EXHIBIT 10.4

                             CARRIAGE SERVICES, INC.

              AMENDMENT NO. 2 TO 1996 DIRECTORS' STOCK OPTION PLAN

      THIS AMENDMENT NO. 2 (this "Amendment") to the Amended and Restated 1996
Directors' Stock Option Plan (as heretofore amended, the "Plan"), of CARRIAGE
SERVICES, INC., a Delaware corporation (the "Company"), adopted effective
February 28, 1999;

      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 the Company
thereafter amended the Plan on October 29, 1998; 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. The first sentence of Paragraph IIIA of the Plan is hereby
amended in its entirety so that, as amended, the first sentence of said
Paragraph IIIA shall read as follows:

         "Options may be granted only to individuals who are Eligible Directors
      of the Company."

      3. EFFECTIVENESS OF AMENDMENT. The amendment to the Plan evidenced by this
Amendment shall be effective as of February 28, 1999, provided that such
amendment is approved by the stockholders of the Company on or before September
30, 1999.

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

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