EXHIBIT 99.3

                            CARRIAGE SERVICES, INC.

             AMENDMENT NO. 1 TO 1996 DIRECTORS' STOCK OPTION PLAN

            THIS AMENDMENT NO. 1 (this "Amendment") to the Amended and Restated
1996 Directors' Stock Option Plan (the "Plan"), of CARRIAGE SERVICES, INC., a
Delaware corporation (the "Company"), adopted effective October 29, 1998;

            WHEREAS, the Company originally adopted the Plan (then known as the
1996 Nonemployee Directors' Stock Option Plan) effective July 18, 1996, and then
amended and restated the Plan effective as of January 7, 1997; and

            WHEREAS, the Board of Directors of the Company has proposed that the
Plan be further amended as hereafter described;

            NOW, THEREFORE, the Plan shall be amended as follows:

            1. DEFINED TERMS. Capitalized terms used but not defined herein
shall have the meanings given such terms in the Plan.

            2. ELIGIBILITY; AWARDS. There shall be added to Paragraph III of the
Plan a new subparagraph E, which subparagraph E shall read as follows:

                  "E. Each person who is an Eligible Director on October 29,
            1998 and who on such date is not a full-time employee of either the
            Company or any subsidiary of the Company ("Nonemployee Director"),
            shall, in addition to the other Options described in this Paragraph
            III, receive as of such date, but without the exercise of discretion
            of any person or persons, an Option exercisable for 18,000 shares of
            Stock (subject to adjustment in the same manner as provided in
            Paragraph VII hereof with respect to shares of Stock subject to
            Options then outstanding), subject to the vesting requirements
            hereafter described. The purchase price of Stock under each Option
            issued under this subparagraph E shall be the same as specified in
            Paragraph V hereof. Each Option granted under this subparagraph E
            shall vest as to the number of shares of Stock shown below, subject
            to the requirement that each Nonemployee Director receiving such
            Option be and remain an Eligible Director on and as of each of the
            dates of the Company's annual meeting of stockholders in the years
            shown opposite such number of shares:

            ANNUAL STOCKHOLDERS
            MEETING  IN THE YEAR          NO. OF SHARES OF STOCK
            --------------------          ----------------------
                  1999                          6,000
                  2000                          6,000
                  2001                          6,000

                  A Nonemployee Director receiving Options under this
            subparagraph E shall not be eligible to receive Options under
            subparagraph C of this Paragraph III on any of the annual
            stockholders meeting dates set forth above. All of the other
            provisions of the Plan applicable to Options granted hereunder shall
            apply equally to Options granted pursuant to this subparagraph E."

            3. NUMBER OF AUTHORIZED SHARES. The first sentence of Article IV of
the Plan is hereby amended in its entirety so that, as amended, the first
sentence of said Article IV shall read as follows:

                  "The aggregate number of shares which may be issued under
            Options granted under the Plan shall not exceed 350,000 shares of
            Stock."

            4. EFFECTIVENESS OF AMENDMENT. The amendment to the Plan evidenced
by this Amendment shall be effective as of October 29, 1998, provided that such
amendment is approved by the stockholders of the Company on or before September
30, 1999.

            5. RATIFICATION. As amended hereby, the Plan in hereby ratified and
confirmed.