Exhibit 10.3

 

STEWART INFORMATION SERVICES CORPORATION EXECUTIVE SEPARATION PAY AND

CHANGE IN CONTROL PLAN

(Effective as of January 1, 2018, the "Effective Date")

 

ARTICLE 1

PURPOSE

 

1.1             General Purpose. The Stewart Information Services Corporation
Executive Separation Pay and Change in Control Plan, as set forth herein (the
''Plan"), is intended to provide certain benefits for eligible senior management
employees ("Participants," as defined below) of Stewart Information Services
Corporation, a Delaware corporation, and its Subsidiaries (collectively, the
"Company") where the Participant is terminated by the Company, without Cause (as
hereinafter defined) or resigns from his or her employment with the Company for
Good Reason (as hereinafter defined), as well as to provide certain enhanced
benefits where such a termination of employment occurs in connection with a
transaction that constitutes a Change in Control (as hereinafter defined). The
Plan, as set forth herein supersedes all prior plans or programs providing any
Participant severance or separation pay benefits, whether written or unwritten.

 

1.2             Coverage Under ERISA. It is the intention of the Company that
the Plan be a welfare benefit plan providing severance benefits, as defined in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

 

ARTICLE 2

DEFINITIONS

 

2.1              Defined Terms. Whenever used in the Plan, capitalized terms
shall, unless the context clearly indicates otherwise, have the same meanings
set forth below:

 

2.1.1        "Administrator" means the Company or any Committee appointed by the
Board to act as Administrator.

 

2.1.2        "Board" means the board of directors of the Company.

 

2.1.3        "Cause" shall mean in the good faith determination of the Board,
any of the following:

 

(a)                      A Participant's willful failure to substantially
perform his or her duties with the Company (other than by reason of disability),
after a written demand for substantial performance is delivered to the
Participant that specifically identifies the manner in which the Company
believes the Participant has not substantially performed such duties, and
Executive has failed to remedy the situation within 30 days of such written
notice from the Company;

 

(b)A Participant’s gross negligence in the performance of his or her duties;

 

 

 

 

(c)                      A Participant's conviction of, or plea of guilty or
nolo contendre to any felony or any crime involving moral turpitude or the
personal enrichment of Executive at the expense of the Company;

 

(d)                      A Participant's willful engagement in conduct that is
demonstrably and materially injurious to the Company, monetarily or otherwise,
including, without limitation, Executive's breach of fiduciary duties owed to
the Company;

 

(e)                      A Participant's willful violation of any material
provision of the Company's code of conduct;

 

(f)                       A Participant's willful violation of any of the
material covenants contained in his or her employment agreement;

 

(g)                      A Participant's act of dishonesty resulting in or
intending to result in personal gain at the expense of the Company; or

 

(h)                      A Participant's engaging in any material act that is
intended or may be reasonably expected to harm the reputation, business
prospects, or operations of the Company.

 

2.1.4A "Change in Control" shall be deemed to have occurred if,

 

(a)                      Any "Person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 50% or more of the combined voting power of the
Company's then outstanding securities; or

 

(b)                      There occurs a proxy contest or a consent solicitation,
or the Company is a party to a merger, consolidation, sale of assets, plan of
liquidation or other reorganization, as a consequence of which members of the
Board in office immediately prior to such transaction or event thereafter
constitute less than a majority of the Board immediately after such transaction
or event; or

 

(c)                      There occurs a reverse merger involving the Company in
which the Company is the surviving corporation but the shares of common stock of
the Company outstanding immediately preceding the merger are converted by virtue
of the merger into other property, whether in the form of securities, cash or
otherwise; or

 

(d)                      There is a sale or other disposition of all or
substantially all of the assets of the Company; or

 

(e)                      There is an adoption of any plan or proposal for the
liquidation or dissolution of the Company; or

 

(f)                       Stewart Title Guaranty Company is placed in
supervision, receivership, conservatorship, or special administrative action by
its domiciled Department of Insurance.

 

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2.1.5        "Change in Control Effective Date" shall mean the first date on
which a Change in Control occurs; provided that if a Change in Control occurs
and if a Participant's employment with the Company is terminated prior to the
date on which the Change in Control occurs, the Change in Control Effective Date
shall be the date immediately prior to such termination of employment if the
Participant can demonstrate that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change in Control or (ii) otherwise arose in connection with or anticipation of
a Change in Control.

 

2.1.6        "Change in Control Period" shall mean the period commencing on the
Change in Control Effective Date and ending on the second anniversary of the
Change in Control Effective Date,

 

2.1.7        "Code" means the Internal Revenue Code of 1986, as amended, and
regulations issued thereunder.

 

2.1.8        "Employer" means the Company and its Subsidiaries, and, as to a
Participant, the entity that is that Participant's employer.

 

2.1.9        "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and regulations issued thereunder.

 

2.1.10      "Good Reason" means "Good Reason" means any of the following:

 

(a)                      The occurrence of any material breach of the
Participant's employment agreement by the Company or any of its Subsidiaries;

 

(b)                      Any material failure by the Company after a Change in
Control to vest any grants under the LTI Plan consistent with the requirements
of that plan and the terms of the Participant's grants thereunder;

 

(c)                      The Company's failure, following a Change in Control,
to obtain the assumption in writing of all of the Company's material obligations
under the

Participant's employment agreement and any of the Participant's outstanding
grants or awards by the successor to all or substantially all of the assets of
the Company or any Subsidiary within 15 days after a reorganization, merger,
consolidation, sale or other disposition of assets of the Company or such
Subsidiary;

 

(d)                      The Company's assignment to a Participant of any duties
materially inconsistent with the Participant's position, including any other
action which results in a material diminution in such status, title, authority,
duties or responsibility; or

 

(e)                      The relocation of the Participant's office to a
location more than 35 miles farther from the Participant's residence as compared
to as the Participant's office location immediately prior to such relocation or
as specified at the time of the Participant's most recent employment agreement.

 

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Notwithstanding the foregoing, a Participant resignation shall not be deemed to
be for Good Reason if the Participant has consented to the condition claimed to
constitute Good Reason, nor shall a Participant’s resignation be deemed to be
for Good Reason, unless the Participant has provided any written notice to the
Company specifying the event or condition claimed to constitute Good Reason
within 60 days following the initial existence of such event or condition, and
the Company has, after receipt of such notice of Good Reason from the
Participant, failed to cure or correct such condition or event within 60 days
following the Company's receipt of the Participant's notice of intent to resign
for Good Reason.

 

2.1.11    "LTI Plan” means the Company's shareholder approved incentive plan or
plans providing for equity-based compensation grants, as such plan or plans may
be in effect and as amended and/or superseded from time to time.

 

2.1.12    "Participant" means an executive employee who has been designated as
eligible to participate in the Plan by the Administrator or as provided for in
the Participant's employment agreement.

 

2.1.13    "Plan Year" means the calendar year, except that the first Plan Year
shall be the shorter period commencing on the Effective Date and ending on
December 31, 2018.

 

2.1.14    "Subsidiary'' means each of the entities specified in the Schedule of
Subsidiaries attached hereto as Exhibit A, as that may be amended by the
Administrator from time to time.

 

ARTICLE 3

PARTICIPATION

 

3.1              Eligibility for Participation. An executive employee will be
eligible to participate in the Plan if, and only if, he or she has been
designated as eligible to participate in the Plan on the Schedule of
Participation attached hereto as Exhibit B or has otherwise been notified in
writing of his or her eligibility to participate in the Plan by the
Administrator.

 

3.2              Eligibility for Benefits. A Participant shall be eligible for
separation pay benefits hereunder if his or her employment is terminated
involuntarily by the Company (other than a termination for Cause), or if the
Participant resigns for "Good Reason."

 

ARTICLE 4

SEPARATION BENEFITS

 

4.1              Schedule of Separation Pay Benefits. In the event a
Participant's employment with the Company or a Subsidiary is terminated by the
Company without Cause, or by the Participant for Good Reason, the Participant
shall, subject to execution of a Release, receive, in addition to any payments
required by law, the following severance benefits:

 

4.1.1         Twelve (12) months of the Participant's then current base salary,
payable in semi-monthly installments or other regular installments in accordance
with the Company's payroll practices, beginning on the 60th day after the
Participant's termination of employment (the "Severance Payment Commencement
Date");

 

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4.1.2         An additional payment in installments payable on the same schedule
as the payments provided for in Section 4.1.1, above, equal to an amount such
that, net after taxes paid by the Participant (assuming the Participant is taxed
at the highest applicable federal, state and local tax rates in effect for the
Participant), the Participant will retain, in the aggregate, the dollar value of
the Company's subsidy (based on costs borne by the Company for active employees)
of the cost of the Participant's coverage under the Company's group health plan
for a period of twelve (12) months;

 

4.1.3         Outplacement services provided by a firm selected by the Company
in its sole discretion for a period of 12 months and at a cost to the Company
not in excess of $10,000; and

 

4.1.4         Such accelerated vesting as may be provided for under the terms of
the LTI Plan and/or award agreement under the LTI Plan.

 

Notwithstanding anything in this Section 4.1 to the contrary, the Company shall
have the right to cease or terminate the severance pay or benefits otherwise
provided for in the event the Participant breaches, in the Company's sole
discretion, any covenant set forth in the Participant's employment agreement.

 

4.2               Other Severance Benefits. Notwithstanding anything in this
Article 4, if a Participant is entitled to any separation pay by reason of any
agreement or arrangement applicable to such Participant other than by reason of
the terms of the Plan ("Other Separation Pay"), the separation pay otherwise
payable to the Participant under this Article 4 shall be reduced by the amount
of such Participant's Other Separation Pay. A Participant's entitlement to Other
Separation Pay shall be deemed to be separation pay provided for under and shall
be incorporated into the Plan for purposes of the Plan's administrative
procedures. To the extent any separation pay is subject to Code Section 409A,
the provisions regarding the time and manner such separation payments are to be
made shall not be modified so as to avoid, to the extent possible, any
modification to the time and manner of payment of compensation that would
constitute a violation of the requirements of Code Section 409A.

 

4.3               Consequences of a Change in Control. In the event a
Participant's employment is terminated by the Company without Cause or by the
Participant for Good Reason during a Change in Control Period, and provided the
Participant executes, and does not thereafter revoke, a Release, the Participant
shall be entitled to receive, in lieu of the separation pay provided for under
Section 4.1.1, twenty-four (24) months of the Participant's then current base
salary, payable in semi-monthly installments or other regular installments in
accordance with the Company's payroll practices, beginning on the Severance
Payment Commencement Date, plus an amount equal to two times the Participant's
target annual bonus in effect for the fiscal year in which the Participant's
termination of employment occurs, to be paid to the Participant in a lump sum
within 30 days after the date all applicable revocation periods under the
Release have expired, and, in all events, no later than the end of the
''applicable 2 ½ month period" (as that phrase is defined for purposes of
Treasury Regulation Section 1.409A-l(b)(4). The Participant shall also be
entitled to all other payments and/or benefits provided for under Section 4.1
(other than Section 4.1.1).

 

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4.4              Required Release and Other Requirements. As a condition to a
Participant's receipt of payments and/or benefits provided for under the Plan,
the Participant must execute and deliver to the Company a full release of all
claims that Executive may have against the Company, its Subsidiaries and
affiliates, and all of their respective officers, employees, directors, and
agents, and that shall include the Participant's agreement not to disparage the
Company and not to divulge any of the Company's confidential information, in a
form acceptable to the Company (the "Release"), and all applicable revocation
periods must have expired prior to the Severance Payment Commencement Date. The
Company shall provide the Participant with the form of Release within 10 days
following his or her termination of employment. In addition, the Participant
must execute such other documentation that formalizes the Participant's
resignation from the Board, the boards of any affiliates of the Company, and any
other positions with the Company and its affiliates to be eligible for receipt
of payments and benefits under the Plan.

 

4.5              Excess Parachute Payments. Notwithstanding anything in this
Article 4 to the contrary, in the event payments to a Participant under the Plan
would cause any amounts to be subject to loss of deductibility pursuant to Code
Section 280G and/or to excise taxes under Code Section 4999, the amount of the
payments to such Participant shall be reduced, if possible, to the extent
necessary so that no portion of the payments under the Plan are subject to the
aforementioned provisions of the Code; provided, however, that the
aforementioned reduction to Plan payments shall not be made (and payments of the
Plan benefits shall be made in full) if such full payment of Plan benefits
produces a better net after-tax position for the Participant (taking into
account any applicable excise tax under Section 4999 of the Code and any other
applicable taxes). In no event shall the Company be obligate to pay any tax
gross-up payment to a Participant by reason of the Participant's participation
in the Plan.

 

ARTICLE 5

ADMINISTRATION

 

5.1             Plan Administrator. As defined in Section 3(16)(A) of ERISA, the
Company shall act as Administrator. The Administrator shall be charged with the
interpretation, administration and operation of the Plan.

 

5.2              Delegation of Duties. The Administrator may delegate to any
person or persons, severally or jointly, the responsibility for the preparation
and filing of all disclosure material and reports which the Plan Administrator
is required to file by law, and the responsibility for the day to day operation
of the Plan.

 

5.3             Rules and Regulations. The Administrator, subject to the
provisions of the Plan, may adopt such rules and regulations as it deems
necessary to carry out the provisions of the Plan.

 

5.4              Discretionary Actions. The Administrator shall have the power
of full and final determination as to all issues concerning eligibility for
benefits under the Plan and all matters involving the interpretation of the Plan
and determination of disputed facts, and such determinations with respect to any
individual's rights or benefits under the Plan shall be entitled to the maximum
deference permitted by law. With respect to any decision that is delegated to
the Company in its sole discretion under the Plan, any review of such decision
that shall be undertaken in the capacity of the Administrator shall be
implemented by a Company executive (or committee consisting of company
employees) who is (or are) not subject to the supervision of the Company
representative exercising such discretion.

 

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5.5             Benefit Claims Procedure. In accordance with Section 503 of
ERISA and the regulations of the Secretary of Labor prescribed thereunder:

 

5.5.1          All claims for benefits under the Plan shall be filed in writing
with the Administrator in accordance with such procedures as the Administrator
shall reasonably establish.

 

5.5.2          The Administrator shall, within ninety (90) days of submission of
a claim, provide adequate notice in writing to any claimant with a description
of any material or information which is necessary in order for the claimant to
perfect his or her claim and an explanation of why such information is
necessary. If special circumstances require an extension of time for processing
the claim, the Administrator shall furnish the claimant a written notice of such
extension prior to the expiration of the ninety (90) day period. The extension
notice shall indicate the reasons for the extension and the expected date for a
final decision, which date shall not be more than one hundred eighty (180) days
from the initial claim.

 

5.6             The Administrator shall, upon written request by a claimant
within sixty (60) days of receipt of the notice that his or her claim has been
denied, afford a reasonable opportunity to such claimant for a full and fair
review by the Administrator of the decision denying the claim. The Administrator
will afford the claimant an opportunity to review his or her decision, the
Administrator will attempt to make his or her decision as soon as practicable,
and in no event will the Administrator take more than one hundred twenty (120)
days to send the claimant a written notice of its decision.

 

ARTICLE 6

MISCELLANEOUS

 

6.1              Right to Amend or Terminate. The Company reserves the right to
amend the Plan, in whole or in part, or discontinue or terminate the Plan;
provided, however, that no such amendment, discontinuance or termination made
during the period starting six (6) months prior to a Change in Control, and
ending two (2) years after the Change in Control shall affect any right of any
Participant to claim benefits under the Plan without the Participant's consent.

 

6.2              Benefits Payable from General Assets. Benefits payable
hereunder shall be paid exclusively from the general assets of the Company that
employed the Participant, and no person entitled to payment hereunder shall have
any claim, right, security interest, or other interest in any fund, trust
account, insurance contracts or other asset of the Company. In no event shall
benefits payable hereunder be the financial responsibility of any officer or
shareholder of the Company or of any successor thereto who does not assume
liabilities hereunder or of any related corporation which may be looked to for
such payment.

 

6.3              No Contract for Continued Services. The Plan shall not be
construed as creating any contract for continued services between the Company
and the Participant, and nothing herein contained shall give the Participant the
right to be retained as an employee of the Company.

 

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6.4              Tax Matters. The Plan is structured so that all payments under
the Plan are intended to be exempt from Code Section 409A by reason of the
short-term deferral rules set forth in Treasury Regulation Section
l.409A-l(b)(4) and shall be interpreted consistent with that intent.
Notwithstanding the foregoing, the Company makes no representations or
warranties regarding the tax treatment of any payments made to any Participant
under the Plan and the Participant shall be liable for all income and wage taxes
imposed on the Participant by reason of the Participant's participation in the
Plan. The Company shall in all events deduct and withhold from any payments made
pursuant to the Plan all amounts required to be deducted or withheld for
federal, state or local income or wage taxes, or otherwise required to be
withheld by any applicable law.

 

6.5              Governing Law. The Plan shall be construed as administered and
enforced in accordance with ERISA and, where appropriate and not otherwise
preempted, the laws of the State of Texas.

 

6.6              Definition of Words. Feminine or neuter pronouns shall be
substituted for those of the masculine form, the plural shall be substituted for
the singular, and vice-versa, in any place or places herein where the context
may require such substitution or substitutions.

 

IN WITNESS WHEREOF the Plan has been signed and sealed for and in behalf of the
Company by its duly authorized representative, this 15 day of Feb, 2017.

 

STEWART INFORMATION SERVICES CORPORATION

 

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Exhibit A

 

Schedule of Subsidiaries

 

Stewart Title Company

Stewart Title Guaranty Company

Stewart Title Insurance Company

 

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