Document:

AMENDMENT NO. 1 TO

EMPLOYMENT AGREEMENT AND

AMENDMENT NO. 1 TO CHANGE OF CONTROL AGREEMENT

                   
This Amendment No. 1 to Employment Agreement and Amendment No. 1 to Change of
Control Agreement is made as of the 31st day of October, 2000, by and between
Stewart Enterprises, Inc., a Louisiana corporation (the "Company"),
and Everett N. Kendrick (the "Employee").

W I T N E S S E T H:

                   
WHEREAS, the Company has entered into an Employment Agreement with the Employee
dated as of January 31, 2000 (the "Employment Agreement");

                   
WHEREAS, the Company has entered into a Change of Control Agreement with the
Employee dated as of January 31, 2000 (the "Change of Control
Agreement"); and

                   
WHEREAS, the Company and the Employee have agreed to an extension of the terms
of the Employment Agreement and the Change of Control Agreement, as set forth
herein.

                   
NOW, THEREFORE, for and in consideration of the continued employment of Employee
by the Company and the payment of wages, salary and other compensation to
Employee by the Company, the parties hereto agree as follows, effective
October 31, 2000:

                   
Section 1.     Except as expressly amended herein, all
of the terms and provisions of the Employment Agreement and Change of Control
Agreement shall remain in full force and effect.

                   
Section 2.     Article I, Section 2 of the Employment
Agreement is hereby amended to read in its entirety as follows:

  
               
    Employment Term.     The term of this Agreement (the
    "Employment Term") shall commence on the Agreement Date and shall
    continue through October 31, 2001, subject to any earlier termination
    of Employee's status as an employee pursuant to this Agreement.

  

                   
Section 3.     Article II, Section 2.1(a) of the Change
of Control Agreement is hereby amended to read in its entirety as follows:

  
                2.1   
     Employment Term and Capacity after Change of Control. (a) If a
    Change of Control occurs on or before October 31, 2001, then the Employee's
    employment term (the "Employment Term") shall continue through the
    second anniversary of the Change of Control, subject to any earlier
    termination of Employee's status as an employee pursuant to this
    Agreement.

  

                   
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and signed as of the date indicated above.

	 	STEWART ENTERPRISES, INC.
      By:  /s/ James W. McFarland                  

                  James W. McFarland

                  Compensation Committee Chairman

	 	 
      EMPLOYEE:

           /s/  
      Everett N.
      Kendrick                 
        

                     
      Everett N. KendrickSTEWART ENTERPRISES, INC.

2000 INCENTIVE COMPENSATION PLAN

           1.    
Purpose. The purpose of the 2000 Incentive
Compensation Plan (the "Plan") of Stewart Enterprises, Inc.
("Stewart") is to increase shareholder value and to advance the
interests of Stewart and its subsidiaries (collectively, the
"Company") by furnishing a variety of equity incentives (the
"Incentives") designed to attract, retain and motivate key employees
and officers and to strengthen the mutuality of interests between such employees
and officers and Stewart's shareholders. Incentives may consist of opportunities
to purchase or receive shares of Stewart's Class A common stock, no par
value per share (the "Common Stock"), on terms determined under the
Plan. As used in the Plan, the term "subsidiary" means any corporation
of which Stewart owns (directly or indirectly) within the meaning of Section
425(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
50 percent or more of the total combined voting power of all classes of stock.
Any Incentives granted hereunder prior to approval of the Plan by the
shareholders of Stewart, shall be granted subject to such approval.

            2.    
Administration.

        2.1    
Composition. The Plan shall be administered
    by the compensation committee of the Board of Directors of Stewart, or by a
    subcommittee of the compensation committee. The committee or subcommittee
    that administers the Plan shall hereinafter be referred to as the
    "Committee". The Committee shall consist of not fewer than two
    members of the Board of Directors, each of whom shall (a) qualify as a
    "non-employee director" under Rule 16b-3 under the Securities
    Exchange Act of 1934 (the "1934 Act"), as currently in effect or
    any successor rule, and (b) qualify as an "outside director" under
    Section 162(m) of the Code and the regulations thereunder.

        2.2    
Authority. The Committee shall have plenary
    authority to award Incentives under the Plan, to interpret the Plan, to
    establish any rules or regulations relating to the Plan that it determines
    to be appropriate, to enter into agreements with or provide notices to
    participants as to the terms of the Incentives (the "Incentive
    Agreements") and to make any other determination that it believes
    necessary or advisable for the proper administration of the Plan. Its
    decisions in matters relating to the Plan shall be final and conclusive on
    the Company and participants. The Committee may delegate its authority
    hereunder to the extent provided in Section 3 hereof. 

  

           3.    
Eligible Participants. Key employees and officers
of the Company (including officers who also serve as directors of the Company)
shall become eligible to receive Incentives under the Plan when designated by
the Committee. Employees may be designated individually or by groups or
categories, as the Committee deems appropriate. With respect to participants not
subject to Section 16 of the 1934 Act or Section 162(m) of the Code, the
Committee may delegate to appropriate personnel of the Company its authority to
designate participants, to determine the size and type of Incentives to be
received by those participants and to determine or modify performance objectives
for those participants.

           4.    
Shares Subject to the Plan. The shares of Common
Stock with respect to which Incentives may be granted under the Plan shall be
subject to the following:

         4.1    
Type of Common Stock. The shares of Common
    Stock with respect to which Incentives may be granted under the Plan shall
    be currently authorized but unissued shares or shares currently held or
    subsequently acquired by the Company as treasury shares, including shares
    purchased in the open market or in private transactions.

            
4.2     Maximum Number of Shares. Subject to the
    following provisions of this subsection 4, the maximum number of shares of
    Common Stock that may be delivered to Participants and their beneficiaries
    under the Plan shall be 3,000,000 shares of Common Stock.

            
4.3     Share Counting. If permitted by the Plan and
    the Committee, any Incentive may be settled in cash rather than Common
    Stock. To the extent any shares of Common Stock covered by an Incentive are
    not delivered to a participant or beneficiary because the Incentive is
    forfeited or cancelled, or the shares of Common Stock are not delivered
    because the Incentive is settled in cash or used to satisfy the applicable
    tax withholding obligation, such shares shall not be deemed to have been
    delivered for purposes of determining the maximum number of shares of Common
    Stock available for delivery under the Plan. If the exercise price of any
    stock option granted under the Plan is satisfied by tendering shares of
    Common Stock to the Company (by either actual delivery or by attestation),
    only the number of shares of Common Stock issued net of the shares of Common
    Stock tendered shall be deemed delivered for purposes of determining the
    maximum number of shares of Common Stock available for delivery under the
    Plan.

          4.4    
Limitations on Number of Shares. Subject to
    Section 4.5, the following additional limitations are imposed under the
    Plan:

  

                 (a)     The maximum number of shares of Common Stock that
        may be issued upon exercise of stock options intended to qualify as
        incentive stock options under Section 422 of the Code shall be 3,000,000
        shares. The net share counting provisions of Section 4.3 shall not apply
        to incentive stock options.

                 (b)     The maximum number of shares of Common Stock that
        may be covered by Incentives granted under the Plan to any one
        individual during any one calendar-year period shall be 1,500,000.

         (c)     The maximum number of shares of Common Stock that
        may be issued as restricted stock or Other Stock-Based Awards shall be
        100,000 shares.

         (d)     If, after shares have been earned under an
        Incentive, the delivery is deferred, any additional shares attributable
        to dividends during the deferral period shall be disregarded for
        purposes of the limitations of this Section 4.

  

                
  4.5     Adjustment.    
In the event of any
    recapitalization, stock dividend, stock split, combination of shares or
    other change in the Common Stock, all limitations on numbers of shares of
    Common Stock provided in this Section 4 and the number of shares of Common
    Stock subject to outstanding Incentives shall be adjusted in proportion to
    the change in outstanding shares of Common Stock. In addition, in the event
    of any such change in the Common Stock, the Committee shall make any other
    adjustment that it determines to be equitable, including adjustments to the
    exercise price of any option, the performance objectives of any Incentive,
    and the shares of Common Stock issuable pursuant to any Incentive in order
    to provide participants with the same relative rights before and after such
    adjustment.

              5.    
    Stock Options. A stock option is a right to
purchase shares of Common Stock from Stewart. Each stock option granted by the
Committee under this Plan shall be subject to the following terms and
conditions:

          5.1    
Price. The exercise price per share shall be
    determined by the Committee, subject to adjustment under Section 4.5;
    provided that in no event shall the exercise price be less than the Fair
    Market Value of a share of Common Stock on the date of grant, except in the
    case of a stock option granted in assumption of or in substitution for an
    outstanding award of a company acquired by the Company or with which the
    Company combines.

             
    5.2    Number. The number of shares of Common Stock
    subject to the option shall be determined by the Committee, subject to the
    limitations and adjustments provided in Section 4 hereof.

             
    5.3     Duration and Time for Exercise.
    Subject to earlier termination as provided in Section 8.4 and 8.12, the term
    of each stock option shall be determined by the Committee. Each stock option
    shall become exercisable at such time or times during its term as shall be
    determined by the Committee. The Committee may accelerate the exercisability
    of any stock option at any time.

             
    5.4     Repurchase. Upon approval of the Committee,
    the Company may repurchase all or a portion of a previously granted stock
    option from a participant by mutual agreement before such option has been
    exercised by payment to the participant of cash or Common Stock or a
    combination thereof with a value equal to the amount per share by which: (a)
    the Fair Market Value (as defined in Section 8.11) of the Common Stock
    subject to the option on the business day immediately preceding the date of
    purchase exceeds (b) the exercise price.

    
             5.5    
    Manner of Exercise. A stock option may be
    exercised, in whole or in part, by giving written notice to the Company,
    specifying the number of shares of Common Stock to be purchased. The
    exercise notice shall be accompanied by the full purchase price for such
    shares. The option price shall be payable in United States dollars and may
    be paid by (a) cash; (b) uncertified or certified check; (c) delivery of
    shares of Common Stock, which shares shall be valued for this purpose at the
    Fair Market Value on the business day immediately preceding the date such
    option is exercised and, unless otherwise determined by the Committee, shall
    have been held by the optionee for at least six months; (d) if permitted by
    the Committee, delivery of a properly executed exercise notice together with
    irrevocable instructions to a broker approved by the Company (with a copy to
    the Company) to deliver promptly to the Company the amount of sale or loan
    proceeds to pay the exercise price; or (e) in such other manner as may be
    authorized from time to time by the Committee. In the case of delivery of an
    uncertified check upon exercise of a stock option, no shares shall be issued
    until the check has been paid in full. Prior to the issuance of shares of
    Common Stock upon the exercise of a stock option, a participant shall have
    no rights as a shareholder.

             
    5.6     Repricing. Except for adjustments pursuant to
    Section 4.5, the exercise price for any outstanding option granted under the
    Plan may not be decreased after the date of grant nor may an outstanding
    option granted under the Plan be surrendered to the Company as consideration
    for the grant of a new option with a lower exercise price.

    
             5.7    
    Incentive Stock Options. Notwithstanding
    anything in the Plan to the contrary, the following additional provisions
    shall apply to the grant of stock options that are intended to qualify as
    incentive stock options (as such term is defined in Section 422 of the
    Code):

    

            (a)   
    Any incentive stock option authorized under the Plan
        shall contain such other provisions as the Committee shall deem
        advisable, but shall in all events be consistent with and contain or be
        deemed to contain all provisions required in order to qualify the
        options as incentive stock options;

                (b)   
        All incentive stock options must be granted within
        ten years from the date on which this Plan was adopted by the Board of
        Directors;

                (c)   
        Unless sooner exercised, all incentive stock options
        shall expire no later than ten years after the date of grant;

                (d)   
        No incentive stock option shall be granted to any
        participant who, at the time such option is granted, would own (within
        the meaning of Section 422 of the Code) stock possessing more than 10
        percent of the total combined voting power of all classes of stock of
        the employer corporation or of its parent or subsidiary corporation; and

                (e)   
        The aggregate Fair Market Value (determined with
        respect to each incentive stock option as of the time such incentive
        stock option is granted) of the Common Stock with respect to which
        incentive stock options are exercisable for the first time by a
        participant during any calendar year (under the Plan or any other plan
        of the Company) shall not exceed $100,000. To the extent that such
        limitation is exceeded, such options shall not be treated, for federal
        income tax purposes, as incentive stock options.

    

    

        6.     Restricted Stock.

        6.1    
Grant of Restricted Stock. The Committee may
    award shares of restricted stock to such key employees as the Committee
    determines to be eligible pursuant to the terms of Section 3. An award of
    restricted stock may be subject to the attainment of specified performance
    goals or targets, restrictions on transfer, forfeitability provisions and
    such other terms and conditions as the Committee may determine, subject to
    the provisions of the Plan. To the extent restricted stock is intended to
    qualify as performance based compensation under Section 162(m) of the Code,
    it must meet the additional requirements imposed thereby.

    
            6.2    
    The Restricted Period.  At the time
    an award of restricted stock is made, the Committee shall establish a period
    of time during which the transfer of the shares of restricted stock shall be
    restricted (the "Restricted Period"). Each award of restricted
    stock may have a different Restricted Period. A Restricted Period of at
    least three years is required, except that if vesting of the shares is
    subject to the attainment of specified performance goals, a Restricted
    Period of one year or more is permitted. Unless otherwise provided in the
    Incentive Agreement, the Committee may in its discretion declare the
    Restricted Period terminated upon a participant's death, disability,
    retirement or involuntary termination and permit the sale or transfer of the
    restricted stock. The expiration of the Restricted Period shall also occur
    as provided under Section 8.12 upon a Change of Control of the Company.

    
            6.3    
    Escrow. The participant receiving restricted
    stock shall enter into an Incentive Agreement with the Company setting forth
    the conditions of the grant. Certificates representing shares of restricted
    stock shall be registered in the name of the participant and deposited with
    the Company, together with a stock power endorsed in blank by the
    participant. Each such certificate shall bear a legend in substantially the
    following form:

    

        The transferability of this certificate and the shares
        of Common Stock represented by it is subject to the terms and conditions
        (including conditions of forfeiture) contained in the Stewart
        Enterprises, Inc. 2000 Incentive Compensation Plan (the
        "Plan") and an agreement entered into between the registered
        owner and Stewart Enterprises, Inc. thereunder. Copies of the Plan and
        the agreement are on file and available for inspection at the principal
        office of the Company.

    

    
            6.4    
    Dividends on Restricted Stock. Any and all
    cash and stock dividends paid with respect to the shares of restricted stock
    shall be subject to any restrictions on transfer, forfeitability provisions
    or reinvestment requirements as the Committee may, in its discretion,
    prescribe in the Incentive Agreement.

    
            6.5    
    Forfeiture. In the event of the forfeiture of
    any shares of restricted stock under the terms provided in the Incentive
    Agreement (including any additional shares of restricted stock that may
    result from the reinvestment of cash and stock dividends, if so provided in
    the Incentive Agreement), such forfeited shares shall be surrendered and the
    certificates cancelled. The participants shall have the same rights and
    privileges, and be subject to the same forfeiture provisions, with respect
    to any additional shares received pursuant to Section 4.5 due to a
    recapitalization, stock split or other change in capitalization.

    
            6.6    
    Expiration of Restricted Period. Upon the
    expiration or termination of the Restricted Period and the satisfaction of
    any other conditions prescribed by the Committee or at such earlier time as
    provided for in Section 6.2 and in the Incentive Agreement or an amendment
    thereto, the restrictions applicable to the restricted stock shall lapse and
    a stock certificate for the number of shares of restricted stock with
    respect to which the restrictions have lapsed shall be delivered, free of
    all such restrictions and legends other than those required by law, to the
    participant or the participant's estate, as the case may be.

    
            6.7    
    Rights as a Shareholder. Subject to the terms
    and conditions of the Plan and subject to any restrictions on the receipt of
    dividends that may be imposed in the Incentive Agreement, each participant
    receiving restricted stock shall have all the rights of a shareholder with
    respect to shares of stock during any period in which such shares are
    subject to forfeiture and restrictions on transfer, including without
    limitation, the right to vote such shares.

        6.8    
Performance-Based Restricted Stock. The
    Committee shall determine at the time of grant if a grant of restricted
    stock is intended to qualify as "performance-based compensation"
    as that term is used in Section 162(m) of the Code. Any such grant shall be
    conditioned on the achievement of one or more performance measures. The
    performance measures pursuant to which the restricted stock shall vest shall
    be any or a combination of the following: earnings per share, return on
    assets, an economic value added measure, stockholder return, earnings,
    return on equity, return on investment, cash provided by operating
    activities or increase in cash flow of the Company, a division of the
    Company or a subsidiary. For any performance period, such performance
    objectives may be measured on an absolute basis or relative to a group of
    peer companies selected by the Committee, relative to internal goals or
    relative to levels attained in prior years. For grants of restricted stock
    intended to qualify as "performance-based compensation," the
    grants of restricted stock and the establishment of performance measures
    shall be made during the period required under Section 162(m).

         7.     Other Stock-Based Awards.

    
    
            7.1    
    Grant of Other Stock-Based Awards. The
    Committee is authorized to grant "Other Stock-Based Awards," which
    shall consist of awards the value of which is based in whole or in part on
    the value of shares of Common Stock, that is not an instrument or award
    specified in Sections 5 or 6 of the Plan. Other Stock-Based Awards may be
    awards of shares of Common Stock or may be denominated or payable in, valued
    in whole or in part by reference to, or otherwise based on or related to,
    shares of Common Stock (including, without limitation, securities
    convertible or exchangeable into or exercisable for shares of Common Stock
    ), as deemed by the Committee consistent with the purposes of the Plan. The
    Committee shall determine the terms and conditions of any such Other
    Stock-Based Award and may provide that such awards would be payable in whole
    or in part in cash. An Other Stock-Based Award may be subject to the
    attainment of such specified performance goals or targets as the Committee
    may determine, subject to the provisions of the Plan. To the extent that an
    Other Stock-Based Award is intended to qualify as "performance-based
    compensation" under Section 162(m) of the Code, it must meet the
    additional requirements imposed thereby.

        7.2        
Performance-Based Other Stock-Based Awards.
    The Committee shall determine at the time of grant if the grant of an Other
    Stock-Based Award is intended to qualify as "performance-based
    compensation" as that term is used in Section 162(m) of the Code. Any
    such grant shall be conditioned on the achievement of one or more
    performance measures. The performance measures pursuant to which the Other
    Stock-Based Award shall vest shall be any or a combination of the following:
    earnings per share, return on assets, an economic value added measure,
    stockholder return, earnings, return on equity, return on investment, cash
    provided by operating activities or increase in cash flow of the Company, a
    division of the Company or a subsidiary. For any performance period, such
    performance objectives may be measured on an absolute basis or relative to a
    group of peer companies selected by the Committee, relative to internal
    goals or relative to levels attained in prior years. For grants of Other
    Stock-Based Awards intended to qualify as "performance-based
    compensation," the grants of Other Stock-Based Awards and the
    establishment of performance measures shall be made during the period
    required under Section 162(m) of the Code.

    

        8.     General.

    
    
            8.1    
    Duration. Subject to Section 8.10, the Plan
    shall remain in effect until all Incentives granted under the Plan have
    either been satisfied by the issuance of shares of Common Stock or the
    payment of cash or been terminated under the terms of the Plan and all
    restrictions imposed on shares of Common Stock in connection with their
    issuance under the Plan have lapsed.

    
            8.2    
    Transferability of Incentives. No Incentive
    granted hereunder may be transferred, pledged, assigned or otherwise
    encumbered by the holder thereof except:

                                       
                (a)     by will;

                       
(b)     by the laws of descent and distribution;

  
        (c)     in the case of stock options only, if permitted by
        the Committee and so provided in the Incentive Agreement or an amendment
        thereto, (i) pursuant to a domestic relations order, as defined in the
        Code, (ii) to Immediate Family Members, (iii) to a partnership in which
        Immediate Family Members, or entities in which Immediate Family Members
        are the sole owners, members or beneficiaries, as appropriate, are the
        only partners, (iv) to a limited liability company in which Immediate
        Family Members, or entities in which Immediate Family Members are the
        sole owners, members or beneficiaries, as appropriate, are the only
        members, or (v) to a trust for the sole benefit of Immediate Family
        Members. "Immediate Family Members" shall be defined as the
        spouse and natural or adopted children or grandchildren of the
        participant and their spouses. To the extent that an incentive stock
        option is permitted to be transferred during the lifetime of the
        participant, it shall be treated thereafter as a non-qualified stock
        option.

  

        Any attempted assignment, transfer, pledge, hypothecation or
    other disposition of an Incentive, or levy of attachment or similar process
    upon the Incentive not specifically permitted herein, shall be null and void
    and without effect.

          8.3    
Dividend
  Equivalents. In the sole and complete discretion of the Committee, an
  Incentive may provide the holder thereof with dividends or dividend
  equivalents, payable in cash, shares, other securities or other property on a
  current or deferred basis.

  
          8.4    
  Effect of Termination of Employment or Death.
  In the event that a participant ceases to be an employee of the Company for
  any reason, including death, disability, early retirement or normal
  retirement, any Incentives may be exercised, shall vest or shall expire at
  such times as may be determined by the Committee in the Incentive Agreement.

          
8.5     Additional Condition. Anything in this Plan to
  the contrary notwithstanding: (a) the Company may, if it shall determine it
  necessary or desirable for any reason, at the time of award of any Incentive
  or the issuance of any shares of Common Stock pursuant to any Incentive,
  require the recipient of the Incentive, as a condition to the receipt thereof
  or to the receipt of shares of Common Stock issued pursuant thereto, to
  deliver to the Company a written representation of present intention to
  acquire the Incentive or the shares of Common Stock issued pursuant thereto
  for his own account for investment and not for distribution; and (b) if at any
  time the Company further determines, in its sole discretion, that the listing,
  registration or qualification (or any updating of any such document) of any
  Incentive or the shares of Common Stock issuable pursuant thereto is necessary
  on any securities exchange or under any federal or state securities or blue
  sky law, or that the consent or approval of any governmental regulatory body
  is necessary or desirable as a condition of, or in connection with the award
  of any Incentive, the issuance of shares of Common Stock pursuant thereto, or
  the removal of any restrictions imposed on such shares, such Incentive shall
  not be awarded or such shares of Common Stock shall not be issued or such
  restrictions shall not be removed, as the case may be, in whole or in part,
  unless such listing, registration, qualification, consent or approval shall
  have been effected or obtained free of any conditions not acceptable to the
  Company.

    
            8.6    
    Incentive Agreements. The terms of each
    Incentive shall be stated in an agreement or notice approved by the
    Committee.

    
            8.7    
    Withholding.

    
    

                (a)   
        The Company shall have the right to withhold from
        any payments or stock issuances under the Plan, or to collect as a
        condition of payment, any taxes required by law to be withheld.

                (b)    
        Any participant may, but is not required to, satisfy
        his or her withholding tax obligation in whole or in part by electing
        (the "Election") to have the Company withhold from the shares
        the participant otherwise would receive shares of Common Stock having a
        value equal to the minimum amount required to be withheld. The value of
        the shares to be withheld shall be based on the Fair Market Value of the
        Common Stock on the date that the amount of tax to be withheld shall be
        determined (the "Tax Date"). Each Election must be made prior
        to the Tax Date. The Committee may disapprove of any Election, may
        suspend or terminate the right to make Elections, or may provide with
        respect to any Incentive that the right to make Elections shall not
        apply to such Incentive.

    

                
8.8     No Continued Employment. No participant under
    the Plan shall have any right, because of his or her participation, to
    continue in the employ of the Company for any period of time or to any right
    to continue his or her present or any other rate of compensation.

    
            8.9    
    Deferral Permitted. Payment of cash or
    distribution of any shares of Common Stock to which a participant is
    entitled under any Incentive shall be made as provided in the Incentive
    Agreement. Payment may be deferred at the option of the participant if
    provided in the Incentive Agreement.

            
8.10     Amendment or Discontinuance of the Plan. The
    Board may amend or discontinue the Plan at any time; provided, however, that
    no such amendment may

      

                (a)    
        without the approval of the shareholders, (i)
        increase, subject to adjustments permitted herein, the maximum number of
        shares of Common Stock that may be issued through the Plan, (ii)
        materially increase the benefits accruing to participants under the Plan
        (iii) materially expand the classes of persons eligible to participate
        in the Plan, or (iv) amend Section 5.6 to permit repricing of options,
        or

                (b)    
        materially impair, without the consent of the
        recipient, an Incentive previously granted, except that the Company
        retains all rights under Section 8.12 hereof.

      

    
            8.11    
    Definition of Fair Market Value. Whenever
    "Fair Market Value" of Common Stock shall be determined for
    purposes of this Plan, it shall be determined as follows: (i) if the Common
    Stock is listed on an established stock exchange or any automated quotation
    system that provides sale quotations, the closing sale price for a share of
    the Common Stock on such exchange or quotation system on the day preceding
    the date as of which fair market value is to be determined, (ii) if the
    Common Stock is not listed on any exchange or quotation system, but bid and
    asked prices are quoted and published, the mean between the quoted bid and
    asked prices on the day preceding the date as of which fair market value is
    to be determined, and if bid and asked prices are not available on such day,
    on the next preceding day on which such prices were available; and (iii) if
    the Common Stock is not regularly quoted, the fair market value of a share
    of Common Stock on the applicable date as established by the Committee in
    good faith.

      

    
              
           8.12    
    Change of Control.

  
    
    (a) A Change of Control
    shall mean:

              

                    (i)    
            the acquisition by any individual, entity or
            group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
            1934 Act) of beneficial ownership (within the meaning of Rule 13d-3
            promulgated under the 1934 Act) of more than 30 percent of the
            outstanding shares of Stewart's Class A Common Stock, no par value
            per share (the "Common Stock"); provided, however, that
            for purposes of this subsection (i), the following acquisitions
            shall not constitute a Change of Control:

                
                

    
            (A)    
            any acquisition of Common Stock directly
                from Stewart,

                    

    
            (B)    
                any acquisition of Common Stock by Stewart,

                    

    
            (C)    
                any acquisition of Common Stock by any
                employee benefit plan (or related trust) sponsored or maintained
                by Stewart or any corporation controlled by Stewart, or

                    

    
            (D)    any acquisition of Common Stock by any
                corporation pursuant to a transaction that complies with clauses
                (A), (B) and (C) of subsection (iii) of this Section 8.12(a); or

                

                         (ii)    
                individuals who, as of the date this Plan was
            adopted by the Board of Directors (the "Approval Date"),
            constitute the Board (the "Incumbent Board") cease for any
            reason to constitute at least a majority of the Board; provided,
            however, that any individual becoming a director subsequent to the
            Approval Date whose election, or nomination for election by
            Stewart's shareholders, was approved by a vote of at least a
            majority of the directors then comprising the Incumbent Board shall
            be considered a member of the Incumbent Board, unless such
            individual's initial assumption of office occurs as a result of an
            actual or threatened election contest with respect to the election
            or removal of directors or other actual or threatened solicitation
            of proxies or consents by or on behalf of a person other than the
            Incumbent Board; or

                    (iii)    
            consummation of a reorganization, merger or
            consolidation (including a merger or consolidation of the Company or
            any direct or indirect subsidiary of the Company), or sale or other
            disposition of all or substantially all of the assets of Stewart (a
            "Business Combination"), in each case, unless, following
            such Business Combination,

                

                        (A)    
                all or substantially all of the individuals
                and entities who were the beneficial owners of Stewart's
                outstanding common stock and Stewart's voting securities
                entitled to vote generally in the election of directors
                immediately prior to such Business Combination have direct or
                indirect beneficial ownership, respectively, of more than 50
                percent of the then outstanding shares of common stock, and more
                than 50 percent of the combined voting power of the then
                outstanding voting securities entitled to vote generally in the
                election of directors, of the corporation resulting from such
                Business Combination (which, for purposes of this paragraph (A)
                and paragraphs (B) and (C), shall include a corporation which as
                a result of such transaction owns Stewart or all or
                substantially all of Stewart's assets either directly or through
                one or more subsidiaries), and

                        (B)    
                except to the extent that such ownership
                existed prior to the Business Combination, no person (excluding
                any corporation resulting from such Business Combination or any
                employee benefit plan or related trust of Stewart or such
                corporation resulting from such Business Combination)
                beneficially owns, directly or indirectly, 20 percent or more of
                the then outstanding shares of common stock of the corporation
                resulting from such Business Combination or 20 percent or more
                of the combined voting power of the then outstanding voting
                securities of such corporation, and

                        (C)    
                at least a majority of the members of the
                board of directors of the corporation resulting from such
                Business Combination were members of the Incumbent Board at the
                time of the execution of the initial agreement, or of the action
                of the Board, providing for such Business Combination; or

                

              

                        
                (iv)     approval by the shareholders of Stewart of a
            plan of complete liquidation or dissolution of Stewart.

    

                 (b)    
        Upon a Change of Control, or immediately prior to
        the closing of a transaction that will result in a Change of Control if
        consummated, all outstanding Incentives granted pursuant to the Plan
        shall automatically become fully vested and exercisable, all
        restrictions or limitations on any Incentives shall lapse and all
        performance criteria and other conditions relating to the payment of
        Incentives shall be deemed to be achieved or waived by Stewart without
        the necessity of action by any person.

                 (c)    
        No later than 30 days after the approval by the
        Board of a Change of Control of the types described in subsections (iii)
        or (iv) of Section 8.12(a) and no later than 30 days after a Change of
        Control of the type described in subsections (i) and (ii) of Section
        8.12(a), the Committee (as the Committee was composed immediately prior
        to such Change of Control and notwithstanding any removal or attempted
        removal of some or all of the members thereof as directors or Committee
        members), acting in its sole discretion without the consent or approval
        of any participant, may act to effect one or more of the alternatives
        listed below and such act by the Committee may not be revoked or
        rescinded by persons not members of the Committee immediately prior to
        the Change of Control:

            

                    (i)    
            require that all outstanding options be
            exercised on or before a specified date (before or after such Change
            of Control) fixed by the Committee, after which specified date all
            unexercised options shall terminate,

                    (ii)    
            make such equitable adjustments to Incentives
            then outstanding as the Committee deems appropriate to reflect such
            Change of Control (provided, however, that the Committee may
            determine in its sole discretion that no adjustment is necessary),

                    (iii)    
            provide for mandatory conversion of some or
            all of the outstanding options held by some or all participants as
            of a date, before or after such Change of Control, specified by the
            Committee, in which event such options shall be deemed automatically
            cancelled and the Company shall pay, or cause to be paid, to each
            such participant an amount of cash per share equal to the excess, if
            any, of the Change of Control Value of the shares subject to such
            option, as defined and calculated below, over the exercise price(s)
            of such options or, in lieu of such cash payment, the issuance of
            Common Stock or securities of an acquiring entity having a Fair
            Market Value equal to such excess, or

                    (iv)    
            provide that thereafter upon any exercise of an
            option the participant shall be entitled to purchase under such
            option, in lieu of the number of shares of Common Stock then covered
            by such option, the number and class of shares of stock or other
            securities or property (including, without limitation, cash) to
            which the participant would have been entitled pursuant to the terms
            of the agreement providing for the reorganization, merger,
            consolidation or asset sale, if, immediately prior to such Change of
            Control, the participant had been the holder of record of the number
            of shares of Common Stock then covered by such options.

                    (v)    
            For the purposes of paragraph (iii) of this
            Section 8.12(c) the "Change of Control Value" shall equal
            the amount determined by whichever of the following items is
            applicable:

    

                        (A)    
                the per share price to be paid to
                stockholders of Stewart in any such merger, consolidation or
                other reorganization,

                        (B)    
                the price per share offered to stockholders
                of Stewart in any tender offer or exchange offer whereby a
                Change of Control takes place,

                        
                (C)     in all other events, the Fair Market Value
                per share of Common Stock into which such options being
                converted are exercisable, as determined by the Committee as of
                the date determined by the Committee to be the date of
                conversion of such options, or

                        
                (D)     in the event that the consideration offered
                to stockholders of Stewart in any transaction described in this
                Section 8.12 consists of anything other than cash, the Committee
                shall determine the fair cash equivalent of the portion of the
                consideration offered that is other than cash.

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