EXHIBIT 10.3

April 18, 2016
 

James V. Smith
9190 Priority Way West Drive, Suite 300
Indianapolis, IN 46240
Re:    Letter Agreement
Dear Mr. Smith:
This Letter Agreement (“Agreement”) is made and entered into as of April 18,
2016 (the “Effective Date”) by and between Stonegate Mortgage Corporation, an
Ohio corporation (the “Company”), and James V. Smith (“You”). The Agreement sets
forth the terms of your employment with the Company as follows:
1.        Employment. The Company hereby agrees to employ you, and you hereby
accept such employment with the Company, in each case, on the following terms
and conditions. Your employment will be “at-will”, meaning that either you or
the Company may terminate your employment at any time for any or no reason,
subject to the terms of this Agreement. Any contrary representations that may
have been made to you will be superseded by this Agreement. This Agreement shall
last from the date hereof through April 17, 2017, and shall continue from April
18 of each year to April 17 of the following year thereafter.
2.        Position and Responsibilities. As of the date hereof, you will serve
as President and Chief Executive Officer (or such other position as may be
assigned by the Board of Directors of the Company (the “Board”)). You will have
the duties and authority as determined from time to time by the Board. While
employed by the Company, you will devote your full business time and best
efforts to the performance of your duties hereunder and the business and affairs
of the Company and will not engage in any other business, profession or
occupation for compensation or otherwise which would conflict or interfere with
the rendition of such services to the Company, without the Board’s prior written
consent. While employed by the Company, you will be expected to primarily work
from the Company’s office in Indianapolis, IN.
3.        Compensation.
(a) Base Salary. Your base salary will be paid, in accordance with the Company’s
normal payroll practices in effect from time to time, at an annual rate of
$440,000, subject to annual redetermination by the Board (the rate in effect at
any given time, the “Base Salary”), with additional amounts paid by the Company
in respect of your health insurance and monthly automobile expenses, in each
case subject to annual determination by the Board.
(b) Annual Bonus. During each calendar year, you will eligible to participate in
the Company’s Discretionary Incentive Compensation Plan or similar annual bonus
program whereby you will have the opportunity to earn compensation (the “Annual
Bonus”) as determined by the Board in its sole discretion. The Annual Bonus may
be payable in cash or grants of stock, as determined by the Board, and will be
paid at the time or times provided by the applicable bonus program.

(c) Benefits and Expenses. While employed by the Company, you will be eligible
to participate in the Company’s employee benefit plans (including vacation
policy) as in effect from time to time, on the same basis as those benefits are
generally made available to other peer executives of the Company. You will also
be entitled to a monthly automobile lease allowance in an amount to be
determined. You will be entitled to reimbursement, by the Company in accordance
with then current Company policies applicable to other executives of the
Company, of reasonable business expenses that you incur in the performance of
your duties hereunder.
4.        Termination. Your employment may be terminated by you or the Company
at any time and for any or no reason, subject to the following terms.
(a) Termination for Cause. Your employment may be terminated by the Company for
Cause at any time upon delivery of written notice to you, in which case you will
be entitled to receive only: (i) accrued but unpaid Base Salary; (ii) accrued
but unreimbursed business expenses that were properly incurred in accordance
with Company policy before your

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termination date; and (iii) any employee benefits which you may be entitled to
under the employee benefit plans or policies of the Company according to their
terms, all reduced by any amounts that you then owe the Company ((i), (ii) and
(iii) above are collectively “Accrued Rights”). Following termination of your
employment for Cause, you will have no further rights to any compensation or any
other benefits under this Agreement or otherwise. “Cause” means the Company’s
termination of your employment, as determined in the sole judgment of the Board,
due to your: (i) continued failure to perform your material duties with respect
to the Company or its affiliates for a period of more than 30 days after receipt
of written notice of such failure; (ii) fraud, misappropriation, embezzlement or
acts of similar dishonesty; (iii) conviction of a felony or any other crime
involving moral turpitude; (iv) illegal use of drugs or excessive use of alcohol
in the workplace; (v) misconduct that may subject the Company or its affiliates
to criminal or civil liability; (vi) breach of your duty of loyalty, including
the diversion or usurpation of corporate opportunities properly belonging to the
Company; (vii) intentional disregard of the Company’s policies and procedures;
(viii) breach of any of the terms of this Agreement or any other agreement
between you and the Company; (ix) adjudication as guilty in a court of competent
jurisdiction for, or a settlement is reached with respect to claims of,
discrimination or harassment of any employee; or (x) insubordination or
deliberate refusal to follow the reasonable instructions of the Board.
(b) Resignation. Your employment shall terminate automatically upon your
resignation. If you provide written notice to the Company at least thirty
(30) days before your resignation date, you will be entitled to receive only the
Accrued Rights. However, if you resign for Good Reason (as defined below),
provided you give notice of your resignation within 90 days of the condition for
Good Reason first occurring, the Company does not cure the condition within 30
days of such notice and you resign within 30 days after the Company’s failure to
cure, then no later than five days after your resignation for Good Reason the
Company will deliver to you a general release of employment related claims in
favor of the Company and its affiliates (the “Release”) and if you execute and
deliver to the Company the Release within 21 days (or such other time as is
required by law to make the Release effective and irrevocable) of delivery to
you and do not revoke the Release during the seven day revocation period (or
such other time as is required by law to make the Release effective and
irrevocable), then you will receive a lump sum payment within ten (10) days
following the Release effective date in an amount equal to the Severance Payment
(as defined below). “Good Reason” shall mean, in each case without your consent:
(i) a material diminution in your Base Salary (other than a similar diminution
that impacts other similarly situated executives of the Company), (ii) a
material diminution in your authority, duties or responsibilities that typically
would result in you no longer being the CEO or reporting to the Board of a
similarly situated company, and (iii) any other action or inaction by the
Company constituting a material breach of this Agreement. Following a
resignation for Good Reason, you shall have no further rights to any
compensation or any other benefits.
(c) Death or Disability. Your employment will terminate upon your death, and may
be terminated by the Company as a result of your Disability, in which case you
(or your estate) will be entitled to receive only the Accrued Rights. Following
your termination of employment due to death or Disability, you will have no
further rights to any compensation or any other benefits. “Disability” means the
Board’s good faith determination that you are (i) unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months; or (ii) by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, you receive income replacement benefits for a period of not
less than three months under an accident or health plan covering employees of
the Company.
(d) Termination Without Cause. Your employment may be terminated by the Company
at any time without Cause (other than by reason of death or Disability), in
which case you will be entitled to receive the Accrued Rights and any earned but
unpaid annual bonus. In addition, no later than five days after the date of
termination without Cause, the Company shall deliver to you the Release and if
you execute, deliver to the Company and do not revoke the Release within the
timeframe described in Section 4(b) above then you will receive a lump sum
payment within ten (10) days following the Release effective date in an amount
equal to twelve (12) months of your then current Base Salary (the “Severance
Payment”). Following your termination without Cause, you will have no further
rights to any compensation or any other benefits under this Agreement.
(e) Change in Control. If a Change in Control (as defined below) occurs and
either (i) you remain employed by the Company (or its successor following such
Change in Control) for at least 120 calendar days following such Change in
Control or (ii) your employment is terminated by the Company for any reason
other than Cause during such 120-day period, you will be entitled to receive (1)
a lump sum payment in an amount equal to twenty-four (24) months of your Base
Salary immediately prior to the occurrence of such Change in Control, (2)
accelerated vesting of any then-outstanding unvested Company equity incentive
awards, which will become payable or exercisable in accordance with the terms of
the applicable incentive plan and award agreement under which the awards were
granted, (3) any earned but unpaid annual bonus and (4), in the event your
employment by the Company is terminated as set forth in clause (ii) above, any
Accrued Rights. Such payments and any vesting will be made or occur by the
earlier of ten (10) days after the end of such 120-day period or, if applicable,
the

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effective date of the Release described in the following sentence. In the event
your employment by the Company is terminated as set forth in clause (ii) above,
in order to receive such payments and benefits, you will be required to sign,
deliver to the Company and not revoke the Release, as set forth in
Subsection 4(b) above, within the timeframe described therein.
“Change in Control” means the occurrence of any of the following events:
(i) any “person” (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 and as used in Sections 13(d)(3) and 14(d)(2) of the
Securities Exchange Act of 1934), is or becomes a “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 35% or more of the combined voting power of the
Company’s then outstanding securities eligible to vote for the election of the
Board (“Company Voting Securities”); provided, however, that the event described
in this paragraph (i) shall not be deemed to be a Change in Control by virtue of
the ownership, or acquisition, of Company Voting Securities: (A) by the Company
or any subsidiary of the Company (B) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any subsidiary of the Company,
(C) by any underwriter temporarily holding securities pursuant to an offering of
such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (ii) of this definition) or (E) by Long Ridge Equity Partners, LLC
(“Long Ridge”) or any affiliate of Long Ridge of which Long Ridge owns (either
directly or indirectly) a majority of the voting power or which Long Ridge
controls (either directly or indirectly);
(ii) the consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company that requires the
approval of the Company’s stockholders, whether for such transaction or the
issuance of securities in the transaction (a “Business Combination”), excluding
such a Business Combination with Long Ridge or any affiliate of Long Ridge of
which Long Ridge owns (either directly or indirectly) a majority of the voting
power or which Long Ridge controls (either directly or indirectly), unless
immediately following such Business Combination: (A) more than 50% of the total
voting power of (x) the entity resulting from such Business Combination (the
“Surviving Entity”), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of at least 95% of the voting
power, is represented by Company Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such Company Voting Securities were converted
pursuant to such Business Combination), and such voting power among the holders
thereof is in substantially the same proportion as the voting power of such
Company Voting Securities among the holders thereof immediately prior to the
Business Combination, (B) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Entity or the parent),
is or becomes the beneficial owner, directly or indirectly, of 35% or more of
the total voting power of the outstanding voting securities eligible to elect
directors of the parent (or, if there is no parent, the Surviving Entity) and
(C) at least a majority of the members of the board of directors of the parent
(or, if there is no parent, the Surviving Entity) following the consummation of
the Business Combination were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) of this paragraph (ii) shall be deemed to be a
“Non-Qualifying Transaction”); or
(iii) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or the consummation of a sale of all or substantially
all of the Company’s assets.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any person acquires beneficial ownership of more than 35% of the
Company Voting Securities as a result of the acquisition of Company Voting
Securities by the Company which reduces the number of Company Voting Securities
outstanding; provided that if after such acquisition by the Company such person
becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control shall then occur.
(f) Board and Other Resignation. You agree that, upon termination of your
employment with the Company for any reason, you will automatically be deemed to
have resigned, as of the termination date, from any other employment, including
service on the board of directors, with the Company or any of its affiliates,
including any entity in which the Company or its affiliates have rights and any
position in which you act as a representative of the Company.
(g) Return of Materials. Upon any termination of your employment, you will
(i) cease use of any Confidential Information (as defined below) or intellectual
property owned or used by the Company or any of its affiliates; (ii) immediately
destroy or return to the Company, at its option, all originals and copies of
such Confidential Information, intellectual property, or other information
related to the business of the Company or its affiliates in your possession or
control; and (iii) notify and

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fully cooperate with the Company regarding the delivery or destruction of any
other Confidential Information of which you become aware.
5.        Confidentiality. You acknowledge that in the course of your employment
you will acquire knowledge of the Company’s and its affiliates Confidential
Information (as defined below). You also acknowledge that such Confidential
Information is not known outside the business of the Company and its affiliates,
is known only to a limited group of their top employees and directors, is
protected by strict measures to preserve secrecy, is of great value to the
Company and its affiliates, is the result of the expenditure of large sums of
money, is difficult for an outsider to duplicate, and disclosure of which would
be extremely detrimental to the Company and its affiliates. You acknowledge that
all Confidential Information shall at all times remain the property of the
Company, and the Company shall have free and unlimited access at all times to
all materials containing Confidential Information and shall have the right to
claim and take possession of such materials on demand. Except as required by
your duties to the Company, you will not, at any time during or after your
employment, directly or indirectly use, divulge or disseminate any Confidential
Information without having first obtained written permission from the Board. You
will safeguard and maintain secret all Confidential Information and all
materials that include or embody Confidential Information. You also acknowledge
that the Company may receive confidential or proprietary information belonging
to customers, or other third parties subject to the Company’s duty to not
disclose said information. Accordingly, you agree to not disclose (except as
authorized by the Company), publish, or use in competition with the Company, any
such third party confidential and proprietary information. “Confidential
Information” means any oral or written information disclosed to you or known by
you as a consequence of your employment by the Company relating to the Company’s
or any of its affiliate’s business, products, processes, or services, including,
but not limited to, information relating to research, development, discoveries,
concepts, and ideas, whether patentable or not including, but not limited to,
apparatus, processes, methods, compositions of matter, techniques, and formulas,
as well as related improvements or know-how, works of authorship fixed in a
tangible medium of expression, products under development, manufacturing
processes, formulas, strategic plans, purchasing, finance, accounting, revenues,
costs or expenses, engineering, marketing, selling, suppliers, customer lists,
customer requirements, trade secrets and the documentation thereof; provided,
however, that Confidential Information shall not include information that was:
(i) publicly known prior to the date of disclosure or is published or otherwise
becomes publicly known after the date of disclosure through no fault of your
own; or (ii) was rightfully in the possession of or independently derived by a
party to whom such information was disclosed whether before or after your
disclosure. If you are requested or are legally compelled to make any disclosure
that is prohibited or constrained by this Agreement, you will provide the
Company with prompt notice of the request so that it may seek an appropriate
protective order or other remedy and you will only disclose so much of that
Confidential Information as you are required to disclose by law. For the
avoidance of doubt, nothing in this agreement is intended to impair your rights
to bring any claim under the applicable provisions of any federal whistleblower
laws.
6.        Limited Restricted Covenants. During and after your employment it is
important for the Company to protect its legitimate business interests.
Therefore, the following non-competition and non-solicitation provisions are
drafted narrowly to safeguard the Company’s legitimate business interests while
not unreasonably interfering with your ability to obtain other employment. As a
condition of your employment with the Company, you agree as follows:
(a)        During Employment by the Company. During your employment with the
Company, you will not, directly or indirectly, have any ownership interest in,
work for, advise, consult with, or have any business connection with any person
or entity that competes with the Company or that is planning to compete with the
Company. Furthermore, you shall not take any actions with respect to competitors
that could be detrimental to the Company.
 
(b)        During Post-Employment Period. For twelve (12) months following any
termination of your employment with the Company, you will not (i) solicit or
sell to any Customer (as defined below) any product or service that competes
with the Company’s products or services; (ii) request or advise any Customer to
curtail or cease business with the Company or its affiliates; (iii) disclose to
any person or entity the identities of any Customers; or (iv) influence or
attempt to influence any employee or contractor of the Company or any of its
affiliates to separate from the Company. “Customer” means any person or entity
who is a customer or prospective customer of the Company or any of its
affiliates and that (i) you or any other officer of the Company solicited,
serviced, or sold to within two (2) years of the termination of your employment
with the Company or (ii) you learned of within two (2) years of the termination
of your employment with the Company.
7.        Additional Restricted Matters. The provisions of Sections 4 through 9
shall survive any termination of your employment. The restricted period of time
in Sections 5 and 6 will be tolled during any periods of your non-compliance. If
a final judicial determination is made by a court of competent jurisdiction that
the time or territory or any other restriction contained in this Agreement is
unenforceable, such provisions shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may determine to be enforceable.
8.        Injunctive Relief. You acknowledge that any restricted activity
referred to in this Agreement may cause irreparable injury to the Company, and
that the remedies at law for any breach by you may be inadequate, and that the
Company may be

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entitled to institute and prosecute legal proceedings to obtain injunctive
relief to enforce any provision without proof of actual injury or damage and
without posting security. If the Company prevails in any litigation to enforce
this Agreement, the Company is entitled to recover from you the Company’s costs
and reasonable attorneys’ fees incurred in such enforcement.
9.        Miscellaneous.
(a) Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana, without regard to conflicts of
laws principles thereof. You and the Company agree that any claim of any type
brought by you against the Company or any of its employees or agents must be
maintained only in a court sitting in Marion County, Indiana or, if a federal
court, the Southern District of Indiana. You specifically consent to personal
jurisdiction in the State of Indiana. You waive any right to a jury trial, and
agree that any claim hereunder will be tried without a jury. At the Company’s
sole election, the Company may refer any litigation to arbitration through a
mutually agreeable qualified arbitrator in Indiana
(b) Compliance with Code Section 409A. This Agreement is intended to be exempt
from the requirements of Internal Revenue Code Section 409A (“Code Section
409A”) and shall be interpreted and administered accordingly, provided that if
any part of this Agreement is determined to be subject to Code Section 409A,
then it is intended to comply with such requirements, and it shall be
interpreted and administered to effect compliance. To effect such compliance,
references to “termination of employment” and similar terms shall be deemed to
mean “separation from service” within the meaning of Code
Section 409A(a)(2)(A)(i). Notwithstanding anything herein to the contrary, to
the extent that any payments of “nonqualified deferred compensation” that become
payable pursuant to this Agreement as a result of a “separation from service”
are required to be delayed because you are a “specified employee” within the
meaning of Code Section 409A, such payments will be made at the earliest time
permitted by Code Section 409A.
 
(c) Entire Agreement; Amendment. This Agreement contains the entire
understanding of the parties with respect to your employment by the Company and
supersedes all prior written and oral statements or agreements. There are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth herein. This Agreement may not be altered, modified, or
amended except by written instrument signed by the parties hereto.
(d) Successors; Assignment. This Agreement shall inure to the benefit of and be
binding upon personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees of the parties hereto.
This Agreement and all of your rights and duties hereunder, shall not be
assignable by you. Any purported assignment or delegation in violation of the
foregoing shall be null and void ab initio and of no force or effect.
(e) Set Off; No Mitigation. The Company’s obligation to pay you the amounts and
to make the arrangements provided hereunder shall be subject to set-off,
counterclaim or recoupment of amounts owed by you to the Company or its
affiliates (subject to Section 9(b)); provided, however, that in no event shall
you be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to you under Section 5 of this Agreement.
(f) Notice. Notices and other communications provided for in the Agreement shall
be in writing and shall be deemed to have been duly given when delivered by
hand, U.S. Mail or overnight courier, addressed, if to the Company, to Stonegate
Mortgage Corporation, 9190 Priority Way West Drive, Suite 300, Indianapolis, IN
46240 Attn: Board of Directors, and if to you, to the most recent address in the
Company’s personnel records (or to such other address as either party may have
furnished to the other in writing) which notice will be effective only upon
receipt.
(g) Withholding Taxes. The Company may withhold from any amounts payable under
this Agreement such Federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
(h) Pre Suit Mediation. Prior to initiating litigation, you must first serve
written notice to the Company within 90 days of the alleged loss setting forth
in detail the nature of the alleged claim and an itemization of remedies sought.
You must then submit to mediation in good faith, bearing 50% of the mediation
expense. Failure to serve proper notice or to mediate in good faith shall serve
as a waiver of any rights to pursue litigation.
(i) Executive Acknowledgements. You acknowledge and agree that you have
carefully read this entire Agreement and have been given sufficient opportunity
to discuss this Agreement with the Company before signing and an adequate
opportunity to consult with your lawyer, accountant, tax advisor, spouse and
other persons you deem appropriate concerning this Agreement.

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(j) Subsequent Employers. After any termination of your employment with the
Company, you agree not to enter into any agreement that conflicts with your
obligations under this Agreement, and you will (and the Company may) inform any
subsequent employers of your obligations under this Agreement.
 
(k) Other. A party’s failure to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver of such party’s
rights or deprive such party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. If any provision of
this Agreement is determined to be unenforceable, the remaining provisions shall
remain in full force and effect, and if any provision is susceptible to two or
more constructions, one of which would render the provision unenforceable, then
the provision shall be construed to have the meaning that renders it
enforceable. This Agreement may be signed in counterparts, each of which shall
be an original, with the same effect as if the signatures were on the same
instrument.
 

If you agree with the preceding please sign and return this Agreement, which
will become a binding agreement on our receipt.
 
 
 
 
Very truly yours,
 
STONEGATE MORTGAGE CORPORATION
 
 
By:
 
          
 
 

Accepted and agreed: