibit thereto except to the extent expressly
      provided therein.

            (b) Discharge for Cause. Prior to the end of the term of this
      Agreement, the Company may discharge the Consultant for Cause and
      terminate this Agreement. In such

                                      -3-
<PAGE>

      case this Agreement shall automatically terminate and the Company shall
      have no further obligation to the Consultant or his estate other than to
      pay to the Consultant or his estate in the event of his subsequent death
      any consulting fee which may have become earned through the date of
      termination but not yet paid in accordance with Section 3(a) hereof. For
      purposes of this Agreement, the Company shall have "Cause" to discharge
      the Consultant or terminate the Consultant's services hereunder upon (i)
      the Consultant's failure to cure, after reasonable notice of not less than
      thirty (30) days, a material breach of any of the terms of this Agreement;
      (ii) the Consultant's conviction of a felony involving moral turpitude,
      fraud, theft, embezzlement, assault, battery, rape or other violent act or
      another crime; or (iii) the Consultant having engaged in willful
      misconduct in the performance of the Required Services that has a material
      adverse effect on the Company; provided, however, no act or failure to act
      shall be deemed "willful" if due primarily to an error in judgment or
      negligence or if made in good faith and with reasonable belief that such
      act is in the best interest of the Company. Neither Consultant's failure
      to render the required number of hours of Required Services in a
      particular month, nor the quality or nature of such services, will by
      itself constitute "Cause" hereunder. On the other hand, a violation of
      Section 2(d), 6 or 7 of this Agreement may, subject to the above
      qualifications, constitute "Cause."

            (c) Discharge Without Cause. Prior to the end of the term of this
      Agreement, the Company may discharge the Consultant without Cause (as
      defined in paragraph (b) above) and terminate this Agreement. In such case
      this Agreement shall automatically terminate and the Company shall have no
      further obligation to the Consultant or his estate, except that the
      Company shall (i) continue to pay the consulting fees for Required
      Services pursuant to Section 3(a) hereof for the remainder of the
      four-year term of this Agreement, subject to his continued compliance with
      Sections 6 and 7 hereof, in the same manner and at the same times as they
      would have been paid to the Consultant had he not been discharged; and
      (ii) pay any consulting fees due for services rendered beyond the Required
      Services prior to the effective date of termination. A discharge of the
      Consultant without Cause shall not affect the Company's obligations under
      the Separation Agreement or any other exhibit thereto.

            (d) Survival. The provisions of Sections 6 and 7 hereof survive any
      termination of this Agreement.

      6. Restrictive Covenants.

            (a) Non-Competition. The Consultant acknowledges that in the course
      of his employment with the Company as a member of the Company's senior
      executive and management team, and during the term of his consultancy
      hereunder, he has had and may continue to have access to confidential and
      proprietary business information of Carriage, and has developed and may
      hereafter continue to develop, through such employment and/or consultancy,
      valuable business systems, methods of doing business, and contacts within
      the death care industry, all of which have helped to identify him with the
      business and goodwill of Carriage. Consequently, it is important that
      Carriage protect its interests in regard to such

                                      -4-
<PAGE>

      matters from unfair competition. During the full four-year term of this
      Agreement, the Consultant agrees that he will not, directly or indirectly:

                  (i) become a director, officer, employee, proprietor,
            consultant, advisor or agent of, or own beneficially or of record
            more than one percent (1%) of the fully diluted equity securities
            (including options, warrants or other securities convertible into
            equity securities) of, or otherwise derive any active income from,
            any Conflicting Organization (as hereafter defined); or

                  (ii) induce or assist anyone in inducing in any way any
            employee of Carriage to resign or sever his or her employment or to
            breach an employment contract with Carriage.

            The covenant under clause (i) above restricts the Consultant's
      activities only insofar as they relate to the operations of the
      Conflicting Organizations within the Continental United States, and any
      activities devoted to business transacted exclusively outside the
      Continental United States shall not be restricted hereby. Clause (i)
      covers all roles or positions involving the Conflicting Organizations,
      including but in no way limited to corporate development. For purposes
      hereof, a "Conflicting Organization" means (x) any of the firms and
      organizations listed on Schedule I hereto, and (y) any other firm or
      organization, however structured, which owns or operates one or more
      funeral homes, cemeteries or other businesses in the death care industry
      anywhere within the Continental United States, whether now existing or
      hereafter arising during the four-year term of this Agreement.

            (b) E-Commerce Venture. In no event shall an E-Commerce Venture (as
      defined in the Separation Agreement) constitute a Conflicting Organization
      for purposes of this Agreement. The covenant under clause (ii) of
      paragraph (a) above does not apply to Michael S. Lade or Vicki McArthur,
      regardless of whether their employment is in connection with an E-Commerce
      Venture or any other firm or organization with which the Consultant may
      become associated.

            (c) Term of Covenants. The covenants in this Section 6 shall
      continue for the full four-year term of this Agreement, notwithstanding
      that a discharge with or without Cause may sooner occur pursuant to
      Section 5. On the other hand, such covenants shall not extend past such
      four-year term, except for the duration of any period in which the
      Consultant is in material breach of such covenants. It is specifically
      understood that the Consultant shall not have the right or option to forgo
      any compensation or benefits under this Agreement or the Separation
      Agreement in order to be relieved of his covenants hereunder.

            (d) Reformation. The foregoing covenants shall not be held invalid
      or unen forceable because of the scope of the territory or actions subject
      hereto or restricted hereby, or the period of time within which such
      covenants respectively are operative, but the

                                      -5-
<PAGE>

      maximum territory, the action subject to such covenants and the period of
      time they are enforceable are subject to any determination by a final
      judgment of any court which has juris diction over the parties and subject
      matter.

            (e) Remedies. Both parties recognize that the services to be
      rendered under this Agreement by the Consultant are special, unique, and
      of extraordinary character, and that in the event of the breach by the
      Consultant of the covenants contained in this Section 6 or Section 7
      below, the Company shall be entitled, if it so elects, to suspend (if
      applicable) any payments due under this Agreement and the Separation
      Agreement and/or to institute and prosecute proceedings in any court of
      competent jurisdiction to enforce through injunctive relief such
      covenants. Consultant acknowledges and agrees that there is no adequate
      remedy at law for his violation of such covenants and that in light of the
      numerous years and the scope of his responsibilities with the Company, the
      restrictions as to time, geographic scope and scope of activities
      restrained in paragraph (a) above are both reasonable and necessary to
      protect the goodwill and other legitimate business interests of the
      Company. Indeed, the Consultant acknowledges that the payments and
      commitments made by the Company in this Agreement and in the Separation
      Agreement are in significant part provided by the Company to secure the
      Consultant's agreement to such covenants. The Consultant agrees to waive
      and hereby waives any requirement for the Company to secure any bond in
      connection with the obtaining of such injunction or other equitable
      relief.

      7. Confidential Information. The Consultant acknowledges that in the
course of his affiliation with Carriage he has received, and in the course of
his consultancy hereunder he may continue to have access to, certain trade
secrets, lists of customers, management methods, operating techniques,
prospective acquisitions, employee lists, training manuals and procedures,
personnel evaluation procedures, financial reports and other confidential
information and knowledge concerning the business of Carriage (hereinafter
collectively referred to as "Information") which the Company desires to protect.
The Consultant understands that the Information is confidential and he agrees
not to reveal the Information to anyone outside of Carriage so long as the
confidential or secret nature of the Information shall continue; provided,
however, that Consultant may disclose E- Commerce Rights (as defined in the
Exclusive Development Agreement between Consultant and the Company of even date
herewith) to the extent necessary to develop the E-Commerce Venture pursuant to
the terms of such Agreement. The Consultant further agrees that he will at no
time use any Information in competing with Carriage. Consultant represents that
upon his transition from employee to Consultant hereunder, he has surrendered to
the Company, and has not kept any copies of, all papers, documents, writings and
other property produced by his or coming into his possession by or through his
employment with Carriage or relating to the Information, which the Consultant
acknowledges to be and will remain at all times remain the property of Carriage,
except insofar as the Company and the Consultant have specifically identified as
necessary to enable the Consultant to render services hereunder, and upon
termination of the consultancy hereunder, all remaining papers, documents,
writings and other property shall similarly be surrendered to the Company,
without any copies thereof retained by Consultant. Notwithstanding the
foregoing, Consultant may

                                      -6-
<PAGE>

retain so-called Board books, encompassing materials which Consultant has
heretofore received in his capacity as a director of the Company.

      8. Notices. All notices, requests, consents and other communications under
this Agreement shall be in writing and shall be deemed to have been delivered on
the date personally delivered or three business days after the date mailed,
postage prepaid, by certified mail, return receipt requested, or when sent by
telex or telecopy and receipt is confirmed, if addressed to the respective
parties as follows:

      If to the Consultant:   Mr. Mark W. Duffey
                              597 Piney Point Road
                              Houston, Texas 77024

      If to the Company:      Carriage Services, Inc.
                              1900 St. James Place, 4th Floor
                              Houston, Texas 77056
                              Attn: Chief Executive Officer

Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.

      9. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
provision or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.

      10. Assignment. This Agreement may not be assigned by the Consultant.
Neither the Consultant nor his estate shall have any right to commute, encumber
or dispose of any right to receive payments hereunder, it being agreed that such
payments and the right thereto are nonassignable and nontransferable.

      11. Binding Effect. Subject to the provisions of Section 10 of this
Agreement, this Agreement shall be binding upon and inure to the benefit of the
parties hereto, the Consultant's heirs and personal representatives, and the
successors and assigns of the Company.

      12. Captions. The section and paragraph headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

      13. Complete Agreement. This Agreement represents the entire agreement
between the parties concerning the subject hereof and supersedes all prior
agreements and arrangements between the parties concerning the subject thereof.
Without limiting the generality of the foregoing, this Agreement upon the
effective date hereof will supersede and replace the Prior Employment

                                      -7-
<PAGE>

Agreement (subject to reinstatement if this Agreement is rendered void as
described in Section 1 hereof), as well as any other prior agreements respecting
or relating to the Consultant's employment with or compensation from Carriage.

      14. Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Texas.

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

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

                                    CARRIAGE SERVICES, INC.

                                    By: ________________________________________
                                        MELVIN C. PAYNE, Chief Executive Officer

                                    ____________________________________________
                                    MARK W. DUFFEY

                                      -8-
<PAGE>

                                   SCHEDULE I
                                       TO
                              CONSULTING AGREEMENT
                                (MARK W. DUFFEY)

                            Conflicting Organization

For purposes of clause (x) of Section 6(a) of this Agreement, the term
"Conflicting Organization" specifically includes each of the following:

            Service Corporation International
            The Loewen Group Inc.
            Stewart Enterprises, Inc.
            Keystone Group Holdings, Inc.
            Meridian Mortuary Group, Inc.
            Cornerstone Family Services, Inc.
            Prime Succession, Inc.
            Hamilton Group, Inc.
            Century Group
            Saber Group
            Thomas Pierce & Co.

The above listing is not intended to be in limitation of the generality of
clause (y) of Section 6(a).

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