-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PuD+Z3WENiZbzQXGHepFqSxRcCNQXo2RGDjcdXQg//iWcA5An4xIOtt+PFCYQgqH m51HiWikEe3lP9CYSjq4fg== 0000905870-97-000040.txt : 19970814 0000905870-97-000040.hdr.sgml : 19970814 ACCESSION NUMBER: 0000905870-97-000040 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESTORS TITLE CO CENTRAL INDEX KEY: 0000720858 STANDARD INDUSTRIAL CLASSIFICATION: TITLE INSURANCE [6361] IRS NUMBER: 561110199 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11774 FILM NUMBER: 97657778 BUSINESS ADDRESS: STREET 1: 121 N COLUMBIA ST STREET 2: P O DRAWER 2687 CITY: CHAPEL HILL STATE: NC ZIP: 27514 BUSINESS PHONE: 9199682200 MAIL ADDRESS: STREET 1: 121 NORTH COLUMBIA STREET CITY: CHAPEL HILL STATE: NC ZIP: 27514 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 0-11774 INVESTORS TITLE COMPANY (Exact name of registrant as specified in its charter) North Carolina 56-1110199 (State of Incorporation) (I.R.S. Employer) 121 North Columbia Street, Chapel Hill, North Carolina 27514 (Address of Principal Executive Offices) (Zip Code) (919) 968-2200 ( Registrant's Telephone Number Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 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 Shares outstanding of each of the issuer's classes of common stock as of June 30, 1997: Common Stock, no par value 2,774,850 Class Shares Outstanding 1 INVESTORS TITLE COMPANY AND SUBSIDIARIES Index PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 . . . . . . . . . . . . . . . . . . 3 Consolidated Statements of Income: Three and Six Months Ended June 30, 1997 and 1996. 4 Consolidated Statements of Cash Flows: Six Months Ended June 30, 1997 and 1996 . . . . . 5 Notes to Consolidated Financial Statements . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . 8 PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . .11 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . .11 Item 6. Exhibits and Reports on Form 8-K. . . . . . . .11 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . .12 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Investors Title Company and Subsidiaries Consolidated Balance Sheets As of June 30, 1997 and December 31, 1996 (Unaudited) 6/30/97 12/31/96 Assets Cash and Cash Equivalents $ 5,626,284 $ 4,244,570 Investments: Held-to-maturity: Certificates of deposit 169,004 169,004 Bonds - at amortized cost 4,637,317 5,098,368 Available-for-sale - at market: Bonds 14,567,157 12,832,724 Common and nonredeemable preferred stocks 5,137,853 5,473,567 Total investments 24,511,331 23,573,663 Receivables: Premiums, net 2,435,733 2,016,122 Accrued interest and dividends 319,283 321,634 Recoveries of claims previously paid 37,700 69,334 Other 57,418 35,663 Total receivables 2,850,134 2,442,753 Prepaid Expenses and Other Assets 376,285 451,972 Property Acquired in Settlement of Claims 198,500 165,500 Property-At Cost: Land 782,582 782,582 Office buildings and improvements 1,293,726 1,293,726 Furniture, fixtures and equipment 1,927,765 1,843,636 Automobiles 173,627 169,423 Total 4,177,700 4,089,367 Less accumulated depreciation 1,480,717 1,325,297 Property, net 2,696,983 2,764,070 Total Assets $ 36,259,517 $ 33,642,528 Liabilities and Stockholders' Equity Liabilities: Accounts payable and accrued liabilities $ 815,793 $ 997,759 Commissions and reinsurance payables 67,744 60,902 Premium taxes payable 13,643 101,766 Income taxes payable: Current 208,154 175,143 Deferred 1,121,573 1,232,716 Total liabilities 2,226,907 2,568,286 Reserves for Claims 6,078,330 5,086,065 Stockholders' Equity: Common stock-No par value (shares authorized 6,000,000; 2,855,744 and 2,855,744 shares issued; and 2,774,850 and 2,767,830 shares outstanding 1997 and 1996, respectively) 805,069 722,321 Retained earnings 25,581,178 23,745,995 Net unrealized gain on investments (net of deferred taxes: 1997: $807,773 ; 1996: $782,959) 1,568,033 1,519,861 Total stockholders' equity 27,954,280 25,988,177 Total Liabilities and Stockholders' Equity $ 36,259,517 $ 33,642,528
3 Investors Title Company and Subsidiaries Consolidated Statements of Income June 30, 1997 and 1996 (Unaudited) For The Three For The Six Months Ended Months Ended June 30 June 30 1997 1996 1997 1996 Revenues: Underwriting income: Premiums written $ 7,703,332 $ 5,505,691 $ 13,190,962 $ 9,958,580 Less-premiums for reinsurance ceded 41,643 24,199 110,485 42,289 Net premiums written 7,661,689 5,481,492 13,080,477 9,916,291 Investment income-interest and dividends 385,606 314,286 783,719 609,077 Net Gain (loss) on sales of investments (32) 48,656 107,049 8,604 Other 144,536 72,196 266,065 141,906 Total 8,191,799 5,916,630 14,237,310 10,675,878 Operating Expenses: Salaries 1,087,793 919,272 2,079,269 1,781,158 Commissions to agents 2,588,253 1,362,102 4,260,341 2,449,054 Provision for claims 1,003,167 830,812 1,817,988 1,512,145 Employee benefits and payroll taxes 486,780 448,131 950,252 730,381 Office occupancy and operations 623,376 558,384 1,170,316 987,357 Business development 324,805 167,026 470,752 296,191 Taxes, other than payroll and income 173,702 147,528 346,546 259,080 Professional fees 64,121 38,920 99,257 71,171 Other 241,537 93,066 263,400 191,249 Total 6,593,534 4,565,241 11,458,121 8,277,786 Income Before Income Taxes 1,598,265 1,351,389 2,779,189 2,398,092 Provision For Income Taxes: Current 551,221 454,377 908,618 701,622 Deferred (98,430) (81,770) (135,957) (30,031) Total 452,791 372,607 772,661 671,591 Net Income $ 1,145,474 $ 978,782 $ 2,006,528 $ 1,726,501 Average number of shares outstanding $ 2,773,582 $ 2,773,362 $ 2,771,264 $ 2,778,105 Net Income Per Share $ 0.41 $ 0.35 $ 0.72 $ 0.62 Dividends Paid $ 85,673 $ 71,394 $ 171,345 $ 128,508 Dividends Per Share $ 0.03 $ 0.025 $ 0.06 $ 0.045
4 Investors Title Company and Subsidiaries Consolidated Statements of Cash Flows For the Six Months Ended June 30, 1997 and 1996 (Unaudited) 1997 1996 Operating Activities: Net income $2,006,528 $1,726,501 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 166,434 158,208 Amortization, net of accretion 2,132 6,942 Net (gain) loss on disposals of property 422 (11,910) Net gain on sales of investments (107,049) (8,604) Benefit for deferred income taxes (135,957) (30,031) Provision for possible claims 1,817,988 1,512,145 Payments of claims, net of recoveries (825,723) (862,145) Increase in receivables (407,381) (606,848) (Increase) decrease in prepaid expenses and other assets 75,687 (16,417) (Increase) decrease in assets acquired in settlement of claims (33,000) 85,000 Decrease in accounts payable and accrued liabilities (181,966) (197,642) Increase (decrease) in commissions and reinsurance payables 6,842 (2,538) Decrease in premium taxes payable (88,123) (22,839) Increase in income taxes payable - current 33,011 68,014 Net cash provided by operating activities 2,329,845 1,797,836 Investing Activities: Purchases of investments held-to-maturity 0 (897,846) Purchases of investments available-for-sale (2,525,212) (1,010,755) Proceeds from investments held-to-maturity 460,000 491,019 Proceeds from investments available-for-sale 1,305,447 594,960 Purchases of property (120,849) (171,080) Proceeds from sales of property 21,080 81,979 Net cash used in investing activities (859,534) (911,723) Financing Activities: Dividends paid (171,345) (128,508) Repurchases of common stock, net 82,748 (255,214) Net cash used in financing activities (88,597) (383,722) Net Increase in Cash and Cash Equivalents 1,381,714 502,391 Cash and Cash Equivalents, Beginning of Year 4,244,570 2,527,008 Cash and Cash Equivalents, End of Period $5,626,284 $3,029,399 Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for: Interest $0 $0 Income Taxes $875,765 $784,006
5 INVESTORS TITLE COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1997 (Unaudited) Note 1 - Basis of Presentation The consolidated financial statements include Investors Title Company and its subsidiaries, and have been prepared in conformity with generally accepted accounting principles. In the opinion of management all necessary adjustments have been reflected for a fair presentation of the financial position, results of operations and cash flows in the accompanying unaudited consolidated financial statements. All such adjustments are of a normal recurring nature. Certain 1996 amounts have been reclassified to conform to the 1997 presentation. Reference should be made to the "Notes to Consolidated Financial Statements" of the Registrant's Annual Report to Shareholders for the year ended December 31, 1996 for a description of accounting policies. Note 2 - Reserves for Claims Transactions in the reserve for claims for the six months ended June 30, 1997 were as follows: Balance, beginning of year $5,086,065 Provision, charged to operations 1,817,988 Recoveries 65,703 Payments of claims (891,426) Balance, June 30, 1997 $6,078,330 In management's opinion, the reserve is adequate to cover claim losses which might result from pending and possible claims. Note 3 - New Accounting Pronouncements In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS 128") which specifies a new methodology for computing earnings per share. SFAS 128 replaces the presentation of primary and fully diluted earnings per share pursuant to Accounting Principles Board Opinion No. 15 - "Earnings per Share" ("APB 15") with the presentation of basic and diluted earnings per share. Basic earnings per share excludes the dilutive effect of common stock equivalents and is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted 6 earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. SFAS 128 must be adopted for financial statements issued after December 15, 1997. Restatement of prior-period earnings per share data is required. Earnings per share will be computed under APB 15 until that time. The Company does not believe that implementation of SFAS 128 will materially affect its financial results. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS 130"). This Statement establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. The Company is required to adopt SFAS 130 for the year ended December 31, 1998. Management has not determined the impact of this Statement. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The 1996 Form 10-K and the 1996 Annual Report should be read in conjunction with the following discussion since they contain important information for evaluating the Company's operating results and financial condition. Results of Operations: For the quarter ended June 30, 1997, premiums written increased 40% to $7,703,332, investment income increased 23% to $385,606, revenues increased 38% to $8,191,799, net income increased 17% to $1,145,474 and net income per share increased 17% to $.41 all compared to the same quarter in 1996. For the six months ended June 30, 1997, premiums written increased 32% to $13,190,962, investment income increased 29% to $783,719, revenues increased 33% to $14,237,310, net income increased 16% to $2,006,528 and net income per share increased 16% to $.72 all compared to the same period in 1996. Sales growth in 1997 has resulted from a combination of continued marketing efforts and a healthy real estate market. The volume of business continued to increase in the second quarter of 1997 as the number of policies and commitments issued rose to 46,946, an increase of 27% compared to 37,027 in the same period in 1996. The average premium per policy has risen primarily due to increased business in operating areas with higher premium rates. Policies and commitments issued for the six months ended June 30, 1997 were 81,803 compared to 69,242 in 1996. Shown below is a breakdown of branch and agency premiums: Three Months Ended Six Months Ended June 30 June 30 1997 % 1996 % 1997 % 1996 % Branch $4,006,363 52 $3,493,143 63 $ 7,113,776 54 $6,331,032 64 Agency $3,696,969 48 $2,012,548 37 $ 6,077,186 46 $3,627,548 36 Total $7,703,332 100 $5,505,691 100 $13,190,962 100 $9,958,580 100
Premiums written from branch operations increased 12% in 1997 compared to 1996. Agency premiums increased 68% in 1997 compared to 1996. The following table shows title premiums written for the three and six months ended June 30, 1997 and 1996 in all states where our two insurance subsidiaries, Investors Title Insurance Company and Northeast Investors Title Insurance Company, currently underwrite insurance: 8 Three Months Ended Six Months End June 30 June 30 1997 1996 1997 1996 Florida 17,062 22,194 $39,835 $41,221 Georgia 118,741 27,203 311,650 43,622 Indiana 30,279 27,411 49,218 49,002 Kentucky 0 0 0 84 Maryland 28,239 16,219 48,604 27,693 Michigan 1,249,142 24,365 1,917,432 24,365 Minnesota 7,719 0 7,719 0 Mississippi 4,982 0 15,770 0 Nebraska 171,739 134,659 330,609 273,229 New York 118,175 133,257 217,530 215,736 North Carolina 3,945,470 3,447,972 6,911,833 6,232,693 South Carolina 692,295 630,318 1,100,349 1,196,115 Tennessee 62,683 18,559 76,567 41,569 Virginia 1,241,178 1,013,997 2,125,971 1,790,945 Direct Premiums 7,687,704 5,496,154 13,153,087 9,936,274 Reinsurance 15,628 9,537 37,875 22,306 Total Premiums $7,703,332 $5,505,691 $13,190,962 $9,958,580
Operating expenses increased 44% and 38% for the three and six months ended June 30, 1997, respectively, when compared to the same periods in 1996. Salaries and employee benefits increased primarily due to additional staffing needed to process the rise in premium volume. Office occupancy and operations, business development, and premium taxes increased primarily due to the increase in premium volume. The increase in commissions is the result of the Company's expansion into new markets primarily through establishing new agency relationships. For the three months ended June 30, 1997, the provision for claims as a percentage of premiums written was 13.02% compared to 15.09% for same period in 1996. For the six months ended June 30, 1997, the provision for claims as percentage of premiums written was 13.78% compared to 15.18% for the same period in 1996. The lower provision in 1997 was primarily the result of an improvement in claims experience. The reserve for claims has increased $992,265 in 1997 compared to year-end based on management's assessment of the reserve. Income tax expense as percentage of income before income taxes was 27.8% and 28% for the six months ended June 30, 1997 and 1996, respectively. Liquidity and Capital Resources: Net cash provided by operating activities for the six months ended June 30, 1997, amounted to $2,329,845 compared to $1,797,836 for the same six month period during 1996. This increase is attributable to the increase in net income and a number of other factors, including a smaller increase in receivables, a decrease in prepaid expenses and other assets, and a higher provision for possible claims in 1997, partially offset by a 9 net gain on sales of investments, a larger benefit for deferred income taxes and an increase in assets acquired in settlement of claims in 1997. On December 9, 1996, the Board of Directors approved the repurchase by the Company of shares of the Company's common stock from time to time at prevailing market prices. The purpose of the repurchases is to avoid dilution to existing shareholders as a result of issuances of stock in connection with stock options and stock bonuses. Pursuant to this approval, the Company has repurchased 8,250 shares at an average purchase price of $14.97 per share as of July 17, 1997. The Board has authorized management to repurchase up to an additional 141,750 shares. Management believes that funds generated from operations (primarily underwriting and investment income) will enable the Company to adequately meet its operating needs. In addition to operational liquidity, the Company maintains a high degree of liquidity within the investment portfolio in the form of short-term investments and other readily marketable securities. Safe Harbor Statement Except for the historical information presented, the matters disclosed in the foregoing discussion and analysis and other parts of this report include forward-looking statements. These statements represent the Company's current judgment on the future and are subject to risks and uncertainties that could cause actual results to differ materially. Such factors include, without limitation: (i) the demand for title insurance will vary with factors beyond the control of the Company such as changes in mortgage interest rates, availability of mortgage funds, level of real estate activity, cost of real estate, consumer confidence, supply and demand for real estate, inflation and general economic conditions; (ii) the risk that losses from claims are greater than anticipated such that reserves for possible claims are inadequate; (iii) the risk that unanticipated adverse changes in securities markets could result in material losses on investments made by the Company; and (iv) the dependence of the Company on key management personnel the loss of whom could have a material adverse affect on the Company's business. Other risks and uncertainties may be described from time to time in the Company's other reports and filings with the Securities and Exchange Commission. 10 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders Investors Title Company's Annual Meeting of Shareholders was held May 13, 1997. The proposals voted upon and the results of the voting were as follows: 1. Election of three Directors for a three-year term. Broker For Against Abstentions Withheld Non-votes James A. Fine, Jr. 2,339,426 N/A N/A 20,811 N/A James R. Morton 2,346,726 N/A N/A 13,511 N/A Lillard H. Mount 2,342,564 N/A N/A 17,673 N/A
2. Approval of the 1997 Stock Option and Restricted Stock Plan. Broker For Against Abstentions Withheld Non-votes 1,866,852 47,849 28,420 N/A N/A
3. Ratification of the selection of Deloitte & Touche LLP, Certified Public Accountants to audit the books and accounts of the Company for the calendar year ending December 31, 1997. Broker For Against Abstentions Withheld Non-votes 2,350,459 8,898 880 N/A N/A
Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (10)(ix) Form of Nonqualified Stock Agreement to nonemployee directors dated May 13, 1997 included herewith. (27) Financial Data Schedule included herewith. (b) Reports on Form 8-K There were no reports filed on Form 8-K for this quarter. 11 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed in its behalf by the undersigned hereunto duly authorized. INVESTORS TITLE COMPANY (Registrant) By: /s/James A. Fine, Jr. James A. Fine, Jr. President By: /s/Elizabeth P. Bryan Elizabeth P. Bryan Vice President (Principal Accounting Officer) Dated: August 11, 1997 EX-10 2 INVESTORS TITLE COMPANY EXHIBIT 10(ix) 1997 STOCK OPTION AND RESTRICTED STOCK PLAN NONQUALIFIED STOCK OPTION AGREEMENT THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and entered into as of _________, 199__, by and between Investors Title Company, a North Carolina corporation (the "Company"), and ________________, a director of the Company (the "Optionee"): W I T N E S S E T H: WHEREAS, the Company recognizes the value to it of the services of the Optionee and desires to provide the Optionee with an incentive to remain as a director of the Company and an opportunity to purchase common stock of the Company, so that the Optionee may acquire or increase a proprietary interest in the Company's success, and WHEREAS, the Company desires to grant the Optionee a nonqualified stock option under Article II of the Company's 1997 Stock Option and Restricted Stock Plan (the "Plan"), and the Optionee desires to accept such option in accordance with the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and intending to be legally bound hereby, the parties agree as follows: 1. Grant of Option. Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants to the Optionee an option (the "Option") to purchase all or any portion of five hundred (500) shares (the "Shares") of the Company's common stock, no par value ("Common Stock"), at an exercise price of Fourteen Dollars ($14.00) per Share (the "Exercise Price"). The Optionee shall be entitled to exercise the Option in full from and after the date hereof and, unless sooner terminated as provided in the Plan or in Section 4 hereof, shall terminate, and all rights of the Optionee hereunder shall expire, ten (10) years from the date hereof. This Option is intended to be a "Nonqualified Stock Option" within the meaning specified in the Plan and is hereby designated as such pursuant to Article II, Section 1(a) of the Plan. The grant of this Option has been duly authorized by the Committee that administers the Plan, as established by the Board of Directors of the Company pursuant to Article I, Section 3 of the Plan (the "Committee"). 2. Transfer of Option. The Option may not be sold, pledged, assigned or transferred in any manner other than by will or by the laws of descent or distribution. 1 3. Adjustments. If the shares of Common Stock are increased, decreased, changed into or exchanged for a different number or kind of shares or securities through merger, consolidation, combination, exchange of shares, other reorganization, recapitalization, reclassification, stock dividend, stock split or reverse stock split in which the Company is the surviving entity, the aggregate number of Shares subject to the Option and the Exercise Price per Share subject to the Option shall be appropriately and proportionately adjusted in the manner provided in the Plan, provided, however, that the aggregate pruchase price applicable to the unexercised portion of the Option shall not be affected by such adjustment. 4. Termination of Option. The Option hereby granted shall terminate and be of no force or effect upon the happening of the first to occur of the following events: (a) expiration of three months after the date of termination of the Optionee's service as a director of the Company for any reason other than the death of the Optionee; (b) expiration of twelve months after the death of the Optionee while serving as a director of the Company; (c) occurrence of any event described in paragraph 9 hereof that causes a termination of the Option; or (d) expiration of ten years from the date of this Agreement. Any Option that may be exercised for a period following termination of the Optionee's service as a director may be exercised only to the extent it was exercisable immediately before such termination and in no event after the Option would expire by its terms without regard to such termination. 5. Method of Exercise. The Option shall be exercised by tender of payment of the Exercise Price and delivery to the Company at its principal place of business of a written notice, at least three business days prior to the proposed date of exercise, which notice shall: (a) state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and the name, address, and social security number of the person in whose name the stock certificate or certificates for such Shares is to be registered; (b) contain any such representations and agreements as to Optionee's investment intent with respect to such Shares as shall be reasonably required by the Committee pursuant to paragraph 7 hereof; and (c) be signed by the person entitled to exercise the Option, and if the Option is being exercised by any person or persons other than the Optionee, be accompanied by proof, satisfactory to the Committee, of the right of such person or persons to 2 exercise the Option. Payment of the Exercise Price may be made in cash or by certified or official bank check payable to the order of the Company. Payment may also be made by surrendering shares of Common Stock (including any Shares received upon a prior or simultaneous exercise of the Option) at the then fair market value of such Common Stock, as determined pursuant to Section 1(b) of Article II of the Plan as of the date of surrender. Payment may also be made by combining cash, check or Common Stock. After receipt of such notice in a form satisfactory to the Committee and the acceptance of payment, the Company shall deliver to the Optionee a certificate or certificates representing the Shares purchased hereunder, provided, that if any law or regulation requires the Company to take any action with respect to the Shares specified in such notice before the issuance thereof, the date of delivery of such Shares shall be extended for the period necessary to take such action. 6. Rights of a Shareholder. The Optionee shall not be deemed for any purpose to be a shareholder of the Company with respect to any Shares covered by this Option unless this Option shall have been exercised and the Exercise Price paid in the manner provided herein. No adjustment will be made for dividends or other rights where the record date is prior to the date of exercise and payment. Upon the exercise of the Option as provided herein and the issuance of the certificate or certificates evidencing the Shares covered thereby, the Optionee shall have all the rights of a shareholder of the Company, including the right to receive all dividends or other distributions paid or made with respect to such Shares. 7. Compliance with Securities Laws. Shares issuable pursuant to this Option are not presently registered under applicable federal and state securities laws. The Company may in the future, but shall have no obligation to, undertake such registrations or may, in lieu thereof, issue Shares hereunder only pursuant to applicable exemptions from such registrations. Before issuing Shares to Optionee hereunder, the Committee may require appropriate representations from Optionee and take such other action as the Committee may deem necessary, including but not limited to placing restrictive legends on certificates evidencing such shares and place stop transfer instructions in the Company's stock transfer records, or delivering such instructions to the Company's transfer agent, in order to assure compliance with any such exemptions. 8. Rule 144. The Optionee acknowledges that, notwithstanding any future registration of the Option and the Shares issuable upon its exercise under the Securities Act of 1933 or under the securities laws of any state, if, at the time of exercise of the Option, he is deemed to be an "affiliate" of the Company as defined in Rule 144 of the Securities and Exchange Commission, any shares purchased thereunder will nevertheless be subject to sale only in compliance with Rule 144 (but without any holding period), and that the Company shall take such action as it deems necessary or appropriate to assure such 3 compliance, including placing restrictive legends on certificates evidencing such shares and delivering stop transfer instructions to the Company's transfer agent. 9. Reorganizations. If the Company shall be a party to any merger or consolidation in which it is not the surviving entity or pursuant to which the shareholders of the Company exchange their Common Stock, or if the Company shall dissolve or liquidate or sell all or substantially all of its assets, the Option granted hereunder shall terminate on the effective date of such merger, consolidation, dissolution, liquidation or sale; provided, however, that prior to such effective date, the Committee may, in its discretion, cause the Option to become immediately exercisable, and may, to the extent the Option is terminated as provided in this paragraph 9, authorize a payment to the Optionee that approximates the economic benefit that he would realize if the Option were exercised immediately before such effective date, or authorize a payment in such other amount as it deems appropriate to compensate the Optionee for the termination of the unexercised portion of the Option, or arrange for the granting of a substitute option to the Optionee. This Agreement shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or to dissolve, liquidate, sell or transfer all or any part of its business or assets. 10. Tax Matters. The Optionee acknowledges that, upon exercise of the Option, the Optionee will recognize taxable income generally in an amount equal to the excess of the fair market value of the purchased Shares over the Exercise Price paid therefor, and the Company will have certain withholding obligations for income and other taxes. It shall be a condition to the Optionee's receipt of a stock certificate covering Shares purchased pursuant to the Option that the Optionee pay to the Company such amounts as it is required to withhold or, with the consent of the Company, that the Optionee otherwise provide for the discharge of the Company's withholding obligation. If any such payment is not made by the Optionee, the Company may deduct the amounts required to be withheld from payments of any kind to which the Optionee would otherwise be entitled from the Company. 11. Construction. This Agreement shall be construed so as to be consistent with the Plan and the provisions of the Plan shall be deemed to be controlling in the event that any provision hereof should be inconsistent therewith. The Optionee hereby acknowledges receipt of a copy of the Plan from the Company and agrees to be bound by all of the terms and provisions of the Plan. Whenever the word "Optionee" is used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to (i) the estate, personal representative, or beneficiary to whom this Option may be transferred by will or by the laws of descent and distribution or (ii) the guardian or legal representative of the Optionee acting pursuant to a valid power of attorney or the decree of a court of competent 4 jurisdiction, then the term "Optionee" shall be construed to include such estate, personal representative, beneficiary, guardian or legal representative. 12. Severability. The provisions of this Agreement shall be severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereto. 13. Successor and Assigns. The terms of this Agreement shall be binding upon and shall enure to the benefit of any successors or assigns of the Company and of the Optionee. 14. Notices. Notices under this Agreement shall be in writing and shall be deemed to have been duly given (i) when personally delivered, (ii) when forwarded by Federal Express, Airborne, or another private carrier which maintains records showing delivery information, (iii) when sent via facsimile but only if a written facsimile acknowledgment of receipt is received by the sending party, or (iv) when placed in the United States Mail and forwarded by registered or certified mail, return receipt requested, postage prepaid, addressed to the party to whom such notice is being given or such other address as furnished to the Company from time to time for this purpose. 15. Entire Agreement; Modification. This Agreement is the entire agreement and understanding of the parties hereto with respect to the Option granted herein and supersedes any and all prior and contemporaneous negotiations, understandings and agreements with regard to the Option and the matters set forth herein, whether oral or written. No representation, inducement, agreement, promise or understanding altering, modifying, taking from or adding to the terms and conditions hereof shall have any force or effect unless the same is in writing and validly executed by the parties hereto. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina. IN WITNESS WHEREOF, the Optionee has executed this Agreement and the Company has caused this Agreement to be executed by its duly authorized officer, effective as of the day and year first above written. INVESTORS TITLE COMPANY By:____________________ ATTEST: _______________________ Secretary (Corporate Seal) ______________________ [Optionee] 5 EX-27 3 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
7 *Not disclosed on a quarterly basis. 3-MOS 6-MOS DEC-31-1997 DEC-31-1997 MAR-31-1997 JUN-30-1997 13,276,954 14,567,157 4,832,752 4,687,316 0* 0* 4,579,347 5,137,853 0 0 0 0 22,838,058 24,511,331 5,100,623 5,626,284 0 0 0 0 33,842,040 36,259,517 5,436,065 6,078,330 0 0 89,154 67,744 0 0 0 0 0 0 0 0 705,966 805,069 25,660,262 27,149,211 33,842,040 36,259,517 5,418,788 13,080,477 398,113 783,719 107,081 107,049 121,529 266,065 814,821 1,817,988 0 0 4,049,766 9,640,133 1,180,924 2,779,189 319,870 772,661 861,054 2,006,528 0 0 0 0 0 0 861,054 2,006,528 .31 .72 .31 .72 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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