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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
------------
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file number 1-12688
STEWART INFORMATION SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 74-1677330
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1980 POST OAK BLVD., HOUSTON, TEXAS 77056
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (713) 625-8100
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1 PAR VALUE
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 1, 1998, 6,389,846 shares of Common Stock, $1 par value,
and 525,006 shares of Class B Common Stock, $1 par value, were outstanding. The
aggregate market value as of such date of the Common Stock (based upon the
closing sales price of the Common Stock as reported by the NYSE on February 27,
1998 of Stewart Information Services Corporation held by non-affiliates of the
Registrant was approximately $200,513,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Stewart Information Services Corporation Annual Report
to Stockholders for the year ended December 31, 1997 are incorporated by
reference in Parts I and II of this document.
Portions of the definitive proxy statement (the "Proxy Statement"),
relating to the annual meeting of the Registrant's stockholders to be held April
24, 1998, are incorporated by reference in Parts III and IV of this document.
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FORM 10-K
ANNUAL REPORT
YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
ITEM
NO. PAGE
--- ----
<S> <C>
1. Business ................................................................. 1
2. Properties ............................................................... 3
3. Legal Proceedings ........................................................ 4
4. Submission of Matters to a Vote of Security Holders ...................... 4
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters .... 5
6. Selected Financial Data .................................................. 6
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations ............................................................. 6
8. Financial Statements and Supplementary Data .............................. 6
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ............................................................. 6
PART III
10. Directors and Executive Officers of the Registrant ....................... 7
11. Executive Compensation ................................................... 7
12. Security Ownership of Certain Beneficial Owners and Management ........... 7
13. Certain Relationships and Related Transactions ........................... 7
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ......... 8
Signatures .............................................................. 9
</TABLE>
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P A R T I
ITEM 1. BUSINESS
Stewart's primary business is title insurance. Stewart issues policies through
more than 3,800 issuing locations on homes and other real property located in
all 50 states, the District of Columbia and several foreign countries. Stewart
also sells computer-related services and information, as well as mapping
products and geographic information systems, to government and private entities,
both domestic and foreign.
Examination and closing. The purpose of a title examination is to ascertain the
ownership of the property being transferred, what debts are owed on it and what
the title policy coverage will be. This involves searching for and examining
documents such as deeds, mortgages, wills, divorce decrees, court judgments,
liens, paving assessments and tax records.
At the closing or "settlement", the seller executes a deed to the new owner. The
buyer signs new mortgage documents. Closing funds are then disbursed to the
seller, the prior mortgage company, real estate brokers, the title company and
others. The documents are then recorded in the public records. A title policy is
generally issued to both the lender and new owner.
Title policies. Lenders in the USA generally require title insurance as a
condition to making a loan on real estate, including securitized lending. This
is to assure lenders of the priority of their lien position. The purchasers of
the property want the assurance given in their policy against claims that may
arise against their ownership. The face amount of the policy is normally the
purchase price or the amount of the related loan.
Title insurance is substantially different from other types of insurance. Fire,
auto, health and life insurance protect against losses and events in the future.
In contrast, title insurance seeks to eliminate most risks through the
examination and settlement process.
Losses. Losses on policies occur because of a title defect not discovered during
the examination and settlement process. Other reasons for losses include
forgeries, misrepresentations, unrecorded construction liens, the failure to pay
off existing liens, mishandling of settlement funds, issuance by agents of
unauthorized coverages and other legal issues.
Some claimants seek damages in excess of policy limits. Such claims are based on
various legal theories usually alleging misrepresentation by an issuing office.
Although the Company vigorously defends against spurious claims, it has from
time to time incurred a loss in excess of policy limits.
Experience shows that most claims against policies and claim payments are made
in the first six years after the policy has been issued, although claims may be
made many years later. By their nature, claims are often complex, vary greatly
in dollar amounts and are affected by economic and market conditions and the
legal environment existing at the time of settlement of the claims.
Factors affecting revenues. Title revenues are closely related to the level of
activity in the real estate market and the prices at which real estate sales are
made. Real estate sales are directly affected by the availability and cost of
money to finance purchases. Other factors include demand by buyers, consumer
confidence and family incomes. These factors may override the seasonal nature of
the title business. Generally, the third quarter is the most active in terms of
real estate sales and the first quarter is the least active.
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Selected information for the national real estate industry follows (1997 amounts
are preliminary):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Housing starts - millions ............... 1.48 1.47 1.35
Housing resales - millions .............. 4.22 4.09 3.80
Housing resales - median sales price in $
thousands ............................. 124.1 118.1 112.9
</TABLE>
Customers. The primary sources of title business are attorneys, builders,
developers, lenders and real estate brokers. No one customer was responsible for
as much as five percent of Stewart's title revenues in any of the last three
years. Titles insured included residential and commercial properties,
undeveloped acreage, farms and ranches.
Service, location, financial strength, size and related factors affect customer
acceptance. Increasing market share is accomplished primarily by providing
superior service. The parties to a closing are concerned with personal schedules
and the interest and other costs associated with the delays in the settlement.
The rates charged to customers are regulated to varying degrees by different
states.
Market share. Estimating a title insurer's market share is difficult. Stewart
believes it is the leading title insurer in Texas and in a number of cities
across the USA. Based on unconsolidated statutory net premiums written for 1996
(1997 amounts are not available), Stewart Title Guaranty Company ("Guaranty") is
the fourth largest title insurer in America.
Competitors include (names are abbreviated) Chicago Title, Commonwealth,
Fidelity, First American, Lawyers Title and Old Republic (Commonwealth and
Lawyers Title merged in January 1998). As do most title insurers, Stewart also
competes with abstractors, attorneys who issue title opinions and attorney-owned
title insurance bar funds. A number of home builders, financial institutions,
real estate brokers and others own or control title insurance agents, some of
which issue policies underwritten by Guaranty. This "controlled" business also
provides competition for Stewart's agents.
Offices. The number of locations issuing Stewart policies was 3,798 at December
31, 1997, compared to 3,763 a year earlier and 3,549 two years earlier. Of these
totals, 3,517, 3,488 and 3,302 were independent agents at December 31, 1997,
1996, and 1995, respectively.
Title revenues by state. The approximate amounts and percentages of Stewart's
consolidated title revenues (excluding other revenues) by state for the last
three years were:
<TABLE>
<CAPTION>
AMOUNTS
($ MILLIONS) PERCENTAGES
========================== ==========================
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
California ....... 123 119 97 19 20 20
Texas ............ 116 111 93 18 18 19
New York ......... 51 50 35 8 8 7
Florida .......... 47 40 29 7 7 6
Colorado ......... 20 18 16 3 3 3
Nevada ........... 19 18 14 3 3 3
Arizona .......... 19 17 14 3 3 3
All others ....... 262 236 198 39 38 39
---- ---- ---- ---- ---- ----
657 609 496 100 100 100
==== ==== ==== ==== ==== ====
</TABLE>
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Regulations. Title insurance companies are subject to extensive state
regulations covering rates, agent licensing, policy forms, trade practices,
reserve requirements, investments and the flow of funds between an insurer and
its parent or its subsidiaries and any similar related party transaction.
Kickbacks and similar practices are prohibited by certain state and federal
laws.
Employees. Stewart and its subsidiaries employed approximately 4,569 persons at
December 31, 1997.
ITEM 2. PROPERTIES
The Registrant and its wholly-owned subsidiary, Stewart Title Guaranty
Company and its subsidiaries ("Guaranty"), own or lease the following
properties:
The following table sets forth information about the Registrant's other
principal properties:
<TABLE>
<CAPTION>
Location Type Use Size Acquired In
- ------------------------ ---------------------- ------------------- -------------- -----------
<S> <C> <C> <C> <C>
Houston, Texas Leased office building Executive office of 218,318 sq. ft. (1)
the Registrant and
Guaranty
Corpus Christi, Texas Leased office building Office of Guaranty 27,000 sq. ft (2)
Houston, Texas Leased office building Office of Guaranty 26,420 sq. ft (3)
Dallas, Texas Leased office building Office of Guaranty 25,117 sq. ft (4)
Austin, Texas Leased office building Office of Guaranty 24,773 sq. ft. (5)
Los Angeles, California Leased office building Office of Guaranty 22,466 sq. ft. (2)
San Diego, California Leased office building Office of Guaranty 20,020 sq. ft. (4)
Riverside, California Leased office building Office of Guaranty 20,968 sq. ft. (2)
Fresno, California Leased office building Office of Guaranty 13,204 sq. ft. (2)
San Antonio, Texas Owned office building Office of Guaranty 26,769 sq. ft. 1980 & 1982
Galveston, Texas Owned office building Office of Guaranty 50,000 sq. ft. 1905
Phoenix, Arizona Owned office building Office of Guaranty 24,459 sq. ft. 1981
Phoenix, Arizona Owned office building Office of Guaranty 17,500 sq. ft. 1985
Tucson, Arizona Owned office building Office of Guaranty 24,000 sq. ft. 1974
</TABLE>
(1) This lease terminates in 2004.
(2) These leases terminate in 1998.
(3) These leases terminate in 2002.
(4) These leases terminate in 2000.
(5) This lease terminates in 2001.
The Registrant leases offices at approximately 287 locations. The
average term for all such leases is approximately six years. The leases expire
from 1998 to 2006. The Registrant believes it will not have any difficulty
obtaining renewals of leases as they expire or, alternatively, leasing
comparable property. The aggregate annual rental expense under all leases was
approximately $20,520,000.
All buildings and equipment owned or leased by the Registrant are
considered by the Registrant to be well maintained, adequately insured and
generally sufficient for the Registrant's purposes. Substantially all of the
Registrant's owned real property above is subject to mortgages.
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ITEM 3. LEGAL PROCEEDINGS
The Registrant is a party to 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. The Registrant
does not expect that any of these proceedings will have a material adverse
effect on its financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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P A R T II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following table sets forth the high and low sales prices of the
Common Stock for each fiscal period indicated, as reported by NYSE, and the
amount of cash dividends paid per share.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- --- ---------
<S> <C> <C> <C>
1997:
First quarter ................................. 21.13 19.88 .06
Second quarter ................................ 21.00 18.75 .06
Third quarter ................................. 26.44 20.50 .07
Fourth quarter ................................ 29.25 25.00 .07
1996:
First quarter ................................. 21.38 19.63 .06
Second quarter ................................ 21.25 19.63 .06
Third quarter ................................. 21.00 20.00 .06
Fourth quarter ................................ 22.63 20.25 .06
</TABLE>
The Company has paid regular quarterly cash dividends on its Common
Stock since 1972. The Company's Certificate of Incorporation provides that no
cash dividends may be paid on the Class B Common Stock.
While it is the current intention of the Board of Directors to continue
to pay quarterly cash dividends on its Common Stock, the payment of future
dividends necessarily will depend on the earnings and financial needs of the
Company, as well as applicable legal restrictions.
The number of shareholders of record as of December 31, 1997 was 2,220.
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ITEM 6. SELECTED FINANCIAL DATA
Selected financial data have been included on Page 18 of the
Registrant's Annual Report to Stockholders for the year ended December 31, 1997,
and such information is incorporated herein by reference. See Exhibit 13 hereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is set forth on Pages 19 through
21 of the Registrant's Annual Report to Stockholders for the year ended December
31, 1997, and such information is incorporated herein by reference. See Exhibit
13 hereto.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
1997 Annual Report
to Stockholders
Page No.
--------
<S> <C>
Independent Auditors' Report ................................... 21
Consolidated Statements of Earnings and Retained Earnings for the
Years Ended December 31, 1997, 1996 and 1995 .................... 22
Consolidated Balance Sheets as of December 31, 1997 and 1996 .... 23
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 ................................ 24
Notes to Consolidated Financial Statements ...................... 25
</TABLE>
See Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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P A R T III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 24,1998, under the captions "Election of Directors" and
"Executive Compensation", and such information is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 24, 1998, under the caption "Executive Compensation", and such
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 24, 1998, under the caption "Security Ownership of Certain
Beneficial Owners and Management", and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth in the Registrant's
Proxy Statement relating to the annual meeting of the Registrant's stockholders
to be held April 24, 1998, under the caption "Executive Compensation", and such
information is incorporated herein by reference.
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P A R T IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. and 2. Financial Statements and Financial Statement Schedules
Item 8 of this Report on Form 10-K lists certain consolidated
financial statements of the Registrant and its subsidiaries incorporated by
reference to the Annual Report to Stockholders for the year ended December 31,
1997, which includes a reference to appropriate page numbers in such Annual
Report.
<TABLE>
<CAPTION>
---------
Form 10-K
Page No.
---------
<S> <C>
Independent Auditors' Report ........................................ 10
Reports of Independent Auditors ..................................... 11
Schedule II - Financial information of the Registrant (Parent Company) 40
Schedule V - Valuation and Qualifying Accounts ....................... 44
</TABLE>
All other schedules are omitted, as the required information is inapplicable or
the information is presented in the consolidated financial statements or related
notes.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended December
31, 1997.
(c) Exhibits
3.1 - Certificate of Incorporation of the Registrant, as amended
April 30, 1993
3.2 - By-Laws of the Registrant
4 - Rights of Common and Class B Common Stockholders
(incorporated by reference to Exhibits 3.1 and 3.2 hereto)
10.1 - Summary of agreements as to payment of bonuses to certain
executive officers
10.2 - Deferred Compensation Agreements dated March 10, 1986,
amended July 24, 1990 and October 30, 1992, between the
Registrant and certain executive officers.
13 - Annual Report to Stockholders for 1997 (the financial text
of the annual report incorporated herein by reference in Item
6 of Part II of this report)
21 - Subsidiaries of the Registrant
23 - Consents of Independent Certified Public Accountants,
including consents to incorporation by reference of their
reports into previously filed Securities Act registration
statements.
27 - Financial Data Schedule
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<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
STEWART INFORMATION SERVICES CORPORATION
(Registrant)
By: Carloss Morris
---------------------------------------
Carloss Morris, Co-Chief Executive Officer
and Chairman of the Board of Directors
By: Stewart Morris
---------------------------------------
Stewart Morris, Co-Chief Executive
Officer, President and Director
By: Max Crisp
---------------------------------------
Max Crisp, Vice President-Finance,
Secretary, Treasurer, Director and
Principal Financial and
Accounting Officer
Dated: March 18, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
Max Crisp Director March 18, 1998
- -------------------------------- --------------
(Max Crisp)
E. Douglas Hodo Director March 18, 1998
- -------------------------------- --------------
(E. Douglas Hodo)
C. M. Hudspeth Director March 18, 1998
- -------------------------------- --------------
(C. M. Hudspeth)
Carloss Morris Director March 18, 1998
- -------------------------------- --------------
(Carloss Morris)
Stewart Morris Director March 18, 1998
- -------------------------------- --------------
(Stewart Morris)
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<PAGE> 12
Independent Auditors' Report
To the Board of Directors and Stockholders
of Stewart Information Services Corporation:
Under date of February 13, 1998, we reported on the consolidated balance sheets
of Stewart Information Services Corporation and subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of earnings and retained
earnings and cash flows for each of the years in the three-year period ended
December 31, 1997, as contained in the 1997 annual report to stockholders.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year 1997.
In connection with our audits of the aforementioned consolidated financial
statements, we also audited the related financial statement schedules as listed
in the accompanying index. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
/s/ KPMG PEAT MARWICK LLP
Houston, Texas
February 13, 1998
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<PAGE> 13
REPORT OF INDEPENDENT ACCOUNTANT
Stewart Title Company
El Paso, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office at 500 N. Mesa, Suite 300, El Paso, Texas.
This financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company, El
Paso, Texas, as of December 31, 1997 and 1996, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ M. TIMOTHY O'ROARK, C.P.A.
M. TIMOTHY O'ROARK, C.P.A.
El Paso, Texas
February 3, 1998
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<PAGE> 14
To the Board of Directors
Stewart Title of California
San Jose, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Stewart Title of
California at December 31, 1996 and 1995 and the related statements of income,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Stewart Title of
California as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 16, 1997
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<PAGE> 15
To the Board of Directors
Stewart Title of Monterey County
Monterey, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Stewart Title of Monterey
County at December 31, 1996 and 1995 and the related statements of income,
retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Stewart Title of Monterey
County as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 7, 1997
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<PAGE> 16
To the Board of Directors
Stewart Title of Fresno County
Fresno, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Stewart Title of
Fresno County at December 31, 1996 and 1995 and the related statements of
income, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Stewart Title of
Fresno County as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 8, 1997
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<PAGE> 17
To the Board of Directors
Stewart Tide of Modesto
Modesto, California
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Stewart Title of
Modesto at December 31, 1996 and 1995, and the related statements of income,
retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Stewart Title of
Modesto as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ GRANT BENNETT ACCOUNTANTS
GRANT BENNETT ACCOUNTANTS
A PROFESSIONAL CORPORATION
Certified Public Accountants
January 7, 1997
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<PAGE> 18
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Stewart Title Dallas, Inc.
dba: Stewart Title North Texas, Inc.
We have audited the Statement of assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997, prepared from the accounts maintained at your
office at 5728 LBJ freeway, Dallas, Texas.
This financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the assets
and liabilities of such accounts handled by Stewart Title Dallas, Inc. dba:
Stewart Title North Texas, Inc, as of December 31, 1997 in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and are not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ WILKERSON & ARTHUR, P.C.
Wilkerson & Arthur, P.C.
January 28, 1998
-16-
<PAGE> 19
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Priority Title Company of Dallas, L.L.C.
We have audited the Statement of assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997, prepared from the accounts maintained at your
office at 5728 LBJ freeway, Dallas, Texas.
This financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation, We believe that our audit provides a reasonable basis
for our opinion,
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Priority Title Company of
Dallas, L.L.C. as of December 31, 1997 in conformity with generally accepted
accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and are not a required part of the basic financial
statement, Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ WILKERSON & ARTHUR, P.C.
Wilkerson & Arthur, P,C.
January 28, 1998
-17-
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title - Houston Division
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts of the National Title Services Division of Stewart Title
Guaranty Company as of December 31, 1997, prepared from the accounts maintained
in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. we conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Stewart Title
Guaranty Company as of December 31, 1997, in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATZER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 23, 1998
-18-
<PAGE> 21
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title - Houston Division
I have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts of the National Title Services Division of Stewart Title Guaranty
Company as of December 31, 1996, prepared from the accounts maintained in your
office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's management. My
responsibility is to express an opinion on this financial statement based on my
audit. I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made my
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by the National Title Services
Division of Stewart Title Guaranty Company as of December 31, 1996, in
conformity with generally accepted accounting principles.
My audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ GINNY SANDERS MAY, CPA
January 21, 1997
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<PAGE> 22
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title - Houston Division
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility Of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Stewart
Title - Houston Division as of December 31, 1997, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 21, 1998
-20-
<PAGE> 23
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title - Houston Division
I have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1996, prepared from the accounts maintained in your
office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's management. My
responsibility is to express an opinion on this financial statement based on my
audit. I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made my
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by the Houston Division of
Stewart Title as of December 31, 1996, in conformity with generally accepted
accounting principles.
My audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ GINNY SANDERS MAY, CPA
January 21, 1997
-21-
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
Managers
Priority Title Company of Houston, L.L.C.
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Priority Title
Company of Houston, L.L.C. as of December 31, 1997, in conformity with
generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATZER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 15, 1998
-22-
<PAGE> 25
INDEPENDENT AUDITORS' REPORT
Managers
Priority Title Company of Houston, L.L.C.
I have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1996, prepared from the accounts maintained in your
office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's management. My
responsibility is to express an opinion on this financial statement based on my
audit. I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made my
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Priority Title Company of
Houston, L.L.C. as of December 31, 1996, in conformity with generally accepted
accounting principles.
My audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ GINNY SANDERS MAY, CPA
January 21, 1997
-23-
<PAGE> 26
INDEPENDENT AUDITORS' REPORT
Managers
Premier Title Company of Houston, L.L.C.
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. we conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Premier Title
Company of Houston, L.L.C. as of December 31, 1997, in conformity with
generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATZER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 16, 1998
-24-
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
Managers
MHI Title Company of Houston, L.L.C.
We have audited the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained in your office at 1980 Post Oak Boulevard, Houston, Texas.
The financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by MHI Title
Company of Houston, L.L.C. as of December 31, 1997, in conformity with
generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
contained in Exhibits C through F, inclusive, and Exhibit H of this report is
presented as additional information and is not a required part of the basic
financial statement. Such information has been subjected to the audit
procedures applied in the examination of the basic statement of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statement of assets and liabilities, taken as a whole.
/s/ GRATZER, CLEM & COMPANY, P.C.
Gratzer, Clem & Company, P.C.
Certified Public Accountants
January 16, 1998
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<PAGE> 28
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title Company - Beaumont Division
Beaumont, Texas 77706
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997, prepared from the accounts maintained at your
office at 2390 N. Dowlen Road, Beaumont, Texas.
This financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company -
Beaumont Division, as of December 31, 1997, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
Very truly yours,
/s/ EDGAR, KIKER & CROSS, L.L.P.
EDGAR, KIKER & CROSS, L.L.P.
Certified Public Accountants
RTE/rh
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<PAGE> 29
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Stewart Title Company
Houston, Texas
I have examined the statements of assets and liabilities of trust (escrow) fund
accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office in San Antonio, Texas.
My examination, which was limited to such accounts, was made in accordance with
generally accepted auditing standards, and accordingly included such tests of
the accounting records and such other auditing procedures as I considered
necessary in the circumstances.
In my opinion, the aforementioned statements of assets and liabilities of trust
(escrow) fund accounts (not separately presented herein) present fairly the
assets and liabilities of such accounts handled by the San Antonio Division of
Stewart Title Company, as of December 31, 1997 and 1996, in accordance with
generally accepted accounting principles, applied on a consistent basis.
/s/ JIM S. WALKER
---------------------------
Jim S. Walker
Certified Public Accountant
Beaumont, Texas
January 20, 1998
-27-
<PAGE> 30
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Stewart Title Company
Amarillo, Texas District Office
We have audited the accompanying Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts as of December 31, 1997, prepared from the accounts
maintained at your office at Amarillo, Texas. This financial statement is the
responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts provides a reasonable basis for our opinion.
In our opinion, the accompanying Statement of Assets and Liabilities of Trust
(Escrow) Fund Accounts referred to above presents fairly, in all material
respects, the assets and liabilities of such accounts handled by Stewart Title
Company, for the year then ended in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basis
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the audit of the basic Statement of Assets and Liabilities, and is fairly
stated in all material respects in relation to the basic Statement of Assets
and Liabilities, taken as a whole.
/s/ DOSHIER, PICKENS & FRANCIS, P.C.
DOSHIER, PICKENS, & FRANCIS, P.C.
January 16, 1998
-28-
<PAGE> 31
INDEPENDENT AUDITORS' REPORT
Board of Directors
Stewart Title of Corpus Christi, Inc.
Corpus Christi, Texas
We have audited the Statements of Assets and Liabilities of Trust (Escrow] Fund
Accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office at Corpus Christi, Texas. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit of the financial statements
provides a reasonable basis for our opinion.
In our opinion, the Statements of Assets and Liabilities of Trust [Escrow] Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of Corpus
Christi, Inc., as of December 31, 1997 and 1996, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information contained
in Exhibits C through F, inclusive, and Exhibit H of this report is presented
as additional information and is not a required part of the basic financial
statements. Such Information has been subjected to the audit procedures applied
in the examination of the basic statements of assets and liabilities, and is
fairly stated in all material respects In relation to the basic statements of
assets and liabilities, taken as a whole.
/s/ FANCHER AND COMPANY
FANCHER AND COMPANY
January 22, 1998
-29-
<PAGE> 32
REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors
Stewart Title of Lubbock, Inc,
7802 Indiana Avenue
Lubbock, Texas 79423
I have audited the accompanying Statement of Assets and Liabilities of Trust
(Escrow) Accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office at 7802 Indiana Avenue, Lubbock, Texas 79423.
These financial statements are the responsibility of the company's management.
My responsibility is to express an opinion of these financial statements based
on my audits. I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audits provides a reasonable basis for my
opinions,
In my opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above present fairly, in all material respects, the assets
and liabilities of such escrow accounts handled by Stewart Title of Lubbock,
Inc., as of December 31, 1997, and 1996 in conformity with generally accepted
accounting principles.
My audits have been made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information contained
in Exhibit C through F, inclusive, and Exhibit H of these reports, is presented
as additional information and is not a required part of the basic financial
statements. Such information has been subjected to the audit procedures applied
in the examination of the basic Statement of Assets and Liabilities, and is
fairly stated in all material respects in relation to the basic statements of
assets and liabilities taken as a whole,
/s/ JESUS YEPEZ CPA
Jesus Yepez
Certified Public Accountant
Lubbock, Texas
January 29, 1998
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<PAGE> 33
REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors
Stewart Title Guaranty Company
Houston, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997 and 1996, prepared from the accounts
maintained at your office at 2401 Moores Lane, Texarkana, Texas.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinions.
In our opinion, the Statements of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above present fairly, in all material respects, the assets
and liabilities of such accounts handled by Stewart Title of Texarkana as of
December 31, 1997 and 1996, in conformity with generally accepted accounting
principles.
Our audits have been made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information contained
in Exhibits C through F, inclusive, and Exhibit H of these reports are
presented as additional information and are not a required part of the basic
financial statements. Such information has been subjected to the audit
procedures applied in the examinations of the basic statements of assets and
liabilities, and is fairly stated in all material respects in relation to the
basic statements of assets and liabilities, taken as a whole.
/s/ WILLIAMS & PEARCY
Williams & Pearcy, P.C.
January 19, 1998
-31-
<PAGE> 34
INDEPENDENT AUDITOR'S REPORT
Stewart Title Company of Rockport, Inc.
Rockport, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997 prepared from the accounts maintained at your
office at Rockport, Texas.
The financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the assets
and liabilities of such accounts handled by Stewart Title Company of Rockport,
Inc. as of December 31, 1997, in conformity with generally accepted accounting
principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through H, inclusive and Form T-19, of this report are presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities, taken as a whole.
/s/ FLUSCHE, VAN BEVEREN, KILGORE, P.C.
FLUSCHE, VAN BEVEREN, KILGORE, P.C.
Corpus Christi, Texas
February 3, 1998
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<PAGE> 35
INDEPENDENT AUDITOR'S REPORT
Stewart Title of San Patricio County, Inc.
Portland, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts as of December 31, 1997 prepared from the accounts maintained at your
office at Portland, Texas.
The financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit. We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow) Fund
Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of San
Patricio County, Inc. as of December 31, 1997, in conformity with generally
accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through Exhibit H of this report are presented as additional
information and is not a required part of the basic financial statement. Such
information has been subjected to the audit procedures applied in the
examination of the basic statement of assets and liabilities, and is fairly
stated in all material respects in relation to the basic statement of assets
and liabilities, taken as a whole.
/s/ FLUSCHE, VAN BEVEREN, KILGORE, P.C.
FLUSCHE, VAN BEVEREN, KILGORE, P.C.
Corpus Christi, Texas
February 17, 1998
-33-
<PAGE> 36
To: Stewart Title Company - Galveston
Galveston, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title Company - Galveston as of December 31, 1997,
prepared from the accounts maintained at your office at Galveston, Texas. This
financial statement is the responsibility of the company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company -
Galveston, as of December 31, 1997, in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above,
January 14, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-34-
<PAGE> 37
To: Stewart Title of Montgomery County, Inc.
The Woodlands, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title of Montgomery County, Inc. as of December 31,
1997, prepared from the accounts maintained at your office at The Woodlands,
Texas. This financial statement is the responsibility of the company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of Montgomery
County, Inc., as of December 31, 1997, in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above.
January 14, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-35-
<PAGE> 38
REPORT OF INDEPENDENT ACCOUNTANTS
To: Stewart Title Company Fort Bend
Sugar Land, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title Company - Fort Bend as of December 31, 1997 and
1996, prepared from the accounts maintained at your office at Sugar Land,
Texas. Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Company - Fort
Bend, as of December 31, 1997 and 1996, in conformity with generally accepted
accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained In
Exhibits C through F, Inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole.
January 19, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-36-
<PAGE> 39
To: Stewart Title Austin, Inc.
Austin, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title Austin, Inc. as of December 31, 1997, prepared
from the accounts maintained at your office at Austin, Texas, This financial
statement is the responsibility of the company's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title Austin, Inc.,
as of December 31, 1997, in conformity with generally accepted accounting
principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such Information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above.
January 20, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-37-
<PAGE> 40
To: Pacific Title, L.C.
Sugar Land, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Pacific Title, L.C. as of December 31, 1997, prepared from the
accounts maintained at your office at Sugar Land, Texas, This financial
statement is the responsibility of the company's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Pacific Title, L.C., as of
December 31, 1997, in conformity with generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above.
January 19, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-38-
<PAGE> 41
To: Stewart Title of Eagle Pass, Inc. d/b/a Title Guaranty
Eagle Pass, Texas
We have audited the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts of Stewart Title of Eagle Pass, Inc, d/b/a Title Guaranty as of
December 31, 1997, prepared from the accounts maintained at your office at
Eagle Pass, Texas. This financial statement is the responsibility of the
company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The financial statement does not disclose significant accounting policies
used by the company and other disclosures ordinarily included as part of the
financial statement because the financial statement has been prepared to comply
with regulatory requirements which do not include such disclosures. In our
opinion, disclosure of the information is required to conform with generally
accepted accounting principles.
In our opinion, the Statement of Assets and Liabilities of Trust (Escrow)
Fund Accounts referred to above presents fairly, in all material respects, the
assets and liabilities of such accounts handled by Stewart Title of Eagle Pass,
Inc, d/b/a Title Guaranty, as of December 31, 1997, in conformity with
generally accepted accounting principles.
Our audit has been made for the purpose of forming an opinion on the basic
financial statement taken as a whole. The supplemental information contained in
Exhibits C through F, inclusive, and Exhibit H of this report is presented as
additional information and is not a required part of the basic financial
statement. Such information has been subjected to the audit procedures applied
in the examination of the basic statement of assets and liabilities, and is
fairly stated in all material respects in relation to the basic statement of
assets and liabilities taken as a whole, except for omission of the information
discussed in the paragraph above.
January 16, 1998
/s/ AARONSON, WHITE & COMPANY
Aaronson, White & Company
16010 Barker's Point Lane
Suite 175
Houston, Texas 77079
-39-
<PAGE> 42
SCHEDULE II
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
INCOME AND RETAINED EARNINGS INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1997 1996 1995
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Revenues
Investment income ....................................... $ 701 $ 439 $ 224
Other income ............................................ 3 -- 12
--------- --------- ---------
704 439 236
Expenses
Employee costs .......................................... 201 163 211
Other operating expenses ................................ 2,098 1,515 1,634
Depreciation and amortization ........................... 90 100 101
--------- --------- ---------
2,389 1,778 1,946
Loss before taxes and equity in earnings of investees ...... (1,685) (1,339) (1,710)
Income taxes (benefit) ..................................... (502) (458) (592)
Equity in earnings of investees ............................ 16,471 15,318 8,125
--------- --------- ---------
Net income ................................................. 15,288 14,437 7,007
Retained earnings at beginning of year ..................... 131,496 118,547 112,754
Cash dividends on Common Stock ($.26, $.24 and $.21 per
share) ................................................. (1,644) (1,488) (1,214)
Retained earnings at end of year ........................... 145,140 $ 131,496 $ 118,547
======= ========= =========
</TABLE>
See accompanying note to financial statements.
(Schedule continued on following page.)
-40-
<PAGE> 43
SCHEDULE II
(CONTINUED)
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
December 31,
------------------------
1997 1996
--------- ---------
(In thousands)
<S> <C> <C>
Assets
Cash and cash equivalents ................................................. $ 13 $ 100
--------- ---------
Short-term investments .................................................... 9,001 10,620
--------- ---------
Receivables:
Notes, including $7,324 and $6,960 from affiliates ...................... 7,435 7,094
Other, including $7,543 and $3,863 from affiliates ...................... 10,522 6,140
Less allowance for uncollectible amounts ................................ (20) (20)
--------- ---------
17,937 13,214
Furniture and equipment at cost ........................................... 183 167
Less accumulated depreciation ............................................. (95) (85)
--------- ---------
88 82
Title plants, at cost ..................................................... 48 48
Investments in investees .................................................. 182,754 168,243
Other assets .............................................................. 3,482 3,168
--------- ---------
$ 213,323 $ 195,475
========= =========
Liabilities
Payables:
Notes, including $ - and $ - from affiliates ............................ $ 685 580
Accounts payable and accrued liabilities ................................ 3,134 3,905
Contingent liabilities and commitments
Stockholders' equity
Common - $1 par, authorized 15,000,000 issued and outstanding 6,381,046 and
6,216,441 .............................................................. 6,381 6,216
Class B Common - $1 par, authorized 1,500,000 and outstanding 525,006 ..... 525 525
Additional paid-in-capital ................................................ 52,922 50,833
Net unrealized investment gains, net of deferred taxes ................... 4,536 1,920
Retained earnings (1) ..................................................... 145,140 131,496
--------- ---------
Total stockholders' equity ($30.34 and $28.33 per share) ........... 209,504 190,990
--------- ---------
$ 213,323 $ 195,475
========= =========
</TABLE>
(1) Includes undistributed earnings of subsidiaries of $142,596 in 1997 and
$130,708 in 1996.
See accompanying note to financial statements.
(Schedule continued on following page.)
-41-
<PAGE> 44
SCHEDULE II
(CONTINUED)
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1997 1996 1995
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Cash flow from operating activities (Note) ................ $ 38 $ 7,033 $ 1,169
Cash flow from investing activities:
Proceeds from investments sold ......................... 1,619 -- 147
Purchases of investments, excluding mortgage loans ..... -- (6,247) --
Increases in mortgages and other notes receivable ...... (364) (70) (262)
Collections on mortgages and other notes receivable .... 23 227 31
-------- -------- --------
Cash provided (used) by investing activities .............. 1,278 (6,090) (85)
-------- -------- --------
Cash flow from financing activities:
Dividends paid ......................................... (1,644) (1,488) (1,214)
Proceeds of notes payable .............................. 106 610 --
Payments on notes payable .............................. -- (30) --
Proceeds from issuance of stock ........................ 135 11 --
-------- -------- --------
Cash used by financing activities ......................... (1,403) (897) (1,214)
-------- -------- --------
(Decrease) increase in cash and cash equivalents .......... $ (87) $ 46 $ (130)
======== ======== ========
Note: Reconciliation of net income to the above amounts:
Net income ............................................. $ 15,288 $ 14,437 $ 7,007
Add (deduct):
Depreciation and amortization ....................... 90 100 101
Provision for uncollectible amounts - net ........... -- 20 64
Increase in accounts receivable - net ............... (3,267) (3,207) (1,326)
Increase (decrease) in accounts payable and accrued
liabilities - net ................................ 671 264 (2,668)
Equity in net earnings of investees ................. (16,471) (15,318) (8,125)
Dividends received from unconsolidated subsidiaries . 4,583 11,090 5,650
Other - net ......................................... (856) (353) 466
-------- -------- --------
Cash provided by operating activities ..................... $ 38 $ 7,033 $ 1,169
======== ======== ========
Supplemental information:
Income taxes paid .................................... -- -- --
Interest paid ........................................ -- -- --
</TABLE>
See accompanying note to financial statements.
(Schedule continued on following page.)
-42-
<PAGE> 45
SCHEDULE II
(continued)
STEWART INFORMATION SERVICES CORPORATION
(PARENT COMPANY)
NOTE TO FINANCIAL STATEMENT INFORMATION
The Registrant operates as a holding company transacting substantially all
business through its subsidiaries. The consolidated financial statements for the
Registrant and its subsidiaries are included in Part II, Item 8 of Form 10-K.
The Parent Company financial statements should be read in conjunction with the
aforementioned consolidated financial statements and notes thereto and financial
statement schedules.
Total dividends received from unconsolidated subsidiaries for 1997, 1996
and 1995 were $9,633,000, $8,583,000, and $9,390,000, respectively.
-43-
<PAGE> 46
SCHEDULE V
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
====================================================================================================================
Col. A Col. B Col. C Col. D Col. E
Additions
====================================================================================================================
Balance Charged Charged to
at to other Balance
beginning cost and accounts -Deductions- at end
Description of period expenses describe described of period
====================================================================================================================
<S> <C> <C> <C> <C> <C>
Stewart Information Services
Corporation and subsidiaries:
Year ended December 31, 1995:
Estimated title losses ......... $134,316,436 $29,590,891 - $25,594,793 (A) $138,312,534
Allowance for uncollectible
amounts ....................... 6,123,049 1,333,744 - 957,846 (B) 6,498,947
Year ended December 31, 1996:
Estimated title losses ......... 138,312,534 33,829,851 - 21,810,822 (A) 150,331,563
Allowance for uncollectible
amounts ..................... 6,498,947 1,575,000 - 1,404,356 (B) 6,669,591
Year ended December 31, 1997:
Estimated title losses.......... 150,331,563 29,794,444 - 23,334,625 (A) 156,791,382
Allowance for uncollectible
amounts...................... 6,669,591 1,596,000 - 2,713,742 (B) 5,551,849
Stewart Information Services
Corporation - Parent:
Year ended December 31, 1995:
Allowance for uncollectible $8,198 $64,382 - $72,580 (C) -
amounts
Year ended December 31, 1996:
Allowance for uncollectible - 20,000 - - 20,000
amounts
Year ended December 31, 1997:
Allowance for uncollectible amounts 20,000 - - - 20,000
</TABLE>
(A) Represents payments of policy losses and loss adjustment expenses during
the year, less salvage collections.
(B) Represents uncollectible accounts written off.
(C) Represents an adjustment to accounts receivable previously reserved and
current year write-off of uncollected accounts.
-44-
<PAGE> 47
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
3.1 - Certificate of Incorporation of the Registrant, as amended April 30,
1993
3.2 - By-laws of the Registrant
4 - Rights of Common and Class B Common Stockholders (incorporated by
reference to Exhibits 3.1 and 3.2 hereto)
10.1 - Summary of agreements as to payment of bonuses to certain executive
officers
10.2 - Deferred Compensation Agreements dated March 10, 1986, amended July
24, 1990 and October 30, 1992, between the Registrant and certain
executive officers.
13 - Annual Report to Stockholders for 1997 (the financial text of the
annual report incorporated herein by reference in Item 6 of Part II
of this report)
21 - Subsidiaries of the Registrant
23 - Consents of Independent Certified Public Accountants, including
consents of incorporation by reference of their reports to previously
filed Securities Act registration statements.
27 - Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
STEWART INFORMATION SERVICES CORPORATION
STEWART INFORMATION SERVICES CORPORATION, a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is STEWART INFORMATION SERVICES
CORPORATION. The date of filing its original Certificate of Incorporation with
the Secretary of State was March 25, 1970.
2. This Restated Certificate of Incorporation restates and
integrates and also amends the Certificate of Incorporation to read as herein
set forth in full:
CERTIFICATE OF INCORPORATION
OF
STEWART INFORMATION SERVICES CORPORATION
FIRST: The name of the corporation is Stewart Information Services
Corporation.
SECOND: The registered office of the corporation in the State of
Delaware is located at 100 West Tenth Street in the City of Wilmington, County
of New Castle. The name and address of its registered agent is The Corporation
Trust Company, 100 West Tenth Street, Wilmington, Delaware.
<PAGE> 2
Third: The nature of the business, objects and purposes to be transacted,
promoted or carried on by the corporation are:
The business of accumulating and dealing in information of all types, the
guaranteeing of such information, the providing of services related to real
estate and other services by use of such information or otherwise, either
directly or through subsidiaries or affiliates; and
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
Fourth: The total number of shares of stock which the corporation shall
have authority to issue is 6,500,000 of which 5,000,000 shares of the par value
of $1 each, amounting in the aggregate to $5,000,000, shall be designated
Common Stock, and of which 1,500,000 shares of the par value of $1 each,
amounting in the aggregate to $1,500,000, shall be designated Class B Common
Stock.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof are as follows:
(1) Voting. The Common Stock and the Class B Common Stock shall have
the exclusive right to vote for the election of directors and for all other
purposes, each holder of the Common Stock and each holder of the Class B
Common Stock being
<PAGE> 3
entitled to one vote for each share held. For so long as there are issued and
outstanding 175,000 or more shares of Class B Common Stock (adjusted
proportionately for stock dividends and stock splits or combinations), at each
election for directors the Common Stock and the Class B Common Stock shall be
voted as separate classes, and the holders of the Common Stock shall be
entitled to elect five of the nine directors (each holder of Common Stock
having the right to vote, in person or by proxy, the number of shares owned by
him for the five directors to be elected by the holders of the Common Stock
and for whose election he has a right to vote, or to cumulate his votes by
giving one candidate as many votes as five times the number of his shares shall
equal, or by distributing such votes on the same principle among any number of
such five candidates). The holders of the Class B Common Stock shall be
entitled to elect the remaining four of the nine directors, and no holder of
Class B Common Stock shall have the right of cumulative voting at any election
of directors. In the event that issued and outstanding shares of Class B
Common Stock are less than 175,000 shares but more than 100,000 shares
(adjusted proportionately for stock dividends and stock splits or
combinations), the number of directors to be so elected by the holders of the
Common Stock shall be six and the number of directors to be so elected by the
holders of the Class B Common Stock shall be three. Except as
-3-
<PAGE> 4
otherwise provided hereinafter in this paragraph and as otherwise required by
law, all shares of Common Stock and Class B Common Stock shall, upon all matters
other than the election of directors, be voted as a single class (and, in the
event that the number of issued and outstanding shares of Class B Common Stock
is ever less than 100,000 (adjusted proportionately for stock dividends and
stock splits or combinations), 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); provided, however, that 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.
(2) Dividends. The holders of the Common Stock and the Class B Common
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors, out of funds legally available therefor, dividends payable in cash,
stock or otherwise, subject to the following preferences and restrictions:
(a) No cash dividends shall be declared or paid upon the Class B Common
Stock;
(b) Dividends payable in property (other than cash or stock) of the
corporation shall be payable upon the shares of Common Stock and Class B Common
Stock without distinction between the two classes;
-4-
<PAGE> 5
(c) If a dividend payable in stock of the corporation shall be declared at
any time upon either the Common Stock or the Class B Common Stock, a like
dividend shall be declared upon the other class of common stock. All dividends
payable in stock of the corporation shall be paid in shares of Common Stock
with respect to dividends upon shares of the Common Stock and in shares of
Class B Common Stock with respect to dividends upon shares of the Class B
Common Stock.
(3) Preemptive Rights. No stockholder shall have any preemptive right to
subscribe to an additional issue of capital stock of the corporation or to any
security convertible into such stock. Any preferential rights to purchase stock
or securities of the corporation which are granted to the stockholders shall be
granted to the holders of the Common Stock and Class B Common Stock without
distinction between the two classes.
(4) Conversion. Each share of Class B Common Stock of the corporation
shall, at any time at the option of the holder thereof, be convertible into one
share of Common Stock of the corporation. In the event of any transfer, upon
death or otherwise, of any share of Class B Common Stock to any person or entity
other than a lineal descendant of William H. Stewart (who died in 1903 in
Galveston County, Texas), a spouse of any such descendant or a personal
representative, trustee or custodian for
-5-
<PAGE> 6
the benefit of any such spouse or descendant, such share shall thereupon become
a share of Common Stock.
(5) Liquidation. Upon any liquidation, dissolution or winding up of
the corporation, whether voluntary or involuntary, the remaining net assets of
the corporation shall be distributed pro rata to the holders of the Common
Stock and the Class B Stock in accordance with their respective rights and
interests.
*****
Whenever the vote of stockholders at a meeting thereof is required or
permitted to be taken for or in connection with any corporate action, the
meeting and vote of stockholders may be dispensed with and such action may be
taken with the written consent of stockholders having not less than the minimum
percentage of the vote required by statue for the proposed corporate action,
provided that prompt notice shall be given to all stockholders of the taking of
corporate action without a meeting and by less than unanimous consent.
Fifth: The name and mailing address of the incorporator is:
<TABLE>
<CAPTION>
Name Mailing Address
---- ---------------
<S> <C>
William M. Ryan 800 Bank of Southwest Building
Houston, Texas 77002
</TABLE>
-6-
<PAGE> 7
Sixth: The corporation is to have perpetual existence.
Seventh: The Board of Directors of the corporation shall consist of
nine members. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
(1) To make, alter or repeal the by-laws of the corporation.
(2) To authorize and cause to be executed mortgages and liens
upon the real and personal property of the corporation.
(3) To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose
and to abolish any such reserve in the manner in which it was created.
(4) By a majority of the whole Board of Directors, to designate
one or more committees, each committee to consist of two or more of
the Directors of the corporation. The Board of Directors may
designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee, to the extent provided
in the resolution or in the by-laws of the corporation, shall have
and may exercise the powers of the Board of Directors in the
management of the business and affairs of the corporation and may
authorize the seal of the corporation to be affixed to all papers
which may require it; provided, however, the by-laws may provide that
in the absence or disqualification of any member of such committee or
committees the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or
disqualified member.
-7-
<PAGE> 8
(5) When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by
statute, or when authorized by the written consent of the holders of a
majority of the voting stock issued and outstanding, to sell, lease or
exchange all or substantially all the property and assets of the
corporation, including its good will and its corporate franchises, upon
such terms and conditions and for such consideration, which may consist in
whole or in part of money or property including securities of any other
corporation or corporations, as the Board of Directors shall deem expedient
and for the best interests of the corporation.
Eighth: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number
-8-
<PAGE> 9
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholder or class of stockholders of this corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization
of this corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
Ninth: Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the corporation. Elections of directors
need not be by written ballot unless the by-laws of the corporation shall so
provide.
Tenth: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
-9-
<PAGE> 10
3. This Restated Certificate of Incorporation was duly adopted in
accordance with Sections 242 and 245 of the General Corporation Law of the
State of Delaware, by written consent of the sole stockholder in accordance
with Section 228 thereof.
4. The capital of the corporation will not be reduced under or by reason
of any amendment in this Restated Certificate of Incorporation.
IN WITNESS WHEREOF, the corporation has caused its corporate seal to be
affixed hereto and this Certificate to be signed by its President and attested
by its Secretary, this 20 day of October, 1970.
STEWART INFORMATION SERVICES CORPORATION
BY James W. Davis
-------------------------------------
Executive Vice President
[SEAL]
-10-
<PAGE> 11
STATE OF TEXAS )
) SS.
COUNTY OF HARRIS )
BE IT REMEMBERED that on this 20 day of October, 1970, personally
came before me a notary public in and for the State and County of aforesaid,
James W. Davis, Executive Vice President of Stewart Information Services
Corporation, a Delaware corporation, known to me personally to be such, and
acknowledged that he signed the foregoing Restated Certificate of
Incorporation, that the Restated Certificate of Incorporation is the act and
deed of the corporation and that the facts stated therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office
the day and year aforesaid.
B. Weaver
---------------------
Notary Public
NOTARY PUBLIC
COUNTY OF HARRIS, TEXAS
-11-
<PAGE> 12
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
STEWART INFORMATION SERVICES CORPORATION
Stewart Information Services Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That a meeting of the Board of Directors of Stewart Information
Services Corporation, resolutions were duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and calling a meeting of the stockholders of
said corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation
be amended by deleting the Article thereof numbered "Fourth (1)" so that,
as amended, said Article shall be and read as follows:
(1) Voting. The Common Stock and the Class B Common Stock shall
have the exclusive right to vote for the election of directors and
for all other purposes, each holder of the Common Stock and each
holder of the Class B Common Stock being entitled to one vote for
each share held. For so long as there are issued and outstanding
175,000 or more shares of Class B Common Stock (adjusted
proportionately for stock dividends and stock splits or
combinations), at each election for directors the Common Stock and
the Class B Common Stock shall be voted as separate classes, and the
holders of the Common Stock shall be entitled to elect five of the
nine directors (each holder of Common Stock having the right to vote,
in person or by proxy, the number of shares owned by him for the five
directors to be elected by the holders of the Common Stock and for
whose election he has a right to vote, or to cumulate his votes by
giving one candidate as many votes as five times the number of his
shares shall equal, or by distributing such votes on the same
principle among any number of such five candidates). The holders of
the Class B Common Stock shall be entitled to elect the remaining
four of the nine directors, and no holder of Class B Common Stock
shall have the right of cumulative voting at any election of
directors. In the event that issued and outstanding shares of Class B
Common Stock are less than 175,000 shares but more than 100,000
shares (adjusted proportionately for stock dividends and stock splits
or combinations), the number of directors to be so elected by the
holders of the Common Stock shall be six and the number of directors
to be so elected by the holders of the Class B Common Stock shall be
three. Any amendment to, or rescission of, Section 3.7 of the
Company's by-laws must be approved by a majority of the Company's
outstanding Common Stock, and a majority of the Company's outstanding
Class B Common Stock, voting as separate classes. Except as otherwise
provided hereinafter in this paragraph and as otherwise required by
law, all shares of Common Stock and Class B Common Stock shall, upon
all matters other than the election of directors, be voted as a
single class (and, in the event that the number of issued and
outstanding shares of Class B Common Stock is ever less than 100,000
(adjusted proportionately for stock dividends and stock splits or
combinations), 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); provided, however, that no
change in the Certificate of Incorporation which would affect the
Common Stock
<PAGE> 13
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.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said Stewart Information Services Corporation has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by Stewart Morris, its President, and stressed by Max Crisp, its
Secretary, this 27th day of April, 1979.
STEWART INFORMATION SERVICES
CORPORATION
By /s/ STEWART MORRIS
--------------------
President
(Corporate Seal)
ATTEST:
/s/ MAX CRISP
- ---------------
Secretary
THE STATE OF TEXAS )
COUNTY OF HARRIS )
BE IT REMEMBERED that on this 27th day of April, 1979, personally came
before me, a Notary Public in and for the County and State aforesaid, Stewart
Morris, President of Stewart Information Services Corporation, a corporation of
the State of Delaware, and he duly executed said certificate before me and
acknowledged the said certificate to be his act and deed and the act and deed
of said corporation and the facts stated therein are true; and that the seal
affixed to said certificate and attested by the Secretary of said corporation
is the common or corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this
the day and year aforesaid.
/s/ SUE M. NOLZ
---------------------------
NOTARIAL SEAL Notary Public in and
for Harris County, Texas
<PAGE> 14
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
STEWART INFORMATION SERVICES CORPORATION
Stewart Information Services Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Stewart Information
Services Corporation, resolutions were duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and directing that said amendment be considered
at the next annual meeting of the stockholders of said corporation. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the restated Certificate of Incorporation of the Company be
amended by deleting therefrom paragraph (4) of Article Fourth and adding a new
paragraph (4) as follows:
(4) Conversion Each share of Class B Common Stock of the corporation
shall, at any time at the option of the holder thereof, be convertible
into one share of Common Stock of the corporation. In event of any
transfer, upon death or otherwise, of any share of Class B Common Stock
to any person or entity other than a "qualified holder" (as hereinafter
defined), such share shall thereupon become a share of Common Stock. As
used in the preceding sentence, the term "qualified holder" means (i) a
lineal descendant of William H. Stewart (who died in 1903 in Galveston
County, Texas), (ii) a spouse of any such descendant and (iii) a
personal representative, trustee or custodian for the benefit of any
such spouse or descendant. A partnership shall be deemed to be a
qualified holder if each of its partners is qualified holder; a
corporation shall be deemed to be qualified holder if each holder of its
capital stock is a qualified holder; and a trust shall be deemed to be a
qualified holder if each beneficiary is a qualified holder.
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the annual meetings of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware, at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: Trust said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced under or
by reason of said amendment.
<PAGE> 15
IN WITNESS WHEREOF, said Stewart Information Services Corporation has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by Stewart Morris, its President, and attested by Max Crisp, its
Secretary, this 2nd day of June, 1980.
STEWART INFORMATION SERVICES
CORPORATION
By: /s/ STEWART MORRIS
-----------------------
President
(Corporate Seal)
ATTEST:
/s/ MAX CRISP
- ----------------
Secretary
THE STATE OF TEXAS
COUNTY OF HARRIS
BE IT REMEMBERED that on this 2nd day of June, 1980, personally came
before me, a Notary Public in and for the County and State aforesaid, Stewart
Morris, President of Stewart Information Services Corporation, a corporation of
the State of Delaware, and he duly executed said certificate before me and
acknowledged the said certificate to be his act and deed and the act and deed
of said corporation and the facts stated therein are true; and that the seal
affixed to said certificate and attested by the Secretary of said corporation
is the common or corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this
the day and year aforesaid.
/s/ SUE M. NOLZ
--------------------------
Notary Public in and
for Harris County, Texas
NOTARIAL SEAL
<PAGE> 16
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
STEWART INFORMATION SERVICES CORPORATION
Stewart Information Services Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Stewart Information
Services Corporation, resolutions were duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and calling a meeting of the stockholders of
said corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation
be amended by adding thereto Article Eleventh, which Article shall read as
follows:
Eleventh: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. If the
Delaware General Corporation Law hereafter is amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the corporation, in addition to the limitation
on personal liability provided herein, shall be limited to the fullest
extent permitted by the amended Delaware General Corporation Law. Any
repeal or modification of this paragraph by the stockholders of the
corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the corporation
existing at the time of such repeal or modification.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced under
or by reason of said amendment.
<PAGE> 17
IN WITNESS WHEREOF, said Stewart Information Services Corporation has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by Stewart Morris, its President, and attested by Max Crisp, its
Secretary, this 18th day of May, 1987.
STEWART INFORMATION SERVICES
CORPORATION
By /s/ STEWART MORRIS
---------------------------------
President
(Corporate Seal)
ATTEST:
/s/ MAX CRISP
- ---------------------------------
Secretary
THE STATE OF TEXAS )
COUNTY OF HARRIS )
BE IT REMEMBERED that on this 18th day of May, 1987, personally came
before me, a Notary Public in and for the County and State aforesaid, Stewart
Morris, President of Stewart Information Services Corporation, a corporation of
the State of Delaware, and be duly executed said certificate before me and
acknowledged the said certificate to be his act and deed and the act and deed
of said corporation and the facts stated therein are true; and that the seal
affixed to said certificate and attested by the Secretary of said corporation
is the common or corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this
the day and year aforesaid.
/s/ SANDI M. BRYANT
-----------------------------------
SANDI M. BRYANT NOTARY PUBLIC IN
AND FOR THE STATE
OF TEXAS
[SEAL OF NOTARY]
<PAGE> 18
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
STEWART INFORMATION SERVICES CORPORATION
Stewart Information Services Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Stewart Information
Services Corporation, resolutions were duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and calling a meeting of the stockholders of
said corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation
be amended by deleting the first full paragraph of Article thereof numbered
"Fourth" and adding a new first paragraph of such Article as follows:
"Fourth: The total number of shares of stock which the
corporation shall have authority to issue is 16,500,000, of which
15,000,000 shares of the par value of $1 each, amounting in the
aggregate to $15,000,000, shall be designated Common Stock, and of
which 1,500,000 shares of the par value of $1 each, amounting in the
aggregate to $1,500,000, shall be designated Class B Common Stock."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, said Stewart Information Services Corporation has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by Stewart Morris, its President, and attested by Max Crisp, its
Secretary, this 30th day of April, 1993.
STEWART INFORMATION SERVICES CORPORATION
By /s/ STEWART MORRIS
--------------------------------------
Stewart Morris, President
(Corporate Seal)
ATTEST:
/s/ MAX CRISP
- --------------------------------------
Max Crisp, Secretary
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
STEWART INFORMATION SERVICES CORPORATION
ARTICLE I
OFFICES
SECTION 1.1. Registered office. The registered office of the
corporation in the State of Delaware shall be in the City of Wilmington, County
of New Castle, and the name of its registered agent shall be The Corporation
Trust Company.
SECTION 1.2. Other offices. The corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. Place of Meeting. All meetings of stockholders for the
election of directors shall be held at such place, either within or without the
State of Delaware, as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting.
1
<PAGE> 2
SECTION 2.2. Annual Meeting. The annual meeting of stockholders shall
be held at such date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting.
SECTION 2.3. Voting List. The officer who has charge of stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 2.4. Special Meeting. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board or by
the President or by the Board of Directors or by written order of a majority of
the
2
<PAGE> 3
directors and shall be called by the President or the Secretary at the request
in writing of stockholders owning a majority in amount of the entire capital
stock of the corporation issued and outstanding and entitled to vote. Such
request shall state the purpose of the proposed meeting. The Chairman of the
Board or the President or directors so calling, or the stockholders so
requesting, any such meeting shall fix the time and any place, either within or
without the State of Delaware, as the place for holding such meeting.
SECTION 2.5. Notice of Meeting. Written notice of the annual, and each
special meeting of stockholders, stating the time, place and purpose or
purposes thereof, shall be given to each stockholder entitled to vote thereat,
not less than ten nor more than 60 days before the meeting.
SECTION 2.6. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at any meeting of stockholders for the
transaction of business except at each election of directors and as otherwise
provided by statute or by the Certificate of Incorporation. At each meeting for
the election of directors the holders of a majority of the Common Stock and the
holders of a majority of the Class B Common Stock, issued and outstanding of
each such class, and entitled to vote thereat, present in person or represented
by
3
<PAGE> 4
proxy shall constitute a quorum. Notwithstanding the other provisions of the
Certificate of Incorporation or these by-laws, the holders of a majority of the
shares of capital stock entitled to vote thereat, present in person or
represented by proxy, whether or not a quorum is present, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present or represented. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
At such adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting as
originally notified.
SECTION 2.7. Voting.
(a) Unless express provision of applicable statute, of the Certificate
of Incorporation or of these by-laws shall provide to the contrary, at each
meeting of stockholders each holder of capital stock of the Corporation shall
be entitled to cast one vote for each share of capital stock registered in his
or its name on the books of the Corporation on the record date for
determination of stockholders entitled to notice of, and to vote at, such
meeting on each matter properly submitted to stockholders at each meeting. If
any stockholder entitled to vote at any
4
<PAGE> 5
meeting shall be present at such meeting and such stockholder shall abstain,
whether in person or by proxy, from casting the vote or votes which he or it is
entitled to cast at such meeting, such abstention shall not affect the
determination of the presence of a quorum at such meeting. For all purposes of
these by-laws, an abstention from voting on any matter properly submitted to
stockholders at a meeting shall not be considered a vote cast for or against
such matter.
(b) Each stockholder having the right to vote shall be entitled to
vote in person or by proxy appointed by an instrument in writing subscribed by
stockholder, bearing a date not more than three years prior to voting, unless
such instrument provides for a longer period, and filed with the Secretary of
the Corporation before, or at the time of, the meeting. If such instrument
shall designate two or more persons to act as proxies, unless such instrument
shall provide to the contrary, a majority of such persons present at any
meeting at which their powers thereunder are to be exercised shall have and may
exercise all of the powers of voting or giving consents thereby conferred, or
if only one be present, then such powers may be exercised by that one, or if
any even number attend and a majority do not agree on any particular issue,
each proxy so attending shall be entitled to exercise such powers in respect to
the same portion of the shares as he is of the proxies representing such
shares.
5
<PAGE> 6
(c) When a quorum is present at any meeting of stockholders, a
majority of the shares voted in person or by proxy shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of applicable statute, of the Certificate of Incorporation or of
these by-laws, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
(d) When a quorum is present at any meeting of stockholders at which
the Board of Directors is to be elected, the stockholders shall elect such
directors by a plurality of the shares voted in person or by proxy. All votes
for election of directors that are cast in person shall be cast by written
ballot.
SECTION 2.8. Consent of Stockholders. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken for or
in connection with any corporate action by any provision of the statutes, the
meeting and vote of stockholders may be dispensed with if all the stockholders
who would have been entitled to vote upon the action if such meeting were held
shall consent in writing to such corporate action being taken; or if the
Certificate of Incorporation authorizes the action to be taken with the written
consent of the holders of less than all the stock who would have been entitled
to vote upon the action if a meeting were held, then on the written consent of
the stockholders having not less than such percentage of the number of votes as
may be
6
<PAGE> 7
authorized in the Certificate of Incorporation; provided that in no case shall
the written consent be by the holders of stock having less than the minimum
percentage of the vote required by statute for the proposed corporate action,
and provided that prompt notice must be given to all stockholders of the taking
of corporate action without a meeting and by less than unanimous consent.
SECTION 2.9. Voting of Stock of Certain Holders. Shares standing in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe, or in
the absence of such provision, as the Board of Directors of such corporation
may determine. Shares standing in the name of a deceased person may be voted by
the executor or administrator of such deceased person, either in person or by
proxy. Shares standing in the name of a guardian, conservator or trustee may be
voted by such fiduciary, either in person or by proxy, but no such fiduciary
shall be entitled to vote shares held in such fiduciary capacity without a
transfer of such shares into the name of such fiduciary. Shares standing in the
name of a receiver may be voted by such receiver. A stockholder whose shares
are pledged shall be entitled to vote such shares, unless in the transfer by
the pledgor on the books of the corporation, he has expressly empowered the
pledgee to vote
7
<PAGE> 8
thereon, in which case only the pledgee, or his proxy, may represent the stock
and vote thereon.
SECTION 2.10. Treasury Stock. The corporation shall not vote, directly
or indirectly, shares of its own stock owned by it; and such shares shall not
be counted in determining the total number of outstanding shares.
SECTION 2.11. Fixing Record Date. The Board of Directors may fix in
advance a date, not exceeding 60 days preceding the date of any meeting of
stockholders, or the date for payment of any dividend or distribution, or the
date for the allotment of rights, or the date when any change, or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining a consent, as a record date for the determination of the stockholders
entitled to notice of, and to vote at, any such meeting and any adjournment
thereof, or entitled to receive payment of any such dividend or distribution,
or to receive any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent, and in such case such stockholders and only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, any such meeting and any adjournment thereof, or to
receive payment of such dividend or distribution, or to receive such allotment
of rights, or to exercise such rights, or to give such
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consent, as the case may be, notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. Powers. The business and affairs of the corporation shall
be managed by its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
SECTION 3.2. Number, Election and Term. The number of directors which
shall constitute the whole Board shall be NINE. Unless such number if fixed by
express provision of the statutes or the Certificate of Incorporation, in which
case such express provision shall govern and control, the number of directors
shall from time to time be fixed and determined by the directors and shall be
set forth in the notice of any meeting of stockholders held for the purpose of
electing directors. The directors shall be elected at the annual meeting of
stockholders, except as provided in Section 3.3, and each director elected
shall hold office until his successor shall be elected and shall qualify.
Directors need not be residents of Delaware or stockholders of the corporation.
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SECTION 3.3. Vacancies, Additional Directors and Removal From Office.
If any vacancy occurs in the members of the Board of Directors elected by the
holders of Common stock caused by death, resignation, retirement,
disqualification or removal from office of any such director, or otherwise, or
if any new directorship to be elected by the holders of Common stock is created
by an increase in the authorized number of directors, a majority of the
directors then in office elected by the holders of Common stock, though less
than a quorum, or a sole remaining such director, may choose a successor or
fill the newly created directorship; and a director so chosen shall hold office
until the next annual election and until his successor shall be duly elected
and shall qualify, unless sooner displaced. If any vacancy occurs in the
members of the Board of Directors elected by the holders of Class B Common
stock caused by death, resignation, retirement, disqualification or removal
from office of any such director, or otherwise, or if any new directorship to
be elected by the holders of Class B Common stock is created by an increase in
the authorized number of directors, a majority of the directors then in office
elected by the holders of Class B Common stock, though less than a quorum, or a
sole remaining such director, may choose a successor or fill the newly created
directorship; and a director so chosen shall hold office until the next annual
election and until his successor shall be duly elected and shall qualify,
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unless sooner displaced. A director may be removed either for or without cause
at any special meeting of stockholders duly called and held for such purpose
except that only the stockholders entitled to vote for any such director may
vote for the removal of such director.
SECTION 3.4. Regular Meeting. A regular meeting of the Board of
Directors shall be held each year, without other notice than this by-law, at
the place of, and immediately following, the annual meeting of stockholders;
and other regular meetings of the Board of Directors shall be held each year,
at such time and place as the Board of Directors may provide, by resolution,
either within or without the State of Delaware, without other notice than such
resolution.
SECTION 3.5. Special Meeting. A special meeting of the Board of
Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
The Chairman or President so calling, or the directors so requesting, any such
meeting shall fix the time and any place, either within or without the State of
Delaware, as the place for holding such meeting.
SECTION 3.6. Notice of Special Meeting. Written notice of special
meetings of the Board of Directors shall be given to each director at least 48
hours prior to the time of such meeting; provided however, in instances where
notice of such meeting is
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given orally, by telephone or telegraph, such notice need be given only 24
hours prior to such meeting. Any director may waive notice of any meeting. The
attendance of a director at any meeting shall constitute a waiver of notice of
such meeting for the purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any special meeting of the Board of
Directors need be specified in notice or waiver of notice of such meeting,
except that notice shall be given of any proposed amendment to the by-laws if
it is to be adopted at any special meeting or with respect to any other matter
where notice is required by statute.
SECTION 3.7. Quorum and Vote Required. Six of the nine members of the
Board of Directors shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors, and the act of six of the directors
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, by the Certificate of Incorporation or by
these by-laws. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
SECTION 3.8. Action Without Meeting. Unless otherwise restricted by
the Certificate of Incorporation or these by-laws,
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any action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof as provided in Article IV of these by-
laws, may be taken without a meeting, if a written consent thereto is signed by
all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.
SECTION 3.9. Compensation. Directors, as such, shall not be entitled
to any stated salary for their services unless voted by the stockholders or the
Board of Directors; but by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of the Board of Directors or any meeting of a
committee of directors. No provision of these by-laws shall be construed to
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
SECTION 3.10. Nomination of Directors to be Elected by Holders of
Common Stock. Only persons who are nominated in accordance with the following
procedures are eligible for election as directors by the holders of the Common
Stock of the corporation. Nominations of persons for election by the holders of
Common Stock to the Board of Directors of the corporation may be made at a
meeting of stockholders provided such nominations are made by or at the
direction of the Board of Directors or by a nominating committee appointed by
the Board of Directors or a
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person appointed by the Board of Directors to make nominations. Nominations may
also be made by any holder of Common Stock of the corporation entitled to vote
for the election of directors at the meeting who complies with the notice
procedures set forth in this section. Nominations, if made by a stockholder of
the corporation, shall be made pursuant to timely notice in writing addressed
to the secretary of the corporation. To be timely, a stockholder's notice shall
be delivered to or mailed and received at the principal executive offices of
the corporation not later than the 15th day of February next preceding the
annual meeting of stockholders.
SECTION 3.11. Advisory Directors. The Board of Directors may elect
from one (1) to nine (9) (as it may decide) Advisory Members of the Board of
Directors who may meet with the Board of Directors at such Board Meeting to
which they are invited by the Chairman of the Board, or the President or
Executive Vice President (it being realized that there may be meetings not
deemed important enough to warrant time and travel expense of all or a part of
the Advisory Members), and give the Board of Directors the benefit of their
advice and counsel. The Advisory Members of the Board of Directors may be
elected at any regular or special meeting of the Board of Directors. The
Advisory Members of the Board of Directors shall receive the same fee for
attending a meeting that a Director receives and shall be paid their travel
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expenses, if any, incurred in attending meetings of the Board of Directors. No
such payment shall preclude any Director from serving the corporation in any
other capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEE OF DIRECTORS
SECTION 4.1. Designation, Powers and Name. The Board of Directors may,
by resolution passed by a majority of the whole Board, designate one or more
committees, including, if they shall so determine, an Executive Committee, each
such committee to consist of two or more of the directors of the corporation.
The committee shall have and may exercise such of the powers of the Board of
Directors in the management of the business and affairs of the corporation as
may be provided in such resolution. The committee may authorize the seal of the
corporation to be affixed to all papers which may require it. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
such committee. In the absence or disqualification of any member of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to
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act at the meeting in the place of any such absent or disqualified member. Such
committee or committees shall have such name or names and such limitations of
authority as may be determined from time to time by resolution adopted by the
Board of Directors.
SECTION 4.2. Minutes. Each committee of directors shall keep regular
minutes of its proceedings and report the same to the Board of Directors when
required.
SECTION 4.3. Compensation. Members of special or standing committees
may be allowed compensation for attending committee meetings, if the Board of
Directors shall so determine.
ARTICLE V
NOTICE
SECTION 5.1. Methods of Giving Notice. Whenever under the provisions
of the statutes, the Certificate of Incorporation or these by-laws, notice is
required to be given to any director, member of any committee or stockholder,
such notice shall be in writing and delivered personally or mailed to such
director, member or stockholder; provided that in the case of a director or a
member of any committee such notice may be given orally or by telephone or
telegram. If mailed, notice to a director, member of a committee or stockholder
shall be deemed to be given when deposited in the United States mail first
class in a sealed envelope, with postage thereon prepaid, addressed, in the
case of a stockholder, to the stockholder at the stockholder's address as
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it appears on the records of the corporation or, in the case of a director or a
member of a committee, to such person at his business address. If sent by
telegraph, notice to a director or member of a committee shall be deemed to be
given when the telegram, so addressed, is delivered to the telegraph company.
SECTION 5.2. Written Waiver. Whenever any notice is required to be
given under the provisions of the statutes, the Certificate of Incorporation or
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE VI
OFFICERS
SECTION 6.1. Officers. The officers of the corporation are Chairman of
the Board and Co-Chief Executive Officer, a President and Co-Chief Executive
Officer, a Senior Executive Vice President-Assistant Chairman, a Senior
Executive Vice President-Assistant President, one or more Vice Presidents, any
one or more which may be designated an Executive Vice President and/or Senior
Vice President, a Vice President-Finance, a Secretary, a Treasurer and a
Controller. The Board of Directors may by resolution create the office of Vice
Chairman of the Board and define the duties of such office. The Board of
Directors may appoint such other officers and agents including Assistant Vice
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Presidents, Assistant Secretaries and Assistant Treasurers, as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined by the Board. Any two or
more offices, other than the offices of President and Secretary, may be held by
the same person. No officer shall execute, acknowledge, verify or countersign
any instrument on behalf of the corporation in more than one capacity, if such
instrument is required by law, by these by-laws or by any act of the
corporation to be executed, acknowledged, verified or countersigned by two or
more officers. The Chairman of the Board and Co-Chief Executive Officer and the
President and Co-Chief Executive Officer shall be elected from among the
directors. With the foregoing exceptions, none of the other officers need be a
director, and none of the officers need be a stockholder of the corporation.
SECTION 6.2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at its first
regular meeting held after the annual meeting of stockholders or as soon
thereafter as conveniently possible. Each officer shall hold office until his
successor shall have been chosen and shall have qualified or until his death or
the effective date of his resignation or removal, or until he shall cease to be
a director in the case of the Chairman of the
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Board and Co-Chief Executive Officer and the President and Co-Chief Executive
Officer.
SECTION 6.3. Removal and Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed with cause by the
affirmative vote of the Board of Directors whenever, in its judgment, the best
interests of the corporation shall be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
Any officer may resign at any time by giving written notice to the corporation.
Any such resignation shall take effect at the date of the receipt of such
notice or at any later time specified therein, and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 6.4. Vacancies. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
SECTION 6.5. Salaries. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors or pursuant to its
direction; and no officer shall be prevented from receiving such salary by
reason of his also being a director.
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SECTION 6.6. Chairman of the Board and Co-Chief Executive Officer. The
Chairman of the Board and Co-Chief Executive Officer shall preside at all
meetings of the Board of Directors or of the stockholders of the corporation.
In the Chairman's absence, or at the election of the President and Co-Chief
Executive Officer and the Chairman of the Board and Co-Chief Executive Officer,
such duties shall be attended to by the President and Co-Chief Executive
Officer. The Chairman of the Board and the President shall formulate and submit
to the Board of Directors or the Executive Committee matters of general policy
for the corporation and shall perform such other duties as usually appertain to
the office or as may be prescribed by the Board of Directors or the Executive
Committee. The Chairman of the Board and Co-Chief Executive Officer shall, with
the President and Co-Chief Executive Officer, be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control the business and affairs of
the corporation. The Chairman of the Board and Co-Chief Executive Officer,
acting with the President and Co-Chief Executive Officers shall have the power
to appoint and remove subordinate officers, agents and employees, except those
elected or appointed by the Board of Directors. The Chairman of the Board and
Co-Chief Executive Officer, acting with the President and Co-Chief Executive
Officer, shall keep the Board of Directors and
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the Executive Committee fully informed and shall consult them concerning the
business of the corporation. Either or both may sign with the Secretary or any
other officer of the corporation thereunto authorized by the Board of
Directors, certificates for shares of the corporation and any deeds, bonds,
mortgages, contracts, checks, notes, drafts or other instruments which the
Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof has been expressly delegated by these by-laws or
by the Board of Directors to some other officer or agent of the corporation, or
shall be required by law to be otherwise executed. Either or both the Chairman
of the Board and the President shall vote, or give a proxy to any other officer
of the corporation to vote, all shares of stock of any other corporation
(except that the Board of Directors shall vote, or give a proxy to one or more
member(s) of the Board to vote, all shares of the stock of Stewart Title
Guaranty Company) standing in the name of the corporation and in general they
shall perform all other duties normally incident to the office of the Chairman
of the Board and Co-Chief Executive Officer and President and Co-Chief
Executive Officer, and such other duties as may be prescribed by the
stockholders, the Board of Directors or the Executive Committee from time to
time. In the absence of the President and Co-Chief Executive Officer, or in the
event such officer is unable or refuses to act, the Chairman of the Board and
Co-Chief Executive Officer shall perform the duties and exercise
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the powers of the President and Co-Chief Executive Officer. If the office of
the President is vacant, the Chairman of the Board shall be the Chief Executive
Officer.
SECTION 6.7. President and Co-Chief Executive Officer. The President
and Co-Chief Executive Officer shall, with the Chairman of the Board and Co-
Chief Executive Officer, be the principal executive officer of the corporation
and subject to the control of the Board of Directors, shall in general
supervise and control the business and affairs of the corporation. In the
absence of the Chairman of the Board and Co-Chief Executive Officer, the
President and Co-Chief Executive Officer shall preside at all meetings of the
Board of Directors and of the Stockholders. The President and Co-Chief
Executive Officer, acting with the Chairman of the Board and Co-Chief Executive
Officer, shall have the power to appoint and remove subordinate officers,
agents and employees, except those elected or appointed by the Board of
Directors. The President and Co-Chief Executive Officer, acting with the
Chairman of the Board and Co-Chief Executive Officer, shall keep the Board of
Directors and the Executive Committee fully informed and shall consult them
concerning the business of the corporation. Either or both may sign with the
Secretary or any other officer of the corporation thereunto authorized by the
Board of Directors, certificates for shares of the corporation and any deeds,
bonds, mortgages,
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contracts, checks, notes, drafts or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof has been expressly delegated by these by-laws or by the Board
of Directors to some other officer or agent of the corporation, or shall be
required by law to be otherwise executed. Either or both the Chairman of the
Board and the President shall vote, or give a proxy to any other officer of the
corporation to vote, all shares of stock of any other corporation (except that
the Board of Directors shall vote, or give a proxy to one or more member(s) of
the Board to vote, all shares of the stock of Stewart Title Guaranty Company)
standing in the name of the corporation and in general they shall perform all
other duties normally incident to the office of President and Co-Chief
Executive Officer and Chairman of the Board and Co-Chief Executive Officer and
such other duties as may be prescribed by the stockholders, the Board of
Directors or the Executive Committee from time to time. In the absence of the
Chairman of the Board and Co-Chief Executive Officer, or in the event such
officer is unable or refuses to act, the President and Co-Chief Executive
Officer shall perform the duties and exercise the powers of the Chairman of the
Board and Co-Chief Executive Officer. If the office of the Chairman of the
Board is vacant, the President shall be the Chief Executive Officer.
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SECTION 6.8. Vice President. In the absence of the President and Co-
Chief Executive Officer and the Chairman of the Board and Co-Chief Executive
Officer, or in the event both are unable or refuse to act, either or both the
Senior Executive Vice President-Assistant Chairman and the Senior Executive
Vice President-Assistant President (or in the event both such offices are
vacant or both such officers are unable or refuse to act, the Vice President-
Finance) shall perform the duties and exercise the powers of the President and
Co-Chief Executive Officer and the Chairman of the Board and Co-Chief Executive
Officer. In the event the offices of both Chairman and President are vacant,
the Senior Executive Vice President-Assistant Chairman shall perform the duties
and exercise the powers of the Chairman and Co-Chief Executive Officer and the
Senior Executive Vice President-Assistant President shall perform the duties
and exercise the powers of the President and Co-Chief Executive Officer. Any
Vice President may sign, with the Secretary or Assistant Secretary,
certificates for shares of the corporation. The Vice Presidents shall perform
such other duties as from time to time may be assigned to them by the Chairman,
the President, the Board of Directors or the Executive Committee.
SECTION 6.9. Secretary. The Secretary shall (a) keep the minutes of
the meetings of the stockholders, the Board of Directors and committees of
directors; (b) see that all notices
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are duly given in accordance with the provisions of these by-laws and as
required by law; (c) be custodian of the corporate records and of the seal of
the corporation, and see that the seal of the corporation or a facsimile
thereof is affixed to all certificates for shares prior to the issue thereof
and to all documents, the execution of which on behalf of the corporation under
its seal is duly authorized in accordance with the provisions of these by-laws;
(d) keep or cause to be kept a register of the post office address of each
stockholder which shall be furnished by such stockholder; (e) sign with the
President, or an Executive Vice President or Vice President, certificates for
shares of the corporation, the issue of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general, perform all duties
normally incident to the office of Secretary and such other duties as from time
to time may be assigned to him by the President, the Board of Directors or the
Executive Committee.
SECTION 6.10. Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors shall determine.
He shall have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for
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monies due and payable to the corporation from any source whatsoever and
deposit all such monies in the name of the corporation in such banks, trust
companies or other depositories as shall be selected in accordance with the
provisions of Section 7.3 of these by-laws, and in general, perform all duties
normally incident to the office of Treasurer and such other duties as from time
to time may be assigned to him by the President, the Board of Directors or the
Executive Committee.
SECTION 6.11. Controller. The Controller shall prepare, or cause to be
prepared, for submission at each regular meeting of the Board of Directors, at
each annual meeting of the stockholders, and at such other times as may be
required by the Board of Directors, the President or the Executive Committee, a
statement of financial condition of the corporation in such detail as may be
required; and in general, perform all the duties incident to the office of
Controller and such other duties as from time to time may be assigned to him by
the President, the Board of Directors or the Executive Committee.
SECTION 6.12. Assistant Secretary or Treasurer. The Assistant
Secretaries and Assistant Treasurers shall, in general, perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or
by the President, the Board of Directors or the Executive Committee. The
Assistant Secretaries and Assistant Treasurers shall, in the absence of the
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Secretary or Treasurer, respectively, perform all functions and duties which
such absent officers may delegate, but such delegation shall not relieve the
absent officer from the responsibilities and liabilities of his office. The
Assistant Secretaries may sign, with the President or a Vice President,
certificates for shares of the corporation, the issue of which shall have been
authorized by a resolution of the Board of Directors. The Assistant Treasurers
shall respectively, if required by the Board of Directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
Board of Directors shall determine.
ARTICLE VII
CONTRACTS, CHECKS AND DEPOSITS
SECTION 7.1. Contracts. Subject to the provisions of Section 6.1, the
Board of Directors may authorize any officer, officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general or confined
to specific instances.
SECTION 7.2. Checks, etc. All checks, demands, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers or
such agent or agents of the
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corporation, and in such manner, as shall be determined by the Board of
Directors.
SECTION 7.3. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 8.1. Issuance. Each stockholder of this corporation shall be
entitled to a certificate or certificates showing the number of shares of stock
registered in his name on the books of the corporation. The certificates shall
be in such form as may be determined by the Board of Directors, shall be issued
in numerical order and shall be entered in the books of the corporation as they
are issued. They shall exhibit the holder's name and number of shares and shall
be signed by the President or a Vice President and by the Secretary or an
Assistant Secretary. If any certificate is countersigned (1) by a transfer
agent other than the corporation or any employee of the corporation, or (2) by
a registrar other than the corporation or any employee of the corporation, any
other signature on the certificate may be a facsimile. If the corporation shall
be authorized to issue more than one class of stock or more than one series of
any class, the designations, preferences and relative participating, optional
or
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other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and rights
shall be set forth in full or summarized on the face or back of the certificate
which the corporation shall issue to represent such class of stock; provided
that, except as otherwise provided by statute, in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock, a
statement that the corporation will furnish to each stockholder who so requests
the designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and qualifications,
limitations or restrictions of such preferences and rights. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in the case of a
lost, stolen, destroyed or mutilated certificate a new one may be issued
therefor upon such terms and with such indemnity, if any, to the corporation as
the Board of Directors may prescribe. Certificates shall not be issued
representing fractional shares of stock.
SECTION 8.2. Lost Certificates. The Board of Directors may direct a
new certificate or certificates to be issued in place
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of any certificate or certificates theretofore issued by the corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against
the corporation with respect to the certificate or certificates alleged to have
been lost, stolen or destroyed, or both.
SECTION 8.3. Transfers. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made only on the books
of the corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney and filed with the Secretary of the
corporation or the Transfer Agent.
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SECTION 8.4. Registered Stockholders. The corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of the State of Delaware.
ARTICLE IX
DIVIDENDS
SECTION 9.1. Declaration. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property or in
shares of capital stock, subject to the provisions of the Certificate of
Incorporation.
SECTION 9.2. Reserve. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conclusive to the interest of the corporation, and the
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Directors may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. Third Party Actions. The corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create
a presumption that the person did not act in good faith and
32
<PAGE> 33
in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 10.2. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for misconduct in the performance of his duty to the corporation unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of
33
<PAGE> 34
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
SECTION 10.3. Determination of Conduct. The determination that an
officer, director, employee or agent, has met the applicable standard of
conduct set forth in Sections 10.1 and 10.2 (unless indemnification is ordered
by a court) shall be made (1) by the Board of Directors by a majority vote of a
quorum consisting of Directors who were not parties to such action, suit or
proceeding, or (2) if such quorum is not obtainable, or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
SECTION 10.4. Payment of Expenses in Advance. Expenses incurred in
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized in this Article X.
34
<PAGE> 35
SECTION 10.5. Indemnity Not Exclusive. The indemnification and
advancement of expenses provided hereunder or granted pursuant hereto shall not
be deemed exclusive of any other rights to which those seeking indemnification
or the advancement of expenses may be entitled under any other by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his official capacity and as to action in another capacity
while holding such office. The indemnification and advancement of expenses
provided hereunder or granted pursuant hereto shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Seal. The corporate seal shall have inscribed thereon
the name of the corporation, and the words "Corporate Seal, Delaware." The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
otherwise reproduced.
SECTION 11.2. Books. The books of the corporation may be kept (subject
to any provision contained in the statutes) outside the State of Delaware at
the offices of the corporation at
35
<PAGE> 36
Houston, Texas, or at such other place or places as may be designated from time
to time by the Board of Directors.
ARTICLE XII
AMENDMENT
These by-laws may be altered, amended or repealed at any regular or
special meeting of the Board of Directors if (i) notice of such alteration,
amendment or repeal is contained in the notice of such meeting and (ii) such
alteration, amendment or repeal is approved by a majority vote of the directors
elected by the holders of the Common Stock and a majority vote of the directors
elected by the holders of Class B Common Stock; with each such class of
directors voting separately.
36
<PAGE> 1
EXHIBIT 10.1
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
MATERIAL CONTRACTS
DECEMBER 31, 1997
STEWART MORRIS, JR., as Chairman of the Board, shall receive in addition to his
salary, 1% on the first $20,000,000 of the consolidated income before taxes of
Stewart Title Guaranty Company as reported to its stockholders and .5% of the
profits exceeding $20,000,000. For the calendar year 1997, Mr. Morris shall
receive no less that $125,000 in bonus compensation. For the calendar year 1997,
Mr. Morris received $224,148 in bonus compensation. Total compensation shall
exclude payments made by the company for insurance premiums, board fees or stock
options granted.
MALCOLM S. MORRIS, as President and Chief Executive Officer, shall receive in
addition to his salary, 1% on the first $20,000,000 of the consolidated income
before taxes of Stewart Title Guaranty Company as reported to its stockholders
and .5% of the profits exceeding $20,000,000. For the calendar year 1997, Mr.
Morris shall receive no less that $125,000 in bonus compensation. For the
calendar year 1997, Mr. Morris received $224,148 in bonus compensation. Total
compensation shall exclude payments made by the company for insurance premiums,
board fees or stock options granted.
CARLOSS MORRIS, as Chairman of the Executive Committee, shall receive in
addition to his salary, 1.5% of the first $13,000,000 of the consolidated net
income of Stewart Title Guaranty Company as reported to its stockholders and
.75% of the profits exceeding $13,000,000. For the calendar year 1997, Mr.
Morris shall receive no less than $100,000 in bonus compensation. For the
calendar year 1997 Mr. Morris received $228,165 in bonus compensation. Total
compensation shall exclude any insurance premiums, board fees or stock options
granted.
STEWART MORRIS, as Vice Chairman of the Executive Committee, shall receive in
addition to his salary, 1.5% of the first $13,000,000 of the consolidated net
income of Stewart Title Guaranty Company as reported to its stockholders and
.75% of the profits exceeding $13,000,000 for calendar year 1997, Mr. Morris
shall receive no less than $100,000 in bonus compensation. For the calendar year
1997 Mr. Morris received $228,165 in bonus compensation. Total compensation
shall exclude any insurance premiums, board fees or stock options granted.
<PAGE> 1
EXHIBIT 10.2
SALARY DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made this 10th day of March 1986, by and between Stewart
Information Services Corporation, hereinafter called the "Company" and
Malcom S. Morris, an employee, hereinafter called the "Participant".
WHEREAS, the Participant's competent and faithful efforts on behalf of the
Company have resulted in substantial growth and profits to the Company, and,
WHEREAS, the Company values the efforts, abilities and accomplishments of
the Participant as an important member of management and recognizes that his
future services are vital to its continued growth and profits and that the loss
of his services would result in substantial financial losses, and,
WHEREAS, the Company, in order to retain the services of the Participant,
is willing to provide pre and post-retirement benefits to Participant or his
designated beneficiary pursuant to the terms and conditions contained in this
Salary Deferred Compensation Plan,
NOW, THEREFORE, IT IS MUTUALLY AGREED THAT:
1. DEATH BENEFITS.
If death occurs while Participant is serving as an employee of the Company
or an affiliated Company prior to attaining the retirement age of 65 years,
the company will pay the amount of dollars necessary to net after payment
of Federal Income Taxes $133,333.33 per year, for a period of fifteen
years, to such individual or individuals as the Participant shall have
designated in writing, or in the absence of such designation, to the estate
of the Participant. The first payment shall commence not later than three
months following the Participant's death. Annual benefits are to be paid
1/12th each month.
Definition of "net after payment of federal income taxes" (above). For the
purpose of this agreement, to determine the amount to be paid, it will be
assumed that the payment will be subject to tax at the highest federal
marginal rate applicable to individuals for that year. Should the rate be
increased during the year, the Participant will be entitled to an
adjustment payment within three months of the effective date of the
increase.
2. RETIREMENT BENEFITS.
In addition to any other compensation, beginning at age 65 (whether or not
the Participant retires at such time), the Participant shall be entitled to
receive from the Company the amount of dollars necessary to net after
payment of Federal Income Taxes $133,333.33 per year commencing not later
than three months after the Participant has reached age 65, for a period of
fifteen years. If the Participant should die during said fifteen year
period, the sum of $133,333.33 per year shall be payable until the
expiration of said fifteen year period to such individual or individuals as
the Participant shall have designated in writing filed with the Company, or
in the absence of such designation, to the estate of the Participant.
Annual benefits are to be paid 1/12th each month.
<PAGE> 2
3. FORFEITURE PROVISIONS.
3.1 Except as provided in sections 3.2 and 3.3, the participant's rights to
the death benefit and retirement benefit provided in this agreement shall
be vested one-seventh per year, the first one-seventh becoming invested
December 31, 1986 and amounts so vested are nonforfeitable even though the
Participant's employment with the Corporation terminates.
3.2 If the Participant's employment with the Corporation is terminated by
reason of fraud, dishonesty, embezzlement or theft, the Agreement shall
terminate and all payments whether vested or not under the terms of this
Agreement shall be forfeited.
3.3 The Participant expressly agrees, as a condition to the performance
by the Corporation of its obligations hereunder, that, during and after the
Participant's employment with the Corporation, or if the Participant is
suffering from total and permanent disability, the Participant will not,
directly or indirectly, render any services of an advisory nature to or
otherwise become employed by or participate or engage in any business
competitive with any of the businesses of the Corporation, without the
prior written consent of the Corporation; provided, however, that nothing
herein shall prohibit the Participant from owning stock or other securities
of a competitor which do not exceed one percent (1%) of the total
outstanding stock of such competitor, and so long as the Participant in
fact does not have the power to control or direct the management or
policies of such competitor. The Corporation shall not be required to make
any payments hereunder whether vested or not if the Participant fails to
comply with the conditions of this section.
4. VESTING.
This benefit shall vest one-seventh per year at the end of each calendar
year beginning December 31, 1986 when the first one-seventh shall vest. If
the Participant terminates his employment with Company, no further amounts
shall vest thereafter. If Participant's employment is terminated by
Company, he shall continue to vest one-seventh each year until fully
vested, subject to the forfeiture provisions of Paragraph 3. Participant
shall be fully vested on death even though prior to the end of the seventh
year. Participant shall continue to vest in the event of permanent
disability.
5. ASSIGNMENT OF RIGHTS.
This Agreement may not be assigned.
6. CONSTRUCTION AGREEMENT.
Any payments under this Agreement shall be independent of and in addition
to, those under any other plan, program, or agreement which may be in
effect between the parties hereto, or any other compensation payable to the
Participant or the Participant's designee by the Company. This Agreement
shall not be construed as a contract of employment and shall not operate to
change in any way any of the other terms and conditions of Participant's
employment and furthermore does not restrict the right of the Company to
discharge the Participant for proper cause or the right of the Participant
to discontinue service as an employee of the Company.
Benefits under this Agreement are compensation for services and rendered
and with respect to such benefit amounts shall constitute a liability of
the Company to the Participant and/or the beneficiaries in accordance with
the terms hereof.
<PAGE> 3
6. Construction Agreement (continued).
The Company shall be under no obligation whatever to purchase or maintain
any contract, policy or other asset to provide the benefits under this
Agreement. Further, any contract, policy or other asset which the Company
may utilize to insure itself of the funds to provide the benefits hereunder
shall not serve in any way as security to the Participant for the Company's
performance under this Agreement. The right accruing to the Participant or
any designated beneficiary hereunder shall be no greater than the right of
any unsecured general creditor of the Company.
The law of the State of Texas shall govern this Agreement.
7. AMENDMENT OF AGREEMENT.
This Agreement may not be altered, amended or revoked except by a written
agreement signed by the Company and the Participant.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first hereinabove written.
STEWART INFORMATION SERVICES CORPORATION
ATTEST:
By: /s/ SUE M. NOLZ By: /s/ CARLOSS MORRIS
---------------------------- ------------------------------------
Asst. Secretary Title: Chairman
-----------------------------
By: /s/ MALCOM S. MORRIS
-------------------------------------
Participant
<PAGE> 4
DESIGNATION OF BENEFICIARY
Pursuant to the terms of a Salaried Deferred Compensation Agreement, dated
March 10, 1986, between myself and the Company, I hereby designate the
following beneficiary(ies) to receive any payments which may be due under such
Agreement after my death. This designation hereby revokes any prior
designation which may have been in effect.
/s/ REBECCA ANN MORRIS
- ------------------------------- -------------------------------------
(Primary Beneficiary) (Secondary Beneficiary)
Date: 3/12/86 By: /s/ MALCOM S. MORRIS
-------------------------- ----------------------------------
Acknowledged by: STEWARD INFORMATION
SERVICES CORPORATION
By: /s/ CARLOSS MORRIS
----------------------------------
Title: Chairman
<PAGE> 5
SALARY DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made this 10th day of March 1986, by and between Stewart
Information Services Corporation, hereinafter called the "Company" and Stewart
Morris, Jr. an employee, hereinafter called the "Participant".
WHEREAS, the Participant's competent and faithful efforts on behalf of the
Company have resulted in substantial growth and profits to the Company, and,
WHEREAS, the Company values the efforts, abilities and accomplishments of
the Participant as an important member of management and recognizes that his
future services are vital to its continued growth and profits and that the loss
of his services would result in substantial financial losses, and,
WHEREAS, the Company, in order to retain the services of the Participant,
is willing to provide pre and post-retirement benefits to Participant or his
designated beneficiary pursuant to the terms and conditions contained in this
Salary Deferred Compensation Plan,
NOW, THEREFORE, IT IS MUTUALLY AGREED THAT:
1. DEATH BENEFITS.
If death occurs while Participant is serving as an employee of the Company
or an affiliated Company prior to attaining the retirement age of 65
years, the company will pay the amount of dollars necessary to net after
payment of Federal Income Taxes $133,333.33 per year, for a period of
fifteen years, to such individual or individuals as the Participant shall
have designated in writing, or in the absence of such designation, to the
estate of the Participant. The first payment shall commence not later than
three months following the Participant's death. Annual benefits are to be
paid 1/12th each month.
Definition of "net after payment of federal income taxes" (above). For the
purpose of this agreement, to determine the amount to be paid, it will be
assumed that the payment will be subject to tax at the highest federal
marginal rate applicable to individuals for that year. Should the rate be
increased during the year, the Participant will be entitled to an
adjustment payment within three months of the effective date of the
increase.
2. RETIREMENT BENEFITS.
In addition to any other competition, beginning at age 65 (whether or not
the Participant retires at such time), the Participant shall be entitled
to receive from the Company the amount of dollars necessary to net after
payment of federal Income Taxes $133,333.33 per year commencing not later
than three months after the Participant has reached age 65, for a period
of fifteen years. If the Participant should die during said fifteen year
period, the sum of $133,333.33 per year shall be payable until the
expiration of said fifteen year period to such individual or individuals
as the Participant shall have designated in writing filed with the
Company, or in the absence of such designation, to the estate of the
Participant. Annual benefits are to be paid 1/12 each month.
<PAGE> 6
6. Construction Agreement (continued).
The Company shall be under no obligation whatever to purchase or
maintain any contract, policy or other asset to provide the benefits
under this Agreement. Further, any contract, policy or other asset
which the Company may utilize to insure itself of the funds to
provide the benefits hereunder shall not serve in any way as security
to the Participant for the Company's performance under this
Agreement. The right accruing to the Participant or any designated
beneficiary hereunder shall be no greater than the right of any
unsecured general creditor of the Company
The law of the State of Texas shall govern this Agreement.
7. AMENDMENT OF AGREEMENT.
This Agreement may not be altered, amended or revoked except by a
written agreement signed by the Company and the Participant.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first hereinabove written.
STEWART INFORMATION SERVICES CORPORATION
ATTEST:
By: /s/ SUE M. NOLZ By: /s/ CARLOSS MORRIS
---------------------------- ----------------------------
Asst. Secretary Title: Chairman
-------------------
By: /s/ STEWART MORRIS, JR.
----------------------------
<PAGE> 7
DESIGNATION OF BENEFICIARY
Pursuant to the terms of a Salaried Deferred Compensation Agreement, dated
_______________, between myself and the Company, I hereby designate the
following beneficiary(ies) to receive any payments which may be due under such
Agreement after my death. This designation hereby revokes any prior designation
which may have been in affect.
/s/ CARLOTTA BARKER
- ------------------------------------ ------------------------------------
(Primary Beneficiary) (Secondary Beneficiary)
Date: March 12, 1986 By: /s/ STEWART MORRIS, JR.
- ------------------------------------ ------------------------------------
Acknowledged by: STEWART INFORMATION
SERVICES CORPORATION
By: /s/ CARLOSS MORRIS
------------------------------------
Title: Chairman
------------------------------------
<PAGE> 8
DESIGNATION OF BENEFICIARY
Pursuant to the terms of a Salaried Deferred Compensation Agreement, dated
March 10, 1986, between myself and the Company, I hereby designate the
following beneficiary (ies) to receive any payments which may be due under such
Agreement after my death. This designation hereby revokes any prior designation
which may have been in effect.
STEWART MORRIS, SR. CARLOTTA BARKER
- ------------------------------ ----------------------------
(Primary Beneficiary as to the (Secondary Beneficiary as to
first one million) the remainder)
Date: 9/15/87 By: /s/ STEWART MORRIS, JR.
------------------------- -------------------------
Acknowledge By:
STEWART INFORMATION SERVICES
CORPORATION
By: /s/ MALCOM S. MORRIS
-------------------------
Title: SR EX V.P.
----------------------
<PAGE> 9
SALARY DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made this 10th day of March 1986, by and between Stewart
Information Services Corporation, hereinafter called the "Company" and Max
Crisp, an employee, hereinafter called the "Participant".
WHEREAS, the Participant's competent and faithful efforts on behalf of the
Company have resulted in substantial growth and profits to the Company, and,
WHEREAS, the Company values the efforts, abilities and accomplishments of
the Participant as an important member of management and recognizes that his
future services are vital to its continued growth and profits and that the loss
of his services would result in substantial financial losses, and,
WHEREAS, the Company, in order to retain the services of the Participant,
is willing to provide pre and post-retirement benefits to Participant or his
designated beneficiary pursuant to the terms and conditions contained in this
Salary Deferred Compensation Plan,
NOW, THEREFORE, IT IS MUTUALLY AGREED THAT:
1. DEATH BENEFITS.
If death occurs while Participant is serving as an employee of the Company
or an affiliated Company prior to attaining the retirement age of 65 years,
the company will pay the amount of dollars necessary to net after payment
of Federal Income Taxes $66,666.67 per year, for a period of fifteen years,
to such individual or individuals as the Participant shall have designated
in writing, or in the absence of such designation, to the estate of the
Participant. The first payment shall commence not later than three months
following the Participant's death. Annual benefits are to be paid 1/12th
each month.
Definition of "net after payment of federal income taxes" (above). For the
purpose of this agreement, to determine the amount to be paid, it will be
assumed that the payment will be subject to tax at the highest federal
marginal rate applicable to individuals for that year. Should the rate be
increased during the year, the Participant will be entitled to an
adjustment payment within three months of the effective date of the
increase.
2. RETIREMENT BENEFITS.
In addition to any other compensation, beginning at age 65 (whether or not
the Participant retires at such time), the Participant shall be entitled to
receive from the Company the amount of dollars necessary to net after
payment of Federal Income Taxes $66,666.67 per year commencing not later
than three months after the Participant has reached age 65, for a period of
fifteen years. If the Participant should die during said fifteen year
period, the sum of $66,666.67 per year shall be payable until the
expiration of said fifteen year period to such individual or individuals as
the Participant shall have designated in writing filed with the Company, or
in the absence of such designation, to the estate of the Participant.
Annual benefits are to be paid 1/12th each month.
<PAGE> 10
3. FORFEITURE PROVISIONS.
3.1 Except as provided in sections 3.2 and 3.3, the Participant's rights
to the death benefit and retirement benefit provided in this agreement
shall be vested one-seventh per year, the first one-seventh becoming
invested December 31, 1986 and amounts so vested are nonforfeitable even
though the Participant's employment with the Corporation terminates.
3.2 If the Participant's employment with the Corporation is terminated by
reason of fraud, dishonesty, embezzlement or theft, the Agreement shall
terminate and all payments whether vested or not under the terms of this
Agreement shall be forfeited.
3.3 The Participant expressly agrees, as a condition to the performance by
the Corporation of its obligations hereunder, that, during and after the
Participant's employment with the Corporation, or if the Participant is
suffering from total and permanent disability, the Participant will not,
directly or indirectly, render any services of an advisory nature to or
otherwise become employed by or participate or engage in any business
competitive with any of the businesses of the Corporation, without the
prior written consent of the Corporation; provided, however, that nothing
herein shall prohibit the Participant from owning stock or other securities
of a competitor which do not exceed one percent (1%) of the total
outstanding stock of such competitor, and so long as the Participant in
fact does not have the power to control or direct the management or
policies of such competitor. The Corporation shall not be required to make
any payments hereunder whether vested or not if the Participant fails to
comply with the conditions of this section.
4. VESTING.
This benefit shall vest one-seventh per year at the end of each calendar
year beginning December 31, 1986 when the first one-seventh shall vest. If
the Participant terminates his employment with Company, no further amounts
shall vest thereafter. If Participant's employment is terminated by
Company, he shall continue to vest one-seventh each year until fully
vested, subject to the forfeiture provisions of Paragraph 3. Participant
shall be fully vested on death even though prior to the end of the seventh
year. Participant shall continue to vest in the event of permanent
disability.
5. ASSIGNMENT OF RIGHTS.
This Agreement may not be assigned.
6. CONSTRUCTION AGREEMENT.
Any payments under this Agreement shall be independent of, and in addition
to, those under any other plan, program or agreement which may be in effect
between the parties hereto, or any other compensation payable to the
Participant or the Participant's designee by the Company. This Agreement
shall not be construed as a contract of employment and shall not operate to
change in any way any of the other terms and conditions of Participant's
employment and furthermore does not restrict the right of the Company to
discharge the Participant for proper cause or the right of the Participant
to discontinue service as an employee of the Company.
Benefits under this Agreement are compensation for services and rendered
and with respect to such benefit amounts shall constitute a liability of
the Company to the Participant and/or the beneficiaries in accordance with
the terms hereof.
<PAGE> 11
6. Construction Agreement (continued).
The Company shall be under no obligation whatever to purchase or maintain
any contract, policy or other asset to provide the benefits under this
Agreement. Further, any contract, policy or other asset which the Company
may utilize to insure itself of the funds to provide the benefits hereunder
shall not serve in any way as security to the Participant for the Company's
performance under this Agreement. The right accruing to the Participant or
any designated beneficiary hereunder shall be no greater than the right of
any unsecured general creditor of the Company.
The law of the State of Texas shall govern this Agreement.
7. AMENDMENT OF AGREEMENT.
This Agreement may not be altered, amended or revoked except by a written
agreement signed by the Company and the Participant.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first hereinabove written.
STEWART INFORMATION SERVICES CORPORATION
ATTEST:
By: /s/ SUE M. NOLZ By: /s/ CARLOSS MORRIS
------------------------------ --------------------------------
Asst. Secretary Title: Chairman
-------------------
By: /s/ MAX CRISP
--------------------------------
Participant
<PAGE> 12
DESIGNATION OF BENEFICIARY
Pursuant to the terms of a Salaried Deferred Compensation Agreement, dated
March 10, 1986, between myself and the Company, I hereby designate the
following beneficiary(ies) to receive any payments which may be due under such
Agreement after my death. This designation hereby revokes any prior
designation which may have been in effect.
JIM CRISP ESTATE OF MAX CRISP
- -------------------------- --------------------------------
(Primary Beneficiary) (Secondary Beneficiary)
Date: March 10, 1986 By: MAX CRISP
-------------------- ----------------------------
Acknowledged by: STEWART INFORMATION
SERVICES CORPORATION
By: /s/ CARLOSS MORRIS
-----------------------------
Title: Chairman
-------------------------
<PAGE> 13
FIRST AMENDMENT TO
SALARY DEFERRED COMPENSATION AGREEMENT
This First Amendment to Salary Deferred Compensation Agreement is made
this 24th day of July, 1990, by and between Stewart Information Services
Corporation (the "Company") and Malcolm Morris, an employee, (the
"Participant").
WHEREAS, the Company and Participant entered into a Salary Deferred
Compensation Agreement on March 10, 1986, (the "Agreement");
WHEREAS, the Company and Participant desire to amend the Agreement to
provide for a specialized funding mechanism to informally fund the benefits to
be provided under the Agreement;
WHEREAS, the Company and Participant have provided for the establishment
of an irrevocable trust (known as the Stewart Information Services Corporation
Salary Deferred Compensation Trust) as the vehicle for this informal funding;
NOW THEREFORE, it is mutually agreed that:
1. In accordance with the terms of Section 7 of the Agreement (pertaining to
the Amendment of the Agreement), Section 6 (pertaining to Construction of the
Agreement), shall be amended by deleting the second and third paragraphs
thereof in their entirety and substituting therefor, the following two
paragraphs:
The Company shall establish an irrevocable trust (the "Trust") pursuant to
a trust agreement, substantially in the form of Exhibit "I" attached to and
made a part of this Agreement with Ameritrust Texas, N.A. as trustee. The
Company shall transfer to the Trust such life insurance policies or other
property or funds as the Company in its sole discretion deems appropriate
for the purpose of making funds available to pay the benefits to the
Participant under this Agreement.
<PAGE> 14
Any such transfers to the Trust shall be irrevocable and be held by the
trustee in accordance with the terms of the Trust for payment in
accordance with this Agreement. In transferring any insurance contracts
or other property rights to the Trust, the Company shall cause such
contracts or rights to be assigned to and in the name of the Trust or
trustee for the Trust and for the benefits thereunder to be payable to
the Trust or trustee for the Trust.
Benefits under the Agreement are compensation for services rendered
and with respect to such benefit amounts, beyond what is funded by and
paid to the Participant (or his beneficiaries) from the Trust, shall
constitute a liability of the Company to the Participant (or his
beneficiaries) in accordance with the terms of this Agreement. Apart from
what the Company transfers to the Trust, the Company shall be under no
obligation to purchase or maintain any assets to provide the benefits
under this Agreement and any asset which the Company may utilize for the
purpose of providing funds to pay the benefits under this Agreement shall
not be considered as security to the Participant for the Company's
performance under this Agreement. The right accruing to the Participant or
any designated beneficiary under this Agreement, shall be no greater than
the right of any unsecured general creditor of the Company.
2. The Agreement shall, except as otherwise hereby amended, continue and
remain in effect.
IN WITNESS WHEREOF, the parties hereto have executed, this First Amendment
to Salary Deferred Compensation Agreement the day and year first hereinabove
written.
STEWART INFORMATION SERVICES
CORPORATION
Affix Corporate Seal
By: /s/ STEWART MORRIS
[SEAL] -------------------------------
Attest Title: President
By: /s/ SUE M. NOLZ -----------------------------
----------------------------------
Assistant Secretary
By: /s/ MALCOLM S. MORRIS
-------------------------------
Malcolm S. Morris, Participant
2
<PAGE> 15
FIRST AMENDMENT TO
SALARY DEFERRED COMPENSATION AGREEMENT
This First Amendment to Salary Deferred Compensation Agreement is made
this 24th day of July, 1990, by and between Stewart Information Services
Corporation (the "Company") and Stewart Morris, Jr. an employee, (the
"Participant").
WHEREAS, the Company and Participant entered into a Salary Deferred
Compensation Agreement on March 10, 1986, (the "Agreement");
WHEREAS, the Company and Participant desire to amend the Agreement to
provide for a specialized funding mechanism to informally fund the benefits to
be provided under the Agreement;
WHEREAS, the Company and Participant have provided for the establishment
of an irrevocable trust (known as the Stewart Information Services Corporation
Salary Deferred Compensation Trust) as the vehicle for this informal funding;
NOW THEREFORE, it is mutually agreed that:
1. In accordance with the terms of Section 7 of the Agreement (pertaining to
the Amendment of the Agreement), Section 6 (pertaining to Construction of the
Agreement) shall be amended by deleting the second and third paragraphs thereof
in their entirety and substituting therefor, the following two paragraphs:
The Company shall establish an irrevocable trust (the "Trust")
pursuant to a trust agreement, substantially in the form of Exhibit "I"
attached to and made a part of this Agreement with Ameritrust Texas, N.A.
as trustee. The Company shall transfer to the Trust such life insurance
policies or other property or funds as the Company in its sole discretion
deems appropriate for the purpose of making funds available to pay the
benefits to the Participant under this Agreement.
<PAGE> 16
Any such transfers to the Trust shall be irrevocable and be held by the
trustee in accordance with the terms of the Trust for payment in accordance
with this Agreement. In transferring any insurance contracts or other
property rights to the Trust, the Company shall cause such contracts or
rights to be assigned to and in the name of the Trust or trustee for the
Trust and for the benefits thereunder to be payable to the Trust or trustee
for the Trust.
Benefits under the Agreement are compensation for services rendered and
with respect to such benefit amounts, beyond what is funded by and paid to
the Participant (or his beneficiaries) from the Trust, shall constitute a
liability of the Company to the Participant (or his beneficiaries) in
accordance with the terms of this Agreement. Apart from what the Company
transfers to the Trust, the Company shall be under no obligation to
purchase or maintain any assets to provide the benefits under this
Agreement and any asset which the Company may utilize for the purpose of
providing funds to pay the benefits under this Agreement shall not be
considered as security to the Participant for the Company's performance
under this Agreement. The right accruing to the Participant or any
designated beneficiary under this Agreement, shall be no greater than the
right of any unsecured general creditor of the Company.
2. The Agreement shall, except as otherwise hereby amended, continue and
remain in effect.
IN WITNESS WHEREOF, the parties hereto have executed, this First Amendment
to Salary Deferred Compensation Agreement the day and year first hereinabove
written.
STEWART INFORMATION SERVICES
CORPORATION
[SEAL]
By:/s/ STEWART MORRIS
Attest -----------------------------
By: /s/ SUE M. NOLZ
-------------------- Title: President
Assistant Secretary --------------------------
By:/s/ STEWART MORRIS, JR.
-----------------------------
Stewart Morris, Jr. Participant
--------------------
2
<PAGE> 17
FIRST AMENDMENT TO
SALARY DEFERRED COMPENSATION AGREEMENT
This First Amendment to Salary Deferred Compensation Agreement is made
this 24th day of July, 1990, by and between Stewart Information Services
Corporation (the "Company") and Max Crisp, an employee, (the "Participant").
WHEREAS, the Company and Participant entered into a Salary Deferred
Compensation Agreement on March 10, 1986, (the "Agreement");
WHEREAS, the Company and Participant desire to amend the Agreement to
provide for a specialized funding mechanism to informally fund the benefits to
be provided under the Agreement;
WHEREAS, the Company and Participant have provided for the establishment
of an irrevocable trust (known as the Stewart Information Services Corporation
Salary Deferred Compensation Trust) as the vehicle for this informal funding;
NOW THEREFORE, it is mutually agreed that:
1. In accordance with the terms of Section 7 of the Agreement (pertaining to
the Amendment of the Agreement), Section 6 (pertaining to Construction of the
Agreement) shall be amended by deleting the second and third paragraphs thereof
in their entirety and substituting therefor, the following two paragraphs:
The Company shall establish an irrevocable trust (the "Trust")
pursuant to a trust agreement, substantially in the form of Exhibit "I"
attached to and made a part of this Agreement with Ameritrust Texas, N.A.
as trustee. The Company shall transfer to the Trust such life insurance
policies or other property or funds as the Company in its sole discretion
deems appropriate for the purpose of making funds available to pay the
benefits to the Participant under this Agreement.
<PAGE> 18
Any such transfers to the Trust shall be irrevocable and be held by the
trustee in accordance with the terms of the Trust for payment in
accordance with this Agreement. In transferring any insurance contracts or
other property rights to the Trust, the Company shall cause such contracts
or rights to be assigned to and in the name of the Trust or trustee for
the Trust and for the benefits thereunder to be payable to the Trust or
trustee for the Trust.
Benefits under the Agreement are compensation for services rendered
and with respect to such benefit amounts, beyond what is funded by and
paid to the Participant (or his beneficiaries) from the Trust, shall
constitute a liability of the Company to the Participant (or his
beneficiaries) in accordance with the terms of this Agreement. Apart from
what the Company transfers to the Trust, the Company shall be under no
obligation to purchase or maintain any assets to provide the benefits
under this Agreement and any asset which the Company may utilize for the
purpose of providing funds to pay the benefits under this Agreement shall
not be considered as security to the Participant for the Company's
performance under this Agreement. The right accruing to the Participant
or any designated beneficiary under this Agreement, shall be no greater
than the right of any unsecured general creditor of the Company.
2. The Agreement shall, except as otherwise hereby amended, continue and
remain in effect.
IN WITNESS WHEREOF, the parties hereto have executed, this First Amendment
to Salary Deferred Compensation Agreement the day and year first hereinabove
written.
STEWART INFORMATION SERVICES
CORPORATION
Affix Corporate Seal
[SEAL] By: /s/ STEWART MORRIS
Attest: ------------------------------
By: /s/ SUE M. NOLZ Title: President
------------------------------ ----------------------------
Assistant Secretary
By: /s/ MAX CRISP
------------------------------
Max Crisp, Participant
------------------------------
2
<PAGE> 19
STEWART INFORMATION SERVICES CORPORATION
SALARY DEFERRED COMPENSATION TRUST
This Trust Agreement is entered into this 24th day of July, 1990 between
Stewart Information Services Corporation (the "Corporation") as settlor and
Ameritrust Texas, N.A., as Trustee (the "Trustee") which in conjunction with
the Salary Deferred Compensation Agreement ("the Agreement") described below,
is intended to be maintained, as an irrevocable, grantor trust for the purpose
of setting aside and providing a specialized funding mechanism for the deferred
compensation provided under the Agreement. The Corporation has transferred and
delivered to the Trustee the property described in Exhibit "A" attached to and
made a part of this Trust Agreement. The Trustee accepts such property in trust
under the terms of this Trust Agreement.
ARTICLE I
DEFINITIONS
1.1 AGREEMENT. The term "Agreement" shall mean the Stewart Information
Services Corporation Salary Deferred Compensation Agreement entered into on
March 10, 1986, including any amendments thereto.
1.2 BENEFICIARIES. The term "Beneficiaries" shall mean any "participant"
or the "beneficiary" of such participant, as those terms are defined or
provided for under the Agreement.
1.3 EMPLOYER. The term "Employer" shall mean the Corporation.
1.4 TRUST. The term "Trust" shall mean all property transferred to the
Trustee by the Employer and thereafter held by the Trustee pursuant to this
Trust Agreement, including the investments and reinvestments thereof. This Trust
shall be known as the Stewart Information Services Corporation Salary Deferred
Compensation Trust.
1.5 TRUSTEE. The term "Trustee" shall mean the Trustee designated herein
and any successor Trustee.
1.6 CODE. The term "Code" shall mean the Internal Revenue Code of 1986,
as amended (or predecessor or successor codes thereto).
1.7 ERISA. The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
<PAGE> 20
ARTICLE II
IRREVOCABILITY AND AMENDABILITY
2.1 GENERAL. Except as provided in Section 2.2 of this Article II, this
Trust shall be irrevocable for its term and shall only terminate when all the
assets of the Trust have been distributed in accordance with the terms of the
Agreement and of this Trust Agreement, and the Corporation shall have no right
or power to revoke this instrument.
2.2 AMENDMENT. This Trust Agreement may be amended by the express
written agreement of the Corporation and Trustee executed and acknowledged in
the same form of this Trust Agreement.
ARTICLE III
INCORPORATION OF OTHER DOCUMENTS
3.1 OTHER DOCUMENTS. The Agreement is hereby incorporated herein by
reference.
3.2 ORDER FOR INTERPRETATION IN THE EVENT OF CONFLICT. If a conflict
between the interpretation of this Trust and the Agreement occurs, then
precedence shall be given to the provisions of the documents in the following
order:
(a) The Trust
(b) The Agreement
To the extent possible, the Agreement shall be interpreted as mutually
consistent.
ARTICLE IV
LEGAL TREATMENT OF THE TRUST
4.1 TRUSTEE. The Trustee of this Trust is the person (or entity) named
herein, and said person (or entity), evidenced by the authorized signature of
its agent and representative hereon, accepts such position. The Trustee shall
receive, hold and disburse the assets designated to be so handled under the
Agreement in trust, for the Beneficiaries in accordance with the provisions of
this Trust Agreement.
4.2 CONTRIBUTIONS.
(a) The Employer shall make contributions to this Trust in accordance
with the provisions of the Agreement as a means of
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<PAGE> 21
providing deferred compensation to the Beneficiaries. The Employer shall
transfer to the Trustee all amounts provided for in the Agreement in accordance
with the terms and conditions of the Agreement, to be held by the Trustee,
together with the investments and reinvestments thereof, in TRUST, for the
purposes and with the powers and authorities provided by this Trust Agreement
and subject to the terms and conditions of this Trust Agreement. Except as
otherwise provided in the Agreement and this Trust Agreement, all contributions
made pursuant to the provisions of the Agreement and this Trust Agreement and
all assets and earnings of the Trust are solely and irrevocably dedicated to
the payment of benefits to the Beneficiaries pursuant to the Agreement. The
Trustee shall not have the responsibility for determining the amount of
contributions or collecting contributions to the Trust from the Employer. The
Trustee shall only be responsible for assets transferred to the Trustee by the
Employer.
(b) The Trustee shall not be required to determine amounts to be
contributed or to take any legal action to collect such amounts or collect,
preserve or maintain any Trust property unless it has been indemnified either
by the Trust itself, with the approval of the Employer, or by the Employer with
respect to any expenses or losses to which it may be subjected by taking such
action. Any property acquired by the Trustee through the enforcement or
compromise of any claim or claims it has as Trustee of this Trust will become a
part of the assets of the Trust.
4.3 ALIENATION AND ASSIGNMENT; SPENDTHRIFT TRUST. The interest of each
Beneficiary in this Trust shall be held subject to a "spendthrift trust" within
the meaning of Section 112.035 of the Texas Trust Code. Accordingly, the
interest of the Beneficiaries in the Trust may not be alienated or assigned,
voluntarily or involuntarily and any such attempt at alienation, assignment, or
attachment shall be void, and such interest is not subject to attachment by or
subject to the claim of any creditors of the Beneficiaries, except for debts
owed the Employer.
4.4 TRUST SUBJECT TO GENERAL CREDITORS OF EMPLOYER.
(a) The assets of the Trust shall be treated as general assets of the
Employer and, as such, shall remain subject to claims of the general creditors
of the Employer (including Beneficiaries) under applicable state and federal
law. Nothing in this Trust Agreement shall affect Beneficiaries' rights as
general creditors of the Employer under the Agreement or this Trust Agreement.
No Beneficiary shall have any preferred claim on or any beneficial ownership in
the Trust prior to the time for
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<PAGE> 22
distribution to such Beneficiary under the Agreement. By agreeing to
participate in the Agreement, each Participant shall, in the event that the
Employer of such Participant becomes insolvent, thereby waive any priority such
Participant may have had under law as an employee with respect to any claim
against the Employer for amounts or benefits payable to such Participant under
the Agreement and Trust beyond the rights such Participant would have as a
general creditor.
(b) At any time the Trustee receives actual notice from the Employer that
the Employer is insolvent, the Trustee shall deliver any undistributed
principal and income in the Trust attributable to the Participants who are
employees of such Employer to satisfy such claims of the general creditors of
such Employer as a court of competent jurisdiction may direct. For purposes of
the preceding sentence (i) the term "employees of such Employer" shall include
former employees of such Employer to the extent such undistributed principal
and income is attributable to contributions made by such Employer and (ii) the
Trustee shall have the right to pay the assets of the Trust into such court in
an interpleader proceeding for the purposes of being directed by such court as
to the proper disposition of such assets. The Trustee and all other parties
shall be bound by such direction, and payment of the Trust assets by the
Trustee pursuant to such court's direction shall discharge it from liability
with respect to such payment under the Trust. The Board of Directors of the
Employer shall appoint an individual with notice to the Trustee who shall have
the duty to inform the Trustee of the Employer's insolvency. If a creditor of
the Employer files a claim with the Trustee against the assets of the Trust,
the Trustee shall determine, within 30 days after receipt of such claim,
whether the Employer is insolvent. Pending such determination of insolvency by
the Trustee, the Trustee shall discontinue payments to the Beneficiaries with
respect to such Employer. The Trustee shall resume holding the Trust assets for
the benefit of the Beneficiaries and resume making any payments under the
Agreement to the Beneficiaries only after the Trustee has determined that the
Employer is not insolvent (or is no longer insolvent, if Trustee initially
determined the Employer to be insolvent). Unless the Trustee has actual notice
of the Employer's insolvency or has received a written claim against the Trust
by a creditor of the Employer, the Trustee shall have no duty to inquire whether
the Employer is insolvent. An Employer shall be considered "insolvent" for
purposes of this Trust Agreement if (i) the Employer is unable to pay its debts
as they mature, or (ii) the Employer is subject to a pending proceeding as a
debtor under the Bankruptcy Code. The determination of insolvency shall be given
to the Trustee by the Employer or shall be made by the Trustee in its reasonable
discretion, whichever
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<PAGE> 23
may be applicable, and the Trustee may rely on evidence of solvency provided by
the Employer and shall not be liable to any person for any good faith actions
it takes on account of any such determination. If more than one Employer
participates in the Agreement and Trust, the provisions of this Section 4(b)
shall only apply to the affected Employer.
4.5 GRANTOR TRUST. It is intended that the Trust be taxed as a grantor
trust under the provisions of Section 671 and Section 677(a)(2) of the Code and
that the Employer, as grantor, be treated as the "owner" within the meaning of
those provisions. The Employer shall file its federal income tax return in a
manner consistent with the provisions of the preceding sentence.
ARTICLE V
DISTRIBUTIONS; INDIVIDUAL ACCOUNTS; EMPLOYER LOANS; TERMINATION
5.1 DISTRIBUTIONS. This Trust shall be an accumulation trust. Principal
and all currently earned income shall be accumulated during the term of the
Trust. The Trustee shall hold, manage, invest and reinvest the assets of the
Trust, collect the income therefrom and, after deducting all charges and
expenses properly payable therefrom, hold and distribute the then principal of
the Trust and the income therefrom, in accordance with the provisions of the
Agreement and this Trust Agreement.
5.2 INDIVIDUAL ACCOUNTS. The Employer shall establish an individual
account or accounts for each Beneficiary in accordance with the terms of the
Agreement.
5.3 EMPLOYER LOANS. The Employer shall have the right to borrow an
amount from the Trust to the extent that any life insurance policies held in
the Trust have available cash loan values; provided that the maximum amount of
such borrowings may not exceed the excess of the sum of any premiums paid on
any such policy and interest paid to the life insurance carrier on any loans
made with respect to any such policy over the outstanding balance of any
previous borrowings made by the Employer hereunder. The terms of any loan
entered into between the Trustee and the Employer hereunder shall be set by the
Trustee based on reasonable terms that are mutually acceptable to the Employer.
5.4 TERMINATION. Unless earlier revoked pursuant to the provisions of
Section 2.2 of this Trust Agreement, this Trust shall terminate upon (a) a
complete distribution of the Trust as provided in the Agreement or (b) if
earlier and if required by the applicable rule against perpetuities, one day
prior to the
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<PAGE> 24
last day of the period ending 21 years after the death of the last to die of
the original "participants" under the Agreement. If the trust terminates
pursuant to clause (b) above then the assets of this Trust shall be transferred
to a successor trust established for this purpose; provided such a transfer
does not result in the taxation of the transferred assets to the Beneficiaries.
Except as otherwise provided in this Trust Agreement or the Agreement any
assets remaining in the Trust (or in the case of multiple participants, in each
respective participant's subtrust or separate account) at the time of
termination of the Trust (or subtrust or separate account, as the case may be)
shall be returned to the Employer.
ARTICLE VI
POWERS AND DUTIES OF TRUSTEE
6.1 GENERAL POWERS. Except as provided herein to the contrary, the
Trustee shall have all the powers granted trustees under the Texas Trust Code,
as amended from time to time, and shall have the power to perform every act
necessary or appropriate to carry out the terms of this Trust to the maximum
extent permitted by law, including, without limitation, the following:
(a) The receipt of contributions or funding under the Agreement;
(b) The investment of Trust assets in the forms of investment
provided in Schedule "A" attached to and made a part of this Trust
Agreement. The forms of investment listed on Schedule "A" may be
modified in accordance with the provisions of Section 6.8 of this
Trust Agreement.
(c) The entering into and performance of any agreement;
(d) Subject to the provisions of Section 4.2(b) of this Trust Agreement,
the undertaking of any legal action, whether as plaintiff or
defendant, on behalf of the Trust;
(e) The payment of any tax or assessment incurred in the administration
of the Trust;
(f) The employment of any person, including attorneys, accountants,
investment managers and agents, to advise and assist the Trustee in
the performance of its duties;
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<PAGE> 25
(g) The execution and delivery of all instruments necessary or
appropriate to accomplishing or facilitating the exercise of the
Trustee's powers;
(h) The borrowing of money from any source as may be necessary or
advisable to effectuate the purposes of the Trust on such terms and
conditions as the Trustee, in the Trustee's absolute discretion, may
deem advisable, and for this purpose to mortgage or pledge on a
nonrecourse basis the assets of the Trust; provided however, except as
may be otherwise provided in Section 5.3 of this Trust Agreement, the
proceeds of any insurance company loan may not be paid from the Trust
and, unless each respective Beneficiary otherwise consents, shall not
be used for any purpose other then to maintain the insurance policy
(with respect to which the loan was made) on a "paid up basis," i.e.,
to pay both current premium and interest expense on prior loans from
that policy;
(i) To release, in the discretion of the Trustee, any fiduciary power at
any time, in whole or in part, temporarily or permanently, whenever
the Trustee may deem it advisable, by acknowledged instrument;
(j) To keep any and all securities or other assets of the Trust in the
name of some other person or entity with a power of attorney for the
transfer attached or in bearer or Federal Reserve Book - Entry form or
in the name of the Trustee without disclosing the fiduciary capacity
of the Trustee;
(k) Subject to the provisions of Section 6.11 of the Trust Agreement, to
vote, either in person or by proxy, any share of stock held as part of
the assets of the Trust; and
(l) To hold cash uninvested at any time and in any amount pending
investment pursuant to the terms of the Agreement.
6.2 PRUDENT MAN STANDARD. Except to the extent otherwise provided in
this Trust Agreement or the Agreement, in acquiring, investing, reinvesting,
exchanging, retaining, selling, supervising and managing trust property, a
trustee shall exercise the judgment and care under the current circumstances
that persons of ordinary prudence, discretion and intelligence exercise in the
management of their own affairs, not in regard to speculation, but in regard to
the permanent disposition of their
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<PAGE> 26
funds, considering the probable income from as well as the probable increase in
value and the safety of their capital. Provided, however, except as may
otherwise be provided under applicable law which cannot be waived, the Trustee
shall incur no liability to any person or entity for any action taken pursuant
to a direction, request or approval (given by any Beneficiary, the Employer or
any agent appointed by or representing such person or persons) contemplated by
the terms of this Trust Agreement, and to that extent shall be relieved of the
Prudent Man standard regarding investments of the Trust.
6.3 Compensation of Trustee. The Trustee shall be paid reasonable
compensation for its services as may be agreed upon between the Trustee and
Company from time to time. Such payment shall be made by the person designated
in Section 6.7 of this Trust Agreement.
6.4 Reliance by Third Parties. Any person dealing in good faith
with the Trustee or in good faith assisting the Trustee in conducting a
transaction shall be entitled to rely without inquiry upon the representation
that the Trustee has the power it purports to exercise and has exercised such
power in accordance with the provisions of this Trust Agreement, and in such
event such person shall not be responsible for the application of money or
property paid or delivered to the Trustee.
6.5 Receipt and Disbursement of Funds. The Trustee shall receive
all contributions from the Employer and disburse the Trust in accordance with
the provisions of the Agreement and the terms of this Trust Agreement.
6.6 Cooperation with Employer. The Trustee shall exert reasonable
efforts to cooperate with the Employer and any investment manager or third
party recordkeeper as to any filings, reports and disclosures required by
United States federal, state and local law. Within thirty (30) days (or such
other reasonable time mutually agreeable to the Trustee and the Corporation)
following the end of each Agreement Year during the term of this Trust, the
Trustee shall provide the Employer with a verified written statement of
accounts based on the Trustee's best information and knowledge in a form which
shall substantially reflects the following:
(a) The period covered by the account;
(b) The total principal with which the Trustee is chargeable
according to the last preceding written statement of accounts
or the original principal if there is no preceding statement;
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<PAGE> 27
(c) An itemized schedule of all principal, cash and property
received and disbursed, distributed, or otherwise disposed of
during the period;
(d) An itemized schedule of income received and disbursed,
distributed, or otherwise disposed of during the period;
(e) The balance of principal and income remaining at the close of
the period, how invested, and both the inventory and current
market values of all investments; and
(f) A statement that the Trust has been administered according to
its terms.
Any information transmitted by the Trustee to the Employer hereunder shall be
certified to as complete and accurate by the Trustee. Any information required
to be provided for the preparation of any annual reporting and disclosure
materials shall be provided on an annual basis not less than 30 days prior to
the time required for filing the applicable report, disclosure or return
(including extensions thereof), unless the Employer and Trustee shall in
writing have agreed to a later date for the provision of such information. The
Trustee shall not be responsible for complying with the provisions of this
Section 6.6 to the extent that the underlying administrative responsibility has
been allocated to a third party in accordance with Section 6.10 of this
Agreement. The statements provided in accordance with the above shall be deemed
correct and final and binding as to all parties 90 days after receipt by the
Employer except to the extent objected to prior to the end of such period.
6.7 Payment of Expenses.
(a) The expenses incurred by the Trustee in the performance of its
duties, including fees for legal services rendered to the
Trustee (whether or not rendered in connection with a judicial
or administrative proceeding and whether or not incurred while
it is acting as Trustee) and the costs of the accounting
described in Section 6.6 above;
(b) any compensation paid to the Trustee in accordance with
Section 6.3 above; and
(c) all other proper charges and disbursements of the Trustee
shall be paid by the Employer.
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<PAGE> 28
6.8 Direction of Investments. The Employer shall have the right to
select the investment alternatives provided in Section 6.1(b) of the Trust
Agreement and to modify them from time to time, provided however, that to the
extent that the Trust shall be holding life insurance policies or contracts
that are eligible for any significant advantages or benefits with respect to
transitional rules and grandfathering protection under the Tax Reform Act of
1986 or other tax legislation, such contract or policy shall not be assigned,
transferred, surrendered, exchanged or cancelled without the prior advice and
consent of an independent insurance advisor mutually designated by the Trustee
and the Company.
6.9 Valuation. The Trustee shall value the Trust at the fair
market value of the assets in the Trust as of the last business day of each
Agreement year and upon such other dates as may be determined by the Employer
or the Trustee or as may be specified under the Agreement. The determination of
the Trustee with respect to the fair market value of any asset shall be final
and conclusive. In making such valuation, the Trustee shall deduct all charges,
expenses and other liabilities, if any, contingent or otherwise, then
chargeable against the Trust, in order to give effect to income realized and
expenses paid or incurred, losses sustained, and unrealized gains or losses
constituting appreciation or depreciation in the value of the Trust investments
since the last previous valuation.
6.10 Appointment of Other Fiduciaries and Service Providers. The
Corporation and Trustee agree that either party with the prior consent of the
other may appoint third parties to be allocated administrative or investment
responsibilities under the Trust as mutually agreeable between the Corporation
and Trustee, including recordkeeping and investment fund managers or sponsors.
6.11 Investment Company Shares. The voting rights of any shares of
any registered funds under the Investment Company Act of 1940 in the Trust
shall be exercised in accordance with the direction given the Trustee by the
Employer.
6.12 Limitation of Trustee Liability. The Trustee shall not be
liable to the Trust or to any person having a beneficial interest in the Trust
for any losses or decline in value which may be incurred upon any investment of
the trust assets, as long as the Trustee acts in good faith and in accordance
with the terms of the Agreement and this Trust Agreement. The Trustee shall not
be liable for any act or omission by the Trustee, because of a direction of any
Beneficiary, the Employer or any investment manager appointed by the Employer,
nor for any act or
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<PAGE> 29
omission of any Beneficiary, the Employer, any investment manager appointed by
the Employer or any other agent appointed by the Employer except to the extent
required by applicable state or federal law under which liability cannot be
waived. The Trustee shall not be liable for any act or omission on the
Trustee's own part (except for any act or omission as is attributable to gross
negligence, a willful breach of trust or bad faith on the part of the Trustee)
except to the extent required by the terms of applicable state or federal law
under which liability cannot be waived. The Trustee shall not be accountable or
held liable for any act or omission of any agent of the Trustee if the Trustee
has used good faith and ordinary care in the selection of such agent, and in
such event, any liability shall be solely that of such agent.
6.13 Reliance on Information. When the Trustee acts in good faith,
the Trustee, in all matters pertaining to the Trustee's management and
investment of the Trust, may rely upon any notice, resolution, instruction,
direction, order, certificate, opinion, letter, telegram or other document
believed by the Trustee to be genuine, to have been signed by a proper
representative of any Beneficiary, the Employer or any investment manager or
third party recordkeeper, if one is appointed, and to be the act of any
Beneficiary, the Employer or the investment manager or third party
recordkeeper, as the case may be. The Trustee shall accept any certificate or
other instrument duly signed by a proper representative of any Beneficiary, the
Employer or the investment manager or third party recordkeeper, if one is
appointed which purports to evidence an instruction, direction or order of any
Beneficiary, the Employer, the investment manager or third party recordkeeper,
as the case may be, as conclusive evidence thereof.
6.14 Indemnification. The Employer hereby, jointly and severally,
agrees to indemnify and hold harmless the Trustee from and against any and all
losses, claims, damages, liabilities costs and expenses, including but not
limited to, liability for any judgments, settlements consented to in writing by
the Trustee, which consents will not be unreasonably withheld, and reasonable
attorneys fees arising out of or in connection with or as a direct or indirect
result of its serving as Trustee of the Trust established under this Trust
Agreement, (including but not limited to the Trustee's acts or omissions with
respect to (a) the voting of any share of stock held as part of the assets of
the Trust, or (b) establishing or maintaining investment funds or effecting
investments therein in accordance with the terms and provisions of the Trust,
or the Trustee's determination of insolvency of any Employer and the Trustee's
acts or omissions in accordance with the terms and provisions of the Trust
following any determination of insolvency of any Employer), except only
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those losses, claims, changes, liabilities, costs and expenses, if any, arising
out of or in connection with or as a direct or indirect result of the Trustee's
bad faith, gross negligence or willful neglect or breach of trust. The Trustee
shall promptly notify each Employer of any claim, action or proceeding for
which it may seek indemnity, Such indemnity is a continuing obligation and
shall be binding on each Employer and its successors, whether by merger or
otherwise, and assigns. In addition, such indemnity shall survive the
resignation or removal of the Trustee and/or the liquidation of the Trust.
ARTICLE VII
ENFORCEMENT AND REMEDIES
7.1 Right to Sue. The Trustee may maintain on behalf of the Trust
in its representative capacity a civil action for any legal or equitable remedy
against a third person that it could maintain in its own right if it were the
party aggrieved.
7.2 Liens. The Trustee is entitled to a lien against the Trust -
(a) for any advances made by it for the benefit of the
Trust or for any unpaid expenses properly chargeable against
the Trust; and
(b) for payment of its compensation under Section 6.3 of
this Trust Agreement.
ARTICLE VIII
REMOVAL, RESIGNATION AND APPOINTMENT
OF TRUSTEES: AMENDMENTS
8.1 Removal of Trustee. The Trustee may be removed at any time by
the Corporation. No such removal shall take effect until thirty (30) days from
the date that a written notice was delivered to the Trustee unless prior
thereto a successor Trustee shall have been appointed and accepted and the
Trustee consents to such earlier date.
8.2 Resignation of Trustee. The Trustee may resign at any time
upon seven (7) days written notice delivered to the Corporation.
8.3 Appointment of Successor Trustee; and Transfer of Funds. The
Corporation shall appoint a qualified corporate
-12-
<PAGE> 31
fiduciary as Trustee to replace a removed or resigned Trustee and such
appointment shall be made not later than the effective date of such removal or
resignation of such Trustee. The predecessor Trustee shall assign, transfer and
pay over the assets of the Trust to the Successor Trustee. The predecessor
Trustee is authorized, however, to reserve such sum of money as is reasonable
for the payment of its fees and expenses in connection with the settlement of
its account or otherwise, and any balance of such reserve remaining after the
payment of such fees and expenses shall be paid over to the successor Trustee.
8.4 Accounting of Removed or Resigned Trustee. Any Trustee removed
under Section 8.1 above shall remain as Trustee until its successor shall have
been appointed, but not more than thirty (30) days following notice of removal.
Within ninety (90) days following the expiration of the thirty (30) day period
following its removal or resignation, the Trustee shall provide the Corporation
with a full and final accounting. The written approval of such an accounting by
an Employer, or the failure of the Employer to notify the Trustee of their
disapproval of such an accounting Within ninety (90) days after its receipt
shall be final and binding as to the Trustee's administration of the Trust for
the applicable accounting period upon the Employer and all persons who have or
may thereafter have an interest in the Trust.
ARTICLE IX
MISCELLANEOUS
9.1 Controlling Law. This Trust has been entered into in the state
of Texas and except to the extent preempted by ERISA or other federal law shall
be construed and enforced in accordance with the laws of Texas.
9.2 Income Tax Deferral; ERISA Status. This Trust is intended to
comply with the law and rulings under Sections 83, 402(b), 451 and 671 of the
Code and the economic benefit and constructive receipt doctrines thereunder,
including the ruling positions and criteria of the Internal Revenue Service as
in effect from time to time, and the related rulings and regulations, which
result in a deferral of income tax to the Participants (or Beneficiaries). This
Trust is also intended to comply with Sections 201(2), 301(a) (3) and 401(a)
(1) of ERISA and the related rules and regulations thereunder, applying to
unfunded plans maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees.
The Trust is also intended to qualify as maintaining separate accounts for each
employee within the meaning of Section 404(a) (5) of the Code pertaining to the
allowance of the Employer's deduction.
-13-
<PAGE> 32
9.3 Subtrusts. This Trust may receive contributions for more than
one Participant, pursuant to the separate Agreement for each such Participant,
provided in the event that more than one Participant is covered by the Trust, a
separate subtrust shall be established for each such Participant in a manner
that satisfies the provisions of the last sentence of the preceding section
(9.2) of this Agreement.
9.4 Accountability For Funds Received. The Trustee shall be
accountable only for funds or other property received by him pursuant to the
Agreement and Trust.
9.5 Recourse Beyond Trust Assets. The Employer shall be liable to
the Beneficiary for the payment of the benefits under the Agreement to the
extent of any insufficiency in the funds available under and paid to the
Beneficiary from the Trust. In addition, the rights of the Beneficiaries
against the Employer for the payment of benefits under the Agreement shall be
preserved in accordance with the provisions of Section 4.4(a) of this Trust
Agreement in the event that the assets of this Trust are paid to the general
creditors of the Employer in accordance with the provisions of Section 4.4(b)
of this Trust Agreement. The provisions of this Section 9.5 shall not limit the
rights of the Beneficiaries under this Trust Agreement or as otherwise allowed
by law with respect to the Trustee.
9.6 Facility of Payment. If the Employer determines that a payee
under this Trust Agreement is unable to care for his own affairs because of
physical or mental condition or minority, any such payment (unless a claim
shall have been made therefor by a duly appointed guardian or other legal
representative) may be made to the payee's guardian or spouse, or to any
descendant, parent, relative, or other person determined by the Employer to be
trustworthy to utilize the payment for the benefit of the payee, and the
payments so made shall completely discharge the liability of the Trustee with
respect thereto.
9.7 No Bond Required. Except as otherwise required by law, no
Trustee acting hereunder shall be required to give bond or other security in
any jurisdiction.
9.8 Gender and Number. To the extent required by the context
herein, each gender shall include the masculine, the feminine and the neuter,
and each number shall include the singular and the plural.
9.9 Execution in Counterparts. This Trust may be executed in
counterparts, each of which shall be deemed an original.
-14-
<PAGE> 33
IN WITNESS WHEREOF, the Corporation and Trustee have caused their
respective seals to be hereunto affixed the date first above written.
CORPORATION:
ASSET STEWART INFORMATION SERVICES CORPORATION
By /s/ [ILLEGIBLE]
-----------------------------
Assistant, Secretary By: /s/ STEWART MORRIS
--------------------------------
Stewart Morris, President
TRUSTEE: AMERITRUST TEXAS, N.A.
By:
Name: /s/ [ILLEGIBLE]
-------------------------------
-15-
<PAGE> 34
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
BEFORE ME, the undersigned authority, on this day personally appeared
Stewart Morris, known to me to be the President of Stewart Information Services
Corporation whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same for the purposes and consideration
therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the 24th day of July,
1990.
/s/ LOU ANN WOCLAND
----------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My Commission Expires: 7/14/92
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
BEFORE ME, the undersigned authority, on this day personally appeared
Carl W. Pitschmonn Jr., known to me to be the person whose name is subscribed to
the foregoing instrument as Trustee and acknowledged to me that such person
executed the same for the purposes and consideration therein expressed, in the
capacity therein stated and as the act and deed of said banking institution.
GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the 21st day of
September, 1990.
/s/ LAURA VALDES
------------------------------
[SEAL] NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My Commission Expires: 5/27/94
-16-
<PAGE> 35
SCHEDULE "A"
Pursuant to Section 6.1(b) of the Trust Agreement the Trustee shall
make investments available under this Trust in the following categories of
investments:
(1) life insurance contracts and policies of a type mutually approved
by or acceptable to both the Employer and the Beneficiaries
-17-
<PAGE> 36
EXHIBIT "A"
The Corporation has transferred and delivered to the Trustee the property
described below:
Security Life of Denver Policy Number 000953922 Dated April 1, 1986 in
the Face Amount of $604,084 for Martin M. Crisp, Insured.
Security Life of Denver Policy Number 000957576 Dated April 1, 1986,
Expiry Date April 1, 1987 in the Face Amount of $219,250 for Martin M.
Crisp, Insured.
Security Life of Denver Policy Number 000953920 Dated April 1, 1986 in
the Face Amount of $877,655 for Malcolm S. Morris, Insured.
Security Life of Denver Policy Number 000957578 Dated April 1, 1986,
Expiry Date April 1, 1987 in the Face Amount of $300,000 for Malcolm
S. Morris, Insured.
Security Life of Denver Policy Number 000953921 Dated April 1, 1986 in
the Face Amount off $958,222 for Stewart Morris, Jr., Insured.
Security Life of Denver (Duplicate) Policy Number 000957577 Dated
April 1, 1986, Expiry Date April 1, 1990 in the Face Amount of
$220,000 for Stewart Morris, Insured.
-18-
<PAGE> 37
SECOND AMENDMENT TO THE
SALARY DEFERRED COMPENSATION AGREEMENT
This Second Amendment to Salary Deferred Compensation Agreement is made
this 30th day of October, 1992 by and between Stewart Information Services
Corporation (the "Company") and Malcolm S. Morris, an employee, (the
"Participant").
WHEREAS, the Company and Participant entered into a Salary Deferred
Compensation Agreement on March 10, 1986, (the "Agreement");
WHEREAS, the Agreement was amended on July 24, 1990;
WHEREAS, the Company and Participant desire to amend the Agreement for a
change in the informal funding mechanism for the benefits to be provided under
the Agreement to accommodate a split-dollar arrangement;
NOW, THEREFORE, it is mutually agreed that:
In accordance with the terms of Section 7 of the Agreement (pertaining to
the Amendment of the Agreement) the Agreement shall be amended as follows:
1. Section 1 (pertaining to Death Benefits) shall be amended by deleting it in
its entirety and substituting therefor, the following:
<PAGE> 38
1. DEATH BENEFITS
If death occurs while Participant is serving as an employee of the Company
or of an affiliated company prior to attaining the retirement age of 65
years, the Company will pay the amount of dollars necessary to net after
the payment of federal, state, county and city income taxes $133,333.33
per year, for a period of 15 years, to such individual or individuals as
the Participant shall have designated in writing, or in the absence of
such designation, to the estate of the Participant. The first payment
shall commence not later than three months following the Participant's
death. Annual payments are to be paid 1/12 each month.
For the purposes of this Agreement, to determine the "net after the payment
of federal, state, county and city income tax," it will be assumed that the
payment will be subject to tax at the highest marginal rates and highest
surtax rates applicable to an individual taxpayer for the year of payment
as set by the federal, State of Texas, Harris County and City of Houston
government.
The amount used for federal, state, county and city taxes shall be treated
separately and shall not be deducted one from the other in the calculation
of the payment to the Participant. Should the tax rates be increased
during the year, the Participant shall be entitled to an adjustment
payment within three months of the effective date of the increase.
2. Section 2 (pertaining to Retirement Benefits) shall be amended by deleting
it in its entirety and substituting therefor the following:
2. RETIREMENT BENEFITS
In addition to any other compensation, beginning at age 65 (whether or not
the Participant retires at such time), the Participant shall be entitled
to receive from the Company the amount of dollars necessary to net after
the payment of federal, state, county and city income taxes $133,333.33
per year commencing not later than three months after the Participant has
reached age 65, for a period of 15 years. If the Participant should die
during the said 15 year period, the sum of $133,333.33 per year shall be
paid until the expiration of said 15 year period to such individual or
individuals as the Participant shall have designated in writing, or in the
absence of such designation, to the estate of the Participant. Annual
benefits are to be paid 1/12 each month.
2
<PAGE> 39
3. Section 6 (pertaining to Construction), as amended by the first amendment,
shall be amended by deleting it in its entirety and substituting therefor the
following:
6. CONSTRUCTION AGREEMENT.
Any payments under this Agreement shall be independent of, and in
addition to, those under any other plan, program or agreement which may be
in effect between the parties hereto, or any other compensation payable to
the Participant or the Participant's designee by the Company. This
Agreement shall not be construed as a contract of employment and shall not
operate to change in any way any of the other terms and conditions of
Participant's employment and furthermore does not restrict the right of the
Company to discharge the Participant for proper cause or the right of the
Participant to discontinue service as an employee of the Company.
The Company shall establish an irrevocable trust (the "Trust") pursuant to
a trust agreement, substantially in the form of Exhibit "A" attached to
and made a part of this Agreement with Ameritrust Texas, N.A., as trustee.
The Company shall transfer to the Trust such life insurance policies or
other property or funds as the Company in its sole discretion deems
appropriate for the purpose of making funds available to pay the benefits
to the Participant under this Agreement.
Any such transfers to the Trust shall be irrevocable and be held by the
trustee in accordance with the terms of the Trust for payment in accordance
with this Agreement. In transferring any insurance contracts or other
property rights to the Trust, the Company shall cause such contracts or
rights to be assigned to and in the name of the Trust or trustee for the
Trust and for the benefits thereunder to be payable to the Trust or trustee
for the Trust.
Benefits under the Agreement are compensation for services rendered and
with respect to such benefit amounts, beyond what is funded by and paid to
the Participant (or his beneficiaries) from the Trust, shall constitute a
liability of the Company to the Participant (or his beneficiaries) in
accordance with the terms of this Agreement. Apart from what the Company
transfers to the Trust, the Company shall be under no obligation to
purchase or maintain any assets to provide the benefits under this
Agreement and any asset which the Company may utilize for the purpose of
providing funds to pay the benefits under this Agreement shall not be
considered as security to the Participant for the Company's performance
under this Agreement. The right accruing to the Participant or any
designated beneficiary under this Agreement, shall be no greater than the
right of any unsecured general creditor of the Company.
3
<PAGE> 40
Although it is not required to do so, the Company may establish a split
dollar agreement with the Participant for the purchase of life insurance as
a means of meeting in whole or in part its obligations under this
Agreement. It is hereby agreed that the amount of policy death benefits (in
event of the Participant's death, to the extent that the death benefits are
payable under the life insurance contract) and accumulated cash values
owned by the Participant under the policy (collectively the "Insurance
Benefits") which are paid to the Participant shall be deemed to be payments
by the Company in discharging its obligations under this Agreement.
In using the Insurance Benefits to offset obligations under this Agreement,
the following steps shall be followed to calculate the amount of payments
due to the Participant or the Participant's beneficiary: (1) the annual
payments of $133,333.33 shall be increased to a pretax amount using the
federal, state, county and city tax rates in effect at the date of the
calculation (consistent with the methodology set forth in the second
paragraph of Section 1 of this Agreement, as amended) and (2) the present
value shall then be calculated based on the payment amount determined in
(1), using a 7% interest rate, and a 15-year payment period.
If the Company establishes a split dollar agreement the Company hereby
agrees that if paying of the Insurance Benefits to the Participant does not
fully satisfy the Company's obligation under this Agreement then the
Company agrees to pay the Participant a lump sum from the Company's
collateral assignment portion of the split dollar insurance contract and
apply such lump sum in satisfaction of such deficiency to the extent
necessary to satisfy such deficiency. To the extent that there are not
sufficient amounts available from the Company's collateral assignment
portion of the split dollar insurance contract to fully satisfy this
deficiency and its obligations under this Agreement then the Company shall
pay any remaining deficiency directly to the Participant in the form of a
lump sum cash bonus or through installments as described in Section 1 and 2
of this amendment.
The trustee of the Trust shall apply any Insurance Benefits, collateral
assignment portion, and any other assets in the Trust in a manner
consistent with the preceding provisions of this Section 6 of the
Agreement, as amended, to satisfy the Company's obligations under this
Agreement. To the extent the assets of the Trust are not sufficient for the
purpose, the Company shall pay the Participant directly any remaining
deficiency in its obligation under this Agreement.
The laws of the State of Texas shall govern this Agreement.
4
<PAGE> 41
4. The Agreement shall, except as otherwise hereby amended, continue and
remain if effect.
IN WITNESS WHEREOF, the parties hereto have executed, this Second
Amendment to Salary Deferred Compensation Agreement the day and year first
hereinabove written.
STEWART INFORMATION SERVICES
CORPORATION
Affix Corporate Seal
By: /s/ CARLOSS MORRIS
-------------------------
Title: Chairman
----------------------
Attest
By: /s/ SUE M. NOLZ
--------------------------
ASST. SECRETARY By: /s/ MALCOLM S. MORRIS
-------------------------
Malcolm S. Morris, Participant
5
<PAGE> 42
SECOND AMENDMENT TO THE
SALARY DEFERRED COMPENSATION AGREEMENT
This Second Amendment to Salary Deferred Compensation Agreement is made
this 30th day of October, 1992 by and between Stewart Information Services
Corporation (the "Company") and Stewart Morris, Jr., an employee, (the
"Participant").
WHEREAS, the Company and Participant entered into a Salary Deferred
Compensation Agreement on March 10, 1986, (the "Agreement");
WHEREAS, the Agreement was amended on July 24, 1990;
WHEREAS, the Company and Participant desire to amend the Agreement for a
change in the informal funding mechanism for the benefits to be provided under
the Agreement to accommodate a split-dollar arrangement;
NOW, THEREFORE, it is mutually agreed that:
In accordance with the terms of Section 7 of the Agreement (pertaining to
the Amendment of the Agreement) the Agreement shall be amended as follows:
1. Section 1 (pertaining to Death Benefits) shall be amended by deleting it in
its entirety and substituting therefor, the following:
<PAGE> 43
1. DEATH BENEFITS
If death occurs while Participant is serving as an employee of the Company
or of an affiliated company prior to attaining the retirement age of 65
years, the Company will pay the amount of dollars necessary to net after
the payment of federal, state, county and city income taxes $133,333.33
per year, for a period of 15 years, to such individuals or individuals as
the Participant shall have designated in writing, or in the absence of
such designation, to the estate of the Participant. The first payment
shall commence not later than three months following the Participant's
death. Annual payments are to be paid 1/12 each month.
For the purposes of this Agreement, to determine the "net after the
payment of federal, state, county and city income tax," it will be assumed
that the payment will be subject to tax at the highest marginal rates and
highest surtax rates applicable to an individual taxpayer for the year of
payment as set by the federal, State of Texas, Harris County and City of
Houston government.
The amount used for federal, state, county and city taxes shall be treated
separately and shall not be deducted one from the other in the calculation
of the payment to the Participant. Should the tax rates be increased
during the year, the Participant shall be entitled to an adjustment
payment within three months of the effective date of the increase.
2. Section 2 (pertaining to Retirement Benefits) shall be amended by deleting
it in its entirety and substituting therefor the following:
2. RETIREMENT BENEFITS
In addition to any other compensation, beginning at age 65 (whether or not
the Participant retires at such time), the Participant shall be entitled
to receive from the Company the amount of dollars necessary to net after
the payment of federal, state, county and city income taxes $133,333.33
per year commencing not later than three months after the Participant has
reached age 65, for a period of 15 years. If the Participant should die
during the said 15 year period, the sum of $133,333.33 per year shall be
paid until the expiration of said 15 year period to such individual or
individuals as the Participant shall have designated in writing, or in the
absence of such designation, to the estate of the Participant. Annual
benefits are to be paid 1/12 each month.
2
<PAGE> 44
3. Section 6 (pertaining to Construction), as amended by the first amendment,
shall be amended by deleting it in its entirety and substituting therefor the
following:
6. CONSTRUCTION AGREEMENT.
Any payments under this Agreement shall be independent of, and in addition
to, those under any other plan, program or agreement which may be in effect
between the parties hereto, or any other compensation payable to the
Participant or the Participant's designee by the Company. This Agreement
shall not be construed as a contract of employment and shall not operate to
change in any way any of the other terms and conditions of Participant's
employment and furthermore does not restrict the right of the Company to
discharge the Participant for proper cause or the right of the Participant
to discontinue service as an employee of the Company.
The Company shall establish an irrevocable trust (the "Trust") pursuant to
a trust agreement, substantially in the form of Exhibit "A" attached to
and made a part of this Agreement with Ameritrust Texas, N.A., as trustee.
The Company shall transfer to the Trust such life insurance policies or
other property or funds as the Company in its sole discretion deems
appropriate for the purpose of making funds available to pay the benefits
to the Participant under this Agreement.
Any such transfers to the Trust shall be irrevocable and be held by the
trustee in accordance with the terms of the Trust for payment in accordance
with this Agreement. In transferring any insurance contracts or other
property rights to the Trust, the Company shall cause such contracts or
rights to be assigned to and in the name of the Trust or trustee for the
Trust and for the benefits thereunder to be payable to the Trust or trustee
for the Trust.
Benefits under the Agreement are compensation for services rendered and
with respect to such benefit amounts, beyond what is funded by and paid to
the Participant (or his beneficiaries) from the Trust, shall constitute a
liability of the Company to the Participant (or his beneficiaries) in
accordance with the terms of this Agreement. Apart from what the Company
transfers to the Trust, the Company shall be under no obligation to
purchase or maintain any assets to provide the benefits under this
Agreement and any asset which the Company may utilize for the purpose of
providing funds to pay the benefits under this Agreement shall not be
considered as security to the Participant for the Company's performance
under this Agreement. The right accruing to the Participant or any
designated beneficiary under this Agreement, shall be no greater than the
right of any unsecured general creditor of the Company.
3
<PAGE> 45
Although it is not required to do so, the Company may establish a split
dollar agreement with the Participant for the purchase of life insurance as
a means of meeting in whole or in part its obligations under this
Agreement. It is hereby agreed that the amount of policy death benefits (in
event of the Participant's death, to the extent that the death benefits are
payable under the life insurance contract) and accumulated cash values
owned by the Participant under the policy (collectively the "Insurance
Benefits") which are paid to the Participant shall be deemed to be payments
by the Company in discharging its obligations under this Agreement.
In using the Insurance Benefits to offset obligations under this Agreement,
the following steps shall be followed to calculate the amount of payments
due to the Participant or the Participant's beneficiary: (1) the annual
payments of $133,333.33 shall be increased to a pretax amount using the
federal, state, county and city tax rates in effect at the date of the
calculation (consistent with the methodology set forth in the second
paragraph of Section 1 of this Agreement, as amended) and (2) the present
value shall then be calculated based on the payment amount determined in
(1), using a 7% interest rate, and a 15-year payment period.
If the Company establishes a split dollar agreement the Company hereby
agrees that if paying of the Insurance Benefits to the Participant does not
fully satisfy the Company's obligation under this Agreement then the
Company agrees to pay the Participant a lump sum from the Company's
collateral assignment portion of the split dollar insurance contract and
apply such lump sum in satisfaction of such deficiency. To the extent that
there are not sufficient amounts available from the Company's collateral
assignment portion of the split dollar insurance contract to fully satisfy
this deficiency and its obligations under this Agreement then the Company
shall pay any remaining deficiency directly to the Participant in the form
of a lump sum cash bonus or through installments as described in Section 1
and 2 of this amendment.
The trustee of the Trust shall apply any Insurance Benefits, collateral
assignment portion, and any other assets in the Trust in a manner
consistent with the preceding provisions of this Section 6 of the
Agreement, as amended, to satisfy the Company's obligations under this
Agreement. To the extent the assets of the Trust are not sufficient for the
purpose, the Company shall pay the Participant directly any remaining
deficiency in its obligation under this Agreement.
The laws of the State of Texas shall govern this Agreement.
4
<PAGE> 46
4. The Agreement shall, except as otherwise hereby amended, continue and
remain in effect.
IN WITNESS WHEREOF, the parties hereto have executed, this Second
Amendment to Salary Deferred Compensation Agreement the day and year first
hereinabove written.
STEWART INFORMATION SERVICES
CORPORATION
Affix Corporate Seal
By: /s/ CARLOSS MORRIS
-----------------------------
Title: Chairman
--------------------------
Attest
By: /s/ SUE M. NOLZ
-----------------------------
Asst. Secretary By: /s/ STEWART MORRIS, JR.
-----------------------------
Stewart Morris, Jr., Participant
5
<PAGE> 47
SECOND AMENDMENT TO THE
SALARY DEFERRED COMPENSATION AGREEMENT
This Second Amendment to Salary Deferred Compensation Agreement is made
this 30th day of October, 1992 by and between Stewart Information Services
Corporation (the "Company") and Max Crisp, an employee, (the "Participant").
WHEREAS, the Company and Participant entered into a Salary Deferred
Compensation Agreement on March 10, 1986, (the "Agreement");
WHEREAS, the Agreement was amended on July 24, 1990;
WHEREAS, the Company and Participant desire to amend the Agreement for a
change in the informal funding mechanism for the benefits to be provided under
the Agreement to accommodate a split-dollar arrangement;
NOW, THEREFORE, it is mutually agreed that:
In accordance with the Terms of Section 7 of the Agreement (pertaining to
the Amendment of the Agreement) the Agreement shall be amended as follows:
1. Section 1 (pertaining to Death Benefits) shall be amended by deleting it in
its entirety and substituting therefor, the following:
<PAGE> 48
3. Section 6 (pertaining to Construction), as amended by the first amendment,
shall be amended by deleting it in its entirety and substituting therefor the
following:
6. CONSTRUCTION AGREEMENT.
Any payments under this Agreement shall be independent of, and in addition
to, those under any other plan, program or agreement which may be in effect
between the parties hereto, or any other compensation payable to the
Participant or the Participant's designee by the Company. This Agreement
shall not be construed as a contract of employment and shall not operate to
change in any way any of the other terms and conditions of Participant's
employment and furthermore does not restrict the right of the Company to
discharge the Participant for proper cause or the right of the Participant
to discontinue service as an employee of the Company.
The Company shall establish an irrevocable trust (the "Trust") pursuant to
a trust agreement, substantially in the form of Exhibit "A" attached to and
made a part of this Agreement with Ameritrust Texas, N.A., as trustee. The
Company shall transfer to the Trust such life insurance policies or other
property or funds as the Company in its sole discretion deems appropriate
for the purpose of making funds available to pay the benefits to the
Participant under this Agreement.
Any such transfers to the Trust shall be irrevocable and be held by the
trustee in accordance with the terms of the Trust for payment in accordance
with this Agreement. In transferring any insurance contracts or other
property rights to the Trust, the Company shall cause such contracts or
rights to be assigned to and in the name of the Trust or trustee for the
Trust and for the benefits thereunder to be payable to the Trust or trustee
for the Trust.
Benefits under the Agreement are compensation for services rendered and with
respect to such benefit amounts, beyond what is funded by and paid to the
Participant (or his beneficiaries) in accordance with the terms of this
Agreement. Apart from what the Company transfers to the Trust, the Company
shall be under no obligation to purchase or maintain any assets to provide
the benefits under this Agreement and any asset which the Company may
utilize for the purpose of providing funds to pay the benefits under this
Agreement shall not be considered as security to the Participant for the
Company's performance under this Agreement. The right accruing to the
Participant or any designated beneficiary under this Agreement, shall be no
greater than the right of any unsecured general creditor of the Company.
3
<PAGE> 49
Although it is not required to do so, the Company may establish a split
dollar agreement with the Participant for the purchase of life insurance as
a means of meeting in whole or in part its obligations under this
Agreement. It is hereby agreed that the amount of policy death benefits (in
event of the Participant's death, to the extent that the death benefits are
payable under the life insurance contract) and accumulated cash values
owned by the Participant under the policy (collectively the "Insurance
Benefits") which are paid to the Participant shall be deemed to be payments
by the Company in discharging its obligations under this Agreement.
In using the Insurance Benefits to offset obligations under this Agreement,
the following steps shall be followed to calculate the amount of payments
due to the Participant or the Participant's beneficiary: (1) the annual
payments of $66,666.67 shall be increased to a pretax amount using the
federal, state, county and city tax rates in effect at the date of the
calculation (consistent with the methodology set forth in the second
paragraph of Section 1 of this Agreement, as amended) and (2) the present
value shall then be calculated based on the payment amount determined in
(1), using a 7% interest rate, and a 15-year payment period.
If the Company establishes a split dollar agreement the Company hereby
agrees that if paying of the Insurance Benefits to the Participant does not
fully satisfy the Company's obligation under this Agreement then the
Company agrees to pay the Participant a lump sum from the Company's
collateral assignment portion of the split dollar insurance contract and
apply such lump sum in satisfaction of such deficiency to the extent that
there are not sufficient amounts available from the Company's collateral
assignment portion of the split dollar insurance contract to fully satisfy
this deficiency and its obligations under this Agreement then the Company
shall pay any remaining deficiency directly to the Participant in the form
of a lump sum cash bonus or through installments as described in Section 1
and 2 of this amendment.
The trustee of the Trust shall apply any Insurance Benefits, collateral
assignment portion, and any other assets in the Trust in a manner
consistent with the preceding provisions of this Section 6 of the
Agreement, as amended, to satisfy the Company's obligations under this
Agreement. To the extent the assets of the Trust are not sufficient for the
purpose, the Company shall pay the Participant directly any remaining
deficiency in its obligation under this Agreement.
The laws of the State of Texas shall govern this Agreement.
4
<PAGE> 50
4. The Agreement shall, except as otherwise hereby amended, continue and
remain in effect.
IN WITNESS WHEREOF, the parties hereto have executed, this Second
Amendment to Salary Deferred Compensation Agreement the day and year first
hereinabove written.
STEWART INFORMATION SERVICES
CORPORATION
Affix Corporate Seal
By: /s/ CARLOSS MORRIS
-----------------------------
Title: Chairman
--------------------------
Attest
By: /s/ SUE M. NOLZ
-----------------------------
Asst. Secretary
By: /s/ MAX CRISP
-----------------------------
Max Crisp, Participant
5
<PAGE> 1
EXHIBIT 13
MANAGEMENT DISCUSSION AND ANALYSIS
A comparison of the results of operations of the Company for 1997 with 1996 and
1996 with 1995 follows.
General. The Company's dominant segment of operations is the land title
business. In general, the principal factors that 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 revenues from nonresidential, commercial transactions. Although
relatively few in number, large commercial transactions usually yield higher
premiums.
Mortgage interest rates, on the average, fell from 7.95% in 1995 to 7.81%
1996 to 7.60% in 1997. Rates begin in early 1995 at a little over 9% and then
trended downward to end the year slightly over 7%. In 1996, rates rose in the
first half of the year and fell in the second half. In the early months of 1997,
rates rose again, but then began a fairly steady decline in May 1997 and fell
each month that followed. At year end 1997, rates were approximately at or below
the 7% level.
Operating in these mortgage interest environments, together with a good
general economy, real estate activity began to increase in the last part of
1997. Existing home sales moved to record levels in the last quarter.
Refinancing transactions in the last month of 1997 and in early 1998 also rose
to record levels.
Title revenues. The Company's revenues from premiums, fees and other revenues
increased 7.9% in 1997 over 1996 and 22.9% in 1996 over 1995. The number of
title orders opened and closed by the Company and the average revenue per order
closed follow (agent operations and certain other income have been excluded).
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of orders opened (000s) . . . . . . . 331 319 278
Number of orders closed (000s) . . . . . . . 247 239 206
Average revenue per order closed . . . . . . $ 979 $ 938 $ 907
- -------------------------------------------------------------------------------
</TABLE>
Total closings increased 3.2% in 1997 and 16.0% in 1996. The average
revenue per closing increased 4.4% in 1997 and 3.4% in 1996. The average rate
was increased each year by higher home prices. There were no major revenue rate
increases in 1997 or 1996.
Title revenues by state. The approximate amounts and percentages of Stewart's
consolidated title revenues by state for the last three years were:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Amounts ($ millions) Percentages
1997 1996 1995 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
California . . . . . . . . . . . . . . . . . 123 119 97 19 20 20
Texas . . . . . . . . . . . . . . . . . . . 116 111 93 18 18 19
New York . . . . . . . . . . . . . . . . . . 51 50 35 8 8 7
Florida . . . . . . . . . . . . . . . . . . 47 40 29 7 7 6
Colorado . . . . . . . . . . . . . . . . . . 20 18 16 3 3 3
Nevada . . . . . . . . . . . . . . . . . . . 19 18 14 3 3 3
Arizona . . . . . . . . . . . . . . . . . . 19 17 14 3 3 3
All others . . . . . . . . . . . . . . . . . 262 236 198 39 38 39
- -----------------------------------------------------------------------------------------------
657 609 496 100 100 100
- -----------------------------------------------------------------------------------------------
</TABLE>
REI revenues. Real estate information revenues were $35.3 million in 1997,
$32.0 million in 1996 and $24.0 million in 1995. The increases in 1997 and 1996
were primarily due to a significant number of new businesses started in those
two years and additional income earned from operations existing in 1995. The
Company terminated an unprofitable business in late 1996 which reduced the
amount of the revenue increase in 1997 over 1996.
19
<PAGE> 2
The Company is engaged in negotiations to sell an unprofitable REI company
in England. If the results of this company were excluded, the pretax loss for
the REI segment would have been $2.5 million in 1997. The Company believes the
losses incurred in starting its REI companies will yield significant earnings in
future years.
Investments. Investment income increased 10.2% in 1997 and 6.5% in 1996,
primarily because of increases in yields and average balances invested.
Investment gains in 1997, 1996 and 1995 were realized as part of the ongoing
management of the investment portfolio for the purpose of improving performance.
Agent retention. Amounts retained by title agents are based on contracts between
the agents and the underwriters of the Company, Contractual rates, closing
practices, remittance rates and agent retentions vary across the country.
The percentage that amounts retained by agents bears to agent revenues may
vary from year to year because of the geographical mix of agent operations and
title revenues.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
Amounts retained by agents ........................ 334,653 311,937 252,064
Agent revenues .................................... 412,970 383,676 307,645
Retained by agents (%) ............................ 81.0 81.3 81.9
- ------------------------------------------------------------------------------------
</TABLE>
Employee and other expenses. Employee costs for the combined segments of
business increased 10.2% in 1997 and 21.4% in 1996. The average number of
employees increased in both years. The number of persons employed by the
Company at December 31, 1997, 1996 and 1995 was 4,569, 4,111 and 3,757,
respectively. The increase in staff in 1997 and 1996 was primarily in
automation, real estate information areas, new offices and field service
centers.
The Company has chosen to increase cost levels in automation and real
estate information areas because it believes the development and sale of new
products and services to new and existing customers is important to its future.
Through automating operating processes, the Company expects to add customer
revenues and reduce operating expenses and title losses in the future.
Other operating expenses increased 11.3% in 1997 and 14.9% in 1996.
Excluding the effect of new offices, the increase was 10.4% in 1997 and 12.8% in
1996. The overall increase for each year was caused primarily by changes in
transaction volume. Expenses that increased in 1997 were rent, premium taxes,
business promotion and delivery costs. Expenses that increased in 1996 included
business promotion, supplies, rent and premium taxes. Other operating expenses
also include policy forms, title plant expenses, telephone and travel. Most of
these expenses follow, to varying degrees, the changes in transaction volume and
revenues.
Provisions for title losses, as a percentage of title premiums, fees and
other revenues, were 4.5%, 5.6% and 6.0% in 1997, 1996 and 1995, respectively.
The continued improvement in industry trends in claims and the Company's
improved experience in claims have also led to smaller provisions for title
losses.
The Company's labor and certain other operating costs are sensitive to
inflation. Increases in consumer prices are considered in granting pay raises.
To the extent inflation causes increases in the prices of homes and other real
estate, premium revenues are also increased. Premiums are determined in part by
the insured values of the transactions handled by the Company.
Nonrecurring charge. A pretax writeoff of $1.9 million of goodwill in a
subsidiary in England that may be sold under current negotiations was recorded
in the fourth quarter of 1997. The subsidiary incurred after-tax operating
losses of $1.0 million in 1997. This subsidiary has been included in the REI
segment of the Company's operations.
20
<PAGE> 3
Income taxes. The provisions for federal and state income taxes represented
effective tax rates of 35.4%, 36.9% and 34.7% in 1997, 1996 and 1995,
respectively. The 1996 effective tax rate was higher primarily because
nontaxable income from municipal bonds was significantly less in relation to
pretax profits.
The Year 2000 issue. Currently, significant attention is being given by
companies to the problem of how their computer operations may be adversely
affected by the rollover of the calendar to the year 2000. The Company has
taken steps to make software programs substantially compliant with the
upcoming demands of the change. The Company is testing and reviewing the
electronic data transfers conducted with business partners. The Company
expects to substantially complete its work in this area in 1998. The related
costs are being expensed as incurred and additional costs are expected to be
insignificant.
Liquidity and capital resources. Cash provided by operations was $33.8
million, $36.8 million and $20.6 million in 1997, 1996 and 1995, respectively.
Internally-generated cash flow has been the primary source of funds for
additions to property and equipment, expanding operations, dividends to
shareholders and other requirements. This source may be supplemented by bank
borrowings.
A substantial majority of consolidated cash and investments is held by
Stewart Title Guaranty Company (Guaranty), Stewart Title Insurance Company
and other title insurer subsidiaries. Cash transfers between Guaranty and its
subsidiaries and the Company are subject to certain legal restrictions. See
Notes 5 and 6 to the financial statements.
The liquidity of the Company itself, excluding Guaranty and its
subsidiaries and excluding notes receivable from affiliates, consisted of cash
and investments of $9.0 million, a dividend receivable of $7.5 million from
Guaranty (received in early 1998) and short-term liabilities of $1.1 million
at December 31, 1997.
The Company knows of no commitments or uncertainties which are likely to
materially affect the ability of the Company and its subsidiaries to fund their
cash needs. See Note 16 to the financial statements.
The Company's capital resources, represented primarily by long-term debt of
$11.4 million and stockholders' equity of $209.5 million at December 31, 1997,
are considered adequate.
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Stewart Information Services
Corporation
We have audited the accompanying consolidated balance sheets of Stewart
Information Services Corporation and subsidiaries as of December 31, 1997 and
1996, and the related consolidated statements of earnings and retained earnings
and cash flows for each of the years in the three-year period ended December
31, 1997. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Stewart
Information Services Corporation and subsidiaries as of December 31, 1997 and
1996, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1997 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 13, 1998
21
<PAGE> 4
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Years ended December 31 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
REVENUES
Title premiums, fees and other revenues . . . . . . . . . . . . 657,298 609,408 496,034
Real estate information services. . . . . . . . . . . . . . . . . 35,320 32,030 24,015
Investment income . . . . . . . . . . . . . . . . . . . . . . . . 15,929 14,451 13,564
Investment gains - net . . . . . . . . . . . . . . . . . . . . . 363 129 956
- ---------------------------------------------------------------------------------------------------------
708,910 656,018 534,569
EXPENSES
Amounts retained by agents . . . . . . . . . . . . . . . . . . . 334,563 311,937 252,064
Employee costs . . . . . . . . . . . . . . . . . . . . . . . . 188,385 170,944 140,795
Other operating expenses . . . . . . . . . . . . . . . . . . . 114,422 102,768 89,408
Title losses and related claims . . . . . . . . . . . . . . . . 29,794 33,830 29,591
Depreciation and amortization . . . . . . . . . . . . . . . . . 12,115 11,007 9,855
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,343 1,140 1,194
Minority interests . . . . . . . . . . . . . . . . . . . . . . 2,614 1,514 933
Nonrecurring charge . . . . . . . . . . . . . . . . . . . . . . 1,905 - -
- ---------------------------------------------------------------------------------------------------------
685,231 633,140 523,840
Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . 23,679 22,878 10,729
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 8,391 8,441 3,722
- ---------------------------------------------------------------------------------------------------------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,288 14,437 7,007
Retained earnings at beginning of year . . . . . . . . . . . . . . 131,496 118,547 112,754
Cash dividends on Common Stock ($.26, $.24 and $.21 per share) . . (1,644) (1,488) (1,214)
- ---------------------------------------------------------------------------------------------------------
Retained earnings at end of year . . . . . . . . . . . . . . . . . 145,140 131,496 118,547
- ---------------------------------------------------------------------------------------------------------
Average number of shares outstanding - assuming dilution
(000 omitted) . . . . . . . . . . . . . . . . . . . . . . . . . 6,897 6,766 6,348
Earnings per share - basic . . . . . . . . . . . . . . . . . . . . 2.24 2.15 1.11
Earnings per share - diluted . . . . . . . . . . . . . . . . . . . 2.22 2.13 1.10
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
22
<PAGE> 5
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------
December 31 1997 1996
- - -------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C>
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,391 18,484
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,761 31,946
Investments in debt securities, at market:
Statutory reserve funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,769 127,057
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,737 73,456
- - -------------------------------------------------------------------------------------------------------
209,506 200,513
Receivables:
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,329 5,686
Premiums from agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,315 10,107
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,776 22,493
Less allowance for uncollectible amounts . . . . . . . . . . . . . . . . . . (5,552) (6,670)
- - -------------------------------------------------------------------------------------------------------
31,868 31,616
Property and equipment, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,266 2,432
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,372 6,354
Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,804 71,239
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . (59,027) (51,840)
- - -------------------------------------------------------------------------------------------------------
30,415 28,185
Title plants, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,778 21,096
Real estate, at lower of cost or net realizable value . . . . . . . . . . . . . 1,583 1,866
Investments in investees, on an equity basis . . . . . . . . . . . . . . . . . 7,231 5,639
Goodwill, less accumulated amortization of $5,840 and $4,828 . . . . . . . . . 18,427 16,535
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,632 15,155
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,099 12,337
- - -------------------------------------------------------------------------------------------------------
417,691 383,372
- - -------------------------------------------------------------------------------------------------------
Liabilities
Notes payable, including $11,442 and $7,935 long-term portion . . . . . . . . . 19,087 12,324
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . 26,553 25,033
Estimated title losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,791 150,331
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,364 419
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,392 4,275
Contingent liabilities and commitments
Stockholders' equity
Common - $1 par, authorized 15,000,000, issued and outstanding
6,381,046 and 6,216,441 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,381 6,216
Class B Common - $1 par, authorized 1,500,000, issued and outstanding 525,006 . 525 525
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 52,922 50,833
Net unrealized investment gains, net of deferred taxes . . . . . . . . . . . . 4,536 1,920
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,140 131,496
- - -------------------------------------------------------------------------------------------------------
Total stockholders' equity ($30.34 and $28.33 per share) . . . . . . . . . . 209,504 190,990
- - -------------------------------------------------------------------------------------------------------
417,691 383,372
- - -------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
23
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------
Years ended December 31 1997 1996 1995
- - -------------------------------------------------------------------------------------------------------
($000 Omitted)
<S> <C> <C> <C>
Cash provided by operating activities (Note) . . . . . . . . . . . 33,828 36,750 20,568
Investing activities:
Purchases of property and equipment and title plants - net . . (13,209) (12,670) (6,700)
Proceeds from investments matured and sold . . . . . . . . . . 40,133 47,724 59,897
Purchases of investments . . . . . . . . . . . . . . . . . . . (48,554) (69,213) (68,608)
Increases in notes receivable . . . . . . . . . . . . . . . . . (2,644) (1,340) (1,081)
Collections on notes receivable . . . . . . . . . . . . . . . . 1,006 2,833 2,069
Cash paid for the acquisition of subsidiaries - net . . . . . . . (3,592) (493) (5,175)
Proceeds from issuance of stock . . . . . . . . . . . . . . . . 135 11 --
- - -------------------------------------------------------------------------------------------------------
Cash used by investing activities . . . . . . . . . . . . . . . . (26,725) (33,148) (19,598)
Financing activities:
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . (1,644) (1,488) (1,214)
Proceeds of notes payable . . . . . . . . . . . . . . . . . . . 10,688 4,366 7,937
Payments on notes payable . . . . . . . . . . . . . . . . . . . (4,240) (4,694) (7,209)
- - -------------------------------------------------------------------------------------------------------
Cash provided (used) by financing activities . . . . . . . . . . . 4,804 (1,816) (486)
- - -------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents . . . . . . . . . . . . . . 11,907 1,786 484
- - -------------------------------------------------------------------------------------------------------
Note: Reconciliation of net earnings to the above amounts
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . 15,288 14,437 7,007
Add (deduct):
Depreciation and amortization . . . . . . . . . . . . . . . . 12,115 11,007 9,855
Provisions for title losses in excess of payments . . . . . . 6,460 12,019 3,996
Provision for uncollectible amounts - net . . . . . . . . . . (1,118) 171 376
Decrease (increase) in accounts receivable - net . . . . . . 2,660 (2,419) 2,814
Increase (decrease) in accounts payable and accrued
liabilities - net . . . . . . . . . . . . . . . . . . . . . . 1,419 4,195 (1,834)
Provision (benefit) for deferred income taxes . . . . . . . . . (1,886) 596 1,344
Increase (decrease) in income tax payable . . . . . . . . . . . 945 (1,184) (708)
Minority interest expense . . . . . . . . . . . . . . . . . . 2,614 1,514 933
Equity in net earnings of investees . . . . . . . . . . . . . (1,964) (980) (700)
Realized investment gains - net . . . . . . . . . . . . . . . (363) (129) (956)
Stock bonuses . . . . . . . . . . . . . . . . . . . . . . . . 409 328 303
Increase in other assets . . . . . . . . . . . . . . . . . . (2,963) (1,151) (846)
Nonrecurring charge . . . . . . . . . . . . . . . . . . . . . . 1,905 -- --
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . (1,693) (1,654) (1,016)
- - -------------------------------------------------------------------------------------------------------
Cash provided by operating activities . . . . . . . . . . . . . 33,828 36,750 20,568
- - -------------------------------------------------------------------------------------------------------
Supplemental information:
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . 7,636 9,004 3,283
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . 1,222 1,092 1,199
</TABLE>
See notes to consolidated financial statements.
24
<PAGE> 1
Exhibit 21
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OF
NAME OF SUBSIDIARY INCORPORATION
------------------ -------------
<S> <C>
Stewart Title of Mobile, Inc. ................................... Alabama
Stewart Title & Trust of Phoenix, Inc. .......................... Arizona
Citizens Title & Trust .......................................... Arizona
Stewart Title & Trust of Tucson ................................. Arizona
Stewart Title of Arkansas ....................................... Arkansas
Landata of Arkansas ............................................. Arkansas
Stewart Title of California ..................................... California
Landata, Inc. of Los Angeles .................................... California
Asset Preservation, Inc. ........................................ California
Landata, Inc. of the West Coast ................................. California
Stewart Valuations .............................................. California
Stewart OnLine Mortgage Documents, Inc. ......................... California
Stewart Title of Larimer County, Inc. ........................... Colorado
Stewart Title of Aspen, Inc. .................................... Colorado
Stewart Title of Eagle County, Inc. ............................. Colorado
Stewart Title of Glenwood Springs, Inc. ......................... Colorado
Stewart Title of Denver, Inc. ................................... Colorado
Stewart Title Company of Colorado Springs ....................... Colorado
Stewart Title of Pueblo ......................................... Colorado
Landata, Inc. of the Rocky Mountains ............................ Colorado
Stewart Title of Tampa .......................................... Florida
Stewart Title Guaranty of Jacksonville, Inc. .................... Florida
Stewart Title of Orange County, Inc. ............................ Florida
Stewart Title of Clearwater, Inc. ............................... Florida
Stewart Title of Polk County, Inc. .............................. Florida
Stewart Title of Martin County .................................. Florida
Stewart Title of Sarasota, Inc. ................................. Florida
Stewart Title of Pinellas, Inc. ................................. Florida
Landata, Inc. of Florida ........................................ Florida
Stewart Title of Pensacola ...................................... Florida
Stewart Title of Tallahassee, Inc. .............................. Florida
Stewart River City Title ........................................ Florida
Stewart Title of Northwestern Florida ........................... Florida
Charlotte County Abstract & Title Company ....................... Florida
Bay Title Services, Inc. ........................................ Florida
Stewart Approved Title, Inc. .................................... Florida
Advance Homestead Title, Inc. ................................... Florida
Stewart Title Company of Idaho, Inc. ............................ Idaho
Stewart Title of North Idaho, Inc. .............................. Idaho
Stewart Title Company of Illinois ............................... Illinois
Information Services of Illinois ................................ Illinois
Landata, Inc. of Illinois ....................................... Illinois
</TABLE>
(continued)
<PAGE> 2
Exhibit 21
(continued)
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OF
NAME OF SUBSIDIARY INCORPORATION
------------------ -------------
<S> <C>
Stewart Title Services of Indiana, Inc. ..................... Indiana
O'Rourke Title .............................................. Kansas
Stewart Title of Louisiana, Inc. ............................ Louisiana
Stewart Title Company of Maryland ........................... Maryland
Cambridge Landata, Incorporated ............................. Maryland
Stewart Title of Detroit, Inc. .............................. Michigan
Stewart Title Company of Minnesota .......................... Minnesota
Rochester Title ............................................. Minnesota
Stewart Title of Mississippi ................................ Mississippi
Stewart Title, Inc. (Kansas City) ........................... Missouri
Public Data Marketing, Inc. ................................. Missouri
Landata, Inc. of Midwest .................................... Missouri
Stewart Title of Douglas County ............................. Nevada
Stewart Title of Northern Nevada ............................ Nevada
Stewart Title of Carson City ................................ Nevada
Stewart Title of Nevada ..................................... Nevada
Stewart Title of Northeastern Nevada ........................ Nevada
Stewart Title of Central Nevada ............................. Nevada
Northeast Land Title ........................................ New Hampshire
Stewart Title of Central Jersey, Inc. ....................... New Jersey
Stewart-Princeton Abstract .................................. New Jersey
Stewart Title Services of North Jersey, L.L.C ............... New Jersey
Stewart Title of Bergen County .............................. New Jersey
Stewart Hudson Title Services ............................... New Jersey
Santa Fe Abstract Limited ................................... New Mexico
Stewart Title Limited ....................................... New Mexico
Stewart Title Insurance Company ............................. New York
River City Abstract, L.L.C .................................. New York
Stewart Title of Mecklenburg County ......................... North Carolina
Stewart Title of North Carolina, Inc. ....................... North Carolina
Stewart Title Agency of Ohio, Inc. .......................... Ohio
Stewart Title Agency of Columbus, Ltd. L.L.C ................ Ohio
Stewart Abstract & Title Co. of Oklahoma .................... Oklahoma
Stewart Escrow & Title Services of Lawton ................... Oklahoma
Landata Research ............................................ Oklahoma
Stewart Title of Oregon ..................................... Oregon
Stewart Title Insurance Company of Oregon ................... Oregon
Stewart Title of Rhode Island, Inc. ......................... Rhode Island
Ortem Investments, Inc. ..................................... Texas
East-West, Inc. ............................................. Texas
Stewart Title of San Patricio County, Inc. .................. Texas
</TABLE>
(Continued)
<PAGE> 3
Exhibit 21
(continued)
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OF
NAME OF SUBSIDIARY INCORPORATION
------------------ -------------
<S> <C>
Nacogdoches Abstract & Title ................................ Texas
Stewart Title Guaranty Company .............................. Texas
Southland Information, Inc. ................................. Texas
Stewart Title Company ....................................... Texas
Stewart Title Austin, Inc. .................................. Texas
Stewart Title of Lubbock, Inc. .............................. Texas
Stewart Title Company of Rockport, Inc. ..................... Texas
Texarkana Title and Abstract, Inc. .......................... Texas
Pacific Title, L.C .......................................... Texas
Premier Title, L.C .......................................... Texas
Gracy Title Co., L.C ........................................ Texas
Stewart Title of Eagle Pass ................................. Texas
MHI Title Company of Houston, L.C ........................... Texas
Brazoria County Abstract .................................... Texas
Stewart Investment Services Corporation ..................... Texas
Stewart Trust Company ....................................... Texas
Landata RE-Source - Texas ................................... Texas
Landata Systems, Inc. ....................................... Texas
Landata, Inc. ............................................... Texas
Landata RE-Source, Inc. ..................................... Texas
Landata Group, Inc. ......................................... Texas
Landata Field Services ...................................... Texas
Landata Site Services ....................................... Texas
Landata Technologies ........................................ Texas
Fulghum, Inc. ............................................... Texas
Stewart Mortgage Information Company ........................ Texas
Stewart Mortgage Processing ................................. Texas
Stewart Management Information, Inc. ........................ Texas
Stewart - U.A.M., Inc. ...................................... Texas
Baca-Landata, Inc. .......................................... Texas
Primero, Inc. ............................................... Texas
Landata Geo Services, Inc. .................................. Texas
Priority Title - Houston .................................... Texas
Priority Title - Dallas ..................................... Texas
Stewart Title of North Texas ................................ Texas
Stewart Information International, Inc. ..................... Texas
Stewart Title of Corpus Christi ............................. Texas
Backman-Stewart ............................................. Utah
Landata Scan Systems ........................................ Utah
Stewart Title and Escrow, Inc. .............................. Virginia
</TABLE>
(Continued)
<PAGE> 4
Exhibit 21
(continued)
STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OF
NAME OF SUBSIDIARY INCORPORATION
------------------ -------------
<S> <C>
Stewart Title - Shenandoah Valley, L.C ...................... Virginia
Stewart Title Services of Virginia, L.C ..................... Virginia
Signature & Stewart Settlements, L.C ........................ Virginia
Stewart Title & Settlement Services, Inc. ................... Virginia
Cedar Run Title & Abstract .................................. Virginia
Land Title Research ......................................... Virginia
Stewart Services of Greater Virginia ........................ Virginia
Potomac Title & Escrow ...................................... Virginia
Resource Title, L.L.C ....................................... Virginia
Howell Title, L.L.C ......................................... Virginia
Pacific Northwest Holding Company ........................... Washington
Sheboygan Title Services, Inc. .............................. Wisconsin
Stewart Title of Gillette, Inc. ............................. Wyoming
INTERNATIONAL
Stewart Information Hungary ................................. Hungary
Stewart Data Slovakia ....................................... Slovakia
Stewart Title Insurance Company (U.K.)
Limited .................................................. United Kingdom
Conquest Group .............................................. United Kingdom
Michael Hickmott & Company ................................. United Kingdom
Stewart Title Great Britain ................................. United Kingdom
</TABLE>
<PAGE> 1
EXHIBIT 23
The Board of Directors
Stewart Information Services Corporation:
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, No. 33-62535, No. 333-03981
and No. 333-24075) on Form S-8 of Stewart Information Services Corporation of
our report dated February 13, 1998, relating to the consolidated balance sheets
of Stewart Information Services Corporation and subsidiaries as of December 31,
1997 and 1996 and the related consolidated statements of earnings and retained
earnings and cash flows for each of the years in the three-year period ended
December 31, 1997, and all related schedules, which report appears in the
December 31, 1997 annual report on Form 10-K of Stewart Information Services
Corporation. Our report covering the December 31, 1995 financial statements
refers to a change in accounting for long-lived assets. We also consent to the
reference to our firm under the heading "Interests of Named Experts and Counsel"
in such Registration Statements.
/s/ KPMG Peat Marwick LLP
Houston, Texas
March 16, 1998
<PAGE> 2
The Board of Directors
Stewart Information Services Corporation
I consent to the incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, No. 33-62535 and No.
333-03981) on Form S-8 of Stewart Information Services Corporation of my report
which appears in the December 31, 1997 annual report on Form 10-K of Stewart
Information Services Corporation. I also consent to the reference to me under
the heading "Interest of Named Experts and Counsel" in such Registration
Statements.
/s/ JESUS YEPEZ, CPA
Lubbock, Texas
January 29, 1998
<PAGE> 3
March 9 , 1998
The Board of Directors
Stewart Information Services Corporation
We consent to the incorporation by reference in the registration statements (No.
33-48519, No.33-48520, No. 33-58156, No. 33-62535 and No. 333-03981) on Form S-8
of Stewart Information Services Corporation of our reports which appears in the
December 31, 1997 annual report on Form 10 K of Stewart Information Services
Corporation. We also consent to the reference to us under the heading "Interests
of Named Experts and Counsel" in such Registration Statements.
Sincerely,
/s/ GRANT BENNETT ACCOUNTANTS
---------------------------------
GRANT BENNETT ACCOUNTANTS
Certified Public Accountants
A Professional Corporation
Sacramento, California
<PAGE> 4
The Board of Directors
Stewart Information Services Corporation
We consent to the incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, No, 33-62535, No. 333-03981
and No, 333-24075) on Form S-8 of Stewart Information Services Corporation of
our reports which appear in the December 31, 1997 annual report on Form 10-K of
Stewart Information Services Corporation. We also consent to the reference to us
under the heading "Interest of Named Experts and Counsel" in such Registration
Statements.
Signed: /s/ WILKERSON & ARTHUR, P.C.
-------------------------------------
Wilkerson & Arthur, P.C.
Fort Worth, Texas
March 2, 1998
<PAGE> 5
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, No. 33-62535, No. 333-03981
and No. 333-24075) on Form S-8 of Stewart Information Services Corporation of
our report, which appears in the December 31, 1997 annual report on Form 10-K of
Stewart Information Services Corporation. We also consent to the reference to us
under the heading "Interests of Named Experts and Counsel" in such Registration
Statements.
/s/ M. TIMOTHY O'ROARK
- ---------------------------------
M. TIMOTHY O'ROARK
El Paso, TX
March 2, 1998
<PAGE> 6
The Board of Directors
Stewart Information Services Corporation
I consent to the incorporation by reference in the registration statements (No.
33-48519, No. 33-46520, No. 33-58156, No. 33-59747, No. 33-62535, No. 333-03981
and No. 333-24075) on Form S-8 of Stewart Information Services Corporation of my
reports which appear in the December 31, 1997 annual report on Form 10-K of
Stewart Information Services Corporation, I also consent to the reference to me
under the heading "Interest of Named Experts and Counsel" in such Registration
Statements.
Signed /s/ GINNY SANDERS MAY, CPA
--------------------------------------------
Lake Jackson, Texas
February 27, 1998
<PAGE> 7
The Board of Directors
Stewart Information Services Corporation
We consent to the incorporation by reference in the registration statements (No.
33-48519, No, 33-48520, No. 33-58156, No. 33-59747, No. 33-62535, No.
333-03981 and No. 333-24075) on Form S-8 of Stewart Information Services
Corporation of our report which appears in the December 31, 1997 annual report
on Form 10-K of Stewart Information Services Corporation. We also consent to the
reference to us under the heading "Interest of Named Experts and Counsel" in
such Registration Statements.
/s/ EDGAR, KIKER & CROSS
------------------------------
EDGAR, KIKER & CROSS, L.L.P.
Certified Public Accountants
Beaumont, Texas
February 27, 1998
<PAGE> 8
The Board of Directors
Stewart Information Services Corporation
I consent to the incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, No. 33-62535, No. 333-03981
and No. 333-24075) on Form S-8 of Stewart Information Services Corporation of my
report which appears in the December 31, 1997 annual report on Form 10-K of
Stewart Information Services Corporation, I also consent to the reference to me
under the heading "Interest of Named Experts and Counsel" in such Registration
Statements.
/s/ JIM S. WALKER
- -----------------------
Beaumont, Texas
March 3, 1998
<PAGE> 9
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, No. 33-62535, No. 333-03981
and No, 333-24075) on Form S-8 of Stewart Information Services Corporation of
our report, which appears in the December 31, 1997 annual report on Form 10-K
of Stewart Information Services Corporation. We also consent to the reference to
us under the heading "Interests of Named Experts and Counsel" in such
Registration Statements.
/s/ DOSHIER, PICKENS & FRANCIS, P.C.
- ----------------------------------------
DOSHIER, PICKENS & FRANCIS, P.C.
Amarillo, TX
March 3, 1998
<PAGE> 10
The Board of Directors
Stewart Information Services Corporation
We consent to the incorporation by reference in the registration statements (No.
33-48519), No. (33-48520, No. 33-58156, No. 33-59747, No. 33-62535, No. 33-
03981 and No. 333-24075) on Form S-8 of Stewart Information Services
Corporation of our report which appear in the December 31, 1997 annual report on
Form 10-K of Stewart Information Services Corporation. We also consent to the
reference to us under the heading "Interest of Named Experts and Counsel" in
such Registration Statements.
Signed /s/ FANCHER AND COMPANY
--------------------------------
March 3, 1998
Corpus Christi, Texas
<PAGE> 11
The Board of Directors
Stewart Information Services Corporation
We consent to the incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, No. 33-62535, No. 333-03981
and No. 333-24075) on Form S-8 of Stewart Information Services Corporation of
our report which appears in the December 31, 1997 annual report on Form-10-K of
Stewart Information Services Corporation. We also consent to the reference to us
under the heading "Interest of Named Experts and Counsel" in such Registration
Statements.
/s/ WILLIAMS & PEARCY, P.C.
- -------------------------------
WILLIAMS & PEARCY, P.C.
Texarkana, AR 71854
January 19, 1998
<PAGE> 12
The Board of Directors
Stewart Information Services Corporation
We consent to the incorporation by reference in the registration statements (No.
33-48519, No. 33-48520, No. 33-58156, No. 33-59747, No. 33-62535, No. 333-03981,
and No. 333-24075) on Form S-8 of Stewart Information Services Corporation of
our reports which appear in the December 31, 1997 annual report on Form 10-K of
Stewart Information Services Corporation. We also consent to the reference to us
under the heading "Interest of Named Experts and Counsel" in such Registration
Statements.
/s/ FLUSCHE, VAN BEVEREN, KILGORE, P. C.
- -------------------------------------------
FLUSCHE, VAN BEVEREN, KILGORE, P. C.
Corpus Christi, Texas
March 11, 1998
<PAGE> 13
The Board of Directors
Stewart Information Services Corporation
We consent to incorporation by reference in the registration statements
(No. 33-48519, No. 33-48520, No. 33-58156, No. 33-59747, No. 33-62535, No.
333-03981 and No. 333-24075) on Form S-8 of Stewart Information Services
Corporation of our report, which appears in the December 31, 1997 annual report
on Form 10-K of Stewart Information Services Corporation. We also consent to the
reference to us under the heading "Interests of Named Experts and Counsel" in
such Registration Statements.
/s/ AARONSON, WHITE & COMPANY
------------------------------------
AARONSON, WHITE & COMPANY
Houston, TX
March 16, 1998
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet as of December 31, 1997 and the related statement of earnings for the year
ended December 31, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<DEBT-HELD-FOR-SALE> 209,506
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 245,267
<CASH> 30,391
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 417,691
<POLICY-LOSSES> 156,791
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 19,087
0
0
<COMMON> 6,906
<OTHER-SE> 202,598
<TOTAL-LIABILITY-AND-EQUITY> 417,691
692,618
<INVESTMENT-INCOME> 15,929
<INVESTMENT-GAINS> 363
<OTHER-INCOME> 0
<BENEFITS> 29,794
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 23,679
<INCOME-TAX> 8,391
<INCOME-CONTINUING> 15,288
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,288
<EPS-PRIMARY> 2.24
<EPS-DILUTED> 2.22
<RESERVE-OPEN> 150,331
<PROVISION-CURRENT> 27,188
<PROVISION-PRIOR> 2,606
<PAYMENTS-CURRENT> 5,991
<PAYMENTS-PRIOR> 17,343
<RESERVE-CLOSE> 156,791
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
