<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURIT
EXCHANGE ACT OF 1934
For the transition period from _________________ to ________________________
Commission file number 1-12688
STEWART INFORMATION SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1677330
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1980 Post Oak Blvd., Houston, TX 77056
(Address of principal executive offices)
(Zip Code)
(713) 625-8100
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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 5,847,003
Class B Common 525,006
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FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item No. Page
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<S> <C> <C> <C>
Part I
1. Financial Statements 1
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Part II
1. Legal Proceedings 10
6. Exhibits and Reports on Form 8-K 13
Signature 30
</TABLE>
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STEWART INFORMATION SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE SIX MONTHS AND QUARTER ENDED
June 30, 1995 and 1994
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
1995 1994 1995 1994
------ ------ ------ ------
($000 Omitted) ($000 Omitted)
<S> <C> <C> <C> <C>
Revenues
Title premiums, fees and related revenues 63,019 76,321 118,043 156,444
Investment income 3,309 2,989 6,627 6,062
Investment gains (losses) 300 (201) 353 377
Other income 699 740 352 1,377
------ ------ ------- -------
67,327 79,849 125,375 164,260
Expenses
Employee costs 33,879 38,901 65,852 80,040
Other operating expenses 21,615 24,175 40,804 46,525
Title losses and related claims 6,406 11,410 13,033 23,210
Depreciation and amortization 2,416 1,847 4,679 3,679
Interest 263 124 415 267
Minority interests 275 232 233 548
------ ------ ------- -------
64,854 76,689 125,016 154,269
Income before taxes 2,473 3,160 359 9,991
Income taxes 798 856 111 3,247
------ ------ ------- -------
Net income 1,675 2,304 248 6,744
====== ====== ======= =======
Average number of shares outstanding (000) 6,228 6,204 6,223 6,189
Earnings per share
Net income 0.27 0.37 0.04 1.09
====== ====== ======= =======
</TABLE>
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STEWART INFORMATION SERVICES CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
JUN 30 DEC 31
1995 1994
-------- ---------
($000 Omitted)
<S> <C> <C>
Assets
Cash and cash equivalents 15,887 16,214
Investments - statutory reserve fund 115,795 105,642
Investments - other 82,788 90,737
Receivables 33,220 29,440
Property and equipment, net 24,698 24,778
Title plants 19,484 14,369
Other 43,196 43,996
------- -------
335,068 325,176
======= =======
Liabilities
Notes payable 14,286 7,865
Accounts payable and accrued liabilities 20,483 21,968
Estimated title losses 133,147 134,316
Minority interest 4,520 4,674
Contingent liabilities and commitments
Stockholders' equity
Common and Class B Common Stock and
additional paid-in capital 49,215 48,962
Net unrealized investment gains/(losses), less
deferred taxes of $530 and ($2,888) 985 (5,363)
Retained earnings 112,432 112,754
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Total stockholders' equity ($26.11 per share at
June 30, 1995) 162,632 156,353
------- -------
335,068 325,176
======= =======
</TABLE>
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STEWART INFORMATION SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
-------- --------
($000 Omitted)
<S> <C> <C>
Net cash flow (used) provided by operating activities (Note) (3,343) 15,288
Cash flow from investing activities:
Purchases of property and equipment and title plants, less capital
leases - net (3,644) (7,066)
Proceeds of investments matured to sold 36,011 35,386
Purchases of investments, excluding mortgage loans (28,780) (58,565)
Increases in mortgages and other notes (766) (1,462)
Collections on mortgages and other notes 759 1,453
Cash paid in the purchase of subsidiaries - net (2,615) (968)
Proceeds from issuance of stock 363 305
------- -------
Net cash provided (used) by investing activities 1,328 (30,917)
Cash flow from financing activities:
Dividends paid (570) (550)
Proceeds of notes payable 3,948 2,377
Payments on notes payable and capital leases (1,690) (2,809)
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Net cash provided (used) by financing activities 1,688 (982)
------- -------
Net decrease in cash equivalents (327) (16,611)
======= =======
NOTE: Reconciliation of net income to above amounts:
Net income 248 6,744
Add (deduct):
Depreciation and amortization 4,679 3,679
Provision for title losses (less than) in excess of payments (1,169) 13,352
Provision for uncollectible amounts 413 987
(Increase) decrease in accounts receivable, net (3,143) 133
Decrease in accounts payable and accrued liabilities - net (4,432) (7,900)
Minority interest expense 233 548
Equity in net earnings of investees 109 (1,070)
Realized investment losses (gains) - net 353 (377)
Other, net (634) (808)
------- -------
Net cash flow (used) provided by operating activities (3,343) 15,288
======= ======
</TABLE>
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STEWART INFORMATION SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==========================================================================
Note 1: Interim Financial Statements
The financial information contained in this report for the six month
periods ended June 30, 1995 and 1994, and as at June 30, 1995, is unaudited.
In the opinion of management, all adjustments necessary for a fair presentation
of this information for all unaudited periods, consisting only of normal
recurring accruals, have been made. The results of operations for the interim
periods are not necessarily indicative of results for a full year.
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Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
______________________________________________________________________________
A comparison of the results of operations of the Company for the first six
months of 1995 with the first six months of 1994 follows:
General
The Company's dominant segment of operations is the land title business. In
general, the principal factors which contribute to increases in title revenues
include declining mortgage interest rates (which usually increase home sales),
increases in refinancing ("refis") transactions, rising home prices, higher
premium rates, increased market share, additional revenues from new offices and
increased revenue from non-residential commercial transactions. Although
relatively few in number, large commercial transactions usually yield higher
premiums.
Revenues
The Company's revenues from title premiums and fees fell $38.4 million, or
24.5%, in the first six months of 1995 as compared to the first six months of
1994. The Company did not benefit in the first quarter of 1995 from a high
volume of loan refinancings like the first quarter of 1994.
Regular business declined also from the same period a year ago. Volume in the
first quarter of 1994 was driven by low mortgage interest rates, which began a
steady rise in February 1994, and peaked at the 9.7% level in December 1994. A
gradual decline in rates began in the early months of 1995, dropping below the
8% level in May.
The number of closings handled by the Company were down 33.0% primarily because
of the reduction in refinancing transactions, as well as regular transactions,
resulting from the rise in mortgage rates noted above. Closings decreased in
California, Texas, Florida, Colorado and most of the company's other major
markets. The average revenue per closing rose 11.1% primarily because regular
transactions generate higher premiums than refi transactions. Premium revenues
from new and existing agents decreased 30.0% in 1995 over 1994.
Investment income was up 9.3% in 1995 due to an increase in the average balance
invested.
Expenses
Employee expenses decreased $14.2 million, or 17.7% in 1995 primarily because
of a decrease in the average number of employees from 4,079 a year ago to 3,423
in 1995. The decrease in staff in 1995 was primarily in Texas, California and
Florida. While the Company has reduced overall employee expenses, employee
expenses of the systems development and programming operations increased. Most
of the increase was attributable to developing new, or significantly improving,
existing operating processes. These expenditures are expected to add customer
revenues and reduce operating expenses and title losses in the future.
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Other operating expenses decreased by $5.7 million, or 12.3%, in 1995 primarily
because of the decrease in volume which reduced supplies, premium taxes,
advertising, bad debts and title plant expenses. Other operating expenses
include office rent, telephone, policy forms, delivery expenses, travel and
fees paid to attorneys for examination and closing services.
Provisions for title losses and related claims were down $10.2 million in 1995.
The Company's recent experience in claims has improved significantly as a
result of the Company's programs designed to curtail claims and improve
recoveries on claims. The first six months of 1995 included larger than usual
recoveries. As a percentage of title premiums, fees and related revenues,
provisions decreased to 11.0% in 1995 versus 14.8% in 1994. The ratio was
13.9% for the full year 1994.
In December 1994 the California Board of Equalization ruled in favor of the
Company concerning an assessment previously filed against the Company for
certain additional premium taxes for the year 1987; however, an assessment for
retaliatory premium taxes for 1987 is still pending. The amount of the
remaining assessment is $1.1 million, excluding interest and penalties. The
Company cannot predict the results of this assessment nor can the Company
predict whether California will assess additional taxes for years subsequent to
1989 or the amount of any such assessments, if made. No assessments were made
for the years 1988 or 1989 and those years are barred from assessments.
The provision for income taxes represented a 30.9% effective tax rate in 1995
and 32.5% effective tax rate in 1994.
Liquidity and capital resources
Operating earnings represent the primary source of financing, but this may be
supplemented by bank borrowings. The capital resources of the Company, and the
present debt-to-equity relationship, are considered satisfactory.
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Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
______________________________________________________________________________
A comparison of the results of operations of the Company for the second quarter
of 1995 with the second quarter of 1994 follows:
General
The Company's dominant segment of operations is the land title business. In
general, the principal factors which contribute to increases in title revenues
include declining mortgage interest rates (which usually increase home sales
and refinancing transactions), rising home prices, higher premium rates,
increased market share, additional revenues from new offices and increased
revenue from non-residential commercial transactions. Although relatively few
in number, large commercial transactions usually yield higher premiums.
Revenues
The Company's revenues from title premiums and fees fell $13.3 million, or
17.4%, in the second quarter of 1995 as compared to the second quarter of 1994.
The number of closings handled by the Company were down 20.9% primarily because
of a decrease in refi and regular transactions resulting from the steady rise
in mortgage interest rates that began in February 1994. A gradual decline in
rates began in the early months of 1995, dropping below the 8% level in May.
Closings decreased in Texas, California, Colorado, Florida and most of the
company's other major markets. The average revenue per closing rose 7.7%.
Premium revenues from new and existing agents decreased 35.4% in 1995 as
compared to 1994.
Investment income was up 10.7% in 1995, due to an increase in market yields.
Expenses
Employee expenses decreased $5.0 million, or 12.9%, in 1995 because of a
decrease in the average number of employees from 3,925 a year ago to 3,350 in
1995. The decrease in staff in 1995 was primarily in Texas and California.
While the Company has reduced overall employee expenses, employee expenses of
the systems development and programming operations increased. Most of the
increase was attributable to developing new, or significantly improving,
existing operating processes. These expenditures are expected to add customer
revenues and reduce operating expenses and title losses in the future.
Other operating expenses decreased by $2.6 million, or 10.6%, in 1995 primarily
because of decreased volume which reduced advertising, premium taxes and title
plant expenses. Other operating expenses include rent, supplies, telephone,
policy forms, delivery, travel and fees paid to attorneys for examination and
closing services.
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<PAGE> 10
Provisions for title losses and related claims were down $5.0 million in 1995.
The Company's recent experience in claims has improved significantly as a
result of the Company's programs designed to curtail claims and improve
recoveries on claims. The first and second quarters of 1995 included larger
than usual recoveries. As a percentage of title premiums, fees and related
revenues, provisions decreased to 10.2% in 1995 versus 15.0% in 1994. The
ratio was 13.9% for the full year 1994.
In December 1994 the California Board of Equalization ruled in favor of the
Company concerning an assessment previously filed against the Company for
certain additional premium taxes for the year 1987; however, an assessment for
retaliatory premium taxes for 1987 is still pending. The amount of the
remaining assessment is $1.1 million, excluding interest and penalties. The
Company cannot predict the results of this assessment nor can the Company
predict whether California will assess additional taxes for years subsequent to
1989 or the amount of any such assessments, if made. No assessments were made
for the years 1988 or 1989 and those years are barred from assessments.
The provision for income taxes represented a 32.3% effective tax rate in 1995
and 27.1% effective tax rate in 1994. The effect tax rate in 1994 was lower
primarily because of the increase in non-taxable income from municipal bonds as
a percentage of taxable income.
Liquidity and capital resources
Operating earnings represent the primary source of financing, but this may be
supplemented by bank borrowings. The capital resources of the Company, and the
present debt-to-equity relationship, are considered satisfactory.
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PART II
Page
----
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4. - Rights of Common and Class B Common
Stockholders
10.1 - SISCO 1995 Stock Option Plan Agreement
10.2 - Executed Incentive Stock Option Agreements
27.0 - Financial data schedule
28.2 - Details of Investments as reported in the
Quarterly Report to Shareholders
(b) There were no reports on Form 8-K filed during the
quarter ended June 30, 1995
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ITEM 3. LEGAL PROCEEDINGS
On August 29, 1989, a purported class action was filed in the
Circuit Court of Milwaukee County, Wisconsin against Guaranty, eleven other
title insurance companies and nine individuals. The plaintiffs purported to
represent a class of all persons and entities in Wisconsin who purchased title
insurance and/or search and examination services from 1971 through at least
December 31, 1984. The complaint alleges that the defendants violated
Wisconsin antitrust and insurance laws by participating in a title insurance
rating bureau. Plaintiffs seek declaratory relief, treble damages in an
unspecified amount and costs and attorneys' fees. On February 1, 1990, the
defendants filed a motion to dismiss the complaint in the Circuit Court of
Milwaukee County, Wisconsin on the basis of res judicata, implied repeal of the
Wisconsin antitrust laws by the Wisconsin insurance laws, filed tariff doctrine
and statute of limitations. The Circuit Court granted the defendants' motion
on October 17, 1990. On June 19, 1991, the Circuit Court denied the
plaintiffs' motion to amend their complaint to add new plaintiffs. The
plaintiffs appealed the Circuit Court's rulings to the Court of Appeals of
Wisconsin, which certified the appeal to the Wisconsin Supreme Court on April
1, 1992. On June 9, 1993, the Supreme Court affirmed the Circuit Court's
dismissal of the case. The plaintiffs filed a motion for reconsideration in
the Wisconsin Supreme Court on or about June 28, 1993, and the defendants filed
a response on or about July 7, 1993. On or about August 17, 1993, the
Wisconsin Supreme Court denied the plaintiffs' motion. The United States
Supreme Court denied the plaintiff's petition for certiorari on
February 22, 1994.
On April 13, 1990, Walter Thomas Brown and Jeffrey L. Dziewit sued
Guaranty and five other major title insurers in a purported class action in
United States District Court for the District of Arizona. The complaint
alleges that the defendants' participation in a title insurance rating bureau
constituted a violation of federal antitrust laws. Plaintiffs seek injunctive
relief, treble damages in an unspecified amount, and costs and attorneys' fees.
The plaintiffs purport to represent a class consisting of all persons, except
officers and directors of the defendants and their immediate families, who
purchased title search and examination services from defendants in Arizona and
Wisconsin from January 7, 1981, to the present time. The District Court
granted the defendants' motion for summary judgment on March 1, 1991. On
December 28, 1992, the United States Court of Appeals for the Ninth Circuit
affirmed in part the decision of the district court, holding that the federal
class action settlement bars the plaintiffs' claims for injunctive relief, but
reversed in part the decision of the district court by holding that the federal
class action settlement does not bar the plaintiffs' claims for monetary
damages. In addition, the court held that the defendants are not protected
from the plaintiffs' claims by the state action doctrine or the filed tariff
doctrine. The title insurers filed a petition for rehearing in the Ninth
Circuit on or about January 11, 1993. On or about March 17, 1993, the Ninth
Circuit denied the petition for rehearing. On or about March 24, 1993, the
Ninth Circuit granted the title insurers' motion to stay issuance of the Ninth
Circuit's mandate for a period of ninety days, pending the title insurers'
filing of a petition for certiorari with the United States Supreme Court.
On or about June 15, 1993, the title insurers filed their petition for
a writ of certiorari. On or about October 1, 1993, counsel for the plaintiffs
and counsel for the defendants executed a "memorandum of understanding"
regarding a proposed settlement. Under an Agreement of Settlement subsequently
executed by the parties, the proposed settlement class would include persons
who purchased search and examination services in Wisconsin and Arizona from
January 1, 1981 through June 10, 1986. Members of the settlement class who
purchased from one of the defendants or their agents from 1981 through 1984
with respect to Wisconsin, or from 1981 through 1982 with respect to Arizona,
would be entitled to receive a cash payment equal to 7.7 percent of the amount
that each such class member paid for title search and examination services
(provided that the total liability of the defendants not exceed $1,587,326 in
Wisconsin and that the total liability of the defendants not exceed $1,225,200
in Arizona). Members of the
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<PAGE> 13
settlement class who are eligible but do not elect to receive the cash option
would receive, without additional charge, a policy enhancement designed to
reflect the impact of inflation from January 1, 1981 to the date of any final
settlement order. Such class members and members of the settlement class who
purchased from persons other than the defendants or their agents will receive
the last $5,000 of coverage without charge in connection with any new title
insurance policy purchased from any of the defendants within one year following
any final settlement order with respect to property located either in Arizona
or Wisconsin. Members of this settlement class would have the right to "opt
out" of the proposed settlement, and the defendants would have the right to
reject the settlement if 5,000 or more members elect to opt out. The proposed
settlement, which is subject to notice and court approval pursuant to the
provisions of Federal Rule of Civil Procedure 23 and other authorities, would
result in a judgment dismissing with prejudice all claims of the settlement
class under federal and state antitrust laws as to the defendants and their
agents, officers, and employees.
On October 4, 1993, the Supreme Court granted the title insurers'
petition for a writ of certiorari. On or about April 4, 1994, the Supreme
Court dismissed the writ as improvidently granted. On June 1, 1994, the
parties jointly filed with the district court their Agreement of Settlement and
a proposed order that would preliminarily approve the proposed settlement,
authorize notice to be given to members of the settlement class, and schedule a
hearing on the proposed settlement. On or about July 5, 1994, counsel for the
plaintiffs filed "Plaintiffs" Notice of Withdrawal of Joint Request for Entry
of Preliminary Settlement Order Lodged June 1, 1994." On or about July 14,
1994, the title insurers filed their response, urging the court to enforce the
Agreement of Settlement and to enter the proposed order.
On September 19, 1989, the Federal Trade Commission ("FTC") denied
Guaranty's appeal of the Administrative Law Judge's decision in In the Matter
of Ticor Title Insurance. The FTC ordered Guaranty and the other respondents
to cease and desist from discussing, proposing, settling or filing any rates
for title search and examination services through rating bureaus in New Jersey,
Pennsylvania, Connecticut, Wisconsin, Arizona and Montana, except where such
collective activity is engaged in pursuant to clearly articulated state policy
and is actively supervised by a state regulatory agency. The Court of Appeals
for the Third Circuit reversed the FTC's decision on January 9, 1991 and held
that the collective filing of rates for title search and examination services
is immune from federal antitrust liability under the state-action doctrine.
On June 12, 1992, the Supreme Court determined that state regulators
in Wisconsin and Montana failed to actively supervise rating bureau activity in
those states and that as a result, state action immunity did not apply.
Accordingly, the Court reversed the Court of Appeals' finding with respect to
those states. The Court also remanded to the Court of Appeals with
instructions to reconsider its findings with respect to Arizona and
Connecticut. The Court did not consider defenses raised by the title insurers
other than state action immunity. On July 15, 1993, the Court of Appeals held
that the state action doctrine did not apply to the title insurers' activity in
Arizona and Connecticut. The Court of Appeals also held that the title
insurers' activity was not protected by the McCarren-Ferguson Act's exemption
for the "business of insurance" or by the exemption for petitioning of the
government. On or about August 30, 1993, the Court of Appeals denied the title
insurers' petition for rehearing. The title insurers filed a petition for a
writ of certiorari with the United States Supreme Court, which denied the
petition on March 21, 1994. The FTC's order has been modified to delete
references to New Jersey and Pennsylvania and, as modified, has become final.
On or about April 22, 1994, Harold Segall and three other plaintiffs
sued Guaranty and 10 other title insurance companies in the United States
District Court for the Eastern District of Wisconsin. The plaintiffs purport
to represent a class consisting of persons who purchased title search and
examination services from one or more of the defendants in connection with the
sale or refinancing of residential real
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<PAGE> 14
estate in Wisconsin from January 7, 1981 through at least January 8, 1985.
According to the plaintiffs, the defendants violated federal antitrust law by
participating in a title insurance rating bureau through which they allegedly
agreed upon the process and other terms and conditions of sale for title search
and examination services in Wisconsin. The plaintiffs request treble damages
in an unspecified amount, costs, and attorney's fees. The plaintiffs also seek
an injunction against certain defendants other than Guaranty. On or about June
15, 1994 Guaranty filed its answer to the complaint. On or about July 8, 1994,
the plaintiffs filed a Motion to Transfer with the Judicial Panel on
Multidistrict Litigation, requesting that it transfer the action to the United
State District Court of the District of Arizona for consolidation with the
Arizona Federal proceeding, described above. Guaranty filed its opposition to
the motion on August 1, 1994.
On May 18, 1995, the plaintiffs and defendants in the consolidated
proceeding presented a proposed settlement to the United States District Court
for the District of Arizona. The proposed settlement class would include
persons who purchased search and examination services in Wisconsin and Arizona
from January 1, 1981, through June 10, 1986 from any title insurance
underwriter or agent. Members of the settlement class who purchased from 1981
through 1984 with respect to Wisconsin, or from 1981 through 1982 with respect
to Arizona, would be entitled to receive a cash payment equal to 7.7 percent of
the amount that each such class member paid for title search and examination
services (provided that the total liability of the defendants not exceed
$2,070,326 in Wisconsin and $1,996,613 in Arizona). Members of the settlement
class who purchased search and examination services between January 1, 1981 and
June 10, 1986 but do not receive the cash option would receive, without
additional charge, a policy enhancement designed to reflect the impact of
inflation from January 1, 1981 to the date of any final settlement order. The
same enhancement would be provided to members of the settlement class who did
not purchase search and examination services but became insured during the
applicable period by any defendant. Class members who purchased search and
examination services, and class members who neither purchased search and
examination nor become insured by any defendant, would receive the last $5,000
of coverage without charge in connection with any new title insurance policy
purchased from any of the defendants within one year following any final
settlement order with respect to property located in either Arizona or
Wisconsin. Members of this settlement class would have the right to "opt out"
of the proposed settlement, and the defendants would have the right to reject
the settlement if 5,000 or more members elected to opt out. The proposed
settlement, which is subject to notice and court approval pursuant to the
provisions of Federal Rule of Civil Procedure 23 and other authorities, would
result in a judgment dismissing with prejudice all claims of the settlement
class under federal and state antitrust and other laws as to the defendants and
their affiliates, agents, officers, and employees.
On June 19, 1995, the Court entered an order preliminarily approving
the proposed settlement. The Court scheduled a final hearing on the proposed
settlement for October 10, 1995.
The Registrant is a party to number routine lawsuits incidental to
its business most of which involve disputed policy claims. In many of these
suits, the plaintiff seeks exemplary or treble damages in excess of policy
limits based on the alleged malfeasance of an issuing agent of the Registrant.
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<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Stewart Information Services Corporation
(Registrant)
08-09-95
______________
Date
/s/ MAX CRISP
_____________________________________
Max Crisp
(Vice President - Finance,
Secretary-Treasurer, Director and
Principal Financial
and Accounting Officer)
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<PAGE> 16
INDEX TO EXHIBITS
(a) Exhibits
4. - Rights of Common and Class B Common
Stockholders
10.1 - SISCO 1995 Stock Option Plan Agreement
10.2 - Executed Incentive Stock Option Agreements
27.0 - Financial data schedule
28.2 - Details of Investments as reported in the
Quarterly Report to Shareholders
<PAGE> 1
EXHIBIT 4
STEWART INFORMATION SERVICES CORPORATION
RIGHTS OF COMMON AND CLASS B COMMON STOCKHOLDERS
JUNE 30, 1995
----------------------------------------------------------------------------
Common and Class B Common stockholders have the same rights, except
(1) no cash dividends may be paid on Class B Common Stock and (2) the two
classes of stock are voted separately in electing directors. A provision in
the by-laws requires an affirmative vote of at least two-thirds of the
directors to approve any proposal which may come before the directors. This
by-law provision cannot be changed without majority vote of each class of
stock.
Common stockholders, with cumulative voting rights, may elect five or
more of the nine directors. Class B Common stockholders may, with no
cumulative voting rights, elect four directors, if 350,000 or more shares of
Class B Common stock are outstanding; three directors, if between 200,000 and
350,000 shares of Class B Common Stock are outstanding; if less than 200,000
shares of Class B Commons Stock are outstanding, the Common Stock and the Class
B Common Stock shall be voted as a single class upon all matters, with the
right to cumulate votes for the election of directors.
No change in the Certificate of Incorporation which would affect the
Common Stock and the Class B Common Stock unequally shall be made without the
affirmative vote of at least a majority of the outstanding shares of each
class, voting as a class.
Class B Common Stock may, at any time, be converted by its holders
into Common Stock on a share-for-share basis. Such conversion is mandatory on
any transfer to a person not a lineal descendant (or spouse, trustee, etc. of
such descendant) of William H. Stewart.
<PAGE> 1
EXHIBIT 10.1
STEWART INFORMATION SERVICES CORPORATION
1995 STOCK OPTION PLAN
1. Purpose. The 1995 Stock Option Plan (the "Plan") of Stewart
Information Services Corporation (the "Company"), for certain key employees, is
intended to advance the best interest of the Company by providing those persons
who have substantial responsibility for its management and growth, with
additional incentive and by increasing their proprietary interest in the
success of the Company, thereby encouraging them to remain in its employ.
2. Administration. The Plan shall be administered by a committee to
be appointed by the Board of Directors of the Company (the "Committee"). The
Committee shall consist of not less than two members of the Board of Directors,
who have not, for a period of at least one year prior to being appointed to the
Committee, been eligible for selection as a person to whom stock may be
allocated or to whom stock options or stock appreciation rights may be granted
pursuant to the Plan or any other plan of the Company entitling the participant
therein to acquire stock, stock options or stock appreciation rights of the
Company. The Board of Directors of the Company shall have the power from time
to time to add or remove members of the Committee, and to fill vacancies
arising for any reason. The Committee shall designate a chairman from among
its members, who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all records, documents, and
data pertaining to its administration of the Plan. Meetings shall be held at
any time and place as it shall choose. A majority of the members of the
Committee shall constitute a quorum for the transaction of business. The vote
of a majority of those members present at any meeting shall decide any question
brought before that meeting. In addition, the Committee may take any action
otherwise proper under the Plan by the affirmative vote, taken without a
meeting, of a majority of its members. No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his own part, including but not limited to the exercise of
any power or discretion given to him under the Plan, except those resulting
from his own gross negligence or willful misconduct. All questions of
interpretation and application of the Plan, or as to options granted under it
(the "Options"), shall be subject to the determination of a majority of the
Committee. The Committee in exercising any power or authority granted under
this Plan or in making any determination under this Plan shall perform or
refrain from performing those acts using its sole discretion and judgment. Any
decision made by the Committee or any refraining to act or any act taken by the
Committee in good faith shall be final and binding on all parties. The
Committee's decision shall never be subject to de novo review. When
appropriate the Plan shall be administered in order to qualify certain of the
Options granted under it as "incentive stock options" described in Section 422
of the Internal Revenue Code of 1986, as amended.
3. Option Shares. The stock subject to the Options and other
provisions of the Plan shall be shares of the Company's Common Stock, $1.00 par
value (or such other par value as may be designated by act of the Company's
stockholders) (the "Common Stock"). The amount of the Common Stock with
respect to which Options may be granted under this Plan shall not exceed
100,000 shares in the aggregate and 40,000 shares to any one individual. The
class and aggregate number of shares which may be subject to the Options
granted it under this Plan shall be subject to adjustment under Section 15.
The shares may be treasury shares or authorized but unissued shares.
In the event that an outstanding Option shall expire or terminate for
any reason, the shares of Common Stock allocable to the unexercised portion of
that Option may again be subject to an Option under the Plan.
4. Authority to Grant Options. The Committee may grant the following
options at any time during the term of this Plan to any eligible employee of
the Company that it chooses:
(a) "Incentive" Stock Options. The Committee may grant to an
eligible employee an Option, or Options, to buy a stated number of
shares of Common Stock under the terms and
<PAGE> 2
EXHIBIT 10.1
conditions of the Plan, which Option or Options would be an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended.
(b) "Non-incentive" Stock Options. The Committee may grant
to an eligible employee an Option, or Options, to buy a stated number
of shares of Common Stock under the terms and conditions of the Plan,
which Option or Options would not constitute an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended.
Each option granted shall be approved by the Committee. Subject only
to any applicable limitations set forth in this Plan, the number of shares of
Common Stock to be covered by an Option shall be as determined by the
Committee.
5. Eligibility. The individuals who shall be eligible to participate
in the Plan shall be the executive officers of the Company other than Carloss
Morris and Stewart Morris. However, no person who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company shall be eligible to receive an Option which is an incentive stock
option unless at the time that the Option is granted the option price is at
least 110% of the fair market value of the Common Stock at the time the Option
is granted and the Option by its own terms is not exercisable after the
expiration of five years from the date the Option is granted. No individual
shall be eligible to receive an Option under the Plan while that individual is
a member of the Committee.
A person will be considered as owning the stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants. Stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust will be
considered as being owned proportionately by or for its shareholders, partners
or beneficiaries.
6. Option Price. The price at which shares may be purchased pursuant
to an Option that is an incentive stock option shall be not less than the fair
market value of the shares of Common Stock on the date the Option is granted.
The Committee in its discretion may provide that the price at which shares may
be purchased shall be more than the minimum price required. If an individual
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, the option price at which shares may be
purchased under an Option which is an incentive stock option shall be not less
than 110% of the fair market value of the Common Stock on the date the Option
is granted.
7. Duration of Options. No Option which is an incentive stock option
shall be exercisable after the expiration of 10 years from the date the Option
is granted. The Committee in its discretion may provide that the Option shall
be exercisable throughout the 10 year period or during any lesser period of
time commencing on or after the date of grant of the Option and ending upon or
before the expiration of the 10 year period. If an individual owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, no Option which is an incentive stock option shall be
exercisable after the expiration of five years from the date the Option is
granted. No Option which is a non-incentive stock option shall be exercisable
after the expiration of 10 years from the date the Option is granted. The
Committee in its discretion may provide that the Option shall be exercisable
throughout the 10 year period or during any lesser period of time commencing on
or after the date of grant of the Option and ending upon or before the
expiration of the 10 year period.
8. Maximum Value of Stock Subject to Options Which are Incentive Stock
Options. To the extent that the aggregate fair market value (determined as of
the date the Option is granted) of the stock with respect to which incentive
stock options are exercisable for the first time by the optionee in any calendar
year (under this Plan and any other incentive stock option plan(s) of the
Company and any parent and subsidiary corporation) exceeds $100,000, the Options
shall be treated as non-incentive stock options. In making this determination,
Options shall be taken into account in the order in which they were granted.
<PAGE> 3
EXHIBIT 10.1
9. Exercise of Options. An optionee may exercise such optionee's
Option by delivering to the Company a written notice stating (i) that such
optionee wishes to exercise such Option on the date such notice is so
delivered, (ii) the number of shares of stock with respect to which the Option
is to be exercised and (iii) the address to which the certificate representing
such shares of stock should be mailed. In order to be effective, such written
notice shall be accompanied by (i) payment of the Option Price of such shares
of stock and (ii) payment of an amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option.
Each such payment shall be made by cashier's check drawn on a national banking
association and payable to the order of the Company in United States dollars.
If, at the time of receipt by the Company of such written notice, (i)
the Company has unrestricted surplus in an amount not less than the Option
Price of such shares of stock, (ii) all accrued cumulative preferential
dividends and other current preferential dividends on all outstanding shares of
preferred stock of the Company have been fully paid, (iii) the acquisition by
the Company of its own shares of stock for the purpose of enabling such
optionee to exercise such Option is otherwise permitted by applicable law and
without any vote or consent of any stockholder of the Company, and (iv) there
shall have been adopted, and there shall be in full force and effect, a
resolution of the Board of Directors of the Company authorizing the acquisition
by the Company of its own shares of stock for such purpose, then such optionee
may deliver to the Company, in payment of the Option Price of the shares of
stock with respect to which such Option is exercised, (x)(i) certificates
registered in the name of such optionee that represent a number of shares of
stock legally and beneficially owned by such optionee (free of all liens,
claims and encumbrances of every kind) and having a fair market value on the
date of receipt by the Company of such written notice that is not greater than
the Option Price of the shares of stock with respect to which such Option is to
be exercised, such certificates to be accompanied by stock powers duly endorsed
in blank by the record holder of the shares of stock represented by such
certificates, with the signature of such record holder guaranteed by a national
banking association or (ii) an assignment to the Company of a portion of the
shares with respect to which such Option is exercised, and (y) if the Option
Price of the shares of stock with respect to which such Option is to be
exercised exceeds such fair market value, a cashier's check drawn on a national
banking association and payable to the order of the Company in an amount, in
United States dollars, equal to the amount of such excess.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the optionee, (ii) payment, in the form required by
the foregoing provisions of this Section 9 of the Option Price of the shares of
stock with respect to which such Option is to be exercised, and (iii) payment,
in the form required by the foregoing provisions of this Section 9, of an
amount of money necessary to satisfy any withholding tax liability that may
result from the exercise of such Option, a certificate representing the number
of shares of stock with respect to which such Option has been so exercised,
such certificate to be registered in the name of such optionee, provided that
such delivery shall be considered to have been made when such certificate shall
have been mailed, postage prepaid, to such optionee at the address specified
for such purpose in such written notice from the optionee to the Company.
For purposes of this Section 9, the "fair market value" of a share of
stock as of any particular date shall mean the closing price of a share of
stock on that date as reported in the New York Stock Exchange--Composite
Transactions listing, provided that if no closing price for the stock as so
reported on that date or if, in the discretion of the Committee, another means
of determining the fair market value of a share of stock at such date shall be
necessary or advisable, the Committee may provide for another means for
determining such fair market value.
10. Transferability of Options. Options shall not be transferable by
the optionee except by will or under the laws of descent and distribution, and
shall be exercisable, during his lifetime, only by him.
11. Termination of Employment or Death of Optionee. Except as may be
otherwise expressly provided herein, all Options (whether incentive or
non-incentive) shall terminate on the earlier of the date of the expiration of
the Option or one day less than three months after the date of severance, upon
severance of the employment relationship between the Company and the optionee,
whether with or without cause, for any reason other than the
<PAGE> 4
EXHIBIT 10.1
death, disability or retirement of the optionee, during which period the
optionee shall be entitled to exercise the Option in respect of the number of
shares that the optionee would have been entitled to purchase had the optionee
exercised the Option on the date of such severance of employment. Whether
authorized leave of absence, or absence on military or government service, shall
constitute severance of the employment relationship between the Company and the
optionee shall be determined by the Committee at the time thereof. In the event
of severance because of the disability of the holder of any Option (whether
incentive or non-incentive) while in the employ of the Company and before the
date of expiration of such Option, such Option shall terminate on the earlier of
such date of expiration or one year following the date of such severance because
of disability, during which period the optionee shall be entitled to exercise
the Option in respect to the number of shares that the optionee would have been
entitled to purchase had the optionee exercised the Option on the date of such
severance because of disability. Disability for this purpose shall be such a
disability as would qualify the optionee for a disability benefit under the
Company's pension plan without regard to any age or service requirement in the
Plan. In the event of the death of the holder of any Option (whether incentive
or non-incentive) while in the employ of the Company and before the date of
expiration of such Option, such Option shall terminate on the earlier of such
date of expiration or one year following the date of death. After the death of
the optionee, his executors, administrators or any person or person to whom his
Option may be transferred by will or by the laws of descent and distribution,
shall have the right, at any time prior to the termination of an Option to
exercise the Option, in respect to the number of shares that the optionee would
have been entitled to exercise if he had exercised the Option on the date of his
death while in employment. In addition, in the event of the retirement of the
holder of any non-incentive stock option in accordance with the provisions of
the Company's pension plan, before the date of expiration of such Option, such
Option shall terminate on the earlier of such date of expiration or one year
following the date of such retirement, and, if such optionee should die within
the one year period any rights he may have to exercise the Option shall be
exercisable by his executor or administrator or the person or persons to whom
the Option shall have been transferred by his will or laws of descent or
distribution, as appropriate, for the remainder of the one year period.
Notwithstanding the foregoing provisions of this Section 11, in the case of an
Option that is a non-incentive stock option, the Committee may provide for a
different option termination date in the option agreement with respect to such
Option. For purposes of incentive stock options issued under this Plan, an
employment relationship between the Company and the optionee shall be deemed to
exist during any period in which the optionee is employed by the Company, by any
parent or subsidiary corporation, by a corporation issuing or assuming an option
in a transaction to which Section 424(a) of the Internal Revenue Code of 1986,
as amended, applies, or by a parent or subsidiary corporation of such
corporation issuing or assuming an option. For this purpose, the phrase
"corporation issuing or assuming an option" shall be substituted for the word
"Company" in the definitions of parent and subsidiary corporations in Section 5
and the parent-subsidiary relationship shall be determined at the time of the
corporate action described in Section 424(a) of the Internal Revenue Code of
1986, as amended. For purposes of non-incentive stock options issued under this
Plan, an employment relationship between the Company and the optionee will exist
under the circumstances described above for incentive stock options and will
also exist if the optionee is transferred to an affiliate corporation approved
by the Committee.
12. Requirements of Law. The Company shall not be required to sell or
issue any shares under any Option if issuing the shares shall constitute a
violation by the optionee or the Company of any provisions of any law or
regulation of any governmental authority. Each Option granted under this Plan
shall be subject to the requirements that, if at any time the Board of Directors
of the Company or the Committee shall determine that the listing, registration
or qualification of the shares upon any securities exchange or under any state
or federal law of the United states or of any other country or governmental
subdivision, or the consent or approval of any governmental regulatory body, or
investment or other representations, are necessary or desirable in connection
with the issue or purchase of shares subject to an Option, that Option shall not
be exercised in whole or in part unless the listing, registration,
qualification, consent, approval or representations shall have been effected or
obtained free of any conditions not acceptable to the Board of Directors. Any
determination in this connection by the Committee shall be final. In the event
the shares issuable on exercise of an Option are not registered under the
Securities Act of 1933, the Company may imprint on the certificate for those
shares the following legend or any other legend which counsel for the Company
considers necessary or advisable to comply with the Securities Act of 1933:
<PAGE> 5
EXHIBIT 10.1
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any state and may not be sold or transferred except upon
registration or upon receipt by the Corporation of an opinion of
counsel satisfactory to the Corporation, in form and substance
satisfactory to the Corporation, that registration is not required for
a sale or transfer."
The Company may, but shall in no event be obligated to, register any securities
covered by this Plan under the Securities Act of 1933 (as now in effect or as
later amended) and, in the event any shares are registered, the Company may
remove any legend on certificates representing those shares. The Company shall
not be obligated to take any other affirmative action in order to cause the
exercise of an Option or the issuance of shares under the Option to comply with
any law or regulation or any governmental authority.
13. No Rights as Stockholder. No optionee shall have rights as a
stockholder with respect to shares covered by his Option until the date a stock
certificate is issued for the shares. Except as provided in Section 15, no
adjustment for dividends, or other matters shall be made if the record date is
prior to the date the certificate is issued.
14. Employment Obligation. The granting of any Option shall not
impose upon the Company any obligation to employ or continue to employ any
optionee. The right of the Company to terminate the employment of any officer
or other employee shall not be diminished or affected by reason of the fact
that an Option has been granted to him.
15. Changes in the Company's Capital Structure. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares
or other capital adjustment of, or the payment of a dividend in capital stock
or other equity securities of the Company on, its Common Stock, or other
increase or reduction of the number of shares of the Common Stock outstanding
without receiving consideration therefor in money, services, or property, or
the reclassification of its Common Stock, in whole or in part, into other
equity securities of the Company, then (a) the number, class and per share
price of shares of stock subject to outstanding Options hereunder shall be
appropriately adjusted (or in the case of the issuance of other equity
securities as a dividend on, or in a reclassification of, the Common Stock, the
Options shall extend to such other securities) in such a manner as to entitle
an optionee to receive, upon exercise of an Option, for the same aggregate cash
compensation, the same total number and class or classes of shares (or in the
case of a dividend of, or reclassification into, other equity securities, such
other securities) he would have held after such adjustment if he had exercised
his Option in full immediately prior to the event requiring the adjustment, or,
if applicable, the record date for determining shareholders to be affected by
such adjustment; and (b) the number and class of shares then reserved for
issuance under the Plan (or in the case of a dividend of, or reclassification
into, other equity securities, such other securities) shall be adjusted by
substituting for the total number and class of shares of stock then received,
the number and class or classes of shares of stock (or in the case of a
dividend on, or reclassification into, other equity securities, such other
securities) that would have been received by the owner of an equal number of
outstanding shares of Common Stock as the result of the event requiring the
adjustment. Comparable rights shall accrue to each optionee in the event of
successive subdivisions, consolidations, capital adjustment, dividends or
reclassifications of the character described above.
<PAGE> 6
EXHIBIT 10.1
If the Company shall make a tender offer for, or grant to all of its
holders of its shares of Common Stock the right to require the Company or any
subsidiary of the Company to acquire from such stockholders shares of, Common
Stock, at a price in excess of the Current Market Price (a "Put Right") or the
Company shall grant to all of its holders for its shares of Common Stock the
right to acquire shares of Common Stock for less than the Current Market Price
(a "Purchase Right") then, in the case of a Put Right, the Option Price shall
be adjusted by multiplying the Option Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such Put
Right by a fraction, the numerator of which shall be the number of shares of
Common Stock then outstanding minus the number of shares of Common Stock which
could be purchased at the Current Market Price for the aggregate amount which
would be paid if all Put Rights are exercised and the denominator of which is
the number of shares of Common Stock which would be outstanding if all Put
Rights are exercised; and, in the case of a Purchase Right, the Option Price
shall be adjusted by multiplying the Option Price in effect immediately prior
to the record date for the determination of the stockholders entitled to
receive such Purchase Right by a fraction, the numerator of which shall be the
number of shares of Common Stock then outstanding plus the number of shares of
Common Stock which could be purchased at the Current Market Price for the
aggregate amount which would be paid if all Purchase Rights are exercised and
the denominator of which is the number of shares of Common Stock which would be
outstanding if all Purchase Rights are exercised. In addition, the number of
shares subject to the option shall be increased by multiplying the number of
shares then subject to the Option by a fraction which is the inverse of the
fraction used to adjust the Option Price. Notwithstanding the foregoing if any
such Put Rights or Purchase Rights shall terminate without being exercised, the
Option Price and number of shares subject to Option shall be appropriately
readjusted to reflect the Option Price and number of shares subject to the
Option which would have been in effect if such unexercised Rights had never
existed Comparable adjustments shall be made in the event of successive
transactions of the character described above.
After the merger of one or more corporations into the Company, after
any consolidation of the Company and one or more corporations, or after any
other corporate transaction described in Section 424(a) of the Code in which
the Company shall be the surviving corporation, each optionee, at no additional
cost, shall be entitled to receive, upon any exercise of his Option, in lieu of
the number of shares as to which the Option shall then be so exercised, the
number and class of shares of stock or other equity securities to which the
optionee would have been entitled pursuant to the terms of the agreement of
merger or consolidation if at the time of such merger or consolidation such
optionee had been a holder of a number of shares of Common Stock equal to the
number of shares as to which the Option shall then be so exercised and, if as a
result of such merger, consolidation or other transaction, the holders of
Common Stock are not entitled to receive any shares of Common Stock pursuant to
the terms thereof, each optionee, at no additional cost shall be entitled to
receive, upon exercise of his Option, such other assets and property, including
cash to which he would have been entitled if at the time of such merger,
consolidation or other transaction he had been the holder of the number of
shares of Common Stock equal to the number of shares as to which the Option
shall then be so exercised. Comparable rights shall accrue to each optionee in
the event of successive mergers or consolidations of the character described
above.
After a merger of the Company into one or more corporations, after a
consolidation of the Company and one or more corporations, or after any other
corporate transaction described in Section 424(a) of the Code in which the
Company is not the surviving corporation, each optionee shall, at no additional
cost, be entitled at the option of the surviving corporation (i) to have his
then existing Option assumed or have a new option substituted for the existing
Option by the surviving corporation to the transaction which is then employing
him, or a parent or subsidiary of such corporation, on a basis where the excess
of the aggregate fair market value of the shares subject to the option
immediately after the substitution or assumption over the aggregate option price
of such option is equal to the excess of the aggregate fair market value of all
shares subject to the option immediately before such substitution or assumption
over the aggregate option price of such shares, provided that the shares subject
to the new option must be traded on the New York or American Stock Exchange or
quoted on the National Association of Securities Dealers Automated Quotation
System, or (ii) to receive, upon any exercise of his Option, in lieu of the
number of shares as to which the Option shall then be so exercised, the
securities, property and other assets, including cash, to which the Optionee
would have been entitled pursuant to the terms of the agreement of merger or
consolidation or the agreement giving rise to the other corporate transaction if
at the time of such merger,
<PAGE> 7
EXHIBIT 10.1
consolidation or other transaction such optionee had been the holder of the
number of shares of Common Stock equal to the number of shares as to which the
Option shall then be so exercised.
If a corporate transaction described in Section 424(a) of the code
which involves the Company is to take place and there is to be no surviving
corporation while an Option remains in whole or in part unexercised, it shall
be canceled by the Board of Directors as of the effective date of any such
corporate transaction but before that date each optionee shall be provided with
a notice of such cancellation and each optionee shall have the right to
exercise such Option in full to the extent it is then still unexercised during
a 30-day period preceding the effective date of such corporate transaction.
For purposes of this Section 15, Current Market Price per share of
Common Stock shall mean the last reported price for the Common Stock in the New
York Stock Exchange--Composite Transaction listing on the trading day
immediately preceding the first trading day on which, as a result of the
establishment of a record date or otherwise, the trading price reflects that an
acquiror of Common Stock in the public market will not participate in or
receive the payment of any applicable dividend or distribution.
Except as hereinbefore expressly provided, the issue 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, the number or price of shares of Common Stock
then subject to outstanding Options.
16. Amendment or Termination of Plan. The Board of Directors may
modify, revise or terminate this Plan at any time and from time to time.
However, without the further Company stockholder approval by a majority of the
votes cast at a duly held stockholders' meeting at which a quorum representing
a majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the issue, the Board of Directors may not (a) change the
aggregate number of shares which may be issued under Options pursuant to the
provisions of this Plan; (b) reduce the Option price permitted for the
incentive stock options; (c) extend the term during which an incentive stock
option may be exercised or the termination date of this Plan; or (d) change the
class of employees eligible to receive incentive stock options. But, the Board
shall have the power to make all changes in the Plan and in the regulations and
administrative provisions under the Plan or in any outstanding Option as in the
opinion of counsel for the Company may be necessary or appropriate from time to
time to enable any Option granted pursuant to the Plan to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code of 1986,
as amended, and the regulations which may be issued under that Section as in
existence from time to time.
17. Written Agreement. Each Option granted under this Plan shall be
embodied in a written option agreement, which shall be subject to the terms and
conditions prescribed above, and shall be signed by the optionee and by the
appropriate officer of the Company for and in the name and on behalf of the
Company. Each option agreement shall contain any other provisions that the
Committee in its discretion shall deem advisable.
18. Indemnification of the Committee. The Company shall indemnify
each present and future member of the Committee against, and each member of the
Committee shall be entitled without further act on his part to indemnity from
the Company for, all expenses (including the amount of judgments and the amount
of approved settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself) reasonably incurred
by him in connection with or arising out of any action, suit or proceeding in
which he may be involved by reason of his being or having been a member of the
Committee, whether or not he continues to be such member of the Committee at
the time of incurring such expenses; provided, however, that such indemnity
shall not include any expenses incurred by any such member of the Committee (a)
in respect of matters as to which he shall be finally adjudged in any such
action, suit or proceeding to have been guilty of gross negligence or willful
misconduct in the performance of his duty as such member of the Committee, or
(b) in respect of any matter in
<PAGE> 8
EXHIBIT 10.1
which any settlement is effected, to an amount in excess of the amount approved
by the Company on the advice of its legal counsel; and provided further, that no
right of indemnification under the provisions set forth herein shall be
available to or enforceable by any such member of the Committee unless, within
sixty (60) days after institution of any such action, suit or proceeding, he
shall have offered the Company, in writing, the opportunity to handle and defend
same at its own expense. The foregoing right of indemnification shall inure to
the benefit of the heirs, executors or administrators of each such member of the
Committee and shall be in addition to all other rights to which such member of
the Committee may be entitled to as a matter of law, contract or otherwise.
Nothing in this Section 18 shall be construed to limit or otherwise affect any
right to indemnification or payment of expense, or any provisions limiting the
liability of any officer or director of the Company or any member of the
Committee, provided by law, the Certificate of Incorporation of the Company or
otherwise.
19. Effective Date of Plan. The Plan shall become effective and
shall be deemed to have been adopted on March 13, 1995, if within one year of
that date it has been approved by the Company stockholders by a majority of the
votes cast at a duly held stockholders' meeting at which a quorum representing
a majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the Plan. No Options shall be granted pursuant to the
Plan after December 1, 2005.
<PAGE> 1
EXHIBIT 10.2
STEWART INFORMATION SERVICES CORPORATION
1995 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Under the terms and conditions of the 1995 Stock Option Plan (the
"Plan"), a copy of which is attached hereto and incorporated in this Agreement
by reference, Stewart Information Services Corporation (the "Company") grants
to Malcolm Morris (the "Optionee") the option to purchase 5,100 shares of the
Company's Common Stock, $1.00 par value, at the price of $19.50 per share,
subject to adjustment as provided in the Plan (the "Option").
This Option shall be for a term commencing on this date and ending July
11, 2005, unless the Option is terminated earlier by reason of the Optionee's
termination of employment, as provided in the Plan.
This Option is an incentive stock option which is intended to be
governed by Section 422 of the Internal Revenue Code of 1986, as amended.
The Optionee in accepting this Option accepts and agrees to be bound by
all the terms and conditions of the Plan which pertain to incentive stock
options granted under the Plan.
Granted the 12th day of July, 1995.
STEWART INFORMATION SERVICES CORPORATION
By /s/ CARLOSS MORRIS
------------------------------------------
Name: Carloss Morris
---------------------------------------
Title: Chairman & Co-Chief Executive Officer
--------------------------------------
ACCEPTED:
(ILLEGIBLE)
-------------------------------
Optionee
7/20/95
-------------------------------
Date
<PAGE> 2
EXHIBIT 10.2
STEWART INFORMATION SERVICES CORPORATION
1995 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Under the terms and conditions of the 1995 Stock Option Plan (the
"Plan"), a copy of which is attached hereto and incorporated in this Agreement
by reference, Stewart Information Services Corporation (the "Company") grants
to Malcolm Morris (the "Optionee") the option to purchase 2,900 shares of the
Company's Common Stock, $1.00 par value, at the price of $19.50 per share,
subject to adjustment as provided in the Plan (the "Option").
This Option shall be for a term commencing January 1, 1996, and ending
July 11, 2005, unless the Option is terminated earlier by reason of the
Optionee's termination of employment, as provided in the Plan.
This Option is an incentive stock option which is intended to be
governed by Section 422 of the Internal Revenue Code of 1986, as amended.
The Optionee in accepting this Option accepts and agrees to be bound by
all the terms and conditions of the Plan which pertain to incentive stock
options granted under the Plan.
Granted the 12th day of July, 1995.
STEWART INFORMATION SERVICES CORPORATION
By /s/ CARLOSS MORRIS
------------------------------------------
Name: Carloss Morris
---------------------------------------
Title: Chairman & Co-Chief Executive Officer
--------------------------------------
ACCEPTED:
(ILLEGIBLE)
-------------------------------
Optionee
7/20/95
-------------------------------
Date
<PAGE> 3
EXHIBIT 10.2
STEWART INFORMATION SERVICES CORPORATION
1995 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Under the terms and conditions of the 1995 Stock Option Plan (the
"Plan"), a copy of which is attached hereto and incorporated in this Agreement
by reference, Stewart Information Services Corporation (the "Company") grants
to Stewart Morris, Jr. (the "Optionee") the option to purchase 5,100 shares of
the Company's Common Stock, $1.00 par value, at the price of $19.50 per share,
subject to adjustment as provided in the Plan (the "Option").
This Option shall be for a term commencing on this date and ending July
11, 2005, unless the Option is terminated earlier by reason of the Optionee's
termination of employment, as provided in the Plan.
This Option is an incentive stock option which is intended to be
governed by Section 422 of the Internal Revenue Code of 1986, as amended.
The Optionee in accepting this Option accepts and agrees to be bound by
all the terms and conditions of the Plan which pertain to incentive stock
options granted under the Plan.
Granted the 12th day of July, 1995.
STEWART INFORMATION SERVICES CORPORATION
By /s/ CARLOSS MORRIS
------------------------------------------
Name: Carloss Morris
---------------------------------------
Title: Chairman & Co-Chief Executive Officer
--------------------------------------
ACCEPTED:
(ILLEGIBLE)
-------------------------------
Optionee
7/20/95
-------------------------------
Date
<PAGE> 4
EXHIBIT 10.2
STEWART INFORMATION SERVICES CORPORATION
1995 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Under the terms and conditions of the 1995 Stock Option Plan (the
"Plan"), a copy of which is attached hereto and incorporated in this Agreement
by reference, Stewart Information Services Corporation (the "Company") grants
to Stewart Morris, Jr. (the "Optionee") the option to purchase 2,900 shares of
the Company's Common Stock, $1.00 par value, at the price of $19.50 per share,
subject to adjustment as provided in the Plan (the "Option").
This Option shall be for a term commencing January 1, 1996, and ending
July 11, 2005, unless the Option is terminated earlier by reason of the
Optionee's termination of employment, as provided in the Plan.
This Option is an incentive stock option which is intended to be
governed by Section 422 of the Internal Revenue Code of 1986, as amended.
The Optionee in accepting this Option accepts and agrees to be bound by
all the terms and conditions of the Plan which pertain to incentive stock
options granted under the Plan.
Granted the 12th day of July, 1995.
STEWART INFORMATION SERVICES CORPORATION
By /s/ CARLOSS MORRIS
------------------------------------------
Name: Carloss Morris
---------------------------------------
Title: Chairman & Co-Chief Executive Officer
--------------------------------------
ACCEPTED:
(ILLEGIBLE)
-------------------------------
Optionee
7/20/95
-------------------------------
Date
<PAGE> 5
EXHIBIT 10.2
STEWART INFORMATION SERVICES CORPORATION
1995 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Under the terms and conditions of the 1995 Stock Option Plan (the
"Plan"), a copy of which is attached hereto and incorporated in this Agreement
by reference, Stewart Information Services Corporation (the "Company") grants
to Max Crisp (the "Optionee") the option to purchase 4,000 shares of the
Company's Common Stock, $1.00 par value, at the price of $19.50 per share,
subject to adjustment as provided in the Plan (the "Option").
This Option shall be for a term commencing on this date and ending July
11, 2005, unless the Option is terminated earlier by reason of the Optionee's
termination of employment, as provided in the Plan.
This Option is an incentive stock option which is intended to be
governed by Section 422 of the Internal Revenue Code of 1986, as amended.
The Optionee in accepting this Option accepts and agrees to be bound by
all the terms and conditions of the Plan which pertain to incentive stock
options granted under the Plan.
Granted the 12th day of July, 1995.
STEWART INFORMATION SERVICES CORPORATION
By /s/ CARLOSS MORRIS
------------------------------------------
Name: Carloss Morris
---------------------------------------
Title: Chairman & Co-Chief Executive Officer
--------------------------------------
ACCEPTED:
(ILLEGIBLE)
-------------------------------
Optionee
7/21/95
-------------------------------
Date
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet as of June 30, 1995 and the related statement of earnings for the six
months ended June 30, 1995 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<DEBT-HELD-FOR-SALE> 175,146
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 3,440
<REAL-ESTATE> 3,014
<TOTAL-INVEST> 198,583
<CASH> 15,887
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 335,068
<POLICY-LOSSES> 133,147
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 14,286
<COMMON> 6,228
0
0
<OTHER-SE> 156,404
<TOTAL-LIABILITY-AND-EQUITY> 335,068
118,043
<INVESTMENT-INCOME> 6,627
<INVESTMENT-GAINS> 353
<OTHER-INCOME> 352
<BENEFITS> 13,033
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 359
<INCOME-TAX> 111
<INCOME-CONTINUING> 248
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 248
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
<RESERVE-OPEN> 134,316
<PROVISION-CURRENT> 14,333
<PROVISION-PRIOR> (1,300)
<PAYMENTS-CURRENT> 3,559
<PAYMENTS-PRIOR> 10,643
<RESERVE-CLOSE> 133,147
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<PAGE> 1
Exhibit 28.2
STEWART INFORMATION SERVICES CORPORATION
DETAILS OF INVESTMENTS
JUNE 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
JUN 30 DEC 31
1995 1994
------ ------
($000 Omitted)
<S> <C> <C>
Investments, at market, partially restricted:
Short-term investments $21,443 $56,363
U.S. Treasury and agency obligations 23,905 10,105
Municipal bonds 90,437 85,267
Mortgage-backed securities 29,345 26,872
Corporate bonds 26,973 11,335
Mortgage loans 3,440 3,309
Real estate and other, at lower of cost or market 3,040 3,128
-------- --------
TOTAL INVESTMENTS $198,583 $196,379
======== ========
</TABLE>
NOTE: The total appears as the sum of two amounts under "investments" in
the balance sheet presented on page 2.
