Document:

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                                                                    EXHIBIT 10.3

                               INDEMNITY AGREEMENT

      This INDEMNITY AGREEMENT is made as of _______________, 2004, between
Stewart Enterprises, Inc. (the "Corporation"), and _____________________
("Indemnitee").

      In consideration of the Indemnitee's continued service after the date
hereof, the Corporation and Indemnitee do hereby agree as follows:

      1.    Agreement to Serve. Indemnitee shall serve or continue to serve as
[AN OFFICER] [A DIRECTOR] of the Corporation, and any other entity of which he
is serving at the request of the Corporation, and agrees to serve in such
capacities for so long as he is duly elected or appointed and qualified or until
such earlier time as he tenders his resignation in writing.

      2.    Definitions. As used in this Agreement:

      (a)   The term "Claim" shall mean any threatened, pending or completed
claim, action, suit or proceeding, including appeals, whether civil, criminal,
administrative or investigative and whether made judicially or extra-judicially,
including any action by or in the right of the Corporation, or any separate
issue or matter therein, as the context requires.

      (b)   The term "Determining Body" shall mean (i) those members of the
Board of Directors who are not named or threatened to be named as parties to the
Claim for which indemnification is being sought ("Impartial Directors"), if
there are at least two Impartial Directors, or (ii) a committee of at least two
Impartial Directors appointed by the Board or a duly authorized committee
thereof (regardless whether the directors voting on such appointment are
Impartial Directors) or (iii) if there are fewer than two Impartial Directors or
if the Board of Directors or the committee appointed pursuant to clause (ii) of
this paragraph so directs (regardless whether the directors voting on such
appointment are Impartial Directors), independent legal counsel, which may be
the regular outside counsel of the Corporation, as designated by the Impartial
Directors or, if no such directors exist, the full Board of Directors.

      (c)   The term "Disbursing Officer" shall mean the President of the
Corporation or, if the President is a party or threatened to be named a party to
the Claim for which indemnification is being sought, any officer who is not a
party or threatened to be named a party to the Claim and who is designated by
the President to be the Disbursing Officer with respect to indemnification
requests related to the Claim, which designation shall be made promptly and not
more than 10 days after receipt of the initial request for indemnification with
respect to such Claim.

      (d)   The term "Expenses" shall mean any expenses or costs including,
without limitation, attorney's fees, judgments, punitive or exemplary damages,
fines, excise taxes or amounts paid in settlement.

      (e)   The term "Insurance Policy" shall mean, collectively, (i) the
Directors and Officers Liability Policy that the Corporation has obtained from
Continental Casualty Company (C.N.A.) (Policy #132032175), (ii) the Excess
Directors and Officers Liability Policies that the Corporation

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has obtained from Landmark American Insurance Company (Policy #LHS616828),
Illinois Union Insurance Company (Policy #DOX G216-48553-003), Executive Risk
Specialty Insurance Company (Policy #8151-6730) and American International
Specialty Lines Company (Policy #459-73-71), and (iii) the Side (Clause) A
Difference-in-Conditions policy that the Corporation has obtained from XL
Specialty Insurance Company (Policy #ELU087029-04) for the policy period
commencing September 27, 2004 and ending September 27, 2005.

      3.    Limitation of Liability. To the fullest extent permitted by Article
VI of the Articles of Incorporation of the Corporation (as in effect on the date
hereof), Indemnitee shall not be liable for any breach of his fiduciary duty. If
and to the extent such provisions are amended to permit further limitations of
liability, Indemnitee shall not be liable for any breach of his fiduciary duty
to the fullest extent permitted after any such amendment.

      4.    Maintenance of Insurance.

      (a)   The Corporation represents and warrants that it currently maintains
in force and effect the Insurance Policy, and Indemnitee represents and warrants
that he has been furnished with a copy of the Insurance Policy. Subject only to
the provisions of Section 4(b) hereof the Corporation hereby agrees that, so
long as Indemnitee shall continue to serve in any capacity referred to in
Section 5(a) hereof, and thereafter so long as Indemnitee shall be subject to
any possible Claim, the Corporation shall use its commercially reasonable best
efforts to purchase and maintain in effect for the benefit of Indemnitee one or
more valid and enforceable policies of directors and officers liability
insurance providing, in all respects, coverage at least comparable to that
currently provided pursuant to the Insurance Policy.

      (b)   The Corporation shall not be required to purchase and maintain the
Insurance Policy or any comparable policy if directors and officers liability
insurance is not reasonably available or if, in the reasonable business judgment
of the then directors of the Corporation, there is insufficient benefit to the
Corporation from such insurance.

      5.    Additional Indemnity.

      (a)   To the extent any Expenses incurred by or on behalf of Indemnitee
are in excess of the amounts reimbursed or indemnified pursuant to the
provisions of Section 4 hereof, the Corporation shall indemnify and hold
harmless Indemnitee against any Expenses actually and reasonably incurred by
Indemnitee (as they are incurred) in connection with any Claim against
Indemnitee, or involving Indemnitee solely as a witness or person required to
give evidence, by reason of Indemnitee's position as a (i) director or officer
of the Corporation, (ii) director or officer of any subsidiary of the
Corporation, (iii) fiduciary with respect to any employee benefit plan of the
Corporation, or (iv) director, officer, partner, employee or agent of another
entity, if such position is or was held at the request of the Corporation,
whether relating to service in such position before or after the effective date
of this Agreement, if (A) Indemnitee is successful in his defense of the Claim
on the merits or otherwise or (B) Indemnitee has been found by the Determining
Body to have met the Standard of Conduct (as hereinafter defined); provided that
(1) the amount of Expenses for which the Corporation shall indemnify Indemnitee
may be reduced by the Determining Body to such amount as it deems proper if it
determines that the Claim involved the

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receipt of an improper personal benefit by Indemnitee, and (2) no
indemnification shall be made in respect of any Claim as to which Indemnitee
shall have been adjudged by a court of competent jurisdiction, after exhaustion
of all appeals therefrom, to be liable for willful or intentional misconduct in
the performance of his duty to the Corporation, unless, and only to the extent
that, a court shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, Indemnitee is fairly
and reasonably entitled to indemnity for such Expenses which the court shall
deem proper.

      (b)   For purposes of this Agreement, the "Standard of Conduct" is met
when conduct by Indemnitee with respect to which a Claim is asserted was conduct
performed in good faith which he reasonably believed to be in, or not opposed
to, the best interest of the Corporation, and, in the case of a Claim which is a
criminal action or proceeding, conduct that Indemnitee had no reasonable cause
to believe was unlawful. The termination of any Claim by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not meet the
Standard of Conduct.

      (c)   Promptly upon becoming aware of the existence of any Claim as to
which Indemnitee may be indemnified for Expenses and as to which Indemnitee
desires to obtain indemnification, Indemnitee shall notify the President of the
Corporation, but the failure to promptly notify the President shall not relieve
the Corporation from any obligation hereunder, except and to the extent that
such failure has materially and irrevocably harmed the Corporation's ability to
defend against such Claim pursuant to Section 5(f)(i) hereof. Within 5 business
days of receipt of such notice, the President shall advise the members of the
Board of Directors of the request and that the establishment of a Determining
Body with respect thereto will be a matter to be considered at the next
regularly scheduled meeting of the Board. If a meeting of the Board of Directors
is not regularly scheduled within 30 calendar days of the date the President
receives notice of the Claim, the President shall cause a special meeting of the
Board of Directors to be called within 45 days of receipt of such notice in
accordance with the provisions of the Corporation's By-laws. After the
Determining Body has been established, the President shall inform Indemnitee of
the constitution of the Determining Body and Indemnitee shall provide the
Determining Body with all facts relevant to the Claim known to him, and deliver
to the Determining Body all documents relevant to the Claim in his possession.
Before the 60th day (the "Determination Date") after its receipt from Indemnitee
of such information, together with such additional information as the
Determining Body may reasonably request of Indemnitee prior to such date (the
receipt of which shall not begin a new 60-day period), the Determining Body
shall determine whether or not Indemnitee has met the Standard of Conduct and
shall advise Indemnitee of its determination. If Indemnitee shall have supplied
the Determining Body with all relevant information, including all additional
information reasonably requested by the Determining Body, any failure of the
Determining Body to make a determination by or on the Determination Date as to
whether the Standard of Conduct was met shall be deemed to be a determination
that the Standard of Conduct was met by Indemnitee.

      (d)   If at any time before or after the Determination Date, Indemnitee
becomes aware of any relevant facts or documents not theretofore provided by him
to the Determining Body, Indemnitee shall promptly inform the Determining Body
of such facts or documents, unless the

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Determining Body has obtained such facts or documents from another source, The
provision of such facts to the Determining Body shall not begin a new 60-day
period.

      (e)   The Determining Body shall have no power to revoke a determination
that Indemnitee met the Standard of Conduct unless Indemnitee (i) submits
fraudulent information to the Determining Body at any time during the 60 days
before the Determination Date or (ii) fails to comply with the provisions of
Sections 5(c) or 5(d) hereof, including without limitation Indemnitee's
obligation to submit information or documents relevant to the Claim reasonably
requested by the Determining Body before the Determination Date.

      (f)   In the case of any Claim not involving any proposed, threatened or
pending criminal proceeding:

            (i)   If Indemnitee has, in the judgment of the Determining Body,
      met the Standard of Conduct, the Corporation may, except as otherwise
      provided below, individually or jointly with any other indemnifying party
      similarly notified, assume the defense thereof with counsel reasonably
      satisfactory to Indemnitee. If the Corporation assumes the defense of the
      Claim, it shall keep Indemnitee informed as to the progress of such
      defense so that Indemnitee may make an informed decision as to the need
      for separate counsel. After notice from the Corporation that it is
      assuming the defense of the Claim, it will not be liable to Indemnitee
      under this Agreement for any legal expenses subsequently incurred by
      Indemnitee in connection with the defense other than reasonable costs of
      investigation or as otherwise provided below. Indemnitee shall have the
      right to employ his own counsel in connection with such Claim but the fees
      and expenses of such counsel incurred after such notice from the
      Corporation of its assumption of the defense shall be at the expense of
      Indemnitee unless (A) the employment of counsel by Indemnitee has been
      authorized by the Determining Body, (B) Indemnitee shall have concluded
      reasonably that there may be a conflict of interest between the
      Corporation and Indemnitee or between Indemnitee and other indemnitees as
      to whom the Corporation has assumed the defense, in the conduct of the
      defense of such action or (C) the Corporation shall not in fact have
      employed counsel to assume the defense of such action, in each of which
      cases the fees and expenses of counsel shall be at the expense of the
      Corporation. The Corporation shall not be entitled to assume the defense
      of any Claim to which Indemnitee shall have made the conclusion provided
      for in (B) above; and

            (ii)  The Corporation shall fairly consider any proposals by
      Indemnitee for settlement of the Claim. If the Corporation proposes a
      settlement of the Claim and such settlement is acceptable to the person
      asserting the Claim, or the Corporation believes a settlement proposed by
      the person asserting the Claim should be accepted, it shall inform
      Indemnitee of the terms of such proposed settlement and shall fix a
      reasonable date by which Indemnitee shall respond. If Indemnitee agrees to
      such terms, he shall execute such documents as shall be necessary to make
      final the settlement. If Indemnitee does not agree with such terms,
      Indemnitee may proceed with the defense of the Claim in any manner he
      chooses, provided that if

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      Indemnitee is not successful on the merits or otherwise, the Corporation's
      obligation to indemnify such Indemnitee as to any Expenses incurred
      following his disagreement with the Corporation shall be limited to the
      lesser of (A) the total Expenses incurred by Indemnitee following his
      decision not to agree to such proposed settlement or (B) the amount that
      the Corporation would have paid pursuant to the terms of the proposed
      settlement. If, however, the proposed settlement would impose upon
      Indemnitee any requirement to act or refrain from acting that would
      materially interfere with the conduct of Indemnitee's affairs, Indemnitee
      may refuse such settlement and continue his defense of the Claim, if he so
      desires, at the Corporation's expense in accordance with the terms and
      conditions of this Agreement without regard to the limitations imposed by
      the immediately preceding sentence. In any event, the Corporation shall
      not be obligated to indemnify Indemnitee for any amount paid in a
      settlement that the Corporation has not approved.

      (g)   In the case of any Claim involving a proposed, threatened or pending
criminal proceeding, Indemnitee shall be entitled to conduct the defense of the
Claim with counsel of his choice and to make all decisions with respect thereto,
provided, however, that the Corporation shall not be obliged to indemnify
Indemnitee for any amount paid in settlement of such a Claim unless the
Corporation has approved such settlement.

      (h)   After notifying the Corporation of the existence of a Claim,
Indemnitee may from time to time request the Corporation to pay the Expenses
(other than judgments, fines, penalties or amounts paid in settlement) that he
incurs in pursuing a defense of the Claim before the time that the Determining
Body determines whether the Standard of Conduct has been met. The Disbursing
Officer shall pay to Indemnitee the amount requested (regardless of Indemnitee's
apparent ability to repay such amount) upon receipt of an undertaking by or on
behalf of Indemnitee to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation under the
circumstances.

      (i)   After the Determining Body has determined that the Standard of
Conduct has been met, for so long as and to the extent that the Corporation is
required to indemnify Indemnitee under this Agreement, the provisions of Section
5(h) hereof shall continue to apply with respect to Expenses incurred after such
time except that (i) no undertaking shall be required of Indemnitee and (ii) the
Disbursing Officer shall pay to Indemnitee the amount of any fines, penalties or
judgments against him which have become final and for which he is entitled to
indemnification hereunder, and any amount of indemnification ordered to be paid
to him by a court.

      (j)   Any determination by the Corporation with respect to settlement of a
Claim shall be made by the Determining Body.

      (k)   All determinations and judgments made by the Determining Body
hereunder shall be made in good faith.

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      6.    Enforcement.

      (a)   The rights provided by this Agreement shall be enforceable by
Indemnitee in any court of competent jurisdiction.

      (b)   If Indemnitee seeks a judicial adjudication of his rights under this
Agreement, or to require action to be taken under this Agreement, or to recover
damages for breach of this Agreement, Indemnitee shall be entitled to recover
from the Corporation, and shall be indemnified by the Corporation against, any
and all expenses actually and reasonably incurred by him in connection with such
proceeding unless it shall be determined by the court that Indemnitee's Claim is
frivolous.

      (c)   In any judicial proceeding described in this Section 6, the
Corporation shall bear the burden of proving that Indemnitee is not entitled to
the relief sought.

      7.    Saving Clause. If any provision of this Agreement is determined by a
court having jurisdiction over the matter to violate or conflict with applicable
law, the court shall be empowered to modify or reform such provision so that, as
modified or reformed, such provision provides the maximum indemnification
permitted by law and such provision, as so modified or reformed, and the balance
of this Agreement, shall be applied in accordance with their terms. Without
limiting the generality of the foregoing, if any portion of this Agreement shall
be invalidated on any ground, the Corporation shall nevertheless indemnify
Indemnitee to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated and to the full extent permitted
by law with respect to that portion that has been invalidated.

      8.    Non-Exclusivity.

      (a)   The indemnification and advancement of Expenses provided by or
granted pursuant to this Agreement shall not be deemed exclusive of any other
rights to which Indemnitee is or may become entitled under any statute, articles
of incorporation, by-law, authorization of stockholders or directors, agreement,
or otherwise.

      (b)   It is the intent of the Corporation by this Agreement to indemnify
and hold harmless Indemnitee to the fullest extent permitted by law, so that if
applicable law would permit the Corporation to provide broader indemnification
rights than are currently permitted, the Corporation shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by applicable law
notwithstanding that the other terms of this Agreement would provide for lesser
indemnification.

      9.    Confidentiality. The Corporation and Indemnitee shall keep
confidential to the extent permitted by law and their fiduciary obligations all
information and determinations provided pursuant to or arising out of the
operation of this Agreement and the Corporation and Indemnitee shall instruct
its or his agents and employees to do likewise.

      10.   Prior Indemnity Agreements. Effective as of the date and year first
above written, this Indemnity Agreement supersedes any prior indemnity
agreements between the Indemnitee and the Corporation.

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      11.   Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original but all of which taken
together shall be deemed to constitute a single instrument.

      12.   Applicable Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of Louisiana.

      13.   Successors and Assigns. This Agreement shall be binding upon
Indemnitee and upon the Corporation, its successors and assigns, and shall inure
to the benefit of Indemnitee's heirs, personal representatives, and assigns and
to the benefit of the Corporation, its successors and assigns.

      14.   Amendment. No amendment, modification, termination or cancellation
of this Agreement shall be effective unless made in writing signed by the
Corporation and Indemnitee. Notwithstanding any amendment, modification,
termination or cancellation of this Agreement or any portion hereof, Indemnitee
shall be entitled to indemnification in accordance with the provisions hereof
with respect to any acts or omissions of Indemnitee which occur prior to such
amendment, modification, termination or cancellation.

      15.   Gender. All pronouns and variations thereof used in this Agreement
shall be deemed to refer to the masculine, feminine or neuter gender, singular
or plural, as the identity of the person, persons, entity or entities referred
to may require.

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

                                    STEWART ENTERPRISES, INC.

                                    By: /s/KENNETH C. BUDDE
                                        ----------------------------------------
                                                  Kenneth C. Budde
                                        President and Chief Executive Officer

                                    INDEMNITEE:

                                    ____________________________________________

                                       7<PAGE>
                              EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement") between Stewart Enterprises,
Inc., a Louisiana corporation (the "Company"), and Kenneth C. Budde (the
"Employee") is effective as of November 1, 2004 (the "Agreement 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;

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         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. 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.

         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.

         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").

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                                   ARTICLE II
                            COMPENSATION AND BENEFITS

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

         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 awarded shall be paid in cash not
later than 30 days following the filing of the Company's annual report on Form
10-K for the Fiscal Year in which the Bonus has been earned.

                  (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. 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.

         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.

                                   ARTICLE III
                            TERMINATION OF EMPLOYMENT

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

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

                  (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

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<PAGE>

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. 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.

         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;

                           (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;

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<PAGE>

                           (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.

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

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

         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 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.

         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 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

                                      -5-
<PAGE>

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

         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.

         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.

         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:

                  (a) the Company shall pay to the Employee an amount equal to a
single year's Base Salary in effect at the Date of Termination, payable in equal
installments over a two-year period beginning on the first regular payroll date
that is at least six months after the Date of Termination and thereafter (1) at
such intervals as other salaried employees of the Company are paid; and

                  (b) all shares of restricted stock previously awarded to
Employee that would not otherwise have been vested on or before the Date of
Termination shall automatically and fully vest on the Date of Termination.

         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.

         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.

----------

(1) This deferral is now required under the American Jobs Creation Act of 2004.

                                      -6-
<PAGE>

                                    ARTICLE V
              NONDISCLOSURE, NONCOMPETITION AND PROPRIETARY RIGHTS

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

         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

                                      -7-
<PAGE>

(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.

         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;

                  (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

                                      -8-
<PAGE>

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.

         4. INJUNCTIVE RELIEF; OTHER REMEDIES. Employee acknowledges that a
breach by Employee of Section 2 or 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 2 or 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 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
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

                                      -9-
<PAGE>

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. REQUESTS FOR WAIVER IN CASES OF UNDUE HARDSHIP. In the event that
Employee should find any of the limitations of Article V Section 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.

         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.

         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 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 and, therefore, to the extent permitted
by applicable law, the parties hereto waive any provision

                                      -10-
<PAGE>

of applicable law that would render any provision of this Article V (including
Appendix B hereto) invalid or unenforceable.

                                   ARTICLE VI
                                   ARBITRATION

         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.

         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 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.

         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

         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.

         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:

         Kenneth C. Budde
         327 Iona Street
         Metairie, Louisiana 70005

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

         3. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the State of Louisiana
without regard to principles of conflict of laws, except as expressly provided
in Article V Section 6 above with respect to the resolution of disputes arising
under, or the Company's enforcement of, Article V of this Agreement.

         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>

         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.

         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. 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.

         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.

         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.

         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.

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

         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.

                                      -13-
<PAGE>

         13. AMERICAN JOBS CREATION ACT OF 2004. In the event that any of the
compensation or benefits payable to the Employee hereunder are considered to be
non-qualified deferred compensation subject to the American Jobs Creation Act of
2004 (the "Jobs Act") and any regulations issued or to be issued by the
Department of the Treasury thereunder, the Company and the 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 the Jobs Act 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
Agreement to be executed on the dates set forth below and effective as of the
Agreement Date.

                                           STEWART ENTERPRISES, INC.

Dated: January 7, 2005                     By: /s/ JAMES W. MCFARLAND
                                               --------------------------------
                                                      James W. McFarland
                                               Compensation Committee Chairman

                                           EMPLOYEE:

Dated: January 7, 2005                         /s/ KENNETH C. BUDDE
                                               --------------------------------
                                                      Kenneth C. Budde

                                      -14-
<PAGE>

                       APPENDIX A TO EMPLOYMENT AGREEMENT
                        BETWEEN STEWART ENTERPRISES, INC.
                                       AND
                                KENNETH C. BUDDE

                  BASE SALARY, BONUS COMPENSATION AND BENEFITS

1.       Effective September 21, 2004, Employee's titles shall be President and
         Chief Executive Officer, and Employee's Base Salary shall be $500,000.
         Effective on September 21, 2006, Employee's Base Salary shall be
         $550,000 and effective on September 21, 2007, Employee's Base Salary
         shall be $600,000. Employee's principal work location shall be the New
         Orleans, Louisiana metropolitan area.

2.       For fiscal year 2004 ("FY 2004"), the Employee shall be eligible to
         receive a maximum Bonus of up to 140% of his base salary in effect
         prior to May 31, 2004 (which was $300,000 per year).

         (a)  Bonus available for FY 2004 will be determined based on the
              following reported EPS levels (i.e., that EPS level, rounded to
              the nearest whole cent, reported in the Company's year-end
              earnings release, adjusted as appropriate pursuant to 2(b)
              hereof):

<Table>
<Caption>

          FY 2004 Diluted Reported EPS          Bonus Potential          Bonus Available
          -----------------------------      ---------------------       ---------------
<S>                                <C>       <C>                         <C>
          Equals or exceeds        $.37       20.0% of Base Salary        $   60,000
          Equals or exceeds         .38       32.5% of Base Salary            97,500
          Equals or exceeds         .39       45.0% of Base Salary           135,000
          Equals or exceeds         .40       57.5% of Base Salary           172,500
          Equals or exceeds         .41       70.0% of Base Salary           210,000
          Equals or exceeds         .42       87.5% of Base Salary           262,500
          Equals or exceeds         .43      105.0% of Base Salary           315,000
          Equals or exceeds         .44      122.5% of Base Salary           367,500
          Equals or exceeds         .45      140.0% of Base Salary           420,000

</Table>

              (1)  75% of the Bonus available will be awarded based on the
                   achievement of the reported EPS level;

              (2)  25% of the Bonus available will be discretionary, based on
                   Qualitative Factors established by the Compensation
                   Committee.

         (b)  Cumulative effects of changes in accounting methods, stock option
              charges, separation pay charges and other items approved for
              exclusion by the Compensation Committee shall be excluded from
              diluted earnings per share for purposes of this calculation.
              Diluted earnings per share shall be calculated by the Company's
              Chief Financial Officer and shall be binding on all Employees
              absent manifest error.

                                      A-1
<PAGE>

3.       For fiscal year 2005 ("FY 2005"), the Employee shall be eligible to
         receive a maximum Bonus of up to 150% of Base Salary. For fiscal years
         2006 and 2007 the Employee shall be eligible to receive a maximum Bonus
         of up to 160% and 170%, respectively of Base Salary, based on such
         performance criteria as the Compensation Committee shall deem
         appropriate in its discretion.

         (a)  For FY 2005, the Bonus available for award will be determined as
              follows:

<Table>
<Caption>
                 FY 2005 Reported EPS               Bonus Available
                 -------------------------          ---------------
<S>                                   <C>           <C>
                 Less than            $.46           $       0

                 Equals or exceeds     .46             750,000
</Table>

         (b)  For FY 2005, the portion of the Bonus available that will be
              awarded will depend on the performance measures set forth below:

              (1)  75% of the Bonus available ($562,500) for FY 2005 will be
                   determined based on the achievement of the following reported
                   EPS levels (i.e., that EPS level, rounded to the nearest
                   whole cent, reported in the Company's year-end earnings
                   release, adjusted as appropriate pursuant to 3(c) hereof):

<Table>
<Caption>
                                                       % of 75% of       Bonus Award
                  FY 2005 Diluted Reported EPS        Bonus Potential    Based on EPS
                  -----------------------------       ---------------    ------------
<S>                                        <C>        <C>                <C>
                  Equals or exceeds        $.46           20.00%           $112,500
                  Equals or exceeds        $.47           35.00%           $196,875
                  Equals or exceeds        $.48           50.00%           $281,250
                  Equals or exceeds        $.49           66.67%           $375,000
                  Equals or exceeds        $.50           83.33%           $468,750
                  Equals or exceeds        $.51          100.00%           $562,500
</Table>

              (2)  25% of the Bonus available ($187,500) will be discretionary,
                   based on Qualitative Factors established by the Compensation
                   Committee.

         (c)  Non-recurring items approved for exclusion by the Compensation
              Committee in its sole discretion shall be excluded from diluted
              earnings per share for purposes of this calculation. Diluted
              earnings per share shall be calculated by the Company's Chief
              Financial Officer taking into account any such exclusions and
              shall be binding on all Employees absent manifest error.

                                      A-2
<PAGE>

                                            Agreed to and accepted:

                                            STEWART ENTERPRISES, INC.

Effective date: November 1, 2004            By:
                                                --------------------------------
                                                       James W. McFarland
                                                Compensation Committee Chairman

                                            EMPLOYEE

Effective date: November 1, 2004
                                            ------------------------------------
                                                      Kenneth C. Budde

                                      A-3
<PAGE>

                       APPENDIX B TO EMPLOYMENT AGREEMENT
                        BETWEEN STEWART ENTERPRISES, INC.
                                       AND
                                KENNETH C. BUDDE

                        Jurisdiction In Which Competition
                            Is Restricted As Provided
                             In Article V Section 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:  /s/ JAMES W. MCFARLAND                    /s/ KENNETH C. BUDDE
     --------------------------------          --------------------------------
     JAMES W. MCFARLAND                        EFFECTIVE DATE: NOVEMBER 1, 2004
     COMPENSATION COMMITTEE CHAIRMAN
     EFFECTIVE DATE: NOVEMBER 1, 2004

                                      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

                                             /s/ KENNETH C. BUDDE
                                             --------------------------------
                                             EFFECTIVE DATE: NOVEMBER 1, 2004

                                      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

                                             /s/ KENNETH C. BUDDE
                                             --------------------------------
                                             EFFECTIVE DATE: NOVEMBER 1, 2004

                                      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

                                             /s/ KENNETH C. BUDDE
                                             --------------------------------
                                             EFFECTIVE DATE: NOVEMBER 1, 2004

                                      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.

                                             EMPLOYEE

                                             /s/ KENNETH C. BUDDE
                                             --------------------------------
                                             EFFECTIVE DATE: NOVEMBER 1, 2004

                                      B-5
<PAGE>

17.             The District of Columbia

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

                                             EMPLOYEE

                                             /s/ KENNETH C. BUDDE
                                             --------------------------------
                                             EFFECTIVE DATE: NOVEMBER 1, 2004

                                      B-6
<PAGE>

         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 3 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

                                             EMPLOYEE

                                             /s/ KENNETH C. BUDDE
                                             --------------------------------
                                             EFFECTIVE DATE: NOVEMBER 1, 2004

                                      B-7
<PAGE>

         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 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 2 or 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 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 3(c) and 3(d) of the Agreement. The parties hereby
         acknowledge and agree that these modifications to the restrictions of
         Article V, Sections 2 and 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

                                             /s/ KENNETH C. BUDDE
                                             --------------------------------
                                             EFFECTIVE DATE: NOVEMBER 1, 2004

                                      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 2 and 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
         2 or 3, the Company may suspend or eliminate payments under Article IV,
         including Section 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 2 or 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

                                             /s/ KENNETH C. BUDDE
                                             --------------------------------
                                             EFFECTIVE DATE: NOVEMBER 1, 2004

                                      B-9
<PAGE>

         Termination, in certain jurisdictions (such as California and
         Nebraska), in conduct otherwise prohibited by Article V Section 2 or 3,
         if Employee does engage in conduct prohibited by the provisions of
         Article V Section 2 or 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 3 of Article IV, during the period
         of such conduct.

                                             EMPLOYEE

                                             /s/ KENNETH C. BUDDE
                                             --------------------------------
                                             EFFECTIVE DATE: NOVEMBER 1, 2004

                                      B-10

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