FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission File No. 0-13990
LAWYERS TITLE CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1589611
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
6630 West Broad Street, Richmond, Virginia 23230
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code (804) 281-6700
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock 8,889,791 August 1, 1996
No Par Value
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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets............................3
Consolidated Statements of Operations
and Retained Earnings ..............................5
Consolidated Statements of
Cash Flows..........................................6
Notes to Consolidated
Financial Statements................................7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations...........................8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................10
Signatures............................................11
2
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
LAWYERS TITLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
- ------ ---- ----
<S> <C>
INVESTMENTS:
Fixed maturities:
Available-for-sale - at fair value (amortized
cost: 1996 - $191,224; 1995 - $179,182) $ 191,840 $ 187,270
Equity securities - at fair value (cost: 1996 -
$43,635; 1995 - $43,327) 58,373 56,540
Mortgage loans (less allowance for doubtful
accounts: 1996 and 1995 - $150) 922 1,015
Invested cash 20,739 21,805
--------- ---------
Total investments 271,874 266,630
CASH 21,137 18,842
NOTES AND ACCOUNTS RECEIVABLE:
Notes (less allowance for doubtful accounts:
1996 - $1,008; 1995 - $365) 7,221 7,565
Premiums (less allowance for doubtful accounts:
1996 - $2,172; 1995 - $1,898) 17,651 17,242
Income tax benefits - 301
--------- ---------
Total notes and accounts receivable 24,872 25,108
PROPERTY AND EQUIPMENT - at cost (less accumulated depreciation and
amortization:
1996 - $40,428; 1995 - $36,581) 21,458 20,850
TITLE PLANTS 48,909 48,731
GOODWILL (less accumulated amortization:
1996 - $10,922; 1995 - $10,174) 57,421 53,645
DEFERRED INCOME TAXES 18,796 16,127
OTHER ASSETS 31,179 25,910
---------- ---------
$ 495,646 $ 475,843
========= =========
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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(Unaudited)
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES 1996 1995
- ----------- ---- ----
<S> <C>
POLICY AND CONTRACT CLAIMS $ 193,824 $ 193,791
ACCOUNTS PAYABLE AND
ACCRUED EXPENSES 40,375 34,933
INCOME TAXES PAYABLE 4,379 -
OTHER 9,721 8,734
Total liabilities 248,299 237,458
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, no par value, authorized
5,000,000 shares, none issued or outstanding - -
Common stock, no par value, authorized 45,000,000
shares, issued and outstanding, 8,887,316 in
1996 and 8,885,991 in 1995 167,033 167,006
Unrealized investment gains (less related
deferred income tax expense of $5,374
in 1996 and $7,456 in 1995) 9,980 13,845
Retained earnings 70,365 57,689
Receivable from employee benefit plan (31) (155)
--------- ---------
Total shareholders' equity 247,347 238,385
--------- ---------
$ 495,646 $ 475,843
========= =========
</TABLE>
See accompanying notes.
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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
ACCUMULATED SURPLUS
SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(In thousands of dollars except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C>
REVENUES
Premiums $213,187 $179,385 $118,467 $ 91,299
Title search, escrow and other 48,075 37,776 25,326 21,024
Investment income 10,845 5,999 5,500 2,698
-------- -------- -------- --------
272,107 223,160 149,293 115,021
-------- -------- -------- --------
EXPENSES
Salaries and employee benefits 89,768 74,875 46,481 36,791
Agents' commissions 86,385 79,206 49,252 38,753
Provision for policy and contract claims 13,584 12,158 7,298 7,193
Other 61,855 50,977 32,464 27,735
-------- ------- -------- -------
251,592 217,216 135,495 110,472
-------- -------- -------- --------
OPERATING INCOME BEFORE
INCOME TAXES 20,515 5,944 13,798 4,549
INCOME TAX EXPENSE
Current 7,535 (3,375) 6,271 (2,503)
Deferred (585) 5,108 (1,517) 3,856
-------- -------- -------- --------
6,950 1,733 4,754 1,353
-------- -------- -------- --------
NET INCOME 13,565 4,211 9,044 3,196
DIVIDENDS (889) (711) (445) (444)
RETAINED EARNINGS BEGINNING OF PERIOD 57,689 42,237 61,766 42,985
-------- --------- -------- ---------
RETAINED EARNINGS END OF PERIOD $ 70,365 $ 45.737 $ 70,365 $ 45,737
======== ======== ======== ========
EARNINGS PER COMMON SHARE $ 1.53 $ .47 $ 1.02 $ .36
======== ======== ======== ========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 8,887 8,885 8,887 8,885
</TABLE>
See accompanying notes.
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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
---- ----
<S> <C>
Cash flows from operating activities:
Net income $ 13,565 $ 4,211
Depreciation & amortization 4,180 3,837
Amortization of bond premium 408 640
Realized investment gains (4,437) (413)
Deferred income tax (585) 5,108
Change in assets & liabilities:
Notes receivable 344 (348)
Premiums receivable (409) (149)
Current income taxes 4,719 (4,484)
Policy & contract claims 33 (4,251)
Accounts payable and accrued expenses 1,513 (7,781)
Other (3,560) (183)
--------- ---------
Net cash provided by (used in) operating activities 15,771 (3,813)
--------- -------------
Cash flows from investing activities:
Purchase of property & equipment - net (4,202) (1,355)
Purchase of businesses, net of cash acquired (2,320) (7,827)
Cost of investments acquired:
Fixed maturities (53,219) (30,624)
Equity securities (19,907) (17,587)
Mortgage loans - (66)
Proceeds from investment sales or maturities:
Fixed maturities 40,789 35,953
Equity securities 24,018 14,530
Mortgage loans 93 147
--------- ---------
Net cash used in investing activities (14,748) (6,829)
--------- --------
Cash flows from financing activities:
Dividends paid (889) (711)
Change in notes payable 1,095 6,354
--------- ---------
Net cash provided by financing activities 206 5,643
--------- ---------
Net increase (decrease) in cash and invested cash 1,229 (4,999)
Cash & invested cash at beginning of period 40,647 31,989
--------- ---------
Cash & invested cash at end of period $ 41,876 $ 26,990
========= =========
</TABLE>
See accompanying notes.
6
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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars except per share amounts)
1. Interim Financial Information
The unaudited consolidated financial information included in this report has
been prepared in conformity with the accounting principles and practices
reflected in the consolidated financial statements included in the Form 10-K
for the year ended December 31, 1995 filed with the Commission under the
Securities Exchange Act of 1934. This report should be read in conjunction
with the aforementioned Form 10-K. In the opinion of management, all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of this information have been made. The results of operations
for the interim periods are not necessarily indicative of results for a full
year.
2. Pending Legal Proceedings
For additional information, see Pending Legal Proceedings on page F-26 and
Legal Proceedings on page 14 of the December 31, 1995 Form 10-K and the
March 31, 1996 Form 10-Q.
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Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations.
LAWYERS TITLE CORPORATION AND SUBSIDIARIES
Results of Operations
Net Income
The Company reported net income of $9.0 million or $1.02 per share for the
quarter ended June 30, 1996, or almost triple the net income of $3.2 million or
$.36 per share for the comparable 1995 period. Net income for the six months
ended June 30, 1996 improved to $13.6 million or $1.53 per share from $4.2
million or $.47 per share reported in the comparable period of 1995.
Operating Revenues
Operating revenues improved 20% in the first six months and 28% in the second
quarter of 1996 compared to the same periods of 1995. This improvement was to
$261.3 million from $217.2 million in the first six months and to $143.8 million
from $112.3 million in the second quarter of 1996 compared to 1995. The 1996
periods reflect strength in the new home and housing resale markets as well as
refinancing activity which was in response to the lower interest rate
environment seen in the year's first quarter.
The Company opened over 209,000 new orders for title insurance during the first
six months of 1996 compared to 161,000 for the comparable period of 1995. During
the second quarter of 1996 order volume was 102,000 compared to 88,000 in the
same period of 1995. While there is no assurance that opened orders will close,
this level of activity has set a solid platform for the start of the third
quarter of 1996. The month of June 1996 did show a reduction in counts compared
to prior months and to June of 1995.
Investment Income
Investment income increased $4.8 million in the first six months and $2.8
million in the second quarter of 1996 compared to the 1995 periods. These
increases were primarily attributable to increased capital gains activity which
accounted for increases of $4.0 million in the six month period and $2.1 million
in the quarter.
Expenses
Operating expenses increased in response to increases in business volume in the
first six months and second quarter of 1996 compared to the same periods of
1995. The operating margin, before claims and investment income showed strong
improvement to 10.8% during the second quarter of 1996 compared to 8.0% in the
second quarter of 1995 and improvement
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to 8.9% in the first six months of 1996 compared to 5.6% in the same period of
1995. The 1995 periods had benefitted from a salary reduction program that was
in place throughout much of the Company. Management continues to monitor
business volumes and is committed to closely managing staffing and other cost
levels to adjust them as activity levels change.
Also, agents commissions increased in direct proportion to the levels of agency
premium reported in the first six months and second quarter of 1996 compared to
the same periods of 1995.
Claims experience continued to show the positive effects of favorable
development patterns seen for the last two years as they were only 5.1% of title
revenues for the second quarter of 1996 compared to 6.4% reported in the second
quarter of 1995. In the first six months of 1996 claims were 5.2% of title
revenues compared to 5.6% in the comparable 1995 period.
Liquidity and Capital Resources
The Company generated $15.8 million of cash from operations in the first six
months of 1996 compared to using $3.8 million in the same period of 1995. At
June 30, 1996 the Company held cash and invested cash of $41.9 million and
combined fixed maturity and equity securities investments of $250.2 million.
Additionally, the Company had unutilized lines of credit totaling $32.5 million
at June 30, 1996. Management believes the Company can meet both its short and
long-term capital needs as of June 30, 1996.
9
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10.1 Lawyers Title Corporation 1991 Stock
Incentive Plan (as amended May 16, 1995
and May 21, 1996).*
10.5 Lawyers Title Corporation 1992 Stock
Option Plan for Non-Employee Directors
(as amended May 21, 1996).*
* Filed Herewith
b. Reports on Form 8-K
None
10
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LAWYERS TITLE CORPORATION
(Registrant)
Date: August 12, 1996 /s/ Charles Henry Foster
------------------------ --------------------------
Charles Henry Foster, Jr.
Chairman and Chief Executive Officer
Date: August 12, 1996 /s/ George William Evans
------------------------ --------------------------
George William Evans
Vice President and Treasurer
11
EXHIBIT 10.1
LAWYERS TITLE CORPORATION
1991 STOCK INCENTIVE PLAN
(as amended May 16, 1995 and May 21, 1996)
Article I
DEFINITIONS
1.01 Affiliate means any "subsidiary" or "parent corporation" (within
the meaning of Section 424 of the Code) of the Company.
1.02 Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Grant or an Award issued to such Participant.
1.03 Award means an award of Common Stock, Restricted Stock and/or
Phantom Stock.
1.04 Board means the Board of Directors of the Company.
1.05 Change of Control means and shall be deemed to have taken place if:
(i) any individual, entity or group (within the meaning of Sections 13(d)(3) or
14(d)(2) of the Exchange Act) becomes the beneficial owner of shares of the
Company having 20 percent or more of the total number of votes that may be cast
for the election of directors of the Company, other than (x) as a result of any
acquisition directly from the Company, or (y) as a result of any acquisition by
any employee benefit plans (or related trusts) sponsored or maintained by the
Company or its Subsidiaries; or (ii) a change in the composition of the Board
such that the individuals who, as of the date hereof, constitute the Board (the
Board as of the date hereof shall be hereinafter referred to as the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section, that any individual who becomes
a member of the Board subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of those individuals who are members of the Board and who
were also members of the Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a member of the
Incumbent Board; but, provided further, that any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board shall
not be so considered as a member of the Incumbent Board.
<PAGE>
1.06 Change of Control Date is the date on which an event described in
(i) or (ii) of Section 1.05 occurs.
1.07 Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.08 Commission means the Securities and Exchange Commission or any
successor agency.
1.09 Committee means the Compensation Committee of the Board.
1.10 Common Stock means the Common Stock of the Company.
1.11 Company means Lawyers Title Corporation.
1.12 Disinterested Person shall have the meaning set forth in Rule
16b-3(c)(2)(i), as promulgated by the Commission under the Exchange Act, or any
successor definition adopted by the Commission.
1.13 Exchange Act means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
1.14 Fair Market Value means, on any given date, the closing price of a
share of Common Stock as reported on the New York Stock Exchange composite tape
on such day or, if the Common Stock was not traded on the New York Stock
Exchange on such day, then on the next preceding day that the Common Stock was
traded on such exchange, all as reported by such source as the Committee may
select.
1.15 Grant means the grant of an Option and/or an SAR.
1.16 Incentive Stock Option means an Option that is intended to qualify
as an "incentive stock option" under Section 422 of the Code.
1.17 Initial Value means, with respect to an SAR, the Fair Market Value
of one share of Common Stock on the date of grant, as set forth in the
Agreement.
1.18 Non-Qualified Stock Option means an option other than an Incentive
Stock Option.
1.19 Option means a stock option that entitles the holder to purchase
from the Company a stated number of shares of Common Stock at the price set
forth in an Agreement.
1.20 Option Price means the price per share for Common Stock purchased
on the exercise of an Option as provided in Article VI.
Page 2
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1.21 Participant means an officer, director or key employee of the
Company or of a Subsidiary who satisfies the requirements of Article IV and is
selected by the Committee to receive a Grant or an Award.
1.22 Phantom Stock means a bookkeeping entry on behalf of a Participant
by which his account is credited (but not funded) as though Common Stock had
been transferred to such account.
1.23 Plan means the Lawyers Title Corporation 1991 Stock Incentive
Plan.
1.24 Restricted Stock means shares of Common Stock awarded to a
Participant under Article IX. Shares of Common Stock shall cease to be
Restricted Stock when, in accordance with the terms of the applicable Agreement,
they become transferable and free of substantial risks of forfeiture.
1.25 Rule 16b-3 means Rule 16b-3, as promulgated by the Commission in
Release No. 34-28869 under Section 16(b) of the Exchange Act, effective May 1,
1991, as amended from time to time.
1.26 SAR means a stock appreciation right granted pursuant to this Plan
that entitles the holder to receive, with respect to each share of Common Stock
encompassed by the exercise of such SAR, the lesser of (a) the excess of the
Fair Market Value at the time of exercise over the Initial Value of the SAR or
(b) the Initial Value of the SAR; provided, that any limited stock appreciation
right granted by the Committee and exercisable upon a Change of Control shall
entitle the holder to receive, with respect to each share of Common Stock
encompassed by the exercise of such SAR, the higher of (x) the highest sales
price of a share of Common Stock on NASDAQ during the 60-day period prior to and
including the Change of Control Date, or (y) the highest price per share paid in
a Change of Control transaction, except that in the case of SARs related to
Incentive Stock Options, such price shall be based only on the Fair Market Value
of the Common Stock on the date that the Incentive Stock Option is exercised.
1.27 Securities Broker means the registered securities broker acceptable
to the Company who agrees to effect the cashless exercise of an Option pursuant
to Section 8.05 hereof.
1.28 Subsidiary means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations in the chain (other than the last corporation) owns stock
possessing at least 50 percent of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
Article II
PURPOSES
Page 3
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The Plan is intended to assist the Company in recruiting and retaining
officers, directors and key employees with ability and initiative by enabling
such persons who contribute significantly to the Company or an Affiliate to
participate in its future success and to associate their interests with those of
the Company and its shareholders. The Plan is intended to permit the award of
Common Stock, Restricted Stock, and Phantom Stock, and the issuance of Options
qualifying as Incentive Stock Options or Non-Qualified Stock Options as
designated by the Committee at time of grant, and SARs. No Option that is
intended to be an Incentive Stock Option however, shall be invalid for failure
to qualify as an Incentive Stock Option under Section 422 of the Code but shall
be treated as a Non-Qualified Stock Option.
Article III
ADMINISTRATION
The Plan shall be administered by the Committee, which shall be composed
of two or more directors each of whom is a Disinterested Person. The Committee
shall have authority to issue Grants and Awards upon such terms (not
inconsistent with the provisions of this Plan) as the Committee may consider
appropriate. The terms of such Grants and Awards may include conditions (in
addition to those contained in this Plan) on (i) the exercisability of all or
part of an Option or SAR and (ii) the transferability or forfeitability of
Restricted Stock or Phantom Stock. In addition, the Committee shall have
complete authority to interpret all provisions of this Plan; to prescribe the
form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. To
fulfill the purposes of the Plan without amending the Plan, the Committee may
also modify any Grants or Awards issued to Participants who are nonresident
aliens or employed outside of the United States to recognize differences in
local law, tax policy or custom.
The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made, or action taken, by the Committee or in connection with the
administration of this Plan shall be final and conclusive. All expenses of
administering this Plan shall be borne by the Company.
Article IV
ELIGIBILITY
4.01 General. Any officer, director or employee of the Company or of any
Subsidiary (including any corporation that becomes a Subsidiary after the
adoption of this Plan) who, in the judgment of the Committee, has contributed
significantly or can be expected to contribute significantly to the profits or
growth of the Company or a Subsidiary may receive one or more Awards or Grants,
or any combination or type thereof. Employee and non-employee directors
Page 4
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of the Company are eligible to participate in this Plan. A person who is a
member of the Committee may not be issued Awards or Grants while he is a member
of the Committee.
4.02 Grants and Awards. The Committee will designate individuals to whom
Grants and/or Awards are to be issued and will specify the number of shares of
Common Stock subject to each such Grant or Award. An Option may be granted alone
or in addition to other Grants and/or Awards under the Plan. The Committee shall
have the authority to grant any Participant Incentive Stock Options,
Non-Qualified Stock Options or both types of Options (in each case with or
without a related SAR); provided, however, that Incentive Stock Options may be
granted only to employees of the Company and its subsidiaries (within the
meaning of Section 424(f) of the Code). An SAR may be granted with or without a
related Option. All Grants or Awards issued under this Plan shall be evidenced
by Agreements which shall be subject to applicable provisions of this Plan and
to such other provisions as the Committee may determine. No Participant may be
granted Options that are Incentive Stock Options, or related SARs (under all
Incentive Stock Option Plans of the Company and Affiliates) which are first
exercisable in any calendar year for stock having an aggregate Fair Market Value
(determined as of the date an Option is granted) exceeding $100,000. Any Grant
or Award to a Participant who is subject to Section 16(b) of the Exchange Act
shall provide for a six month holding period as provided by Rule 16b-3(c)(1) or
16b-3(e)(4), as applicable.
4.03 Designation of Option as an Incentive Stock Option or Non-Qualified
Stock Option. The Committee will designate at the time an Option is granted
whether the Option is to be treated as an Incentive Stock Option or a
Non-Qualified Stock Option. In the absence, however, of any such designation,
such Option shall be treated as an Incentive Stock Option.
4.04 Qualification of Incentive Stock Option under Section 422 of the
Code. Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be exercised so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
optionee affected, to disqualify any Incentive Stock Option under such Section
422.
Article V
STOCK SUBJECT TO PLAN
5.01 Maximum Number of Shares to be Awarded. Upon the exercise of any
Option (or tandem SAR), the award of Common Stock or Restricted Stock, or the
payment of an Award of Phantom Stock, the Company may deliver to the Participant
authorized but previously unissued shares of Common Stock or previously issued
shares of Common Stock reacquired by the Company. The maximum aggregate number
of shares of Common Stock available under the Plan for Grants and Awards made
prior to January 1, 1996, shall be 615,000. Commencing January 1, 1996, the
maximum number of shares of Common Stock available under the Plan for Grants
Page 5
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and Awards made in each calendar year shall be one and one-half percent ( 1.5%)
of the shares of Common Stock outstanding as of the first business day of each
calendar year. The shares of Common Stock available for Grants and Awards under
the Plan in 1996 and in each year thereafter shall be increased by the number of
shares of Common Stock available for Grants and Awards under the Plan in
previous years but not covered by Grants and Awards under the Plan in prior
years, plus any shares of Common Stock as to which Grants and Awards under the
Plan have terminated or been forfeited. In no event shall more than 500,000
shares of Common Stock be cumulatively available for Grants of Incentive Stock
Options under the Plan. Subject to the foregoing limitations, the maximum number
of shares of Common Stock available for Grants and Awards under the Plan is
subject to adjustment as provided in Article XI. If an Option is terminated, in
whole or in part, for any reason other than its exercise, the number of shares
of Common Stock allocated to the Option or portion thereof may be reallocated to
other Option, SAR, Common Stock, Restricted Stock or Phantom Stock Grants or
Awards to be made under this Plan. Any shares of Restricted Stock that are
forfeited may be reallocated to other Grants or Awards to be made under this
Plan.
5.02 Independent SARs. Upon the exercise of an SAR granted independently
of an Option, the Company may deliver to the Participant authorized but
previously unissued Common Stock, cash, or a combination thereof as provided in
Section 8.03. The maximum aggregate number of shares of Common Stock that may be
issued pursuant to SARs that are granted independently of Options is subject to
the provisions of Section 5.01 hereof. Cash settlements of SARs held by
Participants who are subject to Section 16(b) of the Exchange Act shall comply
with the "window period" provisions of Rule 16b-3.
Article VI
OPTION PRICE
The price per share for Common Stock purchased on the exercise of an
Option shall be fixed by the Committee on the date of grant; provided, however,
that in the case of an Option that is an Incentive Stock Option, the price per
share shall not be less than the Fair Market Value on such date.
Article VII
EXERCISE OF OPTIONS
7.01 Maximum Option or SAR Period. The period in which an Option or SAR
may be exercised shall be determined by the Committee on the date of grant;
provided, however that an Incentive Stock Option or related SAR shall not be
exercisable after the expiration of 10 years from the date the Incentive Stock
Option was granted.
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7.02 Nontransferability. Any Option or SAR granted under this Plan shall
be nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option and any related SAR must be
transferred to the same person or persons, trust or estate. During the lifetime
of the Participant to whom an Incentive Stock Option or related SAR is granted,
the Option or SAR may be exercised only by the Participant. No right or interest
of a Participant in any Option or SAR shall be liable for, or subject to, any
lien, obligation or liability of such Participant.
7.03 Employee Status. For purposes of determining the applicability of
Section 422 of the Code (relating to incentive stock options), or in the event
that the terms of any Grant provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Committee may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
Article VIII
METHOD OF EXERCISE
8.01 Exercise. Subject to the provisions of Articles VII and XII, an
Option or SAR may be exercised in whole at any time or in part from time to time
at such times and in compliance with such requirements as the Committee shall
determine; provided, however, that an SAR that is related to an Option may be
exercised only to the extent that the related Option is exercisable and when the
Fair Market Value exceeds the Option Price of the related Option. An Option or
SAR granted under this Plan may be exercised with respect to any number of whole
shares less than the full number for which the Option or SAR could be exercised.
Such partial exercise of an Option or SAR shall not affect the right to exercise
the Option or SAR from time to time in accordance with this Plan with respect to
remaining shares subject to the Option or related SAR. The exercise of an Option
shall result in the termination of the SAR to the extent of the number of shares
with respect to which the Option is exercised.
8.02 Payment. Unless otherwise provided by the Agreement, payment of the
Option Price shall be made in cash. If the Agreement provides, payment of all or
part of the Option Price may be made by surrendering shares of Common Stock to
the Company, provided the shares surrendered have a Fair Market Value
(determined as of the day preceding the date of exercise) that is not less than
such price or part thereof. In addition, the Committee may establish such
payment or other terms as it may deem to be appropriate and consistent with
these purposes.
8.03 Determination of Payment of Cash and/or Common Stock Upon Exercise
of SAR. At the Committee's discretion, the amount payable as a result of the
exercise of an SAR may be settled in cash, Common Stock, or a combination of
cash and Common Stock. No fractional shares shall be delivered upon the exercise
of an SAR but a cash payment will be made
Page 7
<PAGE>
in lieu thereof. Cash settlements of SARs held by Participants who are subject
to Section 16(b) of the Exchange Act shall comply with the "window period"
provisions of Rule 16b-3.
8.04 Shareholder Rights. No participant shall have any rights as a
shareholder with respect to shares subject to his Option or SAR until the date
he exercises such Option or SAR.
8.05 Cashless Exercise. To the extent permitted under the applicable
laws and regulations, at the request of the Participant and with the consent of
the Committee, the Company agrees to cooperate in a "cashless exercise" of the
Option. The cashless exercise shall be effected by the Participant delivering to
the Securities Broker instructions to exercise all or part of the Option,
including instructions to sell a sufficient number of shares of Common Stock to
cover the costs and expenses associated therewith. The Committee may permit a
Participant to elect to pay any applicable withholding taxes by requesting that
the Company withhold the number of shares of Common Stock equivalent at current
market value to the withholding taxes due. If the Participant is subject to
Section 16(b) of the Exchange Act, such election shall comply with the "window
period" provisions of Rule 16b-3.
8.06 Cashing Out of Option. The Committee may elect to cash out all or
part of the portion of any Option to be exercised by paying the optionee an
amount, in cash or Common Stock, equal to the excess of the Fair Market Value of
the Common Stock that is the subject of the portion of the Option to be
exercised over the option price times the number of shares of Common Stock
subject to the portion of the Option to be exercised on the effective date of
such cash out. Cash outs relating to options held by Participants who are
subject to Section 16(b) of the Exchange Act shall comply with the "window
period" provisions of Rule 16b-3.
Article IX
COMMON STOCK AND RESTRICTED STOCK
9.01 Award. In accordance with the provisions of Article IV, the
Committee will designate persons to whom an award of Common Stock and/or
Restricted Stock is to be made and will specify the number of shares of Common
Stock covered by such award or awards.
9.02 Vesting. In the case of Restricted Stock, on the date of the award,
the Committee may prescribe that the Participant's rights in the Restricted
Stock shall be forfeitable or otherwise restricted for a period of time set
forth in the Agreement and/or until certain financial performance objectives are
satisfied as determined by the Committee in its sole discretion. Subject to the
provisions of Article XII hereof, the Committee may award Common Stock to a
Participant which is not forfeitable and is free of any restrictions on
transferability.
9.03 Shareholder Rights. Prior to their forfeiture in accordance with
the terms of the Agreement and while the shares are Restricted Stock, a
Participant will have all rights of a shareholder with respect to Restricted
Stock, including the right to receive dividends, warrants
Page 8
<PAGE>
and rights and vote the shares; provided, however, that (i) a Participant may
not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of
Restricted Stock, (ii) the Company shall retain custody of the certificates
evidencing shares of Restricted Stock, and (iii) the Participant will deliver to
the Company a stock power, endorsed in blank, with respect to each award of
Restricted Stock.
Article X
PHANTOM STOCK
10.01 Award. Pursuant to this Plan or an agreement establishing
additional terms and conditions, the Committee may designate employees to whom
awards of Phantom Stock may be made and will specify the number of shares of
Common Stock covered by the award.
10.02 Vesting. The Committee may prescribe such terms and conditions
under which a Participant's right to receive payment for Phantom Stock shall
become vested.
10.03 Shareholder Rights. A Participant for whom Phantom Stock has been
credited generally shall have none of the rights of a shareholder with respect
to such Phantom Stock. However, a plan or agreement for the use of Phantom Stock
may provide for the crediting of a Participant's Phantom Stock account with cash
or stock dividends declared with respect to Common Stock represented by such
Phantom Stock.
10.04 Payment. At the Committee's discretion, the amount payable to a
Participant for Phantom Stock credited to his account shall be made in cash,
Common Stock or a combination of both. Cash settlements of Phantom Stock held by
Participants who are subject to Section 16(b) of the Exchange Act shall comply
with the "window period" provisions of Rule 16b-3.
10.05 Nontransferability. Any Phantom Stock awarded under this Plan
shall be nontransferable except by will or the laws of descent and distribution.
Article XI
ADJUSTMENT UPON CHANGE IN COMMON STOCK
Should the Company effect one or more (x) stock dividends, stock
split-ups, subdivisions or consolidations of shares or other similar changes in
capitalization; (y) spin-offs, spin-outs, split-ups, split-offs, or other such
distribution of assets to shareholders; or (z) direct or indirect assumptions
and/or conversions of outstanding Options due to an acquisition of the Company,
then the maximum number of shares as to which Grants and Awards may be issued
under this Plan shall be proportionately adjusted and their terms shall be
adjusted as the Committee shall determine to be equitably required. Any
determination made under this Article XI by the Committee shall be final and
conclusive.
Page 9
<PAGE>
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to any
Grant or Award.
Article XII
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Grant shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable Federal and
state laws and regulations (including, without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on which the
Company's shares may be listed or NASDAQ. The Company may rely on an opinion of
its counsel as to such compliance. Any share certificate issued to evidence
Common Stock for which a Grant is exercised or an Award is issued may bear such
legends and statements as the Committee may deem advisable to assure compliance
with Federal and state laws and regulations. No Grant shall be exercisable, no
Common Stock shall be issued, no certificate for shares shall be delivered, and
no payment shall be made under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from regulatory bodies
having jurisdiction over such matters.
Article XIII
GENERAL PROVISIONS
13.01 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or a Subsidiary or in any way affect any right and power of the
Company or a Subsidiary to terminate the employment of any employee at any time
with or without assigning a reason therefor.
13.02 Unfunded Plan. The Plan, insofar as it provides for a Grant or an
award of Phantom Stock, is not required to be funded, and the Company shall not
be required to segregate any assets that may at any time be represented by a
Grant or an award of Phantom Stock under this Plan.
13.03 Change of Control. Notwithstanding any other provision of the
Plan to the contrary, in the event of a Change of Control:
(a) Any outstanding Option, SAR (including any limited SAR) or Phantom
Stock which is not presently exercisable and vested as of a Change of Control
Date shall become fully
Page 10
<PAGE>
exercisable and vested to the full extent of the original grant upon such Change
of Control Date; provided, however, that if the Participant is subject to
Section 16(b) of the Exchange Act, any SAR or Phantom Stock shall have been
outstanding for at least six months prior to the Change of Control Date.
(b) The restrictions applicable to any outstanding Restricted Stock
shall lapse, and such Restricted Stock shall become free of all restrictions and
become fully vested, nonforfeitable and transferable to the full extent of the
original grant. The Committee may also provide in an Agreement that a
Participant may elect, by written notice to the Company within 60 days after a
Change of Control Date, to receive, in exchange for shares that were Restricted
Stock immediately before the Change of Control Date, a cash payment equal to the
Fair Market Value of the shares surrendered on the last business day the Common
Stock is traded on NASDAQ prior to receipt by the Company of such written
notice; provided, however, that if the Participant is subject to Section 16(b)
of the Exchange Act, any such Agreement providing for an election to receive a
cash settlement of the Restricted Stock shall be treated as an SAR for purposes
of compliance with the holding period and "window period" requirements of Rule
16b-3(e).
13.04 Rules of Construction. Headings are given to the articles and
sections of this Plan for ease of reference. The reference to any statute,
regulation, or other provision of law shall be construed to refer to any
amendment to or successor of such provision of law.
13.05 Amendment. The Board may amend or terminate this Plan from time to
time; provided, however, that no amendment may become effective until
shareholder approval is obtained if the amendment (i) materially increases the
aggregate number of shares that may be issued pursuant to Options and Common
Stock and Restricted Stock awards, (ii) materially increases the benefits to
Participants under the Plan, or (iii) materially changes the requirements as to
eligibility for participation in the Plan. No amendment shall, without a
Participant's consent, adversely affect any rights of such Participant under any
Grant or Award outstanding at the time such amendment is made except such an
amendment made to cause the Plan or a Grant or Award to qualify for the Rule
16b-3 exemption. No amendment shall be made if it would disqualify the Plan from
the exemption provided by Rule 16b-3.
13.06 Duration of Plan. No Grant or Award may be issued under this Plan
before November 1, 1991, or after October 31, 2000. Grants and Awards issued on
or after November 1, 1991, but on or before October 31, 2000, shall remain valid
in accordance with their terms.
13.07 Effective Date. This Plan was initially approved by the Board of
Directors and shareholders of the Company effective as of October 1, 1991.
Amendments to the Plan were approved by the Board of Directors and shareholders
of the Company effective as of May 16, 1995, and by the Board of Directors of
the Company effective as of May 21, 1996.
Page 11
EXHIBIT 10.5
LAWYERS TITLE CORPORATION
1992 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(as amended May 21, 1996)
Article I
DEFINITIONS
1.01 Affiliate means any "subsidiary" or "parent corporation" (within
the meaning of Section 424 of the Code) of the Company.
1.02 Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Grant issued to such Participant.
1.03 Board means the Board of Directors of the Company.
1.04 Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.05 Commission means the Securities and Exchange Commission or any
successor agency.
1.06 Committee means the Compensation Committee of the Board.
1.07 Common Stock means the Common Stock of the Company.
1.08 Company means Lawyers Title Corporation.
1.09 Exchange Act means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
1.10 Fair Market Value means, on any given date, the closing price of a
share of Common Stock as reported on the New York Stock Exchange composite tape
on such day or, if the Common Stock was not traded on the New York Stock
Exchange on such day, then on the next preceding day that the Common Stock was
traded on such exchange, all as reported by such source as the Committee may
select.
1.11 Grant means the grant of an Option.
1.12 Non-Employee Director means a member of the Board who is not an
employee of the Company or an Affiliate.
<PAGE>
1.13 Option means a stock option that entitles the holder to purchase
from the Company under the terms of this Plan the number of shares of Common
Stock set forth in Article IV at the Option Price.
1.14 Option Price means the price per share for Common Stock purchased
on the exercise of an Option as provided in Article IV.
1.15 Participant means a Non-Employee Director who is eligible to
receive a Grant under this Plan.
1.16 Rule 16b-3 means Rule 16b-3, as promulgated by the Commission in
Release No. 34-28869 under Section 16(b) of the Exchange Act, effective May 1,
1991, or any successor rule as amended from time to time.
1.17 Securities Broker means the registered securities broker acceptable
to the Company who agrees to effect the cashless exercise of an Option pursuant
to Section 7.03 hereof.
1.18 Subsidiary means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations in the chain (other than the last corporation) owns stock
possessing at least 50 percent of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
Article II
PURPOSE
This Plan is intended to associate the interests of the Non-Employee
Directors with those of the Company and its shareholders through increased
equity ownership, to assist the Company in recruiting and retaining individuals
of ability and experience who are not employed by the Company to serve on the
Board and its committees and to provide incentive to those individuals by
enabling them to participate in the future success of the Company.
Article III
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have all of the powers vested in it by the terms of the Plan, such powers to
include the authority (within the limitations described herein) to prescribe the
form of the Agreements evidencing Grants under the terms of this Plan. The
Committee shall, subject to the provisions of the Plan, have the power to
construe the Plan, to determine all questions arising thereunder and to adopt
and amend such
Page 2
<PAGE>
rules and regulations for the administration of the Plan as it may deem
desirable, consistent with the provisions of the Plan. Any decision of the
Committee in the administration of the Plan, as described herein, shall be final
and conclusive. The Committee may act only by a majority of its members in
office, except that the members thereof may authorize any one or more of their
number or the Secretary or any other officer of the Company to execute and
deliver documents on behalf of the Committee. No member of the Committee shall
be liable for anything done or omitted to be done by such member or by any other
member of the Committee in connection with the Plan, except in circumstances
involving actual bad faith. All costs and expenses of administering the Plan
shall be born by the Company.
Article IV
GRANTS OF OPTIONS
Every Non-Employee Director who serves on the Board during the term of
the Plan is eligible to receive Grants. Each Non-Employee Director serving on
the Board as of the effective date of this Plan shall be granted an Option on
such date. Every Non-Employee Director who continues to serve in such capacity
on the date which is the first business day following each Annual Meeting of
Shareholders during the term of this Plan shall be granted an Option on each
such date. Each Option shall be for the purchase by the Participant of 1,000
shares of Common Stock at a price per share equal to the Fair Market Value of a
share of the Common Stock on the date of the Grant. Each Option shall be
evidenced by an Agreement issued by the Committee in the form prescribed by the
Committee and consistent with the terms of this Plan.
Article V
AMOUNT OF STOCK
The total number of shares of Common Stock reserved and available for
issuance upon exercise of Options granted under the Plan shall be 40,000 shares,
subject to adjustment as provided in Article VIII below. The Common Stock to be
issued may be either authorized and unissued shares, issued shares acquired by
the Company or its Subsidiaries or any combination thereof. In the event that an
Option is terminated, in whole or in part, for any reason other than its
exercise, the number of shares of Common Stock allocated to such Option or
terminated portion thereof may be reallocated to other Options to be granted
under this Plan. In the event that the number of shares of Common Stock
available for future Grants under the Plan is insufficient to make all automatic
Grants required to be made on such date, then all NonEmployee Directors shall
share ratably in the number of Options available for Grants under the Plan.
Page 3
<PAGE>
Article VI
EXERCISE OF OPTIONS
Each Option shall be first exercisable on the date which is six months
from the date of the grant of the Option and shall continue to be exercisable
for a term of ten years thereafter; provided, however, that: (i) subject to the
six month exercisability requirement set forth above, an Option shall be
exercisable, in the event of a Participant's death prior to exercising the
Option, by his estate, or the person or persons to whom his rights under the
Option shall pass by will or the laws of descent and distribution but only for a
period of two years from the date of the Participant's death or during the
remainder of the period preceding the expiration of the Option, whichever is
shorter, (ii) subject to the six month exercisability requirement set forth
above, an Option shall be exercisable, if a Participant becomes permanently and
totally disabled (within the meaning of Section 105(d)(4) of the Code) while
serving on the Board prior to exercising the Option, but only for a period of
two years from the date on which he ceases serving on the Board due to such
disability or during the remainder of the period preceding the expiration of the
Option, whichever is shorter; and (iii) subject to the six month exercisability
period set forth above, in the event that a Participant resigns from or is not
reelected or does not stand for reelection to the Board or in any other
circumstance approved by the Board in its sole discretion, an Option shall be
exercisable but only for a period of two years following the date of his
resignation or cessation of service on the Board, or in the period prescribed by
the Board in an approved circumstance, or during the remainder of the period
prescribed by the Board in an approved circumstance, or during the remainder of
the period preceding the expiration of the Option, whichever is shorter. Any
Option shall be nontransferable, except by will or by the laws of descent and
distribution as set forth above. During the lifetime of the Participant to whom
an Option is granted, the Option may be exercised only by the Participant. No
right or interest of a Participant in any Option shall be liable for, or subject
to, any lien, obligation or liability of such Participant or his estate.
Article VII
MANNER OF EXERCISE
7.01 Exercise. Subject to the provisions of the Article VI, an Option
may be exercised in whole at any time or in part from time to time. An Option
granted under this Plan may be exercised with respect to any number of whole
shares less than the full number for which the Option could be exercised. Such
partial exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan with respect to remaining shares
subject to the Option.
7.02 Payment. Payment of the Option Price may be made in cash or by
surrendering previously-owned shares of Common Stock the Company, provided the
shares surrendered have a Fair Market Value (determined as of the day preceding
the date of exercise) that is not less than such Option Price of part thereof.
Page 4
<PAGE>
7.03 Cashless Exercise. To the extent permitted under applicable laws
and regulations, at the request of the Participant, the Company will cooperate
in a "cashless exercise" of an Option. The cashless exercise shall be effected
by the Participant delivering to the Securities Broker instructions to exercise
all or part of the Option, including instructions to sell a sufficient number of
shares of Common Stock to cover the costs and expenses associated therewith.
7.04 Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to an Option until the date he
exercises such Option.
Article VIII
ADJUSTMENT UPON CHANGE IN COMMON STOCK
Should the Company effect one or more (x) stock dividends, stock
split-ups, subdivisions or consolidations of shares or other similar changes in
capitalization; (y) spin-offs, spin-outs, split-ups, split-offs, or other such
distribution of assets to shareholders; or (z) direct or indirect assumptions
and/or conversions of outstanding options due to an acquisition of the Company,
then the maximum number of shares as to which Grants may be issued under this
Plan and the number and price of shares of Common Stock subject to the Grants
shall be proportionately adjusted, and the terms of Options shall be adjusted,
as the Committee shall determine to be equitably required to retain for the
Participants the equivalent economic benefit of their Option(s). Any
determination made under this Article VIII by the Committee shall be final and
conclusive.
The issuance by the Company of shares of Common Stock or securities
convertible into shares of Common Stock for cash or property or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to any Grant.
Article IX
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements, if any) and the rules of all domestic stock exchanges on which the
Company's shares may be listed or NASDAQ. The Company may rely on an opinion of
its counsel as to such compliance. Any share certificate issued to evidence
Common Stock for which an Option is exercised may bear such legends and
statements as the Committee may deem advisable to assure compliance with federal
and state laws and regulations. No Grant shall be
Page 5
<PAGE>
exercisable, no Common Stock shall be issued, and no certificate for shares
shall be delivered until the Company has obtained such consent or approval as
the Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
Article X
GENERAL PROVISIONS
10.01 Rules of Construction. Headings are given to the articles and
sections of this Plan for ease of reference. The reference to any statute,
regulation, or other provision of law shall be construed to refer to any
amendment to or successor of such provision of law.
10.02 Amendment. The Board may amend or terminate this Plan from time to
time; provided, however, that the Board may amend no more often than once every
six months and no amendment may become effective until shareholder approval is
obtained if the amendment would increase the number of shares that may be issued
hereunder pursuant to Options, increase the benefits to Participants under the
Plan, or change the requirements as to eligibility for participation in the
Plan. No amendment shall, without a Participant's consent, adversely affect any
rights of such Participant under any Grant outstanding at the time such
amendment is made except if such an amendment made to cause the Plan or a Grant
to qualify for the Rule 16b-3 exemption. No amendment shall be made if it would
disqualify the Plan from the exemption provided by Rule 16b-3.
10.03 No Right. Neither the Plan nor any action taken hereunder shall
be construed as giving any Non-Employee Director any right to be retained in the
service of the Company.
10.04 Unfunded Plan. The Plan shall be unfunded. The Company shall not
be required to establish any special or separate fund or to make any other
segregation of assets to assure the issuance of shares upon exercise of any
Option under the Plan and issuance of shares upon exercise of Options shall be
subordinated to the claims of the Company's general creditors.
10.05 Acceptance. By accepting any Option or other benefit under the
Plan, each Participant and each person claiming under or through such person
shall be conclusively deemed to have indicated his acceptance and ratification
of, and consent to, and any action taken under the Plan by the Company or the
Board.
10.06 Rule 16b-3 Compliance. It is the intention of the Company that the
Plan comply in all respects with Rule 16b-3, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3. The Board may
adopt rules and regulations under, and amend, the Plan in furtherance of the
intent of the foregoing.
Page 6
<PAGE>
10.07 Term of Plan. No Grant may be issued under this Plan before the
effective date of the Plan or after the first business day following the 1996
Annual Meeting of Shareholders (the "Termination Date"). Grants issued on or
before the Termination Date shall remain valid in accordance with their terms.
10.08 Effective Date. This Plan was approved by the Board of Directors
and shareholders of the Company effective as of May 19, 1992, and was amended by
the Board of Directors effective as of May 21, 1996.
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213,187
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