Document:

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                                                                   EXHIBIT 10.35

                         EXCLUSIVE DEVELOPMENT AGREEMENT

      THIS AGREEMENT, dated as of the 30th day of December, 2000, between MARK
W. DUFFEY, a resident of Harris County, Texas ("Duffey"), and CARRIAGE SERVICES,
INC., a Delaware corporation ("Carriage");

                              W I T N E S S E T H:
                              - - - - - - - - - -

      WHEREAS, Carriage, through its subsidiaries, owns and operates funeral
homes, cemeteries and related businesses within the death care industry;

      WHEREAS, Carriage has, directly and through the EDS Development Rights (as
defined below), acquired, developed, and improved certain proprietary rights and
interests, referred to below as "E-Commerce Rights", with the intent of further
developing and then exploiting the same in connection with a possible E-Commerce
Venture (as hereafter defined); and

      WHEREAS, Duffey has been Carriage's President since December 1996 and was
one of Carriage's founders, and in such capacity he has been instrumental in
developing and arranging for the development of such rights and interests for
and on behalf of Carriage; and

      WHEREAS, pursuant to the Separation Agreement and Release dated December
30, 2000 between Duffey and Carriage (the "Separation Agreement"), the parties
have mutually agreed to convert Duffey's status from that of an employee to that
of a consultant; and

      WHEREAS, Carriage Life Events, Inc., a Delaware corporation ("Carriage
Life Events"), has been formed as a wholly owned subsidiary of Carriage in order
to continue to pursue development of the E-Commerce Rights and as a possible
vehicle for attracting investment from third parties; and

      WHEREAS, in connection with such further development, the parties desire
that Duffey continue to remain involved in the development of the E-Commerce
Rights, and that Duffey have the exclusive right to continue such development,
on the terms and subject to the conditions hereafter specified;

      NOW, THEREFORE, the parties agree as follows:

      1. Defined Terms. The following terms, when used in this Agreement, shall
have the meanings assigned to them below:
<PAGE>

            (a) "E-Commerce Business" means a portal, or distribution channel,
      conducted primarily (but not necessarily exclusively) through electronic
      means (such as via the Internet), for consumers to plan, finance and/or
      fulfill major life events and celebrations, which may include but will not
      necessarily be limited to death care and memorialization. An E-Commerce
      Business specifically excludes any business that is engaged in the
      traditional delivery of funeral or cemetery services.

            (b) "E-Commerce Rights" means, collectively, the following, whether
      in existence on the date of this Agreement or hereafter arising: (i) all
      EDS Development Rights; (ii) all other trade secrets, know-how,
      intellectual property, methodologies, ideas, concepts, processes,
      technologies, confidential or proprietary information, algorithms,
      software and computer programs (which includes input and output formats,
      source and object codes, program listings, data models, flow charts,
      outlines, narrative descriptions, operating instructions and supporting
      documentation, together with the tangible media upon which such programs
      and documentation are recorded), and development tools, and all rights and
      interests in the foregoing, however arising, whether or not registered,
      including patents, patent applications, copyrights, trademarks and service
      marks, and other similar rights, and any licenses covering any of the
      foregoing, all to the extent the same have been developed by or for
      Carriage and its affiliates in connection with the development of an
      E-Commerce Business; and (iii) all confidentiality, development and other
      contracts and agreements associated with Carriage's development of an
      E-Commerce Business.

            (c) "E-Commerce Venture" means one or more business ventures, in
      whatever form (whether corporation, limited liability company, general or
      limited partnership, joint venture, business trust or otherwise), in which
      Carriage or its affiliates or their successors and assigns has a financial
      interest, if such venture is primarily engaged in the E-Commerce Business.
      Any business venture which arises from EDS Development Rights is
      specifically intended to be encompassed with the definition of "E-Commerce
      Venture." In addition, the parties acknowledge that Carriage Life Events
      has been formed for the specific purpose of developing such rights and
      concepts and that it constitutes an E-Commerce Venture for purposes
      hereof. On the other hand, neither Lifetime Reflections nor Legacy
      Management Partners shall be deemed E-Commerce Ventures. The parties
      acknowledge that the idea or concept of rating businesses or firms (other
      than in the death care industry) according to quality or other criteria is
      not intellectual property of Carriage for purposes hereof.

            (d) "EDS" means, collectively, Electronic Data Systems Corporation,
      a Delaware corporation, EDS Information Services L.L.C., a Delaware
      limited liability company, and any affiliate of the foregoing from which
      Carriage or its affiliates acquire any EDS Development Rights.

            (e) "EDS Development Rights" means all proprietary rights, including
      copyrights, trademark rights, patent rights and other rights, which have
      been acquired by Carriage or its affiliate, by ownership under work for
      hire, by license, or otherwise, from EDS, in connection

                                      -2-
<PAGE>

      with Carriage's development of an E-Commerce Business and the E-Commerce
      Venture. EDS Development Rights specifically include rights created and
      acquired under the letter agreements between Carriage and EDS dated March
      29, 2000 and October 23, 2000.

      2. Carriage Life Events. On or prior to the date of this Agreement,
Carriage has organized Carriage Life Events, which is and shall remain a wholly
owned subsidiary of Carriage, subject to Section 5 below. In connection with the
capitalization of Carriage Life Events, Carriage shall transfer and contribute
to Carriage Life Events all of Carriage's right, title and interest in the
E-Commerce Rights. It is understood, however, that Carriage shall retain all
management and control over the operation of Carriage Life Events and the
E-Commerce Rights and the development of an E-Commerce Venture, whether through
Carriage Life Events or otherwise, and nothing in this Agreement prevents or
restricts Carriage from transferring or assigning all or any part of any
E-Commerce Rights to any other vehicle acting as an E-Commerce Venture, or to
change the corporate structure, management or other aspects of the development
of the E-Commerce Business as Carriage may choose in its sole and absolute
discretion, subject to the other terms and conditions of this Agreement.

      3. Duffey Transition. As provided in the Separation Agreement, Duffey
shall cease to be an employee of Carriage as of December 31, 2000. He shall
thereafter become a consultant to Carriage under the terms of the Consulting
Agreement referred to in the Separation Agreement ("Consulting Agreement"), but
his activities as such shall be separate and apart from his involvement in any
E-Commerce Venture as described in this Agreement.

            (a) Relation to Carriage Life Events. It is the parties' intention
      that Carriage Life Events will continue to develop the E-Commerce Business
      and associated E-Commerce Rights while at the same time seeking out equity
      financing as described in Section 5. It is understood that until any
      equity funding transaction described in Section 5, Carriage Life Events
      will remain 100% owned by Carriage. Duffey may continue to seek out equity
      financing for the E-Commerce Venture, but Duffey will not take or permit
      anyone under his supervision or control to take any major action involving
      Carriage Life Events or the E-Commerce Business without the unanimous
      approval of the Board of Directors of Carriage Life Events, including the
      following: (A) any contract or commitment with EDS which calls for the
      expenditure (or agreement to expend) any money, (B) any transfer,
      assignment, license, encumbrance or other disposition of any E-Commerce
      Rights, (C) the issuance of any equity or other ownership interests, (D)
      the incurrence of any obligation for borrowed money (other than advances
      from Duffey as described in paragraph (b) of Section 4 below), or (E) any
      transaction, contract or commitment outside the ordinary course of
      Carriage Life Events' business, which the parties acknowledge to be
      limited to the continued development of the E-Commerce Business and
      seeking equity funding. The selection and appointment of a financial
      advisor, broker or other similar intermediary in seeking such financing
      shall similarly require such unanimous approval. The entering into of
      confidentiality agreements with possible affiliation partners or equity
      sources does not require such approval.

                                      -3-
<PAGE>

            (b) Office Space and Infrastructure. From January 1, 2001 through
      June 30, 2001, Carriage will make available to Carriage Life Events (or
      any successor E-Commerce Venture) office space at Carriage's corporate
      offices, and related administrative support (in the form of the use of
      existing staff, provided such use does not unreasonably interfere with
      Carriage's other operations, as well as office equipment and normal office
      supplies), in such manner as Carriage may reasonably determine from time
      to time. Such support shall specifically include access to Carriage's
      phones, including reasonable long-distance, fax, and computer (including
      Internet) use, consistent with prior practice.

            (c) Certain Personnel Issues. The parties acknowledge that it is
      Duffey's present intention to offer to include Michael S. Lade and Vicki
      McArthur to remain involved in the E-Commerce Venture, following the
      cessation of their association with Carriage effective December 31, 2000.
      The terms of any severance between Carriage and such individuals have been
      separately negotiated between the applicable parties. It is understood,
      however, that their involvement in the E-Commerce Venture shall not
      constitute a violation of any non-competition covenants to which either of
      them may be bound with Carriage.

            (c) Confidentiality. Duffey acknowledges the importance of
      maintaining the confidentiality of the E-Commerce Rights and agrees that
      he will maintain the confidentiality thereof in the same manner and to the
      same degree that he will maintain the confidentiality of other Carriage
      information as provided in Section 7 of his Consulting Agreement with
      Carriage, which is hereby incorporated herein by reference.

      4. E-Commerce Venture Interim Funding.

            (a) Carriage Funding. Except as hereafter provided, the parties
      acknowledge that Carriage's funding of the E-Commerce Business and the
      E-Commerce Venture shall cease as of December 31, 2000. Items which
      Carriage will not fund after such date specifically include, but are not
      necessarily limited to, the following: development fees, service fees,
      consulting fees and similar fees and costs under any now existing or
      hereafter arising contract with EDS or any other third-party provider
      relating to the development of E-Commerce Rights; compensation, benefits
      and other costs of employment (not including severance costs or payments
      under the Separation Agreement) to Duffey or any other individual,
      including Michael S. Lade or Vicki McArthur; travel, food and lodging; and
      legal fees and expenses for work performed after such date.
      Notwithstanding the foregoing, Carriage will be responsible for funding
      any legal fees and expenses for work performed on behalf of Carriage's own
      interests, and if Carriage receives on or before December 31, 2001 one or
      more commitment letters or letters of intent in form acceptable to
      Carriage containing terms and conditions for equity funding of the
      E-Commerce Venture as accepted by Carriage pursuant to Section 5, then
      Carriage will fund the legal fees and expenses associated with the
      preparation, negotiation, execution and delivery of the formal definitive
      documentation associated with such equity funding transactions, through
      legal counsel of Carriage's choice.

                                      -4-
<PAGE>

            (b) Duffey/Third Party Funding. Duffey may, in his sole discretion
      but without any obligation to do so, provide funding to Carriage Life
      Events (or any successor E-Commerce Venture organized by Carriage), in
      order to finance the continued development of E-Commerce Rights and the
      pursuit of funding sources for an equity financing to be sought as
      described in Section 5. Any such funding so provided by Duffey shall be
      deemed contingent advances by him subject in all respects to the
      successful completion of equity funding of the E-Commerce Venture on terms
      acceptable to Carriage. Such funding by Duffey shall not entitle him to
      any equity interest in Carriage Life Events or any other E-Commerce
      Venture, except that in connection with any such equity funding, Carriage,
      Duffey and any equity investors may negotiate to permit Duffey to either
      be repaid such advances or to convert the same into equity interests in
      the E- Commerce Venture, on terms mutually acceptable to the parties.
      Duffey may also propose to obtaining outside interim financing for the
      E-Commerce Venture for the foregoing purposes, but the terms of such
      interim financing must in all respects be acceptable to Carriage in its
      sole discretion. In no event shall there be recourse against Carriage or
      any of its subsidiaries for any advances made pursuant to this paragraph
      (b).

            (c) Retention of Ownership. Notwithstanding any funding provided by
      Duffey or any third party as described in paragraph (b) above, Carriage
      (whether directly or through Carriage Life Events or any other E-Commerce
      Venture) shall retain full and exclusive ownership over all E-Commerce
      Rights and all ownership in Carriage Life Events and any other E- Commerce
      Venture, and any such funding by Duffey or any other party shall not,
      unless otherwise specifically agreed to in writing by an authorized
      officer of Carriage, constitute a claim, interest, lien or other right of
      any kind in any of the E-Commerce Rights or the E-Commerce Venture.

            (d) No Rights as Member of Consolidated Group. Until consummation of
      an equity funding pursuant to Section 5, Carriage Life Events shall be a
      member of the consolidated group of corporations of which Carriage is the
      corporate parent. However, it is specifically intended that no persons
      associated or affiliated with Carriage Life Events (including but not
      limited to Duffey, Michael S. Lade and Vicki McArthur) shall be eligible
      to participate in any plans or benefits normally available to employees of
      Carriage's subsidiaries (such as medical benefits, retirement plans, stock
      option and stock purchase plans, and other similar rights and benefits),
      subject to any separate agreement expressly conferring those benefits as
      severance, and Duffey shall not cause or permit anyone under his
      supervision or control to participate in Carriage Life Events or any other
      E-Commerce Venture in such a way that any such person becomes eligible for
      any such rights or benefits.

      5. Equity Funding. It is the parties' intention that an E-Commerce Venture
(whether Carriage Life Events or another vehicle) will obtain financing from one
or more third party investors, at which time the capital of the E-Commerce
Venture will be restructured in a way that involves (i) the investors acquiring
economic and voting control over the E-Commerce Venture, (ii) Duffey and other
proposed members of an E-Commerce Venture management team acquiring substantial
financial interests therein, which may include any combination of conversion of
any advances made by Duffey under

                                      -5-
<PAGE>

Section 4(b), new investment, or management stock options, and (iii) Carriage
retaining a substantial financial interest in the E-Commerce Venture. The
parties acknowledge that the precise terms and conditions of the financing for
and ultimate capital structure resulting from such a transaction cannot now be
determined with any precision, although the parties acknowledge that third-party
investment may be made by any combination of purchases of common or preferred
securities, subordinated debt with related warrants, convertible notes, or any
other funding mechanisms, and that in some circumstances, equity interests may
be issued in exchange for services rendered or to be rendered. However, all of
the terms, provisions and conditions of any and all such equity funding
transactions, as well as the form and substance of all documentation related
thereto, will be subject to the approval of Carriage, which it may grant or
withhold in its sole discretion. It is anticipated that Duffey will take the
leadership role in pursuing such equity funding, but Duffey shall keep Carriage
reasonably informed of his efforts in that regard, and in particular any
discussions or negotiations concerning the proposed terms, provisions and
conditions associated with any proposed or possible equity funding transaction.

      6. Exclusivity. It is the parties' intention that Duffey be given a period
of one year in which he may pursue the further development of the E-Commerce
Business for Carriage and seek out equity funding for the E-Commerce Venture as
contemplated in Section 5. Consequently, Carriage grants Duffey the exclusive
right to pursue equity funding for an E-Commerce Venture, subject to Section 5
above. Such right shall commence on January 1, 2001 and end on the earlier to
occur of December 31, 2001 or the date on which Duffey has suspended active
efforts to continue the development of the E- Commerce Business and to pursue
such equity funding (the "Exclusivity Period"). Neither Duffey's rendering of
services under his Consulting Agreement with Carriage, nor his employment with
any other party, shall by itself be evidence that Duffey has suspended such
active efforts, unless Duffey becomes bound by a written commitment which would
conflict with his ability to continue such efforts or to remain involved after
equity funding in the E-Commerce Venture on a full-time executive level. During
the Exclusivity Period, Carriage may (in coordination with Duffey) itself pursue
equity funding sources for an E-Commerce Venture, but any equity funding
transaction consummated during the Exclusivity Period must be on terms
reasonably acceptable to Duffey.

      7. Stock Options. If (but only if) the E-Commerce Venture receives on or
before December 31, 2001 a Cash Equity Infusion (as defined in the Separation
Agreement) of at least $10,000,000, then Carriage shall cause to be issued to
Duffey non-qualified options under Carriage's 1995 Stock Incentive Plan to
purchase up to 50,000 shares of Carriage's Class A Common Stock, $.01 par value.
The exercise price shall be the closing price of Carriage's Class A Common
Stock, as reported on the New York Stock Exchange, on the date of grant. Such
options shall be fully vested upon the grant date and shall expire ten years
from such date, and shall otherwise be subject to the terms and conditions of
such Plan and the option agreement evidencing such grant.

      8. Non-Revocation. This Agreement is expressly made subject to Duffey not
revoking the Separation Agreement, and in the event of such revocation, this
Agreement shall thereupon become void ab initio, as if never entered into.

                                      -6-
<PAGE>

      9. Notices. All notices, requests, consents and other communications
hereunder shall be given in writing and shall be deemed given if personally
delivered or when mailed, first class, registered or certified mail, return
receipt requested, as follows:

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

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

      Either party may change his, her or its address upon written notice of
such change delivered to the other parties hereto.

      10. Assignment; Binding Effect. This Agreement is unique and personal to
the parties and may not be assigned by either party without the prior written
consent of the other party hereto. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, Duffey's
heirs and personal representatives, and the successors and assigns of Carriage.

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

      12. Entire Agreement; Amendment. This Agreement, together with the
Separation Agreement and the other exhibits thereto, embody the entire agreement
and understanding among the parties concerning the subject matter hereof and
thereof, and supersede any and all prior agreements and arrangements between the
parties concerning such subject matter. This Agreement may be amended only by a
written instrument signed by or on behalf of the parties hereto.

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

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

              [the remainder of this page intentionally left blank]

                                      -7-
<PAGE>

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

                                    CARRIAGE SERVICES, INC.

                                    By: ________________________________________
                                        MELVIN C. PAYNE, Chief Executive Officer

                                    ____________________________________________
                                    MARK W. DUFFEY

                                      -8-<PAGE>
                                                                   EXHIBIT 10.36

                        SEPARATION AGREEMENT AND RELEASE

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

      The Employee and the Company agree as follows:

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

      2. Provided the Employee does not revoke this Agreement as provided in
Section 16 hereof, the Company shall pay the Employee a total $60,000.00, less
applicable withholdings (the "Severance Payments"). Subject to the Company's
receipt from the Employee of a properly completed and signed Non-Revocation
Statement in the form attached as Exhibit A hereto (the "Non-Revocation
Statement"), the Severance Payments shall be paid to the Employee commencing
with the first payroll period in January 2001 and shall continue thereafter
through the last payroll period in April 2001 until all of the Severance
Payments have been paid in full.

      3. Simultaneously with the parties' execution of this Agreement, the
Company and the Employee are entering into a Stock Purchase Agreement of even
date herewith (the "Stock Purchase Agreement"), under which the Company is
purchasing from the Employee 46,392 shares of the Company's Class A Common
Stock, in consideration for the partial release of the Employee's debt to the
Company. The parties understand that the Stock Purchase Agreement shall not
become
<PAGE>

effective until the Company's receipt of the properly completed and signed
Non-Revocation Statement, and in the event that the Employee revokes this
Agreement pursuant to Section 16 hereof, the Stock Purchase Agreement shall
thereupon become void ab initio as if never entered into.

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

                                      -2-
<PAGE>

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

      6. This Agreement supersedes and extinguishes the Executive Employment
Agreement between the parties dated November 8, 1999 ("Prior Employment
Agreement"), as well as any other employment agreement and/or bonus or incentive
compensation plan or arrangement, if any, entered into between the Employee and
Carriage. Without limiting the generality of the foregoing, the restrictive
covenants contained in Paragraph 6 of the Prior Employment Agreement shall
terminate upon effectiveness of this Agreement, provided that the Employee
agrees that from the date hereof through December 31, 2001, he will not, without
the consent of the Company's Chief Executive Officer, cause or induce any
executive-level employee of the Company to leave the Company to accept
employment elsewhere. Notwithstanding the foregoing, Paragraph 5 of the Prior
Employment Agreement - Covenant of Secrecy, shall survive such termination and
continue in effect thereafter.

      7. The Company has heretofore tendered his resignation as an executive
officer of the Company effective November 3, 2000, which was accepted by the
Board of Directors. Simultaneously with the parties' execution of this
Agreement, the Employee shall tender his resignation, effective as of the
Transition Date, as an officer of any other Carriage entity of which he is
presently an officer.

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

                                      -3-
<PAGE>

      9. Group health insurance benefits will continue only through the
Transition Date. After the Transition Date, the Employee is entitled to continue
the Employee's group health insurance coverage at his own expense, in accordance
with applicable law.

      10. The Employee hereby agrees for the consideration exchanged herein that
he will not file any requests for unemployment compensation benefits.

      11. The Employee agrees not to disclose or cause to be disclosed the terms
of this Agreement, or the fact that this Agreement exists, except to the
Employee's attorneys and/or tax advisors or to the extent otherwise required by
law.

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

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

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

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

      16. This Agreement has been entered into voluntarily and not as a result
of coercion, duress, or undue influence, economic or otherwise. The Employee
acknowledges that he has read and fully understands the terms of this Agreement,
has been advised to consult with an attorney before executing this Agreement,
and the Severance Payments constitute recited in Section are in excess of that
to which the Employee might otherwise be entitled to receive from the Company.
The Employee represents that he has been given up to forty-five (45) days to
consider the terms of the separation as described herein. Following the date of
this Agreement, the Employee shall have a

                                      -4-
<PAGE>

period of seven (7) days to revoke this Agreement by delivering to the Company,
at its address shown opposite its signature below, a written notice revoking
this Agreement and specifically referring to the right to do so under this
Section 16. If the Employee desires not to so revoke, the Employee will deliver
the Non-Revocation Notice after expiration of such seven-day period. Failure to
deliver any notice within such seven-day period shall constitute a lapse of the
Employee's right to revoke, but the Company's obligation to pay the Severance
Payments shall nonetheless remain subject to receipt from the Employee of the
signed Non-Revocation Statement. If the Employee revokes this Agreement as
aforesaid, the Employee shall forfeit all rights hereunder, including any right
to receive the Severance Payments. In addition, in the event of such revocation
(i) the Stock Purchase Agreement shall be rendered void ab initio as if never
entered into, and (ii) the provisions of the Prior Employment Agreement
(including Paragraph 6 - Restrictive Covenants) shall thereupon be reinstated.

Address:

                                            ____________________________________
11301 Lake Forest Drive                     RUSSELL W. ALLEN
Conroe, Texas  77384

                                            ____________________________________
                                            Date

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

                                            By:_________________________________
                                               Melvin C. Payne, Chief Executive
                                               Officer

                                            ____________________________________
                                            Date

                                      -5-
<PAGE>

                                                                       EXHIBIT A

                            NON-REVOCATION STATEMENT

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

      EXECUTED this ____ day of ______________________, 2000.

                                        ________________________________________
                                        RUSSELL W. ALLEN

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